TD Bank 2009 Annual Report Download - page 101

TD BANK FINANCIAL GROUP ANNUAL REPORT 2009 FINANCIAL RESULTS 97
The fair value of the reclassified debt securities was $5,963 million
as at October 31, 2009 (2008 – $7,355 million). During the year
ended October 31, 2009, net interest income of $378 million after tax
($110 million after tax for the three months ended October 31, 2008)
was recorded relating to the reclassified debt securities. For the year
ended October 31, 2009, the increase in fair value of $687 million after
tax (three months ended October 31, 2008 – decrease of $561 million
after tax) for these securities was recorded in other comprehensive
income. Had the Bank not reclassified these debt securities, the change
in the fair value of these debt securities would have been included as
part of trading income, the impact of which would have resulted in an
increase in net income of $687 million after tax in the year ended
October 31, 2009 (three months ended October 31, 2008 – decrease
of $561 million after tax). In 2007 and the first three quarters of
2008, the Bank recognized the change in the fair value of these debt
securities in its trading income.
SECURITIES PURCHASED UNDER REVERSE REPURCHASE
AGREEMENTS AND SOLD UNDER REPURCHASE AGREEMENTS
Securities purchased under reverse repurchase agreements involve the
purchase of securities by the Bank under agreements to resell the
securities at a future date. These agreements are treated as collateralized
lending transactions whereby the Bank takes possession of the
purchased securities, monitors its market value relative to the amounts
due under the reverse repurchase agreements, and when necessary,
requires transfer of additional collateral. In the event of counterparty
default, the financing agreement provides the Bank with the right to
liquidate collateral held and offset the proceeds against the amount
owing from the counterparty.
Obligations related to securities sold under repurchase agreements
involve the sale of securities by the Bank to counterparties under
agreements to repurchase the securities at a future date. These agree-
ments are treated as collateralized borrowing transactions.
Securities purchased under reverse repurchase agreements and
obligations related to securities sold under repurchase agreements are
carried at amortized cost and recorded on the Consolidated Balance
Sheet at the respective prices at which the securities were originally
acquired or sold, plus accrued interest. Interest earned on reverse
repurchase agreements, and interest incurred on repurchase agree-
ments is determined using the effective interest rate method and is
included in interest income and interest expense, respectively, on the
Consolidated Statement of Income.
Securities Maturity Schedule
(millions of Canadian dollars) Remaining term to maturity1
Over Over Over With no
Within 1 year to 3 years to 5 years to Over specific 2009 2008
1 year 3 years 5 years 10 years 10 years maturity Total Total
Trading securities2
Government and government-related securities
Canadian government debt
Federal $ 4,231 $ 1,328 $ 2,419 $ 878 $ 1,165 $ – $ 10,021 $ 14,288
Provinces 1,166 382 136 408 517 – 2,609 3,534
U.S. Federal, state, municipal governments, and agencies debt 1,413 213 1,075 964 1,425 – 5,090 337
Other OECD government guaranteed debt 1,042 280 317 332 43 – 2,014 1,448
Mortgage-backed securities
Residential 46 200 981 31 31 – 1,289 1,386
7,898 2,403 4,928 2,613 3,181 – 21,023 20,993
Other debt securities
Canadian issuers 853 455 400 481 332 – 2,521 1,967
Other issuers 4,286 788 1,210 280 246 – 6,810 13,314
5,139 1,243 1,610 761 578 – 9,331 15,281
Equity securities
Preferred shares –––––333366
Common shares –––––22,594 22,594 22,631
–––––22,627 22,627 22,697
Retained interests $ – $ 22 $ 119 $ – $ – $ 1,198 $ 1,339 $ 526
Total trading securities $ 13,037 $ 3,668 $ 6,657 $ 3,374 $ 3,759 $ 23,825 $ 54,320 $ 59,497
Available-for-sale securities3
Government and government-related securities
Canadian government debt
Federal $ 10,682 $ 41 $ 76 $ 82 $ – $ – $ 10,881 $ 10,375
Provinces 4 101 143 132 – – 380 233
U.S. Federal, state, municipal governments, and agencies debt 182 1,351 19 199 4,980 – 6,731 5,158
Other OECD government guaranteed debt 13 4,295 6,508 – – – 10,816 22
Mortgage-backed securities
Residential 572 1,940 16,468 165 – – 19,145 28,791
11,453 7,728 23,214 578 4,980 – 47,953 44,579
Other debt securities
Asset-backed securities
Other asset-backed securities 16 5,172 3,726 1,441 1,705 – 12,060 8,889
Non-agency collateralized mortgage obligation portfolio –––––––8,435
Corporate and other debt 378 11,212 2,725 2,529 106 – 16,950 2,562
394 16,384 6,451 3,970 1,811 – 29,010 19,886
Debt securities reclassified from trading 734 2,047 922 1,484 776 – 5,963 7,355
Equity securities
Preferred shares –––––342342444
Common shares –––––1,573 1,573 2,857
–––––1,915 1,915 3,301
Total available-for-sale securities $ 12,581 $ 26,159 $ 30,587 $ 6,032 $ 7,567 $ 1,915 $ 84,841 $ 75,121