TD Bank 2005 Annual Report Download - page 47

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As at As at
(millions of Canadian dollars) October 31, 2005 October 31, 2004
TDBFG excluding TDBFG TDBFG
TD Banknorth TD Banknorth Consolidated Consolidated
Securities $102,833 $ 5,263 $108,096 $ 98,280
Securities purchased under reverse repurchase agreements 26,375 – 26,375 21,888
Loans (net of allowance for credit losses) 129,347 22,896 152,243 123,924
Deposits 220,926 26,055 246,981 206,893
TD BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s Discussion and Analysis 43
GROUP FINANCIAL CONDITION
Balance Sheet Review
Total assets were $365 billion at the end of fiscal 2005, $54 bil-
lion or 17% higher than October 31, 2004. At October 31, 2005
total assets primarily comprised loans (net of allowance for credit
losses) of $152 billion or 42% of total assets, trading assets of
$66 billion or 18% of total assets, investments of $42 billion
or 12% of total assets, and securities purchased under reverse
repurchase agreements of $26 billion or 7% of total assets.
Total average interest-earning assets were $288 billion compared
to $255 billion in 2004. Total liabilities increased by $50 billion
comprising $40 billion or 19% increase in deposits and a $10 bil-
lion or 13% increase in other liabilities, partially offset by a slight
decrease in subordinated notes and debentures. In addition, at
October 31, 2005, total shareholder equity increased $3 billion
to $16 billion, up 25% from the prior year.
FACTORS AFFECTING ASSETS AND LIABILITIES
The consolidation of TD Banknorth added assets of $33 billion
(9% of the Bank's total assets) and total liabilities of $30 billion
to the Bank’s October 31, 2005 Consolidated Balance Sheet.
The consolidation also added financial instruments measured
at fair value of $55 billion to the Bank’s October 31, 2005
Consolidated Balance Sheet. The Bank also enters into structured
transactions on behalf of clients and the assets are recorded on
the Bank’sConsolidated Balance Sheet for which market risk is
transferred to third parties via total return swaps. As at October
31, 2005, assets under such arrangements amounted to $14 bil-
lion unchanged from 2004 and compared with $13 billion in
2003. The Bank also acquires market risk on certain assets via
total return swaps, without acquiring the cash instruments
directly. Assets under such arrangements amounted to $5 billion
as at October 31, 2005 unchanged from 2004 and compared
with $6 billion in 2003. Market risk for all such positions is
tracked and monitored, and regulatory market risk capital is
required. The assets sold under these arrangements (excluding
equity derivatives) discussed in the Off-balance Sheet
Arrangements on page 53 are included in this amount. See Note
19 on page 97 for moredetails on derivative contracts.
Securities and securities purchased under reverse
repurchase agreements increased by $10 billion or 10% and
$5 billion or 20%, respectively.The increase was attributable to
portfolio growth of $9 billion in government and government-
insured securities, $552 million in equity securities, and $499
million in other debt securities.
Total Loans (net of allowance for credit losses) at October 31,
2005 were $152 billion compared to $124 billion in the prior
year,up $28 billion or 23%. TD Banknorth contributed $23 bil-
lion of the growth. The increase represents significant growth
in the consumer loan and the business and government loan
portfolios reflecting the TD Banknorth acquisition, an increase
in loan originations during the year due to the favourable inter-
est rate environment, and partially offset by the impact of
foreign exchange rates. Personal loans, including securitizations,
increased by $15 billion or 27%, of which TD Banknorth
contributed $7 billion. Growth in personal loans was also a
result of strong growth in real estate secured lending volumes
within Canadian Personal and Commercial Banking. Residential
mortgages, including securitizations, increased by $4 billion
or 6%. Bank-originated securitized assets not included on
the balance sheet amounted to $24 billion, compared with
$20 billion last year.
Other assets were up $7 billion or 12%. This was due mainly to
an increase in goodwill from the TD Banknorth acquisition.
Deposits were$247 billion, up $40 billion or 19% from the
prior year. TD Banknorth contributed $26 billion of deposits.
This increase was driven by a $20 billion or 24% increase in busi-
ness and government deposits and a $21 billion or 19% increase
in personal deposits. Personal non-term deposits increased by
$13 billion while personal term deposits remained relatively
unchanged. The growth in deposits primarily reflects the effects
of organic growth, acquisition of TD Banknorth and offset by
the impact of foreign currency translation.
Other liabilities increased by $10 billion or 13%. The growth
was largely caused by a $8 billion or 30% increase in obligations
related to securities sold short and under repurchase agreements,
and a $2 billion or 13% increase in other liabilities.
Subordinated notes and debentures weredown by $506 mil-
lion or 9% due to repayment of various subordinated notes and
debentures.
Non-controlling interest in subsidiaries consists entirely of
the Bank’s interest in TD Banknorth.
Shareholders equity rose by $3 billion or 25% from the
prior year, due to $2 billion of common shares issued for the
TD Banknorth acquisition, a 12% growth in retained earnings,
during the year partially offset by the foreign currency translation
adjustments.
U.S. GAAP
Total assets under U.S. GAAP were $372 billion as at October 31,
2005, $7 billion higher than under Canadian GAAP. The difference
was primarily due to non-cash collateral. Under U.S. GAAP, certain
non-cash collateral received in securities lending transactions is
recognized as an asset and a liability is recorded for the obligation
to return the collateral. Under Canadian GAAP, non-cash collateral
received as part of a security lending transaction is not recognized
in the Consolidated Balance Sheet. Total liabilities under U.S.
GAAP were$350 billion as at October 31, 2005, $3 billion higher
than under Canadian GAAP. The increase is mainly due to the
U.S./Canadian GAAP difference for derivative instruments recorded
in other liabilities. Under U.S. GAAP, all of the Bank’s non-trading
derivatives are required to be recorded on the Consolidated
Balance Sheet at fair value.Under Canadian GAAP,only certain
non-trading derivatives are recorded on the Consolidated
Balance Sheet.
SELECTED CONSOLIDATED BALANCE SHEET ITEMS
TABLE 19