TD Bank 2012 Annual Report Download - page 39

TD BANK GROUP ANNUAL REPORT 2012 MANAGEMENT’S DISCUSSION AND ANALYSIS 37
(millions of Canadian dollars) 2011 2010
Operating results – adjusted
Net interest income $ 12,831 $ 11,543
Non-interest income1 8,587 8,020
Total revenue 21,418 19,563
Provision for credit losses2 1,465 1,685
Non-interest expenses3 12,395 11,464
Income before provision for income taxes, non-controlling interests in subsidiaries, and equity in net income of associated company 7,558 6,414
Provision for income taxes4 1,508 1,387
Non-controlling interests in subsidiaries, net of income taxes 104 106
Equity in net income of an associated company, net of income taxes5 305 307
Net income – adjusted 6,251 5,228
Preferred dividends 180 194
Net income available to common shareholders – adjusted 6,071 5,034
Adjustments for items of note, net of income taxes
Amortization of intangibles6 (426) (467)
Increase (decrease) in fair value of derivatives hedging the reclassified available-for-sale debt securities portfolio7 134 5
Integration and restructuring charges relating to U.S. Personal and Commercial Banking acquisitions8 (69) (69)
Increase (decrease) in fair value of credit default swaps hedging the corporate loan book, net of provision for credit losses9 13 (4)
Recovery of (provision for) income taxes due to changes in statutory income tax rates10 – 11
Release (provision) for insurance claims11 – 17
General allowance release (increase) in Canadian Personal and Commercial Banking and Wholesale Banking12 – 44
Agreement with Canada Revenue Agency13 – (121)
Integration charges relating to the Chrysler Financial acquisition14 (14) –
Total adjustments for items of note (362) (584)
Net income available to common shareholders – reported $ 5,709 $ 4,450
1
Adjusted non-interest income excludes the following items of note: 2011 – $19 million
pre-tax gain due to change in fair value of CDS hedging the corporate loan book, as
explained in footnote 9; $157 million gain due to change in fair value of derivatives
hedging the reclassified debt securities portfolio, as explained in footnote 7; 2010 –
$9 million pre-tax loss due to change in fair value of CDS hedging the corporate loan
book; $14 million pre-tax gain due to change in fair value of derivatives hedging the
reclassified AFS debt securities portfolio; $25 million recovery of insurance claims, as
explained in footnote 11.
2 Adjusted provisions for credit losses exclude the following items of note: 2010 –
$59 million release in general allowance for credit losses in Canadian Personal
and Commercial Banking and Wholesale Banking, as explained in footnote 12.
3 Adjusted non-interest expenses exclude the following items of note: 2011 –
$613 million amortization of intangibles, as explained in footnote 6; $113 million
in integration and restructuring charges relating to U.S. Personal and Commercial
Banking acquisitions, as explained in footnote 8; $21 million of integration charges
related to the Chrysler Financial acquisition, as explained in footnote 14; 2010 –
$592 million amortization of intangibles; $108 million in integration and restructur-
ing charges relating to U.S. Personal and Commercial Banking acquisitions.
4 For a reconciliation between reported and adjusted provision for income taxes,
see the ‘Non-GAAP Financial Measures – Reconciliation of Reported to Adjusted
Provision for Income Taxes’ table in the “Taxes” section.
5 Adjusted equity in net income of an associated company excludes the following
items of note: 2011 – $59 million amortization of intangibles, as explained in foot-
note 6; 2010 – $72 million amortization of intangibles.
6
Amortization of intangibles primarily relates to the Canada Trust acquisition in 2000,
the TD Banknorth acquisition in 2005 and its privatization in 2007, the Commerce
acquisition in 2008, the acquisitions by TD Banknorth of Hudson United Bancorp
(Hudson) in 2006 and Interchange Financial Services (Interchange) in 2007, and
the amortization of intangibles included in equity in net income of TD Ameritrade.
Effective 2011, amortization of software is recorded in amortization of intangibles;
however, amortization of software is not included for purposes of items of note,
which only includes amortization of intangibles acquired as a result of business
combinations.
NON-GAAP FINANCIAL MEASURES − RECONCILIATION OF CANADIAN GAAP ADJUSTED TO REPORTED NET INCOME
TABLE 26
2011 FINANCIAL RESULTS OVERVIEW
Selected Annual Information and Discussion relating to 2011 & 2010
Performance under Canadian GAAP
(millions of Canadian dollars) 2011 2010
Net interest income $ 12,831 $ 11,543
Non-interest income 8,763 8,022
Total revenue 21,594 19,565
Provision for credit losses 1,465 1,625
Non-interest expenses 13,083 12,163
Income before income taxes, non-controlling
interests in subsidiaries, and equity in
net income of associated company 7,046 5,777
Provision for income taxes 1,299 1,262
Non-controlling interests in subsidiaries,
net of income taxes 104 106
Equity in net income of an associated company,
net of income taxes 246 235
Net income – reported 5,889 4,644
Preferred dividends 180 194
Net income available to common
shareholders – reported $ 5,709 $ 4,450
The following section provides selected annual information pursuant to
National Instrument 51-102F1 in relation to the Bank’s 2011 and 2010
financial years. Following the Bank’s transition to IFRS, for purposes of
enabling period to period comparison between 2010 and 2011, the
financial information in this section has been presented under
Canadian GAAP. In addition, for the purposes of this section, the 2011
and 2010 results of the Insurance business have been presented with
the Canadian Personal and Commercial Banking segment and consis-
tent with the presentation under Canadian GAAP. Finally, this section
includes discussion of the factors impacting variation between 2010
and 2011 and such discussion has also been provided with reference
to Canadian GAAP presentation of 2010 and 2011 results.
OPERATING RESULTS UNDER
CANADIAN GAAP – REPORTED
TABLE 25