TD Bank 2009 Annual Report Download - page 89

TD BANK FINANCIAL GROUP ANNUAL REPORT 2009 MANAGEMENT’S DISCUSSION AND ANALYSIS 85
The following table summarizes the adjustments that were required
to adopt the 2009 Amendments.
(millions of Canadian dollars, except as noted) As at
July 31, 2009 Apr. 30, 2009 Jan. 31, 2009
Amount Amount Amount
after after after
Previously Transition transition Previously Transition transition Previously Transition transition
reported adjustment adjustment reported adjustment adjustment reported adjustment adjustment
SUMMARIZED CONSOLIDATED BALANCE SHEET
ASSETS
Securities
Available-for-sale $ 88,914 $ (7,599) $ 81,315 $ 96,481 $ (8,516) $ 87,965 $ 83,978 $ (9,033) $ 74,945
Held-to-maturity 12,223 (3,228) 8,995 12,480 (3,268) 9,212 9,529 (2,006) 7,523
$ 101,137 $ (10,827) $ 90,310 $ 108,961 $ (11,784) $ 97,177 $ 93,507 $ (11,039) $ 82,468
Loans
Debt securities classified as loans $ – $ 11,474 $ 11,474 $ – $ 13,277 $ 13,277 $ – $ 12,885 $ 12,885
Allowance for loan losses (1,979) (279) (2,258) (1,916) (309) (2,225) (1,783) (199) (1,982)
$ (1,979) $ 11,195 $ 9,216 $ (1,916) $ 12,968 $ 11,052 $ (1,783) $ 12,686 $ 10,903
Other
Other assets $ 14,476 $ (137) $ 14,339 $ 16,048 $ (438) $ 15,610 $ 17,911 $ (610) $ 17,301
SHAREHOLDERS’ EQUITY
Retained earnings $ 18,383 $ (191) $ 18,192 $ 18,039 $ (191) $ 17,848 $ 17,986 $ (118) $ 17,868
Accumulated other comprehensive income 598 423 1,021 2,968 936 3,904 2,173 1,155 3,328
SUMMARIZED CONSOLIDATED STATEMENT OF INCOME For the three months ended
Interest income
Loans $ 2,694 $ 191 $ 2,885 $ 2,749 $ 299 $ 3,048 $ 3,241 $ 217 $ 3,458
Securities – Interest 1,096 (191) 905 1,339 (299) 1,040 1,414 (217) 1,197
$ 3,790 $ – $ 3,790 $ 4,088 $ – $ 4,088 $ 4,655 $ – $ 4,655
Provision for credit losses $ 557 $ – $ 557 $ 656 $ 116 $ 772 $ 537 $ 93 $ 630
Provision for (recovery of) income taxes 209 – 209 35 (43) (8) (58) (34) (92)
Net income (loss) 912 – 912 618 (73) 545 712 (59) 653
(Canadian dollars)
Earnings per share
Basic $ 1.01 $ – $ 1.01 $ 0.68 $ (0.09) $ 0.59 $ 0.82 $ (0.07) $ 0.75
Diluted 1.01 – 1.01 0.68 (0.09) 0.59 0.82 (0.07) 0.75
b) Assessment of Embedded Derivatives upon Reclassification
In August 2009, the Bank adopted an amendment to CICA Handbook
Section 3855 to clarify that, upon reclassification of a financial instru-
ment out of the trading category, an assessment of whether an
embedded derivative is required to be bifurcated must be completed.
In addition, the amendment prohibits the reclassification of a financial
instrument out of trading when the derivative embedded in the finan-
cial instrument cannot be separately measured from the host contract.
The amendment is applicable to all reclassifications occurring on or
after July 1, 2009. The adoption of this amendment did not have a
material impact on the financial position, cash flows, or earnings of
the Bank.
c) Subsequent Accounting for Impaired Financial Assets
In April 2009, the Bank adopted an amendment to CICA Handbook
Section 3855. The amendment clarified that, subsequent to the recog-
nition of an impairment loss on a financial asset (other than a loan),
interest income on the impaired financial asset is recognized based on
the rate of interest used to determine the impairment loss. The adoption
of this amendment did not have a material impact on the financial
position, cash flows, or the earnings of the Bank.
d) Reclassification of Financial Assets out of Trading and
Available-For-Sale Categories
Effective August 1, 2008, the Bank adopted amendments to CICA
Handbook Section 3855 (the 2008 Amendments). The 2008 Amend-
ments permit the reclassification of financial assets out of trading
and available-for-sale categories in specified circumstances. For the
impact of the reclassification, see Note 2 to the Bank’s Consolidated
Financial Statements.
ALIGNMENT OF REPORTING PERIOD OF U.S. ENTITIES
Effective April 30, 2009, the reporting periods of TD Bank, N.A., which
includes TD Banknorth and Commerce, were aligned with the reporting
period of the Bank to eliminate the one month lag in financial report-
ing. Prior to April 30, 2009, the reporting period of TD Bank, N.A. was
included in the Bank’s financial statements on a one month lag. In
accordance with the CICA Handbook Section 1506, Accounting Changes,
this alignment is considered a change in accounting policy. The Bank
has assessed that the impact to prior periods is not material and there-
fore, an adjustment was made to opening retained earnings to align
the reporting period of TD Bank, N.A. to that of the Bank’s reporting
period. Accordingly, the results of TD Bank, N.A. for the twelve
months ended October 31, 2009 have been included with the results
of the Bank for the twelve months ended October 31, 2009. The
one month impact of aligning the reporting period of U.S. entities has
been included directly in retained earnings and not in the Consolidated
Statement of Income.
FINANCIAL INSTRUMENTS – DISCLOSURES
In March 2009, the AcSB amended CICA Handbook Section 3862,
Financial Instruments – Disclosures, to enhance the disclosure require-
ments regarding fair value measurements including the relative
reliability of the inputs used in those measurements and the liquidity
risk of financial instruments. The standard also requires disclosure
of a three-level hierarchy for fair value measurements based upon the
transparency of inputs to the valuation of an asset or liability as of the
measurement date. The amendments are effective for the Bank’s 2009
annual Consolidated Financial Statements and its adoption did not
have an impact on the financial position, cash flows, or earnings of the
Bank as Section 3862 relates to disclosures.
IMPACT OF TRANSITION ADJUSTMENT ON ADOPTION OF FINANCIAL INSTRUMENTS AMENDMENTS
ON PRIOR QUARTER BALANCES (unaudited)
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