TD Bank 2012 Annual Report Download - page 80

TD BANK GROUP ANNUAL REPORT 2012 MANAGEMENT’S DISCUSSION AND ANALYSIS78
• Wholesale Bank funding is responsible for meeting short-term
funding and liquidity requirements identified by Wholesale Bank
Treasury. Funding can be achieved via unsecured wholesale deposit
funding including commercial paper or secured repurchase (“repo”)
funding channels.
• U.S. Treasury Group is responsible for managing required utilization
of available borrowing capacity provided by the FHLB system.
• ALCO is required to approve any new external funding structures
or material transactions in conjunction with its regular review of the
TD long-term funding action plan.
We continue to explore all opportunities to access expanded or lower-
cost funding on a sustainable basis relative to our projected term fund-
ing requirements. The following table represents the various sources of
funding obtained for the year:
(billions of Canadian dollars) 2012 2011
Assets securitized $ 6.7 $ 6.5
Covered bonds1 3.0 5.0
Senior unsecured medium term notes1 2.0 8.2
Total $ 11.7 $ 19.7
1 Items are considered long term funding sources but are classified as deposits on the
Consolidated Balance Sheet. Period end balances are included above in Table 58:
Summary of Deposit Funding by Source or Type.
CONTRACTUAL OBLIGATIONS
TD has contractual obligations to make future payments on operating
and capital lease commitments, certain purchase obligations and other
liabilities. These contractual obligations have an impact on TD’s short-
term and long-term liquidity and capital resource needs. The table
below summarizes the remaining contractual maturity for certain
undiscounted financial liabilities and other contractual obligations.
LONG TERM FUNDING SOURCES
TABLE 59
(millions of Canadian dollars) October 31 October 31
2012 2011
Within Over 1 year Over 3 to Over
1 year to 3 years 5 years 5 years Total Total
Deposits1,2 $ 476,055 $ 31,710 $ 17,965 $ 689 $ 526,419 $ 478,998
Securitization liabilities
Securitization liabilities at fair value 6,028 14,191 2,527 1,454 24,200 26,307
Securitization liabilities at amortization cost 11,859 5,790 5,845 2,598 26,092 25,941
Subordinated notes and debentures3 – 150 – 11,168 11,318 11,543
Liability for preferred shares – – – 26 26 32
Liability for capital trust securities4 – – – 1,874 1,874 1,878
Special purpose entity liabilities 5,004 649 – – 5,653 4,295
Contractual interest payments3,5,6 3,798 3,592 1,871 21,140 30,401 34,584
Operating lease commitments 687 1,307 1,077 2,665 5,736 5,521
Capital lease commitments 29 45 17 32 123 149
Network service agreements 26 26 – – 52 77
Automated teller machines 125 225 45 – 395 532
Contact centre technology 28 – – – 28 61
Software licensing and equipment maintenance 121 94 – – 215 125
Total $ 503,760 $ 57,779 $ 29,347 $ 41,646 $ 632,532 $ 590,043
CONTRACTUAL OBLIGATIONS BY REMAINING MATURITY
TABLE 60
1 As the timing of demand deposits and notice deposits is non-specific and callable
by the depositor, obligations have been included as within one year.
2 Amounts include trading deposits which are carried at fair value and include basis
adjustments. Accrued and contractual interest payments are also included.
3 Subsequent to year-end, on November 1, 2012, the Bank redeemed all of its
outstanding 5.38% subordinated notes due November 1, 2017. See Note 17
to the Bank’s Consolidated Financial Statements for more details.
4 Amounts do not include TD Capital Trust Securities (CaTs) II, which do not have
a maturity date. Refer to Note 19 to the Bank’s Consolidated Financial Statements
for additional details.
5
Amounts include accrued and future estimated interest obligations on term deposits,
securitization liabilities, subordinated notes and debentures, liability for preferred
shares, liability for capital trust securities and asset-backed commercial paper based
on applicable interest and foreign exchange rates as at October 31, 2012 and
Octo
ber 31, 2011, respectively. Amounts exclude returns on instruments where the
Bank’s payment obligation is based on the performance of equity linked indices.
6 Interest obligations on subordinated notes and debentures and liability for capital
trust securities are calculated according to their contractual maturity date. Refer
to Notes 17 and 19 for additional details.
(billions of Canadian dollars) 2012 2011
P&C deposits $ 420.3 $ 389.7
Short-term unsecured wholesale deposits
including commercial paper 75.6 63.8
Long-term wholesale deposits including
covered bonds and senior medium term notes 27.7 23.0
Other deposits 2.8 2.5
Total $ 526.4 $ 479.0
The majority of remaining deposit funding is comprised of short-term
unsecured wholesale funding with maturity terms ranging between
overnight and 12 months, and long-term wholesale funding with
maturities typically ranging between two to five years. We maintain
an active external funding program to provide access to widely
diversified funding sources, including asset securitization, covered
bonds and unsecured wholesale debt. Our unsecured wholesale
funding is diversified geographically, by currency and by distribution
network. We maintain limits on the amounts of short-term wholesale
deposits we can hold from any single depositor in order not to rely
excessively on one or a small group of clients as a source of funding.
When deposit levels exceed these limits, excess amounts must be
invested in highly liquid assets and, as a result, are not used to fund
our Wholesale Banking requirements. We also limit the short-term
wholesale funding that can mature in a given time period. These fund-
ing limits are designed to address the potential operational complexity
in selling assets and reduced asset liquidity in a systemic market event,
and serve to limit our exposure to large liability maturities.
Responsibility for normal funding activities is as follows:
• TBSM is responsible for meeting all TD long-term funding needs
related to mortgage or loan asset growth, corporate investment
needs or subsidiary capital requirements.
SUMMARY OF DEPOSIT FUNDING
BY SOURCE OR TYPE
TABLE 58