TD Bank 2009 Annual Report Download - page 58

TD BANK FINANCIAL GROUP ANNUAL REPORT 2009 MANAGEMENT’S DISCUSSION AND ANALYSIS54
(millions of Canadian dollars, except as noted) Percentage of total
2009 2008 2007 2009 2008 2007
Canada
Atlantic provinces $11 $11 $ 3 0.6% 1.3% 0.8%
British Columbia150 37 10 2.8 4.6 2.7
Ontario1429 308 129 24.5 38.3 35.3
Prairies198 50 11 5.6 6.2 3.0
Québec 47 36 13 2.7 4.5 3.6
Total Canada2635 442 166 36.2 54.9 45.4
United States
Connecticut 82 46 41 4.7 5.7 11.2
Florida 78 13 – 4.4 1.6 –
Maine 20 15 15 1.1 1.9 4.1
Massachusetts 120 30 31 6.9 3.7 8.4
New Hampshire 22 12 8 1.3 1.5 2.2
New Jersey 192 66 37 11.0 8.2 10.1
New York 221 81 38 12.6 10.1 10.4
Pennsylvania 84 40 12 4.8 5.0 3.3
Vermont 11 630.6 0.7 0.8
Washington D.C. –7––0.9 –
Other 92 47 15 5.2 5.8 4.1
Total United States2922 363 200 52.6 45.1 54.6
Total excluding debt securities classified as loans 1,557 805 366 88.8 100.0 100.0
Debt securities classified as loans3196 ––11.2 ––
Total impaired loans net of specific allowance $ 1,753 $ 805 $ 366 100.0% 100.0% 100.0%
Impaired loans net of specific allowance as a % of net loans40.67% 0.35% 0.20%
IMPAIRED LOANS NET OF SPECIFIC ALLOWANCE FOR LOAN LOSSES BY GEOGRAPHY
TABLE 28
1The territories are included as follows: Yukon is included in British Columbia;
Nunavut is included in Ontario; and Northwest Territories is included in the
Prairies region.
2Includes trading loans that the Bank intends to sell immediately or in the near
term with a fair value of $140 million (amortized cost of $142 million), and loans
designated as trading under the fair value option of $210 million (amortized cost
of $226 million). No allowance is recorded for trading loans or loans designated
as trading under the fair value option.
3As a result of the 2009 Amendments to CICA Handbook Section 3855, certain
available-for-sale and held-to-maturity securities were reclassified to loans, as
described in the “Changes in Accounting Policies during the Current Year” section.
4Includes customers’ liability under acceptances.
ALLOWANCE FOR CREDIT LOSSES
Total allowance for credit losses consists of specific and general
allowances carried on the Consolidated Balance Sheet. The allowance
is increased by the provision for credit losses, and decreased by write-
offs net of recoveries. The Bank maintains the allowance at levels that
management believes is adequate to absorb all credit-related losses
in the lending portfolio. Individual problem accounts, general economic
conditions, loss experience, as well as the sector and geographic mix
of the lending portfolio are all considered by management in assessing
the appropriate allowance levels.
Specific Allowance
The Bank establishes specific allowances for impaired loans when the
estimated realizable value of the loan is less than its recorded value,
based on discounting expected future cash flows. Specific allowances
for loan losses are established to reduce the book value of loans to
their estimated realizable amounts.
Specific allowances for the non-retail portfolio and for debt securities
classified as loans are borrower-specific and reviewed quarterly. Specific
allowances for the retail portfolio are calculated on an aggregate basis
using a formula that captures recent loss experience, historical default
rates and the type of collateral pledged.
During 2009, specific allowances increased by $206 million, or 59%,
resulting in a total specific allowance of $558 million. Debt securities
classified as loans represented $45 million, or 8%, of the total specific
allowance in 2009. Allowances for credit losses are more fully
described in Note 3 to the 2009 Consolidated Financial Statements.