TD Bank 2012 Annual Report Download - page 147

TD BANK GROUP ANNUAL REPORT 2012 FINANCIAL RESULTS 145
5-Year Rate Reset Preferred Shares, Series AK
On April 3, 2009, the Bank issued 14 million non-cumulative 5-Year
Rate Reset Preferred Shares, Series AK for gross cash consideration of
$350 million. Quarterly non-cumulative cash dividends, if declared, will
be paid at a per annum rate of 6.25% for the initial period from and
including April 3, 2009 to but excluding July 31, 2014. Thereafter,
the dividend rate will reset every five years to equal the then five-year
Government of Canada bond yield plus 4.33%. Holders of the Series AK
shares will have the right to convert their shares into non-cumulative
Floating Rate Class A Preferred Shares, Series AL, subject to certain
conditions, on July 31, 2014, and on July 31 every five years thereafter
and vice versa. The Series AK shares are redeemable by the Bank for
cash, subject to regulatory consent, at $25.00 per share on July 31,
2014 and on July 31 every five years thereafter.
NORMAL COURSE ISSUER BID
The Bank did not have a normal course issuer bid outstanding during
fiscal 2012 or 2011.
DIVIDEND REINVESTMENT PLAN
The Bank offers a dividend reinvestment plan for its common share-
holders. Participation in the plan is optional and under the terms of
the plan, cash dividends on common shares are used to purchase
additional common shares. At the option of the Bank, the common
shares may be issued from the Bank’s treasury at an average market
price based on the last five trading days before the date of the divi-
dend payment, with a discount of between 0% to 5% at the Bank’s
discretion, or from the open market at market price. During the year,
a total of 11.9 million common shares were issued from the Bank’s
treasury at a discount of 1% (2011 – 8.6 million shares at a discount
of 1%) under the dividend reinvestment plan.
DIVIDEND RESTRICTIONS
The Bank is prohibited by the Bank Act from declaring dividends on
its preferred or common shares if there are reasonable grounds for
believing that the Bank is, or the payment would cause the Bank to
be, in contravention of the capital adequacy and liquidity regulations
of the Bank Act or directions of OSFI. The Bank does not anticipate
that this condition will restrict it from paying dividends in the normal
course of business.
The Bank is also restricted from paying dividends in the event that
either Trust II, Trust III or Trust IV fails to pay semi-annual distributions
or interest in full to holders of their respective trust securities, TD
CaTS II, TD CaTS III and TD CaTS IV Notes. In addition, the ability to
pay dividends on common shares without the approval of the holders
of the outstanding preferred shares is restricted unless all dividends on
the preferred shares have been declared and paid or set apart for
payment. Currently, these limitations do not restrict the payment of
dividends on common shares or preferred shares.
TD Bank US Holding Company is restricted from paying dividends to
its parent, TD US P&C Holdings ULC, in the event that either SF Trust I,
SF Trust II or SF Trust III fails to pay quarterly distributions or interest
in full to holders of their respective trust securities. Further, in the case
of SF Trust II and SF Trust III, all subsidiaries of TD Bank US Holding
Company would be restricted from paying dividends in such an event.
TRADING-RELATED INCOME
NOTE 22
Trading assets and liabilities, including trading derivatives, certain loans
held within a trading portfolio that are designated at fair value through
profit or loss, trading loans and trading deposits, are measured at fair
value, with gains and losses recognized in the Consolidated Statement
of Income.
Trading-related income comprises net interest income (recorded in
net interest income in the Consolidated Statement of Income), trading
income, and income from loans designated at fair value through profit
or loss that are managed within a trading portfolio (recorded in trading
income (loss) in the Consolidated Statement of Income). Net interest
income arises from interest and dividends related to trading assets and
liabilities, and is reported net of interest expense and income associated
with funding these assets and liabilities in the table below. Trading
income includes realized and unrealized gains and losses on trading
assets and liabilities. Realized and unrealized gains and losses on loans
designated at fair value through profit or loss are included in non-
interest income in the Consolidated Statement of Income.
Trading-related income excludes underwriting fees and commissions
on securities transactions, which are shown separately in the Consoli-
dated Statement of Income.
Trading-related income by product line depicts trading income for
each major trading category.
Trading-Related Income
(millions of Canadian dollars) 2012 2011
Net interest income (loss) $ 1,050 $ 818
Trading income (loss) (41) (127)
Loans designated at fair value through profit or loss1 10 4
Total $ 1,019 $ 695
By product
Interest rate and credit portfolios $ 534 $ 212
Foreign exchange portfolios 374 428
Equity and other portfolios 101 51
Loans designated at fair value through profit or loss1 10 4
Total $ 1,019 $ 695
1
Excludes amounts related to securities designated at fair value through profit or
loss that are not managed within a trading portfolio, but which have been
combined with derivatives to form economic hedging relationships.