TD Bank 2009 Annual Report Download - page 99

TD BANK FINANCIAL GROUP ANNUAL REPORT 2009 FINANCIAL RESULTS 95
In addition, the 2009 Amendments require loans for which the Bank
has the intention to sell immediately or in the near term to be classified
as trading. As a result, they are accounted for at fair value, with changes
in fair value recorded in the Consolidated Statement of Income. Prior
to the adoption of the 2009 Amendments, these loans were accounted
for at amortized cost. These loans are recorded in residential mortgages
Impact of Transition Adjustment on Adoption of Financial Instruments Amendments on Prior Quarter Balances (unaudited)
(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 Hand book
Section 3855 to clarify that, upon reclassification of a financial
instrument 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
financial 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.
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 report-
ing period of the Bank to eliminate the one month lag in financial
reporting. 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 therefore, 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 Consoli-
dated Statement of Income.
and business and government loans on the Consolidated Balance
Sheet. This change did not have a material impact on the financial
position, cash flows, or earnings of the Bank.
The following table summarizes the adjustments that were required
to adopt the 2009 Amendments.