TD Bank Financial Group Reports Second Quarter 2009 Results



    
    SECOND QUARTER FINANCIAL HIGHLIGHTS, compared with the second quarter a
    year ago:

    -   Reported diluted earnings per share(1) were $0.68, compared with
        $1.12.
    -   Adjusted diluted earnings per share(2) were $1.23, compared with
        $1.32.
    -   Reported net income(1) was $618 million, compared with $852 million.
    -   Adjusted net income(2) was $1,089 million, compared with
        $973 million.

    YEAR-TO-DATE FINANCIAL HIGHLIGHTS, six months ended April 30, 2009,
    compared with the corresponding period a year ago:

    -   Reported diluted earnings per share(1) were $1.50, compared with
        $2.44.
    -   Adjusted diluted earnings per share(2) were $2.58, compared with
        $2.77.
    -   Reported net income(1) was $1,330 million, compared with
        $1,822 million.
    -   Adjusted net income(2) was $2,238 million, compared with
        $2,033 million.

    SECOND QUARTER ADJUSTMENTS (ITEMS OF NOTE)

    The second quarter reported diluted earnings per share figures included
    the following items of note:

    -   Amortization of intangibles of $127 million after tax (14 cents per
        share), compared with $92 million after tax (12 cents per share) in
        the second quarter last year.
    -   A loss of $134 million after tax (16 cents per share) due to the loss
        in excess of the accrued amount of the economic hedges related to the
        reclassified available-for-sale debt securities portfolio.
    -   Restructuring and integration charges of $50 million after tax
        (6 cents per share), relating to the acquisition of Commerce,
        compared with $30 million after tax (4 cents per share) in the second
        quarter last year.
    -   A loss of $44 million after tax (5 cents per share) due to the change
        in fair value of credit default swaps hedging the corporate loan
        book, net of provision for credit losses, compared with a gain of
        $1 million after tax in the same quarter last year.
    -   An increase of $77 million after tax (9 cents per share) in general
        allowance for Canadian Personal and Commercial Banking (excluding
        VFC) and Wholesale Banking.
    -   Settlement of TD Banknorth shareholder litigation of $39 million
        after tax (5 cents per share).

    All dollar amounts are expressed in Canadian currency unless otherwise
    noted.

    (1) Reported results are prepared in accordance with Canadian generally
        accepted accounting principles (GAAP).
    (2) Reported and adjusted results are explained under the "How the Bank
        Reports" section.
    

    TORONTO, May 28 /CNW/ - TD Bank Financial Group (TDBFG) today announced
its financial results for the second quarter ended April 30, 2009. Results for
the quarter included solid earnings contributions from TD's personal and
commercial banking operations in Canada and the United States and very strong
Wholesale Banking results, while Wealth Management continued to manage
prudently through challenging financial markets.
    "All TD businesses are holding up very well under the weight of the
recession in Canada and the United States," said Ed Clark, President and Chief
Executive Officer, TDBFG. "With adjusted earnings over $1 billion again this
quarter, we're feeling quite good about these results. They provide further
evidence of TD's earnings power and capital strength - strengths that have
helped us earn through higher credit losses and end the quarter with a robust
Tier 1 capital ratio of 10.9%. These strengths also allowed us to continue
making the strategic investments that drive future growth, positioning TD to
come out of this global recession with business momentum."

    
    SECOND QUARTER BUSINESS SEGMENT PERFORMANCE

    Canadian Personal and Commercial Banking
    

    Canadian Personal and Commercial Banking posted earnings of $589 million
in the second quarter, up 1% from the same period last year. The combination
of solid revenue growth and prudent expense management more than offset the
significant increase in provision for credit losses (PCL). Strong volume
growth in deposits and lending continued this quarter.
    "Operating in a challenging economic environment, TD Canada Trust chalked
up two significant achievements this quarter," said Clark. "First, its
earnings power continued to push through the economic headwinds and deliver
solid results - results that were generated while we continued to invest in
future growth, adding six new branches and 31 business bankers and advisers.
Second, our internal measure of customer loyalty and advocacy increased for
the sixth month in a row, as dedicated employees worked together with
customers and clients to address financial challenges. Service means something
different in a downturn of this magnitude and we're committed to rising to
that challenge."

    Wealth Management

    Wealth Management, including TDBFG's equity share in TD Ameritrade,
earned $126 million in the quarter, down 31% from the second quarter of last
year, as very strong transactional volumes in online brokerage operations were
more than offset by the impact of market declines on the mutual funds and
advice-based businesses. As previously announced, TD Ameritrade contributed
$48 million in earnings to the segment, with near-record new account openings
in its quarter ended March 31, 2009.
    "Our Wealth Management segment performed as expected given the
environment," said Clark. "While we have felt the impact of margin pressure as
a result of low nominal interest rates, we've seen impressive online brokerage
volumes and continued growth in new client assets. In the U.S., TD Ameritrade
continues to maintain its leadership position in active trading and is growing
net new retail assets faster than its largest peer."
    "And this quarter we continued to increase the number of client-facing
advisors. This investment in our Wealth businesses through these tough times
positions us extremely well for the eventual market recovery."

    U.S. Personal and Commercial Banking

    U.S. Personal and Commercial Banking for the quarter generated $231
million in reported net income and $281 million in adjusted net income, an 8%
decline in adjusted net income from the previous quarter due to increased
provision for credit losses and seasonal factors. Second quarter adjusted
earnings were 116% higher than adjusted earnings for the same period last
year, with much of the increase due to the fact that Commerce earnings did not
contribute to this segment until the third quarter of 2008.
    "In most of our U.S. footprint, we're the only triple-A rated bank
around, and the TD brand is increasingly recognised for its safety and
soundness. That recognition contributed to our ability to grow both deposits
and loans despite continued economic stresses, gaining us market share and
supporting the opening of 24 new stores so far in fiscal 2009," said Clark.
"We remain cautious on the U.S. economic environment and so have increased our
reserves prudently, which is reflected in higher PCLs. But we continue to
believe we'll be a positive outlier, giving us the strength to take advantage
of strategic opportunities."
    "A key accomplishment for us this quarter is our fourth consecutive win
of the J.D. Power award for customer satisfaction. Winning this honour in the
midst of the Commerce integration is an enormous achievement."

    Wholesale Banking

    Wholesale Banking earned net income for the quarter of $173 million, up
86% compared with the same period last year. Strong interest rate and foreign
exchange trading were partially offset by net realized security losses in the
public equity investment portfolio. These losses were related to the strategic
decision to exit the portfolio and redeploy the capital to support franchise
operations.
    "This was a very strong quarter for TD Securities, and we continue to be
very pleased with the positioning of our Wholesale business," said Clark. "The
segment managed to perform very well while significantly reducing positions in
the credit trading and public equity portfolios. Looking forward, we will
continue to focus on growing our client-driven franchise businesses and
solidifying our position as a top-three dealer in Canada."

    Conclusion

    "While the next phase of this global recession will hurt all banks, at TD
we're extremely well positioned - not just to weather the storm but also to
prepare the bank for future growth. In fact, there is a reasonable chance this
may be a recession where we actually grow volumes through the downturn, as we
continue to fill the gaps left by those who have exited the lending market and
help ensure access to credit."

    CAUTION REGARDING FORWARD-LOOKING STATEMENTS

    From time to time, TD Bank Financial Group (TDBFG or the Bank) makes
written and oral forward-looking statements, including in this document, in
other filings with Canadian regulators or the U.S. Securities and Exchange
Commission (SEC), and in other communications. In addition, the Bank's senior
management may make forward-looking statements orally to analysts, investors,
representatives of the media and others. All such statements are made pursuant
to the "safe harbour" provisions of the U.S. Private Securities Litigation
Reform Act of 1995 and applicable Canadian securities legislation. Forward-
looking statements include, among others, statements regarding the Bank's
objectives and targets for 2009 and beyond, and strategies to achieve them,
the outlook for the Bank's business lines, and the Bank's anticipated
financial performance. The forward-looking information contained in this
document is presented for the purpose of assisting our shareholders and
analysts in understanding our financial position as at and for the periods
ended on the dates presented and our strategic priorities and objectives, and
may not be appropriate for other purposes. The economic assumptions for 2009
for the Bank are set out in the Bank's 2008 Annual Report under the heading
"Economic Summary and Outlook" and for each of our business segments, under
the heading "Business Outlook and Focus for 2009." Forward-looking statements
are typically identified by words such as "will", "should", "believe",
"expect", "anticipate", "intend", "estimate", "plan", "may" and "could". By
their very nature, these statements require us to make assumptions and are
subject to inherent risks and uncertainties, general and specific. Especially
in light of the current, unprecedented financial and economic environment,
such risks and uncertainties may cause actual results to differ materially
from the expectations expressed in the forward-looking statements. Some of the
factors - many of which are beyond our control and the effects of which can be
difficult to predict - that could cause such differences include: credit,
market (including equity and commodity), liquidity, interest rate,
operational, reputational, insurance, strategic, foreign exchange, regulatory,
legal and other risks discussed in the Bank's 2008 Annual Report and in other
regulatory filings made in Canada and with the SEC; general business and
economic conditions in Canada, the U.S. and other countries in which the Bank
conducts business, as well as the effect of changes in existing and newly
introduced monetary and economic policies in those jurisdictions and changes
in the foreign exchange rates for the currencies of those jurisdictions; the
degree of competition in the markets in which the Bank operates, both from
established competitors and new entrants; defaults by other financial
institutions in Canada, the U.S. and other countries; the accuracy and
completeness of information the Bank receives on customers and counterparties;
the development and introduction of new products and services in markets;
developing new distribution channels and realizing increased revenue from
these channels; the Bank's ability to execute its strategies, including its
integration, growth and acquisition strategies and those of its subsidiaries,
particularly in the U.S.; changes in accounting policies (including future
accounting changes) and methods the Bank uses to report its financial
condition, including uncertainties associated with critical accounting
assumptions and estimates; changes to our credit ratings; global capital
market activity; increased funding costs for credit due to market illiquidity
and increased competition for funding; the Bank's ability to attract and
retain key executives; reliance on third parties to provide components of the
Bank's business infrastructure; the failure of third parties to comply with
their obligations to the Bank or its affiliates as such obligations relate to
the handling of personal information; technological changes; the use of new
technologies in unprecedented ways to defraud the Bank or its customers and
the organized efforts of increasingly sophisticated parties who direct their
attempts to defraud the Bank or its customers through many channels;
legislative and regulatory developments; change in tax laws; unexpected
judicial or regulatory proceedings; continued negative impact of the U.S.
securities litigation environment; unexpected changes in consumer spending and
saving habits; the adequacy of the Bank's risk management framework, including
the risk that the Bank's risk management models do not take into account all
relevant factors; the possible impact on the Bank's businesses of
international conflicts and terrorism; acts of God, such as earthquakes; the
effects of disease or illness on local, national or international economies;
and the effects of disruptions to public infrastructure, such as
transportation, communication, power or water supply. A substantial amount of
the Bank's business involves making loans or otherwise committing resources to
specific companies, industries or countries. Unforeseen events affecting such
borrowers, industries or countries could have a material adverse effect on the
Bank's businesses, financial results, financial condition or liquidity. The
preceding list is not exhaustive of all possible risk factors and other
factors could also adversely affect the Bank's results. For more information,
see the discussion starting on page 64 of the Bank's 2008 Annual Report. All
such factors should be considered carefully when making decisions with respect
to the Bank, and undue reliance should not be placed on the Bank's forward-
looking statements. Any forward-looking information or statements contained in
this document represent the views of management only as of the date hereof.
The Bank does not undertake to update any forward-looking statements, whether
written or oral, that may be made from time to time by or on its behalf,
except as required under applicable securities legislation.

    This document was reviewed by the Bank's Audit Committee and was approved
by the Bank's Board of Directors, on the Audit Committee's recommendation,
prior to its release.

    
    MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE
    -------------------------------------------------------------------------
    

    This Management's Discussion and Analysis (MD&A) is presented to enable
readers to assess material changes in the financial condition and operational
results of TD Bank Financial Group (TDBFG or the Bank) for the three and six
months ended April 30, 2009, compared with the corresponding periods. This
MD&A should be read in conjunction with the Bank's unaudited Interim
Consolidated Financial Statements and related Notes included in this Report to
Shareholders and with our 2008 Annual Report. This MD&A is dated May 27, 2009.
Unless otherwise indicated, all amounts are expressed in Canadian dollars and
have been primarily derived from the Bank's Annual or Interim Consolidated
Financial Statements prepared in accordance with Canadian generally accepted
accounting principles (GAAP). Certain comparative amounts have been
reclassified to conform to the presentation adopted in the current period.
Additional information relating to the Bank is available on the Bank's website
http://www.td.com, as well as on SEDAR at http://www.sedar.com and on the U.S.
Securities and Exchange Commission's (SEC's) website at http://www.sec.gov
(EDGAR filers section).

    
    FINANCIAL HIGHLIGHTS
    -------------------------------------------------------------------------
                                                                 For the six
                              For the three months ended        months ended
    (millions of           --------------------------------------------------
     Canadian dollars,       Apr. 30    Jan.31   Apr. 30   Apr. 30   Apr. 30
     except as noted)         2009(1)     2009      2008    2009(1)     2008
    -------------------------------------------------------------------------
    Results of operations
    Total revenue             $4,325    $4,150    $3,388    $8,475    $6,992
    Provision for credit
     losses                      656       537       232     1,193       487
    Non-interest expenses      3,051     3,020     2,206     6,071     4,434
    Net income - reported(2)     618       712       852     1,330     1,822
    Net income - adjusted(2)   1,089     1,149       973     2,238     2,033
    Economic profit(3)            58       164       283       224       735
    Return on common
     equity - reported          6.6%      8.1%     13.4%      7.3%     15.4%
    Return on invested
     capital(3)                10.6%     11.7%     13.2%     11.1%     14.6%
    -------------------------------------------------------------------------
    Financial position
    Total assets            $574,882  $585,365  $503,621  $574,882  $503,621
    Total risk-weighted
     assets                  199,745   211,715   178,635   199,745   178,635
    Total shareholders'
     equity                   39,627    38,050    30,595    39,627    30,595
    -------------------------------------------------------------------------
    Financial ratios -
     reported
    Efficiency ratio           70.6%     72.8%     65.1%     71.6%     63.4%
    Tier 1 capital to
     risk-weighted assets      10.9%     10.1%      9.1%     10.9%      9.1%
    Provision for credit
     losses as a % of net
     average loans             1.12%     0.90%     0.48%     1.01%     0.51%
    -------------------------------------------------------------------------
    Common share information
     - reported
     (Canadian dollars)
    Per share
      Basic earnings           $0.68     $0.82     $1.12     $1.50     $2.46
      Diluted earnings          0.68      0.82      1.12      1.50      2.44
      Dividends                 0.61      0.61      0.59      1.22      1.16
      Book value               42.60     41.57     36.70     42.60     36.70
    Closing share price        47.10     39.80     66.11     47.10     66.11
    Shares outstanding
     (millions)
      Average basic            848.8     832.6     747.7     840.6     732.9
      Average diluted          849.8     834.2     753.7     841.9     739.0
      End of period            850.6     848.7     802.9     850.6     802.9
    Market capitalization
     (billions of Canadian
     dollars)                  $40.1     $33.8     $53.1     $40.1     $53.1
    Dividend yield              5.9%      5.0%      3.5%      5.3%      3.4%
    Dividend payout ratio      89.8%     75.5%     56.2%     82.1%     49.0%
    Price to earnings
     multiple                   12.0       9.1      12.1      12.0      12.1
    -------------------------------------------------------------------------
    Common share information
     - adjusted
     (Canadian dollars)
    Per share
      Basic earnings           $1.23     $1.35     $1.33     $2.58     $2.79
      Diluted earnings          1.23      1.34      1.32      2.58      2.77
    Dividend payout ratio      49.4%     46.1%     49.2%     47.7%     43.8%
    Price to earnings
     multiple                   10.0       8.3      11.5      10.0      11.5
    -------------------------------------------------------------------------
    (1) As explained in the "How the Bank Reports" section, effective this
        quarter, as the reporting periods of U.S. entities are aligned with
        the reporting period of the Bank, the results of U.S. entities for
        the three months ended April 30, 2009 have been included with results
        of the Bank, while the results of January 2009 have been included
        directly in retained earnings and not included in the results of the
        Bank.
    (2) Adjusted and reported results are explained in the "How the Bank
        Reports" section, which includes reconciliation between reported and
        adjusted results.
    (3) Economic profit and return on invested capital are non-GAAP financial
        measures and are explained in the "Economic Profit and Return on
        Invested Capital" section.


    HOW WE PERFORMED

    Corporate Overview
    

    The Toronto-Dominion Bank and its subsidiaries are collectively known as
TD Bank Financial Group (TDBFG or the Bank). The Bank is the sixth largest
bank in North America by branches and serves approximately 17 million
customers in four key businesses operating in a number of locations in key
financial centres around the globe: Canadian Personal and Commercial Banking,
including TD Canada Trust and TD Insurance; Wealth Management, including TD
Waterhouse and an investment in TD Ameritrade; U.S. Personal and Commercial
Banking through TD Banknorth Inc. (TD Banknorth) and TD Bank, America's Most
Convenient Bank; and Wholesale Banking, including TD Securities. The Bank also
ranks among the world's leading online financial services firms, with more
than 5.5 million online customers. The Bank had $575 billion in assets on
April 30, 2009. The Toronto-Dominion Bank trades under the symbol "TD" on the
Toronto and New York Stock Exchanges.

    How the Bank Reports

    The Bank prepares its consolidated financial statements in accordance
with GAAP and refers to results prepared in accordance with GAAP as "reported"
results. The Bank also utilizes non-GAAP financial measures referred to as
"adjusted" results to assess each of its businesses and to measure overall
Bank performance. To arrive at adjusted results, the Bank removes "items of
note", net of income taxes, from reported results. The items of note relate to
items which management does not believe are indicative of underlying business
performance. The Bank believes that adjusted results provide the reader with a
better understanding of how management views the Bank's performance. The items
of note are listed in the table on the following page. As explained, adjusted
results are different from reported results determined in accordance with
GAAP. Adjusted results, items of note and related terms used in this document
are not defined terms under GAAP and, therefore, may not be comparable to
similar terms used by other issuers.
    For the purpose of alignment of reporting periods with the Bank,
effective the quarter ended April 30, 2009, the reporting periods of TD
Banknorth and Commerce Bancorp, Inc. (Commerce) have been aligned with the
reporting period of the Bank as described in Note 1 to the Interim
Consolidated Financial Statements. Previously, the reporting periods of TD
Banknorth and Commerce were included in the Bank's financial statements on a
one month lag. Accordingly, to maintain comparability and include only six
months of results through April 30, 2009, the results of TD Banknorth and
Commerce for the three months ended April 30, 2009 have been included with the
results of the Bank for the three and six months ended April 30, 2009 while
the results of January 2009 have been included directly in retained earnings
and not included in the results of the Bank.
    The following tables provide reconciliations between the Bank's reported
and adjusted results.

    
    Operating Results - Reported
    -------------------------------------------------------------------------
                                                                 For the six
                              For the three months ended        months ended
                           --------------------------------------------------
    (millions of             Apr. 30   Jan. 31   Apr. 30   Apr. 30   Apr. 30
     Canadian dollars)          2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Net interest income       $2,940    $2,728    $1,858    $5,668    $3,646
    Other income               1,385     1,422     1,530     2,807     3,346
    -------------------------------------------------------------------------
    Total revenue              4,325     4,150     3,388     8,475     6,992
    Provision for credit
     losses                     (656)     (537)     (232)   (1,193)     (487)
    Non-interest expenses     (3,051)   (3,020)   (2,206)   (6,071)   (4,434)
    -------------------------------------------------------------------------
    Income before
     income taxes, non-
     controlling interests
     in subsidiaries and
     equity in net income of
     an associated company       618       593       950     1,211     2,071
    (Provision for) recovery
     of income taxes             (35)       58      (160)       23      (395)
    Non-controlling interests
     in subsidiaries, net
     of income taxes             (28)      (28)       (9)      (56)      (17)
    Equity in net income of
     an associated company,
     net of income taxes          63        89        71       152       163
    -------------------------------------------------------------------------
    Net income - reported        618       712       852     1,330     1,822
    Preferred dividends          (41)      (29)      (11)      (70)      (19)
    -------------------------------------------------------------------------
    Net income available to
     common shareholders -
     reported                   $577      $683      $841    $1,260    $1,803
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Reconciliation of Non-GAAP Financial Measures
    Adjusted Net Income to Reported Net Income
    -------------------------------------------------------------------------
    Operating results
     - adjusted                                                  For the six
                              For the three months ended        months ended
                           --------------------------------------------------
    (millions of             Apr. 30   Jan. 31   Apr. 30   Apr. 30   Apr. 30
     Canadian dollars)          2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Net interest income       $2,940    $2,728    $1,858    $5,668    $3,646
    Other income(1)            1,612     1,722     1,529     3,334     3,320
    -------------------------------------------------------------------------
    Total revenue              4,552     4,450     3,387     9,002     6,966
    Provision for credit
     losses(2)                  (546)     (457)     (232)   (1,003)     (470)
    Non-interest expenses(3)  (2,745)   (2,741)   (2,041)   (5,486)   (4,147)
    -------------------------------------------------------------------------
    Income before
     income taxes, non-
     controlling interests
     in subsidiaries and
     equity in net income of
     an associated company     1,261     1,252     1,114     2,513     2,349
    Provision for income
     taxes(4)                   (223)     (179)     (220)     (402)     (495)
    Non-controlling interests
     in subsidiaries, net
     of income taxes             (28)      (28)       (9)      (56)      (17)
    Equity in net income of
     an associated company,
     net of income taxes(5)       79       104        88       183       196
    -------------------------------------------------------------------------
    Net income - adjusted      1,089     1,149       973     2,238     2,033
    Preferred dividends          (41)      (29)      (11)      (70)      (19)
    -------------------------------------------------------------------------
    Net income available to
     common shareholders -
     adjusted                  1,048     1,120       962     2,168     2,014
    -------------------------------------------------------------------------
    Items of note affecting
     net income, net of
     income taxes
    Amortization of
     intangibles(6)             (127)     (127)      (92)     (254)     (167)
    Decrease in fair value
     of derivatives hedging
     the reclassified
     available-for-sale
     debt securities
     portfolio(7)               (134)     (200)        -      (334)        -
    Restructuring and
     integration charges
     relating to the
     Commerce acquisition(8)     (50)      (67)      (30)     (117)      (30)
    (Decrease) increase in
     fair value of credit
     default swaps hedging
     the corporate loan book,
     net of provision for
     credit losses(9)            (44)       12         1       (32)       26
    Other tax items(10)            -         -         -         -       (20)
    Provision for insurance
     claims(11)                    -         -         -         -       (20)
    General allowance
     increase in Canadian
     Personal and Commercial
     Banking (excluding VFC)
     and Wholesale Banking       (77)      (55)        -      (132)        -
    Settlement of TD
     Banknorth shareholder
     litigation(12)              (39)        -         -       (39)        -
    -------------------------------------------------------------------------
    Total items of note         (471)     (437)     (121)     (908)     (211)
    -------------------------------------------------------------------------
    Net income available to
     common shareholders -
     reported                   $577      $683      $841    $1,260    $1,803
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1)  Adjusted other income excludes the following items of note: second
         quarter 2009 - $61 million loss due to change in fair value of
         credit default swaps (CDS) hedging the corporate loan book, as
         explained in footnote 9; $166 million loss due to change in fair
         value of derivatives hedging the reclassified available-for-sale
         (AFS) debt securities portfolio, as explained in footnote 7; first
         quarter 2009 - $13 million gain due to change in fair value of CDS
         hedging the corporate loan book; $313 million loss due to change in
         fair value of derivatives hedging the reclassified AFS debt
         securities portfolio; second quarter 2008 - $1 million gain due to
         change in fair value of CDS hedging the corporate loan book; first
         quarter 2008 - $55 million gain due to change in fair value of CDS
         hedging the corporate loan book; $30 million provision for insurance
         claims, as explained in footnote 11.
    (2)  Adjusted provision for credit losses excludes the following items of
         note: second quarter 2009 - $110 million increase in general
         allowance for credit losses in Canadian Personal and Commercial
         Banking (excluding VFC) and Wholesale Banking; first quarter 2009 -
         $80 million increase in general allowance for credit losses in
         Canadian Personal and Commercial Banking (excluding VFC) and
         Wholesale Banking.
    (3)  Adjusted non-interest expenses excludes the following items of note:
         second quarter 2009 - $171 million amortization of intangibles, as
         explained in footnote 6; $77 million restructuring and integration
         charges related to the Commerce acquisition, as explained in
         footnote 8; settlement of TD Banknorth shareholder litigation of
         $58 million, as explained in footnote 12; first quarter 2009 -
         $173 million amortization of intangibles; $106 million restructuring
         and integration charges related to the Commerce acquisition; second
         quarter 2008 - $117 million amortization of intangibles; $48 million
         restructuring and integration charges related to the Commerce
         acquisition; first quarter 2008 - $122 million amortization of
         intangibles.
    (4)  For reconciliation between reported and adjusted provision for
         income taxes, see the 'Reconciliation of non-GAAP provision for
         (recovery of) income taxes' table in the "Taxes" section.
    (5)  Adjusted equity in net income of an associated company excludes the
         following items of note: second quarter 2009 - $16 million
         amortization of intangibles, as explained in footnote 6; first
         quarter 2009 - $15 million amortization of intangibles; second
         quarter 2008 - $17 million amortization of intangibles; first
         quarter 2008 - $16 million amortization of intangibles.
    (6)  Amortization of intangibles relates to the Canada Trust acquisition
         in 2000, the TD Banknorth acquisition in 2005 and its privatization
         in 2007, the acquisitions by TD Banknorth of Hudson United Bancorp
         in 2006 and Interchange Financial Services Corporation in 2007, the
         Commerce acquisition in 2008 and the amortization of intangibles
         included in equity in net income of TD Ameritrade.
    (7)  Effective August 1, 2008, as a result of recent deterioration in
         markets and severe dislocation in the credit market, the Bank
         changed its trading strategy with respect to certain trading debt
         securities. The Bank no longer intends to actively trade in these
         debt securities. Accordingly, the Bank reclassified certain debt
         securities from trading to AFS category in accordance with the
         Amendments to the Canadian Institute of Chartered Accountants (CICA)
         Handbook Section 3855, Financial Instruments - Recognition and
         Measurement. As part of the Bank's trading strategy, these debt
         securities are economically hedged, primarily with CDS and interest
         rate swap contracts. This includes foreign exchange translation
         exposure related to the debt securities portfolio and the
         derivatives hedging it. These derivatives are not eligible for
         reclassification and are recorded on a fair value basis with changes
         in fair value recorded in the period's earnings. Management believes
         that this asymmetry in the accounting treatment between derivatives
         and the reclassified debt securities results in volatility in
         earnings from period to period that is not indicative of the
         economics of the underlying business performance in Wholesale
         Banking. As a result, the derivatives are accounted for on an
         accrual basis in Wholesale Banking and the gains and losses related
         to the derivatives in excess of the accrued amounts are reported in
         the Corporate segment and disclosed as an item of note. Adjusted
         results of the Bank exclude the gains and losses of the derivatives
         in excess of the accrued amount.
    (8)  As a result of the acquisition of Commerce and related restructuring
         and integration initiatives undertaken, the Bank incurred
         restructuring and integration charges. Restructuring charges
         consisted of employee severance costs, the costs of amending certain
         executive employment and award agreements and the write-down of
         long-lived assets due to impairment. Integration charges consisted
         of costs related to employee retention, external professional
         consulting charges and marketing (including customer communication
         and rebranding). In the Interim Consolidated Statement of Income,
         the restructuring and integration charges are included in non-
         interest expenses.
    (9)  The Bank purchases CDS to hedge the credit risk in Wholesale
         Banking's corporate lending portfolio. These CDS do not qualify for
         hedge accounting treatment and are measured at fair value with
         changes in fair value recognized in current period's earnings. The
         related loans are accounted for at amortized cost. Management
         believes that this asymmetry in the accounting treatment between CDS
         and loans would result in periodic profit and loss volatility which
         is not indicative of the economics of the corporate loan portfolio
         or the underlying business performance in Wholesale Banking. As a
         result, the CDS are accounted for on an accrual basis in Wholesale
         Banking and the gains and losses on the CDS, in excess of the
         accrued cost, are reported in the Corporate segment. Adjusted
         results exclude the gains and losses on the CDS in excess of the
         accrued cost.
    (10) This represents the negative impact of the scheduled reductions in
         the income tax rate on reduction of net future income tax assets.
    (11) The provision for insurance claims related to a court decision in
         Alberta. The Alberta government's legislation effectively capping
         minor injury insurance claims was challenged and held to be
         unconstitutional. While the government of Alberta has appealed the
         decision, the ultimate outcome remains uncertain. As a result, the
         Bank accrued an additional actuarial liability for potential losses
         in the first quarter of 2008.
    (12) Upon the announcement of the privatization of TD Banknorth in
         November 2006, certain minority shareholders of TD Banknorth
         initiated class action litigation alleging various claims against
         the Bank, TD Banknorth and TD Banknorth officers and directors. The
         parties agreed to settle the litigation in February 2009 for
         $61.3 million (US$50 million) of which $3.7 million (US$3 million)
         had been previously accrued on privatization. A settlement approval
         hearing with the Court of Chancery in Delaware is scheduled for
         June 2009.


    Reconciliation of Reported Earnings per Share (EPS) to Adjusted EPS(1)
    -------------------------------------------------------------------------
                                                                 For the six
                              For the three months ended        months ended
                           --------------------------------------------------
                             Apr. 30   Jan. 31   Apr. 30   Apr. 30   Apr. 30
    (Canadian dollars)          2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Diluted - reported         $0.68     $0.82     $1.12     $1.50     $2.44
    Items of note affecting
     income (as above)          0.55      0.52      0.16      1.08      0.29
    Items of note affecting
     EPS only(2)                   -         -      0.04         -      0.04
    -------------------------------------------------------------------------
    Diluted - adjusted         $1.23     $1.34     $1.32     $2.58     $2.77
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic - reported           $0.68     $0.82     $1.12     $1.50     $2.46
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) EPS is computed by dividing net income available to common
        shareholders by the weighted-average number of shares outstanding
        during the period. As a result, the sum of the quarterly EPS may not
        equal to year-to-date EPS.
    (2) The diluted EPS figures do not include Commerce earnings for the
        month of April 2008 because there was a month lag between fiscal
        quarter ends until the prior quarter, while share issuance on
        transaction close resulted in a one-time negative earnings impact of
        4 cents per share.


    Amortization of Intangibles, Net of Income Taxes(1)
    -------------------------------------------------------------------------
                                                                 For the six
                              For the three months ended        months ended
                           --------------------------------------------------
    (millions of             Apr. 30   Jan. 31   Apr. 30   Apr. 30   Apr. 30
     Canadian dollars)          2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Canada Trust                 $39       $40       $37       $79       $58
    TD Bank, N.A.                 70        70        32       140        65
    TD Ameritrade (included
     in equity in net income
     of an associated company)    16        15        17        31        33
    Other                          2         2         6         4        11
    -------------------------------------------------------------------------
    Amortization of
     intangibles, net of
     income taxes               $127      $127       $92      $254      $167
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Amortization of intangibles is included in the Corporate segment.
    


    Economic Profit and Return on Invested Capital

    The Bank utilizes economic profit as a tool to measure shareholder value
creation. Economic profit is adjusted net income available to common
shareholders less a charge for average invested capital. Average invested
capital is equal to average common equity for the period plus the average
cumulative after-tax goodwill and intangible assets amortized as of the
reporting date. The rate used in the charge for capital is the equity cost of
capital calculated using the capital asset pricing model. The charge
represents an assumed minimum return required by common shareholders on the
Bank's invested capital. The Bank's goal is to achieve positive and growing
economic profit.
    Return on invested capital (ROIC) is adjusted net income available to
common shareholders divided by average invested capital. ROIC is a variation
of the economic profit measure that is useful in comparison to the equity cost
of capital. Both ROIC and the equity cost of capital are percentage rates,
while economic profit is a dollar measure. When ROIC exceeds the equity cost
of capital, economic profit is positive. The Bank's goal is to maximize
economic profit by achieving ROIC that exceeds the equity cost of capital.
    Economic profit and ROIC are non-GAAP financial measures as these are not
defined terms under GAAP. Readers are cautioned that earnings and other
measures adjusted to a basis other than GAAP do not have standardized meanings
under GAAP and therefore, may not be comparable to similar terms used by other
issuers.
    The following table reconciles between the Bank's economic profit, ROIC
and net income available to common shareholders - adjusted. Adjusted results,
items of note and related terms are discussed in the "How the Bank Reports"
section.

    
    Reconciliation of Economic Profit, Return on Invested Capital and Net
    Income Available to Common Shareholders - Adjusted
    -------------------------------------------------------------------------
                                                                 For the six
                              For the three months ended        months ended
                           --------------------------------------------------
    (millions of             Apr. 30   Jan. 31   Apr. 30   Apr. 30   Apr. 30
     Canadian dollars)          2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Average common equity    $36,120   $33,559   $25,593   $34,777   $23,599
    Average cumulative
     goodwill/intangible
     assets amortized,
     net of income taxes       4,491     4,379     4,082     4,435     4,049
    -------------------------------------------------------------------------
    Average invested
     capital                 $40,611   $37,938   $29,675   $39,212   $27,648
    Rate charged for
     invested capital          10.0%     10.0%      9.3%     10.0%      9.3%
    -------------------------------------------------------------------------
    Charge for invested
     capital                   $(990)    $(956)    $(679)  $(1,944)  $(1,279)
    -------------------------------------------------------------------------
    Net income available
     to common shareholders
     - reported                 $577      $683      $841    $1,260    $1,803
    Items of note impacting
     income, net of
     income taxes                471       437       121       908       211
    -------------------------------------------------------------------------
    Net income available to
     common shareholders
     - adjusted               $1,048    $1,120      $962    $2,168    $2,014
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Economic profit              $58      $164      $283      $224      $735
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Return on invested
     capital                   10.6%     11.7%     13.2%     11.1%     14.6%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    FINANCIAL RESULTS OVERVIEW

    Performance Summary
    

    An overview of the Bank's performance on an adjusted basis for the second
quarter of 2009 against the financial shareholder indicators included in the
2008 Annual Report is outlined below. Shareholder performance indicators help
guide and benchmark the Bank's accomplishments. For the purposes of this
analysis, the Bank utilizes adjusted earnings, which excludes items of note
from the reported results that are prepared in accordance with GAAP. Reported
and adjusted results and items of note are explained in the "How the Bank
Reports" section.

    
    -   Adjusted diluted earnings per share for the six months ended
        April 30, 2009 were down 7% from the same period last year,
        reflecting common and preferred equity issuance in fiscal 2009 to
        further strengthen the Bank's capital position. The Bank's goal is to
        achieve 7 - 10% adjusted earnings per share growth over the longer
        term. In the current environment, meeting this goal will be
        challenging in the short and medium term.
    -   Adjusted return on risk-weighted assets (RWA) for the first six
        months of 2009 was 2.1% compared with 2.6% in the first half of 2008.
    -   For the twelve months ended April 30, 2009, the total shareholder
        return was (25.2)% which was below the Canadian peer average of
        (17.7)%.

    Impact of U.S. dollar on U.S. Personal and Commercial Banking and TD
    Ameritrade Translated Earnings

    Our U.S. Personal and Commercial Banking segment earnings and TD
Ameritrade equity pick-up are impacted by fluctuations in the U.S.
dollar/Canadian dollar exchange rate.
    Depreciation of the Canadian dollar had a favourable impact on our
consolidated earnings for the quarter and for the six months ended April 30,
2009, compared with the corresponding periods of 2008, as shown in the table
below.

    Impact of U.S. Dollar on U.S. Translated Earnings
    -------------------------------------------------------------------------
                                           For the three         For the six
                                            months ended        months ended
                                       --------------------------------------
                                         Apr. 30 2009 vs.    Apr. 30 2009 vs.
    (millions of Canadian dollars)          Apr. 30 2008        Apr. 30 2008
    -------------------------------------------------------------------------
    U.S. Personal and Commercial Banking
      Increased total revenue                       $252                $483
      Increased non-interest expenses                144                 279
      Increased net income                            55                 114
    -------------------------------------------------------------------------
    TD Ameritrade
      Increased equity pick-up                        $9                 $24
    -------------------------------------------------------------------------
    Earnings per share impact                      $0.06               $0.14
    -------------------------------------------------------------------------


    Net Income

    Year-over-year comparison
    -------------------------
    

    Reported net income for the quarter was $618 million, a decrease of $234
million, or 27%, compared with the second quarter last year. Adjusted net
income for the quarter was $1,089 million, an increase of $116 million or 12%.
The increase in adjusted net income was due to higher earnings in U.S.
Personal and Commercial Banking and Wholesale Banking, which was partially
offset by lower earnings from the Wealth Management segment and greater loss
in the Corporate segment. U.S. Personal and Commercial Banking adjusted net
income increased largely due to earnings from Commerce since its acquisition
on March 31, 2008. Wholesale Banking's results in the quarter included strong
trading revenues, led by interest rate and foreign exchange revenue, partially
offset by net security losses in the public equity investment portfolio (Head
Office Portfolio). Wealth Management net income decreased due to market
declines in assets under management and assets under administration in mutual
funds and advice-based businesses, net interest margin compression and lower
earnings from TD Ameritrade due to lower underlying earnings related largely
to lower net interest margins in the quarter. The Corporate segment reported
an increased net loss driven by higher unallocated corporate expenses and the
impact of a favourable tax item reported last year partially offset by net
gains from securitization and net income relating to hedging and treasury
activities.

    
    Prior quarter comparison
    ------------------------
    

    Reported net income for the quarter decreased $94 million, or 13%,
compared with the prior quarter. Adjusted net income for the quarter decreased
$60 million or 5%. The decrease in adjusted net income was due to lower
earnings in the Wholesale Banking, U.S. Personal and Commercial Banking and
Wealth Management segments, which was partially offset by a lower net loss
from the Corporate segment. Wholesale Banking decreased mainly due to lower
trading revenue. U.S. Personal and Commercial Banking adjusted net income
decreased largely due to seasonal factors and higher provision for credit
losses (PCL) that were driven by a cyclical increase in bankruptcies and
delinquencies. Wealth Management net income decreased due to a lower
contribution from TD Ameritrade. The Corporate segment net loss was lower this
quarter due largely to an increase in net securitization gains.

    
    Year-to-date comparison
    -----------------------
    

    On a year-to-date basis, reported net income was $1,330 million, a
decrease of $492 million, or 27%, compared with the same period last year.
Year-to-date adjusted net income increased $205 million or 10%. The increase
in adjusted net income was primarily driven by higher U.S. Personal and
Commercial Banking net income due to the inclusion of Commerce and higher
earnings from Wholesale Banking which was partially offset by lower earnings
in the Wealth Management, Canadian Personal and Commercial Banking and
Corporate segments. Wholesale Banking net income was primarily driven by
higher trading revenue and an increase in client capital market activity.
Wealth Management delivered lower earnings due to lower revenues in mutual
funds and advice-based businesses driven by lower assets under management and
assets under administration, lower interest income due to net interest margin
compression and a decline in TD Ameritrade's underlying earnings. Canadian
Personal and Commercial Banking earnings decreased due to higher PCLs.
Corporate segment net loss increased due the impact of retail hedging activity
and costs related to increased corporate financing activity, higher
unallocated corporate expenses and the impact of favourable tax items reported
last year.

    
    Net Interest Income

    Year-over-year comparison
    -------------------------
    

    Net interest income for the quarter was $2,940 million, an increase of
$1,082 million, or 58%, compared with the second quarter last year. The growth
in net interest income was driven by the U.S. Personal and Commercial Banking,
Wholesale Banking and Canadian Personal and Commercial Banking segments
partially offset by Wealth Management. U.S. Personal and Commercial Banking
net interest income increased primarily due to the inclusion of Commerce.
Wholesale Banking net interest income increased primarily due to higher
trading-related net interest income. Canadian Personal and Commercial Banking
net interest income increased due to strong volume growth across most banking
products, particularly in real-estate secured lending, partially offset by a 2
basis point (bps) decline in margin on average earning assets to 2.94%. Wealth
Management net interest income decreased primarily due to net interest margin
compression and lower margin loans.

    
    Prior quarter comparison
    ------------------------
    

    Net interest income increased $212 million, or 8%, compared with the
prior quarter. The growth in net interest income was driven by the U.S.
Personal and Commercial Banking and Canadian Personal and Commercial Banking
segments with partial offsets in the Wholesale Banking, Wealth Management and
Corporate segments. U.S. Personal and Commercial Banking net interest income
increased primarily due to strong volume growth across all products that was
partially offset by a 4 bps decline in margin on average earning assets.
Canadian Personal and Commercial Banking net interest income increased due to
strong volume growth across most banking products and a 12 bps increase in
margin on average earning assets. Wholesale Banking net interest income
decreased, primarily due to lower trading-related net interest income. Wealth
Management net interest income decreased primarily due to net interest margin
compression and lower margin loans. Corporate segment net interest income
increased due to higher net income related to treasury activities.

    
    Year-to-date comparison
    -----------------------
    

    On a year-to-date basis, net interest income of $5,668 million increased
$2,022 million, or 55%, compared with the same period last year. The growth
was driven primarily by the U.S. Personal and Commercial Banking, Canadian
Personal and Commercial Banking and Wholesale Banking segments partially
offset by Wealth Management. U.S. Personal and Commercial Banking net interest
income increased primarily due to the inclusion of Commerce. Canadian Personal
and Commercial Banking net interest income increased primarily due to strong
volume growth in lending and deposits which was partially offset by a 9 bps
decline in margin on average earning assets to 2.88%. Wholesale Banking net
interest income increased largely due to higher trading-related net interest
income. Wealth Management net interest income decreased primarily due to net
interest margin compression.

    
    Other Income

    Year-over-year comparison
    -------------------------
    

    Reported other income for the second quarter was $1,385 million, a
decrease of $145 million, or 9%, compared with the second quarter of last
year. Adjusted other income for the quarter was $1,612 million, an increase of
$83 million or 5%. The growth was driven primarily by the U.S. Personal and
Commercial Banking and Canadian Personal and Commercial Banking segments with
partial offsets in the Wholesale Banking and Wealth Management segments. The
increase in adjusted other income was driven by U.S. Personal and Commercial
Banking, primarily due to the Commerce acquisition, as well as higher
insurance and fee income in Canadian Personal and Commercial Banking. Other
income in Wholesale Banking decreased primarily due to net security losses
related to the equity investment portfolio that were recognized during the
quarter. Wealth Management other income decreased as the impact of market
declines in mutual funds and advice-based business asset levels were only
partially offset by continued strength in trading volumes in our online
brokerage business.

    
    Prior quarter comparison
    ------------------------
    

    Reported other income decreased $37 million, or 3%, compared with the
prior quarter. Adjusted other income decreased $110 million, or 6%. The
decrease in adjusted other income was due to decreases in the Wholesale
Banking, Canadian Personal and Commercial Banking and U.S. Personal and
Commercial Banking segments. Wholesale Banking other income decreased due to
lower trading revenue. Canadian Personal and Commercial Banking other income
decreased primarily due to fewer calendar days in the current quarter, an
adjustment related to the cost of Visa travel reward points and higher loss
ratios in the insurance business. U.S. Personal and Commercial Banking other
income decreased primarily due to lower fee income.

    
    Year-to-date comparison
    -----------------------
    

    Reported other income of $2,807 million decreased $539 million, or 16%,
compared with the same period last year. Year-to-date adjusted other income
increased $14 million from the previous year. The increase in adjusted other
income was due to an increase in the U.S. Personal and Commercial Banking
segment which was partially offset by decreases in the Canadian Personal and
Commercial Banking, Wholesale Banking and Wealth Management segments. The U.S.
Personal and Commercial Banking increase was due to the inclusion of Commerce
results. Canadian Personal and Commercial Banking other income decreased
primarily due to an adjustment related to the cost of Visa travel reward
points and higher loss ratios in the insurance business. The decrease in
Wholesale Banking was driven by net security losses related to the public
equity investment portfolio. Wealth Management experienced a small decline in
other income driven by lower revenue in mutual funds and lower average fees.

    
    Provision for Credit Losses

    Year-over-year comparison
    -------------------------
    

    During the quarter, the Bank recorded PCL of $656 million, an increase of
$424 million compared with the second quarter last year. The increase was
primarily due to higher provisions in U.S. Personal and Commercial Banking and
Canadian Personal and Commercial Banking, and an increase of $110 million in
general allowance for credit losses related to the Canadian Personal and
Commercial Banking (excluding VFC) and Wholesale Banking segments.

    
    Prior quarter comparison
    ------------------------
    

    PCL for the second quarter was up $119 million from the prior quarter.
The increase was primarily due to higher provisions in the U.S. Personal and
Commercial Banking and Canadian Personal and Commercial Banking segments, and
an increase in general allowance for credit losses related to the Canadian
Personal and Commercial Banking (excluding VFC) and Wholesale Banking
segments.

    
    Year-to-date comparison
    -----------------------
    

    On a year-to-date basis, PCL of $1,193 million increased $706 million, or
145%. The increase was primarily due to higher provisions in the U.S. Personal
and Commercial Banking and Canadian Personal and Commercial Banking segments,
and an increase of $190 million in general allowance for credit losses related
to the Canadian Personal and Commercial Banking (excluding VFC) and Wholesale
Banking segments.

    
    Provision for Credit Losses
    -------------------------------------------------------------------------
                                                                 For the six
                              For the three months ended        months ended
                           --------------------------------------------------
    (millions of             Apr. 30   Jan. 31   Apr. 30   Apr. 30   Apr. 30
     Canadian dollars)          2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Net new specifics
     (net of reversals)         $446      $386      $244      $832      $511
    Recoveries                   (25)      (24)      (33)      (49)      (65)
    -------------------------------------------------------------------------
    Provision for credit
     losses - specifics          421       362       211       783       446
    Change in general allowance
     for credit losses
      VFC                         22        21        16        43        31
      U.S. Personal and
       Commercial Banking        103        74         5       177         9
      Canadian Personal and
       Commercial Banking
       (excluding VFC) and
       Wholesale Banking         110        80         -       190         -
      Other                        -         -         -         -         1
    -------------------------------------------------------------------------
    Total                       $656      $537      $232    $1,193      $487
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Non-Interest Expenses and Efficiency Ratio

    Year-over-year comparison
    -------------------------
    

    Reported non-interest expenses for the quarter were $3,051 million, an
increase of $845 million, or 38%, compared with the second quarter last year.
Adjusted non-interest expenses of $2,745 million increased $704 million, or
34%. The increase in adjusted non-interest expense was primarily driven by
growth in the operating business segments. U.S. Personal and Commercial
Banking increased primarily due to the inclusion of Commerce. Wholesale
Banking non-interest expenses increased, due primarily to higher variable
compensation on stronger results, higher severance and investment in control
and risk initiatives. Wealth Management non-interest expenses increased due to
continued investment in the business partially offset by lower variable
expenses. Canadian Personal and Commercial Banking non-interest expenses
increased due to higher employee compensation and investments in branches.
    The reported efficiency ratio was 70.6%, compared with 65.1% in the
second quarter last year. The adjusted efficiency ratio remained unchanged
from the same period last year at 60.3%.

    
    Prior quarter comparison
    ------------------------
    

    Reported non-interest expenses increased $31 million, or 1%, compared
with the prior quarter. Adjusted non-interest expenses increased $4 million,
which was relatively unchanged, due to higher expenses in U.S. Personal and
Commercial Banking, partially offset by lower expenses in Canadian Personal
and Commercial Banking, Wholesale Banking and Wealth Management. U.S. Personal
and Commercial Banking adjusted non-interest expenses increased primarily due
to Federal Deposit Insurance Corporation (FDIC) premiums and timing of payroll
benefits. Canadian Personal and Commercial Banking non-interest expenses
decreased due to lower litigation costs. Wholesale Banking non-interest
expenses decreased due to lower variable compensation and severance costs.
Wealth Management non-interest expenses decreased due to lower variable
compensation.
    The reported efficiency ratio was 70.6%, compared with 72.8% in the prior
quarter. The adjusted efficiency ratio was 60.3%, compared with 61.6% in the
prior quarter.

    
    Year-to-date comparison
    -----------------------
    

    On a year-to-date basis, reported non-interest expenses were $6,071
million, an increase of $1,637 million, or 37%, compared with the same period
last year. The current year-to-date reported non-interest expenses included
$183 million of restructuring and integration charges attributable to the
Commerce acquisition. Adjusted non-interest expenses were $5,486 million, an
increase of $1,338 million, or 32%. The increase in adjusted non-interest
expense was primarily driven by growth in the operating business segments.
U.S. Personal and Commercial Banking expenses increased due to the inclusion
of Commerce. Canadian Personal and Commercial Banking expenses increased due
to higher employee compensation. Wholesale Banking expenses increased
primarily due to higher variable compensation and severance costs. Wealth
Management expenses increased due to the continued investment in growing our
advice-based businesses and related support staff.
    The reported efficiency ratio was 71.6%, compared with 63.4% in the same
period last year. The Bank's adjusted efficiency ratio was 61.0%, compared
with 59.5% in the same period last year.

    Taxes

    As discussed in the "How the Bank Reports" section, the Bank adjusts its
reported results to assess each of its businesses and to measure overall Bank
performance. As such, the provision for income taxes is stated on a reported
and an adjusted basis.
    The Bank's reported effective tax rate was 5.7% for the second quarter,
compared with 16.8% in the same quarter last year and (9.8)% in the prior
quarter. On a year-to-date basis, the Bank's effective tax rate was (1.9)%,
compared with 19.1% in the same period last year. The negative reported
effective tax rate was primarily caused by a significant decrease in reported
net income before taxes, a proportionate increase in tax exempt income, and a
lower effective tax rate on international operations.

    
    Taxes
    -------------------------------------------------------------------------
                                                  For the three months ended
                               ----------------------------------------------
    (millions of                     Apr. 30         Jan. 31         Apr. 30
     Canadian dollars)                  2009            2009            2008
    -------------------------------------------------------------------------
    Income taxes at Canadian
     statutory income tax rate  $196   31.8%    $189   31.8%    $310   32.7%
    Increase (decrease)
     resulting from:
      Dividends received         (85)  (13.8)   (132)  (22.3)    (79)   (8.3)
      Rate differentials on
       international
       operations               (117)  (19.0)   (134)  (22.5)    (69)   (7.3)
      Other - net                 41     6.7      19     3.2      (2)   (0.3)
    -------------------------------------------------------------------------
    Provision for (recovery
     of) income taxes and
     effective income tax
     rate - reported             $35    5.7%    $(58) (9.8)%    $160   16.8%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    ---------------------------------------------------------
                                    For the six months ended
                               ------------------------------
    (millions of                     Apr. 30         Apr. 30
     Canadian dollars)                  2009            2008
    ---------------------------------------------------------
    Income taxes at Canadian
     statutory income tax rate  $385   31.8%    $677   32.7%
    Increase (decrease)
     resulting from:
      Dividends received        (217)  (17.9)   (166)   (8.0)
      Rate differentials on
       international
       operations               (251)  (20.7)   (153)   (7.4)
      Other - net                 60     4.9      37     1.8
    ---------------------------------------------------------
    Provision for (recovery
     of) income taxes and
     effective income tax
     rate - reported            $(23) (1.9)%    $395   19.1%
    ---------------------------------------------------------
    ---------------------------------------------------------


    The Bank's adjusted effective tax rate was 17.7% for the quarter, compared
with 19.7% in the same quarter last year and 14.3% in the prior quarter. On a
year-to-date basis, the Bank's adjusted effective tax rate was 16.0%, compared
with 21.1% in the same period last year.

    Reconciliation of Non-GAAP Provision for (Recovery of) Income Taxes
    -------------------------------------------------------------------------
                                                                 For the six
                              For the three months ended        months ended
                           --------------------------------------------------
    (millions of             Apr. 30   Jan. 31   Apr. 30   Apr. 30   Apr. 30
     Canadian dollars)          2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Provision for
     (recovery of) income
     taxes - reported            $35      $(58)     $160      $(23)     $395
    Increase (decrease)
     resulting from items
     of note:
      Amortization of
       intangibles                60        61        42       121       105
      Change in fair value
       of derivatives hedging
       the reclassified
       available-for-sale
       debt securities
       portfolio                  32       113         -       145         -
      Restructuring and
       integration charges
       relating to the
       Commerce acquisition       27        39        18        66        18
      Change in fair value
       of credit default
       swaps hedging the
       corporate loan book,
       net of provision for
       credit losses              17        (1)        -        16       (13)
      Other tax items              -         -         -         -       (20)
      Provision for insurance
       claims                      -         -         -         -        10
      General allowance
       increase in Canadian
       Personal and Commercial
       Banking (excluding VFC)
       and Wholesale Banking      33        25         -        58         -
      Settlement of TD
       Banknorth shareholder
       litigation                 19         -         -        19         -
    -------------------------------------------------------------------------
    Tax effect
     - items of note             188       237        60       425       100
    -------------------------------------------------------------------------
    Provision for income
     taxes - adjusted           $223      $179      $220      $402      $495
    -------------------------------------------------------------------------
    Effective income tax
     rate - adjusted(1)        17.7%     14.3%     19.7%     16.0%     21.1%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Adjusted effective income tax rate is adjusted provisions for income
        taxes as a percentage of adjusted net income before taxes.


    HOW OUR BUSINESSES PERFORMED
    

    For management reporting purposes, the Bank's operations and activities
are organized around four key business segments operating in a number of
locations in key financial centres around the globe: Canadian Personal and
Commercial Banking, including TD Canada Trust and TD Insurance; Wealth
Management, including TD Waterhouse and an investment in TD Ameritrade; U.S.
Personal and Commercial Banking through TD Banknorth and TD Bank, America's
Most Convenient Bank; and Wholesale Banking, including TD Securities. The
Bank's other activities are grouped into the Corporate segment. Effective the
third quarter of 2008, U.S. insurance and credit card businesses were
transferred to the Canadian Personal and Commercial Banking segment, and the
U.S. wealth management businesses to the Wealth Management segment for
management reporting purposes to align with how these businesses are now being
managed on a North American basis. Prior periods have not been reclassified as
the impact was not material.
    Results of each business segment reflect revenue, expenses, assets and
liabilities generated by the businesses in that segment. The Bank measures and
evaluates the performance of each segment based on adjusted results where
applicable, and for those segments the Bank notes that the measure is
adjusted. Amortization of intangible expense is included in the Corporate
segment. Accordingly, net income for the operating business segments is
presented before amortization of intangibles, as well as any other items of
note not attributed to the operating segments. For further details, see the
"How the Bank Reports" section, the "Business Focus" section in the 2008
Annual Report and Note 30 to the 2008 Consolidated Financial Statements. For
information concerning the Bank's measures of economic profit and return on
invested capital, which are non-GAAP financial measures, see the "Economic
Profit and Return on Invested Capital" section. Segmented information also
appears in Note 14.
    Net interest income within Wholesale Banking is calculated on a taxable
equivalent basis (TEB), which means that the value of non-taxable or tax-
exempt income, including dividends, is adjusted to its equivalent before-tax
value. Using TEB allows the Bank to measure income from all securities and
loans consistently and makes for a more meaningful comparison of net interest
income with similar institutions. The TEB increase to net interest income and
provision for income taxes reflected in Wholesale Banking results is reversed
in the Corporate segment. The TEB adjustment for the quarter was $103 million,
compared with $107 million in the second quarter last year, and $185 million
in the prior quarter. On a year-to-date basis, the TEB adjustment was $288
million, compared with $242 million in the same period last year.
    The Bank securitizes retail loans and receivables, and records a gain or
loss on sale, including the setup of an asset related to the retained
interests. Credit losses incurred on retained interests subsequent to
securitization are recorded as a charge to other income in the Bank's
consolidated financial statements. For segment reporting, the provision for
credit losses (PCL) related to securitized volumes is included in the Canadian
Personal and Commercial Banking segment but is reversed in the Corporate
segment and reclassified as a charge to other income to comply with GAAP.

    Canadian Personal and Commercial Banking

    Canadian Personal and Commercial Banking net income for the quarter was
$589 million, an increase of $7 million, or 1%, compared with the second
quarter last year, and an increase of $5 million, or 1%, compared with the
prior quarter. The annualized return on invested capital for the quarter was
28% compared to 29% in the second quarter last year and 27% in the prior
quarter. Net income for the six months ended April 30, 2009 was $1,173
million, a decrease of $7 million, or 1%, compared with the same period last
year. On a year-to-date basis the annualized return on invested capital was
27% compared to 29% for the same period last year.
    Revenue for the quarter was $2,276 million, an increase of $142 million,
or 7%, compared with the second quarter last year primarily due to strong
volume growth across most banking products, particularly personal and business
deposits, and real-estate secured lending. Inclusion of revenue from the U.S.
insurance and credit card businesses since the third quarter of 2008 also
contributed to the growth. Revenue decreased by $16 million, or 1%, compared
with the prior quarter mainly due to fewer calendar days in the current
quarter. Revenues this quarter benefited from continued strong volume growth
and from margin improvement, largely offset by an adjustment related to the
cost of Visa travel reward points and higher loss ratios in the insurance
business. The latter was partly offset by gains due to a change in the
insurance liabilities discount rate. Revenue on a year-to-date basis was
$4,568 million, up $287 million, or 7%, compared with the same period last
year. Margin on average earning assets decreased by 2 bps from 2.96% to 2.94%
compared with the second quarter last year, but was up 12 bps compared with
the prior quarter due to wider real estate secured lending margins, partially
offset by narrower margins in term and business deposits. The margin on
average earning assets on a year-to-date basis decreased by 9 bps to 2.88%
when compared with the same period last year. Compared with the second quarter
last year, personal deposits volume grew by $18.1 billion or 16.9%; real-
estate secured lending volume (including securitizations) grew by $17.1
billion or 11.9%; and consumer loan volume grew by $2.4 billion or 13.5%.
Business deposit volume increased by $6.6 billion, or 16.2%, and business
loans and acceptances volume grew by $1.9 billion or 6.9%. Gross originated
insurance premiums grew by $48 million or 8%.
    PCL for the quarter was $286 million, an increase of $95 million, or 50%,
compared with the second quarter last year. Personal banking PCL of $260
million was $85 million, or 49%, higher than the second quarter last year as
deteriorating economic conditions led to higher provisions in unsecured lines
of credit and credit cards. Business banking PCL was $26 million for the
quarter, compared with $16 million in the second quarter last year. Annualized
PCL as a percentage of credit volume was 0.54%, an increase of 15 bps,
compared with the second quarter last year. PCL increased by $20 million, or
8%, compared with the prior quarter. Personal banking provisions increased $15
million, or 6%, compared with the prior quarter primarily due to higher
bankruptcies. Business banking provisions increased by $5 million, compared
with the prior quarter. PCL on a year-to-date basis was $552 million, an
increase of $189 million, or 52%, compared with the same period last year.
Personal banking provisions were $505 million, up $164 million, or 48%, and
business banking provisions were $47 million, up $25 million, or 114%.
    Non-interest expenses for the quarter were $1,143 million, an increase of
$48 million, or 4%, compared with the second quarter last year, but a decrease
of $43 million, or 4%, compared to the prior quarter. Non-interest expenses on
a year-to-date basis were $2,329 million, an increase of $138 million, or 6%,
compared with the same period last year. Primary drivers of the year-over-year
and year-to-date expense growth were higher employee compensation and
inclusion of the U.S. insurance and credit card businesses. The decrease from
the prior quarter was mainly due to fewer calendar days in the quarter and
lower litigation costs. The average full time equivalent (FTE) staffing levels
increased by 722, or 2%, compared with the second quarter last year and
decreased by 182, or 1%, compared with the prior quarter. FTE staffing levels
on a year-to-date basis increased by 726, or 2%, compared with the same period
last year. The efficiency ratio for the current quarter was 50.2%, compared
with 51.3% in the second quarter last year and 51.7% in the prior quarter. The
efficiency ratio on a year-to-date basis was 51.0%, compared with 51.2% in the
same period last year.
    Business activity continues to be vulnerable to economic pressures. The
outlook is for revenue growth to moderate in 2009 as volume growth slows in
deposits. Revenue growth should continue to benefit from our leadership
position in branch hours and continued new branch and marketing investments,
as well as improved customer cross-sell and productivity improvements. PCL
rates are expected to continue to reflect conditions in the Canadian economy.
We anticipate that expenses will be higher relative to last year due to
continued investments in new branches, higher employee compensation and
benefit costs, and the inclusion of the U.S. insurance and credit card
businesses.

    Wealth Management

    Wealth Management net income for the second quarter was $126 million, a
decrease of $56 million, or 31%, compared with the second quarter last year,
and a decrease of $26 million, or 17%, compared with the prior quarter. Net
income in Global Wealth Management, which excludes TD Ameritrade, was $78
million, a decrease of $37 million, or 32%, compared with the second quarter
last year, and an increase of $3 million, or 4%, compared with the prior
quarter. The decline in net income from last year was driven by market
declines in assets under management and assets under administration in mutual
funds and advice-based businesses, lower average fees earned in mutual funds
and net interest margin compression. This was partially offset by continued
strength in trading volumes in our online brokerage business. The Bank's
reported investment in TD Ameritrade generated net income of $48 million, a
decrease of $19 million, or 28%, compared with the second quarter last year
and a decrease of $29 million, or 38%, compared with the prior quarter. TD
Ameritrade experienced lower interest income due to net interest margin
compression which was partially offset by continued increases in trading
volumes and asset growth. For its second quarter ended March 31, 2009, TD
Ameritrade reported net income of US$132 million, a decrease of $55 million,
or 29%, compared with its second quarter last year and a decrease of $52
million, or 28%, compared with its prior quarter. Wealth Management's
annualized return on invested capital for the quarter was 11% compared to 19%
in the second quarter last year and 13% in the prior quarter.
    Net income for the six months ended April 30, 2009 was $278 million, a
decrease of $120 million, or 30%, compared with the same period last year. The
decrease in net income included results from the Bank's investment in TD
Ameritrade, which generated $125 million of net income compared with $155
million in the same period last year. Annualized return on invested capital on
a year-to-date basis was 12%, compared to 21% in same period last year.
    Revenue for the quarter was $528 million, which decreased by $30 million,
or 5%, compared with the second quarter last year. The decrease was primarily
due to lower revenues in mutual funds and advice-based businesses driven by
lower assets under management and assets under administration, lower average
fees, lower interest income due to net interest margin compression and lower
margin loans. This was partially offset by strong trading volumes in our
online brokerage business and the inclusion of the U.S. wealth management
businesses effective the third quarter of 2008. Revenue remained flat compared
with the prior quarter, primarily due to increased trading volumes in online
brokerage and modest increases in assets offset by net interest margin
compression, lower commissions per trade in online brokerage and lower average
fees in mutual funds. Revenue on a year-to-date basis was $1,056 million,
which decreased $72 million, or 6%, compared with the same period last year
primarily due to lower revenues in mutual funds and advice-based businesses
driven by lower assets under management and assets under administration, lower
average fees and net interest margin compression, partially offset by higher
trade volumes in online brokerage, increased new issues revenue and the
inclusion of the U.S. wealth management businesses.
    Non-interest expenses for the quarter were $414 million, an increase of
$27 million, or 7%, compared with the second quarter last year, and a decrease
of $5 million, or 1%, compared with the prior quarter. The increase from the
second quarter of last year was primarily due to the inclusion of U.S. wealth
management businesses and continued investment in the business, partially
offset by lower variable expenses. The decrease compared with the previous
quarter is primarily due to lower variable expenses and prudent expense
management, partially offset by higher volume-related expenses. Non-interest
expenses on a year-to-date basis were $833 million, an increase of $67
million, or 9%, compared with the same period last year. This increase was
mainly due to the inclusion of U.S. wealth management businesses, the
continued investment in growing the sales force in our advice-based businesses
and related support staff, partially offset by lower variable expenses and
prudent expense management.
    The average FTE staffing levels increased by 782, or 13%, compared with
the second quarter last year primarily due to the inclusion of 562 FTE from
the U.S. wealth management businesses, new client-facing advisors and
increased temporary processing staff to handle higher volumes. The increase of
127, or 2%, compared with the prior quarter was mainly due to new client-
facing advisors and increased temporary processing staff to handle higher
volumes. FTE staffing levels on a year-to-date basis increased by 713, or 12%,
compared with the same period last year for the same reasons. The efficiency
ratio for the current quarter was 78.4%, compared with 69.4% in the second
quarter last year and 79.4% in the prior quarter. The efficiency ratio on a
year-to-date basis was 78.9%, compared with 67.9% in the same period last
year.
    Assets under management of $168 billion at April 30, 2009 decreased by $2
billion, or 1%, from October 31, 2008, as the addition of net new client
assets was more than offset by market declines. Assets under administration of
$174 billion were flat compared with October 31, 2008, as market declines were
offset by the addition of net new client assets.
    We anticipate that current capital market and economic challenges in this
low interest rate environment will continue to impact our results over the
next few quarters. However, client engagement remains strong as evidenced by
growth in new accounts and net new client assets. We will continue to manage
expenses prudently while continuing our focused investment in client-facing
advisors, products and technology to ensure future business growth.

    
    Wealth Management
    -------------------------------------------------------------------------
                                                                 For the six
                              For the three months ended        months ended
                           --------------------------------------------------
    (millions of             Apr. 30   Jan. 31   Apr. 30   Apr. 30   Apr. 30
     Canadian dollars)          2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Global Wealth(1)             $78       $75      $115      $153      $243
    TD Ameritrade                 48        77        67       125       155
    -------------------------------------------------------------------------
    Net income                  $126      $152      $182      $278      $398
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Effective the third quarter of 2008, the Bank transferred the U.S.
        wealth management businesses to the Wealth Management segment for
        management reporting purposes. Prior periods have not been
        reclassified as the impact was not material to segment results.


    TD AMERITRADE Holding Corporation
    

    As at April 30, 2009, the Bank's reported investment in TD Ameritrade
Holding Corporation (TD Ameritrade) was 47.5% of the issued and outstanding
shares of TD Ameritrade.
    On February 18, 2009, TD Ameritrade announced a common stock repurchase
program for an aggregate 34 million shares from its second largest
shareholder. As a result of TD Ameritrade's share repurchase activity, the
Bank's ownership position in TD Ameritrade increased to 47.5% as at April 30,
2009 from 44.9% as at January 31, 2009. This level of ownership interest is
expected to be temporary as TD Ameritrade has announced that it plans to issue
shares in connection with its acquisition of thinkorswim Group Inc. Upon
completion of the issuance, the Bank intends to conduct additional sales as
required to bring its ownership interest under the cap of 45% under the
Stockholders' Agreement.
    On March 2, 2009, the Bank took delivery of 27 million shares in
settlement of its amended hedging arrangement with Lillooet Limited (Lillooet)
at a hedged cost to the Bank of US$515 million. As Lillooet was consolidated
in the Bank's consolidated financial statements, the replacement of the
amended hedge arrangement with the direct ownership of the 27 million shares
had no material impact on the Bank.
    The condensed financial statements of TD AMERITRADE Holding Corporation,
based on its consolidated financial statements filed with the SEC, are
provided as follows:

    
    Condensed Consolidated Balance Sheet
    -------------------------------------------------------------------------
                                                                       As at
                                                         --------------------
                                                           Mar. 31,  Sep. 30,
    (millions of U.S. dollars)                                2009      2008
    -------------------------------------------------------------------------
    Assets
    Receivable from brokers, dealers and
     clearing organizations                                 $2,079    $4,177
    Receivable from clients, net of allowance
     for doubtful accounts                                   3,469     6,934
    Other assets                                             7,566     4,841
    -------------------------------------------------------------------------
    Total assets                                           $13,114   $15,952
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities
    Payable to brokers, dealers and clearing
     organizations                                          $2,390    $5,770
    Payable to clients                                       5,706     5,071
    Other liabilities                                        2,234     2,186
    -------------------------------------------------------------------------
    Total liabilities                                       10,330    13,027
    -------------------------------------------------------------------------
    Stockholders' equity                                     2,784     2,925
    -------------------------------------------------------------------------
    Total liabilities and stockholders' equity             $13,114   $15,952
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Condensed Consolidated Statement of Income
    -------------------------------------------------------------------------
                                           For the three         For the six
                                            months ended        months ended
                                     ----------------------------------------
    (millions of U.S. dollars,         Mar. 31   Mar. 31   Mar. 31   Mar. 31
     except per share amounts)            2009      2008      2009      2008
    -------------------------------------------------------------------------
    Revenues
    Net interest revenue                   $67      $138      $152      $287
    Fee-based and other revenue            458       485       984       978
    -------------------------------------------------------------------------
    Total revenue                          525       623     1,136     1,265
    -------------------------------------------------------------------------
    Expenses
    Employee compensation and benefits     121       132       238       238
    Other                                  180       191       373       371
    -------------------------------------------------------------------------
    Total expenses                         301       323       611       609
    -------------------------------------------------------------------------
    Other income                             -         -         -         1
    -------------------------------------------------------------------------
    Pre-tax income                         224       300       525       657
    Provision for income taxes              92       113       209       229
    -------------------------------------------------------------------------
    Net income(1)                         $132      $187      $316      $428
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per share - basic           $0.23     $0.31     $0.54     $0.72
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earning per share - diluted          $0.23     $0.31     $0.54     $0.71
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) The Bank's equity share of net income of TD Ameritrade is subject to
        adjustments relating to amortization of intangibles.
    


    U.S. Personal and Commercial Banking

    As described in the "How the Bank Reports" section, effective this
quarter the reporting periods of all units within U.S. Personal and Commercial
Banking are now aligned with the Bank. Previously, the results for TD
Banknorth and Commerce were reported on a one month lag. The results for this
quarter represent the three months ended April 30, 2009. Net income of TD
Banknorth and Commerce for January 2009 has been excluded from the results of
U.S. Personal and Commercial Banking in this quarter.
    U.S. Personal and Commercial Banking reported net income for the second
quarter was $231 million, an increase of $131 million, or 131%, compared with
the second quarter last year, and a slight decrease of $9 million, or 4%,
compared with the prior quarter. Excluding restructuring and integration
charges related to the Commerce acquisition, adjusted net income for the
quarter was $281 million, an increase of $151 million, or 116%, compared with
the second quarter last year, and a decrease of $26 million, or 8%, compared
with the prior quarter. Much of the increase over the second quarter last year
related to the earnings from Commerce since its acquisition on March 31, 2008.
The annualized return on invested capital for the quarter was 5.3%, compared
with 5.8% in the second quarter last year and 5.9% in the prior quarter.
    Reported net income for the six months ended April 30, 2009 was $471
million, an increase of $244 million, or 107%, compared with the same period
last year, while adjusted net income was $588 million, an increase of $331
million, or 129%, compared with the same period last year. This increase was
primarily due to the earnings from Commerce since its acquisition. The
annualized return on invested capital on a year-to-date basis was 5.6%,
compared with 5.8% in the same period last year.
    Revenue for the quarter was $1,281 million, an increase of $806 million,
or 170%, compared with the second quarter last year, principally due to the
Commerce acquisition and the translation effect of a weaker Canadian dollar.
Revenue increased by $87 million, or 7%, over the prior quarter, partially due
to the translation effect of a weaker Canadian dollar. In U.S. dollar terms,
revenue increased 4% due to strong loan and deposit growth. Revenue on a
year-to-date basis was $2,475 million, representing an increase of $1,548
million, or 167% (116% in U.S. dollar terms), compared with the same period
last year, primarily due to the factors stated above. The margin on average
earning assets of 3.58% decreased by 15 bps from the second quarter last year
and decreased by 4 bps from the prior quarter. The slight decrease over the
prior quarter is primarily due to lower spreads on deposits, partially offset
by the benefit of increased prepayment rates on loans and securities. Margin
on average earning assets on a year-to-date basis decreased by 21 bps from
3.81% to 3.60%, compared with the same period last year. In U.S. dollar terms,
average loans grew by 3% and deposits grew by 5% over the prior quarter. The
available-for-sale (AFS) securities portfolio totalled approximately $56
billion (US$47 billion) for the quarter, including a net unrealized loss of
approximately $1.2 billion after tax (US$1.0 billion). A significant amount of
this unrealized loss is attributed to the current lack of liquidity in
financial markets, and we continue to monitor our position as market
conditions change and we update our valuation models as new data becomes
available. Compared with the prior quarter, the after-tax unrealized loss
declined by $985 million, of which $226 million related to non-agency
collateralized mortgage obligations.
    PCL for the quarter was $201 million, an increase of $155 million, or
337%, compared with the second quarter last year and an increase of $62
million, or 45%, over the prior quarter. The PCL increases were largely due to
higher levels of charge-offs and reserve increases resulting from loan risk
rating downgrades, principally in commercial real estate. Net impaired loans
totalled $688 million, an increase of $415 million, or 152%, over the second
quarter of last year and an increase of $124 million, or 22%, from the prior
quarter. The increase was largely due to net new formations resulting from
continued weakness in the real estate markets and the recession in the U.S.
Net impaired loans as a percentage of total loans and leases were 1.12%,
compared with 0.59% as at the end of the second quarter last year and 0.92% at
the end of the prior quarter. PCL on a year-to-date basis was $340 million,
which increased by $268 million, or 372%, compared with the same period last
year, primarily due to reasons listed above for the quarter.
    Reported non-interest expenses for the quarter were $823 million, an
increase of $529 million, or 180%, compared with the second quarter last year
and an increase of $22 million, or 3%, compared with the prior quarter.
Adjusted non-interest expenses for the quarter were $744 million, an increase
of $498 million, or 202%, compared with the second quarter last year and an
increase of $49 million, or 7%, compared with the prior quarter. Primary
drivers of the expense growth over the prior year were the acquired Commerce
franchise and the translation effect of a weaker Canadian dollar. The increase
over the prior quarter was due to higher Federal Deposit Insurance Corporation
(FDIC) deposit insurance premiums which increased for all banks in the U.S.
effective January 1, 2009, and timing of employee benefit costs. Reported
non-interest expenses on a year-to-date basis were $1,624 million which
increased by $1,092 million, or 205%, compared with the same period last year.
Adjusted non-interest expenses on a year-to-date basis were $1,439 million
which increased by $955 million, or 197%, compared with the same period last
year, primarily due to the Commerce acquisition and the translation effect of
the weaker Canadian dollar. While staffing levels were significantly higher
than in the second quarter of last year due to the Commerce acquisition, the
average FTE staffing level declined by approximately 2% (excluding new store
openings) since the acquisition of Commerce, primarily due to staff reductions
related to integration efforts and branch consolidations. In fiscal 2009, 24
new stores have been opened compared with 13 in the April to September 2008
period representing the first six months of ownership of the Commerce
franchise. The reported efficiency ratio for the quarter was 64.2%, compared
with 61.9% in the second quarter last year and 67.1% in the prior quarter. The
adjusted efficiency ratio for the quarter was 58.2%, compared with 51.7% in
the second quarter last year and 58.2% in the prior quarter. The reported and
adjusted efficiency ratios on a year-to-date basis were 65.6% and 58.1%
respectively, compared with 57.4% and 52.2% respectively in the same period
last year.
    The banking environment in the U.S. is expected to remain challenging,
and there remains uncertainty as to the continuing effects of the ongoing
market issues related to the recession in the U.S. On May 22, 2009, the FDIC,
in the U.S., finalized a five bps special assessment charge based on total
assets less Tier 1 capital of an institution insured under the FDIC program as
at June 30, 2009. The special assessment charge, of approximately US$50
million, is payable by the Bank on September 30, 2009. The final rule adopted
also provides the FDIC authority to charge similar special assessments on
December 31, 2009 and March 31, 2010, if needed, subject to additional FDIC
Board approval at that time. We expect that the weak economy will continue to
result in higher than normal PCLs and lower loan growth; however, the
translation effect of the weaker Canadian dollar, attainment of synergies and
strong expense control should help offset these.

    Wholesale Banking

    Wholesale Banking net income for the quarter was $173 million, an
increase of $80 million, or 86%, compared with the second quarter of last
year, primarily driven by strong interest rate and foreign exchange trading
revenue and an increase in client activity, partially offset by significant
realized net security losses in the public equity investment portfolio (Head
Office Portfolio). Net income decreased by $92 million, or 35%, compared with
prior quarter primarily due to lower trading revenue. The annualized return on
invested capital for the quarter was 18% compared with 11% in the second
quarter of last year and 22% in the prior quarter.
    Net income for the six months ended April 30, 2009 was $438 million, an
increase of $182 million, or 71%, compared with the same period last year. The
annualized return on invested capital on a year-to-date basis was 20%,
compared to 16% for the same period last year.
    Wholesale Banking revenue was derived primarily from capital markets,
investing and corporate lending activities. Revenue for the quarter was $620
million, an increase of $192 million, or 45%, compared with the second quarter
last year and a decrease of $219 million, or 26%, compared with the prior
quarter. Capital markets revenue increased from the second quarter last year
primarily due to very strong interest rate and foreign exchange revenues, an
increase in underwriting and equity commission revenues, and higher energy
trading revenue. Strong interest rate and foreign exchange trading was mainly
driven by an increase in customer flows, wider spreads, and favourable trading
results. Underwriting and equity commission revenues increase was driven by
higher capital market activity. Energy trading revenue increased primarily due
to higher client-related transaction revenues and good trading results.
Effective August 1, 2008, Wholesale Banking reclassified certain debt
securities in its credit trading business from trading to AFS. The AFS
portfolio generated a small, positive contribution in the second quarter
driven mainly by net spread earned on the portfolio. While the portfolio had
securities losses related to defaults by four bond issuers during the quarter,
these losses were fully offset by gains on credit protection held. Revenue
declined from the prior quarter primarily due to lower interest rate and
foreign exchange trading revenue coming off a record quarter and lower
client-driven equity transaction revenues, partially offset by higher credit
and energy trading revenues. The prior quarter also included a recovery from
the cancellation of a loan commitment. Earlier this year, Wholesale Banking
made a strategic decision to exit its public equity investment portfolio.
Approximately two thirds of the portfolio was sold during the quarter which
led to significant realized security losses. The public equity investment
portfolio generated net security gains in the same quarter last year and
moderately lower net security losses in the prior quarter. Corporate lending
revenues increased compared with the second quarter last year and the prior
quarter primarily due to higher margins. Revenue on a year-to-date basis was
$1,459 million, an increase of $423 million, or 41% compared with the same
period last year primarily due to strong trading revenues and an increase in
fee revenues related to higher client activity, partially offset by
significant realized net security losses in the public equity investment
portfolio.
    PCL is composed of specific provisions for credit losses and accrual
costs for credit protection. PCL for the quarter was $59 million, compared
with $10 million in the second quarter of last year and $66 million in the
prior quarter. The provision for the quarter included a specific allowance of
$48 million related to one credit exposure in the corporate lending portfolio
and the cost of credit protection. The provision for the second quarter last
year reflected the cost of credit protection. The provision for the prior
quarter included specific allowances of $56 million related to credit
exposures in the corporate lending and merchant banking portfolios and the
cost of credit protection. PCL on a year-to-date basis was $125 million, an
increase of $59 million, or 89%, compared with the same period last year.
Wholesale Banking continues to actively manage the credit risk in the
corporate loan portfolio and currently holds $2.4 billion in notional credit
default swap (CDS) protection.
    Non-interest expenses for the quarter were $356 million, an increase of
$65 million, or 22%, compared with the second quarter of last year due
primarily to higher variable compensation on stronger results, higher
severance and investment in control and risk initiatives. Non-interest
expenses decreased $32 million, or 8%, from the prior quarter primarily due to
lower variable compensation and severance costs. Non-interest expenses on a
year-to-date basis were $744 million, an increase of $132 million, or 22%,
compared with the same period last year, primarily due to higher variable
compensation and severance costs.
    Overall, the Wholesale Bank had a very strong quarter. Our integrated,
client focused franchise strategy for TD Securities generated strong results.
In addition, the continued focus on strategic use of capital resulted in a
significant reduction in risk weighted assets. Wholesale Banking continued to
make good progress in reducing credit trading positions outside North America
and total exposures are down significantly from the end of last year. There
was also significant progress made with our decision to exit from the public
equity investment portfolio which we expect to be substantially complete in
the third quarter. While Wholesale had strong first half results, we do not
expect this run rate to continue for the second half. We expect the operating
environment to remain volatile and challenging which may lead to lower trading
revenues, additional PCL and further investment security write-downs. Key
priorities for 2009 include solidifying our position as a top-three dealer in
Canada, growing our client driven franchise businesses and completing the
repositioning of the credit trading business.

    Corporate

    Corporate segment's reported net loss for the quarter was $501 million,
compared with a reported net loss of $105 million in the second quarter last
year and a reported net loss of $529 million in the prior quarter. The
adjusted net loss for the quarter was $80 million, an increase in net loss of
$66 million compared with the second quarter last year and a decrease in net
loss of $79 million from the previous quarter. Compared with the second
quarter last year, the higher adjusted net loss was driven by an increase in
unallocated corporate expenses, decreased revenues and a non-recurring tax
benefit reported last year, which were partially offset by net gains from
securitization and net income from other treasury activities. Compared with
the previous quarter, the lower adjusted net loss was primarily attributable
to an increase in net securitization gains, higher net income from other
treasury activities and lower costs related to corporate financing activity
that were partially offset by the impact of unallocated corporate expenses and
decreased revenues in the current quarter.
    The reported net loss for the six months ended April 30, 2009 was $1,030
million compared with a net loss of $239 million in the same period last year.
The adjusted net loss on a year-to-date basis was $239 million, an increase in
net loss of $181 million compared with last year and was primarily
attributable to a non-recurring tax benefit reported last year, retail hedging
activities, costs associated with corporate financing activity and higher
unallocated corporate items.
    The difference between reported and adjusted net loss for the Corporate
segment was due to items of note as outlined below. These items are described
more fully on page 6.

    
    -------------------------------------------------------------------------
                                                                 For the six
                              For the three months ended        months ended
                           --------------------------------------------------
    (millions of             Apr. 30   Jan. 31   Apr. 30   Apr. 30   Apr. 30
     Canadian dollars)          2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Corporate segment net
     loss - reported           $(501)    $(529)    $(105)  $(1,030)    $(239)
    -------------------------------------------------------------------------
    Items of note affecting
     net loss, net of
     income taxes:
      Amortization of
       intangibles               127       127        92       254       167
      Change in fair value
       of derivatives hedging
       the reclassified
       available-for-sale
       securities portfolio      134       200         -       334         -
      Change in fair value of
       credit default swaps
       hedging the corporate
       loan book, net of
       provision for credit
       losses                     44       (12)       (1)       32       (26)
      Other tax items              -         -         -         -        20
      Provision for insurance
       claims                      -         -         -         -        20
      General allowance
       increase in Canadian
       Personal and Commercial
       Banking (excluding VFC)
       and Wholesale Banking      77        55         -       132         -
      Settlement of TD
       Banknorth shareholder
       litigation                 39         -         -        39         -
    -------------------------------------------------------------------------
    Total items of note          421       370        91       791       181
    -------------------------------------------------------------------------
    Corporate segment net
     loss - adjusted            $(80)    $(159)     $(14)    $(239)     $(58)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Decomposition of items
     included in net loss -
     adjusted
    Net securitization            40       (33)       (1)        7       (14)
    Unallocated Corporate
     expenses                    (69)      (60)      (43)     (129)     (108)
    Other                        (51)      (66)       30      (117)       64
    -------------------------------------------------------------------------
    Corporate segment net
     loss - adjusted            $(80)    $(159)     $(14)    $(239)     $(58)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    


    BALANCE SHEET REVIEW

    Total assets of the Bank were $575 billion as at April 30, 2009, $12
billion, or 2%, higher than at October 31, 2008. The net increase reflected a
$25 billion increase in securities and a $10 billion increase in loans (net of
allowance for loan losses), partially offset by an $11 billion decrease in
securities purchased under reverse repurchase agreements, an $8 billion
decrease in other assets and a $5 billion decrease in interest-bearing
deposits with other banks. Translation effect of the weaker Canadian dollar
caused the value of assets in our U.S. Personal and Commercial Banking segment
to increase by $16 billion; the impact of this growth and higher business
volumes in the U.S. Personal and Commercial Banking segment were more than
offset by lower balances in our Wholesale Banking segment.

    Securities increased largely due to a $21 billion increase in AFS
securities primarily related to growth in the U.S. Personal and Commercial
Banking segment due to reinvestment of balances previously invested in
securities purchased under reverse repurchase agreements, Canadian dollar
translation impact of $6 billion and business growth.

    Loans (net of allowance for loan losses) increased by $10 billion due to
the translation effect of the weaker Canadian dollar and volume growth
primarily in the Canadian Personal and Commercial Banking and U.S. Personal
and Commercial Banking segments. Consumer installment and other personal loans
increased by $7 billion, business and government loans in U.S. Personal and
Commercial Banking increased by $7 billion while residential mortgages in
Canadian Personal and Commercial Banking decreased by $6 billion due to an
increase in securitization activity.

    Other assets declined by $8 billion due to a $9 billion decrease in the
market value of derivatives primarily in Wholesale Banking; offset partially
by a $2 billion increase in goodwill primarily due to foreign exchange
adjustments relating to previous U.S. acquisitions.

    Total liabilities of the Bank were $535 billion as at April 30, 2009, $4
billion, or 1%, higher than at October 31, 2008. The net increase was composed
primarily of a $26 billion increase in total deposits and a $23 billion
decrease in other liabilities. Translation effect of the weaker Canadian
dollar caused the value of liabilities in U.S. Personal and Commercial Banking
to increase by $14 billion; the impact of this growth and higher business
volumes in this segment were more than offset by lower balances in our
Wholesale Banking segment.

    Deposits increased $26 billion, or 7%, primarily due to a $23 billion
increase in personal deposits driven by the translation effect of the weaker
Canadian dollar in the U.S. Personal and Commercial Banking segment and volume
increases in the Canadian Personal and Commercial Banking and U.S. Personal
and Commercial Banking segments; a $3 billion increase in business and
government deposits, primarily driven by volume increases in the Canadian
Personal and Commercial Banking and U.S. Personal and Commercial Banking
segments which were offset by decreases in Wholesale Banking volumes.

    Other liabilities decreased $23 billion, or 16%, due to a $12 billion
decrease in obligations related to securities sold under repurchase agreements
in Wholesale Banking, a $6 billion increase in Wholesale Banking derivatives
due to volatility in currency and interest rate markets and a $5 billion
decrease in obligations related to securities sold short.

    Common shares and preferred shares increased $3 billion year-to-date,
primarily due to the new share issuances of $1.4 billion and $1.5 billion,
respectively.

    CREDIT PORTFOLIO QUALITY

    Gross impaired loans were $1,875 million at April 30, 2009, $718 million
higher than at October 31, 2008, largely attributable to a $442 million
increase in U.S. Personal and Commercial Banking (of which approximately $116
million was the foreign exchange effect), a $133 million increase in personal
impaired loans in Canadian Personal and Commercial Banking, and a $104 million
increase in Wholesale Banking.
    Net impaired loans as at April 30, 2009, after deducting specific
allowances, totalled $1,358 million, compared with $805 million as at October
31, 2008.
    The allowance for credit losses of $2,178 million as at April 30, 2009
was comprised of total specific allowances of $517 million and a general
allowance of $1,661 million. Specific allowances increased by $165 million
from October 31, 2008. The total general allowance as at April 30, 2009 was up
by $477 million, compared with October 31, 2008, mainly due to a $190 million
increase in the general allowance for the Canadian Personal and Commercial
Banking (excluding VFC) and Wholesale Banking segments, and increases in
allowance related to the U.S. Personal and Commercial Banking segment. The
Bank establishes general allowances to recognize losses that management
estimates to have occurred in the portfolio at the balance sheet date for
loans or credits not yet specifically identified as impaired.

    
    Changes in Gross Impaired Loans and Acceptances
    -------------------------------------------------------------------------
                                                                 For the six
                              For the three months ended        months ended
                           --------------------------------------------------
    (millions of             Apr. 30   Oct. 31   Apr. 30   Apr. 30   Apr. 30
     Canadian dollars)          2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Balance at beginning
     of period                $1,543    $1,001      $818    $1,157      $569
    Impact due to reporting-
     period alignment of
     U.S. entities(1)             57         -         -        57         -
    Additions                    927       616       575     1,917     1,234
    Return to performing
     status, repaid or sold     (294)     (243)     (234)     (591)     (431)
    Write-offs                  (334)     (247)     (258)     (707)     (470)
    Foreign exchange and
     other adjustments           (24)       30         8        42         7
    -------------------------------------------------------------------------
    Balance at end of period  $1,875    $1,157      $909    $1,875      $909
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Allowance for Credit Losses
    -------------------------------------------------------------------------
                                                                       As at
                                               ------------------------------
                                                 Apr. 30   Oct. 31   Apr. 30
    (millions of Canadian dollars)                  2009      2008      2008
    -------------------------------------------------------------------------
    Specific allowance - on-balance sheet loans     $517      $352      $255
    -------------------------------------------------------------------------
    General allowance for - on-balance sheet
                             loans                 1,399     1,184     1,114
                          - off-balance sheet
                             instruments(2)          262         -         -
    -------------------------------------------------------------------------
    Total general allowance                        1,661     1,184     1,114
    -------------------------------------------------------------------------
    Allowance for credit losses                   $2,178    $1,536    $1,369
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Impaired loans net of specific allowance      $1,358      $805      $654
    Net impaired loans as a percentage of net
     loans                                          0.6%      0.3%      0.3%
    Provision for credit losses as a percentage
     of net average loans (quarterly ratio)        1.12%     0.49%     0.48%
    -------------------------------------------------------------------------
    (1) As a result of the reporting-period alignment of U.S. entities as
        described in the "How the Bank Reports" section, the impact on gross
        impaired loans for January 2009 comprised of additions to impaired
        loans of $153 million; return to performing status, repaid or sold of
        $66 million; write-offs of $35 million; and foreign exchange and
        other adjustments of $5 million.
    (2) Effective April 30, 2009, the allowance for credit losses for
        off-balance sheet instruments is recorded in other liabilities. Prior
        period balances have not been reclassified.
    


    Non-prime Loans

    As at April 30, 2009, VFC had approximately $1.3 billion (October 31,
2008: $1.2 billion) gross exposure to non-prime loans which mainly consist of
automotive loans originated in Canada. The credit loss rate, defined as the
average PCL divided by the average month-end loan balance, which is an
indicator of credit quality, is approximately 6% (October 31, 2008:
approximately 6%) on an annual basis. The portfolio continues to perform as
expected. These loans are recorded at amortized cost.

    
    SECURITIES PORTFOLIO

    Exposure to Non-Agency Collateralized Mortgage Obligation (CMO)
    

    As at April 30, 2009, the amortized cost of the non-agency CMOs held by
the Bank was US$8.1 billion ($9.7 billion), compared with US$8.7 billion ($9.3
billion) as at October 31, 2008. These securities are collateralized primarily
by Alt-A and Prime Jumbo mortgages most of which are prepayable, fixed-rate
mortgages without rate reset features. At the acquisition date, this portfolio
was recorded at fair value and classified as available-for-sale. The fair
value at acquisition became the new cost basis for these securities. See Note
31 to the 2008 Consolidated Financial Statements for more details. At the time
of the acquisition and at the end of the third quarter of 2008, the CMO
portfolio was recognized at fair value using broker quotes. The liquidity in
the market for these securities has decreased since then, and the market has
become inactive. The trading volume for these securities has declined
significantly relative to historical levels. There has been a significant
widening of the bid-ask spread and there are only a small number of bidders
for these securities in the market. Determination of whether a market is
inactive requires judgement, and the above factors are indicators of an
inactive market. In current markets, the broker quotes cannot be considered as
a primary source of valuation. Subsequent to the third quarter of 2008, the
Bank fair valued these securities using a valuation technique which maximizes
the use of observable inputs including broker quotes. The valuation technique
uses assumptions a market participant would use in valuing these securities.
The valuation model determines the fair value by discounting the expected cash
flows using a risk-adjusted interest rate curve that incorporates a liquidity
premium derived from various indices observable in the active market. The
broker quotes for securities in the portfolio are another input to the
valuation model. The contractual cash flows are adjusted for expected
prepayments and credit losses to determine the expected cash flows.
    During the quarter, the Bank re-securitized a portion of the non-agency
CMO securities portfolio. As part of the on-balance sheet re-securitization,
new credit ratings were obtained for the re-securitized securities that better
reflect the discount on acquisition and the Bank's risk inherent on the entire
portfolio. As a result, 80% of the non-agency CMO securities are now rated AAA
for regulatory capital reporting. The net capital benefit of the
re-securitization transaction is reflected in the changes in risk-weighted
assets and in the securitization deductions from Tier 1 and Tier 2 capital.
For accounting purposes, the Bank retained a majority of the beneficial
interests in the re-securitized securities resulting in no financial statement
impact. The Bank's assessment of an other-than-temporary impairment for these
securities is not impacted by the change in the credit ratings.
    The fair value of the portfolio as at April 30, 2009 was US$6.9 billion
($8.2 billion). The decline in fair value of the non-agency CMO portfolio was
not considered to be an other-than-temporary impairment and therefore, an
impairment loss was not recognized. Determination of whether an
other-than-temporary impairment exists requires judgement. The decline in the
fair value of these securities subsequent to acquisition was mainly due to the
current liquidity crisis in the market. An other-than-temporary impairment is
recognized for these securities when the fair value is significantly below the
cost for a prolonged period of time with no expectation of recovery by
maturity. The Bank continues to validate its view on the expected credit loss
by assessing the inputs, such as the projected default rate, the loss given
default rate and housing price decline used in the determination of the
expected credit loss. The Bank's view on the expected credit loss on these
securities determined on acquisition has not changed. The following table
discloses the fair value of the securities by vintage year:

    
    Non-Agency Alt-A and Prime Jumbo CMO Securities by Vintage Year
    -------------------------------------------------------------------------
                                                         As at Apr. 30, 2009
                -------------------------------------------------------------
                               Alt-A         Prime Jumbo               Total
    (millions   -------------------------------------------------------------
     of U.S.     Amortized      Fair Amortized      Fair Amortized      Fair
     dollars)         cost     value      cost     value      cost     value
    -------------------------------------------------------------------------
    2003              $418      $388      $715      $658    $1,133    $1,046
    2004               696       619       818       763     1,514     1,382
    2005               956       750     1,877     1,635     2,833     2,385
    2006               535       377       733       606     1,268       983
    2007               794       594       579       493     1,373     1,087
    -------------------------------------------------------------------------
    Total
     securities(1)  $3,399    $2,728    $4,722    $4,155    $8,121    $6,883
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                         As at Oct. 31, 2008
                -------------------------------------------------------------
                               Alt-A         Prime Jumbo               Total
    (millions   -------------------------------------------------------------
     of U.S.     Amortized      Fair Amortized      Fair Amortized      Fair
     dollars)         cost     value      cost     value      cost     value
    -------------------------------------------------------------------------
    2003              $423      $360      $775      $664    $1,198    $1,024
    2004               759       626       972       850     1,731     1,476
    2005               979       787     2,031     1,711     3,010     2,498
    2006               549       429       819       656     1,368     1,085
    2007               818       644       587       478     1,405     1,122
    -------------------------------------------------------------------------
    Total
     securities     $3,528    $2,846    $5,184    $4,359    $8,712    $7,205
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) These securities are mainly investment grade with ratings of BBB and
        above for accounting purposes and do not reflect the
        re-securitization transaction.
    


    CAPITAL POSITION

    The Bank's capital ratios are calculated using the guidelines of the
Office of the Superintendent of Financial Institutions Canada (OSFI), which
are based under the "International Convergence on Capital Measurement and
Capital Standards - A Revised Framework" (Basel II) issued by the Basel
Committee on Banking Supervision. Effective April 30, 2009, for accounting
purposes, and effective October 31, 2008 for regulatory reporting purposes,
the one month lag in reporting of TD Banknorth and Commerce financial position
and results was eliminated by using the same period end as the rest of the
Bank. Prior to October 31, 2008, regulatory capital was calculated
incorporating TD Banknorth and Commerce on a one month lag. Further, effective
October 31, 2008, for regulatory purposes only, the Bank's investment in TD
Ameritrade is translated using the period end foreign exchange rate of the
Bank.
    Under Basel II, risk-weighted assets (RWA) are calculated for each of
credit risk, market risk and operational risk, as shown below:

    
    Risk-Weighted Assets
    -------------------------------------------------------------------------
                                                                       As at
                                               ------------------------------
                                                 Apr. 30,  Oct. 31,  Apr. 30,
    (millions of Canadian dollars)                  2009      2008      2008
    -------------------------------------------------------------------------
    Risk-weighted assets for:
      Credit risk                               $167,836  $177,552  $147,617
      Market risk                                  7,737     9,644     7,140
      Operational risk                            24,172    24,554    23,878
    -------------------------------------------------------------------------
    Total risk-weighted assets                  $199,745  $211,750  $178,635
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    OSFI's target Tier 1 and Total capital ratios for Canadian banks are 7%
and 10%, respectively. Effective November 1, 2008, substantial investments
held prior to January 1, 2007, which were previously deducted from Tier 2
capital, are deducted 50% from Tier 1 capital and 50% from Tier 2 capital.
Insurance subsidiaries continue to be deconsolidated and reported as a
deduction from Tier 2 capital.
    As at April 30, 2009, the Bank's Tier 1 capital ratio was 10.9%, compared
with 9.8% as at October 31, 2008. The increase was primarily a result of
capital issuances, including common shares, preferred shares and innovative
Tier 1 capital securities and a decline in RWA, largely in Wholesale Banking,
partially offset by the 50/50 deduction discussed above. The Total capital
ratio was 14.1% as at April 30, 2009, compared with 12.0% as at October 31,
2008. The increase was largely due to lower RWA and capital issuances.
    The Bank continues to hold sufficient capital levels to ensure that
flexibility is maintained to grow operations, both organically and through
strategic acquisitions. The strong capital ratios are the result of the Bank's
internal capital generation, management of the balance sheet and periodic
issuance of capital securities.
    For further details of equity and preferred share issuances, see Notes 5,
6 and 8 to the Interim Consolidated Financial Statements. For further details
of regulatory capital, see Note 9 to the Interim Consolidated Financial
Statements.

    
    MANAGING RISK

    EXECUTIVE SUMMARY
    

    Financial services involve prudently taking risks in order to generate
profitable growth. At the Bank, our goal is to earn a stable and sustainable
rate of return for every dollar of risk we take, while putting significant
emphasis on investing in our businesses to ensure we can meet our future
growth objectives. Our businesses thoroughly examine the various risks to
which they are exposed and assess the impact and likelihood of those risks. We
respond by developing business and risk management strategies for our various
business units, taking into consideration the risks and business environment
in which we operate. Through our businesses and operations, we are exposed to
a broad number of risks that have been identified and defined in our
Enterprise Risk Framework. This framework outlines appropriate risk oversight
processes and the consistent communication and reporting of key risks that
could hinder the achievement of our business objectives and strategies. Our
risk governance structure and risk management approach have not substantially
changed from that described in our 2008 Annual Report. Certain risks have been
outlined below. For a complete discussion of our risk governance structure and
our risk management approach, see our 2008 Annual Report.
    Certain sections of this MD&A represent a discussion relating to credit,
market and liquidity risks and form an integral part of the Interim
Consolidated Financial Statements for the period ended April 30, 2009. These
sections, which are included non-continuously below, are shaded on pages 21 to
23 of the fully formatted version of this second quarter 2009 Report to
Shareholders, which can be found on the Bank's website at
www.td.com/investor/earnings.jsp.

    CREDIT RISK

    Gross credit risk exposures, measured before credit risk mitigants, are
given below:

    
    Credit Risk Exposures(1) - Standardized and AIRB Approaches
    -------------------------------------------------------------------------
                           As at Apr. 30, 2009           As at Oct. 31, 2008
                 ------------------------------------------------------------
    (millions of
     Canadian     Standard-                     Standard-
     dollars)       ized(2)     AIRB     Total    ized(2)     AIRB     Total
    -------------------------------------------------------------------------
    Retail
      Residential
       secured     $10,377  $134,310  $144,687    $7,733  $134,930  $142,663
      Qualifying
       revolving
       retail            -    40,714    40,714         -    41,461    41,461
      Other retail  17,193    22,157    39,350    15,386    20,415    35,801
    -------------------------------------------------------------------------
    Total retail    27,570   197,181   224,751    23,119   196,806   219,925
    -------------------------------------------------------------------------
    Non-retail
      Corporate     50,947    99,827   150,774    44,991   113,119   158,110
      Sovereign        397    56,762    57,159       305    57,856    58,161
      Bank          15,206    80,908    96,114     8,302    91,635    99,937
    -------------------------------------------------------------------------
    Total
     non-retail     66,550   237,497   304,047    53,598   262,610   316,208
    -------------------------------------------------------------------------
    Gross
     credit risk
     exposures     $94,120  $434,678  $528,798   $76,717  $459,416  $536,133
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Gross credit risk exposures represent Exposure at default and are
        before the effects of credit risk mitigation. This table excludes
        securitization and equity exposures.
    (2) Beginning the first quarter of 2009, credit risk exposures from the
        Commerce acquisition are reported using the Standardized approach,
        previously reported within the Standardized approach using the
        Interim Approach to Reporting.
    


    MARKET RISK

    A graph that discloses daily Value-at-Risk (VaR) usage and
trading-related income(1) within the Wholesale Banking segment is included on
page 21 of the fully formatted version of this second quarter 2009 Report to
Shareholders, which can be found on the Bank's website at
www.td.com/investor/earnings.jsp. For the quarter ended April 30, 2009
trading-related income was positive for 85.9% of the trading days. Losses in
the quarter did not exceed VaR on any trading day.

    
    (1) Trading-related income is the total of net interest income on trading
        positions reported in net interest income and trading income reported
        in other income. Trading-related revenue in the graph above excludes
        revenue related to changes in the fair value of loan commitments.
        Similarly, the commitments are not included in the VaR measure as
        they are not managed as trading positions. In the prior quarter,
        there was a significant recovery realized on the cancellation of a
        loan commitment due to specific circumstances related to the
        borrower.
    

    The following table presents the end of quarter, average, high and low
Total VaR usage.

    
    Value-at-Risk Usage
    -------------------------------------------------------------------------
                                                  For the three months ended
                        -----------------------------------------------------
                                                   Apr. 30  Jan. 31  Apr. 30
                                                      2009     2009     2008
    (millions of        -----------------------------------------------------
     Canadian dollars)    As at  Average     High      Low  Average  Average
    -------------------------------------------------------------------------
    Interest rate and
     credit spread risk   $21.3    $25.2    $36.4    $18.1    $31.4    $26.3
    Equity risk            10.3      8.2     12.9      4.6     13.1     10.2
    Foreign exchange risk   2.4      5.2      9.1      2.1      4.2      2.4
    Commodity risk          0.6      0.9      2.1      0.5      1.0      1.6
    Debt specific risk     29.3     39.4     50.1     29.3     49.2     31.2
    Diversification
     effect(1)            (30.0)   (32.1)   n/m(2)   n/m(2)   (38.9)   (29.8)
    -------------------------------------------------------------------------
    Total Value-at-Risk   $33.9    $46.8    $58.7    $33.9    $60.0    $41.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------
                             For the six
                            months ended
                        -----------------
                        Apr. 30  Apr. 30
                           2009     2008
    (millions of        -----------------
     Canadian dollars)  Average  Average
    -------------------------------------
    Interest rate and
     credit spread risk   $28.3    $21.1
    Equity risk            10.6      7.7
    Foreign exchange risk   4.7      2.5
    Commodity risk          1.0      1.3
    Debt specific risk     44.2     25.2
    Diversification
     effect(1)            (35.4)   (24.9)
    -------------------------------------
    Total Value-at-Risk   $53.4    $32.9
    -------------------------------------
    -------------------------------------
    (1) The aggregate VaR is less than the sum of the VaR of the different
        risk types due to risk offsets resulting from portfolio
        diversification.
    (2) Not meaningful. It is not meaningful to compute a diversification
        effect because the high and low may occur on different days for
        different risk types.
    


    Interest Rate Risk

    A graph that shows our interest rate risk exposure (as measured by
Economic Value at Risk, or EVaR) on all non-trading assets, liabilities and
derivative instruments used for interest rate risk management instruments is
included on page 22 of the fully formatted version of this second quarter 2009
Report to Shareholders, which can be found on the Bank's website at
www.td.com/investor/earnings.jsp.
    The Bank uses derivative financial instruments, wholesale instruments and
other capital market alternatives and, less frequently, product pricing
strategies to manage interest rate risk. As at April 30, 2009, an immediate
and sustained 100 bps increase in interest rates would have decreased the
economic value of shareholders' equity by $82.8 million after tax. An
immediate and sustained 100 bps decrease in interest rates would have reduced
the economic value of shareholders' equity by $197.4 million after tax.
    The following table shows the sensitivity of the economic value of
shareholders' equity (after tax) by currency for those currencies where the
Bank has material exposure.

    
    Sensitivity of After-tax Economic Value at Risk by Currency
    -------------------------------------------------------------------------
                                                   As at               As at
                                           Apr. 30, 2009       Oct. 31, 2008
                                    -----------------------------------------
                                       100 bps   100 bps   100 bps   100 bps
    (millions of Canadian dollars)    increase  decrease  increase  decrease
    -------------------------------------------------------------------------
    Canadian dollar                     $(10.2)   $(58.1)    $(0.4)   $(27.0)
    U.S. dollar                          (72.6)   (139.3)   (122.4)     (2.0)
    -------------------------------------------------------------------------
    


    Liquidity Risk

    As a financial organization, we must always ensure that we have access to
enough readily-available funds to cover our financial obligations as they come
due, and to sustain and grow our assets and operations under both normal and
stress conditions. In the event of a funding disruption, we need to ensure we
have sufficient liquid assets to continue to function. The process that
ensures adequate access to funds is known as the management of liquidity risk.
    Our overall liquidity requirement is defined as the amount of liquidity
we need to fund expected cash outflows, as well as a prudent liquidity reserve
to fund potential cash outflows in the event of a disruption in the capital
markets or other event that could affect our access to liquidity. We do not
rely on short-term wholesale funding for purposes other than funding
marketable securities or short-term assets.
    To define the amount of liquidity that must be held at all times for a
specified minimum period, we use a conservative base-case scenario stress
test. This scenario ensures that we have sufficient liquidity to cover 100% of
our unsecured wholesale debt coming due, potential retail and commercial
deposit run-off and forecasted operational requirements. In addition, we
provide for coverage of Bank-sponsored funding programs, such as Bankers'
Acceptances we issue on behalf of clients, and Bank-sponsored asset-backed
commercial paper (ABCP). We also use an extended liquidity coverage test to
ensure that we can fund our operations on a fully secured basis for a period
up to one year.
    To meet liquidity requirements, we hold assets that can be readily
converted into cash. Assets must be currently marketable, of sufficient credit
quality and available for sale to be considered readily convertible into cash.
Liquid assets are represented in a cumulative liquidity gap framework based on
settlement timing and market depth. Assets that are not available without
delay because they are needed for collateral or other similar purposes are not
considered readily convertible into cash.
    While each of our major operations has responsibility for the measurement
and management of its own liquidity risks, we also manage liquidity on an
enterprise-wide basis to ensure consistent and efficient management of
liquidity risk across all of our operations. On April 30, 2009, our
consolidated surplus liquid-asset position for up to 90 days, as measured
under our base-case scenario, was $3.7 billion, compared with a surplus
liquid-asset position of $16.4 billion on January 31, 2009. The $12.7 billion
decrease in surplus liquid-asset position over the three month period ended
April 30, 2009 was attributable primarily to changes in the liquidity value
used for certain Wholesale Banking assets due to changes in market conditions.
Our surplus liquid-asset position is our total liquid assets less our
unsecured wholesale funding requirements, potential non-wholesale deposit
run-off and contingent liabilities coming due in 90 days.
    The base-case scenario models a Bank-specific liquidity stress event and
assumes normal levels of asset liquidity in the markets. In response to
conditions recently experienced in global financial markets which
significantly affected liquidity, Asset/Liability Committee (ALCO) and the
Risk Committee of the Board approved managing to a Systemic Market Event
liquidity stress test scenario as directed by the Global Liquidity Risk
Management policy. Building on the base-case scenario described above, the
Systemic Market Event scenario further adjusts asset liquidity to reflect both
the stressed conditions in the current market environment as well as the
availability of high quality, unencumbered Bank-owned assets eligible as
collateral under secured borrowing programs such as the Bank of Canada Term
Purchase and Resale Agreement (PRA) and National Housing Act Mortgage-Backed
Securities (NHA MBS) auction programs and other central bank programs. In
addition, we assume coverage of increased contingent requirements for
potential draws on committed line of credit facilities. Our policy requires
that a surplus liquid-asset position be maintained for all measured time
periods up to 90 days. As of April 30, 2009, we reported a positive surplus as
required.
    We have contingency plans in place to provide direction in the event of a
liquidity crisis.
    We also regularly review the level of increased collateral our trading
counterparties would require in the event of a downgrade of the Bank's credit
rating. The impact of a one notch downgrade would be minimal and could be
readily managed in the normal course of business.
    In response to current conditions in global financial markets affecting
liquidity, the Global Liquidity Forum meets frequently and closely monitors
global funding market conditions and potential impacts to our funding access
on a daily basis.

    OFF-BALANCE SHEET ARRANGEMENTS

    The Bank carries out certain business activities via arrangements with
special purpose entities (SPEs). We use SPEs to obtain sources of liquidity by
securitizing certain of the Bank's financial assets, to assist our clients in
securitizing their financial assets and to create investment products for our
clients. SPEs may be organized as trusts, partnerships or corporations and
they may be formed as qualifying special purpose entities (QSPEs) or variable
interest entities (VIEs). When an entity is deemed a VIE, the entity must be
consolidated by the primary beneficiary. Consolidated SPEs have been presented
in the Bank's Consolidated Balance Sheet.

    Securitization of Bank-Originated Assets

    The Bank securitizes residential mortgages, personal loans and commercial
mortgages to enhance its liquidity position, to diversify sources of funding
and to optimize the management of the balance sheet. All products securitized
by the Bank were originated in Canada and sold to Canadian securitization
structures. Details of these securitization exposures are as follows:

    
    Total Outstanding Exposures Securitized by the Bank as an
    Originator(1),(2)
    -------------------------------------------------------------------------
                                                         As at Apr. 30, 2009
                                   ------------------------------------------
                                           Significant           Significant
                                        unconsolidated        unconsolidated
                                                 QSPEs                  SPEs
                                   ------------------------------------------
                                              Carrying              Carrying
                                     Secur-   value of     Secur-   value of
                                     itized   retained     itized   retained
    (millions of Canadian dollars)   assets  interests     assets  interests
    -------------------------------------------------------------------------
    Residential mortgage loans           $-         $-    $34,078       $936
    Personal loans                    8,100        102          -          -
    Commercial mortgage loans           133          3          -          -
    -------------------------------------------------------------------------
                                     $8,233       $105    $34,078       $936
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                         As at Oct. 31, 2008
                                   ------------------------------------------
                                           Significant           Significant
                                        unconsolidated        unconsolidated
                                                 QSPEs                  SPEs
                                   ------------------------------------------
                                              Carrying              Carrying
                                     Secur-   value of     Secur-   value of
                                     itized   retained     itized   retained
    (millions of Canadian dollars)   assets  interests     assets  interests
    -------------------------------------------------------------------------
    Residential mortgage loans           $-         $-    $24,332       $442
    Personal loans                    8,100         80          -          -
    Commercial mortgage loans           148          4          -          -
    -------------------------------------------------------------------------
                                     $8,248        $84    $24,332       $442
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Certain comparative amounts have been restated and reclassified to
        conform to the presentation adopted in the current period.
    (2) In all the securitization transactions that the Bank has undertaken
        for its own assets, it has acted as an originating bank and retained
        securitization exposure.
    


    Residential Mortgage Loans

    The Bank may be exposed to the risks of transferred loans to the
securitization vehicles through retained interests. There are no expected
credit losses on the retained interests of the securitized residential
mortgages as the mortgages are all government guaranteed.

    Personal Loans

    The Bank securitizes personal loans through QSPEs, as well as
single-seller conduits via QSPEs. As at April 30, 2009, the single-seller
conduits had $5.1 billion (October 31, 2008 - $5.1 billion) of commercial
paper outstanding while another Bank-sponsored QSPE had $3.0 billion (October
31, 2008 - $3.0 billion) of term notes outstanding. While the probability of
loss is negligible, as at April 30, 2009, the Bank's maximum potential
exposure to loss for these conduits through the sole provision of liquidity
facilities was $5.1 billion (October 31, 2008 - $5.1 billion) of which $1.1
billion (October 31, 2008 - $1.1 billion) of underlying personal loans was
government insured. Additionally, the Bank had retained interests of $102
million (October 31, 2008 - $80 million) relating to excess spread.

    Commercial Mortgage Loans

    As at April 30, 2009, the Bank's maximum potential exposure to loss was
$3 million (October 31, 2008 - $4 million) through retained interests in the
excess spread and cash collateral account of the QSPE.

    Securitization of Third Party-Originated Assets

    The Bank administers multi-seller conduits and provides liquidity
facilities as well as securities distribution services; it may also provide
credit enhancements. Third party-originated assets are securitized through
Bank-sponsored SPEs, which are not consolidated by the Bank. The Bank's
maximum potential exposure to loss due to its ownership interest in commercial
paper and through the provision of global style liquidity facilities for
multi-seller conduits was $9.0 billion (October 31, 2008 - $10.7 billion) as
at April 30, 2009. Further, the Bank has committed an additional $2.0 billion
(October 31, 2008 - $1.8 billion) in liquidity facilities for ABCP that could
potentially be issued by the conduits. As at April 30, 2009, the Bank also
provided deal-specific credit enhancement in the amount of $75 million
(October 31, 2008 - $78 million).
    All third-party assets securitized by the Bank were originated in Canada
and sold to Canadian securitization structures. Details of the
Bank-administered multi-seller, ABCP conduits are as follows:

    
    Total Exposure to Third Party-Originated Assets Securitized by
    Bank-Sponsored Conduits
    -------------------------------------------------------------------------
                                                         As at Apr. 30, 2009
                                  -------------------------------------------
                                                Ratings profile of  Expected
                                   Significant     SPE asset class  weighted
                                      unconsol- -------------------  average
                                        idated              AA+ to      life
    (millions of Canadian dollars)        SPEs       AAA       AA- (years)(1)
    -------------------------------------------------------------------------
    Residential mortgage loans          $2,890    $2,844       $46       2.3
    Credit card loans                      500       500         -       3.2
    Automobile loans and leases          3,547     3,543         4       1.4
    Equipment loans and leases             526       526         -       1.2
    Trade receivables                    1,570     1,546        24       2.6
    -------------------------------------------------------------------------
                                        $9,033    $8,959       $74       2.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    ---------------------------------------------------------------
                                               As at Oct. 31, 2008
                                  ---------------------------------
                                                Ratings profile of
                                   Significant     SPE asset class
                                      unconsol- -------------------
                                        idated              AA+ to
    (millions of Canadian dollars)        SPEs       AAA       AA-
    ---------------------------------------------------------------
    Residential mortgage loans          $3,428    $3,378       $50
    Credit card loans                      500       500         -
    Automobile loans and leases          4,474     4,470         4
    Equipment loans and leases             638       636         2
    Trade receivables                    1,705     1,679        26
    ---------------------------------------------------------------
                                       $10,745   $10,663       $82
    ---------------------------------------------------------------
    ---------------------------------------------------------------
    (1) Expected weighted average life for each asset type is based upon each
        conduit's remaining purchase commitment for revolving pools and the
        expected weighted average life of the assets for amortizing pools.
    

    As at April 30, 2009, the Bank held $1.5 billion (October 31, 2008 - $2.8
billion) of ABCP issued by Bank-sponsored multi-seller and single-seller
conduits, on its balance sheet.

    Exposure to Third Party-Sponsored Conduits

    The Bank has exposure to the U.S. arising from providing liquidity
facilities of $339 million (October 31, 2008 - $465 million) to third
party-sponsored conduits of which $207 million (October 31, 2008 - $24
million) has been drawn. The assets within these conduits primarily comprise
automotive-related financing assets, including loans and leases. During the
three months ended April 30, 2009 and subsequently, these assets have received
significantly different ratings (split ratings) from various credit rating
agencies, ranging from AAA to BB-. The weighted average of the lowest of the
split ratings, in the event that the facilities are drawn, will result in
credit exposure to the Bank of BBB+ (October 31, 2008 - AAA).
    The Bank's exposure to Canadian third party-sponsored conduits in the
form of margin funding facilities as at April 30, 2009 was not significant.

    Other Investment and Financing Products

    Other Financing Transactions

    The Bank enters into transactions with major U.S. corporate clients
through VIEs as a means to provide them with cost efficient financing. Under
these transactions, as at April 30, 2009, the Bank provided approximately
$2.12 billion (October 31, 2008 - $2.13 billion) in financing to these VIEs.
The Bank has received guarantees from or has recourse to major U.S. banks with
A+ credit ratings on an S&P-equivalent basis, fully covering its investments
in these VIEs (October 31, 2008 - AA). At inception or through recent
restructuring of the transactions, the counterparties posted collateral with
AAA ratings on an S&P-equivalent basis in favour of the Bank and the Bank
purchased credit protection to further reduce its exposure to the U.S. banks.
At April 30, 2009, the Bank's net exposure to the U.S. banks after taking into
account collateral and CDS was approximately $361 million (October 31, 2008 -
$960 million). As at April 30, 2009, the Bank's maximum total exposure to loss
before considering guarantees, recourse, collateral and CDS was approximately
$2.12 billion (October 31, 2008 - $2.13 billion). The transactions allow the
Bank or the counterparties discretion to exit the transactions on short
notice. As at April 30, 2009, these VIEs had assets totalling more than $9.1
billion (October 31, 2008 - $8.0 billion).

    Exposure to Collateralized Debt Obligations

    Since the decision was made in 2005 to exit the structured products
business, the Bank no longer originates Collateralized Debt Obligation
vehicles (CDOs). Total CDOs purchased and sold in the trading portfolio as at
April 30, 2009, were as follows:

    
    -------------------------------------------------------------------------
                                                   As at               As at
                                         Apr. 30, 2009(1)    Oct. 31, 2008(1)
                                     ----------------------------------------
                                                Positive            Positive
                                               (negative)          (negative)
                                      Notional      fair  Notional      fair
    (millions of Canadian dollars)      amount     value    amount     value
    -------------------------------------------------------------------------
    Funded
      CDOs - Purchased protection via
       Bank-issued credit linked notes    $242      $(49)     $283      $(38)
    Unfunded
      CDOs - Sold protection
        - positive fair value              898         -       891         -
        - negative fair value                -      (276)        -      (278)
      CDOs - Purchased protection
        - positive fair value              170       103       261       104
        - negative fair value                -        (4)        -       (28)
    Unfunded - Similar Reference
     Portfolio
      CDOs - Sold protection
        - positive fair value               79         4     1,820         5
        - negative fair value                -         -         -      (568)
      CDOs - Purchased protection
        - positive fair value               79         -     1,883       613
        - negative fair value                -        (4)        -        (5)
    -------------------------------------------------------------------------
    (1) This table excludes standard index tranche CDOs.
    

    The Bank does not have any exposure to U.S. subprime mortgages via the
CDOs. The CDOs are referenced to corporate debt securities. The hedges on the
similar reference portfolio are not entered into with monoline insurers;
rather they are entered into with global financial institutions, such as
universal banks or broker-dealers. All exposures are managed with risk limits
that have been approved by the Bank's risk management group and are hedged
with various financial instruments, including credit derivatives and bonds
within the trading portfolio, not included in this table. Counterparty
exposure on hedges is collateralized under Credit Support Agreements (CSAs)
and netting arrangements, consistent with other over-the-counter (OTC)
derivative contracts. The Bank's CDO positions are fair valued using valuation
techniques with significant non-observable market inputs. The potential effect
of using reasonable possible alternative assumptions for valuing these CDO
positions would range from a reduction in the fair value by $7.4 million to an
increase in the fair value by $6.8 million.

    Leveraged Finance Credit Commitments

    Included in 'Commitments to extend credit' in Note 28 to the 2008
Consolidated Financial Statements are leveraged finance commitments. Leveraged
finance commitments are agreements that provide funding to a wholesale
borrower with higher levels of debt, measured by the ratio of debt capital to
equity capital of the borrower, relative to the industry in which it operates.
The Bank's exposure to leveraged finance commitments as at April 30, 2009, was
not significant (October 31, 2008 - $3.3 billion).

    
    QUARTERLY RESULTS

    The following table provides summary information related to the Bank's
eight most recently completed quarters.

    Quarterly Results(1)
    -------------------------------------------------------------------------
                                                  For the three months ended
                                     ----------------------------------------
                                                    2009                2008
                                     ----------------------------------------
    (millions of Canadian dollars)     Apr. 30   Jan. 31   Oct. 31   July 31
    -------------------------------------------------------------------------
    Net interest income                 $2,940    $2,728    $2,449    $2,437
    Other income                         1,385     1,422     1,191     1,600
    -------------------------------------------------------------------------
    Total revenue                        4,325     4,150     3,640     4,037
    Provision for credit losses           (656)     (537)     (288)     (288)
    Non-interest expenses               (3,051)   (3,020)   (2,367)   (2,701)
    (Provision for) recovery of
     income taxes                          (35)       58       (20)     (122)
    Non-controlling interests in
     subsidiaries, net of income taxes     (28)      (28)      (18)       (8)
    Equity in net income of an
     associated company, net of
     income taxes                           63        89        67        79
    -------------------------------------------------------------------------
    Net income - reported                  618       712     1,014       997
    -------------------------------------------------------------------------
    Items of note affecting net
     income, net of income taxes:
      Amortization of intangibles          127       127       126       111
      Reversal of Enron litigation
       reserve                               -         -      (323)        -
      Decrease (increase) in fair value
       of derivatives hedging the
       reclassified available-for-sale
       debt securities portfolio           134       200      (118)        -
      Gain relating to restructuring
       of Visa                               -         -         -         -
      Restructuring and integration
       charges relating to the
       Commerce acquisition                 50        67        25        15
      Decrease (increase) in fair value
       of credit default swaps hedging
       the corporate loan book, net of
       provision for credit losses          44       (12)      (59)      (22)
      Other tax items                        -         -         -        14
      Provision for insurance claims         -         -         -         -
      General allowance increase
       (release) in Canadian Personal
       and Commercial Banking
       (excluding VFC) and
       Wholesale Banking                    77        55         -         -
      Settlement of TD Banknorth
       shareholder litigation               39         -         -         -
    -------------------------------------------------------------------------
    Total adjustments for items of
     note, net of income taxes             471       437      (349)      118
    -------------------------------------------------------------------------
    Net income - adjusted                1,089     1,149       665     1,115
    Preferred dividends                    (41)      (29)      (23)      (17)
    -------------------------------------------------------------------------
    Net income available to common
     shareholders - adjusted            $1,048    $1,120      $642    $1,098
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (Canadian dollars, except as noted)
    -------------------------------------------------------------------------
    Basic earnings per share
      - reported                         $0.68     $0.82     $1.23     $1.22
      - adjusted                          1.23      1.35      0.79      1.37
    Diluted earnings per share
      - reported                          0.68      0.82      1.22      1.21
      - adjusted                          1.23      1.34      0.79      1.35
    Return on common shareholders'
     equity                               6.6%      8.1%     13.3%     13.4%
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                  For the three months ended
                                     ----------------------------------------
                                                    2008                2007
                                     ----------------------------------------
    (millions of Canadian dollars)     Apr. 30   Jan. 31   Oct. 31   July 31
    -------------------------------------------------------------------------
    Net interest income                 $1,858    $1,788    $1,808    $1,783
    Other income                         1,530     1,816     1,742     1,899
    -------------------------------------------------------------------------
    Total revenue                        3,388     3,604     3,550     3,682
    Provision for credit losses           (232)     (255)     (139)     (171)
    Non-interest expenses               (2,206)   (2,228)   (2,241)   (2,216)
    (Provision for) recovery of
     income taxes                         (160)     (235)     (153)     (248)
    Non-controlling interests in
     subsidiaries, net of income taxes      (9)       (8)       (8)      (13)
    Equity in net income of an
     associated company, net of
     income taxes                           71        92        85        69
    -------------------------------------------------------------------------
    Net income - reported                  852       970     1,094     1,103
    -------------------------------------------------------------------------
    Items of note affecting net
     income, net of income taxes:
      Amortization of intangibles           92        75        99        91
      Reversal of Enron litigation
       reserve                               -         -         -         -
      Decrease (increase) in fair value
       of derivatives hedging the
       reclassified available-for-sale
       debt securities portfolio             -         -         -         -
      Gain relating to restructuring
       of Visa                               -         -      (135)        -
      Restructuring and integration
       charges relating to the
       Commerce acquisition                 30         -         -         -
      Decrease (increase) in fair value
       of credit default swaps hedging
       the corporate loan book, net of
       provision for credit losses          (1)      (25)        2       (30)
      Other tax items                        -        20         -         -
      Provision for insurance claims         -        20         -         -
      General allowance increase
       (release) in Canadian Personal
       and Commercial Banking
       (excluding VFC) and
       Wholesale Banking                     -         -       (39)        -
      Settlement of TD Banknorth
       shareholder litigation                -         -         -         -
    -------------------------------------------------------------------------
    Total adjustments for items of
     note, net of income taxes             121        90       (73)       61
    -------------------------------------------------------------------------
    Net income - adjusted                  973     1,060     1,021     1,164
    Preferred dividends                    (11)       (8)       (5)       (2)
    -------------------------------------------------------------------------
    Net income available to common
     shareholders - adjusted              $962    $1,052    $1,016    $1,162
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (Canadian dollars, except as noted)
    -------------------------------------------------------------------------
    Basic earnings per share
      - reported                         $1.12     $1.34     $1.52     $1.53
      - adjusted                          1.33      1.46      1.42      1.61
    Diluted earnings per share
      - reported                          1.12      1.33      1.50      1.51
      - adjusted                          1.32      1.45      1.40      1.60
    Return on common shareholders'
     equity                              13.4%     18.0%     20.8%     21.0%
    -------------------------------------------------------------------------
    (1) Certain comparative amounts have been reclassified to conform to the
        presentation adopted in the current period.
    


    ACCOUNTING POLICIES AND ESTIMATES

    The Bank's unaudited Interim Consolidated Financial Statements, presented
on pages 29 to 44 of this Report to Shareholders, have been prepared in
accordance with GAAP. These Interim Consolidated Financial Statements should
be read in conjunction with the Bank's Consolidated Financial Statements for
the year ended October 31, 2008. The accounting policies used in the
preparation of these Consolidated Financial Statements are consistent with
those used in the Bank's 2008 Consolidated Financial Statements, except as
described below.

    Changes in Accounting Policies

    Alignment of Reporting Period of U.S. Entities

    Effective for the quarter ended April 30, 2009, the reporting periods of
TD Banknorth and Commerce have been aligned with the reporting period of the
Bank to eliminate the one month lag in financial reporting. Previously, the
reporting periods of TD Banknorth and Commerce were included in the Bank's
financial statements on a one month lag. In accordance with CICA Handbook
Section 1506, Accounting Changes, this alignment is considered a change in
accounting policy. Changes in accounting policy are to be reported through
retrospective application to all prior period financial statements presented.
The Bank has assessed that the impact to the prior period consolidated
financial statements is not material and therefore, an adjustment was made to
opening retained earnings to align the reporting periods of TD Banknorth and
Commerce to that of the Bank's reporting period. Accordingly, the results of
TD Banknorth and Commerce for the three months ended April 30, 2009 have been
included with the results of the Bank for the three and six months ended April
30, 2009, while the results of January 2009 have been included directly in
retained earnings and not included in the Interim Consolidated Statement of
Income.

    Subsequent Accounting for Impaired Financial Assets

    During the quarter, the Bank adopted an amendment to CICA Handbook
Section 3855, Financial Instruments - Recognition and Measurement. The
amendment clarified that, subsequent to the recognition of an impairment loss
on a financial asset (other than a loan), interest income on the impaired
financial asset is recognized using the interest rate used to determine the
impairment loss. The adoption of this amendment did not have a material impact
on the financial position or the earnings of the Bank.

    Goodwill, Intangible Assets and Financial Statement Concepts

    Effective November 1, 2008, the Bank adopted CICA Handbook Section 3064,
Goodwill and Intangible Assets, which clarifies that costs can be deferred
only when they relate to an item that meets the definition of an asset, and as
a result, start-up costs must be expensed as incurred. CICA Handbook Section
1000, Financial Statement Concepts, was also amended to provide consistency
with Section 3064. These standards did not have a material effect on the
financial position or earnings of the Bank.

    Credit Risk and Fair Value

    Effective November 1, 2008, the Bank adopted EIC 173, Credit Risk and the
Fair Value of Financial Assets and Financial Liabilities. The abstract
clarifies how the Bank's own credit risk and the credit risk of the
counterparty should be taken into account in determining the fair value of
financial assets and financial liabilities, including derivatives. The new
guidance did not have a material effect on the financial position or earnings
of the Bank.

    Critical Accounting Estimates

    The critical accounting estimates remain unchanged from those disclosed
in the Bank's 2008 Annual Report.

    Future Accounting and Reporting Changes

    Financial Instruments Disclosures

    The CICA's Accounting Standards Board (AcSB) amended CICA Handbook
Section 3862, Financial Instruments - Disclosures, to enhance the disclosure
requirements regarding fair value measurements and the liquidity risk of
financial instruments. The amendments will be effective for the Bank's fiscal
year ending October 31, 2009.

    Conversion to International Financial Reporting Standards in Fiscal 2012

    The AcSB requires that all Canadian publicly accountable enterprises
adopt IFRS for years beginning on or after January 1, 2011. IFRS uses a
conceptual framework similar to Canadian GAAP, but there are some differences
in recognition, measurement and disclosures.
    IFRS will be effective for the Bank for the fiscal 2012 year beginning on
November 1, 2011. This includes restatement of prior year comparative fiscal
2011 financial results for interim and annual periods. Currently, the Bank is
in the planning phase of converting to IFRS. It is not yet possible to fully
determine the impact to the financial statements, as accounting standards and
their interpretations are changing. The conversion to IFRS is a significant
initiative for the Bank, for which substantial resources are being dedicated
to ensure proper implementation.

    CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

    During the most recent interim period, there have been no changes in the
Bank's policies and procedures and other processes that comprise its internal
control over financial reporting that have materially affected, or are
reasonably likely to materially affect, the Bank's internal control over
financial reporting.


    
    INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
    -------------------------------------------------------------------------


    INTERIM CONSOLIDATED BALANCE SHEET (unaudited)
    -------------------------------------------------------------------------
                                                                       As at
                                                         --------------------
                                                           Apr. 30   Oct. 31
    (millions of Canadian dollars)                            2009      2008
    -------------------------------------------------------------------------
    ASSETS
    Cash and due from banks                                 $2,437    $2,517
    Interest-bearing deposits with banks                    10,805    15,429
    -------------------------------------------------------------------------
                                                            13,242    17,946
    -------------------------------------------------------------------------
    Securities
    Trading                                                 51,232    53,095
    Designated as trading under the fair value option        8,732     6,402
    Available-for-sale (Note 2)                             96,481    75,121
    Held-to-maturity                                        12,480     9,507
    -------------------------------------------------------------------------
                                                           168,925   144,125
    -------------------------------------------------------------------------
    Securities purchased under reverse repurchase
     agreements                                             31,609    42,425
    -------------------------------------------------------------------------
    Loans
    Residential mortgages                                   60,135    63,003
    Consumer installment and other personal                 86,857    79,610
    Credit card                                              7,667     7,387
    Business and government                                 76,721    70,650
    Business and government loans designated as
     trading under the fair value option                       381       510
    -------------------------------------------------------------------------
                                                           231,761   221,160
    Allowance for loan losses (Note 3)                      (1,916)   (1,536)
    -------------------------------------------------------------------------
    Loans, net of allowance for loan losses                229,845   219,624
    -------------------------------------------------------------------------
    Other
    Customers' liability under acceptances                  10,954    11,040
    Investment in TD Ameritrade                              6,271     5,159
    Derivatives                                             74,376    83,548
    Goodwill                                                16,384    14,842
    Other intangibles                                        3,062     3,141
    Land, buildings and equipment                            4,166     3,833
    Other assets                                            16,048    17,531
    -------------------------------------------------------------------------
                                                           131,261   139,094
    -------------------------------------------------------------------------
    Total assets                                          $574,882  $563,214
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LIABILITIES
    -------------------------------------------------------------------------
    Deposits
    Personal                                              $215,508  $192,234
    Banks                                                    5,023     9,680
    Business and government                                131,727   129,086
    Trading                                                 49,697    44,694
    -------------------------------------------------------------------------
                                                           401,955   375,694
    -------------------------------------------------------------------------
    Other
    Acceptances                                             10,954    11,040
    Obligations related to securities sold short            13,802    18,518
    Obligations related to securities sold under
     repurchase agreements                                   4,945    18,654
    Derivatives                                             68,917    74,473
    Other liabilities                                       19,142    17,721
    -------------------------------------------------------------------------
                                                           117,760   140,406
    -------------------------------------------------------------------------
    Subordinated notes and debentures                       12,469    12,436
    -------------------------------------------------------------------------
    Liability for preferred shares (Note 5)                    550       550
    -------------------------------------------------------------------------
    Liability for capital trust securities (Note 6)            900       894
    -------------------------------------------------------------------------
    Non-controlling interests in subsidiaries (Note 7)       1,621     1,560
    -------------------------------------------------------------------------
    SHAREHOLDERS' EQUITY
    Common shares (millions of shares issued and
     outstanding: Apr. 30, 2009 - 850.6 and
     Oct. 31, 2008 - 810.1) (Note 8)                        14,875    13,241
    Preferred shares (millions of shares issued and
     outstanding: Apr. 30, 2009 - 135.8 and
     Oct. 31, 2008 - 75.0) (Note 8)                          3,395     1,875
    Contributed surplus                                        350       350
    Retained earnings                                       18,039    17,857
    Accumulated other comprehensive income (loss)
     (Note 10)                                               2,968    (1,649)
    -------------------------------------------------------------------------
                                                            39,627    31,674
    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity            $574,882  $563,214
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The accompanying notes are an integral part of these Interim Consolidated
    Financial Statements.



    INTERIM CONSOLIDATED STATEMENT OF INCOME (unaudited)
    -------------------------------------------------------------------------
                                           For the three         For the six
                                            months ended        months ended
                                     ----------------------------------------
                                       Apr. 30   Apr. 30   Apr. 30   Apr. 30
    (millions of Canadian dollars)        2009      2008      2009      2008
    -------------------------------------------------------------------------
    Interest income
    Loans                               $2,749    $3,240    $5,990    $6,636
    Securities
      Dividends                            242       242       504       502
      Interest                           1,339       929     2,753     1,904
    Deposits with banks                    570       159       856       273
    -------------------------------------------------------------------------
                                         4,900     4,570    10,103     9,315
    -------------------------------------------------------------------------
    Interest expense
    Deposits                             1,503     2,056     3,471     4,310
    Subordinated notes and debentures      169       159       335       317
    Preferred shares and capital
     trust securities                       23        23        47        46
    Other                                  265       474       582       996
    -------------------------------------------------------------------------
                                         1,960     2,712     4,435     5,669
    -------------------------------------------------------------------------
    Net interest income                  2,940     1,858     5,668     3,646
    -------------------------------------------------------------------------
    Other income
    Investment and securities services     538       544     1,049     1,123
    Credit fees                            138       108       304       209
    Net securities (losses) gains
     (Note 2)                             (168)      110      (373)      262
    Trading income (loss)                   28      (104)      132        56
    Income (loss) from financial
     instruments designated as trading
     under the fair value option           267         5       335       (44)
    Service charges                        373       258       754       518
    Loan securitizations (Note 4)          184        91       241       167
    Card services                          152       116       344       235
    Insurance, net of claims               228       250       458       436
    Trust fees                              39        36        73        70
    Other                                 (394)      116      (510)      314
    -------------------------------------------------------------------------
                                         1,385     1,530     2,807     3,346
    -------------------------------------------------------------------------
    Total revenue                        4,325     3,388     8,475     6,992
    -------------------------------------------------------------------------
    Provision for credit losses
     (Note 3)                              656       232     1,193       487
    -------------------------------------------------------------------------
    Non-interest expenses
    Salaries and employee benefits       1,474     1,137     2,951     2,308
    Occupancy, including depreciation      313       188       621       369
    Equipment, including depreciation      219       148       424       292
    Amortization of other intangibles      171       117       344       239
    Restructuring costs (Note 16)            -        48        27        48
    Marketing and business development     143       102       281       212
    Brokerage-related fees                  68        63       131       122
    Professional and advisory services     175       118       340       229
    Communications                          62        48       121        95
    Other (Note 17)                        426       237       831       520
    -------------------------------------------------------------------------
                                         3,051     2,206     6,071     4,434
    -------------------------------------------------------------------------
    Income before income taxes,
     non-controlling interests in
     subsidiaries and equity in net
     income of an associated company       618       950     1,211     2,071
    Provision for (recovery of) income
     taxes                                  35       160       (23)      395
    Non-controlling interests in
     subsidiaries, net of income taxes      28         9        56        17
    Equity in net income of an
     associated company, net of
     income taxes                           63        71       152       163
    -------------------------------------------------------------------------
    Net income                             618       852     1,330     1,822
    Preferred dividends                     41        11        70        19
    -------------------------------------------------------------------------
    Net income available to common
     shareholders                         $577      $841    $1,260    $1,803
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average number of common shares
     outstanding (millions) (Note 13)
      Basic                              848.8     747.7     840.6     732.9
      Diluted                            849.8     753.7     841.9     739.0
    Earnings per share (in dollars)
     (Note 13)
      Basic                              $0.68     $1.12     $1.50     $2.46
      Diluted                             0.68      1.12      1.50      2.44
    Dividends per share (in dollars)      0.61      0.59      1.22      1.16
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The accompanying notes are an integral part of these Interim Consolidated
    Financial Statements.



    INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
    (unaudited)
    -------------------------------------------------------------------------
                                           For the three         For the six
                                            months ended        months ended
                                     ----------------------------------------
                                       Apr. 30   Apr. 30   Apr. 30   Apr. 30
    (millions of Canadian dollars)        2009      2008      2009      2008
    -------------------------------------------------------------------------
    Common shares (Note 8)
    Balance at beginning of period     $14,781    $6,632   $13,241    $6,577
    Proceeds from shares issued on
     exercise of stock options               6        29        45        71
    Shares issued as a result of
     dividend reinvestment plan             80        22       208        43
    Proceeds from issuance of new
     shares                                  -         -     1,381         -
    Shares issued on acquisition of
     Commerce                                -     6,147         -     6,147
    Impact of shares sold (acquired)
     for trading purposes(1)                 8       (12)        -       (20)
    -------------------------------------------------------------------------
    Balance at end of period            14,875    12,818    14,875    12,818
    -------------------------------------------------------------------------
    Preferred shares (Note 8)
    Balance at beginning of period       2,770       875     1,875       425
    Shares issued                          625       250     1,520       700
    -------------------------------------------------------------------------
    Balance at end of period             3,395     1,125     3,395     1,125
    -------------------------------------------------------------------------
    Contributed surplus
    Balance at beginning of period         340       121       350       119
    Stock options (Note 11)                 10        (1)        -         1
    Conversion of Commerce stock
     options on acquisition (Note 11)        -       263         -       263
    -------------------------------------------------------------------------
    Balance at end of period               350       383       350       383
    -------------------------------------------------------------------------
    Retained earnings
    Balance at beginning of period      17,986    16,499    17,857    15,954
    Net income of U.S. entities for
     January 2009 (Note 1)                   4         -         4         -
    Net income                             618       852     1,330     1,822
    Common dividends                      (518)     (473)   (1,034)     (883)
    Preferred dividends                    (41)      (11)      (70)      (19)
    Share issue expenses                   (10)       (3)      (48)      (10)
    -------------------------------------------------------------------------
    Balance at end of period            18,039    16,864    18,039    16,864
    -------------------------------------------------------------------------
    Accumulated other comprehensive
     income (loss) (Note 10)
    Balance at beginning of period       2,173    (1,187)   (1,649)   (1,671)
    Other comprehensive income of U.S.
     entities for January 2009 (Note 1)    329         -       329         -
    Other comprehensive income for
     the period                            466       592     4,288     1,076
    -------------------------------------------------------------------------
    Balance at end of period             2,968      (595)    2,968      (595)
    -------------------------------------------------------------------------
    Retained earnings and accumulated
     other comprehensive income (loss)  21,007    16,269    21,007    16,269
    -------------------------------------------------------------------------
    Total shareholders' equity         $39,627   $30,595   $39,627   $30,595
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Sold or purchased by subsidiaries of the Bank, which are regulated
        securities entities in accordance with Regulation 92-313 under the
        Bank Act.



    INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (unaudited)
    -------------------------------------------------------------------------
                                           For the three         For the six
                                            months ended        months ended
                                     ----------------------------------------
                                       Apr. 30   Apr. 30   Apr. 30   Apr. 30
    (millions of Canadian dollars)        2009      2008      2009      2008
    -------------------------------------------------------------------------
    Net income                            $618      $852    $1,330    $1,822
    -------------------------------------------------------------------------
    Other comprehensive income (loss),
     net of income taxes
      Change in unrealized gains
       (losses) on available-for-sale
       securities, net of hedging
       activities(a)                       890       (61)     (333)      192
      Reclassification to earnings of
       losses (gains) in respect of
       available-for-sale securities(b)    136       (13)      167       (41)
      Net change in unrealized foreign
       currency translation (losses)
       gains on investments in
       subsidiaries, net of hedging
       activities(c),(d)                  (632)      470     2,929       239
      Change in gains on derivative
       instruments designated as cash
       flow hedges(e)                      461       227     2,064       723
      Reclassification to earnings of
       gains on cash flow hedges(f)       (389)      (31)     (539)      (37)
    -------------------------------------------------------------------------
      Other comprehensive income for
       the period                          466       592     4,288     1,076
    -------------------------------------------------------------------------
    Comprehensive income for the
     period                             $1,084    $1,444    $5,618    $2,898
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (a) Net of income tax provision of $451 million and income tax recovery
        of $237 million, respectively, for the three and six months ended
        April 30, 2009 (three and six months ended April 30, 2008 - income
        tax recovery of $83 million and income tax provision of $70 million,
        respectively).
    (b) Net of income tax recovery of $56 million and $72 million,
        respectively, for the three and six months ended April 30, 2009
        (three and six months ended April 30, 2008 - income tax provision of
        $6 million and $16 million, respectively).
    (c) Net of income tax provision of $205 million and $125 million,
        respectively, for the three and six months ended April 30, 2009
        (three and six months ended April 30, 2008 - income tax recovery of
        $14 million and $295 million, respectively).
    (d) Includes $302 million and $109 million, respectively, of after-tax
        gains arising from hedges of the Bank's investment in foreign
        operations for the three and six months ended April 30, 2009 (three
        and six months ended April 30, 2008 - after-tax losses of $42 million
        and $674 million, respectively).
    (e) Net of income tax provision of $202 million and $943 million,
        respectively, for the three and six months ended April 30, 2009
        (three and six months ended April 30, 2008 - income tax provision of
        $95 million and $318 million, respectively).
    (f) Net of income tax provision of $169 million and $233 million,
        respectively, for the three and six months ended April 30, 2009
        (three and six months ended April 30, 2008 - income tax provision of
        $13 million and $16 million, respectively).

    Certain comparative amounts have been reclassified to conform to the
    current period's presentation.

    The accompanying notes are an integral part of these Interim Consolidated
    Financial Statements.



    INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
    -------------------------------------------------------------------------
                                           For the three         For the six
                                            months ended        months ended
                                     ----------------------------------------
                                       Apr. 30   Apr. 30   Apr. 30   Apr. 30
    (millions of Canadian dollars)        2009      2008      2009      2008
    -------------------------------------------------------------------------
    Cash flows from (used in)
     operating activities
    Net income                            $618      $852    $1,330    $1,822
    Adjustments to determine net
     cash flows from (used in)
     operating activities:
      Provision for credit losses          656       232     1,193       487
      Restructuring costs (Note 16)          -        48        27        48
      Depreciation                         139        85       278       167
      Amortization of other intangibles    171       117       344       239
      Stock options                         11         6        17        11
      Net securities losses (gains)        168      (110)      373      (262)
      Net gain on securitizations
       (Note 4)                           (157)      (38)     (181)      (61)
      Equity in net income of an
       associated company                  (63)      (71)     (152)     (163)
      Non-controlling interests             28         9        56        17
      Future income taxes                   40       (91)       72        21
    Changes in operating assets and
     liabilities:
      Current income taxes payable       1,495      (514)    1,186    (1,512)
      Interest receivable and payable      (12)     (162)      215      (114)
      Trading securities                 1,640    (3,342)     (601)      672
      Derivative assets                 12,833    (1,975)    8,949    (1,403)
      Derivative liabilities           (10,243)    1,959    (5,372)   (1,083)
      Other                              1,458     2,333     3,757    (1,941)
    -------------------------------------------------------------------------
    Net cash from (used in)
     operating activities                8,782      (662)   11,491    (3,055)
    -------------------------------------------------------------------------
    Cash flows from (used in)
     financing activities
    Change in deposits                  (1,296)   16,569    25,240    25,859
    Change in securities sold under
     repurchase agreements              (1,455)   (2,667)  (13,987)   (1,724)
    Change in securities sold short       (758)   (2,251)   (4,716)     (649)
    Issue of subordinated notes and
     debentures                              -       500         -     3,000
    Repayment of subordinated notes
     and debentures                          -         -       (18)        -
    Liability for preferred shares
     and capital trust securities            5       (21)        6       (21)
    Translation adjustment on
     subordinated notes and
     debentures issued in a foreign
     currency and other                    (30)       27        47        17
    Commons shares issued for cash,
     net of expenses                         -         -     1,356         -
    Common shares issued on exercise
     of stock options                        5        22        28        61
    Common shares sold (acquired) in
     Wholesale Banking                       8       (12)        -       (20)
    Dividends paid in cash on common
     shares                               (438)     (451)     (826)     (840)
    Net proceeds from issuance of
     preferred shares                      615       247     1,497       690
    Dividends paid on preferred shares     (41)      (11)      (70)      (19)
    -------------------------------------------------------------------------
    Net cash (used in) from financing
     activities                         (3,385)   11,952     8,557    26,354
    -------------------------------------------------------------------------
    Cash flows from (used in)
     investing activities
    Interest-bearing deposits with
     banks                               3,390    (2,500)    1,985      (853)
    Activity in available-for-sale
     and held-to-maturity securities:
      Purchases                        (32,567)  (28,754)  (59,750)  (38,430)
      Proceeds from maturities          12,819     3,348    21,288     6,697
      Proceeds from sales                8,420    26,328    16,236    31,689
    Activity in lending activities:
      Origination and acquisitions     (35,187)  (31,920)  (84,466)  (69,614)
      Proceeds from maturities          25,031    21,548    58,678    51,348
      Proceeds from sales                  116       292       219       453
      Proceeds from loan
       securitizations (Note 4)          6,585     1,524    14,858     3,414
    Land, buildings and equipment          (78)      (85)     (586)     (162)
    Securities purchased under
     reverse repurchase agreements       5,896     1,167    11,614    (5,419)
    Acquisitions and dispositions
     less cash and cash equivalents
     acquired (Note 18)                      -    (1,759)        -    (1,759)
    -------------------------------------------------------------------------
    Net cash used in investing
     activities                         (5,575)  (10,811)  (19,924)  (22,636)
    -------------------------------------------------------------------------
    Effect of exchange rate changes
     on cash and cash equivalents          (46)        5       (15)       67
    -------------------------------------------------------------------------
    Net (decrease) increase in cash
     and cash equivalents                 (224)      484       109       730
    Impact due to reporting-period
     alignment of U.S. entities
     (Note 1)                             (189)        -      (189)        -
    Cash and cash equivalents at
     beginning of period                 2,850     2,036     2,517     1,790
    -------------------------------------------------------------------------
    Cash and cash equivalents at end
     of period, represented by cash
     and due from banks                 $2,437    $2,520    $2,437    $2,520
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Supplementary disclosure of cash
     flow information
    Amount of interest paid during
     the period                         $1,943    $2,607    $5,143    $5,600
    Amount of income taxes paid
     during the period                    (880)      496      (878)    1,532
    -------------------------------------------------------------------------

    Certain comparative amounts have been reclassified to conform to the
    current period's presentation.

    The accompanying notes are an integral part of these Interim Consolidated
    Financial Statements.



    NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
    -------------------------------------------------------------------------

    Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
    -------------------------------------------------------------------------

    BASIS OF PRESENTATION

    These Interim Consolidated Financial Statements have been prepared in
    accordance with Canadian generally accepted accounting principles (GAAP)
    and follow the same accounting policies and methods of application as the
    Bank's audited Consolidated Financial Statements for the year ended
    October 31, 2008, except as described in Note 1. Under GAAP, additional
    disclosures are required in the annual financial statements and
    accordingly, these Interim Consolidated Financial Statements should be
    read in conjunction with the 2008 Consolidated Financial Statements and
    the accompanying notes included on pages 92 to 135 and the shaded
    sections of the 2008 Management Discussion and Analysis (MD&A) included
    on pages 68 to 76 of the Bank's 2008 Annual Report. Certain disclosures
    are included in the MD&A as permitted by GAAP and as discussed on pages
    21 to 23 of the MD&A in this report. These disclosures are shaded in the
    MD&A and form an integral part of the Interim Consolidated Financial
    Statements. The Interim Consolidated Financial Statements include all
    adjustments which are, in the opinion of management, necessary for a fair
    presentation of the results for the periods presented.

    CHANGES IN ACCOUNTING POLICIES

    Alignment of Reporting Period of U.S. Entities

    Effective for the quarter ended April 30, 2009, the reporting periods of
    TD Banknorth Inc. (TD Banknorth) and Commerce Bancorp, Inc. (Commerce)
    have been aligned with the reporting period of the Bank to eliminate the
    one month lag in financial reporting. Previously, the reporting periods
    of TD Banknorth and Commerce were included in the Bank's financial
    statements on a one month lag. In accordance with Canadian Institute of
    Chartered Accountant's (CICA) Handbook Section 1506, Accounting Changes,
    this alignment is considered a change in accounting policy. Changes in
    accounting policy are to be reported through retrospective application to
    all prior period financial statements presented. The Bank has assessed
    that the impact to the prior period consolidated financial statements is
    not material and therefore, an adjustment was made to opening retained
    earnings to align the reporting periods of TD Banknorth and Commerce to
    that of the Bank's reporting period. Accordingly, the results of
    TD Banknorth and Commerce for the three months ended April 30, 2009 have
    been included with the results of the Bank for the three and six months
    ended April 30, 2009, while the results of January 2009 have been
    included directly in retained earnings and not included in the Interim
    Consolidated Statement of Income.

    Subsequent Accounting for Impaired Financial Assets

    On April 29, 2009, the Bank adopted an amendment to CICA Handbook Section
    3855, Financial Instruments - Recognition and Measurement. The amendment
    clarified that, subsequent to the recognition of an impairment loss on a
    financial asset (other than a loan), interest income on the impaired
    financial asset is recognized using 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 or the earnings of the
    Bank.

    Goodwill, Intangible Assets and Financial Statement Concepts

    Effective November 1, 2008, the Bank adopted CICA Handbook Section 3064,
    Goodwill and Intangible Assets, which clarifies that costs can be
    deferred only when they relate to an item that meets the definition of an
    asset, and as a result, start-up costs must be expensed as incurred. CICA
    Handbook Section 1000, Financial Statement Concepts, was also amended to
    provide consistency with the new standard. The adoption of these
    standards did not have a material impact on the financial position or
    earnings of the Bank.

    Credit Risk and Fair Value

    Effective November 1, 2008, the Bank adopted EIC 173, Credit Risk and the
    Fair Value of Financial Assets and Financial Liabilities. The abstract
    clarifies how the Bank's own credit risk and the credit risk of the
    counterparty should be taken into account in determining the fair value
    of financial assets and financial liabilities, including derivatives. The
    new guidance did not have a material effect on the financial position or
    earnings of the Bank.

    FUTURE CHANGES IN ACCOUNTING POLICIES

    Financial Instruments Disclosures

    The CICA's Accounting Standards Board (AcSB) amended the CICA Handbook
    Section 3862, Financial Instruments - Disclosures, to enhance the
    disclosure requirements regarding fair value measurements and the
    liquidity risk of financial instruments. The amendments will be effective
    for the Bank's fiscal year ending October 31, 2009.

    Conversion to International Financial Reporting Standards

    The AcSB requires that all Canadian publicly accountable enterprises
    adopt International Financial Reporting Standards (IFRS) for years
    beginning on or after January 1, 2011. IFRS uses a conceptual framework
    similar to Canadian GAAP, but there are some differences in recognition,
    measurement and disclosures.

    IFRS will be effective for the Bank for the fiscal 2012 year beginning on
    November 1, 2011. This includes restatement of prior year comparative
    fiscal 2011 financial results for interim and annual periods. Currently,
    the Bank is in the planning phase of converting to IFRS. It is not yet
    possible to fully determine the impact to the financial statements, as
    accounting standards and their interpretations are changing. The
    conversion to IFRS is a significant initiative for the Bank, for which
    substantial resources are being dedicated to ensure proper
    implementation.

    Note 2: SECURITIES
    -------------------------------------------------------------------------

    Impairment of Available-for-Sale Securities

    Available-for-sale securities are written down to fair value through net
    income whenever it is necessary to reflect other-than-temporary
    impairment. For the three and six months ended April 30, 2009, the Bank
    recognized impairment losses on available-for-sale securities that were
    deemed to be other-than-temporary of $98 million and $311 million,
    respectively. These losses were primarily related to the Wholesale
    Banking segment.

    Reclassification of Certain Debt Securities

    As described in more detail in Notes 1 and 2 to the Consolidated
    Financial Statements for the year ended October 31, 2008, as a result of
    deterioration in markets and severe dislocation in the credit market, the
    Bank changed its trading strategy with respect to certain trading debt
    securities and reclassified these debt securities from trading to the
    available-for-sale category effective August 1, 2008 in accordance with
    the Amendments to CICA Section 3855, Financial Instruments - Recognition
    and Measurement and Section 3862, Financial Instruments - Disclosure.

    On August 1, 2008, the fair value of debt securities reclassified from
    trading to available-for-sale was $6,979 million. In addition, on the
    date of reclassification, these debt securities had a weighted average
    effective interest rate of 6.99% with expected recoverable cash flows, on
    an undiscounted basis, of $9,732 million. The fair value of the
    reclassified debt securities was $6,992 million as at April 30, 2009
    (October 31, 2008 - $7,355 million). During the three and six months
    ended April 30, 2009, net interest income of $108 million and
    $214 million after tax, respectively (three months ended October 31, 2008
    - $110 million after tax), was recorded relating to the reclassified debt
    securities. For the three and six months ended April 30, 2009, the
    respective increase in fair value of $236 million and $171 million after
    tax (three months ended October 31, 2008 - decrease of $561 million after
    tax) for these securities was recorded in other comprehensive income. Had
    the Bank not reclassified these debt securities, the change in the fair
    value of these debt securities would have been included as part of
    trading income, the impact of which would have resulted in an increase of
    net income of $236 million and $171 million after tax, respectively, for
    the three and six months ended April 30, 2009 (three months ended
    October 31, 2008 - reduction of $561 million after tax). Included in the
    impairment losses on available-for-sale securities disclosed above,
    $34 million and $85 million, for the three and six months ended April 30,
    2009, respectively (three months ended October 31, 2008 - nil), related
    to debt securities in the reclassified portfolio. These losses were
    primarily offset by gains on credit protection held which were recorded
    in other income. For the three and six months ended April 30, 2008, the
    Bank recognized the change in the fair value of these debt securities in
    its trading income.

    Unrealized Gains and Losses on Available-for-Sale Securities
    -------------------------------------------------------------------------
                                                                       As at
                                     ----------------------------------------
                                                               Apr. 30, 2009
                                     ----------------------------------------
                                                   Gross     Gross
                                          Cost/   unreal-   unreal-
                                     amortized      ized      ized      Fair
    (millions of Canadian dollars)        cost     gains    losses     value
    -------------------------------------------------------------------------
    Government and government-
     related securities
    Canadian government debt
      Federal                           $8,951       $24        $-    $8,975
      Provinces                            298        12         -       310
    U.S. Federal, state and
     municipal governments
     and agencies debt                  16,517       148        47    16,618
    Other OECD government
     guaranteed debt                    10,882         1        36    10,847
    Mortgage-backed securities          28,758       616       636    28,738
    -------------------------------------------------------------------------
                                        65,406       801       719    65,488
    -------------------------------------------------------------------------
    Other debt securities
    Asset-backed securities             11,180         2       430    10,752
    Non-agency collateralized
     mortgage obligation portfolio       9,693         -     1,479     8,214
    Corporate and other debt             3,099        94        59     3,134
    -------------------------------------------------------------------------
                                        23,972        96     1,968    22,100
    -------------------------------------------------------------------------
    Bonds reclassified
     from trading(2)                     7,550        42       600     6,992
    -------------------------------------------------------------------------
    Equity securities(3)
    Preferred shares                       389        57        43       403
    Common shares                        1,586       309       197     1,698
    -------------------------------------------------------------------------
                                         1,975       366       240     2,101
    -------------------------------------------------------------------------
    Total                              $98,903    $1,305    $3,527   $96,681
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total carrying value                                             $96,481
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                                       As at
                                     ----------------------------------------
                                                             Oct. 31, 2008(1)
                                     ----------------------------------------
                                                   Gross     Gross
                                          Cost/   unreal-   unreal-
                                     amortized      ized      ized      Fair
    (millions of Canadian dollars)        cost     gains    losses     value
    -------------------------------------------------------------------------
    Government and government-
     related securities
    Canadian government debt
      Federal                          $10,363       $14        $2   $10,375
      Provinces                            231         3         1       233
    U.S. Federal, state and
     municipal governments
     and agencies debt                   5,295        12       149     5,158
    Other OECD government
     guaranteed debt                        22         -         -        22
    Mortgage-backed securities          29,118       401       728    28,791
    -------------------------------------------------------------------------
                                        45,029       430       880    44,579
    -------------------------------------------------------------------------
    Other debt securities
    Asset-backed securities              9,178         1       290     8,889
    Non-agency collateralized
     mortgage obligation portfolio       9,329        11       905     8,435
    Corporate and other debt             2,601         1        40     2,562
    -------------------------------------------------------------------------
                                        21,108        13     1,235    19,886
    -------------------------------------------------------------------------
    Bonds reclassified
     from trading(2)                     8,219     2,154     3,018     7,355
    -------------------------------------------------------------------------
    Equity securities(3)
    Preferred shares                       452        70        22       500
    Common shares                        2,791       540       244     3,087
    -------------------------------------------------------------------------
                                         3,243       610       266     3,587
    -------------------------------------------------------------------------
    Total                              $77,599    $3,207    $5,399   $75,407
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total carrying value                                             $75,121
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Certain comparative amounts have been reclassified to conform to the
        current period's presentation.
    (2) Includes fair value of government and government-insured securities
        of $39 million (Oct. 31, 2008 - $41 million) and other debt
        securities of $6,953 million (Oct. 31, 2008 - $7,314 million).
    (3) Equity securities in the available-for-sale portfolio with a carrying
        value of $1,576 million (Oct. 31, 2008 - $1,496 million) do not have
        quoted market prices and are carried at cost. The fair value of these
        equity securities was $1,776 million (Oct. 31, 2008 - $1,782 million)
        and is included in the table above.


    Note 3: ALLOWANCE FOR CREDIT LOSSES AND LOANS PAST DUE BUT NOT IMPAIRED
    -------------------------------------------------------------------------

    The Bank maintains an allowance it considers adequate to absorb all
    credit-related losses in a portfolio of instruments that are both on and
    off the Interim Consolidated Balance Sheet. The allowance for loan
    losses, which includes allowance for deposits with banks, mortgages,
    acceptances and loans other than loans designated as trading under the
    fair value option, is deducted from loans on the Interim Consolidated
    Balance Sheet. The allowance for credit losses for off-balance sheet
    instruments, which relate to certain guarantees, letters of credit and
    undrawn lines of credit, is recorded in other liabilities. The change in
    the Bank's allowance for credit losses for the six months ended April 30
    is shown in the following table.

    Allowance for Credit Losses
    -------------------------------------------------------------------------
                                 Apr. 30, 2009                 Apr. 30, 2008
                 ------------------------------------------------------------
    (millions of
     Canadian     Specific   General            Specific   General
     dollars)    allowance allowance     Total allowance allowance     Total
    -------------------------------------------------------------------------
    Allowance for
     credit losses
     at beginning
     of year          $352    $1,184    $1,536      $203    $1,092    $1,295
    Impact due to
     reporting-period
     alignment of
     U.S. entities(1)   22        29        51         -         -         -
    Provision for
     credit losses     783       410     1,193       446        41       487
    Write-offs        (707)        -      (707)     (470)        -      (470)
    Recoveries          49         -        49        65         -        65
    Foreign exchange
     and other
     adjustments(2)     18        38        56        11       (19)       (8)
    -------------------------------------------------------------------------
    Allowance for
     credit losses at
     end of period    $517    $1,661    $2,178      $255    $1,114    $1,369
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Consisting of:
    Allowance for
     loan losses(3)   $517    $1,399    $1,916      $255    $1,114    $1,369
    Allowance for
     credit losses
     for off-balance
     sheet
     instruments(3)      -       262       262         -         -         -
    -------------------------------------------------------------------------
    Allowance for
     credit losses at
     end of period    $517    $1,661    $2,178      $255    $1,114    $1,369
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) The impact due to alignment of reporting period of U.S. entities
        consists of the following: provision for credit losses - $80 million;
        write-offs - $35 million; recoveries - nil; and other - $6 million.
    (2) Includes foreign exchange rate changes, net of losses on loan sales.
    (3) Effective April 30, 2009, the allowance for credit losses for
        off-balance sheet instruments is recorded in other liabilities. Prior
        period balances have not been reclassified.


    Loans Past Due but not Impaired

    A loan is classified as past due when a borrower has failed to make a
    payment by the contractual due date, taking into account the grace
    period, if applicable. The grace period represents the additional time
    period beyond the contractual due date during which a borrower may make
    the payment without the loan being classified as past due. The grace
    period varies depending on the product type and the borrower.

    The table below represents loans that are past due but not impaired. With
    the exception of U.S. Personal and Commercial Banking, these amounts
    exclude loans that fall within the allowed grace period. U.S Personal and
    Commercial Banking may grant a grace period of up to 15 days. There were
    $2.2 billion as at April 30, 2009 (October 31, 2008 - $2.6 billion) of
    U.S. Personal and Commercial Banking loans that were past due up to
    15 days and are included in the 1-30 days category in the table below.

    Loans Past Due but not Impaired
    -------------------------------------------------------------------------
                                                                       As at
                                     ----------------------------------------
                                                               Apr. 30, 2009
                                     ----------------------------------------
                                          1-30     31-60     61-89
    (millions of Canadian dollars)        days      days      days     Total
    -------------------------------------------------------------------------
    Residential mortgages                 $809      $342       $84    $1,235
    Consumer installment and
     other personal                      3,546       531       173     4,250
    Credit card                            352        79        48       479
    Business and government              2,259       318       194     2,771
    -------------------------------------------------------------------------
    Total                               $6,966    $1,270      $499    $8,735
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                                       As at
                                     ----------------------------------------
                                                               Oct. 31, 2008
                                     ----------------------------------------
                                          1-30     31-60     61-89
    (millions of Canadian dollars)        days      days      days     Total
    -------------------------------------------------------------------------
    Residential mortgages                 $811      $357       $64    $1,232
    Consumer installment and
     other personal                      3,234       570       131     3,935
    Credit card                            381        75        41       497
    Business and government              2,725       256        79     3,060
    -------------------------------------------------------------------------
    Total                               $7,151    $1,258      $315    $8,724
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Note 4: LOAN SECURITIZATIONS
    -------------------------------------------------------------------------

    The following tables summarize the Bank's securitization activity, for
    its own assets securitized, for the three and six months ended April 30.
    In most cases, the Bank retained responsibility for servicing the assets
    securitized.

    Securitization Activity
    -------------------------------------------------------------------------
                                                  For the three months ended
                     --------------------------------------------------------
                                                               Apr. 30, 2009
                     --------------------------------------------------------
                     Residential                Credit Commercial
    (millions of        mortgage   Personal       card   mortgage
     Canadian dollars)     loans      loans      loans      loans      Total
    -------------------------------------------------------------------------
    Gross proceeds        $6,585       $644         $-         $-     $7,229
    Retained interests       290          -          -          -        290
    Cash flows received
     on retained
     interests                98         17          -          -        115
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                  For the three months ended
                     --------------------------------------------------------
                                                               Apr. 30, 2008
                     --------------------------------------------------------
                     Residential                Credit Commercial
    (millions of        mortgage   Personal       card   mortgage
     Canadian dollars)     loans      loans      loans      loans      Total
    -------------------------------------------------------------------------
    Gross proceeds        $2,024     $1,291       $800         $-     $4,115
    Retained interests        50         14          6          -         70
    Cash flows received
     on retained
     interests                51         25         15          1         92
    -------------------------------------------------------------------------


    Securitization Activity
    -------------------------------------------------------------------------
                                                    For the six months ended
                     --------------------------------------------------------
                                                               Apr. 30, 2009
                     --------------------------------------------------------
                     Residential                Credit Commercial
    (millions of        mortgage   Personal       card   mortgage
     Canadian dollars)     loans      loans      loans      loans      Total
    -------------------------------------------------------------------------
    Gross proceeds       $14,858     $1,723         $-         $-    $16,581
    Retained interests       566          2          -          -        568
    Cash flows received
     on retained
     interests               171         38          -          1        210
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                    For the six months ended
                     --------------------------------------------------------
                                                               Apr. 30, 2008
                     --------------------------------------------------------
                     Residential                Credit Commercial
    (millions of        mortgage   Personal       card   mortgage
     Canadian dollars)     loans      loans      loans      loans      Total
    -------------------------------------------------------------------------
    Gross proceeds        $3,914     $2,744     $1,600         $-     $8,258
    Retained interests        99         26         12          -        137
    Cash flows received
     on retained
     interests               109         52         29          1        191
    -------------------------------------------------------------------------

    The following tables summarize the impact of securitizations on the
    Bank's Interim Consolidated Statement of Income for the three and six
    months ended April 30.

    Securitization Gains and Income on Retained Interests
    -------------------------------------------------------------------------
                                                  For the three months ended
                     --------------------------------------------------------
                                                               Apr. 30, 2009
                     --------------------------------------------------------
                     Residential                Credit Commercial
    (millions of        mortgage   Personal       card   mortgage
     Canadian dollars)     loans      loans      loans      loans      Total
    -------------------------------------------------------------------------
    Gain on sale            $157         $-         $-         $-       $157
    Income on retained
     interests(1)             22          5          -          -         27
    -------------------------------------------------------------------------
    Total                   $179         $5         $-         $-       $184
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                  For the three months ended
                     --------------------------------------------------------
                                                               Apr. 30, 2008
                     --------------------------------------------------------
                     Residential                Credit Commercial
    (millions of        mortgage   Personal       card   mortgage
     Canadian dollars)     loans      loans      loans      loans      Total
    -------------------------------------------------------------------------
    Gain on sale             $18        $14         $6         $-        $38
    Income on retained
     interests(1)             22          6         25          -         53
    -------------------------------------------------------------------------
    Total                    $40        $20        $31         $-        $91
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Securitization Gains and Income on Retained Interests
    -------------------------------------------------------------------------
                                                    For the six months ended
                     --------------------------------------------------------
                                                               Apr. 30, 2009
                     --------------------------------------------------------
                     Residential                Credit Commercial
    (millions of        mortgage   Personal       card   mortgage
     Canadian dollars)     loans      loans      loans      loans      Total
    -------------------------------------------------------------------------
    Gain on sale            $179         $2         $-         $-       $181
    Income on retained
     interests(1)             50         10          -          -         60
    -------------------------------------------------------------------------
    Total                   $229        $12         $-         $-       $241
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                    For the six months ended
                     --------------------------------------------------------
                                                               Apr. 30, 2008
                     --------------------------------------------------------
                     Residential                Credit Commercial
    (millions of        mortgage   Personal       card   mortgage
     Canadian dollars)     loans      loans      loans      loans      Total
    -------------------------------------------------------------------------
    Gain on sale             $23        $26        $12         $-        $61
    Income on retained
     interests(1)             46         13         47          -        106
    -------------------------------------------------------------------------
    Total                    $69        $39        $59         $-       $167
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Income on retained interests excludes income arising from changes in
        fair values. Unrealized gains and losses on retained interests
        arising from changes in fair value are recorded in trading income.


    The key assumptions used to value the retained interests at the date of
    the securitization activities are as follows:

    Key Assumptions
    -------------------------------------------------------------------------
                                                                        2009
                                ---------------------------------------------
                                Residential                Credit Commercial
                                   mortgage   Personal       card   mortgage
                                      loans      loans      loans      loans
    -------------------------------------------------------------------------
    Prepayment rate(1)                18.6%       5.3%        n/a       5.2%
    Excess spread(2)                    1.2        0.3        n/a        1.0
    Discount rate                       3.1        3.4        n/a        6.2
    Expected credit losses(3)             -          -        n/a        0.1
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                                        2008
                                ---------------------------------------------
                                Residential                Credit Commercial
                                   mortgage   Personal       card   mortgage
                                      loans      loans      loans      loans
    -------------------------------------------------------------------------
    Prepayment rate(1)                18.5%       6.1%      43.5%       8.7%
    Excess spread(2)                    0.9        1.1        7.1        1.0
    Discount rate                       5.2        5.9        6.1        7.5
    Expected credit losses(3)             -          -        2.4        0.1
    -------------------------------------------------------------------------
    (1) Represents monthly payment rate for secured personal and credit card
        loans.
    (2) The excess spread for credit card loans reflects the net portfolio
        yield, which is interest earned less funding costs and losses.
    (3) There are no expected credit losses for residential mortgage loans as
        the loans are government-guaranteed.


    During the three months ended April 30, 2009, there were maturities of
    previously securitized loans and receivables of $644 million (three
    months ended April 30, 2008 - $2,591 million). Proceeds from new
    securitizations were $6,585 million for the three months ended April 30,
    2009 (three months ended April 30, 2008 - $1,524 million). During the six
    months ended April 30, 2009, there were maturities of previously
    securitized loans and receivables of $1,723 million (six months ended
    April 30, 2008 - $4,844 million). Proceeds from new securitizations were
    $14,858 million for the six months ended April 30, 2009 (six months ended
    April 30, 2008 - $3,414 million).


    Note 5: LIABILITY FOR PREFERRED SHARES
    -------------------------------------------------------------------------

    The Bank's liability for preferred shares is as follows:

    Preferred Shares
    -------------------------------------------------------------------------
                                                                       As at
                                                        ---------------------
                                                           Apr. 30   Oct. 31
    (millions of Canadian dollars)                            2009      2008
    -------------------------------------------------------------------------
    Preferred shares issued by the Bank
     (thousands of shares):
    Class A - 14,000 Series M                                 $350      $350
    Class A - 8,000 Series N                                   200       200
    -------------------------------------------------------------------------
    Total liability for preferred shares                      $550      $550
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Note 6: CAPITAL TRUST SECURITIES
    -------------------------------------------------------------------------

    The following table summarizes the Capital Trust Securities issued by
    the Trusts that were established by the Bank.

    Capital Trust Securities
    -------------------------------------------------------------------------
                                                                       As at
                                                        ---------------------
                                                           Apr. 30   Oct. 31
    (millions of Canadian dollars)                            2009      2008
    -------------------------------------------------------------------------
    Trust units issued by TD Capital Trust
     (thousands of units)
      900 Capital Trust Securities - Series 2009(1)           $900      $894

    Trust units issued by TD Capital Trust II(2)
     (thousands of units)
      350 TD Capital Trust II Securities - Series 2012-1       350       350

    Trust units issued by TD Capital Trust III
     (thousands of units)
      1,000 TD Capital Trust III Securities - Series 2008(3)   990       990

    Debt issued by TD Capital Trust IV(2)
     (thousands of units)
      550 TD Capital Trust IV Notes - Series 1                 550         -
      450 TD Capital Trust IV Notes - Series 2                 450         -
    -------------------------------------------------------------------------
    (1) Included in liability for Capital Trust Securities on the Interim
        Consolidated Balance Sheet.
    (2) Trust II & Trust IV are variable interest entities. As the Bank is
        not the primary beneficiary of the trusts, the Bank does not
        consolidate them. The senior deposit notes that were issued to
        Trust II & Trust IV are reflected in deposits on the Interim
        Consolidated Balance Sheet.
    (3) Included in non-controlling interest in subsidiaries on the Interim
        Consolidated Balance Sheet. See Note 7.


    TD Capital IV Notes

    On January 26, 2009, TD Capital Trust IV (Trust IV), a trust established
    under the laws of the Province of Ontario, issued $550,000,000 of 9.523%
    TD Capital Trust IV Notes - Series 1 due June 30, 2108 (TD CaTS IV -
    Series 1) and $450,000,000 of 10.00% TD Capital Trust IV Notes - Series 2
    due June 30, 2108 (TD CaTS IV - Series 2) (collectively, the TD CaTS IV
    Notes). The proceeds from the issuance were invested in Bank deposits. TD
    CaTS IV Notes qualify as Tier 1 capital of the Bank.

    TD CaTS IV - Series 1 will pay interest, at a rate of 9.523%, in equal
    semi-annual instalments on June 30 and December 31 of each year until
    June 30, 2019. Starting on June 30, 2019 and on every fifth anniversary
    thereafter until June 30, 2104 (Series 1 Interest Reset Date), the
    interest rate on the TD CaTS IV - Series 1 will reset to equal the
    Government of Canada (GOC) yield plus 10.125%. TD CaTS IV - Series 2 will
    pay interest, at a rate of 10.00%, in equal semi-annual instalments on
    June 30 and December 31 of each year until June 30, 2039. Starting on
    June 30, 2039 and on every fifth anniversary thereafter until June 30,
    2104 (Series 2 Interest Reset Date), the interest rate on the TD CaTS IV
    - Series 2 will reset to equal the GOC yield plus 9.735%.

    On or after June 30, 2014, the Trust may redeem the TD CaTS IV - Series
    1, subject to regulatory consent, for a price per $1,000 principal amount
    of TD CaTS IV - Series 1 redeemed (a) on any day that is not a Series 1
    Interest Reset Date equal to the greater of par and a price calculated to
    provide an annual yield equal to the yield of a GOC bond maturing on the
    next Series 1 Interest Reset Date plus (i) 1.6875% if the redemption date
    is prior to June 30, 2019 or (ii) 3.375% if the redemption date is on or
    after June 30, 2019 or (b) on a Series 1 Interest Reset Date equal to
    par, together in each case with accrued and unpaid interest. On or after
    June 30, 2014, the Trust may redeem the TD CaTS IV - Series 2, subject to
    regulatory consent, for a price per $1,000 principal amount of TD CaTS IV
    - Series 2 redeemed (a) on any day that is not a Series 2 Interest Reset
    Date equal to the greater of par and a price calculated to provide an
    annual yield equal to the yield of a GOC bond maturing on the next Series
    2 Interest Reset Date plus (i) 1.62% if the redemption date is prior to
    June 30, 2039 or (ii) 3.24% if the redemption date is on or after
    June 30, 2039 or (b) on a Series 2 Interest Reset Date equal to par,
    together in each case with accrued and unpaid interest.

    Holders of TD CaTS IV Notes may, in certain circumstances, be required to
    invest interest paid on the TD CaTS IV Notes in non-cumulative Class A
    First Preferred Shares of the Bank. In addition, in certain
    circumstances, the TD CaTS IV Notes will be exchanged automatically,
    without the consent of the holders, for non-cumulative Class A First
    Preferred Shares, Series A10 of the Bank.


    Note 7: NON-CONTROLLING INTERESTS IN SUBSIDIARIES
    -------------------------------------------------------------------------
                                                                       As at
                                                        ---------------------
                                                           Apr. 30   Oct. 31
    (millions of Canadian dollars)                            2009      2008
    -------------------------------------------------------------------------
    REIT preferred stock, Series A                            $586      $523
    TD Capital Trust III Securities - Series 2008              990       990
    Other                                                       45        47
    -------------------------------------------------------------------------
    Total non-controlling interests in subsidiaries         $1,621    $1,560
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Note 8: SHARE CAPITAL
    -------------------------------------------------------------------------

    Shares Issued and Outstanding
    -------------------------------------------------------------------------
                                           Apr. 30, 2009       Apr. 30, 2008
                                    -----------------------------------------
    (millions of shares and          Number of           Number of
     millions of Canadian dollars)      shares    Amount    shares    Amount
    -------------------------------------------------------------------------
    Common shares:
    Balance at beginning of year         810.1   $13,241     717.8    $6,577
    Issued on exercise of stock
     options                               0.8        45       1.4        71
    Issued as a result of
     dividend reinvestment plan            4.9       208       0.6        43
    Issued for cash                       34.9     1,381         -         -
    Issued on the acquisition
     of Commerce                             -         -      83.3     6,147
    Impact of shares acquired
     for trading purposes(1)              (0.1)        -      (0.2)      (20)
    -------------------------------------------------------------------------
    Balance at end of period -
     common shares                       850.6   $14,875     802.9   $12,818
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Preferred shares (Class A):
    Series O                              17.0      $425      17.0      $425
    Series P                              10.0       250      10.0       250
    Series Q                               8.0       200       8.0       200
    Series R                              10.0       250      10.0       250
    Series S                              10.0       250         -         -
    Series Y                              10.0       250         -         -
    Series AA                             10.0       250         -         -
    Series AC                              8.8       220         -         -
    Series AE                             12.0       300         -         -
    Series AG                             15.0       375         -         -
    Series AI                             11.0       275         -         -
    Series AK                             14.0       350         -         -
    -------------------------------------------------------------------------
    Balance at end of period -
     preferred shares                    135.8    $3,395      45.0    $1,125
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Purchased by subsidiaries of the Bank, which are regulated securities
        entities in accordance with Regulation 92-313 under the Bank Act.


    COMMON SHARES

    On December 5, 2008, the Bank issued 35 million common shares for gross
    cash consideration of $1.4 billion. The common share issue qualifies as
    Tier 1 capital of the Bank.

    PREFERRED SHARES

    5-Year Rate Reset Preferred Shares, Series AC

    On November 5, 2008, the Bank issued 8.8 million non-cumulative 5-Year
    Rate Reset Preferred Shares, Series AC for gross cash consideration of
    $220 million. Quarterly non-cumulative cash dividends, if declared, will
    be paid at a per annum rate of 5.60% for the initial period from and
    including November 5, 2008 to but excluding January 31, 2014. Thereafter,
    the dividend rate will reset every five years to equal the then five year
    Government of Canada bond yield plus 2.74%. Holders of the Series AC
    shares will have the right to convert their shares into non-cumulative
    Floating Rate Preferred Shares, Series AD, subject to certain conditions,
    on January 31, 2014, and on January 31 every five years thereafter and
    vice versa. The Series AC shares are redeemable by the Bank for cash,
    subject to regulatory consent, at $25.00 per share on January 31, 2014
    and on January 31 every five years thereafter. The Series AC shares
    qualify as Tier 1 capital of the Bank.

    5-Year Rate Reset Preferred Shares, Series AE

    On January 14, 2009, the Bank issued 12 million non-cumulative 5-Year
    Rate Reset Preferred Shares, Series AE for gross cash consideration of
    $300 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 January 14, 2009 to but excluding April 30, 2014. Thereafter,
    the dividend rate will reset every five years to equal the then five year
    Government of Canada bond yield plus 4.37%. Holders of the Series AE
    shares will have the right to convert their shares into non-cumulative
    Floating Rate Class A Preferred Shares, Series AF, subject to certain
    conditions, on April 30, 2014, and on April 30 every five years
    thereafter and vice versa. The Series AE shares are redeemable by the
    Bank for cash, subject to regulatory consent, at $25.00 per share on
    April 30, 2014 and on April 30 every five years thereafter. The Series AE
    shares qualify as Tier 1 capital of the Bank.

    5-Year Rate Reset Preferred Shares, Series AG

    On January 30, 2009, the Bank issued 15 million non-cumulative 5-Year
    Rate Reset Preferred Shares, Series AG for gross cash consideration of
    $375 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 January 30, 2009 to but excluding April 30, 2014. Thereafter,
    the dividend rate will reset every five years to equal the then five year
    Government of Canada bond yield plus 4.38%. Holders of the Series AG
    shares will have the right to convert their shares into non-cumulative
    Floating Rate Class A Preferred Shares, Series AH, subject to certain
    conditions, on April 30, 2014, and on April 30 every five years
    thereafter and vice versa. The Series AG shares are redeemable by the
    Bank for cash, subject to regulatory consent, at $25.00 per share on
    April 30, 2014 and on April 30 every five years thereafter. The Series AG
    shares qualify as Tier 1 capital of the Bank.

    5-Year Rate Reset Preferred Shares, Series AI

    On March 6, 2009, the Bank issued 11 million non-cumulative 5-Year Rate
    Reset Preferred Shares, Series AI for gross cash consideration of
    $275 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 March 6, 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 4.15%. Holders of the Series AI
    shares will have the right to convert their shares into non-cumulative
    Floating Rate Class A Preferred Shares, Series AJ, subject to certain
    conditions, on July 31, 2014, and on July 31 every five years thereafter
    and vice versa. The Series AI 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. The Series AI shares qualify as
    Tier 1 capital of the Bank.

    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. The Series AK shares qualify as
    Tier 1 capital of the Bank.


    Note 9: REGULATORY CAPITAL
    -------------------------------------------------------------------------

    The Bank manages its capital under guidelines established by the Office
    of the Superintendent of Financial Institutions Canada (OSFI). The
    regulatory capital guidelines measure capital in relation to credit,
    market and operational risks. The Bank has various capital policies,
    procedures and controls which it utilizes to achieve its goals and
    objectives. Effective April 30, 2009 for accounting purposes, and
    effective October 31, 2008 for regulatory reporting purposes, the
    reporting period of the U.S. entities was aligned with the rest of the
    Bank. Prior to April 30, 2009 and October 31, 2008, the Bank's financial
    statements and regulatory capital, respectively, were calculated
    incorporating TD Banknorth and Commerce on a one month lag.

    During the six months ended April 30, 2009, the Bank complied with the
    OSFI guideline related to capital ratios and the assets-to-capital
    multiple. This guideline is based on the "International Convergence of
    Capital Measurement and Capital Standards - A Revised Framework" (Basel
    II) issued by the Basel Committee on Banking Supervision. Effective
    November 1, 2008, substantial investments held prior to January 1, 2007,
    which were previously deducted from Tier 2 capital, are deducted 50% from
    Tier 1 capital and 50% from Tier 2 capital. Insurance subsidiaries
    continue to be deconsolidated and reported as a deduction from Tier 2
    capital.

    The Bank's regulatory capital position was as follows:

                                                                       As at
                                                     ------------------------
                                                           Apr. 30   Oct. 31
    (millions of Canadian dollars)                            2009      2008
    -------------------------------------------------------------------------
    Tier 1 capital                                         $21,778   $20,679
    Tier 1 capital ratio(1)                                  10.9%      9.8%
    Total capital(2)                                       $28,216   $25,348
    Total capital ratio(3)                                   14.1%     12.0%
    Assets-to-capital multiple(4)                             17.1      19.3
    -------------------------------------------------------------------------
    (1) Tier 1 capital ratio is calculated as Tier 1 capital divided by risk-
        weighted assets (RWA).
    (2) Total capital includes Tier 1 and Tier 2 capital.
    (3) Total capital ratio is calculated as Total capital divided by RWA.
    (4) The assets-to-capital multiple is calculated as total assets plus
        off-balance sheet credit instruments, such as certain letters of
        credit and guarantees, less investments in associated corporations,
        goodwill and net intangibles, divided by Total adjusted capital.


    OSFI's target Tier 1 and Total capital ratios for Canadian banks are 7%
    and 10%, respectively.


    Note 10: ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
    -------------------------------------------------------------------------

    The following table summarizes the Bank's accumulated other comprehensive
    income (loss), net of income taxes, as at April 30:

    Accumulated Other Comprehensive Income (Loss), Net of Income Taxes
    -------------------------------------------------------------------------
                                                                       As at
                                                    -------------------------
                                                           Apr. 30   Oct. 31
    (millions of Canadian dollars)                          2009(1)     2008
    -------------------------------------------------------------------------
    Unrealized loss on available-for-sale securities,
     net of hedging activities                             $(1,376)  $(1,409)
    Unrealized foreign currency translation gain (loss)
     on investments in subsidiaries, net of hedging
     activities                                              1,462    (1,633)
    Gain on derivatives designated as cash flow hedges       2,882     1,393
    -------------------------------------------------------------------------
    Accumulated other comprehensive income (loss) balance
     as at end of period                                    $2,968   $(1,649)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) This included the impact of other comprehensive income of U.S.
        entities for January 2009, as explained in Note 1, and consists of
        the following: unrealized gains on available-for-sale securities, net
        of hedging activities - $199 million; unrealized foreign currency
        translation gains on investments in subsidiaries, net of hedging
        activities - $166 million; and losses on derivatives designated as
        cash flow hedges - $(36) million.


    Note 11: STOCK-BASED COMPENSATION
    -------------------------------------------------------------------------

    For the three and six months ended April 30, 2009, the Bank recognized
    compensation expense for stock option awards of $11 million and
    $17 million, respectively (three and six months ended April 30, 2008 -
    $6 million and $11 million, respectively).

    During the three months ended April 30, 2009, 0.6 million (three months
    ended April 30, 2008 - nil) options were granted by the Bank with a
    weighted average fair value of $6.85 per option (three months ended April
    30, 2008 - n/a). During the six months ended April 30, 2009, 4 million
    (six months ended April 30, 2008 - 2 million) options were granted by the
    Bank with a weighted average fair value of $7.62 per option (six months
    ended April 30, 2008 - $10.80 per option).

    The fair value of options granted was estimated at the date of grant
    using a binomial tree-based valuation model. The following assumptions
    were used:

                                                    For the six months ended
                                                -----------------------------
                                                           Apr. 30   Apr. 30
                                                              2009      2008
    -------------------------------------------------------------------------
    Risk-free interest rate                                   2.2%      3.8%
    Expected option life                                 5.6 years 5.5 years
    Expected volatility                                      23.9%     15.9%
    Expected dividend yield                                  3.00%     2.85%
    -------------------------------------------------------------------------


    Note 12: EMPLOYEE FUTURE BENEFITS
    -------------------------------------------------------------------------

    The expenses for the Bank's pension plans and principal non-pension post-
    retirement benefit plan are as follows:

    Principal Pension Plan Pension Expense
    -------------------------------------------------------------------------
                                           For the three         For the six
                                            months ended        months ended
                                      ---------------------------------------
                                       Apr. 30   Apr. 30   Apr. 30   Apr. 30
    (millions of Canadian dollars)        2009      2008      2009      2008
    -------------------------------------------------------------------------
    Elements of pension plan expense
     before adjustments to recognize
     the long term nature of the cost:
      Service cost - benefits earned       $12       $21       $32       $37
      Interest cost on projected
       benefit obligation                   34        33        70        63
      Actual return on plan assets          83       110       410       107
      Plan amendments                        -         -         -         7
    Adjustments to recognize the
     long-term nature of plan cost:
      Difference between costs arising
       in the period and costs
       recognized in the period
       in respect of:
        Return on plan assets(1)          (114)     (148)     (478)     (183)
        Actuarial losses(2)                  2         5         5         5
        Plan amendments(3)                   6         2        11        (2)
    -------------------------------------------------------------------------
    Total                                  $23       $23       $50       $34
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) For the three months ended April 30, 2009, includes expected return
        on plan assets of $31 million (three months ended April 30, 2008 -
        $38 million) less actual return on plan assets of $(83) million
        (three months ended April 30, 2008 - $(110) million). For the six
        months ended April 30, 2009, includes expected return on plan assets
        of $68 million (six months ended April 30, 2008 - $76 million) less
        actual return on plan assets of $(410) million (six months ended
        April 30, 2008 - $(107) million).
    (2) For the three months ended April 30, 2009, includes loss recognized
        of $2 million (three months ended April 30, 2008 - $5 million) less
        actuarial losses on projected benefit obligation of nil (three months
        ended April 30, 2008 - nil). For the six months ended April 30, 2009,
        includes loss recognized of $5 million (six months ended April 30,
        2008 - $5 million) less actuarial losses on projected benefit
        obligation of nil (six months ended April 30, 2008 - nil).
    (3) For the three months ended April 30, 2009, includes amortization of
        costs for plan amendments of $6 million (three months ended April 30,
        2008 - $2 million) less actual cost amendments of nil (three months
        ended April 30, 2008 - nil). For the six months ended April 30, 2009,
        includes amortization of costs for plan amendments of $11 million
        (six months ended April 30, 2008 - $5 million) less actual cost
        amendments of nil (six months ended April 30, 2008 - $7 million).


    Other Pension Plans' Expense
    -------------------------------------------------------------------------
                                           For the three         For the six
                                            months ended        months ended
                                      ---------------------------------------
                                       Apr. 30   Apr. 30   Apr. 30   Apr. 30
    (millions of Canadian dollars)        2009      2008      2009      2008
    -------------------------------------------------------------------------
    CT defined benefit pension plan         $1        $1        $2        $2
    TD Banknorth defined benefit
     pension plan(1)                         3         1         5         -
    Supplemental employee
     retirement plans                        7         8        16        16
    -------------------------------------------------------------------------
    Total                                  $11       $10       $23       $18
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) TD Banknorth defined benefit plan was frozen as of December 31, 2008,
        and no service credits can be earned after that date.


    Principal Non-Pension Post-Retirement Benefit Plan Expense
    -------------------------------------------------------------------------
                                           For the three         For the six
                                            months ended        months ended
                                      ---------------------------------------
                                       Apr. 30   Apr. 30   Apr. 30   Apr. 30
    (millions of Canadian dollars)        2009      2008      2009      2008
    -------------------------------------------------------------------------
    Elements of non-pension plan
     expense before adjustments
     to recognize the long-term
     nature of the cost:
        Service cost - benefits
         earned                             $2        $3        $4        $6
        Interest cost on projected
         benefit obligation                  5         5        10        11
    Adjustments to recognize the
     long-term nature of plan cost:
      Difference between costs
       arising in the period and
       costs recognized in the
       period in respect of:
        Actuarial losses                     -         2         -         3
        Plan amendments                     (2)       (2)       (3)       (3)
    -------------------------------------------------------------------------
    Total                                   $5        $8       $11       $17
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Cash Flows

    The Bank's contributions to its pension plans and its principal non-
    pension post-retirement benefit plan are as follows:

    Plan Contributions
    -------------------------------------------------------------------------
                                           For the three         For the six
                                            months ended        months ended
                                      ---------------------------------------
                                       Apr. 30   Apr. 30   Apr. 30   Apr. 30
    (millions of Canadian dollars)        2009      2008      2009      2008
    -------------------------------------------------------------------------
    Principal pension plan                 $28       $18       $49       $37
    Supplemental employee
     retirement plans                        3         3         6         7
    Non-pension post-retirement
     benefit plan                            2         2         4         4
    -------------------------------------------------------------------------
    Total                                  $33       $23       $59       $48
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    As at April 30, 2009, the Bank expects to contribute an additional $142
    million to its principal pension plan, nil to its CT defined benefit
    pension plan, nil to its TD Banknorth defined benefit pension plan, $5
    million to its supplemental employee retirement plans and $5 million to
    its non-pension post-retirement benefit plan by the end of the year.
    However, future contribution amounts may change upon the Bank's review of
    the current contribution levels during the year.


    Note 13: EARNINGS PER SHARE
    -------------------------------------------------------------------------

    The Bank's basic and diluted earnings per share at April 30 are as
    follows:

    Basic and Diluted Earnings per Share
    -------------------------------------------------------------------------
                                           For the three         For the six
                                            months ended        months ended
                                      ---------------------------------------
                                       Apr. 30   Apr. 30   Apr. 30   Apr. 30
                                          2009      2008      2009      2008
    -------------------------------------------------------------------------
    Basic earnings per share
    Net income available to
     common shareholders ($ millions)     $577      $841    $1,260    $1,803
    Average number of common shares
     outstanding (millions)              848.8     747.7     840.6     732.9
    Basic earnings per share ($)         $0.68     $1.12     $1.50     $2.46
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Diluted earnings per share
    Net income available to
     common shareholders ($ millions)     $577      $841    $1,260    $1,803
    -------------------------------------------------------------------------
    Average number of common shares
     outstanding (millions)              848.8     747.7     840.6     732.9
    Stock options potentially
     exercisable as determined
     under the treasury stock
     method(1)(millions)                   1.0       6.0       1.3       6.1
    -------------------------------------------------------------------------
    Average number of common shares
     outstanding - diluted (millions)    849.8     753.7     841.9     739.0
    -------------------------------------------------------------------------
    Diluted earnings per share(1) ($)    $0.68     $1.12     $1.50     $2.44
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) For the six months ended April 30, 2009, the computation of diluted
        earnings per share excluded weighted-average options outstanding of
        18.8 million with a weighted-average exercise price of $63.79 as the
        option price was greater than the average market price of the Bank's
        common shares. For the six months ended April 30, 2008, the
        computation of diluted earnings per share excluded weighted-average
        options outstanding of 3.4 million with a weighted-average exercise
        price of $69.49 as the option price was greater than the average
        market price of the Bank's common shares.


    Note 14: SEGMENTED INFORMATION
    -------------------------------------------------------------------------

    The Bank's operations and activities are organized around the following
    operating business segments: Canadian Personal and Commercial Banking,
    Wealth Management, U.S. Personal and Commercial Banking and Wholesale
    Banking. Results for these segments for the three and six months ended
    April 30 are presented in the following tables:

    Results by Business Segment
    -------------------------------------------------------------------------
                                                                         U.S.
                           Canadian Personal                    Personal and
    (millions of              and Commercial          Wealth      Commercial
     Canadian dollars)            Banking(1)   Management(1) Banking(1)(2)(3)
    -------------------------------------------------------------------------
                                 Apr.    Apr.    Apr.    Apr.    Apr.    Apr.
    For the three                 30      30      30      30      30      30
     months ended               2009    2008    2009    2008    2009    2008
    -------------------------------------------------------------------------
    Net interest income       $1,536  $1,402     $63     $82  $1,002    $309
    Other income                 740     732     465     476     279     166
    -------------------------------------------------------------------------
    Total revenue              2,276   2,134     528     558   1,281     475
    Provision for
     (reversal of)
     credit losses               286     191       -       -     201      46
    Non-interest expenses      1,143   1,095     414     387     823     294
    -------------------------------------------------------------------------
    Income (loss) before
     income taxes                847     848     114     171     257     135
    Provision for
     (recovery of)
     income taxes                258     266      36      56      26      35
    Non-controlling
     interests in
     subsidiaries, net of
     income taxes                  -       -       -       -       -       -
    Equity in net income
     of an associated
     company, net of
     income taxes                  -       -      48      67       -       -
    -------------------------------------------------------------------------
    Net income (loss)           $589    $582    $126    $182    $231    $100
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total assets
    (billions of Canadian
     dollars)
      - balance sheet         $172.5  $159.9   $18.9   $15.6  $150.6  $120.7
      - securitized             52.3    42.0       -       -       -       -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    (millions of                   Wholesale
     Canadian dollars)             Banking(4)    Corporate(4)          Total
    -------------------------------------------------------------------------
                                 Apr.    Apr.    Apr.    Apr.    Apr.    Apr.
    For the three                 30      30      30      30      30      30
     months ended               2009    2008    2009    2008    2009    2008
    -------------------------------------------------------------------------
    Net interest income         $662    $314   $(323)  $(249) $2,940  $1,858
    Other income                 (42)    114     (57)     42   1,385   1,530
    -------------------------------------------------------------------------
    Total revenue                620     428    (380)   (207)  4,325   3,388
    Provision for
     (reversal of)
     credit losses                59      10     110     (15)    656     232
    Non-interest expenses        356     291     315     139   3,051   2,206
    -------------------------------------------------------------------------
    Income (loss) before
     income taxes                205     127    (805)   (331)    618     950
    Provision for
     (recovery of)
     income taxes                 32      34    (317)   (231)     35     160
    Non-controlling
     interests in
     subsidiaries, net of
     income taxes                  -       -      28       9      28       9
    Equity in net income
     of an associated
     company, net of
     income taxes                  -       -      15       4      63      71
    -------------------------------------------------------------------------
    Net income (loss)           $173     $93   $(501)  $(105)   $618    $852
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total assets
    (billions of Canadian
     dollars)
      - balance sheet         $192.1  $186.5   $40.8   $20.9  $574.9  $503.6
      - securitized              3.6     3.0   (13.6)  (15.0)   42.3    30.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Results by Business Segment
    -------------------------------------------------------------------------
                                                                         U.S.
                           Canadian Personal                    Personal and
    (millions of              and Commercial          Wealth      Commercial
     Canadian dollars)            Banking(1)   Management(1) Banking(1)(2)(3)
    -------------------------------------------------------------------------
                                 Apr.    Apr.    Apr.    Apr.    Apr.    Apr.
    For the six                   30      30      30      30      30      30
     months ended               2009    2008    2009    2008    2009    2008
    -------------------------------------------------------------------------
    Net interest income       $3,030  $2,816    $138    $170  $1,894    $621
    Other income               1,538   1,465     918     958     581     306
    -------------------------------------------------------------------------
    Total revenue              4,568   4,281   1,056   1,128   2,475     927
    Provision for
     (reversal of)
     credit losses               552     363       -       -     340      72
    Non-interest expenses      2,329   2,191     833     766   1,624     532
    -------------------------------------------------------------------------
    Income (loss) before
     income taxes              1,687   1,727     223     362     511     323
    Provision for
     (recovery of)
     income taxes                514     547      70     119      40      96
    Non-controlling interests
     in subsidiaries, net
     of income taxes               -       -       -       -       -       -
    Equity in net income
     of an associated
     company, net of
     income taxes                  -       -     125     155       -       -
    -------------------------------------------------------------------------

    Net income (loss)         $1,173  $1,180    $278    $398    $471    $227
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    (millions of                   Wholesale
     Canadian dollars)             Banking(4)    Corporate(4)          Total
    -------------------------------------------------------------------------
                                 Apr.    Apr.    Apr.    Apr.    Apr.    Apr.
    For the six                   30      30      30      30      30      30
     months ended               2009    2008    2009    2008    2009    2008
    -------------------------------------------------------------------------
    Net interest income       $1,382    $506   $(776)  $(467) $5,668  $3,646
    Other income                  77     530    (307)     87   2,807   3,346
    -------------------------------------------------------------------------
    Total revenue              1,459   1,036  (1,083)   (380)  8,475   6,992
    Provision for
     (reversal of)
     credit losses               125      66     176     (14)  1,193     487
    Non-interest expenses        744     612     541     333   6,071   4,434
    -------------------------------------------------------------------------
    Income (loss) before
     income taxes                590     358  (1,800)   (699)  1,211   2,071
    Provision for
     (recovery of)
     income taxes                152     102    (799)   (469)    (23)    395
    Non-controlling interests
     in subsidiaries, net
     of income taxes               -       -      56      17      56      17
    Equity in net income
     of an associated
     company, net of
     income taxes                  -       -      27       8     152     163
    -------------------------------------------------------------------------
    Net income (loss)           $438    $256 $(1,030)  $(239) $1,330  $1,822
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Effective the third quarter ended July 31, 2008, the Bank transferred
        the U.S. insurance and credit card businesses to the Canadian
        Personal and Commercial Banking segment, and the U.S. wealth
        management businesses to the Wealth Management segment for management
        reporting purposes. Prior periods have not been reclassified as the
        impact was not material to segment results.
    (2) Commencing the third quarter ended July 31, 2008, the results of U.S.
        Personal and Commercial Banking segment include Commerce. For
        details, see Note 31 to the 2008 Annual Report.
    (3) As explained in Note 1, effective the three months ended April 30,
        2009, as a result of the alignment of reporting period of the U.S.
        entities, TD Banknorth and Commerce are consolidated using the same
        period as the Bank.
    (4) The taxable equivalent basis increase to net interest income and
        provision for income taxes, reflected in the Wholesale Banking
        segment results, is reversed in the Corporate segment.


    Note 15: HEDGE ACCOUNTING
    -------------------------------------------------------------------------

    Hedge accounting results were as follows:

    Hedge Accounting Results
    -------------------------------------------------------------------------
                                           For the three         For the six
                                            months ended        months ended
                                      ---------------------------------------
                                       Apr. 30   Apr. 30   Apr. 30   Apr. 30
    (millions of Canadian dollars)        2009      2008      2009      2008
    -------------------------------------------------------------------------
    Fair value hedges
    Gain arising from hedge
     ineffectiveness                      $2.7      $1.7     $19.8      $8.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash flow hedges
    (Loss) gain arising from hedge
     ineffectiveness                     $(4.7)     $1.7     $(4.6)     $1.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Portions of derivative gains (losses) that were excluded from the
    assessment of hedge effectiveness for fair value and cash flow hedging
    activities and the change in fair value related to these portions in each
    period are included in the Interim Consolidated Statement of Income. The
    effect of this exclusion was not significant for the three and six months
    ended April 30, 2009.

    During the six months ended April 30, 2009, there were no firm
    commitments that no longer qualified as hedges.

    Over the next twelve months, the Bank expects approximately $1.5
    billion in net gains reported in other comprehensive income as at April
    30, 2009 to be reclassified to net income. The maximum length of time
    over which the Bank is hedging its exposure to the variability in future
    cash flows from anticipated transactions is 30 years. During the six
    months ended April 30, 2009, there were no forecasted transactions that
    failed to occur.


    Note 16: RESTRUCTURING AND INTEGRATION CHARGES
    -------------------------------------------------------------------------

    As a result of the acquisition of Commerce and related restructuring and
    integration initiatives undertaken, the Bank incurred integration charges
    of $77 million and $79 million during the three months ended April 30,
    2009 and January 31, 2009, respectively. Integration charges consisted of
    costs related to resources dedicated to the integration, employee
    retention, external professional consulting charges, marketing (including
    customer communication and rebranding) and integration related travel
    costs. In the Interim Consolidated Statement of Income, the integration
    charges are included in other non-interest expenses.

    For the three months ended January 31, 2009, the Bank incurred $27
    million of restructuring charges. Restructuring charges consisted of
    estimated lease termination costs for approximately 50 legacy TD
    Banknorth branches that were closed and consolidated with nearby branches
    in connection with the Commerce merger. In the Interim Consolidated
    Statement of Income, the restructuring charges are included in
    restructuring costs. No restructuring charges were recorded in the three
    months ended April 30, 2009. As at April 30 2009, the remaining balance
    of the restructuring liability related to the acquisition of Commerce was
    $36 million. Restructuring and integration charges included in the
    Interim Consolidated Statement of Income are presented in the following
    table:

    Commerce Restructuring and Integration Charges
    -------------------------------------------------------------------------
                                           For the three         For the six
                                            months ended        months ended
                                      ---------------------------------------
                                       Apr. 30   Apr. 30   Apr. 30   Apr. 30
    (millions of Canadian dollars)        2009      2008      2009      2008
    -------------------------------------------------------------------------
    Restructuring costs                     $-       $48       $27       $48
    Integration charges(1)                  77         -       156         -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) These amounts do not include integration charges of $25 million
        booked directly to retained earnings as a result of the alignment of
        reporting period of U.S. entities, as explained in Note 1.


    Note 17: OTHER NON-INTEREST EXPENSES
    -------------------------------------------------------------------------

    Other non-interest expenses include a charge for settlement of TD
    Banknorth shareholder litigation. Upon the announcement of the
    privatization of TD Banknorth in November 2006, certain minority
    shareholders of TD Banknorth initiated class action litigation alleging
    various claims against the Bank, TD Banknorth and TD Banknorth officers
    and directors. The parties agreed to settle the litigation in February
    2009 for $61.3 million (US$50 million) of which $3.7 million (US$3
    million) had been previously accrued on privatization. A settlement
    approval hearing with the Court of Chancery in Delaware is scheduled for
    June 2009.


    Note 18: ACQUISITIONS AND DISPOSITIONS
    -------------------------------------------------------------------------

    Commerce Bancorp, Inc.

    During the period from February 1, 2009 to April 30, 2009, goodwill
    increased by $36 million to $6,274 million primarily due to the
    establishment of a valuation allowance on future income tax assets
    related to certain securities and the completion of the valuation of the
    loan portfolio and a corresponding future income tax liability. The
    purchase price allocation, including the valuation of the assets and
    liabilities, is now complete.

    TD AMERITRADE Holding Corporation

    As at April 30, 2009, the Bank's reported investment in TD AMERITRADE
    Holding Corporation (TD Ameritrade) was 47.5% of the issued and
    outstanding shares of TD Ameritrade.

    On February 18, 2009, TD Ameritrade announced a common stock repurchase
    program for an aggregate 34 million shares from its second largest
    shareholder. As a result of TD Ameritrade's repurchase activity, the
    Bank's ownership position in TD Ameritrade increased to 47.5% as at April
    30, 2009 from 44.9% as at January 31, 2009. This level of ownership
    interest is expected to be temporary as TD Ameritrade has announced that
    it plans to issue shares in connection with its acquisition of
    thinkorswim Group Inc. Upon completion of the issuance, the Bank will
    conduct additional sales as required to bring the ownership interest
    under the cap of 45% under the Stockholders' Agreement.

    On March 2, 2009, the Bank took delivery of 27 million shares in
    settlement of its amended hedging arrangement with Lillooet Limited
    (Lillooet) at a hedged cost to the Bank of US$515 million. As Lillooet
    was consolidated in the Bank's consolidated financial statements, the
    replacement of the amended hedge arrangement with the direct ownership of
    the 27 million shares had no material impact on the Bank.


    Note 19: RISK MANAGEMENT
    -------------------------------------------------------------------------

    The risk management policies and procedures of the Bank are provided in
    the MD&A. The shaded sections of the Managing Risk section, included on
    pages 21 to 23 of the MD&A, relating to credit, market and liquidity
    risks are an integral part of the Interim Consolidated Financial
    Statements. For a complete discussion of our risk management policies and
    procedures refer to the shaded sections presented on pages 68 to 76 of
    the Bank's 2008 Annual Report.


    Note 20: SUBSEQUENT EVENTS
    -------------------------------------------------------------------------

    FDIC Restoration Plan Charge

    On May 22, 2009, the Federal Deposit Insurance Corporation (FDIC), in the
    U.S., finalized a five basis points special assessment charge based on
    total assets less Tier 1 capital of an institution insured under the FDIC
    program as at June 30, 2009. The special assessment charge, of
    approximately US$50 million, is payable by the Bank on September 30,
    2009. The final rule adopted also provides the FDIC authority to charge
    similar special assessments on December 31, 2009 and March 31, 2010, if
    needed, subject to additional FDIC Board approval at that time.


    SHAREHOLDER AND INVESTOR INFORMATION

    Shareholder Services

    -------------------------------------------------------------------------

          If you:               And your inquiry          Please contact:
                                 relates to:
    -------------------------------------------------------------------------
    Are a registered         Missing dividends,       Transfer Agent:
    shareholder (your        lost share certifi-      CIBC Mellon Trust
    name appears on your     cates, estate ques-      Company
    TD share certificate)    tions, address changes   P.O. Box 7010
                             to the share register,   Adelaide Street Postal
                             dividend bank account    Station
                             changes, the dividend    Toronto, Ontario
                             reinvestment plan, to    M5C 2W9
                             eliminate duplicate      416-643-5500
                             mailings of share-       or toll-free at
                             holder materials, or     1-800-387-0825
                             to stop (and resume)     inquiries@
                             receiving Annual and     cibcmellon.com or
                             Quarterly Reports.       www.cibcmellon.com
    -------------------------------------------------------------------------
    Hold your TD shares      Missing dividends,       Co-Transfer Agent and
    through the Direct       lost share certifi-      Registrar:
    Registration System in   cates, estate ques-      BNY Mellon Shareowner
    the United States        tions, address changes   Services
                             to the share register,   P.O. Box 358015
                             to eliminate duplicate   Pittsburgh,
                             mailings of share-       Pennsylvania 15252-8015
                             holder materials, or     or 480 Washington
                             to stop (and resume)     Boulevard
                             receiving Annual and     Jersey City, New Jersey
                             Quarterly Reports.       07310
                                                      1-866-233-4836
                                                      TDD for hearing
                                                      impaired:
                                                      1-800-231-5469
                                                      Foreign shareholders:
                                                      201-680-6578
                                                      TDD foreign share-
                                                      holders: 201-680-6610
                                                      www.bnymellon.com/
                                                      shareowner
    -------------------------------------------------------------------------
    Beneficially own TD      Your TD shares,          Your intermediary
    shares that are held     including questions
    in the name of an        regarding the dividend
    intermediary, such as    reinvestment plan and
    a bank, a trust          mailings of share-
    company, a securities    holder materials
    broker or other
    nominee
    -------------------------------------------------------------------------

    For all other shareholder inquiries, please contact TD Shareholder
    Relations at 416-944-6367 or 1-866-756-8936 or email tdshinfo@td.com.
    Please note that by leaving us an e-mail or voicemail message you are
    providing your consent for us to forward your inquiry to the appropriate
    party for response.

    General Information

    Contact Corporate & Public Affairs:
    (416) 982-8578

    Products and services: Contact TD Canada Trust, 24 hours a day, seven
    days a week:
    1-866-567-8888
    French: 1-866-233-2323
    Cantonese/Mandarin: 1-800-328-3698
    Telephone device for the deaf: 1-800-361-1180

    Internet website: http://www.td.com
    Internet e-mail: customer.service@td.com

    Quarterly Earnings Conference Call

    TD Bank Financial Group will host an earnings conference call on May 28,
    2009. The call will be webcast live via TDBFG's website at 3 p.m. ET. The
    call and webcast will feature presentations by TDBFG executives on the
    Bank's financial results for the second quarter, followed by a question-
    and-answer period with analysts. The presentation material referenced
    during the call will be available on the TDBFG website at
    http://www.td.com/investor/earnings.jsp on May 28, 2009, before 12 p.m.
    ET. A listen-only telephone line is available at 416-644-3416 or 1-800-
    732-9307 (toll free).

    The webcast and presentations will be archived at
    http://www.td.com/investor/calendar_arch.jsp. Replay of the
    teleconference will be available from 6 p.m. ET on May 28, 2009, until
    June 29, 2009, by calling 416-640-1917 or 1-877-289-8525 (toll free). The
    passcode is 21305246 followed by the number sign.

    About TD Bank Financial Group

    The Toronto-Dominion Bank and its subsidiaries are collectively known as
    TD Bank Financial Group. TD Bank Financial Group is the sixth largest
    bank in North America by branches and serves approximately 17 million
    customers in four key businesses operating in a number of locations in
    key financial centres around the globe: Canadian Personal and Commercial
    Banking, including TD Canada Trust and TD Insurance; Wealth Management,
    including TD Waterhouse and an investment in TD Ameritrade; U.S. Personal
    and Commercial Banking through TD Banknorth and TD Bank, America's Most
    Convenient Bank; and Wholesale Banking, including TD Securities. TD Bank
    Financial Group also ranks among the world's leading online financial
    services firms, with more than 5.5 million online customers. TD Bank
    Financial Group had $575 billion in assets on April 30, 2009. The
    Toronto-Dominion Bank trades under the symbol "TD" on the Toronto and New
    York Stock Exchanges.
    





For further information:

For further information: Tim Thompson, Senior Vice President, Investor
Relations, (416) 308-9030; Nick Petter, Manager, Media Relations, (416)
308-1861


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