TD Bank Financial Group Reports Third Quarter 2008 Results; Raises Dividend



    
    THIRD QUARTER FINANCIAL HIGHLIGHTS, compared with the third quarter a
    year ago:

    -   Reported diluted earnings per share(1) were $1.21, compared with
        $1.51.
    -   Adjusted diluted earnings per share(2) were $1.35, compared with
        $1.60.
    -   Reported net income(1) was $997 million, compared with
        $1,103 million.
    -   Adjusted net income(2) was $1,115 million, compared with
        $1,164 million.

    YEAR-TO-DATE FINANCIAL HIGHLIGHTS, nine months ended July 31, 2008,
    compared with the corresponding period a year ago:

    -   Reported diluted earnings per share(1) were $3.65, compared with
        $3.98.
    -   Adjusted diluted earnings per share(2) were $4.12, compared with
        $4.34.
    -   Reported net income(1) was $2,819 million, compared with
        $2,903 million.
    -   Adjusted net income(2) was $3,148 million, compared with
        $3,168 million.

    THIRD QUARTER ADJUSTMENTS (ITEMS OF NOTE)

    The third quarter reported diluted earnings per share figures include the
    following items of note:

    -   Amortization of intangibles of $111 million after tax (13 cents
        per share), compared with $91 million after tax (13 cents per share)
        in the third quarter last year. The $111 million was net of a related
        tax benefit in the future tax liability of $21 million, arising as
        the combined overall tax rate for U.S. Personal and Commercial
        Banking declined as a result of the Commerce Bancorp, Inc. (Commerce)
        acquisition.
    -   A gain of $22 million after tax (3 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
        $30 million after tax (4 cents per share) in the same quarter last
        year.
    -   Restructuring and integration charges of $15 million after tax
        (2 cents per share), relating to the acquisition of Commerce.
    -   A negative impact of $14 million (2 cents per share) on the provision
        for income taxes of a reduction in future income tax assets
        associated with the Commerce acquisition.

    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 referenced in this press release and
        Report to Shareholders are explained under the "How the Bank
        Reports" section.
    

    TORONTO, Aug. 28 /CNW/ - TD Bank Financial Group (TDBFG) today announced
its financial results for the third quarter ended July 31, 2008. Overall
results for the quarter reflected solid earnings contributions from TDBFG's
personal and commercial banking operations in both Canada and the United
States and its Wealth Management segment, while the performance of Wholesale
Banking was affected by continuing challenges in financial markets. TDBFG also
announced its quarterly dividend will be raised to 61 cents from 59 cents per
fully paid common share for the quarter ended October 31, 2008, representing
an increase of 3.4%.
    "Our retail businesses in both Canada and the U.S. led the way for us
again this quarter - delivering over $1 billion in combined net income," said
Ed Clark, TD Bank Financial Group President and Chief Executive Officer. "Our
strategy is delivering steady performance in tough market conditions while
allowing us to continue investing in future growth."

    THIRD QUARTER BUSINESS SEGMENT PERFORMANCE

    Canadian Personal and Commercial Banking

    TD Canada Trust posted record earnings of $644 million in the third
quarter, up 8% over the same period last year. The quarter was defined by
strong volume growth across most Canadian Personal and Commercial Banking
operating businesses. Core banking, real estate secured lending, credit cards
and business banking led earnings growth.
    "Our TD Canada Trust franchise achieved a record quarter - in volume
growth, customer satisfaction levels and efficiency. These very strong results
were delivered while we continued to invest in the business, opening 11 new
branches and supporting our longer-hours strategy," said Clark. "We are
certainly feeling good about these results and our position as the leader in
service and convenience in banking, which was highlighted by TDCT's winning of
the J.D. Power customer-satisfaction award for the third year in a row."

    Wealth Management

    Wealth Management, including TDBFG's equity share in TD Ameritrade,
earned $201 million in the quarter, up 9% year over year. As previously
announced, TD Ameritrade contributed $74 million in earnings to the segment.
In Canada, strong volumes in discount brokerage were moderated by a
lower-commission strategy, while current market conditions impacted revenues
in full-service brokerage.
    "We are pleased with how the investments we've made in our Wealth
Management platform are positioning us for future growth," said Clark. "As we
expand our U.S. wealth business, we look forward to taking advantage of our
diversified offering to become the number-one wealth management provider to TD
Bank customers."

    U.S. Personal and Commercial Banking

    U.S. Personal and Commercial Banking, which now includes the earnings
contribution from Commerce, generated $273 million in adjusted net income. The
combination of TD Banknorth and Commerce (to be known as TD Bank) saw growth
in commercial loans while overall asset quality remained solid. As previously
announced, the rebranding as TD Bank, America's Most Convenient Bank, will
begin in the fall of 2008 and is expected to be completed in 2009.
    "We're very pleased to see our U.S. Personal and Commercial operations
coming together as planned, exceeding our earnings expectations and creating a
first-rate U.S. franchise that is positioned to grow organically and deliver
long-term value to TD shareholders," said Clark. "We expect the quality of
TD Bank's loan portfolio will continue to set us apart as we operate in a
challenging environment."

    Wholesale Banking

    Wholesale Banking earned $37 million in the third quarter. As previously
announced, TD Securities identified incorrectly priced financial instruments
that led to a cumulative impact in the quarter of $96 million before tax.
Wholesale's underlying business performance in the quarter showed strength in
fixed income trading, while equity trading revenues and securities gains were
lower.
    "This was a tough quarter for our wholesale bank. The mispricing that
occurred is particularly disappointing and not consistent with our strong
risk-management culture. We're continuing to work on a thorough review of our
risk practices across the organization to ensure we minimise the risk of this
kind of thing happening again," said Clark. "Looking forward, TD Securities
remains focused on producing high-quality earnings and solidifying its
position as a top-three dealer in Canada."

    Conclusion

    "Our retail businesses on both sides of the border - which again produced
more than 90% of our earnings this quarter - continued to perform very well,
providing TD with a solid base of consistent earnings," said Clark. "In what
continues to be a tough environment for banks, we're showing our strategy is
working."
    "Our commitment to growth is reflected in the increase to our dividend.
We've said all along that our dividend will grow in line with our earnings
over the medium term. The increase this quarter demonstrates the Board's
confidence in the strength and stability of our earnings as we head into
2009."

    CAUTION REGARDING FORWARD-LOOKING STATEMENTS

    From time to time, 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 2008 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 2008 for each of
our business segments are set out in the 2007 Annual Report under the headings
"Economic Outlook" and "Business Outlook and Focus for 2008", as updated in
the subsequently filed quarterly Reports to Shareholders. 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,
which 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 - 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 2007 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 monetary policy 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;
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; 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;
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 financial results, businesses, financial condition or liquidity. The
preceding list is not exhaustive of all possible factors. Other factors could
also adversely affect the Bank's results. For more information, see the
discussion starting on page 59 of the Bank's 2007 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 as they may not be suitable for other purposes. 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 (the Bank) for the three and nine months
ended July 31, 2008, 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 2007 Annual Report. This MD&A is dated August 27, 2008. 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
www.td.com, as well as on SEDAR at www.sedar.com and on the U.S. Securities
and Exchange Commission's (SEC's) website at www.sec.gov (EDGAR filers
section).

    
    FINANCIAL HIGHLIGHTS
    -------------------------------------------------------------------------
                                                                For the nine
                            For the three months ended          months ended
    (millions of       -------------------------------- ---------------------
     Canadian dollars,   July 31    Apr. 30    July 31    July 31    July 31
     except as noted)       2008       2008       2007       2008       2007
    -------------------------------------------------------------------------
    Results of
     operations
    Total revenue         $4,037     $3,388     $3,682    $11,029    $10,731
    Provision for
     credit losses           288        232        171        775        506
    Non-interest
     expenses              2,701      2,206      2,216      7,135      6,734
    Net income -
     reported(1)             997        852      1,103      2,819      2,903
    Net income -
     adjusted(1)           1,115        973      1,164      3,148      3,168
    Economic profit(2)       321        283        578      1,073      1,447
    Return on common
     equity - reported      13.4%      13.4%      21.0%      14.8%      18.9%
    Return on invested
     capital(2)             13.1%      13.2%      18.7%      14.2%      17.4%
    -------------------------------------------------------------------------
    Financial position
    Total assets        $508,839   $503,621   $403,890   $508,839   $403,890
    Total risk-weighted
     assets(3)           184,674    178,635    150,783    184,674    150,783
    Total shareholders'
     equity               31,293     30,595     21,003     31,293     21,003
    -------------------------------------------------------------------------
    Financial ratios -
     reported
    Efficiency ratio        66.9%      65.1%      60.2%      64.7%      62.8%
    Tier 1 capital to
     risk-weighted assets    9.5        9.1       10.2        9.5       10.2
    Provision for credit
     losses as a % of net
     average loans          0.54       0.49       0.39       0.54       0.39
    -------------------------------------------------------------------------
    Common share
     information -
     reported (Canadian
     dollars)
    Per share
      Basic earnings       $1.22      $1.12      $1.53      $3.68      $4.02
      Diluted earnings      1.21       1.12       1.51       3.65       3.98
      Dividends             0.59       0.59       0.53       1.75       1.54
      Book value           36.75      36.70      28.65      36.75      28.65
    Closing share price    62.29      66.11      68.26      62.29      68.26
    Shares outstanding
     (millions)
      Average basic        804.0      747.7      719.5      756.8      719.0
      Average diluted      811.0      753.7      726.9      763.2      725.9
      End of period        807.3      802.9      718.3      807.3      718.3
    Market capitalization
     (billions of
     Canadian dollars)     $50.3      $53.1      $49.0      $50.3      $49.0
    Dividend yield           3.7%       3.5%       2.9%       3.6%       2.9%
    Dividend payout ratio   48.5%      56.2%      34.6%      48.8%      38.4%
    Price to earnings
     multiple               12.1       12.1       13.6       12.1       13.6
    -------------------------------------------------------------------------
    Common share
     information -
     adjusted (Canadian
     dollars)
    Per share
      Basic earnings       $1.37      $1.33      $1.61      $4.15      $4.39
      Diluted earnings      1.35       1.32       1.60       4.12       4.34
    Dividend payout ratio   43.3%      49.2%      32.8%      43.6%      35.1%
    Price to earnings
     multiple               11.3       11.5       12.3       11.3       12.3
    -------------------------------------------------------------------------
    (1) Reported and adjusted results are explained under the "How the Bank
        Reports" section, which includes a reconciliation between reported
        and adjusted results.
    (2) Economic profit and return on invested capital are non-GAAP financial
        measures and are explained under the "Economic Profit and Return on
        Invested Capital" section.
    (3) The Bank adopted the "International Convergence of Capital
        Measurement and Capital Standards - A Revised Framework" (Basel II),
        issued by the Basel Committee on Banking Supervision for calculating
        risk-weighted assets (RWA) and regulatory capital starting
        November 1, 2007. Prior period numbers are based on the Basel I
        Capital Accord (Basel I). For details, see the "Capital Position"
        section.
    

    HOW WE PERFORMED

    Corporate Overview

    The Toronto-Dominion Bank and its subsidiaries are collectively known as
TD Bank Financial Group. The Bank 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, as well as the Bank's global insurance operations; Wealth
Management, including TD Waterhouse Canada, TD Waterhouse U.K. and the Bank's
investment in TD Ameritrade; U.S. Personal and Commercial Banking through
TD Banknorth and Commerce (to be known together as TD Bank); and Wholesale
Banking, including TD Securities. The Bank also ranks among the world's
leading on-line financial services firms, with more than 5.5 million on-line
customers. The Bank had $509 billion in assets as at July 31, 2008. The Bank
is headquartered in Toronto, Canada. The Bank's common stock is listed on the
Toronto Stock Exchange and the New York Stock Exchange under symbol: TD, as
well as on the Tokyo Stock Exchange.

    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.

    The following tables provide reconciliation between the Bank's reported
and adjusted results.

    
    Operating Results - Reported
    -------------------------------------------------------------------------
                                                                For the nine
                            For the three months ended          months ended
                       -------------------------------- ---------------------
    (millions of         July 31    Apr. 30    July 31    July 31    July 31
     Canadian dollars)      2008       2008       2007       2008       2007
    -------------------------------------------------------------------------
    Net interest income   $2,437     $1,858     $1,783     $6,083     $5,116
    Other income           1,600      1,530      1,899      4,946      5,615
    -------------------------------------------------------------------------
    Total revenue          4,037      3,388      3,682     11,029     10,731
    Provision for
     credit losses          (288)      (232)      (171)      (775)      (506)
    Non-interest
     expenses             (2,701)    (2,206)    (2,216)    (7,135)    (6,734)
    -------------------------------------------------------------------------
    Income before
     provision for
     income taxes,
     non-controlling
     interests in
     subsidiaries and
     equity in net
     income of an
     associated company    1,048        950      1,295      3,119      3,491
    Provision for
     income taxes           (122)      (160)      (248)      (517)      (700)
    Non-controlling
     interests in
     subsidiaries, net
     of income taxes          (8)        (9)       (13)       (25)       (87)
    Equity in net income
     of an associated
     company, net of
     income taxes             79         71         69        242        199
    -------------------------------------------------------------------------
    Net income - reported    997        852      1,103      2,819      2,903
    Preferred dividends      (17)       (11)        (2)       (36)       (15)
    -------------------------------------------------------------------------
    Net income available
     to common
     shareholders -
     reported               $980       $841     $1,101     $2,783     $2,888
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Reconciliation of Non-GAAP Financial Measures(1)
    Adjusted Net Income to Reported Results
    -------------------------------------------------------------------------
    Operating results -                                         For the nine
     adjusted               For the three months ended          months ended
                       -------------------------------- ---------------------
    (millions of         July 31    Apr. 30    July 31    July 31    July 31
     Canadian dollars)      2008       2008       2007       2008       2007
    -------------------------------------------------------------------------
    Net interest income   $2,437     $1,858     $1,783     $6,083     $5,116
    Other income(2)        1,566      1,529      1,853      4,886      5,566
    -------------------------------------------------------------------------
    Total revenue          4,003      3,387      3,636     10,969     10,682
    Provision for
     credit losses(3)       (288)      (232)      (171)      (758)      (506)
    Non-interest
     expenses(4)          (2,512)    (2,041)    (2,085)    (6,659)    (6,287)
    -------------------------------------------------------------------------
    Income before
     provision for
     income taxes,
     non-controlling
     interests in
     subsidiaries and
     equity in net
     income of an
     associated company    1,203      1,114      1,380      3,552      3,889
    Provision for
     income taxes(5)        (175)      (220)      (282)      (670)      (844)
    Non-controlling
     interests in
     subsidiaries, net
     of income taxes(6)       (8)        (9)       (14)       (25)      (111)
    Equity in net income
     of an associated
     company, net of
     income taxes(7)          95         88         80        291        234
    -------------------------------------------------------------------------
    Net income - adjusted  1,115        973      1,164      3,148      3,168
    Preferred dividends      (17)       (11)        (2)       (36)       (15)
    -------------------------------------------------------------------------
    Net income available
     to common shareholders
     - adjusted            1,098        962      1,162      3,112      3,153
    -------------------------------------------------------------------------
    Items of note
     affecting net income,
     net of income taxes:
      Amortization of
       intangibles(8)       (111)       (92)       (91)      (278)      (254)
      TD Banknorth
       restructuring,
       privatization and
       merger-related
       charges(9)              -          -          -          -        (43)
      Restructuring and
       integration
       charges relating
       to the Commerce
       acquisition(10)       (15)       (30)         -        (45)         -
      Change in fair
       value of credit
       default swaps
       hedging the
       corporate loan
       book, net of
       provision for
       credit losses(11)      22          1         30         48         32
      Other tax items(12)    (14)         -          -        (34)         -
      Provision for
       insurance claims(13)    -          -          -        (20)         -
    -------------------------------------------------------------------------
    Total items of note     (118)      (121)       (61)      (329)      (265)
    -------------------------------------------------------------------------
    Net income available
     to common
     shareholders -
     reported               $980       $841     $1,101     $2,783     $2,888
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1)    Certain comparative amounts have been reclassified to conform to
           the presentation adopted in the current period.
    (2)    Adjusted other income excludes the following items of note:
           third quarter 2008 - $34 million gain due to change in fair value
           of credit default swaps (CDS) hedging the corporate loan book;
           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 13; third quarter 2007 - $46 million gain
           due to change in fair value of CDS hedging the corporate loan
           book.
    (3)    Adjusted provision for credit losses excludes the following item
           of note: first quarter 2008 - $17 million related to the portion
           that was hedged via the CDS.
    (4)    Adjusted non-interest expenses excludes the following items of
           note: third quarter 2008 - $166 million amortization of
           intangibles; $23 million restructuring and integration charges, as
           explained in footnote 10; second quarter 2008 - $117 million
           amortization of intangibles; $48 million restructuring and
           integration charges; first quarter 2008 - $122 million
           amortization of intangibles; third quarter 2007 - $131 million
           amortization of intangibles.
    (5)    For reconciliation between reported and adjusted provision for
           income taxes, refer to the reconciliation table on page 12.
    (6)    Adjusted non-controlling interests excludes the following items of
           note: third quarter 2007 - $1 million amortization of intangibles.
    (7)    Adjusted equity in net income of an associated company excludes
           the following items of note: third quarter 2008 - $16 million
           amortization of intangibles; second quarter 2008 - $17 million
           amortization of intangibles; first quarter 2008 - $16 million
           amortization of intangibles; third quarter 2007 - $11 million
           amortization of intangibles.
    (8)    Amortization of intangibles primarily relates to the Canada Trust
           acquisition in 2000, the TD Banknorth Inc. (TD Banknorth)
           acquisition in 2005 and its privatization in 2007, Commerce
           Bancorp, Inc (Commerce) acquisition in 2008, the acquisitions by
           TD Banknorth of Hudson United Bancorp (Hudson) in 2006 and
           Interchange Financial Services Corporation (Interchange) in 2007,
           and the amortization of intangibles included in equity in net
           income of TD Ameritrade. See additional information in the
           amortization of intangibles table on the following page.
    (9)    The TD Banknorth restructuring, privatization and merger-related
           charges include the following: $31 million restructuring charge,
           which primarily consisted of employee severance costs, the costs
           of amending certain executive employment and award agreements and
           write-down of long-lived assets due to impairment, included in
           U.S. Personal and Commercial Banking; $4 million restructuring
           charge related to the transfer of functions from TD Bank USA, N.A.
           (TD Bank USA) to TD Banknorth, included in the Corporate segment;
           $5 million privatization charges, which primarily consisted of
           legal and investment banking fees, included in U.S. Personal and
           Commercial Banking; and $3 million merger-related charges related
           to conversion and customer notices in connection with the
           integration of Hudson and Interchange with TD Banknorth, included
           in U.S. Personal and Commercial Banking. In the Interim
           Consolidated Statement of Income, the restructuring, privatization
           and merger-related charges are included in non-interest expenses.
    (10)   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.
    (11)   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 they 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 the Wholesale Banking segment
           and the gains and losses on the CDS, in excess of the accrued
           cost, are reported in the Corporate segment. Adjusted earnings
           excludes the gains and losses on the CDS in excess of the accrued
           cost. When a credit event occurs in the corporate loan book that
           has an associated CDS hedge, the PCL related to the portion that
           was hedged via the CDS is netted against this item of note. During
           the prior quarter, the change in the fair value of CDS, net of
           PCL, resulted in a net gain of $38 million before tax ($25 million
           after tax). The item of note included a change in fair value of
           CDS of $55 million before tax ($36 million after tax), net of PCL
           of approximately $17 million before tax ($11 million after tax).
    (12)   Third quarter 2008 - As a result of the Commerce acquisition, the
           combined overall tax rate for U.S. Personal and Commercial Banking
           segment declined, resulting in a negative impact on future income
           tax assets of $14 million related to non-intangible future income
           tax assets. First quarter 2008 - The negative impact of the
           scheduled reductions in the income tax rate, resulting in a
           decrease of $20 million in the net future income tax assets.
    (13)   The provision for insurance claims relates to a court decision in
           Alberta. The Alberta government's legislation effectively capping
           minor injury insurance claims was challenged and held to be
           unconstitutional earlier this calendar year. 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 claims in the first quarter of 2008.



    Reconciliation of Reported Earnings per Share (EPS) to Adjusted EPS(1)
    -------------------------------------------------------------------------
                                                                For the nine
                            For the three months ended          months ended
                       -------------------------------- ---------------------
                         July 31    Apr. 30    July 31    July 31    July 31
    (Canadian dollars)      2008       2008       2007       2008       2007
    -------------------------------------------------------------------------
    Diluted - reported     $1.21      $1.12      $1.51      $3.65      $3.98
    Items of note
     affecting income
     (as above)             0.14       0.16       0.09       0.43       0.36
    Items of note
     affecting EPS
     only(2)                   -       0.04          -       0.04          -
    -------------------------------------------------------------------------
    Diluted - adjusted     $1.35      $1.32      $1.60      $4.12      $4.34
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic - reported       $1.22      $1.12      $1.53      $3.68      $4.02
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (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 due to a one month lag between fiscal quarter
        ends, while share issuance on close resulted in a one-time negative
        earnings impact of 4 cents per share.


    Amortization of Intangibles, Net of Income Taxes
    -------------------------------------------------------------------------
                                                                For the nine
                            For the three months ended          months ended
                       -------------------------------- ---------------------
    (millions of         July 31    Apr. 30    July 31    July 31    July 31
     Canadian dollars)      2008       2008       2007       2008       2007
    -------------------------------------------------------------------------
    Canadian Personal
     and Commercial
     Banking                 $46        $37        $41       $104       $135
    -------------------------------------------------------------------------
    U.S. Personal and
     Commercial Banking:
      Reported
       amortization of
       intangibles            42         32         32        107         72
      Less: non-controlling
       interest                -          -          1          -          9
    -------------------------------------------------------------------------
      Net amortization
       of intangibles         42         32         31        107         63
    TD Ameritrade
     (included in
     equity in net
     income of an
     associated company)      16         17         11         49         35
    Other                      7          6          8         18         21
    -------------------------------------------------------------------------
    Amortization of
     intangibles, net of
     income taxes(1)        $111        $92        $91       $278       $254
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (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, return
on invested capital and adjusted net income. 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
    Adjusted Net Income
    -------------------------------------------------------------------------
                                                                For the nine
                            For the three months ended          months ended
                       -------------------------------- ---------------------
    (millions of         July 31    Apr. 30    July 31    July 31    July 31
     Canadian dollars)      2008       2008       2007       2008       2007
    -------------------------------------------------------------------------
    Average common
     equity              $29,065    $25,593    $20,771    $25,198    $20,478
    Average cumulative
     goodwill/intangible
     assets amortized,
     net of income taxes   4,171      4,082      3,857      4,091      3,785
    -------------------------------------------------------------------------
    Average invested
     capital             $33,236    $29,675    $24,628    $29,289    $24,263
    Rate charged for
     invested capital        9.3%       9.3%       9.4%       9.3%       9.4%
    -------------------------------------------------------------------------
    Charge for invested
     capital               $(777)     $(679)     $(584)   $(2,039)   $(1,706)
    -------------------------------------------------------------------------
    Net income available
     to common
     shareholders -
     reported               $980       $841     $1,101     $2,783     $2,888
    Items of note
     affecting net
     income, net of
     income taxes            118        121         61        329        265
    -------------------------------------------------------------------------
    Net income available
     to common
     shareholders -
     adjusted             $1,098       $962     $1,162     $3,112     $3,153
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Economic profit         $321       $283       $578     $1,073     $1,447
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Return on invested
     capital                13.1%      13.2%      18.7%      14.2%      17.4%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Significant Events in 2008

    Acquisition of Commerce Bancorp, Inc.

    On March 31, 2008, the Bank acquired 100% of the outstanding shares of
Commerce for purchase consideration of $8.5 billion, paid in cash and common
shares. As a result, $57.1 billion of assets (including additional goodwill of
approximately $6.4 billion and intangible assets of $1.5 billion) and
$48.6 billion of liabilities were included in the Bank's Consolidated Balance
Sheet. The allocation of the purchase price is subject to finalization.
    Commerce is reported in the U.S. Personal and Commercial Banking segment.
    For details, see Note 20 to the Interim Consolidated Financial Statements
for the quarter ended July 31, 2008.
    The fiscal periods of Commerce and the Bank are not co-terminus.
Commerce's results for each calendar quarter are consolidated on a one month
lag with the Bank's results for the fiscal quarter. This is in the normal
course of the Bank's financial reporting and TD Banknorth is reported in a
similar manner. Because the Commerce transaction closed on March 31, due to
the one month lag, the Bank's second quarter results did not include any
results of Commerce. However, $48 million before tax ($30 million after tax)
restructuring and integration charges incurred in April 2008 were included in
the Bank's results for the quarter ended April 30, 2008 because they represent
material U.S. Personal and Commercial Banking events for the quarter ended
April 30, 2008.
    As previously disclosed, the projected earnings of U.S. Personal and
Commercial Banking segment is estimated to be at least $750 million in 2008
and a minimum of $1,200 million in 2009(1).

    
    (1) Projected results for 2008 are equal to the nine months ended
        July 31, 2008 annualized including management's estimate of the
        expected contribution from the Commerce transaction, taking into
        account expected synergies and excluding restructuring and
        integration charges. The 2009 estimate is equal to the 2008 estimate,
        excluding the contribution from the Commerce transaction, increased
        by our target growth rate range of 7% to 10%, plus management's
        estimate of the contribution from the Commerce transaction. Projected
        results exclude restructuring and integration charges, anticipated to
        total US$420 million before tax, the majority of which will be taken
        in 2008 and 2009. Commerce's future earnings and all other estimates
        are subject to risks and uncertainties that may cause actual results
        to differ materially. See the "Caution regarding forward-looking
        statements" included in the Bank's press release dated April 21,
        2008, which is available on the Bank's website at www.td.com, as well
        as on SEDAR at www.sedar.com and on the SEC's website at www.sec.gov
        (EDGAR filers section).
    


    FINANCIAL RESULTS OVERVIEW

    Performance Summary

    An overview of the Bank's performance on an adjusted basis for the third
quarter of 2008 against the financial shareholder indicators included in the
2007 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 exclude items of note
from the reported results that are prepared in accordance with Canadian GAAP.
Reported and adjusted results and items of note are explained under the "How
the Bank Reports" section.

    
    -   Adjusted diluted earnings per share for the nine months ended
        July 31, 2008 were down 5% from the same period last year. The Bank's
        goal is to grow adjusted earnings per share by 7% to 10% over the
        longer term.
    -   Adjusted return on risk-weighted assets for the nine months ended
        July 31, 2008 was 2.6%, down from 2.9% in 2007.
    -   Total shareholder return for the twelve months ended July 31, 2008
        was (5.5)%, above the peer average of (14.5)%.

    Net Income

    Year-over-year comparison
    -------------------------
    
    Reported net income for the current quarter was $997 million, down
$106 million, or 10%, compared with the third quarter last year. Adjusted net
income was $1,115 million, a decline of $49 million or 4%. The decrease in
adjusted net income was due to a decline in Wholesale Banking and Corporate
segment earnings, partially offset by higher earnings generated from U.S.
Personal and Commercial Banking, and Canadian Personal and Commercial Banking.
Wholesale Banking net income was down due to the difficult capital markets
environment resulting in lower trading revenue and securities gains. U.S.
Personal and Commercial Banking earnings were higher, largely due to the
first-time inclusion of Commerce results. Canadian Personal and Commercial
Banking delivered earnings growth driven largely by strong volume growth
across most banking products.

    
    Prior quarter comparison
    ------------------------
    
    Reported net income increased $145 million, or 17%, compared with the
prior quarter. Adjusted net income for the quarter increased by $142 million
or 15%. The increase in adjusted net income was due to increased earnings in
most segments, partially offset by a decline in Wholesale Banking and
Corporate segment. Wholesale Banking net income was impacted by difficult
capital markets environment resulting in lower trading revenue and securities
gains. U.S. Personal and Commercial Banking earnings were higher, largely due
to the first-time inclusion of Commerce results. Canadian Personal and
Commercial Banking delivered earnings growth, driven largely by strong volume
growth across most banking products.

    
    Year-to-date comparison
    -----------------------
    
    On a year-to-date basis, reported net income of $2,819 million decreased
$84 million, or 3%, compared with the same period last year. Adjusted net
income of $3,148 million decreased $20 million, or 1%. The decrease in
adjusted net income was primarily driven by lower Wholesale Banking earnings
due to challenging operating environments and a higher loss recorded in the
Corporate segment. These decreases were largely offset by higher core earnings
in Canadian Personal and Commercial Banking, the first-time inclusion of
Commerce results in U.S. Personal and Commercial Banking, and higher earnings
in TD Ameritrade.

    Net Interest Income

    
    Year-over-year comparison
    -------------------------
    
    Net interest income for the quarter was $2,437 million, an increase of
$654 million, or 37%, compared with the third quarter last year. The growth
was largely driven by U.S. Personal and Commercial Banking, with positive
contributions from the Canadian Personal and Commercial Banking and Wholesale
Banking segments. U.S. Personal and Commercial Banking net interest income
increased primarily due to the first-time inclusion of Commerce results.
Canadian Personal and Commercial Banking increased primarily due to strong
volume growth across most banking products, partially offset by a 9 basis
point (bps) decline in margin on average earning assets to 2.98%.

    
    Prior quarter comparison
    ------------------------
    
    Net interest income increased by $579 million, or 31%, compared with the
previous quarter. The increase was driven primarily by U.S. Personal and
Commercial Banking due to the first-time inclusion of Commerce results, with
positive contributions from all other segments.

    
    Year-to-date comparison
    -----------------------
    
    On a year-to-date basis, net interest income of $6,083 million increased
$967 million, or 19%, compared with the same period last year, due to growth
across most segments. Canadian Personal and Commercial Banking net interest
income increased primarily due to strong volume growth in real estate secured
lending and deposits, which was partially offset by an 8 bps decline in margin
on average earning assets to 2.97%. U.S. Personal and Commercial Banking net
interest income increased primarily due to the first-time inclusion of
Commerce results.

    Other Income

    
    Year-over-year comparison
    -------------------------
    
    Reported other income for the third quarter was $1,600 million, down
$299 million, or 16%, compared with the third quarter of last year. On an
adjusted basis, other income was $1,566 million, lower by $287 million or 16%.
The decrease in adjusted other income was driven by a $494 million decline in
Wholesale Banking due to lower trading revenue and advisory fees as the
capital markets businesses were impacted by difficult market conditions. The
decrease was partially offset by an increase in Canadian Personal and
Commercial Banking and U.S. Personal and Commercial Banking other income,
driven by higher personal deposit and card services fee growth and the
first-time inclusion of Commerce results.

    
    Prior quarter comparison
    ------------------------
    
    Reported other income increased $70 million, or 5%, compared with the
prior quarter. Adjusted other income was $37 million, or 2%, above the prior
quarter. The increase in adjusted other income was due to increases in the
Canadian Personal and Commercial Banking, U.S. Personal and Commercial Banking
and Wealth Management segments; partially offset by a decrease in Wholesale
Banking resulting from weaker equity trading revenue and lower securities
gains.

    
    Year-to-date comparison
    -----------------------
    
    Reported other income of $4,946 million decreased $669 million, or 12%,
compared with the same period last year. Prior year reported other income
included the favourable impact of higher gains due to the change in fair value
of CDS used to hedge the corporate loan book. Year-to-date adjusted other
income was down $680 million, or 12%, from the previous year. The decrease in
adjusted other income was due to a decrease of $894 million in Wholesale
Banking driven by weak trading revenue and lower security gains. Wealth
Management and Corporate segments experienced marginal declines in other
income. These declines were partially offset by higher other income in U.S.
Personal and Commercial Banking due to the first-time inclusion of Commerce
results, and higher fee income, primarily from personal deposit and credit
card growth in Canadian Personal and Commercial Banking.

    Provision for Credit Losses

    
    Year-over-year comparison
    -------------------------
    
    During the quarter, the Bank recorded a provision for credit losses of
$288 million, an increase of $117 million compared with the third quarter last
year, primarily due to higher specific provisions in the Canadian Personal and
Commerial Banking and Wholesale Banking segments and higher general provisions
in the U.S. Personal and Commercial Banking segment.

    
    Prior quarter comparison
    ------------------------
    
    Provision for credit losses for the third quarter was up $56 million from
$232 million in the prior quarter. The increase was primarily due to higher
specific provisions in Wholesale Banking and higher general provisions in the
U.S. Personal and Commercial Banking segment.

    
    Year-to-date comparison
    -----------------------
    On a year-to-date basis, provision for credit losses increased
$269 million, from $506 million in the same period last year. The increase was
primarily due to higher specific provisions in the Canadian Personal and
Commercial Banking and Wholesale Banking segments, and higher general
provisions in the U.S. Personal and Commercial Banking segment.

    Provision for Credit Losses
    -------------------------------------------------------------------------
                                                                For the nine
                            For the three months ended          months ended
                       -------------------------------- ---------------------
    (millions of         July 31    Apr. 30    July 31    July 31    July 31
     Canadian dollars)      2008       2008       2007       2008       2007
    -------------------------------------------------------------------------
    Net new specifics
     (net of reversals)     $260       $244       $181       $771       $586
    Recoveries               (30)       (33)       (40)       (95)      (108)
    -------------------------------------------------------------------------
    Provision for credit
     losses - specifics      230        211        141        676        478
    Change in general
     allowance
      VFC                     16         16         12         47         34
      U.S. Personal and
       Commercial Banking     42          5         18         51         (6)
      Other                    -          -          -          1          -
    -------------------------------------------------------------------------
    Total                   $288       $232       $171       $775       $506
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Non-Interest Expenses and Efficiency Ratio

    Year-over-year comparison
    -------------------------
    
    Reported non-interest expenses for the third quarter were $2,701 million,
an increase of $485 million, or 22%, compared with the third quarter last
year. Adjusted non-interest expenses of $2,512 million, increased
$427 million, or 20%, compared with the third quarter last year. This increase
was largely driven by growth in U.S. Personal and Commercial Banking resulting
from the first-time inclusion of Commerce results, as well as growth in
Canadian Personal and Commercial Banking.
    The reported efficiency ratio was 66.9%, compared with 60.2% in the third
quarter last year. The Bank's adjusted efficiency ratio was 62.8%, compared
with 57.3% in the same period last year.

    
    Prior quarter comparison
    ------------------------
    
    Reported non-interest expenses increased $495 million, or 22%, compared
with the prior quarter. Adjusted non-interest expenses increased $471 million,
or 23%. The increase was a result of higher expenses, primarily in U.S.
Personal and Commercial Banking due to the first-time inclusion of Commerce
results.
    The reported efficiency ratio was 66.9%, compared with 65.1% in the prior
quarter. The Bank's adjusted efficiency ratio was 62.8% compared with 60.3% in
the prior quarter.

    
    Year-to-date comparison
    -----------------------
    
    On a year-to-date basis, reported non-interest expenses of $7,135 million
were up $401 million, or 6%, compared with the same period last year, with the
growth in amortization of intangibles accounting for $44 million of the
increase. The current year-to-date reported expenses included $71 million of
restructuring and integration charges attributable to the Commerce acquisition
while the prior year-to-date period included $67 million in charges related to
the privatization of TD Banknorth and the transfer of functions from TD Bank
USA, N.A. to TD Banknorth. Adjusted non-interest expenses were $6,660 million,
an increase of $373 million, or 6%, due to increases in the Canadian Personal
and Commercial Banking, U.S. Personal and Commercial Banking, Wealth
Management and Corporate segments. Canadian Personal and Commercial Banking
expenses increased due to investments in new branches, higher staffing costs
associated with longer branch hours and higher employee compensation. U.S.
Personal and Commercial Banking accounted for the greatest portion of the
year-to-date increase, primarily due to the first-time inclusion of Commerce
results.
    The reported efficiency ratio was 64.7%, compared with 62.8% in the same
period last year. The Bank's adjusted efficiency ratio was 60.7%, compared to
58.9% 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 11.6% for the third quarter,
compared with 19.2% in the same quarter last year, and 16.8% in the prior
quarter. On a year-to-date basis, the Bank's reported effective tax rate was
16.6%, compared with 20.1% in the same period last year. The period over
period tax rate reduction was primarily due to a significantly lower effective
tax rate on international operations, which includes the tax synergies related
to the Commerce acquisition.

    
    Taxes
    -------------------------------------------------------------------------
                                             For the three months ended
                                ---------------------------------------------
    (millions of                       July 31        Apr. 30        July 31
     Canadian dollars)                    2008           2008           2007
    -------------------------------------------------------------------------
    Income taxes at
     Canadian statutory
     income tax rate             $343    32.7%  $310    32.7%  $452    34.9%
    Increase (decrease)
     resulting from:
      Dividends received          (93)    (8.9)  (79)    (8.3)  (92)    (7.1)
      Rate differentials on
       international
       operations                (126)   (12.0)  (69)    (7.3) (103)    (8.0)
      Other - net                  (2)    (0.2)   (2)    (0.3)   (9)    (0.6)
    -------------------------------------------------------------------------
    Provision for income taxes
     and effective income
     tax rate - reported         $122    11.6%  $160    16.8%  $248    19.2%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    ----------------------------------------------------------
                                    For the nine months ended
                                ------------------------------
    (millions of                       July 31        July 31
     Canadian dollars)                    2008           2007
    ----------------------------------------------------------
    Income taxes at
     Canadian statutory
     income tax rate             $1,019  32.7% $1,218   34.9%
    Increase (decrease)
     resulting from:
      Dividends received           (258)  (8.3)  (262)   (7.5)
      Rate differentials on
       international
       operations                  (279)  (8.9)  (250)   (7.2)
      Other - net                    35    1.1     (6)   (0.1)
    ----------------------------------------------------------
    Provision for income taxes
     and effective income
     tax rate - reported           $517  16.6%   $700   20.1%
    ----------------------------------------------------------
    ----------------------------------------------------------

    The Bank's adjusted effective tax rate was 14.5% for the third quarter,
compared with 20.4% in the same quarter last year, and 19.7% in the prior
quarter. On a year-to-date basis, the Bank's adjusted effective tax rate was
18.9%, compared with 21.7% in the same period last year.

    Reconciliation of Adjusted Provision for Income Taxes
    -------------------------------------------------------------------------
                                                                For the nine
                            For the three months ended          months ended
                       -------------------------------- ---------------------
    (millions of         July 31    Apr. 30    July 31    July 31    July 31
     Canadian dollars)      2008       2008       2007       2008       2007
    -------------------------------------------------------------------------
    Provision for income
     taxes - reported       $122       $160       $248       $517       $700
    Increase (decrease)
     resulting from
     items of note:
      Amortization of
       intangibles            71         42         50        176        133
      TD Banknorth
       restructuring,
       privatization
       and merger-
       related charges         -          -          -          -         28
      Restructuring and
       integration
       charges relating
       to the Commerce
       acquisition             8         18          -         26          -
      Change in fair
       value of credit
       default swaps
       hedging the
       corporate loan
       book, net of
       provision for
       credit losses         (12)         -        (16)       (25)       (17)
      Other tax items        (14)         -          -        (34)         -
      Provision for
       insurance claims        -          -          -         10          -
    -------------------------------------------------------------------------
    Tax effect - items
     of note                  53         60         34        153        144
    -------------------------------------------------------------------------
    Provision for income
     taxes - adjusted       $175       $220       $282       $670       $844
    Effective income
     tax rate -
     adjusted               14.5%      19.7%      20.4%      18.9%      21.7%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    HOW OUR BUSINESSES PERFORMED

    For management reporting purposes, the Bank's operations and activities
are organized around the following operating business segments: Canadian
Personal and Commercial Banking, Wealth Management, including TD Ameritrade,
U.S. Personal and Commercial Banking, including TD Banknorth and Commerce, and
Wholesale Banking. 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 business 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 2007 Annual Report and Note 27 to the 2007 audited 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 page 7. Segmented information also appears in Note 15.
    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 adjustment reflected
in the Wholesale Banking segment is eliminated in the Corporate segment. The
TEB adjustment for the quarter was $129 million, compared with $161 million in
the third quarter last year, and $107 million in the prior quarter. On a
year-to-date basis, the TEB adjustment was $371 million, compared with $417
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 loss 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
$644 million, an increase of $47 million, or 8%, compared with the third
quarter last year, and an increase of $62 million, or 11%, compared with the
prior quarter. The annualized return on invested capital was 31%, up from 28%
in the third quarter last year and 29% in the prior quarter.
    Net income for the nine months ended July 31, 2008 was $1,824 million, an
increase of $143 million, or 9%, compared with the same period last year. The
return on invested capital, on a year-to-date basis, was 30%, compared with
27% in same period last year.
    Revenue for the quarter was $2,262 million, which grew by $161 million,
or 8%, compared with the third quarter last year, due to strong volume growth
across most banking products, particularly in deposits, real estate secured
lending and credit cards. The inclusion of revenue from the U.S. credit card
business contributed to the growth as well. Revenue increased by $128 million,
or 6%, compared with the prior quarter, due mainly to more calendar days in
the current quarter and volume growth in real estate secured lending and
credits cards. On a year-to-date basis, revenue was $6,543 million, which
increased by $446 million, or 7%, compared with the same period last year, due
to good volume growth in deposits and real estate secured lending. Higher fee
income, primarily from personal deposit and credit card growth, and deposit
fee initiatives also contributed to the year-over-year growth. Margin on
average earning assets for the quarter decreased by 9 bps to 2.98%, compared
with the third quarter last year due to continued higher funding costs, price
competition in high-yield savings and term deposits and customer product
preference towards lower margin products. Margin on average earning assets
increased 2 bps compared with the prior quarter, and decreased by 8 bps to
2.97 on a year-to-date basis.
    Compared with the third quarter last year, real estate secured lending
volume (including securitizations) grew by $15.3 billion, or 11%; personal
deposit volume grew by $10.3 billion, or 10%; and consumer loans volume grew
by 11% to $17.6 billion. Business deposits volume increased by $3.8 billion,
or 9.7%, and business loans and acceptances volume grew by $2.7 billion or
13.8%. Gross originated insurance premiums grew by $48 million or 7%. As at
May 2008, personal deposit market share was 21.2% and personal lending market
share was 19.9%. Small business lending (credit limits of less than $250,000)
market share as at March 31, 2008 was 18.6%.
    Provision for credit losses for the quarter was $194 million, which
increased by $43 million, or 28%, compared with the third quarter last year.
Personal banking provision for credit losses of $179 million was $32 million
higher than the third quarter last year, primarily due to higher personal
lending and credit card volumes. Business banking provision for credit losses
was $15 million for the quarter, compared with $4 million in the third quarter
last year. Annualized provision for credit losses as a percentage of credit
volume was 0.38%, an increase of 5 bps, compared with the third quarter last
year. Provision for credit losses increased by $3 million, or 2%, compared
with the prior quarter. Personal banking provisions increased $4 million, or
2%, compared with the prior quarter primarily due to the first time inclusion
of the U.S. credit card business. Excluding the impact of the U.S. credit card
business, personal banking provisions improved mostly from credit cards and
real estate secured lending. Business banking provisions decreased slightly by
$1 million, compared with the prior quarter. On a year-to-date basis,
provision for credit losses was $557 million, which increased by $125 million,
or 29%, compared with the same period last year. Personal banking provisions
of $520 million increased $106 million, or 26%, compared with the same period
last year, primarily due to higher volume, while business banking provisions
amounted to $37 million, compared with $18 million in the same period last
year.
    Non-interest expenses for the quarter were $1,129 million, which
increased by $79 million, or 8%, compared with the third quarter last year. On
a year-to-date basis, non-interest expenses were $3,320 million, which
increased by $178 million, or 6%, compared with the same period last year.
Primary drivers of the expense growth were investments in new branches, higher
staffing costs associated with longer branch hours and higher employee
compensation. Non-interest expenses increased by $34 million compared with the
prior quarter, mainly due to higher seasonal business volume-related costs.
The average full time equivalent (FTE) staffing levels increased by 1,876, or
6%, compared with the third quarter last year, and 776, or 2%, compared with
the prior quarter. On a year-to-date basis, FTE staffing levels increased by
1,647, or 5%, compared with the same period last year. The growth was
primarily from increases in branch sales and service personnel, continued
growth in the insurance business, as well as the inclusion of our U.S.
insurance and credit card businesses during the quarter. The efficiency ratio
for the current quarter was 49.9%, which was in line with the third quarter
last year of 50.0% and relatively flat compared with the prior quarter ratio
of 51.3%. On a year-to-date basis, the efficiency ratio improved to 50.7%,
compared with 51.5% in the same period last year.
    Revenue growth is expected to be relatively stable in the near term.
While margins and volume growth continue to be vulnerable to economic
pressures, we believe that, over time, revenue growth will continue to benefit
from increasing our leading position in branch hours, customer service, and
new branch openings. Provision for credit losses on both personal and business
banking loans, in aggregate, is expected to grow, in line with the underlying
volume growth and will further increase if economic conditions continue to
worsen. Expenses will continue to be managed to ensure spending supports
long-term earnings growth.

    Wealth Management

    Wealth Management's net income for the third quarter was $201 million,
which represented an increase of $16 million, or 9%, compared with the third
quarter last year, and an increase of $19 million, or 10%, compared with the
prior quarter. The annualized return on invested capital for the quarter was
19% flat to the third quarter last year and to the prior quarter. Net income
in Global Wealth Management (excluding TD Ameritrade) was $127 million, flat
compared with the third quarter last year, and an increase of $12 million, or
10%, compared with the prior quarter due to stronger performance in discount
brokerage, mutual funds and the advice channels. The Bank's reported
investment in TD Ameritrade generated net income of $74 million, an increase
of $15 million, or 25%, compared with the third quarter last year and an
increase of $7 million, or 10%, compared with the prior quarter. Strong core
earnings growth was partially offset by the impact of the stronger Canadian
dollar. For its third quarter ended June 30, 2008, TD Ameritrade delivered net
income of US$204 million, up 29% from the same period last year and 9% above
the prior quarter.
    Net income for the nine months ended July 31, 2008 was $599 million, an
increase of $31 million, or 5%, compared with the same period last year. The
year-to-date increase in net income included results from the Bank's
investment in TD Ameritrade, which generated $229 million of net income
compared with $186 million in the same period last year. On a year-to-date
basis, the return on invested capital was 20%, flat compared with the same
period last year.
    Revenue for the quarter was $609 million, which increased by $22 million,
or 4%, compared with the third quarter last year, primarily due to the
inclusion of the U.S. wealth management businesses. Excluding this, revenue
increased in discount brokerage due to higher trade volumes as a result of
strategic pricing changes introduced last year and increased net interest
income, primarily due to growth in client cash deposits and margin loans,
partially offset by lower fees in the mutual funds business. Revenue increased
by $51 million, or 9%, compared with the prior quarter, primarily due to the
inclusion of the U.S. wealth management businesses and other items including a
combination of higher transactional revenue, net interest income, higher
management fees from mutual funds and on higher assets in the advice channels.
On a year-to-date basis, revenue was $1,737 million, which was flat compared
with the same period last year, primarily due to the inclusion of the U.S.
wealth management businesses and other items such as higher trade volumes in
discount brokerage and the new mutual fund administration fee, offset by lower
commissions in discount brokerage and current market conditions impacting new
issues and transactional revenues in full-service brokerage.
    Expenses for the quarter were $421 million, which represented an increase
of $26 million, or 7%, compared with the third quarter last year, and
$34 million, or 9%, compared with the prior quarter, primarily due the
inclusion of the U.S. wealth management businesses and other items such as the
continued investment in growing our sales force. On a year-to-date basis,
expenses were $1,187 million, which increased by $35 million, or 3%, compared
with the same period last year, mainly due the inclusion of U.S. wealth
management businesses and other items such as the new mutual fund
administration fee and the continued investment in growing the sales force in
our advice-based businesses.
    Assets under management of $180 billion at July 31, 2008 increased
$20 billion, or 13%, from October 31, 2007, primarily due to the inclusion of
U.S. wealth management businesses and other items such as the addition of net
new client assets and additional mutual fund assets under management from TD
Ameritrade, which were partially offset by the impact of market-related
declines. Assets under administration totalled $197 billion at the end of the
quarter, increasing by $12 billion, or 6%, from October 31, 2007, primarily
due to the inclusion of U.S. wealth management businesses and other items such
as the addition of net new client assets, which were partially offset by
declines driven by capital markets volatility.
    Wealth Management is anticipated to continue to be impacted by volatile
capital markets for the balance of the fiscal year. Investment in
client-facing advisors, products and technology continues in order to ensure
that the business grows for the future.

    
    Wealth Management
    -------------------------------------------------------------------------
                                                                For the nine
                            For the three months ended          months ended
                       -------------------------------- ---------------------
    (millions of         July 31    Apr. 30    July 31    July 31    July 31
     Canadian dollars)      2008       2008       2007       2008       2007
    -------------------------------------------------------------------------
    Global Wealth(1)        $127       $115       $126       $370       $382
    TD Ameritrade             74         67         59        229        186
    -------------------------------------------------------------------------
    Net income              $201       $182       $185       $599       $568
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (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.
    

    U.S. Personal and Commercial Banking

    The acquisition of Commerce closed last quarter and the results of
Commerce operations were included for the first time this quarter. Effective
this quarter, the results of the wealth management, insurance and credit card
business lines previously included in the U.S. Personal and Commercial Banking
segment were transferred to the Canadian Personal and Commercial Banking and
Wealth Management segments to align with how these businesses are now being
managed on a North American basis. Prior periods have not been reclassified as
the amounts are not material to the segment results.
    U.S. Personal and Commercial Banking's reported net income for the
quarter was $244 million, compared with $109 million in the third quarter last
year, and $100 million in the prior quarter. Adjusted net income for the
quarter was $273 million, compared with $109 million in the third quarter last
year and $130 million in the prior quarter. Adjusted net income for the
quarter excludes $15 million of after-tax charges for restructuring and
integration costs and a $14 million tax expense for a reduction in the overall
tax rates applicable to future tax assets, both related directly to the
Commerce acquisition. Adjusted net income for the prior quarter excluded a
$30 million after-tax charge for restructuring and integration costs incurred
in connection with the Commerce acquisition. There were no items of note
affecting earnings in the third quarter last year. The quarter-over-quarter
and year-over-year increase in adjusted net income was due to the first-time
inclusion of Commerce results. The annualized return on invested capital was
6.2%, compared with 4.7% in the third quarter last year and 5.8% in the prior
quarter.
    Reported net income for the nine months ended July 31, 2008 was
$471 million, compared with $196 million in the same period last year. On a
year-to-date basis, adjusted net income was $530 million, up from $235 million
in the same period last year; due largely to the Commerce acquisition as well
as an increased ownership percentage starting in April 2007 due to the
privatization of TD Banknorth. On a year-to-date basis, the return on invested
capital was 6.0%, compared with 4.3% in the same period last year.
    Revenue for the quarter was $1.0 billion, an increase of $543 million, or
112%, compared with the third quarter last year, primarily due to the
acquisition of Commerce. Excluding Commerce and inter-segment business
transfers, revenue in U.S. dollars increased slightly compared with the prior
year due to higher fee income and solid lending growth partially offset by
margin compression. Revenue increased by $551 million, or 116%, compared with
the prior quarter, primarily due to the first-time inclusion of Commerce.
Excluding Commerce and inter-segment business transfers, revenue in U.S.
dollars declined slightly from the prior quarter due primarily to the gain
recorded in the second quarter related to the Visa IPO. On a year-to-date
basis, revenue increased $480 million, or 33%, compared with the same period
last year, primarily due to the addition of Commerce. Excluding Commerce,
year-to-date revenue in U.S. dollars increased, primarily due to growth in fee
income and the Visa IPO gain. Margin on average earning assets increased from
3.86% to 3.92%, compared with the third quarter last year, and increased
19 bps compared with the prior quarter. On a year-to-date basis, the margin on
average earning assets decreased by 6 bps from 3.90% to 3.84%, compared with
the same period last year. The addition of Commerce including the higher
yielding securities portfolio contributed to the higher margin. Excluding
Commerce, margins were slightly lower.
    Provision for credit losses for the quarter was $76 million which
increased by $43 million, or 130%, compared with the third quarter last year,
and by $30 million, or 65%, compared with the prior quarter. The increased
provision for credit losses was due to the Commerce acquisition and continued
softness in real estate markets. Asset quality remains solid. Net impaired
loans increased by $104 million compared with the third quarter last year
primarily due to the inclusion of $97 million of net impaired loans from
Commerce on close. Net impaired loans increased by $38 million compared with
the prior quarter due to higher impaired commercial loans in the mid-Atlantic
region. Net impaired loans as a percentage of total loans and leases was
0.66%, compared with 0.61% as at the end of the prior quarter and 0.76% as at
the end of the third quarter last year.
    Reported non-interest expenses for the quarter were $610 million, an
increase of $335 million, or 122%, from the third quarter last year and an
increase of $316 million, or 107%, over the prior quarter. On an adjusted
basis, non-interest expenses for the quarter were $587 million, an increase of
$312 million, or 113%, compared with the third quarter last year and an
increase of $341 million, or 139%, over the prior quarter. On a year-to-date
basis, adjusted non-interest expenses were $1.1 billion, an increase of
$191 million, or 22%, compared with the same period last year. These increases
were primarily due to the Commerce acquisition partially offset by the impact
of the strengthening Canadian dollar; in U.S. dollars, year-to-date adjusted
expenses increased 38%. The Commerce acquisition increased average FTE
staffing levels by approximately 12 thousand compared with the prior periods.
The efficiency ratio for the quarter on a reported basis was 59.5% for the
quarter, compared with 56.9% in the third quarter last year and 61.9% in the
prior quarter. On an adjusted basis, the efficiency ratio for the quarter was
57.2%, compared with 56.9% in the same period last year and 51.7% in the prior
quarter. On a year-to-date basis, the reported efficiency ratio was 58.5%,
compared with 65.0% in the same period last year, and the adjusted efficiency
ratio was 54.8%, compared with 59.7% in the same period last year.
    Management continues to focus on asset quality, organic growth of loans
and deposits, and on the ongoing integration of the TD Banknorth and Commerce
organizations. We remain committed to protecting and enhancing our combined
customer base during the extended integration period and all significant
decisions regarding integration matters must consider the effect on the
customer experience. The conversion of operating systems remains on track for
the latter part of 2009. Although the banking market in the U.S. remains
challenging, and there is continuing uncertainty of the ongoing market issues
related to subprime real estate lending and related issues, we expect to be
able to achieve our previously communicated target earnings of at least
$750 million for the current fiscal year and a minimum of $1.2 billion for
2009. For more detail, see the Bank's press release dated April 21, 2008,
which is available on the Bank's website at www.td.com, as well as on SEDAR at
www.sedar.com and on the SEC's at www.sec.gov (EDGAR filers section).

    Wholesale Banking

    Wholesale Banking reported net income for the quarter of $37 million, a
decrease of $216 million, or 85%, compared with the third quarter last year,
and a decrease of $56 million, or 60%, compared with the prior quarter.
Wholesale Banking results this quarter included a $96 million before tax
($65 million after tax) cumulative impact related to incorrectly priced
financial instruments and favourable tax items. The annualized return on
invested capital was 4% in the current quarter, compared with 37% in the third
quarter last year and 11% in the prior quarter.
    Net income for the nine months ended July 31, 2008 was $293 million, down
$374 million, or 56%, while the return on invested capital was 12%, compared
with 34% 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
$328 million, compared with $692 million in the third quarter last year and
$428 million in the prior quarter. The capital markets businesses generate
revenue from advisory, underwriting fees, trading, facilitation and execution
services. Capital markets revenue decreased from the third quarter last year,
primarily due to the cumulative impact related to incorrectly priced financial
instruments noted above, weaker credit and equity trading revenue as well as
lower advisory revenue, partially offset by very strong revenue in interest
rate trading. Interest rate trading generated strong revenue, mainly driven by
interest rates volatility and higher client activity. Credit trading revenue
declined from strong revenues in the prior year due to weakness in credit
markets and lower liquidity. Equity trading revenue declined primarily due to
weaker equity markets and lower non-taxable transaction revenue. A decline in
overall capital markets activity led to lower advisory revenue. Capital
markets revenue decreased from the prior quarter, primarily due to weaker
equity trading revenue, partially offset by stronger revenue in interest rate
trading. The equity investment portfolio posted lower securities gains this
quarter compared with the third quarter last year and the prior quarter due to
weaker equity markets and lower realizations from merchant banking
investments. Corporate lending revenue decreased compared with the third
quarter last year and the prior quarter, primarily due to higher funding
costs.
    On a year-to-date basis, revenue was $1,364 million, a decrease of
$605 million, or 31%, compared with the same period last year, primarily due
to lower credit and equity trading revenue, weaker M&A revenue and lower
securities gains.
    Provision for credit losses was comprised of allowances for credit losses
and accrual costs for credit protection. Provision for credit losses was
$30 million in the quarter, compared with $8 million in the third quarter last
year and $10 million in the prior quarter. The provision for this quarter
includes specific allowances of $19 million primarily related to a single
credit exposure in the merchant banking portfolio. The third quarter last year
included a $3 million recovery in the merchant banking portfolio. On a
year-to-date basis, provision for credit losses was $96 million, an increase
of $52 million compared with the same period last year, mainly due to higher
provisions in merchant banking. Wholesale Banking continues to proactively
manage its credit risk and currently holds $2.4 billion in notional CDS
protection.
    Expenses for the quarter were $281 million, a decrease of $45 million, or
14%, compared with the third quarter last year, and a decrease of $10 million,
or 3%, from the prior quarter, mainly due to lower variable compensation. On a
year-to-date basis, expenses were $893 million, a decrease of $94 million, or
10%, compared with the same period last year. The efficiency ratio for the
quarter was 86%, compared with 47% in the third quarter last year and 68% in
the prior quarter. On a year-to-date basis, the efficiency ratio was 66%,
compared with 50% in the same period last year.
    Overall, Wholesale Bank had a weak third quarter driven by the charge
related to incorrectly priced financial instruments, a lower net income
contribution from the equity investment portfolio, and weaker capital markets
activity. We expect the operating environment to remain challenging which may
lead to continued weak capital market activity and lower trading revenue
relative to the prior year. Our key priorities remain: solidifying our
position as a top three dealer in Canada, seeking opportunities to grow
proprietary trading in scalable and liquid markets, maintaining a superior
rate of return on invested capital and enhancing the efficiency ratio through
improved cost control.

    Corporate

    Corporate segment's reported net loss was $129 million for the quarter,
compared with a reported net loss of $41 million in the third quarter last
year and a reported net loss of $105 million in the prior quarter. The
adjusted net loss for the quarter was $40 million, compared with adjusted net
income of $20 million in the same quarter last year and an adjusted net loss
of $14 million in the previous quarter. Compared with last year, the increase
in net loss of $60 million on an adjusted basis was driven by higher
unallocated corporate expenses and costs associated with increased corporate
financing activity, partially offset by tax benefits. The current quarter
adjusted net loss was $26 million higher than the prior quarter, which also
resulted from higher unallocated corporate expenses, partially offset by tax
benefits. Unallocated corporate expenses were higher due to the timing of
expense recoveries and higher capital taxes.
    The Corporate segment's reported net loss was $368 million for the nine
months ended July 31, 2008. On an adjusted basis, the year-to-date net loss
was $98 million or $115 million higher than last year, primarily due to higher
unallocated corporate expenses, a decrease in securitization activity and
costs related to increased corporate financing activity.
    The difference between reported and adjusted net income for the corporate
segment was due to items of note as outlined below. These items are described
more fully on page 6.

    
    Reconciliation of Corporate Segment Reported and Adjusted Net Income
    -------------------------------------------------------------------------
                                                                For the nine
                            For the three months ended          months ended
                       -------------------------------- ---------------------
    (millions of         July 31    Apr. 30    July 31    July 31    July 31
     Canadian dollars)      2008       2008       2007       2008       2007
    -------------------------------------------------------------------------
    Corporate segment net
     income/(loss) -
     reported              $(129)     $(105)      $(41)     $(368)     $(209)
    -------------------------------------------------------------------------
    Items of note
     affecting net
     income, net of
     income taxes:
      Amortization of
       intangibles           111         92         91        278        254
      Change in fair
       value of credit
       default swaps
       hedging the
       corporate loan
       book, net of
       provision for
       credit losses         (22)        (1)       (30)       (48)       (32)
      Other tax items          -          -          -         20          -
      Provision for
       insurance claims        -          -          -         20          -
      Restructuring
       charges                 -          -          -          -          4
    -------------------------------------------------------------------------
    Total items of note       89         91         61        270        226
    -------------------------------------------------------------------------
    Corporate segment net
     income/(loss) -
     adjusted               $(40)      $(14)       $20       $(98)       $17
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    TD AMERITRADE HOLDING CORPORATION

    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 Sheets
    -------------------------------------------------------------------------
                                                          June 30,  Sept. 30,
    (millions of U.S. dollars)                               2008       2007
    -------------------------------------------------------------------------
    Assets
    Receivables from brokers, dealers and clearing
     organizations                                         $5,694     $6,750
    Receivables from clients, net of allowance for
     doubtful accounts                                      8,644      7,728
    Other assets                                            5,356      3,614
    -------------------------------------------------------------------------
    Total assets                                           19,694     18,092
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities
    Payable to brokers, dealers and clearing
     organizations                                          8,881      8,387
    Payable to clients                                      4,743      5,314
    Other liabilities                                       3,320      2,236
    -------------------------------------------------------------------------
    Total liabilities                                      16,944     15,937
    -------------------------------------------------------------------------
    Stockholders' equity                                   $2,750     $2,155
    -------------------------------------------------------------------------
    Total liabilities and stockholders' equity            $19,694    $18,092
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Condensed Consolidated Statements of Income
    -------------------------------------------------------------------------
                                                                For the nine
                            For the three months ended          months ended
                       -------------------------------- ---------------------
    (millions of U.S.
     dollars, except                June 30    June 30    June 30    June 30
     per share amounts)                2008       2007       2008       2007
    -------------------------------------------------------------------------
    Revenues
    Net interest revenue               $132       $139       $419       $415
    Fee-based and other revenue         492        403      1,469      1,187
    -------------------------------------------------------------------------
    Total revenue                       624        542      1,888      1,602
    -------------------------------------------------------------------------
    Expenses
    Employee compensation
     and benefits                       129        115        367        321
    Other                               167        172        537        563
    -------------------------------------------------------------------------
    Total expenses                      296        287        904        884
    -------------------------------------------------------------------------
    Other income                          0          0          1          5
    -------------------------------------------------------------------------
    Pre-tax income                      328        255        985        723
    Provision for income taxes          124         96        353        278
    -------------------------------------------------------------------------
    Net income(1)                       204        159        632        445
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per share - basic        $0.34      $0.27      $1.06      $0.74
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earning per share - diluted       $0.34      $0.26      $1.05      $0.73
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) The Bank's equity share of net income of TD Ameritrade is subject to
        adjustments relating to amortization of intangibles.
    

    BALANCE SHEET REVIEW

    Total assets were $509 billion as at July 31, 2008, $87 billion higher
than at October 31, 2007 of which $57 billion related to the acquisition of
Commerce. The net increase was composed primarily of a $44 billion increase in
loans, a $22 billion increase in securities, and a $16 billion increase in
other assets. Residential mortgage loans increased $15 billion, due to volume
growth in Canadian Personal and Commercial Banking and growth in U.S. Personal
and Commercial Banking due to the acquisition of Commerce. Consumer and
personal loans were $10 billion higher with the increase arising from volume
growth in Canadian Personal and Commercial Banking and from growth in U.S.
Personal and Commercial Banking due to the acquisition of Commerce. Business
and government loans were up $18 billion, primarily due to the acquisition of
Commerce and business loan volume growth in Wholesale Banking. Securities
purchased under reverse repurchase agreements increased $6 billion as the
business experienced higher client demand. Available-for-sale securities
increased $25 billion, mainly due to the acquisition of Commerce. Other assets
increased $16 billion, primarily due to a $6 billion increase in goodwill from
U.S. Personal and Commercial Banking, and a combination of higher customer
liabilities under acceptances in Canadian Commercial and Personal Banking and
Wholesale Banking, an increase in land, building and equipment in U.S.
Personal and Commercial Banking, and an increase in trading derivatives,
primarily in Wholesale Banking due to market movement.
    Total deposits were $354 billion as at July 31, 2008, $78 billion higher
than at October 31, 2007 of which $47 billion related to the acquisiton of
Commerce. Personal deposits increased $37 billion, largely due to increased
volumes in Canadian Personal and Commercial Banking and from growth in U.S.
Personal and Commercial Banking due to the acquisition of Commerce. Business
and government deposits were up $39 billion, driven primarily by higher
deposits in Canadian Personal and Commercial Banking, and U.S. Personal and
Commercial Banking due to the acquisition of Commerce, and Corporate segment
balances. Wholesale Banking trading deposits were also up $2 billion. Other
liabilities decreased $5 billion, largely due to lower Wealth Management and
Wholesale Banking broker payables and a lower net future tax liability in U.S.
Personal and Commercial Banking. Subordinated notes and debentures increased
$4 billion due to the $1 billion medium term note issuance in July 2008, a
$0.5 billion issuance in the second quarter, and $2.5 billion issuance of
medium term notes in the first quarter. Preferred stock increased $1.5 billion
due to issuances throughout this year.
    The table below presents the impact of the acquisition of Commerce on the
Bank's consolidated balance sheet as at July 31, 2008:

    
    Impact of Commerce on the Bank's Consolidated Balance Sheet
    -------------------------------------------------------------------------
                                TDBFG
                         Consolidated,
                        excluding the     Commerce       TDBFG         TDBFG
                          acquisition  acquisition     Consoli-      Consoli-
                            impact of     impact(2)    dated(3)        dated
    (millions of           Commerce(1)   (March 31,   (July 31,  (October 31,
     Canadian dollars) (July 31, 2008)        2008)       2008)         2007)
    -------------------------------------------------------------------------
    Assets
    Cash and cash
     equivalents              $14,756         $408     $15,164       $16,536
    Securities                120,019       25,154     145,173       123,036
    Loans, net of
     allowance for
     credit losses            201,765       18,031     219,796       175,915
    Goodwill                    7,958        6,359      14,317         7,918
    Other intangibles
     (gross)                    1,699        1,514       3,213         2,104
    Other                     105,553        5,623     111,176        96,615
    -------------------------------------------------------------------------
    Total assets             $451,750      $57,089     508,839      $422,124
    -------------------------------------------------------------------------
    Liabilities

    Deposits                 $306,947      $47,271    $354,218      $276,393
    Other                     104,458        3,408     107,866       112,905
    Subordinated notes and
     debentures, liability
     for preferred shares,
     capital trust
     securities and
     non-controlling
     interests in
     subsidiaries              15,462            -      15,462        11,422
    -------------------------------------------------------------------------
    Total liabilities         426,867       50,679     477,546       400,720
    -------------------------------------------------------------------------
    Shareholders' equity

    Common shares               6,943        6,147      13,090         6,577
    Contributed surplus            92          263         355           119
    Preferred shares,
     retained earnings
     and accumulated
     other comprehensive
     income                    17,848            -      17,848        14,708
    -------------------------------------------------------------------------
    Total shareholders'
     equity                    24,883        6,410      31,293        21,404
    -------------------------------------------------------------------------
    Total liabilities and
     shareholders' equity    $451,750      $57,089    $508,839      $422,124
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Amounts include changes in the balance sheet of Commerce subsequent
        to acquisition.
    (2) Commerce impact includes the Commerce assets and liabilities acquired
        (shown in Note 20 to the Interim Consolidated Financial Statements
        for the quarter ended July 31, 2008) and the purchase consideration
        for the Commerce acquisition. Cash portion of the purchase
        consideration is included in other liabilities.
    (3) The fiscal periods of Commerce and the Bank are not co-terminus. As a
        result, Commerce's results for the three months ended each calendar
        quarter are consolidated on a one month lag with the Bank's results
        for the fiscal quarter. This is the normal course of the Bank's
        financial reporting.
    

    CREDIT PORTFOLIO QUALITY

    Gross impaired loans were $1,001 million at July 31, 2008, $432 million
higher than at October 31, 2007, largely due to a $219 million increase in the
Canadian Personal and Commercial Banking segment (the majority of which was
due to a change in the definition of gross impaired loans for insured
residential mortgages from 360 to 90 days past the contractual due date; as
the majority are insured residential mortgages, there was no material impact
to specific allowance), $150 million attributable to Commerce, and an
$81 million increase in the Wholesale Banking segment. These increases were
partially offset by decreases in other segments.
    Net impaired loans as at July 31, 2008, after deducting specific
allowances, totalled $709 million, compared with $366 million as at
October 31, 2007.
    The total allowance for credit losses of $1,447 million as at July 31,
2008 comprised total specific allowances of $292 million and a general
allowance of $1,155 million. Specific allowances increased by $89 million from
$203 million as at October 31, 2007. The general allowance for credit losses
as at July 31, 2008 was up by $63 million, compared with October 31, 2007,
mainly due to the increase related to VFC and TD Banknorth. 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 three months ended
                                         ------------------------------------
                                           July 31     Oct. 31       July 31
    (millions of Canadian dollars)            2008        2007          2007
    -------------------------------------------------------------------------
    Balance at beginning of period            $909        $590          $603
    Additions                                  554         387           375
    Return to performing status,
     repaid or sold                           (231)       (188)         (166)
    Write-offs                                (229)       (202)         (200)
    Foreign exchange and other adjustments      (2)        (18)          (22)
    -------------------------------------------------------------------------
    Balance at end of period                $1,001        $569          $590
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Allowance for Credit Losses(1)
    -------------------------------------------------------------------------
                                                                       As at
                                         ------------------------------------
                                           July 31     Oct. 31       July 31
    (millions of Canadian dollars)            2008        2007          2007
    -------------------------------------------------------------------------
    Specific allowance                        $292        $203          $211
    General allowance                        1,155       1,092         1,146
    -------------------------------------------------------------------------
    Total allowance for credit losses       $1,447      $1,295        $1,357
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Impaired loans net of specific
     allowance                                $709        $366          $379
    Net impaired loans as a percentage
     of net loans                              0.3%        0.2%          0.2%
    Provision for credit losses as a
     percentage of net average loans          0.54%       0.30%         0.39%
    -------------------------------------------------------------------------
    (1) Certain comparative amounts have been restated to conform to the
        presentation adopted in the current period.
    

    Non-prime Loans

    As at July 31, 2008, the Bank's wholly-owned subsidiary, VFC Inc., had
approximately $1.1 billion (October 31, 2007: $0.9 billion) gross exposure to
non-prime loans which mainly consist of automotive loans originated in Canada.
The credit loss rate, defined as the average provision for credit losses
divided by the average month-end loan balance, which is an indicator of credit
quality, is approximately 6% on an annual basis. The Bank's portfolio
continues to perform as expected. These loans are recorded at amortized cost.
See Note 3 to the 2007 Annual Consolidated Financial Statements for further
information regarding the accounting for loans and related credit losses.

    Exposure to Alt-A Securities

    As discussed in Note 20 to the Interim Consolidated Financial Statements
for the quarter ended July 31, 2008, the results of Commerce are recorded on a
one month lag basis, therefore the balance sheet values of Commerce assets
recorded in the Bank's consolidated balance sheet as at July 31, 2008,
represent the fair value of Commerce assets at June 30, 2008.
    As at July 31, 2008, due to its acquisition of Commerce, the Bank had
$3.6 billion (October 31, 2007: nil) exposure to Alt-A mortgages in
residential mortgage-backed securities (RMBS) collateralized primarily by
fixed-rate mortgages with no rate reset features. Upon the acquisition of
Commerce, this portfolio was recorded at fair value. The Bank's Alt-A
exposures are fair valued using broker-dealer quotes. Based on the Bank's
analysis, the intrinsic value of the portfolio is considered to exceed the
fair value, net of a liquidity discount, in today's market. The Bank does not
hedge the portfolio for credit risk. These securities have public debt ratings
of mainly AAA and are accounted for as available-for-sale securities. The fair
value of the Alt-A RMBS declined by $233 million in the month of July 2008,
due to deterioration in liquidity in the market for these securities, which
will be reflected in the fourth quarter of 2008.
    Subsequent to June 30, 2008, the public debt ratings for certain
securities have been down graded from AAA to AA, BBB and BB. The following
table discloses the fair value of the securities by vintage year:

    
    Alt-A Securities Exposure by Vintage Year
    -------------------------------------------------------------------------
                                                                       As at
                                                                 ------------
                                                                     July 31
    (millions of Canadian dollars)                                      2008
    -------------------------------------------------------------------------
    2003                                                                $434
    2004                                                                 774
    2005                                                               1,008
    2006                                                                 541
    2007                                                                 814
    -------------------------------------------------------------------------
    Total Alt-A securities                                            $3,571
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    CAPITAL POSITION

    The Bank's capital ratios are calculated using the guidelines of the
Office of the Superintendent of Financial Institutions (OSFI). Effective
November 1, 2007, the Bank began calculating its regulatory capital under the
new capital adequacy rules included in Basel II. The top corporate entity to
which Basel II applies at the consolidated level is The Toronto-Dominion Bank.
    Under Basel II, risk-weighted assets (RWA) are calculated for each of
credit risk, market risk and operational risk. Operational risk is a new
component of total RWA and represents the risk of loss resulting from
inadequate or failed internal processes, people and systems or from external
events. The Bank's RWA were as follows:

    
    Risk-weighted Assets
    -------------------------------------------------------------------------
                                                            As at      As at
                                                          July 31,   Apr. 30,
    (millions of Canadian dollars)                           2008       2008
    -------------------------------------------------------------------------
    Risk-weighted assets (RWA) for:
      Credit risk                                        $152,326   $147,617
      Market risk                                           8,179      7,140
      Operational risk                                     24,169     23,878
    -------------------------------------------------------------------------
    Total RWA                                            $184,674   $178,635
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    OSFI's target Tier 1 and Total capital ratios for Canadian banks are 7%
and 10%, respectively. As at July 31, 2008, the Bank's Tier 1 capital ratio
was 9.5% and the Total capital ratio was 13.4%, computed under Basel II. Under
Basel I, the Bank's Tier 1 capital ratio and Total capital ratio were 10.3%
and 13.0%, respectively, at October 31, 2007.
    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 accounting purposes, GAAP is followed for consolidation of
subsidiaries and joint ventures. For regulatory capital purposes, insurance
subsidiaries are deconsolidated and reported as a deduction from capital.
Insurance subsidiaries are subject to their own capital adequacy reporting
such as OSFI's Minimum Continuing Capital Surplus Requirements. Currently, for
regulatory capital purposes, all the entities of the Bank are either
consolidated or deducted from capital and there are no entities from which
surplus capital is recognized.
    During the quarter, the Bank issued $250 million of its 5-Year Rate Reset
Preferred Shares, Series S and $250 million of its 5-Year Rate Reset Preferred
Shares, Series Y. Also during the quarter, the Bank issued $650 million and
$375 million of medium term notes constituting subordinated indebtedness which
qualify as Tier 2B regulatory capital. For further details of debt and equity
issues/repurchases, see Notes 6, 7 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 2007 Annual Report. Certain risks have been outlined
below. For a complete discussion of our risk governance structure and our risk
management approach, see our 2007 Annual Report.

    WHO MANAGES RISK

    We have a risk governance structure in place that emphasizes and balances
strong central oversight and control of risk with clear accountability for,
and ownership of, risk within each business unit. Our structure ensures that
important information about risks flows up from the business units and
oversight functions to the Senior Executive Team and the Board of Directors.

    HOW WE MANAGE RISK

    We have a comprehensive and proactive risk management approach that
combines the experience and specialized knowledge of individual business
units, risk professionals and the corporate oversight functions. Our approach
is designed to promote a strong risk management culture and ensure alignment
to our strategic objectives. It includes:

    
    -   Maintaining appropriate enterprise-wide risk management policies and
        practices including guidelines, requirements and limits to ensure
        risks are managed to acceptable levels;
    -   Subjecting risk management policies to regular review and evaluation
        by the Executive Committees and review and approval by the Risk
        Committee of the Board;
    -   An integrated enterprise-wide risk monitoring and reporting process
        that communicates key elements of our risk profile, both
        quantitatively and qualitatively, to senior management and the Board
        of Directors;
    -   Maintaining risk measurement methodologies that support risk
        quantification, including Value-at-Risk (VaR) analysis, scenario
        analysis and stress-testing;
    -   Annual self-assessments by significant business units and corporate
        oversight functions of their key risks and internal controls. Overall
        significant risk issues are identified, escalated and monitored as
        needed;
    -   Supporting appropriate performance measurement that allocates risk-
        based economic capital to businesses and charges a cost against that
        capital;
    -   Actively monitoring internal and external risk events to assess
        whether our internal controls are effective;
    -   Independent and comprehensive reviews conducted by the Audit
        Department of the quality of the internal control environment and
        compliance with established risk management policies and procedure.
    

    Basel II

    Basel II is a framework developed by the Basel Committee on Banking
Supervision, with the objectives of improving the consistency of capital
requirements internationally and making required regulatory capital more risk
sensitive. Basel II sets out several options which represent increasingly more
risk-sensitive approaches to calculating credit-, market- and
operational-risk- based regulatory capital. Under the more sophisticated
approaches, banks develop their own internal estimates of risk parameters,
which are used in the determination of RWA and calculation of regulatory
capital.
    The Bank has implemented the Advanced Internal Ratings Based (AIRB)
approach to credit risk for all material portfolios, with some exemptions and
waivers in place to use the Standardized approach as outlined below. We do not
use the Foundation Internal Ratings Based approach.

    
    -   Exemptions are available for non-material portfolios to remain under
        the Standardized approach indefinitely. We have exemptions in place
        covering some small exposures in North America. The continued
        appropriateness of the Standardized approach will be reconfirmed
        annually by Risk Management.
    -   Waivers are available to use the Standardized approach for a defined
        period of time where there are clear plans in place to implement the
        AIRB approach. We have received waivers for our Margin Trading Book,
        some small Retail portfolios and the majority of our TD Banknorth
        portfolios. Detailed plans are in place to implement the AIRB
        approach for these portfolios within timelines agreed with OSFI.
        Commerce portfolios are reported using the Interim Approach to
        Reporting, moving to the Standardized approach in 2009.
    

    We are compliant with the market risk requirements as at October 31, 2007
and are implementing the additional market risk requirements within the OSFI-
established timelines. For operational risk, the Basic Indicator Approach is
used primarily for TD Banknorth and Commerce. For the rest of the Bank, we use
The Standardized Approach.
    Certain sections of this MD&A represent a discussion on risk management
policies and procedures relating to credit, market and liquidity risks as
required under the Canadian Institute of Chartered Accountants (CICA) Handbook
Section 3862, Financial Instruments - Disclosures, which permits these
specific disclosures to be included in the MD&A. Therefore, these sections
form an integral part of the unaudited interim consolidated financial
statements for the quarter ended July 31, 2008. These sections, which are
included non-continuously below, are shaded on pages 21 to 28 of the fully
formatted version of this third quarter 2008 Report to Shareholders, which can
be found on the Bank's website at www.td.com/investor/earnings.jsp.

    CREDIT RISK

    Credit risk is the potential for financial loss if a borrower or
counterparty in a transaction fails to meet its obligations in accordance with
agreed terms.
    Credit risk is one of the most significant and pervasive risks in
banking. Every loan, extension of credit or transaction that involves
settlements between the Bank and other parties or financial institutions
exposes the Bank to some degree of credit risk.
    Our primary objective is to create a methodological approach to our
credit risk assessment in order to better understand, select and manage our
exposures to deliver reduced earnings volatility.
    Our strategy is to ensure central oversight of credit risk in each
business, reinforcing a culture of accountability, independence and balance.

    Who Manages Credit Risk

    The responsibility for credit risk management is enterprise-wide in
scope.
    Credit risk control functions are integrated into each business to
reinforce ownership of credit risk, reporting to the Risk Management
Department to ensure objectivity and accountability.
    Each business segment's credit risk control unit is primarily responsible
for credit adjudication, and is subject to compliance with established
policies, exposure guidelines and discretionary limits, as well as adherence
to established standards of credit assessment, with escalation to the Risk
Management Department for material credit decisions.
    Independent oversight of credit risk is provided by the Risk Management
Department, through the development of centralized policies to govern and
control portfolio risks and product specific policies as required.
    The Risk Committee of the Board ultimately oversees the management of
credit risk and annually approves all major credit risk policies.

    How we Manage Credit Risk

    Credit Risk is managed through a centralized infrastructure based on:

    
    -   Centralized approval by the Risk Management Department of all credit
        risk policies and the discretionary limits of officers throughout the
        Bank for extending lines of credit;
    -   The establishment of guidelines to monitor and limit concentrations
        in the portfolios in accordance with the Board approved, enterprise-
        wide policies governing country risk, industry risk and group
        exposures;
    -   The development and implementation of credit risk models and policies
        for establishing borrower and facility risk ratings to quantify and
        monitor the level of risk and facilitate its management in our
        Commercial Banking and Wholesale Banking businesses. Risk ratings are
        also used to determine the amount of credit exposure we are willing
        to extend to a particular borrower.
    -   Approval of the scoring techniques and standards used in extending,
        monitoring and reporting of personal credit in our retail businesses;
    -   Implementation of management processes to monitor country, industry
        and counterparty risk ratings which include daily, monthly and
        quarterly review requirements for credit exposures;
    -   Implementation of an ongoing monitoring process for the key risk
        parameters used in our credit risk models.
    

    Unanticipated economic or political changes in a foreign country could
affect cross-border payments for goods and services, loans, dividends, trade-
related finance, as well as repatriation of the Bank's capital in that
country. The Bank currently has counterparty exposure in a number of
countries, with the majority of the exposure in North America. Country risk
ratings are based on approved risk rating models and qualitative factors and
are used to establish country exposure guidelines covering all aspects of
credit exposure across all businesses. Country risk ratings are managed on an
ongoing basis and subject to a detailed review at least annually.
    As part of our credit risk strategy, we establish credit exposure limits
for specific industry sectors. We monitor industry concentration limits to
ensure the diversification of our loan portfolio. Industry exposure guidelines
are a key element of this process as they limit exposure based on an internal
risk rating score determined through the use of our industry risk rating model
and detailed industry analysis.
    If several industry segments are affected by common risk factors, we
assign a single exposure guideline to those segments. In addition, for each
material industry, the Risk Management Department assigns a maximum exposure
limit or a concentration limit which is a percentage of our total wholesale
and commercial exposure. We regularly review industry risk ratings to ensure
that those ratings properly reflect the risk of the industry.
    Credit derivatives may be used from time to time to mitigate industry
concentration and borrower-specific exposure as part of our portfolio risk
management techniques.

    Credit Risk Exposures under Basel II

    Gross credit risk exposures include both on- and off-balance sheet
exposures. On-balance sheet exposures consist primarily of outstanding loans,
acceptances, non-trading securities, derivatives and certain repo-style
transactions. Off-balance sheet exposures consist primarily of undrawn
commitments, guarantees and certain repo-style transactions. The calculation
of gross credit risk exposures differs under each of the two approaches we use
to measure credit risk: the Standardized approach and the AIRB approach.
    Gross credit risk exposures, measured before credit risk mitigants, are
given below:

    
    Gross Credit Risk Exposures(1) by Counterparty Type - Standardized and
    AIRB Approaches
    -------------------------------------------------------------------------
                          As at July 31, 2008           As at April 30, 2008
    (millions    ------------------------------------------------------------
     of
     Canadian     Standard-                     Standard-
     dollars)         ized      AIRB     Total      ized      AIRB     Total
    -------------------------------------------------------------------------
    Retail
      Residential
       secured      $7,517  $134,518  $142,035    $7,849  $124,927  $132,776
      Qualifying
       revolving
       retail            -    41,979    41,979         -    41,019    41,019
      Other
       retail       15,942    19,715    35,657    15,375    20,040    35,415
    -------------------------------------------------------------------------
    Total retail    23,459   196,212   219,671    23,224   185,986   209,210
    Non-retail
      Corporate     45,703   102,884   148,587    45,019    99,646   144,665
      Sovereign        282    40,515    40,797       724    42,261    42,985
      Bank           6,126    80,533    86,659     6,841    84,982    91,823
    -------------------------------------------------------------------------
    Total
     non-retail     52,111   223,932   276,043    52,584   226,889   279,473
    -------------------------------------------------------------------------
    Gross credit
     risk
     exposures     $75,570  $420,144  $495,714   $75,808  $412,875  $488,683
    -------------------------------------------------------------------------
    (1) Gross credit risk exposures exclude equity and securitization
        exposures.
    

    Credit Risk Exposures subject to the Standardized approach

    Under the Standardized approach, used primarily for TD Banknorth
portfolios, balance sheet exposures (net of specific allowances) are
multiplied by OSFI-prescribed risk-weights to calculate RWA. Risk-weights are
assigned based on certain factors including counterparty type, product type
and the nature/extent of credit risk mitigation. External credit ratings from
Moody's Investors Service are used to determine the risk-weight of our
Sovereign and U.S. Bank exposures. For off-balance sheet exposures, the
notional amount of the exposure is multiplied by a credit conversion factor to
produce a credit equivalent amount which is then treated in the same manner as
an on-balance sheet exposure.
    Commerce exposures are currently subject to the Interim Approach to
Reporting. This approach is similar to the Standardized approach, with the
exception of Small business entities, which receive a higher risk-weight under
the Interim Approach to Reporting than they do under the Standardized
approach.

    Credit Risk Exposures subject to the AIRB approach

    Banks adopting the AIRB approach to credit risk are required to
categorize banking-book exposures by counterparty type, each having different
underlying risk characteristics. These counterparty types may differ from the
presentation in our financial statements.
    Our credit risk exposures are categorized into two main portfolios, non-
retail and retail. For the non-retail portfolio, exposures are managed on an
individual basis, using industry and sector-specific credit risk models, and
expert judgement. We have categorized non-retail credit risk exposures
according to the following Basel II counterparty types: corporate (wholesale
and commercial customers), sovereign (governments, central banks and certain
public sector entities), and bank (regulated deposit-taking institutions,
securities firms and certain public sector entities).
    For the retail portfolio (individuals and small businesses), exposures
are managed on a pooled basis, using predictive credit scoring techniques. We
have categorized three sub-types of retail exposures: residential secured
(e.g. individual mortgages, home equity lines of credit), qualifying revolving
retail (e.g. individual credit cards, unsecured lines of credit and overdraft
protection products), and other retail (e.g. personal loans, student lines of
credit, small business banking credit products).

    Risk Parameters

    Under the AIRB approach, we have developed internal risk rating systems
based on key risk estimates; first, probability of default (PD) - The
likelihood the borrower will default within a one-year time horizon; second,
exposure at default (EAD) - the estimated value of the expected exposure at
the time of default; and third, loss given default (LGD) - the expected loss
when a borrower defaults, expressed as a percentage of EAD. Application of
these risk parameters allows us to measure and monitor our credit risk to
ensure it remains within pre-determined thresholds.

    Non-retail Exposures

    Credit risk for non-retail exposures is evaluated through a two-
dimensional risk rating system comprised of a borrower risk rating and a
facility risk rating, which is applied to all corporate, sovereign, and bank
exposures. The risk ratings are determined through the use of industry and
sector-specific credit risk models designed to quantify and monitor the level
of risk and facilitate its management. All borrowers and facilities are
assigned an internal risk rating which must be reviewed at least once each
year.
    Each borrower is assigned a borrower risk rating that reflects the PD of
the borrower. Key factors in the assessment of borrower risk include the
borrower's competitive position, industry, financial performance, economic
trends, management and access to funds. The facility risk rating maps to LGD
and takes into account facility-specific characteristics, such as collateral,
seniority of debt, and structure.
    Internal risk ratings form the basis of several decision-making processes
within the organization, including the calculation of general allowances for
credit losses, regulatory capital and economic capital. Internal ratings are
also integral to portfolio monitoring and management, and are used in setting
exposure limits and loan pricing.

    Retail Exposures

    Our retail credit segment is composed of a large number of customers, and
includes residential mortgages, unsecured loans, credit card receivables and
small business credits. Requests for retail credit are processed using
automated credit and behavioural scoring systems or, for larger and more
complex transactions, directed to underwriters in regional credit centres who
operate within designated approval limits. Once retail credits are funded they
are monitored on an ongoing basis using quantitative customer management
programs which utilize current internal and external risk indicators to
identify changes in risk.
    Retail exposures are assessed on a pooled basis, with each pool
consisting of exposures that possess similar homogeneous characteristics.
Pools are segmented by product type and by the forward-looking one-year PD
estimate. Credit risk is evaluated through statistically derived analytical
models and decision strategies. Proprietary statistical models have been
developed for each retail product portfolio based on a minimum of 10 years of
internal historical data. Credit risk parameters (PD, EAD and LGD) for each
individual facility are updated quarterly using the most recent borrower
credit bureau and product-related information. The calculation of LGD includes
an adjustment to reflect the potential of increased loss during an economic
downturn.

    Validation of the Credit Risk Rating System

    Credit risk rating systems and methodologies are subject to independent
validation to verify that they remain accurate predictors of risk. The
validation process includes the following considerations:

    
    -   Risk parameter estimates - PDs, EADs and LGDs are reviewed and
        updated against actual loss experience and benchmarked against public
        sources of information to ensure estimates continue to be reasonable
        predictors of potential loss
    -   Model performance - estimates continue to be discriminatory, stable
        and predictive
    -   Data quality - data used in the risk rating system is accurate,
        appropriate and sufficient
    -   Assumptions - key assumptions underlying model development remain
        valid for the current portfolio and environment
    

    The Risk Management Department contributes to the oversight of the credit
risk rating system in accordance with the Bank's model risk rating policy. The
Risk Committee of the Board is apprised of the performance of the credit risk
rating system, at a minimum, on an annual basis. The Risk Committee must
approve any material changes to the Bank's credit risk rating system.

    Stress Testing

    Sensitivity and stress tests are used to ascertain the size of probable
losses under a range of scenarios for our credit portfolios. Sensitivity tests
are performed using different market and economic assumptions to examine the
impact on portfolio metrics. Stress tests are also employed to assess client-
specific and portfolio vulnerability to the effects of severe but plausible
conditions, such as material market or industry disruption or economic
downturn.

    Credit Risk Mitigation

    There are documented policies and procedures in place for the valuation
and management of financial and non-financial collateral, for vetting and
negotiation of netting agreements, and other credit risk mitigation techniques
used in connection with on- and off-balance sheet banking activities which
result in credit exposure. The amount and type of collateral and other credit
enhancements required depend on the Bank's internal assessment of counterparty
credit quality and repayment capacity.
    Non-financial collateral is primarily used in connection with retail
exposures. Enterprise-wide standards for collateral valuation, frequency of
recalculation of the collateral requirement, documentation, registration and
perfection procedures and monitoring are in effect. Non-financial collateral
taken by the Bank includes residential real estate, real estate under
development, commercial real estate and business assets, such as accounts
receivable, inventory and fixed assets. Non-financial collateral is
concentrated in residential real estate and business assets.
    Financial collateral is primarily used in connection with non-retail
exposures. Financial collateral processes are centralized in the Treasury
Credit group within Wholesale Banking and include pre-defined haircuts and
procedures for the receipt, safekeeping and release of the pledged securities.
The main types of financial collateral taken by the Bank include cash and
negotiable securities issued by governments and investment grade issuers.
    Guarantees may be taken in order to reduce the risk in credit exposures.
For guarantees taken in support of a pool of retail exposures, the guarantor
must be a government agency or investment grade issuer.
    The Bank makes use of credit derivatives and on-balance sheet netting for
the purposes of credit risk mitigation. Derivative counterparties are
investment grade financial institutions with the additional benefit of netting
agreements and collateral support agreements. Credit policies are in place
that limit the amount of credit exposure to an entity based on the credit
quality and repayment capacity of the entity.
    Off-balance sheet transactions with qualifying financial institutions are
subject to netting agreements and collateral agreements. Residual credit
exposure, after the effects of collateral, are calculated and reported daily.
This represents a substantial portion of credit risk mitigation used in
connection with off-balance sheet items and related credit exposures.

    MARKET RISK

    Market risk is the potential for loss from changes in the value of
financial instruments. The value of a financial instrument can be affected by
changes in interest rates, foreign exchange rates, equity and commodity prices
and credit spreads.
    We are exposed to market risk in our trading and investment portfolios,
as well as through our non-trading activities.

    Market Risk in Trading Activities

    The four main trading activities that expose us to market risk are:

    
    -   Market making: We provide markets for a large number of securities
        and other traded products. We keep an inventory of these securities
        to buy from and sell to investors, profiting from the spread between
        bid and ask prices;
    -   Sales: We provide a wide variety of financial products to meet the
        needs of our clients, earning money on these products from mark-ups
        and commissions;
    -   Arbitrage: We take positions in certain markets or products and
        offset the risk in other markets or products. Our knowledge of
        various markets and products and how they relate to one another
        allows us to identify and benefit from pricing anomalies;
    -   Positioning: We aim to make profits by taking positions in certain
        financial markets in anticipation of changes in those markets.
    

    Who Manages Market Risk in Trading Activities

    Primary responsibility for managing market risk in trading activities
lies with Wholesale Banking with oversight from Trading Risk Management within
the Risk Management Department.

    How we Manage Market Risk in Trading Activities

    Trading Limits

    We set trading limits that are consistent with the approved business plan
for each business and our tolerance for the market risk of that business.
    The core market risk limits are based on the key risk drivers in the
business and can include notional limits, credit spread limits, yield curve
shift limits, price and volatility shift limits.
    Another primary measure of trading limits is Value-at-Risk (VaR) which we
use to monitor and control overall risk levels and to calculate the regulatory
capital required for market risk in trading activities.
    At the end of each day, risk positions are compared with risk limits,
with excesses reported in accordance with established market risk policies and
procedures.

    Calculating VaR

    We estimate VaR by creating a distribution of potential changes in the
market value of the current portfolio. We value the current portfolio using
the most recent 259 trading days of market price and rate changes as well as
the market value changes associated with probability of Debt Issuer rating
migrations and defaults. VaR is then computed as the threshold level that
portfolio losses are not expected to exceed more than one out of every 100
trading days.
    A graph that discloses daily VaR usage and trading-related income(1)
within the Wholesale Banking segment is included on page 25 of the fully
formatted version of this third quarter 2008 Report to Shareholders, which can
be found on TD's website at www.td.com/investor/earnings.jsp. During the
quarter, there was one day where the loss exceeded the Total VaR. This was a
result of the $96 million pre-tax cumulative impact related to the incorrectly
priced financial instruments.

    
    (1) Trading-related income is the total of trading income reported in
        other income and the net interest income on trading positions
        reported in net interest income.

    Value-at-Risk Usage
    -------------------------------------------------------------------------
                                                                     For the
                                                     For the     nine months
                                              quarters ended           ended
               ---------------------------------------------- ---------------
    (millions                       July 31,
     of                                2008    April    July    July    July
     Canadian  -----------------------------      30,     31,     31,     31,
     dollars)  As at  Average   High    Low     2008    2007    2008    2007
                                              Average Average Average Average
    -------------------------------------------------------------------------
    Interest
     rate and
     credit
     spread
     risk      $29.1    $25.6  $31.1   19.2    $26.3    $7.2    22.6    $7.2
    Equity
     risk       12.9     13.4   18.7   10.5     10.2     6.0     9.7     7.8
    Foreign
     exchange
     risk        4.1      3.8    7.0    1.6      2.4     1.9     2.9     2.0
    Commodity
     risk        0.5      1.5    2.6    0.5      1.6     1.5     1.4     1.5
    Debt
     specific
     risk       43.4     35.1   47.0   24.2     31.2    13.2    28.5    13.5
    Diversi-
     fication
     effect(1) (35.5)   (33.0) n/m(2) n/m(2)   (29.8)  (13.5)  (27.6)  (15.2)
    -------------------------------------------------------------------------
    Total
     Value-
     at-Risk   $54.5    $46.4  $57.8  $34.7   $41.9    16.3   $37.5    $16.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) The aggregate VaR is less then 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.
    

    Stress Testing

    Our trading business is subject to an overall global stress test limit.
As well, each global business has a stress test limit, and each broad risk
class has an overall stress test limit.
    Stress tests are produced and reviewed regularly with the Market Risk and
Capital Committee.

    Market Risk in Investment Activities

    We are also exposed to market risk in the Bank's own investment portfolio
and in the merchant banking business. Risks are managed through a variety of
processes, including identification of our specific risks and determining
their potential impact. Policies and procedures are established to monitor,
measure and mitigate those risks.

    Who Manages Market Risk in Investment Activities

    The TDBFG Investment Committee regularly reviews the performance of the
Bank's own investments and assesses the success of the portfolio managers.
Similarly, the Merchant Banking Investment Committee reviews and approves
merchant banking investments. The Risk Committee of the Board reviews and
approves the investment policies and limits for the Bank's own portfolio and
for the merchant banking business.

    How we Manage Risk in Investment Activities

    We use advanced systems and measurement tools to manage portfolio risk.
Risk intelligence is embedded in the investment decision-making process by
integrating performance targets, risk/return tradeoffs and quantified risk
tolerances. Analysis of returns identifies performance drivers, such as sector
and security exposures, as well as the influence of market factors.

    Market Risk in Non-trading Banking Transactions

    We are exposed to market risk when we enter into non-trading banking
transactions with our customers. These transactions primarily include deposit
taking and lending, which are also referred to as "asset and liability"
positions.

    Asset/Liability Management

    Asset/liability management deals with managing the market risks of our
traditional banking activities. Market risks primarily include interest rate
risk and foreign exchange risk.

    Who is Responsible for Asset/Liability Management

    The Treasury and Balance Sheet Management Department measures and manages
the market risks of our non-trading banking activities, with oversight from
the Asset/Liability Committee, which is chaired by the Chief Financial
Officer, and includes other senior executives. The Risk Committee of the Board
periodically reviews and approves all asset/liability management market risk
policies and receives reports on compliance with approved risk limits.

    How we Manage our Asset and Liability Positions

    When Bank products are issued, risks are measured using a fully hedged
option-adjusted transfer-pricing framework that allows us to measure and
manage product risk within a target risk profile. The framework also ensures
that business units engage in risk-taking activities only if they are
productive.

    Managing Interest Rate Risk

    Interest rate risk is the impact that changes in interest rates could
have on our margins, earnings and economic value. The objective of interest
rate risk management is to ensure that earnings are stable and predictable
over time. To this end, we have adopted a disciplined hedging approach to
managing the net income contribution from our asset and liability positions
including a modeled maturity profile for non-rate sensitive assets,
liabilities and equity. Key aspects of this approach are:

    
    -   Evaluating and managing the impact of rising or falling interest
        rates on net interest income and economic value;
    -   Measuring the contribution of each Bank product on a risk-adjusted,
        fully-hedged basis, including the impact of financial options, such
        as mortgage commitments, that are granted to customers;
    -   Developing and implementing strategies to stabilize net income from
        all personal and commercial banking products.
    

    We are exposed to interest rate risk when asset and liability principal
and interest cash flows have different payment or maturity dates. These are
called "mismatched positions." An interest-sensitive asset or liability is
repriced when interest rates change, when there is cash flow from final
maturity, normal amortization, or when customers exercise prepayment,
conversion or redemption options offered for the specific product.
    Our exposure to interest rate risk depends on the size and direction of
interest rate changes, and on the size and maturity of the mismatched
positions. It is also affected by new business volumes, renewals of loans or
deposits, and how actively customers exercise options, such as prepaying a
loan before its maturity date.
    Interest rate risk is measured using various interest rate "shock"
scenarios to estimate the impact of changes in interest rates on both the
Bank's annual Earnings at Risk (EaR) and Economic Value at Risk (EVaR). EaR is
defined as the change in our annual net interest income from a 100 bps
unfavourable interest rate shock due to mismatched cash flows. EVaR is defined
as the difference in the change in the present value of our asset portfolio
and the change in the present value of our liability portfolio, including off-
balance sheet instruments, resulting from a 100 bps unfavourable interest rate
shock.
    Valuations of all asset and liability positions, as well as off-balance
sheet exposures, are performed regularly. Our objectives are to protect the
present value of the margin booked at the time of inception for fixed-rate
assets and liabilities, and to reduce the volatility of net interest income
over time.
    The interest rate risk exposures from instruments with closed (non-
optioned) fixed-rate cash flows are measured and managed separately from
embedded product options. Projected future cash flows include the impact of
modeled exposures for:

    
    -   An assumed maturity profile for our core deposit portfolio;
    -   Our targeted investment profile on our net equity position;
    -   Liquidation assumptions on mortgages other than from embedded pre-
        payment options.
    

    The objective of portfolio management within the closed book is to
eliminate cash flow mismatches, thereby reducing the volatility of net
interest income.
    Product options, whether they are freestanding options such as mortgage
rate commitments or embedded in loans and deposits, expose us to a significant
financial risk.
    Our exposure from freestanding mortgage rate commitment options is
modeled based on an expected funding ratio derived from historical experience.
We model our exposure to written options embedded in other products, such as
the rights to prepay or redeem, based on analysis of rational customer
behaviour. We also model an exposure to declining interest rates resulting in
margin compression on certain demand deposit accounts that are interest rate
sensitive. Product option exposures are managed by purchasing options or
through a dynamic hedging process designed to replicate the payoff on a
purchased option.
    The Bank's policy sets overall limits on EVaR and EaR based on 100 bps
interest rate shock for its management of Canadian and U.S. non-trading
interest rate risk.
    A graph that shows our interest rate risk exposure (as measured by EVaR)
on all non-trading assets, liabilities and derivative instruments used for
interest rate risk management instruments is included on page 27 of the fully
formatted version of this third quarter 2008 Report to Shareholders, which can
be found on TD's website at www.td.com/investor/earnings.jsp. Starting this
quarter, the EVaR exposure includes the Commerce portfolios.
    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 July 31, 2008, an immediate and
sustained 100 bps increase in interest rates would have decreased the economic
value of shareholders' equity by $66.4 million after tax. An immediate and
sustained 100 bps decrease in interest rates would have reduced the economic
value of shareholders' equity by $88.7 million after tax.
    The following table shows the sensitivity by currency for those
currencies where the Bank has material exposure.

    
    Sensitivity of After-tax Economic Value at Risk by Currency
    -------------------------------------------------------------------------
    (millions of
     Canadian dollars)         As at July 31, 2008      As at April 30, 2008
    -------------------------------------------------------------------------
                              100 bps      100 bps     100 bps       100 bps
    Currency                 increase     decrease    increase      decrease
    -------------------------------------------------------------------------
    Canadian dollar             $(7.8)      $(21.6)      $16.1        $(53.4)
    U.S. dollar                 (58.7)       (67.1)       35.3         (70.6)
    -------------------------------------------------------------------------
    

    Managing Non-trading Foreign Exchange Risk

    Foreign exchange risk refers to losses that could result from changes in
foreign-currency exchange rates. Assets and liabilities that are denominated
in foreign currencies have foreign exchange risk.
    We are exposed to non-trading foreign exchange risk from our investments
in foreign operations, and when our foreign currency assets are greater or
less than our liabilities in that currency, they create a foreign currency
open position. An adverse change in foreign exchange rates can impact our
reported net income and equity, and also our capital ratios. Our objective is
to minimize these impacts.
    Minimizing the impact of an adverse foreign exchange rate change on
reported equity will cause some variability in capital ratios, due to the
amount of RWA that are denominated in a foreign currency. If the Canadian
dollar weakens, the Canadian-dollar equivalent of our RWA in a foreign
currency increases, thereby increasing our capital requirement. For this
reason, the foreign exchange risk arising from the Bank's net investments in
foreign operations is hedged to the point where capital ratios change by no
more than a tolerable amount for a given change in foreign exchange rates.

    LIQUIDITY RISK

    Liquidity risk is the risk that we cannot meet a demand for cash or fund
our obligations as they come due. Demand for cash can arise from withdrawals
of deposits, debt maturities and commitments to provide credit. Liquidity risk
also includes the risk of not being able to liquidate assets in a timely
manner at a reasonable price.
    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 both under normal and
stress conditions. In the unlikely event of a funding disruption, we need to
be able to continue to function without being forced to sell too many of our
assets. The process that ensures adequate access to funds is known as the
management of liquidity risk.

    Who Manages Liquidity Risk

    The Asset/Liability Committee oversees our liquidity risk management
program. It ensures that a management structure is in place to properly
measure and manage liquidity risk. In addition, a Global Liquidity Forum,
comprising senior management from Finance, Treasury and Balance Sheet
Management, Risk Management and Wholesale Banking, identifies and monitors our
liquidity risks. When necessary, the Forum recommends actions to the
Asset/Liability Committee to maintain our liquidity position within limits in
both normal and stress conditions. We have one global liquidity risk policy,
but the major operating areas measure and manage liquidity risks as follows:

    
    -   The Treasury and Balance Sheet Management Department is responsible
        for consolidating and reporting the Bank's global liquidity risk
        position and for managing the Canadian Personal and Commercial
        Banking liquidity position.
    -   Wholesale Banking is responsible for managing the liquidity risks
        inherent in the wholesale banking portfolios.
    -   U.S. Personal and Commercial Banking is responsible for managing its
        liquidity position.
    -   Each area must comply with the Global Liquidity Risk Management
        policy that is periodically reviewed and approved by the Risk
        Committee of the Board.
    

    How we Manage Liquidity Risk

    Our overall liquidity requirement is defined as the amount of liquidity
required to fund expected cash outflows, as well as a 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.
    We measure liquidity requirements using a conservative base case scenario
to define the amount of liquidity that must be held at all times for a
specified minimum period. This scenario provides coverage for 100% of our
unsecured wholesale debt coming due, potential retail and commercial deposit
run-off and forecast operational requirements. In addition, we provide for
coverage of Bank-sponsored funding programs, such as Bankers' Acceptance notes
we issue on behalf of clients, and Bank-sponsored Asset-backed Commercial
Paper. We also use an extended liquidity coverage test to ensure that we can
fund our operations on a fully collateralized basis for a period up to one
year.
    We meet liquidity requirements by holding assets that can be readily
converted into cash, and by managing our cash flows. To be considered readily
convertible into cash, assets must be currently marketable, of sufficient
credit quality and available for sale. Liquid assets are represented in a
cumulative liquidity gap framework based on settlement timing and market
depth. Assets needed for collateral purposes or those that are similarly
unavailable 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 a
global basis to ensure consistent and efficient management of liquidity risk
across all of our operations. On July 31, 2008, our consolidated surplus
liquid asset position up to 90 days was $3.6 billion, compared with a surplus
liquid asset position of $7.8 billion on October 31, 2007. 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.

    Contingency Planning

    If a liquidity crisis were to occur, we have contingency plans in place
to ensure that we can meet all our obligations as they come due.
    At the time of preparing this report, global debt markets were
experiencing a significant liquidity event. During that time, we continued to
operate within our liquidity risk management framework and limit structure.

    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, credit card
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)
    -------------------------------------------------------------------------
    (millions
     of Canadian                                                       As at
     dollars)                                                  July 31, 2008
    -------------------------------------------------------------------------
                                             Significant         Significant
                                          unconsolidated      unconsolidated
                                                   QSPEs                SPEs
                                       --------------------------------------
                                                Carrying            Carrying
                                       Securi-  value of   Securi-  value of
                                         tized  retained    itized  retained
                                        assets interests    assets interests
    -------------------------------------------------------------------------
    Residential mortgage loans              $-        $-   $20,262      $316
    Personal loans                       8,500        90         -         -
    Credit card loans                        -         -         -         -
    Commercial mortgage loans              151         4         -         -
                                        $8,651       $94   $20,262      $316
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    (millions
     of Canadian                                                       As at
     dollars)                                               October 31, 2007
    -------------------------------------------------------------------------
                                             Significant         Significant
                                          unconsolidated      unconsolidated
                                                   QSPEs                SPEs
                                       --------------------------------------
                                                Carrying            Carrying
                                       Securi-  value of   Securi-  value of
                                         tized  retained    itized  retained
                                        assets interests    assets interests
    -------------------------------------------------------------------------
    Residential mortgage loans              $-        $-   $20,352      $289
    Personal loans                       9,000        71         -         -
    Credit card loans                      800         6         -         -
    Commercial mortgage loans              163         5         -         -
                                        $9,963       $82   $20,352      $289
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    (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. These structures are used to enhance the Bank's
liquidity position, to diversify its sources of funding and to optimize the
management of its balance sheet. As at July 31, 2008, the single-seller
conduits had $5.1 billion (October 31, 2007 - $5.1 billion) of commercial
paper outstanding while another Bank-sponsored QSPE had $3.4 billion
(October 31, 2007 - $3.9 billion) of term notes outstanding. While the
probability of loss is negligible, as at July 31, 2008, the Bank's maximum
potential exposure to loss for these conduits through the sole provision of
liquidity facilities was $5.1 billion (October 31, 2007 - $5.1 billion) of
which $1.1 billion of underlying personal loans was government insured.
Additionally, the Bank had retained interests of $90 million (October 31, 2007
- $71 million) relating to excess spread.

    Credit card loans

    The Bank provides credit enhancement to the QSPE through its retained
interests in the excess spread. As at July 31, 2008, the outstanding term
notes issued by the credit card loan securitization vehicle matured; as such,
the maximum potential exposure to loss was nil (October 31, 2007 - $6 million)
through retained interests.

    Commercial mortgage loans

    As at July 31, 2008, the Bank's maximum potential exposure to loss was
$4.3 million (October 31, 2007 - $5 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. All Bank-sponsored third party-originated assets are
securitized through 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 $11.6 billion (October 31, 2007 - $12.7 billion) as
at July 31, 2008. Further, the Bank has committed to an additional $1.56
billion (October 31, 2007 - $2.5 billion) in liquidity facilities for
asset-backed commercial paper that could potentially be issued by the
conduits. As at July 31, 2008, the Bank also provided deal-specific credit
enhancement in the amount of $79 million (October 31, 2007 - $59 million).
Note 25 to the Bank's 2007 Annual Consolidated Financial Statements provides
detailed information about the maximum amount of additional credit the Bank
could be obligated to commit.
    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, asset-backed commercial paper conduits are as
follows:

    
    -------------------------------------------------------------------------
    Total Exposure to Third-Party originated Assets Securitized by Bank-
    Sponsored Conduits(1)
    -------------------------------------------------------------------------
    (millions of Canadian dollars)                       As at July 31, 2008
    -------------------------------------------------------------------------
                                                Ratings profile of
                                                   SPE asset class
                                                ------------------
                                        Signif-                     Expected
                                         icant                      weighted
                                      unconsol-                      average
                                        idated              AA+ to      life
                                          SPEs       AAA       AA- (years)(2)
    -------------------------------------------------------------------------
    Residential mortgage loans          $3,435    $3,381       $54      1.77
    Credit card loans                      500       500         -      3.97
    Automobile loans and leases          5,003     4,999         4      1.39
    Equipment loans and leases             726       726         -      1.91
    Trade receivables                    1,923     1,896        27      3.19
    -------------------------------------------------------------------------
                                       $11,587   $11,502       $85      1.94
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    ---------------------------------------------------------------
    (millions of Canadian dollars)          As at October 31, 2007
    ---------------------------------------------------------------
                                                Ratings profile of
                                                   SPE asset class
                                                ------------------
                                        Signif-
                                         icant
                                      unconsol-
                                        idated              AA+ to
                                          SPEs       AAA       AA-
    ---------------------------------------------------------------
    Residential mortgage loans          $3,046    $2,998       $48
    Credit card loans                      486       486         -
    Automobile loans and leases          5,593     5,589         4
    Equipment loans and leases             701       700         1
    Trade receivables                    2,833     2,805        28
    ---------------------------------------------------------------
                                       $12,659   $12,578       $81
    ---------------------------------------------------------------
    ---------------------------------------------------------------

    (1) Certain comparative amounts have been restated and reclassified to
        conform to the presentation adopted in the current period.
    (2) Expected weighted average life for each asset type is based upon each
        of the conduit's remaining purchase commitment for revolving pools
        and the expected weighted average life of the assets for amortizing
        pools.
    

    Liquidity Facilities to Third Party-sponsored Conduits

    The Bank has exposure to the U.S. arising from providing liquidity
facilities of $462 million (October 31, 2007 - $427 million) to third party-
sponsored conduits of which none has been drawn. The assets within these
conduits are primarily comprised of automotive-related financing assets,
including loans and leases. In the event that the facilities are drawn, the
Bank's credit exposure will mainly be AAA rated.

    Other Investment and Financing Products

    Other Financing Transactions

    The Bank enters into transactions with major U.S. corporate clients
through jointly-owned VIEs as a means to provide them with cost efficient
financing. Under these transactions, as at July 31, 2008, the Bank provided
approximately $2.0 billion (October 31, 2007 - $3.0 billion) in financing to
these VIEs. The Bank has received guarantees from or has recourse to major
U.S. banks with credit ratings from AA to AA+ on an S&P equivalent basis fully
covering its investments in these VIEs. At the inception of the transactions,
the counterparties posted collateral in favour of the Bank and the Bank
purchased credit protection to further reduce its exposure to the U.S. banks.
At July 31, 2008, the Bank's net exposure to the U.S. banks after taking into
account collateral and CDS was approximately $785 million (October 31, 2007 -
$1.5 billion). As at July 31, 2008, the Bank's maximum total exposure to loss
before considering guarantees, recourse, collateral and CDS was approximately
$2.0 billion (October 31, 2007 - $3.0 billion). The transactions allow the
Bank unilateral discretion to exit the transactions every 30 to 90 days. As at
July 31, 2008, these VIEs had assets totaling more than $9.8 billion
(October 31, 2007 - $12.0 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 were
as follows:

    
    -------------------------------------------------------------------------
    (millions of Canadian dollars)       July 31, 2008(1) October 31, 2007(1)
    -------------------------------------------------------------------------
                                                Positive/           Positive/
                                               (negative)          (negative)
                                      Notional      fair  Notional      fair
                                        amount     value    amount     value
    -------------------------------------------------------------------------
    Funded
      CDOs - Purchased protection via
       TD-issued credit linked notes      $296     $(136)     $304     $(205)

    Unfunded
      CDOs - Sold protection
        - positive
          fair value                       834         -       742         5
        - negative fair value                -      (118)        -       (13)
      CDOs - Purchased protection
        - positive fair value              256        47       371        10
        - negative fair value                -       (36)        -        (7)

    Unfunded - Similar Reference Portfolio
      CDOs - Sold protection
        - positive fair value            1,562         6     1,367         -
        - negative fair value                -      (183)        -       (38)
      CDOs - Purchased protection
        - positive fair value            1,616       196     1,485        47
        - negative fair value                -        (6)        -        (6)
    -------------------------------------------------------------------------
    (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 primarily investment-grade 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
$23 million to an increase in the fair value by $26 million. A sensitivity
analysis was performed for all items fair valued using valuation techniques
with significant non-observable market inputs, and disclosed in the Bank's
2007 Annual Consolidated Financial Statements.

    Leveraged Finance Credit Commitments

    The Bank enters into various commitments to meet the financing needs of
the Bank's clients and to earn fee income. Included in 'commitments to extend
credit', in Note 25 to the Bank's 2007 Annual Consolidated Financial
Statements, are leveraged finance commitments. Leveraged finance commitments,
are agreements that provide funding to a wholesale borrower with higher levels
of debt, typically 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 July 31, 2008, was not
significant, except for its commitment to provide funding in the amount of
$3.3 billion (October 31, 2007 - $3.3 billion) to a consortium led by Ontario
Teachers' Pension Plan in their bid to privatize BCE Inc. and is now expected
to close in December 2008. These products may expose the Bank to liquidity and
credit risks. There are adequate risk management and control processes in
place to mitigate these risks. Note 25 to the Bank's 2007 Annual Consolidated
Financial Statements provides detailed information about the maximum amount of
additional credit the Bank could be obligated to extend. Funding commitments
on loans that the Bank intends to syndicate are recorded as a derivative at
fair value with changes in fair value recorded through income.

    RELATED-PARTY TRANSACTIONS

    During the quarter ended January 31, 2008, the Bank purchased certain
securities with a notional value of approximately $300 million at par from a
fund that is managed by the Bank. The Bank immediately recognized a securities
loss of $45 million that was recorded in the Wholesale Banking segment.

    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
                                                              2008      2007
    --------------------------------------------------------------- ---------
    (millions of Canadian dollars)     July 31   Apr. 30   Jan. 31   Oct. 31
    -------------------------------------------------------------------------
    Net interest income                 $2,437    $1,858    $1,788    $1,808
    Other income                         1,600     1,530     1,816     1,742
    -------------------------------------------------------------------------
    Total revenue                        4,037     3,388     3,604     3,550
    Provision for credit losses           (288)     (232)     (255)     (139)
    Non-interest expenses               (2,701)   (2,206)   (2,228)   (2,241)
    Provision for income taxes            (122)     (160)     (235)     (153)
    Non-controlling interests               (8)       (9)       (8)       (8)
    Equity in net income of an
     associated company, net of income
     taxes                                  79        71        92        85
    -------------------------------------------------------------------------
    Net income - reported                  997       852       970     1,094
    Items of note affecting net
     income, net of income taxes:
      Amortization of intangibles          111        92        75        99
      Gain relating to restructuring
       of Visa                               -         -         -      (135)
      TD Banknorth restructuring,
       privatization and merger-related
       charges                               -         -         -         -
      Restructuring and integration
       charges relating to the Commerce
       acquisition                          15        30         -         -
      Change in fair value of credit
       default swaps hedging the
       corporate loan book, net of
       provision for credit losses         (22)       (1)      (25)        2
      Other tax items                       14         -        20         -
      Provision for insurance claims         -         -        20         -
      Initial set up of specific
       allowance for credit card and
       overdraft loans                       -         -         -         -
      General allowance release              -         -         -       (39)
    -------------------------------------------------------------------------
    Total adjustments for items of
     note, net of income taxes             118       121        90       (73)
    -------------------------------------------------------------------------
    Net income - adjusted                1,115       973     1,060     1,021
    Preferred dividends                    (17)      (11)       (8)       (5)
    -------------------------------------------------------------------------
    Net income available to common
     shareholders - adjusted            $1,098      $962    $1,052    $1,016
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (Canadian dollars)
    -------------------------------------------------------------------------
    Basic earnings per share
      - reported                         $1.22     $1.12     $1.34     $1.52
      - adjusted                          1.37      1.33      1.46      1.42
    Diluted earnings per share
      - reported                          1.21      1.12      1.33      1.50
      - adjusted                          1.35      1.32      1.45      1.40
    Return on common shareholders'
     equity                              13.4%     13.4%     18.0%     20.8%
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                  For the three months ended
                                                              2007      2006
    --------------------------------------------------------------- ---------
    (millions of Canadian dollars)     July 31   Apr. 30   Jan. 31   Oct. 31
    -------------------------------------------------------------------------
    Net interest income                 $1,783    $1,662    $1,671    $1,714
    Other income                         1,899     1,882     1,834     1,604
    -------------------------------------------------------------------------
    Total revenue                        3,682     3,544     3,505     3,318
    Provision for credit losses           (171)     (172)     (163)     (170)
    Non-interest expenses               (2,216)   (2,297)   (2,221)   (2,211)
    Provision for income taxes            (248)     (234)     (218)     (175)
    Non-controlling interests              (13)      (27)      (47)      (48)
    Equity in net income of an
     associated company, net of income
     taxes                                  69        65        65        48
    -------------------------------------------------------------------------
    Net income - reported                1,103       879       921       762
    Items of note affecting net
     income, net of income taxes:
      Amortization of intangibles           91        80        83        87
      Gain relating to restructuring
       of Visa                               -         -         -         -
      TD Banknorth restructuring,
       privatization and merger-related
       charges                               -        43         -         -
      Restructuring and integration
       charges relating to the Commerce
       acquisition                           -         -         -         -
      Change in fair value of credit
       default swaps hedging the
       corporate loan book, net of
       provision for credit losses         (30)       (7)        5         8
      Other tax items                        -         -         -         -
      Provision for insurance claims         -         -         -         -
      Initial set up of specific
       allowance for credit card and
       overdraft loans                       -         -         -        18
      General allowance release              -         -         -         -
    -------------------------------------------------------------------------
    Total adjustments for items of
     note, net of income taxes              61       116        88       113
    -------------------------------------------------------------------------
    Net income - adjusted                1,164       995     1,009       875
    Preferred dividends                     (2)       (7)       (6)       (5)
    -------------------------------------------------------------------------
    Net income available to common
     shareholders - adjusted            $1,162      $988    $1,003      $870
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (Canadian dollars)
    -------------------------------------------------------------------------
    Basic earnings per share
      - reported                         $1.53     $1.21     $1.27     $1.05
      - adjusted                          1.61      1.37      1.40      1.21
    Diluted earnings per share
      - reported                          1.51      1.20      1.26      1.04
      - adjusted                          1.60      1.36      1.38      1.20
    Return on common shareholders'
     equity                              21.0%     17.1%     18.2%     15.7%
    -------------------------------------------------------------------------
    (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, as
presented on pages 33 to 47 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 audited Consolidated Financial
Statements for the year ended October 31, 2007. The accounting policies used
in the preparation of these Consolidated Financial Statements are consistent
with those used in the Bank's October 31, 2007 audited Consolidated Financial
Statements, except as described below.

    Changes in Significant Accounting Policies

    Capital Disclosures

    Effective November 1, 2007, the CICA's new accounting standard, Section
1535, Capital Disclosures, was implemented, which requires the disclosure of
both qualitative and quantitative information that enables users of financial
statements to evaluate the entity's objectives, policies and processes for
managing capital. The new guidance did not have an effect on the financial
position or earnings of the Bank.

    Financial Instruments Disclosures and Presentation

    Effective November 1, 2007, the accounting and disclosure requirements of
the CICA's two new accounting standards, Section 3862, Financial Instruments -
Disclosures, and Section 3863, Financial Instruments - Presentation, were
implemented. The new guidance did not have a material effect on the financial
position or earnings of the Bank.

    Accounting for Transaction Costs of Financial Instruments Classified
    Other Than as Held For Trading

    Effective November 1, 2007, the Bank adopted EIC-166, Accounting Policy
Choice for Transaction Costs. This abstract provided clarity around the
application of accounting guidance related to transaction costs that is
codified in Section 3855, Financial Instruments - Recognition and Measurement.
More specifically, the abstract contemplated whether an entity must make one
accounting policy choice that applies to all financial assets and financial
liabilities classified other than as held for trading or whether these
transaction costs may be recognized in net income for certain of these
financial assets and liabilities and added to the carrying amount for other
financial assets and liabilities. 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 2007 Annual Report.

    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
                                                          -------------------
                                                          July 31    Oct. 31
    (millions of Canadian dollars)                           2008       2007
    -------------------------------------------------------------------------
    ASSETS
    Cash and due from banks                                $2,719     $1,790
    Interest-bearing deposits with banks                   12,445     14,746
    -------------------------------------------------------------------------
                                                           15,164     16,536
    -------------------------------------------------------------------------
    Securities
    Trading                                                73,670     77,637
    Designated as trading under the fair value option       2,037      2,012
    Available-for-sale                                     60,155     35,650
    Held-to-maturity                                        9,311      7,737
    -------------------------------------------------------------------------
                                                          145,173    123,036
    -------------------------------------------------------------------------
    Securities purchased under reverse repurchase
     agreements                                            34,138     27,648
    -------------------------------------------------------------------------
    Loans
    Residential mortgages                                  73,229     58,485
    Consumer installment and other personal                77,206     67,532
    Credit card                                             7,227      5,700
    Business and government                                62,964     44,258
    Business and government designated as trading
     under the fair value option                              617      1,235
    -------------------------------------------------------------------------
                                                          221,243    177,210
    Allowance for credit losses (Note 4)                   (1,447)    (1,295)
    -------------------------------------------------------------------------
    Loans, net of allowance for credit losses             219,796    175,915
    -------------------------------------------------------------------------
    Other
    Customers' liability under acceptances                 10,844      9,279
    Investment in TD Ameritrade                             4,877      4,515
    Trading derivatives                                    38,385     36,052
    Goodwill                                               14,317      7,918
    Other intangibles                                       3,213      2,104
    Land, buildings and equipment                           3,687      1,822
    Other assets                                           19,245     17,299
    -------------------------------------------------------------------------
                                                           94,568     78,989
    -------------------------------------------------------------------------
    Total assets                                         $508,839   $422,124
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    -------------------------------------------------------------------------
    Deposits
    Personal                                             $184,643   $147,561
    Banks                                                  10,169     10,162
    Business and government                               111,964     73,322
    Trading                                                47,442     45,348
    -------------------------------------------------------------------------
                                                          354,218    276,393
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Other
    Acceptances                                            10,844      9,279
    Obligations related to securities sold short           24,493     24,195
    Obligations related to securities sold under
     repurchase agreements                                 15,058     16,574
    Trading derivatives                                    37,244     39,028
    Other liabilities                                      20,227     23,829
    -------------------------------------------------------------------------
                                                          107,866    112,905
    -------------------------------------------------------------------------
    Subordinated notes and debentures (Note 6)             13,478      9,449
    -------------------------------------------------------------------------
    Liabilities for preferred shares and capital trust
     securities (Note 7)                                    1,448      1,449
    -------------------------------------------------------------------------
    Non-controlling interests in subsidiaries                 536        524
    -------------------------------------------------------------------------
    SHAREHOLDERS' EQUITY
    Common shares (millions of shares issued and
     outstanding: July 31, 2008 - 807.3 and
     Oct. 31, 2007 - 717.8) (Note 8)                       13,090      6,577
    Preferred shares (millions of shares issued and
     outstanding: July 31, 2008 - 65.0 and
     Oct. 31, 2007 - 17.0) (Note 8)                         1,625        425
    Contributed surplus                                       355        119
    Retained earnings                                      17,362     15,954
    Accumulated other comprehensive income (loss)
     (Note 10)                                             (1,139)    (1,671)
    -------------------------------------------------------------------------
                                                           31,293     21,404
    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity           $508,839   $422,124
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    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 INCOME (unaudited)
    -------------------------------------------------------------------------
                                           For the three        For the nine
                                            months ended        months ended
                                      ---------------------------------------
                                       July 31   July 31   July 31   July 31
    (millions of Canadian dollars)        2008      2007      2008      2007
    -------------------------------------------------------------------------
    Interest income
    Loans                               $3,410    $3,228   $10,046    $9,419
    Securities
      Dividends                            259       210       761       672
      Interest                           1,267       950     3,171     2,855
    Deposits with banks                    194        47       467       205
    -------------------------------------------------------------------------
                                         5,130     4,435    14,445    13,151
    -------------------------------------------------------------------------
    Interest expense
    Deposits                             2,068     1,987     6,378     6,024
    Subordinated notes and debentures      165       125       482       357
    Preferred shares and capital trust
     securities                             24        19        70        81
    Other liabilities                      436       521     1,432     1,573
    -------------------------------------------------------------------------
                                         2,693     2,652     8,362     8,035
    -------------------------------------------------------------------------
    Net interest income                  2,437     1,783     6,083     5,116
    -------------------------------------------------------------------------
    Other income
    Investment and securities services     591       627     1,714     1,826
    Credit fees                            121       109       330       308
    Net securities gains                    14        94       276       266
    Trading (loss) income                 (196)      235      (140)      643
    Income (loss) from financial
     instruments designated as trading
     under the fair value option           (10)      (87)      (54)      (91)
    Service charges                        356       263       874       756
    Loan securitizations (Note 5)           77        86       244       317
    Card services                          175       117       410       333
    Insurance, net of claims               243       257       679       762
    Trust fees                              36        33       106       102
    Other                                  193       165       507       393
    -------------------------------------------------------------------------
                                         1,600     1,899     4,946     5,615
    -------------------------------------------------------------------------
    Total revenue                        4,037     3,682    11,029    10,731
    -------------------------------------------------------------------------
    Provision for credit losses (Note 4)   288       171       775       506
    -------------------------------------------------------------------------
    Non-interest expenses
    Salaries and employee benefits       1,342     1,161     3,650     3,487
    Occupancy, including depreciation      279       188       648       548
    Equipment, including depreciation      188       150       480       447
    Amortization of other intangibles      166       131       405       361
    Restructuring costs (Note 13)            -         -        48        67
    Marketing and business development     131       106       343       330
    Brokerage-related fees                  64        61       186       172
    Professional and advisory services     135       119       364       353
    Communications                          54        46       149       144
    Other                                  342       254       862       825
    -------------------------------------------------------------------------
                                         2,701     2,216     7,135     6,734
    -------------------------------------------------------------------------
    Income before provision for income
     taxes, non-controlling interests
     in subsidiaries and equity in net
     income of an associated company     1,048     1,295     3,119     3,491
    Provision for income taxes             122       248       517       700
    Non-controlling interests in
     subsidiaries, net of income taxes       8        13        25        87
    Equity in net income of an
     associated company, net of
     income taxes                           79        69       242       199
    -------------------------------------------------------------------------
    Net income                             997     1,103     2,819     2,903
    Preferred dividends                     17         2        36        15
    -------------------------------------------------------------------------
    Net income available to common
     shareholders                         $980    $1,101    $2,783    $2,888
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average number of common shares
     outstanding (millions) (Note 14)
      Basic                              804.0     719.5     756.8     719.0
      Diluted                            811.0     726.9     763.2     725.9
    Earnings per share (in dollars)
     (Note 14)
      Basic                              $1.22     $1.53     $3.68     $4.02
      Diluted                             1.21      1.51      3.65      3.98
    Dividends per share (in dollars)      0.59      0.53      1.75      1.54
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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 CHANGES IN SHAREHOLDERS' EQUITY
    (unaudited)
    -------------------------------------------------------------------------
                                           For the three        For the nine
                                            months ended        months ended
                                      ---------------------------------------
                                       July 31   July 31   July 31   July 31
    (millions of Canadian dollars)        2008      2007      2008      2007
    -------------------------------------------------------------------------
    Common shares (Note 8)

    Balance at beginning of period     $12,818    $6,455    $6,577    $6,334
    Proceeds from shares issued on
     exercise of options                   129        79       200       132
    Shares issued as a result of
     dividend reinvestment plan            142        22       185        62
    Repurchase of common shares              -       (29)        -       (29)
    Impact of shares (acquired) sold
     for trading purposes(1)                 1        (2)      (19)       26
    Shares issued on acquisition
     of Commerce                             -         -     6,147         -
    -------------------------------------------------------------------------
    Balance at end of period            13,090     6,525    13,090     6,525
    -------------------------------------------------------------------------
    Preferred shares (Note 8)
    Balance at beginning of period       1,125       425       425       425
    Share issues                           500         -     1,200         -
    -------------------------------------------------------------------------
    Balance at end of period             1,625       425     1,625       425
    -------------------------------------------------------------------------
    Contributed surplus
    Balance at beginning of period         383       124       119        66
    Stock options (Note 11)                (28)       (6)      (27)        -
    Conversion of TD Banknorth stock
     options on privatization (Note 11)      -         -         -        52
    Conversion of Commerce stock
     options on acquisition (Note 11)        -         -       263         -
    -------------------------------------------------------------------------
    Balance at end of period               355       118       355       118
    -------------------------------------------------------------------------
    Retained earnings
    Balance at beginning of period      16,864    14,865    15,954    13,725
    Transition adjustment on adoption
     of Financial Instruments standards      -         -         -        80
    Net income                             997     1,103     2,819     2,903
    Common dividends                      (475)     (381)   (1,358)   (1,108)
    Preferred dividends                    (17)       (2)      (36)      (15)
    Premium paid on repurchase of
     common shares                           -      (207)        -      (207)
    Other                                   (7)        -       (17)        -
    -------------------------------------------------------------------------
    Balance at end of period            17,362    15,378    17,362    15,378
    -------------------------------------------------------------------------
    Accumulated other comprehensive
     income (loss), net of income
     taxes (Note 10)
    Balance at beginning of period        (595)      (94)   (1,671)     (918)
    Transition adjustment on adoption
     of Financial Instruments standards      -         -         -       426
    Other comprehensive income for
     the period                           (544)   (1,349)      532      (951)
    -------------------------------------------------------------------------
    Balance at end of period            (1,139)   (1,443)   (1,139)   (1,443)
    -------------------------------------------------------------------------
    Total shareholders' equity         $31,293   $21,003   $31,293   $21,003
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) 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 nine
                                            months ended        months ended
                                      ---------------------------------------
                                       July 31   July 31   July 31   July 31
    (millions of Canadian dollars)        2008      2007      2008      2007
    -------------------------------------------------------------------------
    Net income                            $997    $1,103    $2,819    $2,903
    Other comprehensive income (loss),
     net of income taxes
      Change in unrealized gains and
       (losses) on available-for-sale
       securities, net of hedging
       activities(a)                      (272)     (188)      (80)      (76)
      Reclassification to earnings in
       respect of available-for-sale
       securities(b)                       (17)       (9)      (58)      (36)
      Change in foreign currency
       translation gains and (losses)
       on investments in subsidiaries,
       net of hedging activities(c),(d)   (231)     (971)        8      (551)
      Change in gains and (losses) on
       derivative instruments designated
       as cash flow hedges(e)               41      (196)      764      (310)
      Reclassification to earnings
       of (gains) and losses on cash
       flow hedges(f)                      (65)       15      (102)       22
    -------------------------------------------------------------------------
      Other comprehensive income for
       the period                         (544)   (1,349)      532      (951)
    -------------------------------------------------------------------------
    Comprehensive income for the period   $453     $(246)   $3,351    $1,952
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (a) Net of income tax benefit of $153 million and $83 million for the
        three and nine months ended July 31, 2008 respectively (income tax
        benefit of $79 million and $17 million for the three and nine months
        ended July 31, 2007 respectively).
    (b) Net of income tax expense of $4 million and $21 million for the three
        and nine months ended July 31, 2008 respectively (income tax benefit
        of $22 million and $42 million for the three and nine months ended
        July 31, 2007 respectively).
    (c) Net of income tax benefit of $97 million for the three months ended
        July 31, 2008 (three months ended July 31, 2007 - tax expense of
        $217 million). Net of income tax benefit of $392 million for the nine
        months ended July 31, 2008 (nine months ended July 31, 2007 - tax
        expense of $269 million).
    (d) Includes $(215) million for the three months ended July 31, 2008
        (three months ended July 31, 2007 - $448 million) of after-tax gains
        (losses) arising from hedges of the Bank's investment in foreign
        operations. Includes $(887) million for the nine months ended
        July 31, 2008 (nine months ended July 31, 2007 - $560 million) of
        after-tax gains (losses) arising from hedges of the Bank's investment
        in foreign operations.
    (e) Net of income tax expense of $10 million and $328 million for the
        three and nine months ended July 31, 2008 respectively (income tax
        benefit of $85 million and $155 million for the three and nine months
        ended July 31, 2007 respectively).
    (f) Net of income tax expense of $29 million and $45 million for the
        three and nine months ended July 31, 2008 respectively (income tax
        expense of $7 million and $11 million for the three and nine months
        ended July 31, 2007 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 nine
                                            months ended        months ended
                                      ---------------------------------------
                                       July 31   July 31   July 31   July 31
    (millions of Canadian dollars)        2008      2007      2008      2007
    -------------------------------------------------------------------------
    Cash flows from (used in)
     operating activities
    Net income                            $997    $1,103    $2,819    $2,903
    Adjustments to determine net cash
     flows from (used in) operating
     activities:
      Provision for credit losses          288       171       775       506
      Restructuring costs                    -         -        48        67
      Depreciation                         135        87       302       262
      Amortization of other intangibles    166       131       405       361
      Stock options                          5         7        16        15
      Net securities gains                 (14)      (94)     (276)     (266)
      Net gain on securitizations
       (Note 5)                            (24)      (29)      (85)     (113)
      Equity in net income of an
       associated company                  (79)      (69)     (242)     (199)
      Non-controlling interests              8        13        25        87
      Future income taxes                 (563)     (263)     (616)       96
    Changes in operating assets and
     liabilities:
      Current income taxes payable        (446)      288    (1,958)      182
      Interest receivable and payable      (18)     (534)     (132)     (397)
      Trading securities                 9,420    (3,736)   10,092     2,791
      Unrealized gains and amounts
       receivable on derivative
       contracts                          (783)   (1,951)   (2,333)   (1,675)
      Unrealized losses and amounts
       payable on derivative contracts    (486)      (84)   (1,784)     (278)
      Other                              1,643     2,121       685    (1,068)
    -------------------------------------------------------------------------
    Net cash used in operating
     activities                         10,249    (2,839)    7,741     3,274
    -------------------------------------------------------------------------
    Cash flows from (used in)
     financing activities
    Change in deposits                   4,695    (2,426)   30,554     5,497
    Securities sold under repurchase
     agreements                            208     4,836    (1,516)   (2,497)
    Securities sold short                  947     1,481       298      (489)
    Issue of subordinated notes and
     debentures                          1,025     1,798     4,025     4,072
    Repayment of subordinated notes
     and debentures                          -      (874)        -      (874)
    Liability for preferred shares
     and capital trust securities           20         1        (1)        4
    Translation adjustment on
     subordinated notes and debentures
     issued in a foreign currency
     and other                             (13)     (129)        4       (93)
    Common shares issued on exercise
     of options                             96        66       157       117
    Common shares (acquired) sold in
     Wholesale Banking                       1        (2)      (19)       26
    Repurchase of common shares              -       (29)        -       (29)
    Dividends paid in cash on common
     shares                               (333)     (359)   (1,173)   (1,046)
    Premium paid on common shares
     repurchased                             -      (207)        -      (207)
    Issuance of preferred shares           493         -     1,183         -
    Dividends paid on preferred shares     (17)       (2)      (36)      (15)
    -------------------------------------------------------------------------
    Net cash from financing activities   7,122     4,154    33,476     4,466
    -------------------------------------------------------------------------
    Cash flows from (used in)
     investing activities
    Interest-bearing deposits
     with banks                          3,154    (1,547)    2,301    (2,580)
    Activity in available-for-sale
     and held-to-maturity securities:
      Purchases                        (37,956)  (19,809)  (76,940)  (90,371)
      Proceeds from maturities          13,642    21,710    20,339    85,618
      Proceeds from sales               16,851     1,099    48,540     8,108
    Activity in lending activities:
      Origination and acquisitions     (42,383)  (32,598) (111,995) (105,259)
      Proceeds from maturities          28,917    24,964    80,265    82,577
      Proceeds from sales                  372     2,993       825     4,781
      Proceeds from loan
       securitizations (Note 5)          1,395     2,383     4,809     8,714
    Land, buildings and equipment         (107)       (6)     (262)     (224)
    Securities purchased under
     reverse repurchase agreements      (1,071)     (471)   (6,490)    5,056
    Acquisitions and dispositions
     less cash and cash equivalents
     acquired (Note 20)                      -         -    (1,761)   (4,139)
    -------------------------------------------------------------------------
    Net cash used in investing
     activities                        (17,186)   (1,282)  (40,369)   (7,719)
    -------------------------------------------------------------------------
    Effect of exchange rate changes
     on cash and cash equivalents           14       (41)       81       (54)
    -------------------------------------------------------------------------
    Net increase in cash and cash
     equivalents                           199        (8)      929       (33)
    Cash and cash equivalents at
     beginning of period                 2,520     1,994     1,790     2,019
    -------------------------------------------------------------------------
    Cash and cash equivalents at
     end of period, represented by
     cash and due from banks            $2,719    $1,986    $2,719    $1,986
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Supplementary disclosure of
     cash flow information
    Amount of interest paid
     during the period                  $2,886    $3,064    $8,486    $8,329
    Amount of income taxes paid
     during the period                     413       101     1,945       774
    -------------------------------------------------------------------------

    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: 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, 2007, except as described in Note 2. 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 audited Consolidated Financial Statements
    for the year ended October 31, 2007 and the accompanying notes included
    on pages 82 to 121 of the Bank's 2007 Annual Report. Certain disclosures
    are included in the Management Discussion & Analysis (MD&A) as permitted
    by GAAP and as discussed on pages 21 to 28 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.

    Note 2: CHANGES IN ACCOUNTING POLICIES
    -------------------------------------------------------------------------

    Capital Disclosures

    Effective November 1, 2007, the CICA's new accounting standard, Section
    1535, Capital Disclosures, was implemented, which requires the disclosure
    of both qualitative and quantitative information that enables users of
    financial statements to evaluate the entity's objectives, policies and
    processes for managing capital. The new guidance did not have an effect
    on the financial position or earnings of the Bank.

    Financial Instruments Disclosures and Presentation

    Effective November 1, 2007, the accounting and disclosure requirements of
    the CICA's two new accounting standards, Section 3862, Financial
    Instruments - Disclosures, and Section 3863, Financial Instruments -
    Presentation, were implemented. The new guidance did not have a material
    effect on the financial position or earnings of the Bank.

    Accounting for Transaction Costs of Financial Instruments Classified
    Other Than as Held For Trading

    Effective November 1, 2007, the Bank adopted EIC-166, Accounting Policy
    Choice for Transaction Costs. This abstract provided clarity around the
    application of accounting guidance related to transaction costs that is
    codified in Section 3855, Financial Instruments - Recognition and
    Measurement. More specifically the abstract contemplated whether an
    entity must make one accounting policy choice that applies to all
    financial assets and financial liabilities classified other than as held
    for trading or whether these transaction costs may be recognized in net
    income for certain of these financial assets and liabilities and added to
    the carrying amount for other financial assets and liabilities. The new
    guidance did not have a material effect on the financial position or
    earnings of the Bank.

    Note 3: FUTURE CHANGES IN ACCOUNTING POLICIES
    -------------------------------------------------------------------------

    Goodwill, Intangible Assets and Financial Statement Concepts

    The CICA issued a new accounting standard, 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. Section 1000,
    Financial Statement Concepts, was also amended to provide consistency
    with the new standard. The new and amended standards are effective for
    the Bank beginning November 1, 2008. The Bank is currently assessing the
    impact of these standards on its Consolidated Financial Statements.

    Note 4: ALLOWANCE FOR CREDIT LOSSES, COLLATERAL 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 Consolidated Balance Sheet. Assets in the portfolio which are
    included on the Interim Consolidated Balance Sheet are deposits with
    banks, loans other than loans designated as trading under the fair value
    option, mortgages and acceptances. Items which are not recorded on the
    Interim Consolidated Balance Sheet include certain guarantees, letters of
    credit and undrawn lines of credit. The allowance, including the
    allowance for acceptances and off-balance sheet items, is deducted from
    loans in the Consolidated Balance Sheet. The change in the Bank's
    allowance for credit losses for the nine months ended July 31 is shown in
    following table.

    Allowance for Credit Losses
    -------------------------------------------------------------------------
                                July 31, 2008                 July 31, 2007
                 ------------------------------------------------------------
    (millions
     of Canadian  Specific    General           Specific    General
     dollars)    allowance  allowance   Total  allowance  allowance   Total
    -------------------------------------------------------------------------
    Balance at
     beginning
     of year          $203    $1,092    $1,295      $176    $1,141    $1,317
    Acquisitions of
     TD Banknorth
     (including
     Interchange)(1)     -         -         -         -        14        14
    Provision for
     (reversal of)
     credit losses     676        99       775       478        28       506
    Write-offs        (699)        -      (699)     (561)        -      (561)
    Recoveries          95         -        95       108         -       108
    Other(2)            17       (36)      (19)       10       (37)      (27)
    -------------------------------------------------------------------------
    Allowance for
     credit losses
     at end of
     period           $292    $1,155    $1,447      $211    $1,146    $1,357
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) All loans acquired from Commerce were recorded at their fair value on
        the date of acquisition which takes into consideration the credit
        quality of the loans. As a result, an allowance for credit losses was
        not recorded on acquisition.
    (2) Includes foreign exchange rate changes.


    A loan is past due when a counterparty has failed to make a payment by
    the contractual due date. The following table provides aging information
    for loans that are past due but not impaired. A grace period has been
    incorporated if it is common to a product type and provided to the
    counterparties. The grace period represents the additional time period
    (e.g. 3 days) beyond the contractual due date during which a counterparty
    is permitted to make the payment without the loan being classified as
    past due.

    Gross Amount of Loans Past Due but not Impaired as at July 31, 2008
    -------------------------------------------------------------------------
    (millions of                1-30     31-60     61-89   90 days
     Canadian dollars)          days      days      days   or more     Total
    -------------------------------------------------------------------------
    Residential mortgages       $911      $319       $57        $-    $1,287

    Consumer installment and
     other personal loans      3,178       562       109         -     3,849
    Credit cards                 365        67        37         -       469
    Business and government    2,364       168        75         -     2,607
    -------------------------------------------------------------------------
    Total                     $6,818    $1,116      $278        $-    $8,212
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    As at July 31, 2008, the fair value of financial collateral held against
    loans that were past due but not impaired was $36.8 million. The fair
    value of non-financial collateral is determined at the origination date
    of the loan. A revaluation of non-financial collateral is performed if
    there has been a significant change in the terms and conditions of the
    loan and/or the loan is considered impaired. For impaired loans, an
    assessment of the collateral is taken into consideration when estimating
    the net realizable amount of the loan.

    The carrying value of loans renegotiated during the nine months ended
    July 31, 2008, that would otherwise be impaired, was $9.4 million.

    As at July 31, 2008, the fair value of financial assets accepted as
    collateral that the Bank is permitted to sell or repledge in the absence
    of default is $26.2 billion. The fair value of financial assets accepted
    as collateral that has been sold or repledged (excluding cash collateral)
    was $5.1 billion. These transactions are conducted under terms that are
    usual and customary to standard lending, and stock borrowing and lending
    activities.

    Note 5: LOAN SECURITIZATIONS
    -------------------------------------------------------------------------

    The following tables summarize the Bank's securitization activity, for
    its own assets securitized, for the three and nine months ended July 31.
    In most cases, the Bank retained responsibility for servicing the assets
    securitized.

    Securitization Activity
    -------------------------------------------------------------------------
                                                  For the three months ended
                       ------------------------------------------------------
                                                               July 31, 2008
    -------------------------------------------------------------------------
                       Residential              Credit  Commercial
    (millions of          mortgage  Personal      card    mortgage
     Canadian dollars)       loans     loans     loans       loans     Total
    -------------------------------------------------------------------------
    Gross proceeds          $2,195    $1,477        $-          $-    $3,672
    Retained interests          45        12         -           -        57
    Cash flows received
     on retained interests      56        18        14           1        89
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                  For the three months ended
                       ------------------------------------------------------
                                                               July 31, 2007
    -------------------------------------------------------------------------
                       Residential              Credit  Commercial
    (millions of          mortgage  Personal      card    mortgage
     Canadian dollars)       loans     loans     loans       loans     Total
    -------------------------------------------------------------------------
    Gross proceeds          $2,178    $1,882      $800        $237    $5,097
    Retained interests          45        29         8           -        82
    Cash flows received
     on retained interests      55        25        14           1        95
    -------------------------------------------------------------------------


    Securitization Activity
    -------------------------------------------------------------------------
                                                   For the nine months ended
                       ------------------------------------------------------
                                                               July 31, 2008
    -------------------------------------------------------------------------
                       Residential              Credit  Commercial
    (millions of          mortgage  Personal      card    mortgage
     Canadian dollars)       loans     loans     loans       loans     Total
    -------------------------------------------------------------------------
    Gross proceeds          $6,109    $4,221    $1,600          $-   $11,930
    Retained interests         145        38        12           -       195
    Cash flows received
     on retained interests     164        70        43           2       279
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                   For the nine months ended
                       ------------------------------------------------------
                                                               July 31, 2007
    -------------------------------------------------------------------------
                       Residential              Credit  Commercial
    (millions of          mortgage  Personal      card    mortgage
     Canadian dollars)       loans     loans     loans       loans     Total
    -------------------------------------------------------------------------
    Gross proceeds          $7,601    $5,806    $2,400        $455   $16,262
    Retained interests         167        84        23           -       274
    Cash flows received
     on retained interests     145        78        46           2       271
    -------------------------------------------------------------------------

    The following tables summarize the impact of securitizations on the
    Bank's Interim Consolidated Statement of Income for the three and nine
    months ended July 31.

    Securitization Gains and Income on Retained Interests
    -------------------------------------------------------------------------
                                                  For the three months ended
                       ------------------------------------------------------
                                                               July 31, 2008
    -------------------------------------------------------------------------
                       Residential              Credit  Commercial
    (millions of          mortgage  Personal      card    mortgage
     Canadian dollars)       loans     loans     loans       loans     Total
    -------------------------------------------------------------------------
    Gain on sale               $13       $11        $-          $-       $24
    Income on retained
     interests(1)               23         1        29           -        53
    -------------------------------------------------------------------------
    Total                      $36       $12       $29          $-       $77
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                  For the three months ended
                       ------------------------------------------------------
                                                               July 31, 2007
    -------------------------------------------------------------------------
                       Residential              Credit  Commercial
    (millions of          mortgage  Personal      card    mortgage
     Canadian dollars)       loans     loans     loans       loans     Total
    -------------------------------------------------------------------------
    Gain on sale               $(8)      $28        $7          $2       $29
    Income on retained
     interests(1)               30         6        21           -        57
    -------------------------------------------------------------------------
    Total                      $22       $34       $28          $2       $86
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Securitization Gains and Income on Retained Interests
    -------------------------------------------------------------------------
                                                   For the nine months ended
                       ------------------------------------------------------
                                                               July 31, 2008
    -------------------------------------------------------------------------
                       Residential              Credit  Commercial
    (millions of          mortgage  Personal      card    mortgage
     Canadian dollars)       loans     loans     loans       loans     Total
    -------------------------------------------------------------------------
    Gain on sale               $36       $37       $12          $-       $85
    Income on retained
     interests(1)               69        14        76           -       159
    -------------------------------------------------------------------------
    Total                     $105       $51       $88          $-      $244
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                   For the nine months ended
                       ------------------------------------------------------
                                                               July 31, 2007
    -------------------------------------------------------------------------
                       Residential              Credit  Commercial
    (millions of          mortgage  Personal      card    mortgage
     Canadian dollars)       loans     loans     loans       loans     Total
    -------------------------------------------------------------------------
    Gain on sale                $3       $85       $21          $4      $113
    Income on retained
     interests(1)              107        27        70           -       204
    -------------------------------------------------------------------------
    Total                     $110      $112       $91          $4      $317
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) Excludes income arising from changes in fair values. Unrealized gains
        and losses on retained interests arising from changes in fair value
        are included in trading income.


    The key assumptions used to value the retained interests are as follows:

    Key Assumptions
    -------------------------------------------------------------------------
                                                                        2008
                              -----------------------------------------------
                                 Residential              Credit  Commercial
                                    mortgage  Personal      card    mortgage
                                       loans     loans     loans       loans
    -------------------------------------------------------------------------
    Prepayment rate(1)                 18.5%      6.0%     43.5%        5.2%
    Excess spread(2)                     0.8       1.1       7.1         1.0
    Discount rate                        5.2       5.7       6.1         8.1
    Expected credit losses(3)              -         -       2.4         0.1
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                                        2007
                              -----------------------------------------------
                                 Residential              Credit  Commercial
                                    mortgage  Personal      card    mortgage
                                       loans     loans     loans       loans
    -------------------------------------------------------------------------
    Prepayment rate(1)                 20.0%      6.4%     43.0%        8.9%
    Excess spread(2)                     0.7       1.1       7.1         1.0
    Discount rate                        6.5       6.2       6.4        10.0
    Expected credit losses(3)              -         -       2.2         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 July 31, 2008, there were maturities of
    previously securitized loans and receivables of $2,277 million (three
    months ended July 31, 2007 - $2,714 million). Proceeds from new
    securitizations were $1,395 million for the three months ended July 31,
    2008 (three months ended July 31, 2007 - $2,383 million). During the nine
    months ended July 31, 2008, there were maturities of previously
    securitized loans and receivables of $7,121 million (nine months ended
    July 31, 2007 - $7,548 million). Proceeds from new securitizations were
    $4,809 million for the nine months ended July 31, 2008 (nine months ended
    July 31, 2007 - $8,714 million).

    Note 6: SUBORDINATED NOTES AND DEBENTURES
    -------------------------------------------------------------------------

    On November 1, 2007, the Bank issued $2.5 billion of medium term notes
    constituting subordinated indebtedness pursuant to its medium term note
    program. The medium term notes will pay a coupon of 5.382% until
    November 1, 2012 and the bankers' acceptance rate plus 1.00% thereafter
    until maturity on November 1, 2017. The notes are redeemable at the
    Bank's option at par on November 1, 2012. The Bank has included the issue
    as Tier 2B regulatory capital.

    On April 2, 2008, the Bank issued $500 million of medium term notes
    constituting subordinated indebtedness pursuant to its medium term note
    program. The medium term notes will pay a coupon of 5.48% until April 2,
    2015 and the bankers' acceptance rate plus 2.00% thereafter until
    maturity on April 2, 2020. The notes are redeemable at the Bank's option
    at par on April 2, 2015. On July 7, 2008, the Bank issued a $375 million
    second tranche of its medium term notes due April 2, 2020, carrying the
    same terms and conditions as the original issue. The Bank has included
    the issue as Tier 2B regulatory capital.

    On July 7, 2008, the Bank issued $650 million of medium term notes
    constituting subordinated indebtedness pursuant to its medium term note
    program. The medium term notes will pay a coupon of 5.828% until July 9,
    2018 and the bankers' acceptance rate plus 2.55% thereafter until
    maturity on July 9, 2023. The notes are redeemable at the Bank's option
    at par on July 9, 2018. The Bank has included the issue as Tier 2B
    regulatory capital.

    On July 31, 2008, the Bank announced its intention to redeem on
    September 5, 2008, all of its $1.0 billion of outstanding 4.54%
    subordinated debentures due September 5, 2013, at a redemption price of
    100 per cent of the principal amount. Interest on the debentures will
    cease to accrue on and after the redemption date.

    Note 7: LIABILITIES FOR PREFERRED SHARES AND CAPITAL TRUST SECURITIES
    -------------------------------------------------------------------------

    The Bank's liabilities for preferred shares and capital trust securities
    are as follows:

    Liabilities
    -------------------------------------------------------------------------
                                                           July 31,  Oct. 31,
    (millions of Canadian dollars)                            2008      2007
    -------------------------------------------------------------------------
    Preferred Shares
    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 preferred shares                                     550       550
    -------------------------------------------------------------------------
    Capital Trust Securities(1)
    Trust units issued by TD Capital Trust (thousands
     of units)
      900 Capital Trust Securities - Series 2009               898       899
    -------------------------------------------------------------------------
    Total Capital Trust Securities                             898       899
    -------------------------------------------------------------------------
    Total preferred shares and Capital Trust Securities     $1,448    $1,449
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) TD Capital Trust II Securities - Series 2012-1 are issued by TD
        Capital Trust II (Trust II), whose voting securities are 100% owned
        by the Bank. Trust II is a variable interest entity. As the Bank is
        not the primary beneficiary of Trust II, the Bank does not
        consolidate it. The senior deposit note of $350 million that was
        issued to Trust II is reflected in deposits on the Consolidated
        Balance Sheet. For regulatory purposes, the $350 million issued by
        Trust II is considered as a part of the Bank's available capital.


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

    Common Shares

    The Bank is authorized by the shareholders to issue an unlimited number
    of common shares, without par value, for unlimited consideration. The
    common shares are not redeemable or convertible. Dividends are typically
    declared by the Board of Directors of the Bank on a quarterly basis and
    the amount may vary from quarter to quarter.

    Shares Issued and Outstanding
    -------------------------------------------------------------------------
                                                   For the nine months ended
                                     ----------------------------------------
                                           July 31, 2008       July 31, 2007
                                     ----------------------------------------
    (millions of shares and          Number of           Number of
     millions of Canadian dollars)      shares    Amount    shares    Amount
    -------------------------------------------------------------------------
    Common:
    Balance at beginning of period       717.8    $6,577     717.4    $6,334
    Issued on exercise of options          3.5       200       2.9       132
    Issued as a result of dividend
     reinvestment plan                     3.0       185       0.9        62
    Impact of shares (acquired) sold
     for trading purposes(1)              (0.3)      (19)      0.3        26
    Purchased for cancellation               -         -      (3.2)      (29)
    Issued on the acquisition of
     Commerce                             83.3     6,147         -         -
    -------------------------------------------------------------------------
    Balance at end of period - common    807.3   $13,090     718.3    $6,525
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Preferred (Class A - Series O, P,
     Q, R, S and Y):
    Balance at beginning of period        17.0      $425      17.0      $425
    Issued during the period              48.0     1,200         -         -
    -------------------------------------------------------------------------
    Balance at end of period - preferred  65.0    $1,625      17.0      $425
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) Purchased by subsidiaries of the Bank, which are regulated securities
        entities in accordance with Regulation 92-313 under the Bank Act.


    Class A First Preferred Shares, Series P

    On November 1, 2007, the Bank issued 10 million Class A First Preferred
    Shares, Series P shares for gross cash consideration of $250 million.
    Quarterly non-cumulative cash dividends, if declared, will be paid at a
    per annum rate of 5.25% per Series P share. The Series P shares are
    redeemable by the Bank for cash, subject to regulatory consent, at a
    declining premium on or after November 1, 2012. The Series P shares
    qualify as Tier 1 capital of the Bank.

    Class A First Preferred Shares, Series Q

    On January 31, 2008, the Bank issued 8 million Class A First Preferred
    Shares, Series Q shares for gross cash consideration of $200 million.
    Quarterly non-cumulative cash dividends, if declared, will be paid at a
    per annum rate of 5.60% per Series Q share. The Series Q shares are
    redeemable by the Bank for cash, subject to regulatory consent, at a
    declining premium on or after January 31, 2013. The Series Q shares
    qualify as Tier 1 capital of the Bank.

    Class A First Preferred Shares, Series R

    On March 12, 2008, the Bank issued 10 million Class A First Preferred
    Shares, Series R shares for gross cash consideration of $250 million.
    Quarterly non-cumulative cash dividends, if declared, will be paid at a
    per annum rate of 5.60% per Series R share. The Series R shares are
    redeemable by the Bank for cash, subject to regulatory consent, at a
    declining premium on or after April 30, 2013. The Series R shares qualify
    as Tier 1 capital of the Bank.

    5-Year Rate Reset Preferred Shares, Series S

    On June 11, 2008, the Bank issued 10 million non-cumulative 5-Year Rate
    Reset Preferred Shares, Series S for $250 million. Quarterly non-
    cumulative cash dividends, if declared, will be paid at a per annum rate
    of 5.00% for the initial period from and including June 11, 2008 to but
    excluding July 31, 2013. Thereafter, the dividend rate will reset every
    five years to equal the then five-year Government of Canada bond yield
    plus 1.60%. Holders of the Series S Shares will have the right to convert
    all or any part of their shares into non-cumulative Floating Rate
    Preferred Shares, Series T, subject to certain conditions, on July 31,
    2013, and on July 31 every five years thereafter and vice versa. The Bank
    may redeem all or part of the outstanding Series S Shares by payment in
    cash of $25.00 per share on July 31, 2013 and on July 31 every five years
    thereafter together, in each case, with declared and unpaid dividends to
    the date of redemption. The Series S Shares qualify as Tier 1 capital of
    the Bank.

    5-Year Rate Reset Preferred Shares, Series Y

    On July 16, 2008, the Bank issued 10 million non-cumulative 5-Year Rate
    Reset Preferred Shares, Series Y for $250 million. Quarterly non-
    cumulative cash dividends, if declared, will be paid at a per annum rate
    of 5.10% for the initial period from and including July 16, 2008 to but
    excluding October 31, 2013. Thereafter, the dividend rate will reset
    every five years to equal the then five-year Government of Canada bond
    yield plus 1.68%. Holders of the Series Y Shares will have the right to
    convert their shares into non-cumulative Floating Rate Preferred Shares,
    Series Z, subject to certain conditions, on October 31, 2013, and on
    October 31 every five years thereafter and vice versa. The Bank may
    redeem all or part of the outstanding Series Y Shares by payment in cash
    of $25.00 per share on October 31, 2013 and on October 31 every five
    years thereafter together, in each case, with declared and unpaid
    dividends to the date of redemption. The Series Y 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.

    The Bank's objectives include:

    -   Provide sufficient capital to maintain the confidence of investors
        and depositors, while providing the Bank's common shareholders with a
        satisfactory return;
    -   Be an appropriately capitalized institution, as measured internally,
        defined by regulatory authorities and compared with the Bank's peers;
        and
    -   Achieve the lowest overall cost of capital consistent with preserving
        the appropriate mix of capital elements to meet target capitalization
        levels.

    The Bank's total capital consists of two tiers of capital approved under
    OSFI's regulatory capital guidelines.

    As at July 31, 2008, Tier 1 capital includes items such as common shares
    and preferred shares, retained earnings, contributed surplus, innovative
    capital instruments and qualifying non-controlling interests in
    subsidiaries. Tier 1 capital is reduced by items such as goodwill and net
    intangible assets (in excess of the 5% limit) and 50% of the shortfall in
    allowances related to the Internal Ratings Based (IRB) approach
    portfolios.

    As at July 31, 2008, Tier 2 capital includes items such as the general
    allowance for standardized portfolios and subordinated notes and
    debentures. Tier 2 capital is reduced by items such as 50% of the
    shortfall in allowances related to IRB approach portfolios and
    substantial investments.

    During the nine months ended July 31, 2008, the Bank complied with the
    capital guidelines issued by OSFI under the "International Convergence of
    Capital Measurement and Capital Standards - A Revised Framework"
    (Basel II). For the comparative period, the Bank complied with the
    capital guidelines issued by OSFI under the Basel I Capital Accord
    (Basel I). The Bank's regulatory capital position was as follows:

    -------------------------------------------------------------------------
                                                           July 31,  Oct. 31,
                                                            2008(1)   2007(1)
    (millions of Canadian dollars)                       (Basel II) (Basel I)
    -------------------------------------------------------------------------
    Tier 1 capital                                         $17,491   $15,645
    Tier 1 capital ratio(2)                                   9.5%     10.3%
    Total capital(3)                                       $24,702   $19,794
    Total capital ratio(4)                                   13.4%     13.0%
    Assets-to-capital multiple(5)                             17.9      19.7
    -------------------------------------------------------------------------

    (1) The Bank's capital positions were calculated based on Basel II as at
        July 31, 2008 and Basel I as at October 31, 2007, and as a result may
        not provide comparable information.
    (2) Tier 1 capital ratio is calculated as Tier 1 capital divided by
        risk-weighted assets (RWA).
    (3) Total capital includes Tier 1 and Tier 2 capital.
    (4) Total capital ratio is calculated as Total capital divided by RWA.
    (5) 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)
    -------------------------------------------------------------------------

    Accumulated other comprehensive income (loss) consists of the after-tax
    change in unrealized gains and losses on available-for-sale securities,
    cash flow hedging activities and foreign currency translation
    adjustments.

    Accumulated Other Comprehensive Income (Loss), Net of Income Taxes
    -------------------------------------------------------------------------
                                                             As at     As at
                                                           July 31,  July 31,
    (millions of Canadian dollars)                            2008      2007
    -------------------------------------------------------------------------
    Unrealized gain on available-for-sale securities,
     net of hedging activities                                $231      $175
    Unrealized foreign currency translation losses
     on investments in subsidiaries, net of hedging
     activities                                             (2,065)   (1,469)
    Gain (loss) on derivatives designated as cash
     flow hedges                                               695      (149)
    -------------------------------------------------------------------------
    Accumulated other comprehensive income (loss)
     balance as at July 31                                 $(1,139)  $(1,443)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

    The following table summarizes the compensation expense recognized by the
    Bank for stock option awards for the three and nine months ended July 31.

                                           For the three        For the nine
                                            months ended        months ended
    -------------------------------------------------------------------------
                                       July 31   July 31   July 31   July 31
    (millions of Canadian dollars)        2008      2007      2008      2007
    -------------------------------------------------------------------------
    The Bank                                $5        $5       $16       $14
    TD Banknorth                             -         2         -         6
    -------------------------------------------------------------------------

    During the three months ended July 31, 2008 and July 31, 2007, there were
    no options granted by the Bank.

    During the nine months ended July 31, 2008, 2.0 million (nine months
    ended July 31, 2007 - 1.5 million) options were granted by the Bank with
    a weighted average fair value of $10.80 per option (nine months ended
    July 31, 2007 - $11.46 per option). During the nine months ended July 31,
    2007, 0.03 million options were granted by TD Banknorth with a weighted
    average fair value of $5.83 per option. On closing of the going-private
    transaction on April 20, 2007, TD Banknorth became a wholly-owned
    subsidiary of the Bank and TD Banknorth's shares were delisted from the
    New York Stock Exchange. As a result, there are no longer any TD
    Banknorth-based stock options outstanding post privatization.

    Effective fiscal 2008, the fair value of options granted was estimated at
    the date of grant using a binomial tree-based valuation model. Prior to
    fiscal 2008, the fair value of options granted was estimated at the date
    of grant using the Black-Scholes valuation model. The following
    assumptions were used:


                                                   For the nine months ended
                                               ------------------------------
                                                          July 31    July 31
    The Bank                                                 2008       2007
    -------------------------------------------------------------------------
    Risk-free interest rate                                 3.80%      3.90%
    Expected option life                                5.5 years  5.2 years
    Expected volatility                                     15.9%      19.5%
    Expected dividend yield                                 2.85%      2.92%
    -------------------------------------------------------------------------

                                                   For the nine months ended
                                               ------------------------------
                                                          July 31    July 31
    TD Banknorth                                             2008       2007
    -------------------------------------------------------------------------
    Risk-free interest rate                                     -      4.45%
    Expected option life                                        -    6 years
    Expected volatility                                         -     15.07%
    Expected dividend yield                                     -      2.98%
    -------------------------------------------------------------------------

    As a result of the acquisition of Commerce Bancorp, Inc. (Commerce),
    19.5 million Commerce stock options were converted into 10.8 million
    stock options of the Bank using the exchange ratio set out in the merger
    agreement. All Commerce stock options vested on acquisition and the fair
    value of the converted options was $263 million. This was recorded in
    contributed surplus and was part of the purchase consideration. As a
    result of the conversion, there are no longer any Commerce stock options
    outstanding.

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

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

    Principal Pension Plan Pension Expense
    -------------------------------------------------------------------------
                                           For the three        For the nine
                                            months ended        months ended
                                      ---------------------------------------
                                       July 31   July 31   July 31   July 31
    (millions of Canadian dollars)        2008      2007      2008      2007
    -------------------------------------------------------------------------
    Elements of pension plan expense
     before adjustments to recognize
     the long-term nature of the cost:
      Service cost - benefits earned       $21       $16       $58       $49
      Interest cost on projected
       benefit obligation                   33        28        96        84
      Actual return on plan assets         (71)      (38)       36      (232)
      Plan amendments                        -         -         7         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)              33         4      (150)      130
      Actuarial losses(2)                    5         3        10         8
      Plan amendments(3)                     2         2         -        (1)
    -------------------------------------------------------------------------
    Total                                  $23       $15       $57       $45
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) For the three months ended July 31, 2008, includes expected return on
        plan assets of $38 million (three months ended July 31, 2007 -
        $34 million) less actual return on plan assets of $71 million (three
        months ended July 31, 2007 - $38 million). For the nine months ended
        July 31, 2008, includes expected return on plan assets of
        $114 million (nine months ended July 31, 2007 - $102 million) less
        actual return on plan assets of $(36) million (nine months ended
        July 31, 2007 - $232 million).
    (2) For the three months ended July 31, 2008, includes loss recognized of
        $5 million (three months ended July 31, 2007 - $3 million) less
        actuarial losses on projected benefit obligation of nil (three months
        ended July 31, 2007 - nil). For the nine months ended July 31, 2008,
        includes loss recognized of $10 million (nine months ended July 31,
        2007 - $8 million) less actuarial losses on projected benefit
        obligation of nil (nine months ended July 31, 2007 - nil).
    (3) For the three months ended July 31, 2008, includes amortization of
        costs for plan amendments of $2 million (three months ended July 31,
        2007 - $2 million) less actual cost amendments of nil (three months
        ended July 31, 2007 - nil). For the nine months ended July 31, 2008,
        includes amortization of costs for plan amendments of $7 million
        (nine months ended July 31, 2007 - $6 million) less actual cost
        amendments of $7 million (nine months ended July 31, 2007 -
        $7 million).


    Other Pension Plans' Expense
    -------------------------------------------------------------------------
                                           For the three        For the nine
                                            months ended        months ended
                                      ---------------------------------------
                                       July 31   July 31   July 31   July 31
    (millions of Canadian dollars)        2008      2007      2008      2007
    -------------------------------------------------------------------------
    CT defined benefit pension plan         $1        $1        $3        $3
    TD Banknorth defined benefit
     pension plans                           1         1         -         3
    Supplemental employee retirement plans   8         8        24        25
    -------------------------------------------------------------------------
    Total                                  $10       $10       $27       $31
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Principal Non-Pension Post-Retirement Benefit Plan Expense
    -------------------------------------------------------------------------
                                           For the three        For the nine
                                            months ended        months ended
                                      ---------------------------------------
                                       July 31   July 31   July 31   July 31
    (millions of Canadian dollars)        2008      2007      2008      2007
    -------------------------------------------------------------------------
    Elements of non-pension plan
     expense before adjustments to
     recognize the long-term nature
     of the cost:
      Service cost - benefits earned        $3        $3        $9        $9
      Interest cost on projected
       benefit obligation                    6         5        17        16
    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                       1         1         4         4
      Plan amendments                       (1)       (1)       (4)       (4)
    -------------------------------------------------------------------------
    Total                                   $9        $8       $26       $25
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash Flows

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

    Pension Plan Contributions
    -------------------------------------------------------------------------
                                           For the three        For the nine
                                            months ended        months ended
                                      ---------------------------------------
                                       July 31   July 31   July 31   July 31
    (millions of Canadian dollars)        2008      2007      2008      2007
    -------------------------------------------------------------------------
    Principal pension plan                 $30       $37       $67       $69
    CT defined benefit pension plan         (1)        1        (1)        3
    TD Banknorth defined benefit
     pension plan                            1         -         1        47
    Supplemental employee retirement plans   1         3         8         9
    Non-pension post-retirement
     benefit plan                            3         2         7         6
    -------------------------------------------------------------------------
    Total                                  $34       $43       $82      $134
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    As at July 31, 2008, the Bank expects to contribute an additional
    $25 million to its principal pension plan, nil to its CT defined benefit
    pension plan, nil to its TD Banknorth defined benefit pension plan,
    $2 million to its supplemental employee retirement plans and $2 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: 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 $23 million during the three months ended July 31, 2008. 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 April 30, 2008, the Bank accrued $48 million
    of restructuring and integration charges. Restructuring charges consisted
    primarily 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 (primarily locations to be closed or
    consolidated). In the Interim Consolidated Statement of Income, the
    restructuring charges are included in restructuring costs. As at July 31,
    2008, the remaining balance of the restructuring liability related to the
    acquisition of Commerce was $20 million.

    Note 14: EARNINGS PER SHARE
    -------------------------------------------------------------------------

    The Bank's basic and diluted earnings per share at July 31 are as
    follows:

    Basic and Diluted Earnings per Share
    -------------------------------------------------------------------------
                                           For the three        For the nine
                                            months ended        months ended
                                      ---------------------------------------
                                       July 31   July 31   July 31   July 31
                                          2008      2007      2008      2007
    -------------------------------------------------------------------------
    Basic Earnings per Share
    Net income available to common
     shares ($ millions)                  $980    $1,101    $2,783    $2,888
    Average number of common shares
     outstanding (millions)              804.0     719.5     756.8     719.0
    Basic earnings per share ($)         $1.22     $1.53     $3.68     $4.02
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Diluted Earnings per Share
    Net income available to common
     shares ($ millions)                  $980    $1,101    $2,783    $2,888
    Average number of common shares
     outstanding (millions)              804.0     719.5     756.8     719.0
    Stock options potentially
     exercisable as determined under
     the treasury stock method(1)          7.0       7.4       6.4       6.9
    -------------------------------------------------------------------------
    Average number of common shares
     outstanding - diluted (millions)    811.0     726.9     763.2     725.9
    -------------------------------------------------------------------------
    Diluted earnings per share ($)       $1.21     $1.51     $3.65     $3.98
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) For the nine months ended July 31, 2008, the computation of diluted
        earnings per share excluded weighted-average options outstanding of
        4,193 thousand with a weighted-average exercise price of $69.49 as
        the options' exercise prices were greater than the average market
        price of the Bank's common shares. For the nine months ended July 31,
        2007, the computation of diluted earnings per share excluded
        weighted-average options outstanding of 0.1 thousand with a
        weighted-average exercise price of $68.10 as the options' exercise
        prices were greater than the average market price of the Bank's
        common shares.


    Note 15: 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 nine months ended
    July 31 are presented in the following table:

    Results by Business Segment
    -------------------------------------------------------------------------
                                                                         U.S.
                           Canadian Personal                    Personal and
    (millions of              and Commercial          Wealth      Commercial
     Canadian dollars)             Banking(1)   Management(1)  Banking(2),(3)
    -------------------------------------------------------------------------
    For the three            July 31 July 31 July 31 July 31 July 31 July 31
     months ended               2008    2007    2008    2007    2008    2007
    -------------------------------------------------------------------------
    Net interest income       $1,485  $1,388     $89     $80    $759    $338
    Other income                 777     713     520     507     267     145
    -------------------------------------------------------------------------
    Total revenue              2,262   2,101     609     587   1,026     483
    Provision for (reversal
     of) credit losses           194     151       -       -      76      33
    Non-interest expenses      1,129   1,050     421     395     610     275
    -------------------------------------------------------------------------
    Income (loss) before
     provision for (benefit
     of) income taxes            939     900     188     192     340     175
    Provision for (benefit of)
     income taxes                295     303      61      66      96      57
    Non-controlling interests
     in subsidiaries, net
     of income taxes               -       -       -       -       -       9
    Equity in net income of
     an associated company,
     net of income taxes           -       -      74      59       -       -
    -------------------------------------------------------------------------
    Net income (loss)           $644    $597    $201    $185    $244    $109
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total assets
    (billions of
     Canadian dollars)
      - balance sheet         $170.5  $146.8   $14.8   $14.7  $117.6   $61.2
      - securitized             39.1    47.6       -       -       -       -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    (millions of                   Wholesale
     Canadian dollars)         Banking(4),(5)    Corporate(4)          Total
    -------------------------------------------------------------------------
    For the three            July 31 July 31 July 31 July 31 July 31 July 31
     months ended               2008    2007    2008    2007    2008    2007
    -------------------------------------------------------------------------
    Net interest income         $348    $218   $(244)  $(241) $2,437  $1,783
    Other income                 (20)    474      56      60   1,600   1,899
    -------------------------------------------------------------------------
    Total revenue                328     692    (188)   (181)  4,037   3,682
    Provision for (reversal
     of) credit losses            30       8     (12)    (21)    288     171
    Non-interest expenses        281     326     260     170   2,701   2,216
    -------------------------------------------------------------------------
    Income (loss) before
     provision for (benefit
     of) income taxes             17     358    (436)   (330)  1,048   1,295
    Provision for (benefit of)
     income taxes                (20)    105    (310)   (283)    122     248
    Non-controlling interests
     in subsidiaries, net
     of income taxes               -       -       8       4       8      13
    Equity in net income of
     an associated company,
     net of income taxes           -       -       5      10      79      69
    -------------------------------------------------------------------------
    Net income (loss)            $37    $253   $(129)   $(41)   $997  $1,103
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total assets
    (billions of
     Canadian dollars)
      - balance sheet         $181.6  $162.7   $24.3   $18.5  $508.8  $403.9
      - securitized              2.7       -   (12.9)  (15.9)   28.9    31.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Results by Business Segment
    -------------------------------------------------------------------------
                                                                         U.S.
                           Canadian Personal                    Personal and
    (millions of              and Commercial          Wealth      Commercial
     Canadian dollars)             Banking(1)   Management(1)  Banking(2),(3)
    -------------------------------------------------------------------------
    For the nine             July 31 July 31 July 31 July 31 July 31 July 31
     months ended               2008    2007    2008    2007    2008    2007
    -------------------------------------------------------------------------
    Net interest income       $4,301  $3,993    $259    $235  $1,380  $1,030
    Other income               2,242   2,104   1,478   1,497     573     443
    -------------------------------------------------------------------------
    Total revenue              6,543   6,097   1,737   1,732   1,953   1,473
    Provision for (reversal
     of) credit losses           557     432       -       -     148      85
    Non-interest expenses      3,320   3,142   1,187   1,152   1,142     958
    -------------------------------------------------------------------------
    Income (loss) before
     provision for (benefit
     of) income taxes          2,666   2,523     550     580     663     430
    Provision for (benefit of)
     income taxes                842     842     180     198     192     143
    Non-controlling interests
     in subsidiaries, net of
     income taxes                  -       -       -       -       -      91
    Equity in net income of
     an associated company,
     net of income taxes           -       -     229     186       -       -
    -------------------------------------------------------------------------
    Net income (loss)         $1,824  $1,681    $599    $568    $471    $196
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    (millions of                   Wholesale
     Canadian dollars)         Banking(4),(5)    Corporate(4)          Total
    -------------------------------------------------------------------------
    For the nine             July 31 July 31 July 31 July 31 July 31 July 31
     months ended               2008    2007    2008    2007    2008    2007
    -------------------------------------------------------------------------
    Net interest income         $854    $565   $(711)  $(707) $6,083  $5,116
    Other income                 510   1,404     143     167   4,946   5,615
    -------------------------------------------------------------------------
    Total revenue              1,364   1,969    (568)   (540) 11,029  10,731
    Provision for (reversal
     of) credit losses            96      44     (26)    (55)    775     506
    Non-interest expenses        893     987     593     495   7,135   6,734
    -------------------------------------------------------------------------
    Income (loss) before
     provision for (benefit
     of) income taxes            375     938  (1,135)   (980)  3,119   3,491
    Provision for (benefit of)
     income taxes                 82     271    (779)   (754)    517     700
    Non-controlling interests
     in subsidiaries, net of
     income taxes                  -       -      25      (4)     25      87
    Equity in net income of
     an associated company,
     net of income taxes           -       -      13      13     242     199
    -------------------------------------------------------------------------
    Net income (loss)           $293    $667 $(368)    $(209) $2,819  $2,903
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (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
        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 May 1, 2007, the results of TD Bank USA, N.A. (previously
        reported in the Corporate segment for the period from the second
        quarter 2006 to the second quarter 2007 and in Wealth Management
        segment prior to the second quarter of 2006) are included in the U.S.
        Personal and Commercial Banking segment prospectively. Prior periods
        have not been reclassified as the impact was not material.
    (3) Commencing the third quarter ended July 31, 2008, the results of U.S.
        Personal and Commercial Banking segment include Commerce. For
        details, see Note 20 to the Interim Consolidated Financial
        Statements.
    (4) The taxable equivalent basis (TEB) increase to net interest income
        and provision for income taxes reflected in the Wholesale Banking
        segment results is reversed in the Corporate segment.
    (5) The Wholesale Banking segment included a $96 million cumulative
        impact due to incorrectly priced financial instruments. This amount
        was included in other income.


    Note 16: DERIVATIVES
    -------------------------------------------------------------------------

    Hedge accounting results were as follows:

    Hedge Accounting Results
    -------------------------------------------------------------------------
                                           For the three        For the nine
                                            months ended        months ended
                                      ---------------------------------------
                                       July 31   July 31   July 31   July 31
    (millions of Canadian dollars)        2008      2007      2008      2007
    -------------------------------------------------------------------------
    Fair value hedges
    Gain (loss) arising from hedge
     ineffectiveness                      $1.3      $4.9      $9.9      $4.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash flow hedges
    (Loss)/Gain arising from hedge
     ineffectiveness                     $(0.9)    $(0.9)     $0.5      $2.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Portions of derivative gains (losses) that were excluded from the
    assessment of hedge effectiveness for fair value and cash flow hedging
    activities are included in the Interim Consolidated Statement of Income
    and are not significant for the three and nine months ended July 31,
    2008.

    During the three and nine months ended July 31, 2008, there were no firm
    commitments that no longer qualified as hedges.

    Over the next twelve months, the Bank expects approximately $180 million
    in net gains reported in other comprehensive income as at July 31, 2008
    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 23 years. During the three and nine
    months ended July 31, 2008, there were no forecasted transactions that
    failed to occur.

    Note 17: CONTINGENCIES
    -------------------------------------------------------------------------

    The two principal legal actions regarding Enron to which the Bank is a
    party are the securities class action and the bankruptcy proceeding. In
    2006, the Bank settled the bankruptcy court claims in this matter for
    approximately $145 million (US$130 million). As at July 31, 2008, the
    total contingent litigation reserve for Enron-related claims was
    approximately $422 million (US$413 million).

    The Bank and its subsidiaries are involved in various other legal actions
    in the ordinary course of business, many of which are loan-related. In
    management's opinion, the ultimate disposition of these actions,
    individually or in the aggregate, will not have a material adverse effect
    on the financial condition of the Bank.

    Note 18: RISK MANAGEMENT
    -------------------------------------------------------------------------

    The risk management policies and procedures of the Bank are provided in
    the MD&A. The shaded sections of the risk management section, included on
    pages 21 to 28 of the MD&A, relating to credit, market and liquidity
    risks are an integral part of the Interim Consolidated Financial
    Statements.

    Note 19: RELATED-PARTY TRANSACTIONS
    -------------------------------------------------------------------------

    During the three months ended January 31, 2008, the Bank purchased
    certain securities with a notional value of approximately $300 million at
    par from a fund that is managed by the Bank. The Bank immediately
    recognized a securities loss of $45 million that was recorded in the
    Wholesale Banking segment.

    Note 20: ACQUISITIONS AND DISPOSITIONS
    -------------------------------------------------------------------------

    Commerce Bancorp, Inc.

    On March 31, 2008, the Bank acquired 100% of the outstanding shares of
    Commerce for total consideration of $8,510 million, primarily paid in
    cash and common shares in the amount of $2,167 million and
    $6,147 million, respectively. Each share of Commerce was exchanged for
    0.4142 of a Bank common share and US$10.50 in cash, resulting in the
    issuance of 83.3 million common shares of the Bank. The value of the
    83.3 million common shares was determined based on the average market
    price of the Bank's common shares over the 2 day period before and after
    the terms of the acquisition were agreed to and announced. The
    acquisition was accounted for by the purchase method. The purchase price
    allocation is subject to finalization.

    The fiscal periods of the Bank and Commerce are not co-terminus. The
    results of Commerce for the period from April 1, 2008 to June 30, 2008
    have been consolidated with the Bank's results for the quarter ended
    July 31, 2008 due to the one month lag. In the future, Commerce's results
    for each calendar quarter will be consolidated with the Bank's results
    for the fiscal quarter. Commerce is reported in the U.S. Personal and
    Commercial Banking segment.

    The following table presents the estimated fair values of the assets and
    liabilities of Commerce as of the date of acquisition. Goodwill increased
    by $245 million during the quarter to $6,359 million primarily due to the
    reallocation of the intangibles, net of related future income tax
    liabilities, as a result of the decision to no longer use the Commerce
    brand name.


    Fair value of assets acquired
    -------------------------------------------------------------------------
    (millions of Canadian dollars)
    -------------------------------------------------------------------------
    Cash and cash equivalents                                           $408
    Securities                                                        25,154
    Loans                                                             18,031
    Intangibles
      Core deposit intangibles                                         1,505
      Other identifiable intangibles                                       9
    Land, buildings and equipment                                      1,904
    Future income tax assets                                             447
    Other assets                                                       3,272
    -------------------------------------------------------------------------
                                                                      50,730
    -------------------------------------------------------------------------
    Less: liabilities assumed
    Deposits                                                          47,271
    Obligations related to securities sold under repurchase
     agreements                                                          105
    Accrued restructuring costs                                          127
    Other liabilities                                                  1,076
    -------------------------------------------------------------------------
                                                                      48,579
    -------------------------------------------------------------------------
    Fair value of identifiable net assets acquired                     2,151
    Goodwill                                                           6,359
    -------------------------------------------------------------------------
    Total purchase consideration                                      $8,510
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Goodwill from the acquisition is not amortized but assessed for
    impairment on a periodic basis. Finite life intangible assets are
    amortized on an economic life basis over 4 to 15 years, based on the
    estimated useful lives.

    SHAREHOLDER AND INVESTOR INFORMATION

    Shareholder Services

    For shareholder inquiries relating to missing dividends, lost share
    certificates, estate questions, address changes to the share register,
    dividend bank account changes or the dividend reinvestment program,
    please contact our transfer agent: CIBC Mellon Trust Company, P.O. Box
    7010, Adelaide Street Postal Station, Toronto, Ontario, M5C 2W9,
    1-800-387-0825 or 416-643-5500 (www.cibcmellon.com or
    inquiries@cibcmellon.com).

    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.

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

    Designation of Eligible Dividends

    The Toronto-Dominion Bank for the purposes of the Income Tax Act, Canada
    and any similar provincial legislation advises that the dividend declared
    for the quarter ending October 31, 2008 and all future dividends will be
    eligible dividends unless indicated otherwise.

    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

    Quarterly Earnings Conference Call

    TD Bank Financial Group will host an earnings conference call on
    Thursday, August 28, 2008. The call will be webcast live via TDBFG's
    website at 3:00 p.m. ET. The call and webcast will feature presentations
    by TDBFG executives on the bank's financial results for the third
    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 www.td.com/investor/earnings.jsp on August 28, 2008, by
    approximately 12:00 p.m. ET. A listen-only telephone line is available at
    416-915-5762 or 1-800-733-7571 (toll free).

    The webcast and presentations will be archived at
    www.td.com/investor/calendar_arch.jsp. Replay of the teleconference will
    be available from 6:00 p.m. ET on August 28, 2008, until September 28,
    2008, by calling 416-640-1917 or 1-877-289-8525 (toll free). The passcode
    is 21279590, followed by the pound key (No.).

    Annual Meeting

    Thursday, April 2, 2009
    Saint John Trade and Convention Centre
    Saint John, New Brunswick

    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 seventh 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; Wealth Management, including TD
    Waterhouse and an investment in TD Ameritrade; U.S. Personal and
    Commercial Banking through TD Banknorth and Commerce Bank (to be known
    together as TD Bank); and Wholesale Banking, including TD Securities. TD
    Bank Financial Group also ranks among the world's leading on-line
    financial services firms, with more than 5.5 million on-line customers.
    TD Bank Financial Group had CDN$509 billion in assets as of July 31,
    2008. The Toronto-Dominion Bank trades on the Toronto and New York Stock
    Exchanges under the symbol "TD", as well as on the Tokyo Stock Exchange.
    




For further information:

For further information: Colleen Johnston, Group Head Finance and Chief
Financial Officer, (416) 308-9030; Tim Thompson, Senior Vice President,
Investor Relations, (416) 308-9030; or Simon Townsend, Senior Manager,
Corporate Communications, (416) 944-7161


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