TD Bank Financial Group Reports Third Quarter 2009 Results

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

    -   Reported diluted earnings per share(1) were $1.01, compared with
        $1.21.
    -   Adjusted diluted earnings per share(2) were $1.47, compared with
        $1.35.
    -   Reported net income(1) was $912 million, compared with $997 million.
    -   Adjusted net income(2) was $1,303 million, compared with
        $1,115 million.

    YEAR-TO-DATE FINANCIAL HIGHLIGHTS, nine months ended July 31, 2009,
    compared with the corresponding period a year ago:

    -   Reported diluted earnings per share(1) were $2.51, compared with
        $3.65.
    -   Adjusted diluted earnings per share(2) were $4.04, compared with
        $4.12.
    -   Reported net income(1) was $2,242 million, compared with
        $2,819 million.
    -   Adjusted net income(2) was $3,541 million, compared with
        $3,148 million.

    THIRD QUARTER ADJUSTMENTS (ITEMS OF NOTE)

    The third quarter reported earnings figures included the following items
    of note:

    -   Amortization of intangibles of $122 million after tax (15 cents per
        share), compared with $111 million after tax (13 cents per share) in
        the third quarter last year.
    -   A loss of $43 million after tax (5 cents per share) due to the change
        in fair value of derivatives hedging the reclassified available-for-
        sale debt securities portfolio.
    -   Restructuring and integration charges of $70 million after tax (8
        cents per share), relating to the acquisition of Commerce, compared
        with $15 million after tax (2 cents per share) in the third quarter
        last year.
    -   A loss of $75 million after tax (9 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
        $22 million after tax (3 cents per share) in the third quarter last
        year.
    -   An increase of $46 million after tax (5 cents per share) in general
        allowance for Canadian Personal and Commercial Banking (excluding
        VFC) and Wholesale Banking.
    -   A special assessment charge of $35 million after tax (4 cents per
        share) from the Federal Deposit Insurance Corporation.

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

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

TORONTO, Aug. 27 /CNW/ - TD Bank Financial Group (TDBFG) today announced its financial results for the third quarter ended July 31, 2009. Results for the quarter included very strong contributions from the Canadian Personal and Commercial Banking and Wholesale Banking segments, and good results from the Wealth Management and U.S. Personal and Commercial Banking segments, which both continue to manage well through challenging financial markets.

"While we expected TD's businesses to hold up well under the weight of a global recession, their resilience is remarkable and has exceeded our expectations," said Ed Clark, President and Chief Executive Officer, TDBFG. "Adjusted net income was up 17% from last year, a new record, with over $1 billion in retail earnings alone. We're obviously feeling pretty good about these results, which really showcase TD's earnings power and why we see tremendous potential upside in those earnings once conditions normalize."

    
    THIRD QUARTER BUSINESS SEGMENT PERFORMANCE

    Canadian Personal and Commercial Banking
    

Canadian Personal and Commercial Banking posted record earnings of $677 million in the third quarter, up 5% from the same period last year. The impact of very strong volume growth in personal and commercial lending and improving efficiency more than offset higher provision for credit losses.

"Faced with a challenging economic environment, TD Canada Trust delivered a quarter full of records - record revenue, efficiency, earnings and customer satisfaction, highlighted by TDCT winning the J.D. Power customer-satisfaction award for the fourth year in a row and the Synovate award for customer-service excellence for the fifth year in a row," said Clark. "Looking forward, we remain cautious in this uncertain environment, but we're certainly feeling good about these results and our position as the leader in service and convenience."

Wealth Management

Wealth Management, including TDBFG's equity share in TD Ameritrade, earned net income of $163 million in the quarter, down 19% from the third quarter of last year, as record transactional volumes in online brokerage operations were more than offset by the impact of market declines in the mutual fund and advice-based businesses. As previously announced, TD Ameritrade contributed $68 million in earnings to the segment, with record average trades per day in its quarter ended June 30, 2009.

"Our wealth businesses performed well, with earnings up nearly 30% from the last quarter," said Clark. "With strong client engagement and continued investments in the business, wealth management is very well positioned for the future."

U.S. Personal and Commercial Banking

U.S. Personal and Commercial Banking generated $172 million in reported net income. Excluding restructuring and integration charges, the segment earned $242 million in adjusted net income for the quarter, down 11% from the same period last year due to higher loan losses reflecting the recessionary environment.

"These are good results in the current economic context driven by solid fundamentals, with growth in both lending and deposits," said Clark. "While credit losses are certainly higher than last year, we continue to see good relative credit performance."

"The integration continues to be a great success story, with synergies and new store openings continuing on target," Clark added. "We are very pleased with the power of our U.S. retail franchise, TD Bank, America's Most Convenient Bank."

Wholesale Banking

Wholesale Banking earned net income for the quarter of $327 million, up $290 million from the same period last year. Very strong trading and capital market fee revenues led robust results across the business, as credit markets improved and market activity increased. These results more than outweighed realized net security losses related to the strategic decision to exit the public equity investment portfolio, which was completed this quarter.

"TD Securities improved its strategic positioning while also achieving record results - a remarkable achievement," said Clark. "And the resulting decline in both market risk and risk-weighted assets has allowed us to redeploy capital strategically."

"While we do not view performance as sustainable at this level and remain cautious about the volatile operating environment, TD Securities is proving that you can actually reduce risk and get better results."

Conclusion

"Last quarter we said this may be a recession in which we actually grow lending through the downturn. This has been proven out, as our very strong capital position has allowed us to provide access to credit, filling the gaps left by those who have exited the lending market," said Clark. "While the recession is turning out to be less severe than we expected, looking forward we remain cautious and continue to expect a tough 2010. But this quarter's results show that strong businesses can perform even in tough economic conditions."

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

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

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

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

This Management's Discussion and Analysis (MD&A) is presented to enable readers to assess material changes in the financial condition and operating results of TD Bank Financial Group (TDBFG or the Bank) for the three and nine months ended July 31, 2009, compared with the corresponding periods in the prior year. This MD&A should be read in conjunction with the Bank's unaudited Interim Consolidated Financial Statements and related Notes included in this Report to Shareholders and with our 2008 Annual Report. This MD&A is dated August 26, 2009. Unless otherwise indicated, all amounts are expressed in Canadian dollars and have been primarily derived from the Bank's Annual or Interim Consolidated Financial Statements prepared in accordance with Canadian generally accepted accounting principles (GAAP). Certain comparative amounts have been reclassified to conform to the presentation adopted in the current period. Additional information relating to the Bank is available on the Bank's website at http://www.td.com, as well as on SEDAR at http://www.sedar.com and on the U.S. Securities and Exchange Commission's (SEC's) website at http://www.sec.gov (EDGAR filers section).

    
    FINANCIAL HIGHLIGHTS
    -------------------------------------------------------------------------
                                                                For the 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)           2009      2009      2008    2009(1)     2008
    -------------------------------------------------------------------------
    Results of operations
    Total revenue             $4,667    $4,325    $4,037   $13,142   $11,029
    Provision for credit
     losses                      557       656       288     1,750       775
    Non-interest expenses      3,045     3,051     2,701     9,116     7,135
    Net income - reported(2)     912       618       997     2,242     2,819
    Net income - adjusted(2)   1,303     1,089     1,115     3,541     3,148
    Economic profit(3)           258        58       321       492     1,073
    Return on common
     equity - reported          9.8%      6.6%     13.4%      8.2%     14.8%
    Return on invested
     capital(3)                12.6%     10.6%     13.1%     11.7%     14.2%
    -------------------------------------------------------------------------
    Financial position
    Total assets            $544,590  $574,882  $508,839  $544,590  $508,839
    Total risk-weighted
     assets                  189,745   199,745   184,674   189,745   184,674
    Total shareholders'
     equity                   37,788    39,627    31,293    37,788    31,293
    -------------------------------------------------------------------------
    Financial ratios -
     reported
    Efficiency ratio -
     reported                  65.2%     70.6%     66.9%     69.4%     64.7%
    Efficiency ratio -
     adjusted                  56.6%     60.3%     62.8%     59.4%     60.7%
    Tier 1 capital to
     risk-weighted assets      11.2%     10.9%      9.5%     11.2%      9.5%
    Provision for credit
     losses as a % of net
     average loans             0.91%     1.12%     0.51%     0.98%     0.51%
    -------------------------------------------------------------------------
    Common share information
     - reported
     (Canadian dollars)
    Per share
      Basic earnings           $1.01     $0.68     $1.22     $2.51     $3.68
      Diluted earnings          1.01      0.68      1.21      2.51      3.65
      Dividends                 0.61      0.61      0.59      1.83      1.75
      Book value               40.27     42.60     36.75     40.27     36.75
    Closing share price        63.11     47.10     62.29     63.11     62.29
    Shares outstanding
     (millions)
      Average basic            851.5     848.8     804.0     844.3     756.8
      Average diluted          855.4     849.8     811.0     846.5     763.2
      End of period            854.1     850.6     807.3     854.1     807.3
    Market capitalization
     (billions of Canadian
     dollars)                  $53.9     $40.1     $50.3     $53.9     $50.3
    Dividend yield              4.4%      5.9%      3.7%      5.1%      3.6%
    Dividend payout ratio      60.1%     89.8%     48.5%     73.2%     48.8%
    Price to earnings
     multiple                   16.9      12.0      12.1      16.9      12.1
    -------------------------------------------------------------------------
    Common share information
     - adjusted
     (Canadian dollars)
    Per share
      Basic earnings           $1.47     $1.23     $1.37     $4.05     $4.15
      Diluted earnings          1.47      1.23      1.35      4.04      4.12
    Dividend payout ratio      41.4%     49.4%     43.3%     45.4%     43.6%
    Price to earnings
     multiple                   13.1      10.0      11.3      13.1      11.3
    -------------------------------------------------------------------------
    (1) As explained in the "How the Bank Reports" section, effective the
        second quarter ended April 30, 2009, as the reporting periods of U.S.
        entities are aligned with the reporting period of the Bank, the
        results of U.S. entities for the nine months ended July 31, 2009 have
        been included with results of the Bank for the nine months ended
        July 31, 2009, while the results of January 2009 have been included
        directly in retained earnings of the second quarter and not included
        in the net income of the Bank.
    (2) Adjusted and reported results are explained in the "How the Bank
        Reports" section, which includes reconciliation between reported and
        adjusted results.
    (3) Economic profit and return on invested capital are non-GAAP financial
        measures and are explained in the "Economic Profit and Return on
        Invested Capital" section.

    HOW WE PERFORMED

    Corporate Overview
    

The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Financial Group (TDBFG or the Bank). The Bank is the sixth largest bank in North America by branches and serves approximately 17 million customers in four key businesses operating in a number of locations in key financial centres around the globe: Canadian Personal and Commercial Banking, including TD Canada Trust and TD Insurance; Wealth Management, including TD Waterhouse and an investment in TD AMERITRADE Holding Corporation (TD Ameritrade); U.S. Personal and Commercial Banking through TD Banknorth Inc. (TD Banknorth) and TD Bank, America's Most Convenient Bank; and Wholesale Banking, including TD Securities. The Bank also ranks among the world's leading online financial services firms, with more than 5.5 million online customers. The Bank had $545 billion in assets on July 31, 2009. The Toronto-Dominion Bank trades under the symbol "TD" on the Toronto and New York Stock Exchanges.

How the Bank Reports

The Bank prepares its Consolidated Financial Statements in accordance with GAAP and refers to results prepared in accordance with GAAP as "reported" results. The Bank also utilizes non-GAAP financial measures referred to as "adjusted" results to assess each of its businesses and to measure overall Bank performance. To arrive at adjusted results, the Bank removes "items of note", net of income taxes, from reported results. The items of note relate to items which management does not believe are indicative of underlying business performance. The Bank believes that adjusted results provide the reader with a better understanding of how management views the Bank's performance. The items of note are listed in the table on the following page. As explained, adjusted results are different from reported results determined in accordance with GAAP. Adjusted results, items of note and related terms used in this document are not defined terms under GAAP and, therefore, may not be comparable to similar terms used by other issuers.

For the purpose of alignment of reporting periods with the Bank, effective the second quarter ended April 30, 2009, the reporting periods of TD Banknorth and Commerce Bancorp, Inc. (Commerce) have been aligned with the reporting period of the Bank as described in Note 1 to the Interim Consolidated Financial Statements. Previously, the reporting periods of TD Banknorth and Commerce were included in the Bank's financial statements on a one month lag. Accordingly, to maintain comparability and include only nine months of results through July 31, 2009, the results of TD Banknorth and Commerce for the nine months ended July 31, 2009 have been included with the results of the Bank for the nine months ended July 31, 2009, while the results of January 2009 have been included directly in retained earnings of the second quarter and not included in the net income of the Bank.

The following tables provide reconciliations 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)          2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Net interest income       $2,833    $2,940    $2,437    $8,501    $6,083
    Non-interest income        1,834     1,385     1,600     4,641     4,946
    -------------------------------------------------------------------------
    Total revenue              4,667     4,325     4,037    13,142    11,029
    Provision for credit
     losses                      557       656       288     1,750       775
    Non-interest expenses      3,045     3,051     2,701     9,116     7,135
    -------------------------------------------------------------------------
    Income before income
     taxes, non-controlling
     interests in subsidiaries
     and equity in net income
     of an associated company  1,065       618     1,048     2,276     3,119
    Provision for income taxes   209        35       122       186       517
    Non-controlling interests
     in subsidiaries, net of
     income taxes                 28        28         8        84        25
    Equity in net income of an
     associated company, net
     of income taxes              84        63        79       236       242
    -------------------------------------------------------------------------
    Net income - reported        912       618       997     2,242     2,819
    Preferred dividends           49        41        17       119        36
    -------------------------------------------------------------------------
    Net income available to
     common shareholders -
     reported                   $863      $577      $980    $2,123    $2,783
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Reconciliation of Non-GAAP Financial Measures
    Adjusted Net Income to Reported Net Income
    -------------------------------------------------------------------------
    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)          2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Net interest income       $2,833    $2,940    $2,437    $8,501    $6,083
    Non-interest income(1)     1,976     1,612     1,566     5,310     4,886
    -------------------------------------------------------------------------
    Total revenue              4,809     4,552     4,003    13,811    10,969
    Provision for credit
     losses(2)                   492       546       288     1,495       758
    Non-interest expenses(3)   2,723     2,745     2,512     8,209     6,659
    -------------------------------------------------------------------------
    Income before income
     taxes, non-controlling
     interests in subsidiaries
     and equity in net income
     of an associated company  1,594     1,261     1,203     4,107     3,552
    Provision for income
     taxes(4)                    367       223       175       769       670
    Non-controlling interests
     in subsidiaries, net of
     income taxes                 28        28         8        84        25
    Equity in net income of an
     associated company, net
     of income taxes(5)          104        79        95       287       291
    -------------------------------------------------------------------------
    Net income - adjusted      1,303     1,089     1,115     3,541     3,148
    Preferred dividends           49        41        17       119        36
    -------------------------------------------------------------------------
    Net income available to
     common shareholders -
     adjusted                  1,254     1,048     1,098     3,422     3,112
    -------------------------------------------------------------------------
    Adjustments for items
     of note, net of income
     taxes:
    Amortization of
     intangibles(6)             (122)     (127)     (111)     (376)     (278)
    Increase (decrease) in
     fair value of derivatives
     hedging the reclassified
     available-for-sale debt
     securities portfolio(7)     (43)     (134)        -      (377)        -
    Restructuring and
     integration charges
     relating to the Commerce
     acquisition(8)              (70)      (50)      (15)     (187)      (45)
    Increase (decrease) in
     fair value of credit
     default swaps hedging the
     corporate loan book, net
     of provision for credit
     losses(9)                   (75)      (44)       22      (107)       48
    Other tax items(10)            -         -       (14)        -       (34)
    Provision for insurance
     claims(11)                    -         -         -         -       (20)
    General allowance increase
     in Canadian Personal and
     Commercial Banking
     (excluding VFC) and
     Wholesale Banking           (46)      (77)        -      (178)        -
    Settlement of TD Banknorth
     shareholder
     litigation(12)                -       (39)        -       (39)        -
    FDIC special assessment
     charge(13)                  (35)        -         -       (35)        -
    -------------------------------------------------------------------------
    Total adjustments for
     items of note              (391)     (471)     (118)   (1,299)     (329)
    -------------------------------------------------------------------------
    Net income available to
     common shareholders -
     reported                   $863      $577      $980    $2,123    $2,783
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1)  Adjusted non-interest income excludes the following items of note:
         third quarter 2009 - $118 million loss due to change in fair value
         of credit default swaps (CDS) hedging the corporate loan book, as
         explained in footnote 9; $24 million loss due to change in fair
         value of derivatives hedging the reclassified available-for-sale
         (AFS) debt securities portfolio, as explained in footnote 7;
         second quarter 2009 - $61 million loss due to change in fair value
         of CDS hedging the corporate loan book; $166 million loss due to
         change in fair value of derivatives hedging the reclassified AFS
         debt securities portfolio; first quarter 2009 - $13 million gain
         due to change in fair value of CDS hedging the corporate loan
         book; $313 million loss due to change in fair value of derivatives
         hedging the reclassified AFS debt securities portfolio; third
         quarter 2008 - $34 million gain due to change in fair value of 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 11.
    (2)  Adjusted provision for credit losses excludes the following items
         of note: third quarter 2009 - $65 million increase in general
         allowance for credit losses in Canadian Personal and Commercial
         Banking (excluding VFC) and Wholesale Banking; second quarter 2009
         - $110 million increase in general allowance for credit losses in
         Canadian Personal and Commercial Banking (excluding VFC) and
         Wholesale Banking; first quarter 2009 - $80 million increase in
         general allowance for credit losses in Canadian Personal and
         Commercial Banking (excluding VFC) and Wholesale Banking; first
         quarter 2008 - $17 million related to the portion that was hedged
         via the CDS.
    (3)  Adjusted non-interest expenses excludes the following items of
         note: third quarter 2009 - $158 million amortization of
         intangibles, as explained in footnote 6; $109 million
         restructuring and integration charges related to the Commerce
         acquisition, as explained in footnote 8; $55 million FDIC special
         assessment charge, as explained in footnote 13; second quarter
         2009 - $171 million amortization of intangibles; $77 million
         restructuring and integration charges related to the Commerce
         acquisition; settlement of TD Banknorth shareholder litigation of
         $58 million, as explained in footnote 12; first quarter 2009 -
         $173 million amortization of intangibles; $106 million
         restructuring and integration charges related to the Commerce
         acquisition; third quarter 2008 - $166 million amortization of
         intangibles; $23 million restructuring and integration charges;
         second quarter 2008 - $117 million amortization of intangibles;
         $48 million restructuring and integration charges related to the
         Commerce acquisition; first quarter 2008 - $122 million
         amortization of intangibles.
    (4)  For reconciliation between reported and adjusted provision for
         income taxes, see the 'Reconciliation of non-GAAP provision for
         (recovery of) income taxes' table in the "Taxes" section.
    (5)  Adjusted equity in net income of an associated company excludes
         the following items of note: third quarter 2009 - $20 million
         amortization of intangibles, as explained in footnote 6; second
         quarter 2009 - $16 million amortization of intangibles; first
         quarter 2009 - $15 million amortization of intangibles; third
         quarter 2008 - $16 million amortization of intangibles; second
         quarter 2008 - $17 million amortization of intangibles; first
         quarter 2008 - $16 million amortization of intangibles.
    (6)  Amortization of intangibles relates to the Canada Trust
         acquisition in 2000, the TD Banknorth acquisition in 2005 and its
         privatization in 2007, the acquisitions by TD Banknorth of Hudson
         United Bancorp in 2006 and Interchange Financial Services
         Corporation in 2007, the Commerce acquisition in 2008 and the
         amortization of intangibles included in equity in net income of TD
         Ameritrade.
    (7)  Effective August 1, 2008, as a result of recent deterioration in
         markets and severe dislocation in the credit market, the Bank
         changed its trading strategy with respect to certain trading debt
         securities. The Bank no longer intends to actively trade in these
         debt securities. Accordingly, the Bank reclassified certain debt
         securities from trading to AFS category in accordance with the
         Amendments to the Canadian Institute of Chartered Accountants
         (CICA) Handbook Section 3855, Financial Instruments - Recognition
         and Measurement. As part of the Bank's trading strategy, these
         debt securities are economically hedged, primarily with CDS and
         interest rate swap contracts. This includes foreign exchange
         translation exposure related to the debt securities portfolio and
         the derivatives hedging it. These derivatives are not eligible for
         reclassification and are recorded on a fair value basis with
         changes in fair value recorded in the period's earnings.
         Management believes that this asymmetry in the accounting
         treatment between derivatives and the reclassified debt securities
         results in volatility in earnings from period to period that is
         not indicative of the economics of the underlying business
         performance in Wholesale Banking. As a result, the derivatives are
         accounted for on an accrual basis in Wholesale Banking and the
         gains and losses related to the derivatives in excess of the
         accrued amounts are reported in the Corporate segment and
         disclosed as an item of note. Adjusted results of the Bank exclude
         the gains and losses of the derivatives in excess of the accrued
         amount.
    (8)  As a result of the acquisition of Commerce and related
         restructuring and integration initiatives undertaken, the Bank
         incurred restructuring and integration charges. Restructuring
         charges consisted of employee severance costs, the costs of
         amending certain executive employment and award agreements and the
         write-down of long-lived assets due to impairment. Integration
         charges consisted of costs related to employee retention, external
         professional consulting charges and marketing (including customer
         communication and rebranding). In the Interim Consolidated
         Statement of Income, the restructuring and integration charges are
         included in non-interest expenses.
    (9)  The Bank purchases CDS to hedge the credit risk in Wholesale
         Banking's corporate lending portfolio. These CDS do not qualify
         for hedge accounting treatment and are measured at fair value with
         changes in fair value recognized in current period's earnings. The
         related loans are accounted for at amortized cost. Management
         believes that this asymmetry in the accounting treatment between
         CDS and loans would result in periodic profit and loss volatility
         which is not indicative of the economics of the corporate loan
         portfolio or the underlying business performance in Wholesale
         Banking. As a result, the CDS are accounted for on an accrual
         basis in Wholesale Banking and the gains and losses on the CDS, in
         excess of the accrued cost, are reported in the Corporate segment.
         Adjusted results exclude the gains and losses on the CDS in excess
         of the accrued cost.
    (10) This represents the negative impact of the scheduled reductions in
         the income tax rate on reduction of net future income tax assets.
    (11) The Bank accrued an additional actuarial liability in its insurance
         subsidiary operations for potential losses in the first quarter of
         2008 related to a court decision in Alberta. The Alberta
         government's legislation effectively capping minor injury insurance
         claims was challenged and held to be unconstitutional. In the
         current quarter, the government of Alberta won their appeal of the
         decision; however, the ultimate outcome remains uncertain as the
         plaintiffs may seek further appeal.
    (12) Upon the announcement of the privatization of TD Banknorth in
         November 2006, certain minority shareholders of TD Banknorth
         initiated class action litigation alleging various claims against
         the Bank, TD Banknorth and TD Banknorth officers and directors. The
         parties agreed to settle the litigation in February 2009 for
         $61.3 million (US$50 million) of which $3.7 million (US$3 million)
         had been previously accrued on privatization. The Court of Chancery
         in Delaware approved the settlement of the TD Banknorth
         Shareholders' Litigation effective June 24, 2009, and the settlement
         became final.
    (13) On May 22, 2009, the Federal Deposit Insurance Corporation (FDIC),
         in the U.S., finalized a special assessment resulting in a charge of
         $55 million before tax ($35 million after tax) or US$49 million
         before tax (US$31 million after tax).


    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)          2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Diluted - reported         $1.01     $0.68     $1.21     $2.51     $3.65
    Items of note
     affecting income
     (as above)                 0.46      0.55      0.14      1.53      0.43
    Items of note
     affecting EPS only(2)         -         -         -         -      0.04
    -------------------------------------------------------------------------
    Diluted - adjusted         $1.47     $1.23     $1.35     $4.04     $4.12
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic - reported           $1.01     $0.68     $1.22     $2.51     $3.68
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) EPS is computed by dividing net income available to common
        shareholders by the weighted-average number of shares outstanding
        during the period. As a result, the sum of the quarterly EPS may not
        equal to year-to-date EPS.
    (2) The diluted EPS figures do not include Commerce earnings for the
        month of April 2008 because there was a month lag between fiscal
        quarter ends until the first quarter of this year, while share
        issuance on transaction close resulted in a one-time negative
        earnings impact of 4 cents per share.


    Amortization of Intangibles, Net of Income Taxes(1)
    -------------------------------------------------------------------------
                                                                For the nine
                              For the three months ended        months ended
                           --------------------------------------------------
    (millions of             July 31   Apr. 30   July 31   July 31   July 31
     Canadian dollars)          2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Canada Trust                 $40       $39       $46      $119      $104
    TD Bank, N.A.                 60        70        42       200       107
    TD Ameritrade (included
     in equity in net income
     of an associated company)    20        16        16        51        49
    Other                          2         2         7         6        18
    -------------------------------------------------------------------------
    Amortization of
     intangibles, net of
     income taxes               $122      $127      $111      $376      $278
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Amortization of intangibles is included in the Corporate segment.
    

Economic Profit and Return on Invested Capital

The Bank utilizes economic profit as a tool to measure shareholder value creation. Economic profit is adjusted net income available to common shareholders less a charge for average invested capital. Average invested capital is equal to average common equity for the period plus the average cumulative after-tax goodwill and intangible assets amortized as of the reporting date. The rate used in the charge for capital is the equity cost of capital calculated using the capital asset pricing model. The charge represents an assumed minimum return required by common shareholders on the Bank's invested capital. The Bank's goal is to achieve positive and growing economic profit.

Return on invested capital (ROIC) is adjusted net income available to common shareholders divided by average invested capital. ROIC is a variation of the economic profit measure that is useful in comparison to the equity cost of capital. Both ROIC and the equity cost of capital are percentage rates, while economic profit is a dollar measure. When ROIC exceeds the equity cost of capital, economic profit is positive. The Bank's goal is to maximize economic profit by achieving ROIC that exceeds the equity cost of capital.

Economic profit and ROIC are non-GAAP financial measures as these are not defined terms under GAAP. Readers are cautioned that earnings and other measures adjusted to a basis other than GAAP do not have standardized meanings under GAAP and therefore, may not be comparable to similar terms used by other issuers.

The following table reconciles between the Bank's economic profit, ROIC and net income available to common shareholders - adjusted. Adjusted results, items of note and related terms are discussed in the "How the Bank Reports" section.

    
    Reconciliation of Economic Profit, Return on Invested Capital and Net
    Income Available to Common Shareholders - Adjusted
    -------------------------------------------------------------------------
                                                                For the nine
                              For the three months ended        months ended
                           --------------------------------------------------
    (millions of             July 31   Apr. 30   July 31   July 31   July 31
     Canadian dollars)          2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Average common equity    $34,898   $36,120   $29,065   $34,680   $25,198
    Average cumulative
     goodwill/intangible
     assets amortized, net
     of income taxes           4,598     4,491     4,171     4,489     4,091
    -------------------------------------------------------------------------
    Average invested
     capital                 $39,496   $40,611   $33,236   $39,169   $29,289
    Rate charged for
     invested capital          10.0%     10.0%      9.3%     10.0%      9.3%
    -------------------------------------------------------------------------
    Charge for invested
     capital                    $996      $990      $777    $2,930    $2,039
    -------------------------------------------------------------------------
    Net income available
     to common shareholders
     - reported                 $863      $577      $980    $2,123    $2,783
    Items of note impacting
     income, net of income
     taxes                       391       471       118     1,299       329
    -------------------------------------------------------------------------
    Net income available to
     common shareholders
     - adjusted               $1,254    $1,048    $1,098    $3,422    $3,112
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Economic profit             $258       $58      $321      $492    $1,073
    -------------------------------------------------------------------------
    Return on invested
     capital                   12.6%     10.6%     13.1%     11.7%     14.2%
    -------------------------------------------------------------------------

    FINANCIAL RESULTS OVERVIEW

    Performance Summary
    

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

    
    -   Adjusted diluted earnings per share for the nine months ended
        July 31, 2009 were $4.04, or down 2%, from the same period last year.
        This decline reflects the common and preferred equity issuances in
        fiscal 2009 to further strengthen the Bank's capital position. The
        Bank's goal is to achieve 7 - 10% adjusted earnings per share growth
        over the longer term.
    -   Adjusted return on risk-weighted assets (RWA) for the first nine
        months of 2009 was 2.3% compared with 2.6% in the same period in
        2008.
    -   For the twelve months ended July 31, 2009, the total shareholder
        return was 6.4% which was below the Canadian peer average of 11.4%.

    Impact of Foreign Exchange Rate on U.S. Personal and Commercial Banking
    and TD Ameritrade Translated Earnings
    

U.S. Personal and Commercial Banking earnings and the Bank's share of earnings from TD Ameritrade are impacted by fluctuations in the U.S. dollar - Canadian dollar exchange rate.

Depreciation of the Canadian dollar had a favourable impact on consolidated earnings for the quarter and for the nine months ended July 31, 2009, compared with the corresponding periods of 2008, as shown in the table below.

    
    Impact of Foreign Exchange Rate on U.S. Translated Earnings
    -------------------------------------------------------------------------
                                           For the three        For the nine
                                            months ended        months ended
                                       --------------------------------------
                                        July 31, 2009 vs.   July 31, 2009 vs.
    (millions of Canadian dollars)         July 31, 2008       July 31, 2008
    -------------------------------------------------------------------------
    U.S. Personal and Commercial
     Banking
      Increased total revenue                       $128                $611
      Increased non-interest expenses                 74                 353
      Increased net income                            34                 148
    -------------------------------------------------------------------------
    TD Ameritrade
      Increased share of earnings                    $16                 $40
    -------------------------------------------------------------------------
    Earnings per share impact                      $0.06               $0.22
    -------------------------------------------------------------------------

    Net Income

    Quarterly comparison - Q3 2009 vs. Q3 2008
    ------------------------------------------
    

Reported net income for the quarter was $912 million, a decrease of $85 million, or 9%, compared with the third quarter last year. Adjusted net income for the quarter was $1,303 million, an increase of $188 million, or 17%. The increase in adjusted net income was due to higher earnings in the Wholesale Banking and Canadian Personal and Commercial Banking segments, partially offset by lower earnings in the Wealth Management and U.S. Personal and Commercial Banking segments, and a higher loss in the Corporate segment. Wholesale Banking net income included strong trading-related revenues, led by interest rate and foreign exchange revenue, partially offset by realized net security losses related to exiting the public equity investment portfolio. Canadian Personal and Commercial Banking net income increased primarily due to higher volumes across most banking products. Wealth Management net income decreased primarily due to market declines in assets under management and administration in mutual funds and advice-based businesses, net interest margin compression and lower earnings from TD Ameritrade. U.S. Personal and Commercial Banking net income decreased largely due to an increase in provision for credit losses (PCL). The Corporate segment reported a higher net loss driven by higher corporate expenses and the benefit of tax items reported last year.

    
    Quarterly comparison - Q3 2009 vs. Q2 2009
    ------------------------------------------
    

Reported net income for the quarter increased $294 million, or 48%, compared with the prior quarter. Adjusted net income for the quarter increased $214 million, or 20%. The increase in adjusted net income was due to higher earnings in the Wholesale Banking, Canadian Personal and Commercial Banking and Wealth Management segments, partially offset by lower earnings in U.S. Personal and Commercial Banking and a higher net loss from the Corporate segment. Wholesale Banking net income increased mainly due to higher trading revenue. Canadian Personal and Commercial Banking net income increased largely due to higher volumes. Wealth Management net income increased primarily due to market appreciation in assets under management and administration in mutual funds and advice-based businesses and a higher contribution from TD Ameritrade. U.S. Personal and Commercial Banking net income decreased primarily due to the translation effect of a stronger Canadian dollar. The higher Corporate segment net loss this quarter was primarily attributable to an increase in corporate expenses and a decrease in net securitization gains.

    
    Year-to-date comparison - Q3 2009 vs. Q3 2008
    ---------------------------------------------
    

Reported net income for the nine months ended July 31, 2009 was $2,242 million, a decrease of $577 million, or 20%, compared with the same period last year. Year-to-date adjusted net income was $3,541, an increase of $393 million, or 12%, compared with the same period last year. The increase in adjusted net income was primarily driven by higher Wholesale Banking and U.S. Personal and Commercial Banking net income, partially offset by lower net income in the Wealth Management and Corporate segments. The increase in Wholesale Banking net income was primarily driven by higher trading revenue and an increase in capital market activity. U.S. Personal and Commercial Banking net income increased mainly due to the full year inclusion of Commerce results this year. Wealth Management delivered lower earnings mainly due to lower revenues in mutual funds and advice-based businesses driven by lower assets under management and administration, lower interest income due to net interest margin compression and a decline in TD Ameritrade's underlying earnings. The Corporate segment increased net loss was primarily attributable to losses associated with retail hedging and corporate financing activities, tax benefits reported last year, and higher corporate expenses.

    
    Net Interest Income

    Quarterly comparison - Q3 2009 vs. Q3 2008
    ------------------------------------------
    

Net interest income for the quarter was $2,833 million, an increase of $396 million, or 16%, compared with the third quarter last year. The growth in net interest income was driven by the Wholesale Banking and Canadian Personal and Commercial Banking segments, partially offset by a decline in Wealth Management. Wholesale Banking net interest income increased primarily due to the reclassification of certain debt securities from credit trading to available-for-sale (AFS) effective August 1, 2008 which provided a positive contribution to net interest income. Canadian Personal and Commercial Banking net interest income increased due to strong volume growth across most banking products, particularly in personal and business deposits and real-estate secured lending, partially offset by a 2 basis point (bps) decline in margin on average earning assets to 2.96%. Wealth Management net interest income decreased primarily due to net interest margin compression and lower margin loans.

    
    Quarterly comparison - Q3 2009 vs. Q2 2009
    ------------------------------------------
    

Net interest income for the quarter decreased $107 million, or 4%, compared with the prior quarter. The lower net interest income was driven by declines in the Wholesale Banking and U.S. Personal and Commercial Banking segments, partially offset by growth in Canadian Personal and Commercial Banking. Wholesale Banking net interest income decreased primarily due to lower trading-related net interest income. U.S. Personal and Commercial Banking net interest income decreased primarily due to the translation effect of a stronger Canadian dollar and an 18 bps decline in margin on average earning assets. Canadian Personal and Commercial Banking net interest income increased due to strong volume growth across most banking products and a 2 bps increase in margin on average earning assets.

    
    Year-to-date comparison - Q3 2009 vs. Q3 2008
    ---------------------------------------------
    

On a year-to-date basis, net interest income was $8,501 million, an increase of $2,418 million, or 40%, compared with the same period last year. The growth was driven primarily by increases in the U.S. Personal and Commercial Banking, Wholesale Banking and Canadian Personal and Commercial Banking segments, partially offset by a decline in Wealth Management. U.S. Personal and Commercial Banking net interest income increased primarily due to the full year inclusion of Commerce revenue this year. Wholesale Banking net interest income increased primarily due to the reclassification of certain debt securities from trading to AFS effective August 1, 2008 which provided a positive contribution to net interest income. Canadian Personal and Commercial Banking net interest income increased primarily due to strong volume growth in lending and deposits. Wealth Management net interest income decreased primarily due to net interest margin compression.

    
    Non-interest Income

    Quarterly comparison - Q3 2009 vs. Q3 2008
    ------------------------------------------
    

Reported non-interest income for the quarter was $1,834 million, an increase of $234 million, or 15%, compared with the third quarter last year. Adjusted non-interest income for the quarter was $1,976 million, an increase of $410 million, or 26%. The increase was driven primarily by growth in the Wholesale Banking and Canadian Personal and Commercial Banking segments, partially offset by a decline in Wealth Management. Wholesale Banking non-interest income increased primarily due to very strong interest rate, credit and foreign exchange trading revenues and higher capital market fee revenues. The increase in Canadian Personal and Commercial Banking non-interest income included a partial reversal of a provision related to Alberta legislation capping minor injury insurance claims and increases in credit-related fees. Wealth Management non-interest income decreased as the impact of market declines in mutual funds and advice-based business asset levels, partially offset by continued strength in trading volumes in online brokerage business.

    
    Quarterly comparison - Q3 2009 vs. Q2 2009
    ------------------------------------------
    

Reported non-interest income for the quarter increased $449 million, or 32%, compared with the prior quarter. Adjusted non-interest income increased $364 million, or 23%. The increase in adjusted non-interest income was due to increases in the Wholesale Banking, Canadian Personal and Commercial Banking and Wealth Management segments. Wholesale Banking non-interest income increased primarily due to higher interest rate and credit trading revenues. The increase in Canadian Personal and Commercial Banking non-interest income was due mainly to higher credit-related fees. Wealth Management non-interest income increased primarily due to market increases in assets under management and assets under administration in mutual funds and advice-based businesses.

    
    Year-to-date comparison - Q3 2009 vs. Q3 2008
    ---------------------------------------------
    

On a year-to-date basis, reported non-interest income of $4,641 million decreased $305 million, or 6%, compared with the same period last year. Year-to-date adjusted non-interest income of $5,310 increased $424 million, or 9%. The increase in adjusted non-interest income was due to an increase in the U.S. Personal and Commercial Banking and Canadian Personal and Commercial Banking segments, partially offset by decreases in the Wholesale Banking and Wealth Management segments. The U.S. Personal and Commercial Banking increase was mainly due to the full year inclusion of Commerce revenue this year. Canadian Personal and Commercial Banking non-interest income increased primarily due to higher insurance revenue and fee income. The decrease in Wholesale Banking was driven by realized net security losses related to exiting the public equity investment portfolio. Wealth Management experienced a small decline in non-interest income driven by lower revenue in mutual funds and lower average fees.

    
    Provision for Credit Losses

    Quarterly comparison - Q3 2009 vs. Q3 2008
    ------------------------------------------
    

During the quarter, the Bank recorded PCL of $557 million, an increase of $269 million, or 93%, compared with the third quarter last year. The increase was primarily due to higher provisions in the U.S. Personal and Commercial Banking and Canadian Personal and Commercial Banking segments, and a general PCL of $65 million related to the Canadian Personal and Commercial Banking (excluding VFC) and Wholesale Banking segments.

    
    Quarterly comparison - Q3 2009 vs. Q2 2009
    ------------------------------------------
    

PCL for the third quarter decreased $99 million, or 15%, from the prior quarter, primarily due to a reduction in the general PCL of $45 million related to the Canadian Personal and Commercial Banking (excluding VFC) and Wholesale Banking segments, and lower specific PCL in Wholesale Banking.

    
    Year-to-date comparison - Q3 2009 vs. Q3 2008
    ---------------------------------------------

    On a year-to-date basis, PCL increased $975 million, or 126%, to $1,750
million. This increase was primarily due to higher provisions in the U.S.
Personal and Commercial Banking and Canadian Personal and Commercial Banking
segments, and a general PCL of $255 million related to the Canadian Personal
and Commercial Banking (excluding VFC) and Wholesale Banking segments.


    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)          2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Net new specifics
     (net of reversals)         $442      $446      $260    $1,274      $771
    Less: recoveries              28        25        30        77        95
    -------------------------------------------------------------------------
    Provision for credit
     losses - specifics          414       421       230     1,197       676
    Change in general
     allowance for credit
     losses
      VFC                         22        22        16        65        47
      U.S. Personal and
       Commercial Banking         56       103        42       233        51
      Canadian Personal and
       Commercial Banking
       (excluding VFC) and
       Wholesale Banking          65       110         -       255         -
      Other                        -         -         -         -         1
    -------------------------------------------------------------------------
    Total                       $557      $656      $288    $1,750      $775
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Non-Interest Expenses and Efficiency Ratio

    Quarterly comparison - Q3 2009 vs. Q3 2008
    ------------------------------------------
    

Reported non-interest expenses for the quarter were $3,045 million, an increase of $344 million, or 13%, compared with the third quarter last year. Adjusted non-interest expenses were $2,723 million, an increase of $211 million, or 8%. U.S. Personal and Commercial Banking increased primarily due to the translation effect of a weaker Canadian dollar. Wholesale Banking non-interest expenses increased primarily due to higher variable compensation on stronger results. Canadian Personal and Commercial Banking non-interest expenses increased due to higher employee compensation.

The reported efficiency ratio improved to 65.2%, compared with 66.9% in the third quarter last year. The Bank's adjusted efficiency ratio improved to 56.6%, compared with 62.8% in the same period last year.

    
    Quarterly comparison - Q3 2009 vs. Q2 2009
    ------------------------------------------
    

Reported non-interest expenses decreased $6 million, which was relatively unchanged compared with the prior quarter. Adjusted non-interest expenses decreased $22 million, or 1%, due to lower expenses in the U.S. Personal and Commercial Banking and Wholesale segments, partially offset by higher expenses in the Canadian Personal and Commercial Banking and Wealth Management segments. U.S. Personal and Commercial Banking adjusted non-interest expenses decreased primarily due to the translation effect of the stronger Canadian dollar and lower advertising and marketing costs. Wholesale Banking non-interest expenses decreased due to lower variable compensation and severance costs. Canadian Personal and Commercial Banking non-interest expenses increased primarily due to higher employee compensation and marketing costs. Wealth Management non-interest expenses increased mainly due to higher variable compensation.

The reported efficiency ratio improved to 65.2%, compared with 70.6% in the prior quarter. The adjusted efficiency ratio improved to 56.6%, compared with 60.3% in the prior quarter.

    
    Year-to-date comparison - Q3 2009 vs. Q3 2008
    ---------------------------------------------
    

On a year-to-date basis, reported non-interest expenses were $9,116 million, an increase of $1,981 million, or 28%, compared with the same period last year. The current year-to-date reported non-interest expenses included $292 million of restructuring and integration charges attributable to the Commerce acquisition. Adjusted non-interest expenses were $8,209 million, an increase of $1,550 million, or 23%, compared with the same period last year. U.S. Personal and Commercial Banking non-interest expenses increased primarily due to the full year inclusion of Commerce expenses this year. Canadian Personal and Commercial Banking non-interest expenses increased mainly due to higher employee compensation. Wholesale Banking non-interest expenses increased primarily due to higher variable compensation driven by stronger results and higher severance costs. Wealth Management non-interest expenses increased primarily due to the continued investment in the sales force in the advice-based businesses.

The reported efficiency ratio declined to 69.4%, compared with 64.7% in the same period last year. The Bank's adjusted efficiency ratio improved to 59.4%, compared with 60.7% 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 19.6% for the third quarter, compared with 11.6% in the same quarter last year and 5.7% in the prior quarter. The increase this quarter was mainly due to a decrease in tax exempt income and a higher effective rate on international operations.

On a year-to-date basis, the Bank's reported effective tax rate was 8.2%, compared with 16.6% in the same period last year. The year-over-year decrease was primarily due to a decrease in reported net income before taxes, a proportionate increase in tax exempt income and a lower effective tax rate on international operations.

    
    Taxes
    -------------------------------------------------------------------------
                                                  For the three months ended
                               ----------------------------------------------
    (millions of                     July 31         Apr. 30         July 31
     Canadian dollars)                  2009            2009            2008
    -------------------------------------------------------------------------
    Income taxes at Canadian
     statutory income tax rate  $337   31.7%    $196   31.8%    $343   32.7%
    Increase (decrease)
     resulting from:
      Dividends received         (48)   (4.5)    (85)  (13.8)    (93)   (8.9)
      Rate differentials on
       international
       operations                (97)   (9.2)   (117)  (19.0)   (126)  (12.0)
      Other - net                 17     1.6      41     6.7      (2)   (0.2)
    -------------------------------------------------------------------------
    Provision for income taxes
     and effective income tax
     rate - reported            $209   19.6%     $35    5.7%    $122   11.6%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    ---------------------------------------------------------
                                   For the nine months ended
                               ------------------------------
    (millions of                     July 31         July 31
     Canadian dollars)                  2009            2008
    ---------------------------------------------------------
    Income taxes at Canadian
     statutory income tax rate  $722   31.7%  $1,019   32.7%
    Increase (decrease)
     resulting from:
      Dividends received        (265)  (11.7)   (258)   (8.3)
      Rate differentials on
       international
       operations               (348)  (15.3)   (279)   (8.9)
      Other - net                 77     3.5      35     1.1
    ---------------------------------------------------------
    Provision for income taxes
     and effective income tax
     rate - reported            $186    8.2%    $517   16.6%
    ---------------------------------------------------------
    ---------------------------------------------------------

    The Bank's adjusted effective tax rate was 23.0% for the third quarter,
compared with 14.5% in the same quarter last year and 17.7% in the prior
quarter. The increase this quarter was mainly due to a decrease in tax exempt
income and a higher effective rate on international operations.
     On a year-to-date basis, the Bank's adjusted effective tax rate was
18.7%, in line with 18.9% in the same period last year.


    Reconciliation of Non-GAAP Provision for (Recovery of) Income Taxes
    -------------------------------------------------------------------------
                                                                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)           2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Provision for income
     taxes - reported           $209       $35      $122      $186      $517
    -------------------------------------------------------------------------
    Adjustments for items
     of note:
    Amortization of
     intangibles                  56        60        71       177       176
    Increase (decrease) in
     fair value of
     derivatives hedging the
     reclassified
     available-for-sale debt
     securities portfolio        (19)       32         -       126         -
    Restructuring and
     integration charges
     relating to the Commerce
     acquisition                  39        27         8       105        26
    Increase (decrease) in
     fair value of credit
     default swaps hedging the
     corporate loan book, net
     of provision for credit
     losses                       43        17       (12)       59       (25)
    Other tax items                -         -       (14)        -       (34)
    Provision for insurance
     claims                        -         -         -         -        10
    General allowance increase
     in Canadian Personal and
     Commercial Banking
     (excluding VFC) and
     Wholesale Banking            19        33         -        77         -
    Settlement of TD Banknorth
     shareholder litigation        -        19         -        19         -
    FDIC special assessment
     charge                       20         -         -        20         -
    -------------------------------------------------------------------------
    Total adjustments for
     items of note               158       188        53       583       153
    -------------------------------------------------------------------------
    Provision for income taxes
     - adjusted                 $367      $223      $175      $769      $670
    -------------------------------------------------------------------------
    Effective income tax rate
     - adjusted(1)             23.0%     17.7%     14.5%     18.7%     18.9%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Adjusted effective income tax rate is adjusted provisions for income
        taxes before other taxes as a percentage of adjusted net income
        before taxes.
    

HOW OUR BUSINESSES PERFORMED

For management reporting purposes, the Bank's operations and activities are organized around four key business segments operating in a number of locations in key financial centres around the globe: Canadian Personal and Commercial Banking, including TD Canada Trust and TD Insurance; Wealth Management, including TD Waterhouse and an investment in TD Ameritrade; U.S. Personal and Commercial Banking through TD Banknorth and TD Bank, America's Most Convenient Bank; and Wholesale Banking, including TD Securities. The Bank's other activities are grouped into the Corporate segment. Effective the third quarter of 2008, U.S. insurance and credit card businesses were transferred to the Canadian Personal and Commercial Banking segment, and the U.S. wealth management businesses to the Wealth Management segment for management reporting purposes to align with how these businesses are now being managed on a North American basis. Prior periods have not been reclassified as the impact was not material.

Results of each business segment reflect revenue, expenses, assets and liabilities generated by the businesses in that segment. The Bank measures and evaluates the performance of each segment based on adjusted results where applicable, and for those segments the Bank notes that the measure is adjusted. Amortization of intangible expenses is included in the Corporate segment. Accordingly, net income for the operating business segments is presented before amortization of intangibles, as well as any other items of note not attributed to the operating segments. For further details, see the "How the Bank Reports" section, the "Business Focus" section in the 2008 Annual Report and Note 30 to the 2008 Consolidated Financial Statements. For information concerning the Bank's measures of economic profit and return on invested capital, which are non-GAAP financial measures, see the "Economic Profit and Return on Invested Capital" section. Segmented information also appears in Note 14.

Net interest income within Wholesale Banking is calculated on a taxable equivalent basis (TEB), which means that the value of non-taxable or tax-exempt income, including dividends, is adjusted to its equivalent before-tax value. Using TEB allows the Bank to measure income from all securities and loans consistently and makes for a more meaningful comparison of net interest income with similar institutions. The TEB increase to net interest income and provision for income taxes reflected in Wholesale Banking results is reversed in the Corporate segment. The TEB adjustment for the quarter was $62 million, compared with $129 million in the third quarter last year, and $103 million in the prior quarter. On a year-to-date basis, the TEB adjustment was $350 million, compared with $371 million in the same period last year.

The Bank securitizes retail loans and receivables, and records a gain or loss on sale, including the recognition of an asset related to the retained interests. Credit losses incurred on retained interests after securitization are recorded as a charge to non-interest income in the Bank's Consolidated Financial Statements. For segment reporting, PCL related to securitized volumes is included in Canadian Personal and Commercial Banking but is reversed in the Corporate segment and reclassified as a charge to non-interest income to comply with GAAP.

Canadian Personal and Commercial Banking

Canadian Personal and Commercial Banking net income for the quarter was a record $677 million, an increase of $33 million, or 5%, compared with the third quarter last year, and an increase of $88 million, or 15%, compared with the prior quarter. The annualized return on invested capital for the quarter was 31%, in line with the third quarter last year and up from 28% in the prior quarter. Net income for the nine months ended July 31, 2009 was $1,850 million, an increase of $26 million, or 1%, compared with the same period last year. On a year-to-date basis, the annualized return on invested capital was 29% compared with 30% for the same period last year.

Revenue for the quarter was $2,447 million, a new record and an increase of $185 million, or 8%, compared with the third quarter last year primarily due to strong volume growth across most banking products, particularly in personal and business deposits, and real estate secured lending. Compared with the prior quarter, revenue increased $171 million, or 8%, largely due to strong volume growth, margin improvement, and more calendar days in the current quarter. In addition, the partial reversal of the provision related to Alberta legislation capping minor injury insurance claims was offset by increasing industry-wide property and casualty insurance loss ratios, including the impact of severe weather events, and increased reserves due to the pending Ontario harmonized sales tax implementation. Revenue on a year-to-date basis was $7,015 million, up $472 million, or 7%, compared with the same period last year. Margin on average earning assets decreased by 2 bps to 2.96% compared with the third quarter last year, and increased 2 bps compared with the prior quarter. The margin on average earning assets on a year-to-date basis decreased by 6 bps to 2.91% when compared with the same period last year largely due to rate compression arising from the lower overall level of interest rates. Compared with the third quarter last year, real-estate secured lending volume, including securitizations, increased $21.8 billion, or 13%, while consumer loan volume increased $3.0 billion, or 17%. Business loans and acceptances volume grew $1.9 billion, or 7%. Personal deposit volume increased $14.3 billion, or 13%, while business deposit volume increased $6.4 billion, or 15%. Gross originated insurance premiums increased $79 million, or 11%.

PCL for the quarter was $290 million, an increase of $96 million, or 49%, compared with the third quarter last year. Personal banking PCL of $268 million was $89 million, or 50%, higher than the third quarter last year as higher bankruptcies led to higher provisions in unsecured lines of credit and credit cards. Business banking PCL was $22 million for the quarter, compared with $15 million in the third quarter last year. Annualized PCL as a percentage of credit volume was 0.52%, an increase of 13 bps compared with the third quarter last year. Compared with the prior quarter, PCL increased $4 million, or 1%. Personal banking PCL increased $8 million, or 3%, compared with the prior quarter primarily due to higher bankruptcies, while business banking PCL decreased by $4 million. PCL on a year-to-date basis was $842 million, an increase of $285 million, or 51%, compared with the same period last year. Personal banking PCL was $773 million, up $253 million, or 49%, and business banking PCL was $69 million, up $32 million, or 86%.

Non-interest expenses for the quarter were $1,170 million, an increase of $41 million, or 4%, compared with the third quarter of last year, primarily due to higher employee compensation. Compared with the prior quarter, non-interest expenses increased $27 million, or 2%, largely due to higher employee compensation and marketing expenses. On a year-to-date basis, non-interest expenses were $3,499 million, an increase of $179 million, or 5%, compared with the same period last year, primary due to higher employee compensation and the inclusion of the U.S. insurance and credit card businesses.

The average full time equivalent (FTE) staffing levels increased 250, or 1%, compared with the third quarter last year and increased 304, or 1%, compared with the prior quarter. FTE staffing levels on a year-to-date basis increased 569, or 2%, compared with the same period last year. The efficiency ratio for the current quarter improved to 47.8%, compared with 49.9% in the third quarter last year and 50.2% in the prior quarter. The efficiency ratio on a year-to-date basis improved to 49.9%, compared with 50.7% in the same period last year.

Volume growth across most products is anticipated to slow down, while PCL rates are expected to continue to rise reflective of the challenging conditions of the Canadian economy. Expenses will continue to be managed to ensure that spending supports long-term earnings growth.

Wealth Management

Wealth Management net income for the quarter was $163 million, a decrease of $38 million, or 19%, compared with the third quarter last year and an increase of $37 million, or 29%, compared with the prior quarter. Net income in Global Wealth Management, which excludes TD Ameritrade, was $95 million, a decrease of $32 million, or 25%, compared with the third quarter last year and an increase of $17 million, or 22%, compared with the prior quarter. The Bank's reported investment in TD Ameritrade generated net income of $68 million, a slight decrease of $6 million, or 8%, compared with the third quarter last year and an increase of $20 million, or 42%, compared with the prior quarter. The growth in TD Ameritrade's contribution compared with the prior quarter is due to continued increases in trading volumes, partially offset by the translation effect of a stronger Canadian dollar. For its third quarter ended June 30, 2009, TD Ameritrade reported net income of US$171 million, a decrease of US$33 million, or 16%, compared with its third quarter last year and an increase of US$39 million, or 30%, compared with its prior quarter. Wealth Management's annualized return on invested capital for the quarter was 14% compared with 19% in the third quarter last year and 11% in the prior quarter.

Net income for the nine months ended July 31, 2009 was $441 million, a decrease of $158 million, or 26%, compared with the same period last year primarily due to lower income in mutual funds and advice-based businesses driven by lower assets under management and administration, lower average fees, net interest margin compression and lower income from the Bank's reported investment in TD Ameritrade, partially offset by higher trade volumes in online brokerage and increased new issues revenue. The Bank's reported investment in TD Ameritrade generated $193 million of net income compared with $229 million in the same period last year. Annualized return on invested capital on a year-to-date basis was 13%, compared with 21% in same period last year.

Revenue for the quarter was $562 million, a decrease of $47 million, or 8%, compared with the third quarter last year primarily due to lower revenues in mutual funds and advice-based businesses driven by lower assets under management and administration, lower average fees, net interest margin compression, and lower margin loans. These decreases were partially offset by strong trading volumes in the online brokerage business. Revenue increased by $34 million, or 6%, compared with the prior quarter primarily due to increased assets under management and administration in mutual funds and advice-based businesses and higher trading volumes. Revenue on a year-to-date basis was $1,618 million, a decrease of $119 million, or 7%, compared with the same period last year primarily due to lower revenues in mutual funds and advice-based businesses driven by lower assets under management and administration, lower average fees and net interest margin compression. These decreases were partially offset by the inclusion of U.S. wealth management businesses starting in the third quarter of last year, higher trade volumes in online brokerage, and increased new issues revenue.

Non-interest expenses for the quarter were $424 million, an increase of $3 million, or 1%, compared with the third quarter last year primarily due to continued investment in growing the sales force in the advice-based businesses and related support staff, partially offset by lower variable compensation. Compared with the prior quarter, non-interest expenses increased by $10 million, or 2%, primarily due to higher variable and volume-related expenses, partially offset by prudent expense management. Non-interest expenses on a year-to-date basis were $1,257 million, an increase of $70 million, or 6%, compared with the same period last year mainly due to the inclusion of the U.S. wealth management businesses starting in the third quarter of last year, continued investment in growing the sales force in advice-based businesses and related support staff, partially offset by lower variable expenses and prudent expense management.

The average FTE staffing levels increased by 260, or 4%, compared with the third quarter last year primarily due to new client-facing advisors and increased processing staff to handle higher trading volumes. Compared with the prior quarter, average FTE staffing levels decreased by 69, or 1%, mainly due to a decline in processing staff, partially offset by new client-facing advisors. Average FTE staffing levels on a year-to-date basis increased by 562, or 9%, compared with the same period last year mainly due to the inclusion of 325 FTE from the U.S. wealth management businesses, new client-facing advisors, and increased processing staff to handle higher trading volumes. The efficiency ratio for the current quarter was 75.4%, compared with 69.1% in the third quarter last year and 78.4% in the prior quarter. The efficiency ratio on a year-to-date basis worsened to 77.7%, compared with 68.3% in the same period last year.

Assets under management of $164 billion as at July 31, 2009 decreased by $6 billion, or 4%, from October 31, 2008, primarily due to declines in institutional assets, partially offset by the addition of net new client assets and market appreciation. Assets under administration of $188 billion as at July 31, 2009, increased by $15 billion, or 9%, from October 31, 2008 primarily due to the addition of net new client assets and market appreciation.

Current capital market and economic challenges in this low interest rate environment are anticipated to continue to impact results over the next few quarters. In the third quarter, advice-based businesses witnessed stronger asset growth due to a rebound in equity markets. Client engagement remains strong as evidenced by growth in new accounts and net new client assets. Expenses continue to be managed prudently while continuing to focus on investment in client-facing advisors, products and technology to enable future business growth.

    
    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)          2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Global Wealth(1)             $95       $78      $127      $248      $370
    TD Ameritrade                 68        48        74       193       229
    -------------------------------------------------------------------------
    Net income                  $163      $126      $201      $441      $599
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Effective the third quarter of 2008, the Bank transferred the U.S.
        wealth management businesses to the Wealth Management segment for
        management reporting purposes. Prior periods have not been
        reclassified as the impact was not material to segment results.
    

TD AMERITRADE Holding Corporation

As at July 31, 2009, the Bank's reported investment in TD AMERITRADE Holding Corporation (TD Ameritrade) was 45.2% of the issued and outstanding shares of TD Ameritrade.

As a result of the issuance of shares on June 11, 2009 by TD Ameritrade in connection with its acquisition of thinkorswim Group Inc., the Bank's ownership position in TD Ameritrade decreased from 47.5% as at April 30, 2009 to 45.2% as at July 31, 2009.

On January 24, 2009, the limit in the Bank's beneficial ownership of TD Ameritrade under the Stockholders' Agreement increased from 39.9% to 45%. Pursuant to the terms of the Stockholders' Agreement, the Bank will not exercise the voting rights in respect of any shares held in excess of the 45% limit. On March 2, 2009, the Bank took delivery of 27 million shares in settlement of its amended hedging arrangement with Lillooet Limited (Lillooet) at a hedged cost to the Bank of US$515 million. As Lillooet was consolidated in the Bank's Consolidated Financial Statements, the replacement of the amended hedge arrangement with the direct ownership of the 27 million shares had no material impact on the Bank.

The condensed financial statements of TD Ameritrade, based on its Consolidated Financial Statements filed with the SEC, are provided as follows:

    
    Condensed Consolidated Balance Sheet
    -------------------------------------------------------------------------
                                                                       As at
                                                        ---------------------
                                                          June 30,   Sep. 30,
    (millions of U.S. dollars)                               2009       2008
    -------------------------------------------------------------------------
    Assets
    Receivable from brokers, dealers and clearing
     organizations                                         $1,540     $4,177
    Receivable from clients, net of allowance for
     doubtful accounts                                      5,013      6,934
    Other assets                                           10,667      4,841
    -------------------------------------------------------------------------
    Total assets                                          $17,220    $15,952
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities
    Payable to brokers, dealers and clearing
     organizations                                         $2,269     $5,770
    Payable to clients                                      9,188      5,071
    Other liabilities                                       2,385      2,186
    -------------------------------------------------------------------------
    Total liabilities                                      13,842     13,027
    -------------------------------------------------------------------------
    Stockholders' equity                                    3,378      2,925
    -------------------------------------------------------------------------
    Total liabilities and stockholders' equity            $17,220    $15,952
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Condensed Consolidated Statement of Income
    -------------------------------------------------------------------------
                                         For the three          For the nine
                                          months ended          months ended
                                  -------------------------------------------
    (millions of U.S. dollars,      June 30    June 30    June 30    June 30
     except per share amounts)         2009       2008       2009       2008
    -------------------------------------------------------------------------
    Revenues
    Net interest revenue                $99       $132       $251       $419
    Fee-based and other revenue         515        492      1,499      1,469
    -------------------------------------------------------------------------
    Total revenue                       614        624      1,750      1,888
    -------------------------------------------------------------------------
    Expenses
    Employee compensation and
     benefits                           128        129        366        367
    Other                               204        167        577        537
    -------------------------------------------------------------------------
    Total expenses                      332        296        943        904
    -------------------------------------------------------------------------
    Non-interest income                  (2)         -         (2)         1
    -------------------------------------------------------------------------
    Pre-tax income                      280        328        805        985
    Provision for income taxes          109        124        318        353
    -------------------------------------------------------------------------
    Net income(1)                      $171       $204       $487       $632
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per share - basic        $0.30      $0.34      $0.84      $1.06
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earning per share - diluted       $0.30      $0.34      $0.83      $1.05
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) The Bank's equity share of net income of TD Ameritrade is subject to
        adjustments relating to amortization of intangibles.
    

U.S. Personal and Commercial Banking

U.S. Personal and Commercial Banking reported net income for the quarter was $172 million, a decrease of $72 million, or 30%, compared with the third quarter last year and a decrease of $59 million, or 26%, compared with the prior quarter. Excluding restructuring and integration charges related to the Commerce acquisition, adjusted net income for the quarter was $242 million, a decrease of $31 million, or 11%, compared with the third quarter last year and a decrease of $39 million, or 14%, compared with the prior quarter. The annualized return on invested capital for the quarter was 5.0%, compared with 6.2% for the same period last year and 5.3% in the prior quarter.

Reported net income for the nine months ended July 31, 2009 was $643 million, an increase of $172 million, or 37%, compared with the same period last year. On a year-to-date basis, adjusted net income was $830 million, an increase of $300 million, or 57%, compared with the same period last year. The current year-to-date period included nine months of earnings from Commerce compared with only three months in the same period last year. The annualized return on invested capital on a year-to-date basis was 5.4%, compared with 6.0% in the same period last year.

Revenue for the quarter was $1,136 million, an increase of $110 million, or 11%, compared with the third quarter last year and a decrease of $145 million, or 11%, as compared with the prior quarter. In U.S. dollar terms, revenue declined nominally when compared with both the third quarter last year and the prior quarter. Revenue on a year-to-date basis was $3,611 million, an increase of $1,658 million, or 85% (55% in U.S. dollar terms), compared with the same period last year, primarily due to the Commerce acquisition and the translation effect of a weaker Canadian dollar. Margin on average earning assets of 3.40% decreased by 52 bps from the third quarter last year, primarily due to rate compression arising from the lower overall level of interest rates and increased levels of impaired loans. Compared with the third quarter last year, in U.S. dollar terms, average loans increased $5.8 billion, or 12%, with business loan volume up 10% and personal loan volume up 16%, while average deposit volume increased $6.4 billion, or 9%, with 8% growth in business deposit volume, and 10% growth in personal deposit volume. Compared with the prior quarter, margin on average earning assets decreased by 18 bps primarily due to lower prepayment rates on loans and securities, partially offset by core margin expansion in the current quarter. Average business loans outstanding declined slightly from the prior quarter. Margin on average earning assets on a year-to-date basis decreased by 31 bps from 3.84% to 3.53%, compared with the same period last year.

The AFS securities portfolio was approximately $53 billion (US$49 billion) as at July 31, 2009, including a net unrealized gain of $115 million after tax (US$106 million). Included in this amount is a net unrealized loss of $402 million related to non-agency collateralized mortgage obligations. Compared with the prior quarter, the after-tax unrealized loss on non-agency collateralized mortgage obligations declined by $528 million, or 57%.

PCL for the quarter was $183 million, an increase of $107 million, or 141%, compared with the third quarter last year largely due to higher levels of charge-offs and higher reserve requirements resulting from the economic recession in the U.S. Compared with the prior quarter, PCL decreased by $18 million, or 9%. In U.S. dollar terms, PCL was largely unchanged this quarter compared with the prior quarter. Net impaired loans were $741 million, an increase of $434 million, or 141%, over the third quarter last year and an increase of $52 million, or 8%, from the prior quarter. The increase was largely due to net new formations resulting from continued weakness in the real estate markets and the recession in the U.S. Net impaired loans as a percentage of total loans and leases were 1.31%, compared with 0.64% as at July 31, 2008, and 1.12% as at April 30, 2009. PCL on a year-to-date basis was $523 million, an increase of $375 million, or 253%, compared with the same period last year primarily due to reasons discussed above for the quarter.

Reported non-interest expenses for the quarter were $783 million, an increase of $173 million, or 28%, compared with the third quarter last year and a decrease of $40 million, or 5%, compared with the prior quarter. Excluding restructuring and integration charges related to the Commerce acquisition, adjusted non-interest expenses for the quarter were $674 million, an increase of $86 million, or 15%, compared with the third quarter last year and a decrease of $72 million, or 10%, compared with the prior quarter. In U.S. dollar terms, adjusted non-interest expenses were 2% higher than the third quarter last year and 1% lower than the prior quarter, largely due to increased FDIC premiums, partially offset by realized expense synergies and timing of marketing campaigns. Reported non-interest expenses on a year-to-date basis were $2,407 million, an increase of $1,265 million, or 111%, compared with the same period last year. Adjusted non-interest expenses on a year-to-date basis were $2,115 million, an increase of $1,044 million, or 97%, compared with the same period last year. In U.S. dollar terms, year-to-date adjusted non-interest expenses increased by $701 million, or 66%, primarily due to the inclusion of nine months of Commerce expenses.

The average FTE staffing levels decreased by 210, or 1%, compared with the third quarter last year. Included in this decrease is a reduction of approximately 600 FTE staff due to integration efforts and branch consolidations, partially offset by the increase of approximately 400 FTE staff resulting from 35 new store openings since the third quarter last year. The reported efficiency ratio for the quarter worsened to 68.9%, compared with 59.5% in the third quarter last year and 64.2% in the prior quarter. The adjusted efficiency ratio for the quarter worsened to 59.3%, compared with 57.3% in the third quarter last year and 58.2% in the prior quarter. The reported and adjusted efficiency ratios on a year-to-date basis worsened to 66.7% and 58.6% respectively, compared with 58.5% and 54.8% respectively in the same period last year.

Loan volume growth is expected to slow and the weak economy in the U.S. will continue to result in higher than normal PCLs. Continued core deposit growth, attainment of synergies and prudent expense management should help offset these adverse effects.

Wholesale Banking

Wholesale Banking reported a record net income for the quarter was $327 million, an increase of $290 million, or 784%, compared with the third quarter last year and an increase of $154 million, or 89%, compared with the prior quarter. The current quarter results were primarily driven by strong trading related revenues and capital market fee revenues, partially offset by realized net security losses in the public equity investment portfolio and an unfavourable tax item. The annualized return on invested capital for the quarter was 40%, compared with 4% in the third quarter last year and 18% in the prior quarter.

Net income for the nine months ended July 31, 2009 was $765 million, an increase of $472 million, or 161%, compared with the same period last year. The annualized return on invested capital on a year-to-date basis was 26%, compared with 12% 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 $876 million, an increase of $548 million, or 167%, compared with the third quarter last year. Capital markets revenue increased from the third quarter last year due to very strong interest rate, credit and foreign exchange trading revenues, a reduction in credit valuation adjustments, and higher capital market fee revenues, partially offset by a decline in equity trading revenues. Further, the third quarter last year included a $96 million charge related to incorrectly priced financial instruments. Overall, the operating environment was favourable for foreign exchange, interest rates and credit trading driven by strong customer activity, wider margins, as well as higher liquidity, and normalization of pricing in credit markets. Capital market fee revenue was solid, mainly driven by higher underwriting and credit fee revenues flowing from strong client activity. Equity trading revenues declined mainly due to lower non-taxable transaction revenues. Revenue increased $256 million, or 41%, compared with the prior quarter primarily due to higher interest rate and credit trading revenues, partially offset by lower energy trading revenue as compared with record levels in the prior quarter. Wholesale Banking completed the exit of its public equity investment portfolio during the quarter which led to further realized net security losses. The public equity investment portfolio generated net security gains in the same quarter last year and higher net security losses in the prior quarter. Corporate lending revenues increased compared with the third quarter last year primarily due to higher margins and average asset volumes. Corporate lending revenues were in line with the prior quarter. Revenue on a year-to-date basis was $2,335 million, an increase of $971 million, or 71%, compared with the same period last year primarily due to strong trading revenues, and an increase in underwriting and credit fee revenue, partially offset by significant realized net security losses in the public equity investment portfolio.

PCL is composed of specific provisions for credit losses and accrual costs for credit protection. PCL for the quarter was $32 million, compared with $30 million in the third quarter last year and $59 million in the prior quarter. The specific provision for the quarter included specific allowances of $21 million, compared to $19 million for the third quarter last year and $48 million for the prior quarter. The cost for credit protection for the quarter of approximately $11 million was in line with the costs for the prior year and prior quarter. PCL on a year-to-date basis was $157 million, an increase of $61 million, or 64%, compared with the same period last year. Wholesale Banking continues to actively manage the credit risk in the corporate loan portfolio. It currently holds $1.6 billion in notional credit default swap (CDS) protection, down $0.8 billion from the prior quarter due to maturities and the translation effect of a stronger Canadian dollar.

Non-interest expenses for the quarter were $326 million, an increase of $45 million, or 16%, compared with the third quarter last year primarily due to higher variable compensation on stronger results. Non-interest expenses decreased $30 million, or 8%, from the prior quarter primarily due to lower variable compensation and severance costs. Non-interest expenses on a year-to-date basis were $1,070 million, an increase of $177 million, or 20%, compared with the same period last year primarily due to higher variable compensation and severance costs.

RWA declined $7 billion from April 30, 2009 primarily driven by declines in market risk as measured by Value-at-Risk (VaR), continued progress in exiting credit trading positions outside North America, a decline in credit exposures, and completion of the exit of the public equity investment portfolio. On a year-to-date basis, RWA declined by $20 billion, or 36%.

Wholesale Banking had a very strong quarter, delivering record net income. Our integrated, client focused franchise strategy performed very well amidst the more favourable capital markets operating environment. However, we expect the Wholesale Banking contribution to moderate in the fourth quarter as the operating conditions normalize leading to potentially lower trading revenues and lower capital market activity. Key priorities for Wholesale Banking include solidifying our position as a top-three dealer in Canada, growing our client-driven franchise businesses, focusing on strategic use of capital and risk management, and maintaining a good return on invested capital.

Corporate

Corporate segment's reported net loss for the quarter was $427 million, compared with a reported net loss of $129 million in the third quarter last year and a reported net loss of $501 million in the prior quarter. The adjusted net loss for the quarter was $106 million, compared with an adjusted net loss of $40 million in the third quarter last year and an adjusted net loss of $80 million in the prior quarter. Compared with the third quarter last year, the higher adjusted net loss was driven by higher unallocated corporate expenses, higher losses from securitization, and lower benefits from tax items. Compared with the prior quarter, the higher adjusted net loss was primarily attributable to an increase in unallocated corporate expenses and lower net securitization gains reported in the current quarter.

The reported net loss for the nine months ended July 31, 2009 was $1,457 million compared with a reported net loss of $368 million in the same period last year. The adjusted net loss on a year-to-date basis was $345 million, compared with an adjusted net loss of $98 million in the same period last year. This increase was primarily attributable to non-recurring tax benefits reported in the same period last year, losses associated with retail hedging and corporate financing activities, and higher unallocated corporate expenses.

The difference between reported and adjusted net loss for the Corporate segment was due to items of note as outlined below. These items are described further on page 6.

    
    -------------------------------------------------------------------------
                                                                For the nine
                              For the three months ended        months ended
                           --------------------------------------------------
    (millions of             July 31   Apr. 30   July 31   July 31   July 31
     Canadian dollars)          2009      2009      2008      2009      2008
    -------------------------------------------------------------------------
    Corporate segment net
     loss - reported           $(427)    $(501)    $(129)  $(1,457)    $(368)
    -------------------------------------------------------------------------
    Adjustments for items
     of note, net of
     income taxes:
    Amortization of
     intangibles                 122       127       111       376       278
    Decrease in fair value
     of derivatives hedging
     the reclassified
     available-for-sale
     securities portfolio         43       134         -       377         -
    Decrease (increase) in
     fair value of credit
     default swaps hedging
     the corporate loan
     book, net of provision
     for credit losses            75        44       (22)      107       (48)
    Other tax items                -         -         -         -        20
    Provision for insurance
     claims                        -         -         -         -        20
    General allowance
     increase in Canadian
     Personal and
     Commercial Banking
     (excluding VFC) and
     Wholesale Banking            46        77         -       178         -
    Settlement of TD
     Banknorth shareholder
     litigation                    -        39         -        39         -
    FDIC special assessment
     charge                       35         -         -        35         -
    -------------------------------------------------------------------------
    Total adjustments for
     items of note               321       421        89     1,112       270
    -------------------------------------------------------------------------
    Corporate segment net
     loss - adjusted           $(106)     $(80)     $(40)    $(345)     $(98)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Decomposition of items
     included in net loss -
     adjusted
    Net securitization           (15)       40        (6)       (8)      (20)
    Unallocated corporate
     expenses                    (96)      (69)      (77)     (225)     (185)
    Other                          5       (51)       43      (112)      107
    -------------------------------------------------------------------------
    Corporate segment net
     loss - adjusted           $(106)     $(80)     $(40)    $(345)     $(98)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    BALANCE SHEET REVIEW

    Year-to-date comparison - July 31, 2009 vs. October 31, 2008
    ------------------------------------------------------------
    

Total assets of the Bank were $545 billion as at July 31, 2009, $19 billion, or 3%, lower than at October 31, 2008. The net decrease reflected a $30 billion decrease in other assets and a $10 billion decrease in securities purchased under reverse repurchase agreements, partially offset by a $7 billion increase in securities and a $15 billion increase in loans (net of allowance for loan losses). Translation effect of the stronger Canadian dollar caused the value of assets to decrease by $15 billion since October 31, 2008. The impact of this decline along with lower balances in Wholesale Banking was partially offset by higher business volumes in the U.S. Personal and Commercial Banking and Canadian Personal and Commercial Banking segments.

Securities increased largely due to a $14 billion increase in AFS securities primarily related to growth in U.S. Personal and Commercial Banking due to reinvestment of balances previously invested in securities purchased under reverse repurchase agreements. Translation effect of the stronger Canadian dollar caused the value of securities to decrease by $5 billion.

Loans (net of allowance for loan losses) increased by $15 billion due to volume growth, primarily in the Canadian Personal and Commercial Banking and U.S. Personal and Commercial Banking segments. The increase was primarily due to a $10 billion increase in consumer instalment and other personal loans and a $6 billion increase in business and government loans in U.S. Personal and Commercial Banking.

Other assets declined by $30 billion primarily due to a $26 billion decrease in the market value of derivatives in Wholesale Banking resulting from movements in interest rates and cross currency swaps and lower volatility in currency and interest rate markets.

Total liabilities of the Bank were $507 billion as at July 31, 2009, $25 billion, or 5%, lower than at October 31, 2008. The net decrease was composed primarily of a $38 billion decrease in other liabilities, partially offset by a $13 billion increase in deposits. Translation effect of the stronger Canadian dollar caused the value of liabilities in U.S. Personal and Commercial Banking to decline by $14 billion.

Deposits increased $13 billion, or 3%, primarily due to a $25 billion increase in personal deposits, primarily driven by volume increases in the Canadian Personal and Commercial Banking and U.S. Personal and Commercial Banking segments which were partially offset by decreases in Wholesale Banking volumes, and a decrease of $12 billion related to the translation effect of the stronger Canadian dollar in U.S. Personal and Commercial Banking.

Other liabilities decreased $38 billion, or 27%, mainly due to an $11 billion decrease in obligations related to securities sold under repurchase agreements in Wholesale Banking, a $19 billion decrease in Wholesale Banking derivatives due to movements in interest rates and cross currency swaps, lower volatility in currency and interest rate markets, and a $6 billion decrease in obligations related to securities sold short.

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

CREDIT PORTFOLIO QUALITY

Gross impaired loans were $1,947 million at July 31, 2009, $790 million higher than at October 31, 2008, largely attributable to a $519 million increase in U.S. Personal and Commercial Banking (of which approximately $42 million was due to the translation effect of the stronger Canadian dollar), a $113 million increase in personal impaired loans in Canadian Personal and Commercial Banking, and a $124 million increase in Wholesale Banking.

Net impaired loans as at July 31, 2009, after deducting specific allowances, totalled $1,411 million, compared with $805 million as at October 31, 2008.

The allowance for credit losses of $2,253 million as at July 31, 2009 was composed of total specific allowances of $536 million and a general allowance of $1,717 million. Specific allowances increased $184 million from October 31, 2008. The total general allowance as at July 31, 2009 was up by $533 million, compared with October 31, 2008, mainly due to a $255 million increase in the general allowance for the Canadian Personal and Commercial Banking (excluding VFC) and Wholesale Banking segments, and increases related to U.S. Personal and Commercial Banking. The Bank establishes a general allowance 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 nine
                              For the three months ended        months ended
                           --------------------------------------------------
    (millions of             July 31   Oct. 30   July 31   July 31   July 31
     Canadian dollars)          2009      2008      2008      2009      2008
    -------------------------------------------------------------------------
    Balance at beginning
     of period                $1,875    $1,001      $909    $1,157      $569
    Impact due to reporting-
     period alignment of
     U.S. entities(1)              -         -         -        57         -
    Additions                    969       616       554     2,886     1,788
    Return to performing
     status, repaid or sold     (366)     (243)     (231)     (957)     (662)
    Write-offs                  (401)     (247)     (229)   (1,108)     (699)
    Foreign exchange and
     other adjustments          (130)       30        (2)      (88)        5
    -------------------------------------------------------------------------
    Balance at end of
     period                   $1,947    $1,157    $1,001    $1,947    $1,001
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Allowance for Credit Losses
    -------------------------------------------------------------------------
                                                                       As at
                                               ------------------------------
                                                 July 31   Oct. 31   July 31
    (millions of Canadian dollars)                  2009      2008      2008
    -------------------------------------------------------------------------
    Specific allowance - on-balance sheet loans     $536      $352      $292
    -------------------------------------------------------------------------
    General allowance for - on-balance sheet
                             loans                 1,443     1,184     1,155
                          - off-balance sheet
                             instruments(2)          274         -         -
    -------------------------------------------------------------------------
    Total general allowance                        1,717     1,184     1,155
    -------------------------------------------------------------------------
    Allowance for credit losses                   $2,253    $1,536    $1,447
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Impaired loans net of specific allowance      $1,411      $805      $709
    Net impaired loans as a percentage of
     net loans                                      0.6%      0.3%      0.3%
    Provision for credit losses as a
     percentage of net average loans
     (quarterly ratio)                             0.91%     0.49%     0.51%
    -------------------------------------------------------------------------
    (1) As a result of the reporting-period alignment of U.S. entities as
        described in the "How the Bank Reports" section, the impact on gross
        impaired loans for January 2009 comprised of additions to impaired
        loans of $153 million; return to performing status, repaid or sold of
        $66 million; write-offs of $35 million; and foreign exchange and
        other adjustments of $5 million.
    (2) Effective April 30, 2009, the allowance for credit losses for
        off-balance sheet instruments is recorded in other liabilities. Prior
        period balances have not been reclassified.
    

Non-Prime Loans

As at July 31, 2009, VFC had approximately $1.4 billion (October 31, 2008 - $1.2 billion) gross exposure to non-prime loans which mainly consist of automotive loans originated in Canada. The credit loss rate, which is an indicator of credit quality and is defined as the average PCL divided by the average month-end loan balance, was approximately 5.8% (October 31, 2008 - approximately 6.1%) on an annual basis. The portfolio continues to perform as expected. These loans are recorded at amortized cost.

    
    SECURITIES PORTFOLIO

    Exposure to Non-Agency Collateralized Mortgage Obligation (CMO)
    

As at July 31, 2009, the amortized cost of the non-agency CMOs held by the Bank was US$7.4 billion ($8.0 billion), compared with US$8.7 billion ($9.3 billion) as at October 31, 2008. These securities are collateralized primarily by Alt-A and Prime Jumbo mortgages most of which are prepayable, fixed-rate mortgages without rate reset features. At the acquisition date, this portfolio was recorded at fair value and classified as AFS securities. The fair value at acquisition became the new cost basis for these securities. See Note 31 to the 2008 Consolidated Financial Statements for more details. At the time of the acquisition and at the end of the third quarter of 2008, the CMO portfolio was recognized at fair value using broker quotes. The liquidity in the market for these securities has decreased since then and the market has become inactive. The trading volume for these securities has declined significantly relative to historical levels. There has been a significant widening of the bid-ask spread and there are only a small number of bidders for these securities in the market. Determination of whether a market is inactive requires judgment, and the above factors are indicators of an inactive market. In current markets, the broker quotes cannot be considered as a primary source of valuation. After the third quarter of 2008, the Bank fair valued these securities using a valuation technique which maximizes the use of observable inputs including broker quotes. The valuation technique uses assumptions a market participant would use in valuing these securities. The valuation model determines the fair value by discounting the expected cash flows using a risk-adjusted interest rate curve that incorporates a liquidity premium derived from various indices observable in the active market. The broker quotes for securities in the portfolio are another input to the valuation model. The contractual cash flows are adjusted for expected prepayments and credit losses to determine the expected cash flows.

During the second quarter of the current year, the Bank re-securitized a portion of the non-agency CMO securities portfolio. As part of the on-balance sheet re-securitization, new credit ratings were obtained for the re-securitized securities that better reflect the discount on acquisition and the Bank's risk inherent on the entire portfolio. As a result, 68% of the non-agency CMO securities are now rated AAA for regulatory capital reporting. The net capital benefit of the re-securitization transaction is reflected in the changes in RWA and in the securitization deductions from Tier 1 and Tier 2 capital. For accounting purposes, the Bank retained a majority of the beneficial interests in the re-securitized securities resulting in no financial statement impact. The Bank's assessment of an other-than-temporary impairment for these securities is not impacted by the change in the credit ratings.

The fair value of the portfolio as at July 31, 2009 was US$6.8 billion ($7.4 billion), compared with US$7.2 billion ($8.4 billion) as at October 31, 2008. The decline in fair value of the non-agency CMO portfolio was not considered to be an other-than-temporary impairment and therefore, an impairment loss was not recognized. Determination of whether an other-than-temporary impairment exists requires judgment. The decline in the fair value of these securities after acquisition was mainly due to the current liquidity crisis in the market. An other-than-temporary impairment is recognized for these securities when the fair value is significantly below the cost for a prolonged period of time with no expectation of recovery by maturity. The Bank continues to review the expected credit loss by assessing the inputs, such as the projected default rate, the loss given default rate and housing price decline used in the determination of the expected credit loss. The Bank's view on the expected credit loss on these securities determined on acquisition has not changed. The following table discloses the fair value of the securities by vintage year:

    
    Non-Agency Alt-A and Prime Jumbo CMO Securities by Vintage Year
    -------------------------------------------------------------------------
    (millions of
     U.S. dollars)
    -------------------------------------------------------------------------
                               Alt-A         Prime Jumbo               Total
    As at       -------------------------------------------------------------
     July 31,    Amortized      Fair Amortized      Fair Amortized      Fair
     2009             cost     value      cost     value      cost     value
    -------------------------------------------------------------------------
    2003              $379      $374      $654      $644    $1,033    $1,018
    2004               652       634       702       695     1,354     1,329
    2005               921       820     1,705     1,586     2,626     2,406
    2006               509       419       642       554     1,151       973
    2007               761       655       502       453     1,263     1,108
    -------------------------------------------------------------------------
    Total
     securities(1)  $3,222    $2,902    $4,205    $3,932    $7,427    $6,834
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

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

CAPITAL POSITION

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

    
    Regulatory Capital Position
    -------------------------------------------------------------------------
                                                                       As at
                                  -------------------------------------------
    (millions of Canadian           July 31,   Apr. 30,   Oct. 31,   July 31,
     dollars, except as noted)         2009       2009       2008       2008
    -------------------------------------------------------------------------
    Risk-weighted assets for:
      Credit risk                  $160,336   $167,836   $177,552   $152,326
      Market risk                     4,682      7,737      9,644      8,179
      Operational risk               24,727     24,172     24,554     24,169
    -------------------------------------------------------------------------
    Total risk-weighted assets     $189,745   $199,745   $211,750   $184,674
    -------------------------------------------------------------------------

    Tier 1 capital                  $21,219    $21,778    $20,679    $17,491
    Tier 1 capital ratio(1)           11.2%      10.9%       9.8%       9.5%
    Total capital(2)                $27,906    $28,216    $25,348    $24,702
    Total capital ratio(3)            14.7%      14.1%      12.0%      13.4%
    Assets-to-capital multiple(4)      16.6       17.1       19.3       17.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Tier 1 capital ratio is calculated as Tier 1 capital divided by RWA.
    (2) Total capital includes Tier 1 and Tier 2 capital.
    (3) Total capital ratio is calculated as Total capital divided by RWA.
    (4) The assets-to-capital multiple is calculated as total assets plus
        off-balance sheet credit instruments, such as certain letters of
        credit and guarantees, less investments in associated corporations,
        goodwill and net intangibles, divided by Total adjusted capital.
    

OSFI's target Tier 1 and Total capital ratios for Canadian banks are 7% and 10%, respectively. Effective November 1, 2008, substantial investments held before January 1, 2007, which were previously deducted from Tier 2 capital, are deducted 50% from Tier 1 capital and 50% from Tier 2 capital. Insurance subsidiaries continue to be deconsolidated and reported as a deduction from Tier 2 capital.

As at July 31, 2009, the Bank's Tier 1 capital ratio was 11.2%, compared with 9.8% as at October 31, 2008. The increase was primarily a result of capital issuances, including common shares, preferred shares and innovative Tier 1 capital securities and a decline in RWA, largely in Wholesale Banking, partially offset by the 50/50 deduction discussed above. The Total capital ratio was 14.7% as at July 31, 2009, compared with 12.0% as at October 31, 2008. The increase was largely due to lower RWA and capital issuances.

The Bank continues to maintain sufficient capital levels to ensure that flexibility is maintained to grow operations, both organically and through strategic acquisitions. The strong capital ratios are the result of the Bank's internal capital generation, management of the balance sheet and periodic issuance of capital securities.

For further details of equity and preferred share issuances, see Notes 5, 6 and 8 to the Interim Consolidated Financial Statements. For further details of regulatory capital, see Note 9 to the Interim Consolidated Financial Statements.

    
    MANAGING RISK

    EXECUTIVE SUMMARY
    

Financial services involve prudently taking risks to generate profitable growth. At the Bank, our goal is to earn a stable and sustainable rate of return for every dollar of risk we take, while putting significant emphasis on investing in our businesses to ensure we can meet our future growth objectives. Our businesses thoroughly examine the various risks to which they are exposed and assess the impact and likelihood of those risks. We respond by developing business and risk management strategies for our various business units, taking into consideration the risks and business environment in which we operate. Through our businesses and operations, we are exposed to a broad number of risks that have been identified and defined in our Enterprise Risk Framework. This framework outlines appropriate risk oversight processes and the consistent communication and reporting of key risks that could hinder the achievement of our business objectives and strategies. Our risk governance structure and risk management approach have not substantially changed from that described in our 2008 Annual Report. Certain risks have been outlined below. For a complete discussion of our risk governance structure and our risk management approach, refer to "Managing Risk" on pages 66 to 79 of the Bank's 2008 Annual Report.

Certain sections of this MD&A represent a discussion relating to credit, market and liquidity risks and form an integral part of the Interim Consolidated Financial Statements for the period ended July 31, 2009. These sections, which are included non-continuously below, are shaded on pages 21 to 23 of the fully formatted version of this third quarter 2009 Report to Shareholders, which can be found on the Bank's website at www.td.com/investor/qr_2009.jsp.

CREDIT RISK

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

    
    Credit Risk Exposures(1) - Standardized and AIRB Approaches
    -------------------------------------------------------------------------
                           As at July 31, 2009           As at Oct. 31, 2008
    (millions of ------------------------------------------------------------
     Canadian    Standard-                     Standard-
     dollars)       ized(2)     AIRB     Total    ized(2)     AIRB     Total
    -------------------------------------------------------------------------
    Retail
      Residential
       secured     $10,239  $141,934  $152,173    $7,733  $134,930  $142,663
      Qualifying
       revolving
       retail            -    40,715    40,715         -    41,461    41,461
      Other retail  16,133    22,992    39,125    15,386    20,415    35,801
    -------------------------------------------------------------------------
    Total retail    26,372   205,641   232,013    23,119   196,806   219,925
    -------------------------------------------------------------------------
    Non-retail
      Corporate     45,426    98,807   144,233    44,991   113,119   158,110
      Sovereign      1,725    50,516    52,241       305    57,856    58,161
      Bank          16,145    77,098    93,243     8,302    91,635    99,937
    -------------------------------------------------------------------------
    Total
     non-retail     63,296   226,421   289,717    53,598   262,610   316,208
    -------------------------------------------------------------------------
    Gross
     credit risk
     exposures     $89,668  $432,062  $521,730   $76,717  $459,416  $536,133
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Gross credit risk exposures represent exposure at default and are
        before the effects of credit risk mitigation. This table excludes
        securitization and equity exposures.
    (2) Beginning the first quarter of 2009, credit risk exposures from the
        Commerce acquisition are reported using the Standardized approach,
        previously reported within the Standardized approach using the
        Interim Approach to Reporting.
    

MARKET RISK

A graph that discloses daily Value-at-Risk (VaR) usage and trading-related income(1) within the Wholesale Banking segment is included on page 21 of the fully formatted version of this third quarter 2009 Report to Shareholders, which can be found on the Bank's website at www.td.com/investor/qr_2009.jsp. For the quarter ended July 31, 2009 trading-related income was positive for 84.8% of the trading days. Losses in the quarter did not exceed VaR on any trading day.

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

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


    Value-at-Risk Usage
    -------------------------------------------------------------------------
                                                  For the three months ended
                         ----------------------------------------------------
                                                   July 31  Apr. 30  July 31
                                                      2009     2009     2008
    (millions of         ----------------------------------------------------
     Canadian dollars)    As at  Average     High      Low  Average  Average
    -------------------------------------------------------------------------
    Interest rate and
     credit spread risk    $9.7    $14.3    $22.0     $8.3    $25.2    $25.6
    Equity risk             6.4      8.3     13.8      4.8      8.2     13.4
    Foreign exchange
     risk                   4.7      3.3      6.0      1.2      5.2      3.8
    Commodity risk          0.5      0.9      1.5      0.5      0.9      1.5
    Debt specific risk     17.0     21.9     30.4     13.9     39.4     35.1
    Diversification
     effect(1)            (19.4)   (23.4)   n/m(2)   n/m(2)   (32.1)   (33.0)
    -------------------------------------------------------------------------
    Total Value-at-Risk   $18.9    $25.3    $34.7    $18.2    $46.8    $46.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------
                            For the nine
                            months ended
                        -----------------
                        July 31  July 31
                           2009     2008
    (millions of        -----------------
     Canadian dollars)  Average  Average
    -------------------------------------
    Interest rate and
     credit spread risk   $23.5    $22.6
    Equity risk             9.8      9.7
    Foreign exchange
     risk                   4.2      2.9
    Commodity risk          0.9      1.4
    Debt specific risk     36.6     28.5
    Diversification
     effect(1)            (31.2)   (27.6)
    -------------------------------------
    Total Value-at-Risk   $43.8    $37.5
    -------------------------------------
    -------------------------------------
    (1) The aggregate VaR is less than the sum of the VaR of the different
        risk types due to risk offsets resulting from portfolio
        diversification.
    (2) Not meaningful. It is not meaningful to compute a diversification
        effect because the high and low may occur on different days for
        different risk types.
    

Interest Rate Risk

A graph that shows our interest rate risk exposure (as measured by Economic Value at Risk, or EVaR) on all non-trading assets, liabilities and derivative instruments used for interest rate risk management instruments is included on page 22 of the fully formatted version of this third quarter 2009 Report to Shareholders, which can be found on the Bank's website at www.td.com/investor/qr_2009.jsp.

The Bank uses derivative financial instruments, wholesale instruments and other capital market alternatives and, less frequently, product pricing strategies to manage interest rate risk. As at July 31, 2009, an immediate and sustained 100 bps increase in interest rates would have decreased the economic value of shareholders' equity by $107.6 million after tax. An immediate and sustained 100 bps decrease in interest rates would have reduced the economic value of shareholders' equity by $141.9 million after tax.

The following table shows the sensitivity of the economic value of shareholders' equity (after tax) by currency for those currencies where the Bank has material exposure.

    
    Sensitivity of After-tax Economic Value at Risk by Currency
    -------------------------------------------------------------------------
                               As at               As at               As at
                       July 31, 2009       Oct. 31, 2008       July 31, 2008
    (millions of  -----------------------------------------------------------
     Canadian      100 bps   100 bps   100 bps   100 bps   100 bps   100 bps
     dollars)     increase  decrease  increase  decrease  increase  decrease
    -------------------------------------------------------------------------
    Canadian dollar $(16.7)   $(76.3)    $(0.4)   $(27.0)    $(7.8)   $(21.6)
    U.S. dollar      (90.9)    (65.6)   (122.4)     (2.0)    (58.7)    (67.1)
    -------------------------------------------------------------------------
    

LIQUIDITY RISK

As a financial organization, we must always ensure that we have access to enough readily-available funds to cover our financial obligations as they come due, and to sustain and grow our assets and operations under both normal and stress conditions. In the event of a funding disruption, we need to ensure we have sufficient liquid assets to continue to function. The process that ensures adequate access to funds is known as the management of liquidity risk.

Our overall liquidity requirement is defined as the amount of liquidity we need to fund expected cash outflows, as well as a prudent liquidity reserve to fund potential cash outflows in the event of a disruption in the capital markets or other event that could affect our access to liquidity. We do not rely on short-term wholesale funding for purposes other than funding marketable securities or short-term assets.

To define the amount of liquidity that must be held at all times for a specified minimum period, we use a conservative base-case scenario stress test. This scenario ensures that we have sufficient liquidity to cover 100% of our unsecured wholesale debt coming due, potential retail and commercial deposit run-off and forecasted operational requirements. In addition, we provide for coverage of Bank-sponsored funding programs, such as Bankers' Acceptances we issue on behalf of clients, and Bank-sponsored asset-backed commercial paper (ABCP). We also use an extended liquidity coverage test to ensure that we can fund our operations on a fully secured basis for a period up to one year.

To meet liquidity requirements, we hold assets that can be readily converted into cash. Assets must be currently marketable, of sufficient credit quality and available for sale to be considered readily convertible into cash. Liquid assets are represented in a cumulative liquidity gap framework based on settlement timing and market depth. Assets that are not available without delay because they are needed for collateral or other similar purposes are not considered readily convertible into cash.

While each of our major operations has responsibility for the measurement and management of its own liquidity risks, we also manage liquidity on an enterprise-wide basis to ensure consistent and efficient management of liquidity risk across all of our operations. On July 31, 2009, our consolidated surplus liquid-asset position for up to 90 days, as measured under our base-case scenario, was $3.9 billion, compared with a surplus liquid-asset position of $3.7 billion on April 30, 2009. Our surplus liquid-asset position is our total liquid assets less our unsecured wholesale funding requirements, potential non-wholesale deposit run-off and contingent liabilities coming due in 90 days.

The base-case scenario models a Bank-specific liquidity stress event and assumes normal levels of asset liquidity in the markets. In response to conditions experienced in global financial markets in September, 2008 which significantly affected liquidity, the Asset/Liability Committee (ALCO) and the Risk Committee of the Board approved managing to a Systemic Market Event liquidity stress test scenario as directed by the Global Liquidity Risk Management policy. Building on the base-case scenario, the Systemic Market Event scenario further adjusts asset liquidity to reflect both the stressed market conditions as well as the availability of high quality, unencumbered Bank-owned assets eligible as collateral under secured borrowing programs such as the Bank of Canada Term Purchase and Resale Agreement (PRA) and National Housing Act Mortgage-Backed Securities (NHA MBS) auction programs and other central bank programs. In addition, we assume coverage of increased contingent requirements for potential draws on committed line of credit facilities. Our policy requires that a surplus liquid-asset position be maintained for all measured time periods up to 90 days. As of July 31, 2009, we continued to manage the Systematic Market Event scenario and reported a positive surplus as required.

We have contingency plans in place to provide direction in the event of a liquidity crisis.

We also regularly review the level of increased collateral our trading counterparties would require in the event of a downgrade of the Bank's credit rating. The impact of a one notch downgrade would be minimal and could be readily managed in the normal course of business.

In response to current conditions in global financial markets affecting liquidity, the Global Liquidity Forum meets frequently and closely monitors global funding market conditions and potential impacts to our funding access on a daily basis.

OFF-BALANCE SHEET ARRANGEMENTS

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

Securitization of Bank-Originated Assets

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

    
    Exposure Securitized by the Bank as an Originator(1),(2)
    -------------------------------------------------------------------------
                                                         As at July 31, 2009
                                      ---------------------------------------
                                             Significant         Significant
                                          unconsolidated      unconsolidated
                                                   QSPEs                SPEs
                                      ---------------------------------------
                                                Carrying            Carrying
                                        Secur-  value of    Secur-  value of
                                        itized  retained    itized  retained
    (millions of Canadian dollars)      assets interests    assets interests
    -------------------------------------------------------------------------
    Residential mortgage loans              $-        $-   $36,873    $1,081
    Personal loans                       7,363       107         -         -
    Commercial mortgage loans              125         3         -         -
    -------------------------------------------------------------------------
    Total exposure                      $7,488      $110   $36,873    $1,081
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

Residential Mortgage Loans

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

Personal Loans

The Bank securitizes personal loans through QSPEs, as well as single-seller conduits via QSPEs. As at July 31, 2009, the single-seller conduits had $5.1 billion (October 31, 2008 - $5.1 billion) of commercial paper outstanding while another Bank-sponsored QSPE had $3.0 billion (October 31, 2008 - $3.0 billion) of term notes outstanding. While the probability of loss is negligible, as at July 31, 2009, the Bank's maximum potential exposure to loss for these conduits through the sole provision of liquidity facilities was $5.1 billion (October 31, 2008 - $5.1 billion) of which $1.1 billion (October 31, 2008 - $1.1 billion) of underlying personal loans was government insured. Additionally, the Bank had retained interests of $107 million (October 31, 2008 - $80 million) relating to excess spread.

Commercial Mortgage Loans

As at July 31, 2009, the Bank's maximum potential exposure to loss was $2.6 million (October 31, 2008 - $4 million) through retained interests in the excess spread and cash collateral account of the QSPE.

Securitization of Third Party-Originated Assets

The Bank administers multi-seller conduits and provides liquidity facilities as well as securities distribution services; it may also provide credit enhancements. Third party-originated assets are securitized through Bank-sponsored SPEs, which are not consolidated by the Bank. The Bank's maximum potential exposure to loss due to its ownership interest in commercial paper and through the provision of global style liquidity facilities for multi-seller conduits was $8.6 billion (October 31, 2008 - $10.7 billion) as at July 31, 2009. Further, the Bank has committed an additional $1.2 billion (October 31, 2008 - $1.8 billion) in liquidity facilities for ABCP that could potentially be issued by the conduits. As at July 31, 2009, the Bank also provided deal-specific credit enhancement in the amount of $238 million (October 31, 2008 - $78 million).

All third-party assets securitized by the Bank were originated in Canada and sold to Canadian securitization structures. Details of the Bank-administered multi-seller, ABCP conduits are as follows:

    
    Exposure to Third Party-Originated Assets Securitized by Bank-Sponsored
    Conduits
    -------------------------------------------------------------------------
                                                         As at July 31, 2009
                                  -------------------------------------------
                                                Ratings profile of  Expected
                                   Significant     SPE asset class  weighted-
                                      unconsol- -------------------  average
                                        idated              AA+ to      life
    (millions of Canadian dollars)        SPEs       AAA       AA- (years)(1)
    -------------------------------------------------------------------------
    Residential mortgage loans          $2,631    $2,601       $30       2.5
    Credit card loans                      500       500         -       2.9
    Automobile loans and leases          3,237     3,237         -       1.4
    Equipment loans and leases             436       436         -       1.2
    Trade receivables                    1,748     1,748         -       2.7
    -------------------------------------------------------------------------
    Total exposure                      $8,552    $8,522       $30       2.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

As at July 31, 2009, the Bank held $0.8 billion (October 31, 2008 - $2.8 billion) of ABCP, issued by Bank-sponsored multi-seller and single-seller conduits, on its balance sheet.

Exposure to Third Party-Sponsored Conduits

The Bank has exposure to U.S. third party-sponsored conduits arising from providing liquidity facilities of $214 million (October 31, 2008 - $465 million) of which $156 million (October 31, 2008 - $24 million) has been drawn. The assets within these conduits primarily comprise automotive-related financing assets, including loans and leases. During the three months ended July 31, 2009 and subsequently, these assets have received significantly different ratings (split ratings) from various credit rating agencies, ranging from AAA to BB-. The weighted average of the lowest of the split ratings, if the facilities are drawn, will result in credit exposure to the Bank of BBB+ (October 31, 2008 - AAA).

The Bank's exposure to Canadian third party-sponsored conduits in the form of margin funding facilities as at July 31, 2009 was not significant.

    
    Other Investment and Financing Products

    Other Financing Transactions
    

The Bank enters into transactions with major U.S. corporate clients through VIEs to provide them with cost efficient financing. Under these transactions, as at July 31, 2009, the Bank provided approximately $2.0 billion (October 31, 2008 - $2.1 billion) in financing to these VIEs. The Bank has received guarantees from or has recourse to major U.S. banks with A+ credit ratings on an S&P-equivalent basis, fully covering its investments in these VIEs (October 31, 2008 - AA). At inception or through recent restructuring of the transactions, the counterparties posted collateral with AAA ratings on an S&P-equivalent basis in favour of the Bank and the Bank purchased credit protection to further reduce its exposure to the U.S. banks. At July 31, 2009, the Bank's net exposure to the U.S. banks after taking into account collateral and CDS was approximately $385 million (October 31, 2008 - $960 million). As at July 31, 2009, the Bank's maximum total exposure to loss before considering guarantees, recourse, collateral and CDS was approximately $2.0 billion (October 31, 2008 - $2.1 billion). The transactions provide the Bank or the counterparties discretion to exit the transactions on short notice. As at July 31, 2009, these VIEs had assets totalling more than $10.4 billion (October 31, 2008 - $10.6 billion).

Exposure to Collateralized Debt Obligations

Since the decision was made in 2005 to exit the structured products business, the Bank no longer originates Collateralized Debt Obligation vehicles (CDOs). Total CDOs purchased and sold in the trading portfolio as at July 31, 2009, were as follows:

    
    Collateralized Debt Obligations(1)
    -------------------------------------------------------------------------
                                                   As at               As at
                                           July 31, 2009       Oct. 31, 2008
                                     ----------------------------------------
                                                Positive            Positive
                                               (negative)          (negative)
                                      Notional      fair  Notional      fair
    (millions of Canadian dollars)      amount     value    amount     value
    -------------------------------------------------------------------------
    Funded
      Purchased protection via Bank-
       issued credit linked notes         $231      $(47)     $283      $(38)
    Unfunded
      Sold protection
        - positive fair value              840         -       891         -
        - negative fair value                -      (212)        -      (278)
      Purchased protection
        - positive fair value              170        70       261       104
        - negative fair value                -        (4)        -       (28)
    Unfunded - Similar Reference Portfolio
      Sold protection
        - positive fair value                -         -     1,820         5
        - negative fair value                -         -         -      (568)
      Purchased protection
        - positive fair value                -         -     1,883       613
        - negative fair value                -         -         -        (5)
    -------------------------------------------------------------------------
    (1) This table excludes standard index tranche CDOs.
    

The Bank does not have any exposure to U.S. subprime mortgages via the CDOs. The CDOs are referenced to corporate debt securities. The hedges on the similar reference portfolio are not entered into with monoline insurers; rather they are entered into with global financial institutions, such as universal banks or broker-dealers. All exposures are managed with risk limits that have been approved by the Bank's risk management group and are hedged with various financial instruments, including credit derivatives and bonds within the trading portfolio, not included in this table. Counterparty exposure on hedges is collateralized under Credit Support Agreements (CSAs) and netting arrangements, consistent with other over-the-counter (OTC) derivative contracts. The Bank's CDO positions are fair valued using valuation techniques with significant non-observable market inputs. The potential effect of using reasonable possible alternative assumptions for valuing these CDO positions would range from a reduction in the fair value by $10 million to an increase in the fair value by $10 million.

Leveraged Finance Credit Commitments

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

    
    QUARTERLY RESULTS

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


    Quarterly Results
    -------------------------------------------------------------------------
                                                  For the three months ended
                                    -----------------------------------------
                                                              2009      2008
                                    -----------------------------------------
    (millions of Canadian dollars)     July 31   Apr. 30   Jan. 31   Oct. 31
    -------------------------------------------------------------------------
    Net interest income                 $2,833    $2,940    $2,728    $2,449
    Non-interest income                  1,834     1,385     1,422     1,191
    -------------------------------------------------------------------------
    Total revenue                        4,667     4,325     4,150     3,640
    Provision for credit losses            557       656       537       288
    Non-interest expenses                3,045     3,051     3,020     2,367
    Provision for (recovery of)
     income taxes                          209        35       (58)       20
    Non-controlling interests in
     subsidiaries, net of income taxes      28        28        28        18
    Equity in net income of an
     associated company, net of income
     taxes                                  84        63        89        67
    -------------------------------------------------------------------------
    Net income - reported                  912       618       712     1,014
    -------------------------------------------------------------------------
    Adjustments for items of note, net
     of income taxes:
      Amortization of intangibles          122       127       127       126
      Reversal of Enron litigation
       reserve                               -         -         -      (323)
      Decrease (increase) in fair
       value of derivatives hedging
       the reclassified
       available-for-sale debt
       securities portfolio                 43       134       200      (118)
      Gain relating to restructuring
       of Visa                               -         -         -         -
      Restructuring and integration
       charges relating to the
       Commerce acquisition                 70        50        67        25
      Decrease (increase) in fair
       value of credit default swaps
       hedging the corporate loan
       book, net of provision for
       credit losses                        75        44       (12)      (59)
      Other tax items                        -         -         -         -
      Provision for insurance claims         -         -         -         -
      General allowance increase
       (release) in Canadian Personal
       and Commercial Banking
       (excluding VFC) and Wholesale
       Banking                              46        77        55         -
      Settlement of TD Banknorth
       shareholder litigation                -        39         -         -
      FDIC special assessment charge        35         -         -         -
    -------------------------------------------------------------------------
    Total adjustments for items of
     note                                  391       471       437      (349)
    -------------------------------------------------------------------------
    Net income - adjusted                1,303     1,089     1,149       665
    Preferred dividends                     49        41        29        23
    -------------------------------------------------------------------------
    Net income available to common
     shareholders - adjusted            $1,254    $1,048    $1,120      $642
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (Canadian dollars, except as
     noted)
    -------------------------------------------------------------------------
    Basic earnings per share
      - reported                         $1.01     $0.68     $0.82     $1.23
      - adjusted                          1.47      1.23      1.35      0.79
    Diluted earnings per share
      - reported                          1.01      0.68      0.82      1.22
      - adjusted                          1.47      1.23      1.34      0.79
    Return on common shareholders'
     equity                               9.8%      6.6%      8.1%     13.3%
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                  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
    Non-interest 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 (recovery of)
     income taxes                          122       160       235       153
    Non-controlling interests in
     subsidiaries, net of income taxes       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
    -------------------------------------------------------------------------
    Adjustments for items of note, net
     of income taxes:
      Amortization of intangibles          111        92        75        99
      Reversal of Enron litigation
       reserve                               -         -         -         -
      Decrease (increase) in fair
       value of derivatives hedging
       the reclassified
       available-for-sale debt
       securities portfolio                  -         -         -         -
      Gain relating to restructuring
       of Visa                               -         -         -      (135)
      Restructuring and integration
       charges relating to the
       Commerce acquisition                 15        30         -         -
      Decrease (increase) 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         -
      General allowance increase
       (release) in Canadian Personal
       and Commercial Banking
       (excluding VFC) and Wholesale
       Banking                               -         -         -       (39)
      Settlement of TD Banknorth
       shareholder litigation                -         -         -         -
      FDIC special assessment charge         -         -         -         -
    Total adjustments for items of
     note                                  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, except as
     noted)
    -------------------------------------------------------------------------
    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%
    -------------------------------------------------------------------------
    Certain comparative amounts have been reclassified to conform to the
    current period's presentation.
    

ACCOUNTING POLICIES AND ESTIMATES

The Bank's unaudited Interim Consolidated Financial Statements, presented on pages 29 to 46 of this Report to Shareholders, have been prepared in accordance with GAAP. These Interim Consolidated Financial Statements should be read in conjunction with the Bank's Consolidated Financial Statements for the year ended October 31, 2008. The accounting policies used in the preparation of these Consolidated Financial Statements are consistent with those used in the Bank's 2008 Consolidated Financial Statements, except as described below.

Changes in Accounting Policies

Alignment of Reporting Period of U.S. Entities

Effective the quarter ended April 30, 2009, the reporting periods of TD Banknorth and Commerce have been aligned with the reporting period of the Bank to eliminate the one month lag in financial reporting. Previously, the reporting periods of TD Banknorth and Commerce were included in the Bank's financial statements on a one month lag. In accordance with Canadian Institute of Chartered Accountant's (CICA) Handbook Section 1506, Accounting Changes, this alignment is considered a change in accounting policy. The Bank has assessed that the impact to the prior period Consolidated Financial Statements is not material and therefore, an adjustment was made to opening retained earnings of the second quarter this year to align the reporting periods of TD Banknorth and Commerce to that of the Bank's reporting period. Accordingly, the results of TD Banknorth and Commerce for the nine months ended July 31, 2009 have been included with the results of the Bank for the nine months ended July 31, 2009, while the results of January 2009 have been included directly in retained earnings and not in the Interim Consolidated Statement of Income.

Subsequent Accounting for Impaired Financial Assets

On April 29, 2009, the Bank adopted an amendment to CICA Handbook Section 3855, Financial Instruments - Recognition and Measurement (Section 3855). The amendment clarified that, subsequent to the recognition of an impairment loss on a financial asset (other than a loan), interest income on the impaired financial asset is recognized using the rate of interest used to determine the impairment loss. The adoption of this amendment did not have a material impact on the financial position or earnings of the Bank.

Goodwill, Intangible Assets and Financial Statement Concepts

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

Credit Risk and Fair Value

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

Critical Accounting Estimates

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

Future Changes in Accounting Policies

Financial Instruments Disclosures

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

Assessment of Embedded Derivatives upon Reclassification

During the third quarter of fiscal 2009, the AcSB amended Section 3855 to clarify that, upon reclassification of a financial instrument out of the trading category, an assessment of whether an embedded derivative is required to be bifurcated must be completed. In addition, the amendment prohibits the reclassification of a financial instrument out of trading when the derivative embedded in the financial instrument cannot be separately measured from the host contract. The amendment is applicable to all reclassifications occurring after July 1, 2009. It did not have a material impact on the financial position or earnings of the Bank.

Impairment of Financial Assets

On August 20, 2009, the AcSB amended Section 3855 and CICA Handbook Section 3025, Impaired Loans (Section 3025). The amendments changed the definition of a loan such that certain debt securities may be classified as loans if they do not have a quoted price in an active market and the Bank does not have the intent to sell the security immediately or in the near term. As a result, debt securities classified as loans will be assessed for impairment using the incurred credit loss model of Section 3025 to reduce the carrying value of a loan to its estimated realizable amount. Loan impairment accounting requirements are also applied to held-to-maturity financial assets as a result of the amendments. Debt securities that are classified as AFS continue to be written down to their fair value through the Consolidated Statement of Income when the impairment is considered to be other-than-temporary. However, the impairment loss can be reversed if the fair value subsequently increases and the increase can be objectively related to an event occurring after the impairment loss was recognized. The amendments will be adopted by the Bank in the fourth quarter of fiscal 2009. The Bank is assessing the impact of adoption of the amendments on the financial position and earnings of the Bank.

Conversion to International Financial Reporting Standards

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

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

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

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

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


    INTERIM CONSOLIDATED BALANCE SHEET (unaudited)
    -------------------------------------------------------------------------
                                                                       As at
                                                         --------------------
                                                           July 31   Oct. 31
    (millions of Canadian dollars)                            2009      2008
    -------------------------------------------------------------------------
    ASSETS
    Cash and due from banks                                 $2,477    $2,517
    Interest-bearing deposits with banks                    15,482    15,429
    -------------------------------------------------------------------------
                                                            17,959    17,946
    -------------------------------------------------------------------------
    Securities
    Trading (Note 15)                                       49,756    59,497
    Available-for-sale (Note 2)                             88,914    75,121
    Held-to-maturity                                        12,223     9,507
    -------------------------------------------------------------------------
                                                           150,893   144,125
    -------------------------------------------------------------------------
    Securities purchased under reverse repurchase
     agreements                                             32,414    42,425
    -------------------------------------------------------------------------
    Loans
    Residential mortgages                                   61,843    57,596
    Consumer instalment and other personal                  90,067    79,610
    Credit card                                              7,863     7,387
    Business and government (Note 15)                       76,556    76,567
    -------------------------------------------------------------------------
                                                           236,329   221,160
    Allowance for loan losses (Note 3)                      (1,979)   (1,536)
    -------------------------------------------------------------------------
    Loans, net of allowance for loan losses                234,350   219,624
    -------------------------------------------------------------------------
    Other
    Customers' liability under acceptances                   9,743    11,040
    Investment in TD Ameritrade                              5,865     5,159
    Derivatives                                             57,374    83,548
    Goodwill                                                14,951    14,842
    Other intangibles                                        2,678     3,141
    Land, buildings and equipment                            3,887     3,833
    Other assets                                            14,476    17,531
    -------------------------------------------------------------------------
                                                           108,974   139,094
    -------------------------------------------------------------------------
    Total assets                                          $544,590  $563,214
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LIABILITIES
    Deposits
    Personal                                              $216,900  $192,234
    Banks                                                    6,171     9,680
    Business and government                                124,503   129,086
    Trading                                                 40,904    44,694
    -------------------------------------------------------------------------
                                                           388,478   375,694
    -------------------------------------------------------------------------
    Other
    Acceptances                                              9,743    11,040
    Obligations related to securities sold short            12,439    18,518
    Obligations related to securities sold under
     repurchase agreements                                   7,413    18,654
    Derivatives                                             55,536    74,473
    Other liabilities                                       17,764    17,721
    -------------------------------------------------------------------------
                                                           102,895   140,406
    -------------------------------------------------------------------------
    Subordinated notes and debentures                       12,419    12,436
    -------------------------------------------------------------------------
    Liability for preferred shares (Note 5)                    550       550
    -------------------------------------------------------------------------
    Liability for capital trust securities (Note 6)            899       894
    -------------------------------------------------------------------------
    Non-controlling interests in subsidiaries (Note 7)       1,561     1,560
    -------------------------------------------------------------------------
    SHAREHOLDERS' EQUITY
    Common shares (millions of shares issued and
     outstanding: July 31, 2009 - 854.1 and Oct. 31,
     2008 - 810.1) (Note 8)                                 15,073    13,241
    Preferred shares (millions of shares issued and
     outstanding: July 31, 2009 - 135.8 and Oct. 31, 2008 -
     75.0) (Note 8)                                          3,395     1,875
    Contributed surplus                                        339       350
    Retained earnings                                       18,383    17,857
    Accumulated other comprehensive income (loss) (Note 10)    598    (1,649)
    -------------------------------------------------------------------------
                                                            37,788    31,674
    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity            $544,590  $563,214
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    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
                                     ----------------------------------------
    (millions of Canadian dollars,     July 31   July 31   July 31   July 31
     except as noted)                     2009      2008      2009      2008
    -------------------------------------------------------------------------
    Interest income
    Loans                               $2,694    $3,410    $8,684   $10,046
    Securities
      Dividends                            184       259       688       761
      Interest                           1,096     1,267     3,849     3,171
    Deposits with banks                    538       194     1,394       467
    -------------------------------------------------------------------------
                                         4,512     5,130    14,615    14,445
    -------------------------------------------------------------------------
    Interest expense
    Deposits                             1,221     2,068     4,692     6,378
    Subordinated notes and debentures      168       165       503       482
    Preferred shares and capital trust
     securities                             23        24        70        70
    Other                                  267       436       849     1,432
    -------------------------------------------------------------------------
                                         1,679     2,693     6,114     8,362
    -------------------------------------------------------------------------
    Net interest income                  2,833     2,437     8,501     6,083
    -------------------------------------------------------------------------
    Non-interest income
    Investment and securities services     572       591     1,621     1,714
    Credit fees                            150       121       454       330
    Net securities gains (losses)          (90)       14      (463)      276
    Trading income (loss)                  338      (196)      470      (140)
    Service charges                        368       356     1,122       874
    Loan securitizations (Note 4)           92        77       333       244
    Card services                          197       175       541       410
    Insurance, net of claims               253       243       711       679
    Trust fees                              35        36       108       106
    Other income (loss) (Note 15)          (81)      183      (256)      453
    -------------------------------------------------------------------------
                                         1,834     1,600     4,641     4,946
    -------------------------------------------------------------------------
    Total revenue                        4,667     4,037    13,142    11,029
    -------------------------------------------------------------------------
    Provision for credit losses (Note 3)   557       288     1,750       775
    -------------------------------------------------------------------------
    Non-interest expenses
    Salaries and employee benefits       1,436     1,342     4,387     3,650
    Occupancy, including depreciation      299       279       920       648
    Equipment, including depreciation      227       188       651       480
    Amortization of other intangibles      158       166       502       405
    Restructuring costs (Note 16)            -         -        27        48
    Marketing and business development     127       131       408       343
    Brokerage-related fees                  73        64       204       186
    Professional and advisory services     200       135       540       364
    Communications                          60        54       181       149
    Other (Note 17)                        465       342     1,296       862
    -------------------------------------------------------------------------
                                         3,045     2,701     9,116     7,135
    -------------------------------------------------------------------------
    Income before income taxes,
     non-controlling interests in
     subsidiaries and equity in net
     income of an associated company     1,065     1,048     2,276     3,119
    Provision for income taxes             209       122       186       517
    Non-controlling interests in
     subsidiaries, net of income taxes      28         8        84        25
    Equity in net income of an
     associated company, net of income
     taxes                                  84        79       236       242
    -------------------------------------------------------------------------
    Net income                             912       997     2,242     2,819
    Preferred dividends                     49        17       119        36
    -------------------------------------------------------------------------
    Net income available to common
     shareholders                         $863      $980    $2,123    $2,783
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average number of common shares
     outstanding (millions) (Note 13)
      Basic                              851.5     804.0     844.3     756.8
      Diluted                            855.4     811.0     846.5     763.2
    Earnings per share (Canadian dollars)
     (Note 13)
      Basic                              $1.01     $1.22     $2.51     $3.68
      Diluted                             1.01      1.21      2.51      3.65
    Dividends per share (Canadian
     dollars)                             0.61      0.59      1.83      1.75
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    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)        2009      2008      2009      2008
    -------------------------------------------------------------------------
    Common shares (Note 8)
    Balance at beginning of period     $14,875   $12,818   $13,241    $6,577
    Proceeds from shares issued on
     exercise of stock options              90       129       135       200
    Shares issued as a result of
     dividend reinvestment plan            116       142       324       185
    Proceeds from issuance of new
     shares                                  -         -     1,381         -
    Shares issued on acquisition of
     Commerce                                -         -         -     6,147
    Impact of shares sold (acquired)
     for trading purposes(1)                (8)        1        (8)      (19)
    -------------------------------------------------------------------------
    Balance at end of period            15,073    13,090    15,073    13,090
    -------------------------------------------------------------------------
    Preferred shares (Note 8)
    Balance at beginning of period       3,395     1,125     1,875       425
    Shares issued                            -       500     1,520     1,200
    -------------------------------------------------------------------------
    Balance at end of period             3,395     1,625     3,395     1,625
    -------------------------------------------------------------------------
    Contributed surplus
    Balance at beginning of period         350       383       350       119
    Stock options (Note 11)                (11)      (28)      (11)      (27)
    Conversion of Commerce stock
     options on acquisition                  -         -         -       263
    -------------------------------------------------------------------------
    Balance at end of period               339       355       339       355
    -------------------------------------------------------------------------
    Retained earnings
    Balance at beginning of period      18,039    16,864    17,857    15,954
    Net income of U.S. entities for
     January 2009 (Note 1)                   -         -         4         -
    Net income                             912       997     2,242     2,819
    Common dividends                      (519)     (475)   (1,553)   (1,358)
    Preferred dividends                    (49)      (17)     (119)      (36)
    Share issue expenses                     -        (7)      (48)      (17)
    -------------------------------------------------------------------------
    Balance at end of period            18,383    17,362    18,383    17,362
    -------------------------------------------------------------------------
    Accumulated other comprehensive
     income (loss) (Note 10)
    Balance at beginning of period       2,968      (595)   (1,649)   (1,671)
    Other comprehensive income of U.S.
     entities for January 2009 (Note 1)      -         -       329         -
    Other comprehensive income (loss)
     for the period                     (2,370)     (544)    1,918       532
    -------------------------------------------------------------------------
    Balance at end of period               598    (1,139)      598    (1,139)
    -------------------------------------------------------------------------
    Retained earnings and accumulated
     other comprehensive income         18,981    16,223    18,981    16,223
    -------------------------------------------------------------------------
    Total shareholders' equity         $37,788   $31,293   $37,788   $31,293
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Sold or purchased by subsidiaries of the Bank, which are regulated
        securities entities in accordance with Regulation 92-313 under the
        Bank Act.



    INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (unaudited)
    -------------------------------------------------------------------------
                                           For the three        For the nine
                                            months ended        months ended
                                     ----------------------------------------
                                       July 31   July 31   July 31   July 31
    (millions of Canadian dollars)        2009      2008      2009      2008
    -------------------------------------------------------------------------
    Net income                            $912      $997    $2,242    $2,819
    -------------------------------------------------------------------------
    Other comprehensive income (loss),
     net of income taxes
    Change in unrealized gains (losses)
     on available-for-sale securities,
     net of hedging activities(a)        1,178      (272)      845       (80)
    Reclassification to earnings of
     net losses (gains) in respect of
     available-for-sale securities(b)       45       (17)      212       (58)
    Net change in unrealized foreign
     currency translation gains (losses)
     on investments in subsidiaries,
     net of hedging activities(c),(d)   (2,576)     (231)      353         8
    Change in net gains (losses) on
     derivative instruments designated
     as cash flow hedges(e)               (661)       41     1,403       764
    Reclassification to earnings of
     net gains on cash flow hedges(f)     (356)      (65)     (895)     (102)
    -------------------------------------------------------------------------
    Total other comprehensive income
     (loss) for the period              (2,370)     (544)    1,918       532
    -------------------------------------------------------------------------
    Comprehensive income (loss) for
     the period                        $(1,458)     $453    $4,160    $3,351
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (a) Net of income tax provision of $576 million and $339 million,
        respectively, for the three and nine months ended July 31, 2009
        (three and nine months ended July 31, 2008 - income tax recovery of
        $153 million and $83 million, respectively).
    (b) Net of income tax recovery of $61 million and $133 million,
        respectively, for the three and nine months ended July 31, 2009
        (three and nine months ended July 31, 2008 - income tax provision of
        $4 million and $21 million, respectively).
    (c) Net of income tax provision of $537 million and $662 million,
        respectively, for the three and nine months ended July 31, 2009
        (three and nine months ended July 31, 2008 - income tax recovery of
        $97 million and $392 million, respectively).
    (d) Includes $1,297 million and $1,406 million, respectively, of after-
        tax gains arising from hedges of the Bank's investment in foreign
        operations for the three and nine months ended July 31, 2009 (three
        and nine months ended July 31, 2008 - after-tax losses of
        $215 million and $887 million, respectively).
    (e) Net of income tax recovery of $267 million and net of income tax
        provision of $676 million, respectively, for the three and nine
        months ended July 31, 2009 (three and nine months ended July 31, 2008
        - income tax provision of $10 million and $328 million,
        respectively).
    (f) Net of income tax provision of $165 million and $398 million,
        respectively, for the three and nine months ended July 31, 2009
        (three and nine months ended July 31, 2008 - income tax provision of
        $29 million and $45 million, respectively).

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

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



    INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
    -------------------------------------------------------------------------
                                           For the three        For the nine
                                            months ended        months ended
                                     ----------------------------------------
                                       July 31   July 31   July 31   July 31
    (millions of Canadian dollars)        2009      2008      2009      2008
    -------------------------------------------------------------------------
    Cash flows from (used in)
     operating activities
    Net income                            $912      $997    $2,242    $2,819
    Adjustments to determine net cash
     flows from (used in) operating
     activities:
      Provision for credit losses          557       288     1,750       775
      Restructuring costs (Note 16)          -         -        27        48
      Depreciation                         156       135       434       302
      Amortization of other intangibles    158       166       502       405
      Stock options                          8         5        25        16
      Net securities losses (gains)         90       (14)      463      (276)
      Net gain on securitizations
       (Note 4)                            (53)      (24)     (234)      (85)
      Equity in net income of an
       associated company                  (84)      (79)     (236)     (242)
      Non-controlling interests             28         8        84        25
      Future income taxes                  (32)     (338)       40      (317)
    Changes in operating assets and
     liabilities:
      Current income taxes payable         943      (450)    2,129    (1,962)
      Interest receivable and payable     (139)      (18)       76      (132)
      Trading securities                10,208     9,420     9,607    10,092
      Derivative assets                 17,002      (852)   25,951    (2,255)
      Derivative liabilities           (13,381)     (666)  (18,753)   (1,749)
      Other                             (3,226)    1,671       531       267
    -------------------------------------------------------------------------
    Net cash from operating activities  13,147    10,249    24,638     7,731
    -------------------------------------------------------------------------
    Cash flows from (used in) financing
     activities
    Change in deposits                 (13,477)    4,695    11,763    30,554
    Change in securities sold under
     repurchase agreements               2,468       208   (11,519)   (1,516)
    Change in securities sold short     (1,363)      947    (6,079)      298
    Issue of subordinated notes and
     debentures                              -     1,025         -     4,025
    Repayment of subordinated notes
     and debentures                          -         -       (18)        -
    Liability for preferred shares and
     capital trust securities               (1)       20         5        (1)
    Translation adjustment on
     subordinated notes and debentures
     issued in a foreign currency and
     other                                 (50)      (13)       (3)        4
    Common shares issued for cash, net
     of expenses                             -         -     1,356         -
    Common shares issued on exercise of
     stock options                          71        96        99       157
    Common shares sold (acquired) for
     trading purposes                       (8)        1        (8)      (19)
    Dividends paid in cash on
     common shares                        (403)     (333)   (1,229)   (1,173)
    Net proceeds from issuance of
     preferred shares                        -       493     1,497     1,183
    Dividends paid on preferred shares     (49)      (17)     (119)      (36)
    -------------------------------------------------------------------------
    Net cash from (used in) financing
     activities                        (12,812)    7,122    (4,255)   33,476
    -------------------------------------------------------------------------
    Cash flows from (used in) investing
     activities
    Interest-bearing deposits with
     banks                              (4,677)    3,154    (2,692)    2,301
    Activity in available-for-sale and
     held-to-maturity securities:
      Purchases                        (20,301)  (37,956)  (80,051)  (76,940)
      Proceeds from maturities          20,666    13,642    41,954    20,339
      Proceeds from sales               10,063    16,851    26,299    48,540
    Activity in lending activities:
      Origination and acquisitions     (36,283)  (42,383) (120,749) (111,999)
      Proceeds from maturities          24,876    28,917    83,554    80,265
      Proceeds from sales                  147       372       366       825
      Proceeds from loan
       securitizations (Note 4)          6,048     1,395    20,906     4,809
    Land, buildings and equipment          123      (107)     (463)     (250)
    Securities purchased under reverse
     repurchase agreements                (805)   (1,071)   10,809    (6,490)
    Acquisitions and dispositions less
     cash and cash equivalents acquired
     (Note 18)                               -         -         -    (1,759)
    -------------------------------------------------------------------------
    Net cash used in investing
     activities                           (143)  (17,186)  (20,067)  (40,359)
    -------------------------------------------------------------------------
    Effect of exchange rate changes on
     cash and cash equivalents            (152)       14      (167)       81
    -------------------------------------------------------------------------
    Net increase in cash and cash
     equivalents                            40       199       149       929
    Impact due to reporting-period
     alignment of U.S. entities (Note 1)     -         -      (189)        -
    Cash and cash equivalents at
     beginning of period                 2,437     2,520     2,517     1,790
    -------------------------------------------------------------------------
    Cash and cash equivalents at end
     of period, represented by cash
     and due from banks                 $2,477    $2,719    $2,477    $2,719
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Supplementary disclosure of cash
     flow information
    Amount of interest paid during the
     period                             $2,022    $2,886    $7,165    $8,486
    Amount of income taxes paid
     (refunded) during the period          (90)      413      (968)    1,945
    -------------------------------------------------------------------------
    Certain comparative amounts have been reclassified to conform to the
    current period's presentation.

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



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


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

    BASIS OF PRESENTATION

    These Interim Consolidated Financial Statements have been prepared in
    accordance with Canadian generally accepted accounting principles (GAAP)
    and follow the same accounting policies and methods of application as the
    Bank's audited Consolidated Financial Statements for the year ended
    October 31, 2008 (2008 Consolidated Financial Statements), except as
    described in this Note. Under GAAP, additional disclosures are required
    in the annual financial statements and accordingly, these Interim
    Consolidated Financial Statements should be read in conjunction with the
    2008 Consolidated Financial Statements and the accompanying notes
    included on pages 88 to 135 of the Bank's 2008 Annual Report and the
    shaded sections of the 2008 Management's Discussion and Analysis (MD&A)
    included on pages 68 to 76 of the Bank's 2008 Annual Report. Certain
    disclosures are included in the MD&A as permitted by GAAP and as
    discussed on pages 21 to 23 of the MD&A in this report. These disclosures
    are shaded in the MD&A and form an integral part of the Interim
    Consolidated Financial Statements. The Interim Consolidated Financial
    Statements include all adjustments which are, in the opinion of
    management, necessary for a fair presentation of the results for the
    periods presented. Note that certain comparative amounts have been
    reclassified to conform to the current period's presentation.

    CHANGES IN ACCOUNTING POLICIES

    Alignment of Reporting Period of U.S. Entities

    Effective the quarter ended April 30, 2009, the reporting periods of
    TD Banknorth Inc. (TD Banknorth) and Commerce Bancorp, Inc. (Commerce)
    have been aligned with the reporting period of the Bank to eliminate the
    one month lag in financial reporting. Previously, the reporting periods
    of TD Banknorth and Commerce were included in the Bank's financial
    statements on a one month lag. In accordance with Canadian Institute of
    Chartered Accountant's (CICA) Handbook Section 1506, Accounting Changes,
    this alignment is considered a change in accounting policy. The Bank has
    assessed that the impact to the prior period Consolidated Financial
    Statements is not material and therefore, an adjustment was made to
    opening retained earnings of the second quarter this year to align the
    reporting periods of TD Banknorth and Commerce to that of the Bank's
    reporting period. Accordingly, the results of TD Banknorth and Commerce
    for the nine months ended July 31, 2009 have been included with the
    results of the Bank for the nine months ended July 31, 2009, while the
    results of January 2009 have been included directly in retained earnings
    and not in the Interim Consolidated Statement of Income.

    Subsequent Accounting for Impaired Financial Assets

    On April 29, 2009, the Bank adopted an amendment to CICA Handbook Section
    3855, Financial Instruments - Recognition and Measurement (Section 3855).
    The amendment clarified that, subsequent to the recognition of an
    impairment loss on a financial asset (other than a loan), interest income
    on the impaired financial asset is recognized using the rate of interest
    used to determine the impairment loss. The adoption of this amendment did
    not have a material impact on the financial position or earnings of the
    Bank.

    Goodwill, Intangible Assets and Financial Statement Concepts

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

    Credit Risk and Fair Value

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

    FUTURE CHANGES IN ACCOUNTING POLICIES

    Financial Instruments Disclosures

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

    Assessment of Embedded Derivatives upon Reclassification

    During the third quarter of fiscal 2009, the AcSB amended Section 3855 to
    clarify that, upon reclassification of a financial instrument out of the
    trading category, an assessment of whether an embedded derivative is
    required to be bifurcated must be completed. In addition, the amendment
    prohibits the reclassification of a financial instrument out of trading
    when the derivative embedded in the financial instrument cannot be
    separately measured from the host contract. The amendment is applicable
    to all reclassifications occurring after July 1, 2009. It did not have a
    material impact on the financial position or earnings of the Bank.

    Impairment of Financial Assets

    On August 20, 2009, the AcSB amended Section 3855 and CICA Handbook
    Section 3025, Impaired Loans (Section 3025). The amendments changed the
    definition of a loan such that certain debt securities may be classified
    as loans if they do not have a quoted price in an active market and the
    Bank does not have the intent to sell the security immediately or in the
    near term. As a result, debt securities classified as loans will be
    assessed for impairment using the incurred credit loss model of Section
    3025 to reduce the carrying value of a loan to its estimated realizable
    amount. Loan impairment accounting requirements are also applied to held-
    to-maturity financial assets as a result of the amendments. Debt
    securities that are classified as available-for-sale (AFS) continue to be
    written down to their fair value through the Consolidated Statement of
    Income when the impairment is considered to be other-than-temporary.
    However, the impairment loss can be reversed if the fair value
    subsequently increases and the increase can be objectively related to an
    event occurring after the impairment loss was recognized. The amendments
    will be adopted by the Bank in the fourth quarter of fiscal 2009. The
    Bank is assessing the impact of adoption of the amendments on the
    financial position and earnings of the Bank.

    Conversion to International Financial Reporting Standards

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

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


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

    Impairment of Available-for-Sale Securities

    AFS securities are written down to fair value through net income whenever
    it is necessary to reflect other-than-temporary impairment. For the three
    and nine months ended July 31, 2009, the Bank recognized impairment
    losses on AFS securities that were deemed to be other-than-temporary of
    $22 million and $333 million, respectively. These losses were primarily
    related to Wholesale Banking.

    Reclassification of Certain Debt Securities

    The Bank changed its trading strategy with respect to certain trading
    debt securities and reclassified these debt securities from trading to
    the AFS category effective August 1, 2008 in accordance with the
    Amendments to CICA Handbook Section 3855, Financial Instruments -
    Recognition and Measurement and CICA Handbook Section 3862, Financial
    Instruments - Disclosure. This change was made as a result of
    deterioration in markets and severe dislocation in the credit market and
    is described in more detail in Notes 1 and 2 to the 2008 Consolidated
    Financial Statements.

    On August 1, 2008, the fair value of debt securities reclassified from
    trading to AFS was $6,979 million. In addition, on the date of
    reclassification, these debt securities had a weighted-average effective
    interest rate of 6.99% with expected recoverable cash flows, on an
    undiscounted basis, of $9,732 million. The fair value of the reclassified
    debt securities was $6,193 million as at July 31, 2009 (October 31, 2008
    - $7,355 million). During the three and nine months ended July 31, 2009,
    net interest income of $86 million and $300 million after tax,
    respectively (three months ended October 31, 2008 - $110 million after
    tax), was recorded relating to the reclassified debt securities. For the
    three and nine months ended July 31, 2009, the respective increase in
    fair value of $316 million and $486 million after tax (three months ended
    October 31, 2008 - decrease of $561 million after tax) for these
    securities was recorded in other comprehensive income. Had the Bank not
    reclassified these debt securities, the change in the fair value of these
    debt securities would have been included as part of trading income, the
    impact of which would have resulted in an increase of net income of $316
    million and $486 million after tax, respectively, for the three and nine
    months ended July 31, 2009 (three months ended October 31, 2008 -
    reduction of $561 million after tax). Included in the impairment losses
    on AFS securities disclosed above, $3 million and $88 million, for the
    three and nine months ended July 31, 2009, respectively (three months
    ended October 31, 2008 - nil), related to debt securities in the
    reclassified portfolio. These losses were primarily offset by gains on
    credit protection held which were recorded in other income. For the three
    and nine months ended July 31, 2008, the Bank recognized the change in
    the fair value of these debt securities in its trading income.


    Unrealized Gains and Losses on Available-for-Sale Securities
    -------------------------------------------------------------------------
                                                                       As at
                                     ----------------------------------------
                                                               July 31, 2009
                                     ----------------------------------------
                                                   Gross     Gross
                                          Cost/   unreal-   unreal-
                                     amortized      ized      ized      Fair
    (millions of Canadian dollars)        cost     gains    losses     value
    -------------------------------------------------------------------------
    Government and government-
     related securities securities
    Canadian government debt
      Federal                          $10,618       $10        $-   $10,628
      Provinces                            342         9         -       351
    U.S. Federal, state and
     municipal governments
     and agencies debt                  15,291       188        47    15,432
    Other OECD government-
     guaranteed debt                    10,373        23         -    10,396
    Mortgage-backed securities          22,007     1,017       451    22,573
    -------------------------------------------------------------------------
                                        58,631     1,247       498    59,380
    -------------------------------------------------------------------------
    Other debt securities
    Asset-backed securities             10,115         7        74    10,048
    Non-agency collateralized
     mortgage obligation portfolio       8,002       662     1,301     7,363
    Corporate and other debt             3,664       327        42     3,949
    -------------------------------------------------------------------------
                                        21,781       996     1,417    21,360
    -------------------------------------------------------------------------
    Bonds reclassified
     from trading(1)                     6,285       161       253     6,193
    -------------------------------------------------------------------------
    Equity securities(2)
    Preferred shares                       375        37        30       382
    Common shares                        1,571       308        84     1,795
    -------------------------------------------------------------------------
                                         1,946       345       114     2,177
    -------------------------------------------------------------------------
    Total                              $88,643    $2,749    $2,282   $89,110
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total carrying value                                             $88,914
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                                       As at
                                     ----------------------------------------
                                                               Oct. 31, 2008
                                     ----------------------------------------
                                                   Gross     Gross
                                          Cost/   unreal-   unreal-
                                     amortized      ized      ized      Fair
    (millions of Canadian dollars)        cost     gains    losses     value
    -------------------------------------------------------------------------
    Government and government-
     related securities securities
    Canadian government debt
      Federal                          $10,363       $14        $2   $10,375
      Provinces                            231         3         1       233
    U.S. Federal, state and
     municipal governments
     and agencies debt                   5,295        12       149     5,158
    Other OECD government-
     guaranteed debt                        22         -         -        22
    Mortgage-backed securities          29,118       401       728    28,791
    -------------------------------------------------------------------------
                                        45,029       430       880    44,579
    -------------------------------------------------------------------------
    Other debt securities
    Asset-backed securities              9,178         1       290     8,889
    Non-agency collateralized
     mortgage obligation portfolio       9,329        11       905     8,435
    Corporate and other debt             2,601         1        40     2,562
    -------------------------------------------------------------------------
                                        21,108        13     1,235    19,886
    -------------------------------------------------------------------------
    Bonds reclassified
     from trading(1)                     8,219     2,154     3,018     7,355
    -------------------------------------------------------------------------
    Equity securities(2)
    Preferred shares                       452        70        22       500
    Common shares                        2,791       540       244     3,087
    -------------------------------------------------------------------------
                                         3,243       610       266     3,587
    -------------------------------------------------------------------------
    Total                              $77,599    $3,207    $5,399   $75,407
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total carrying value                                             $75,121
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Includes fair value of government and government-insured securities
        of $36 million (October 31, 2008 - $41 million) and other debt
        securities of $6,157 million (October 31, 2008 - $7,314 million).
    (2) Equity securities in the AFS portfolio with a carrying value of
        $2,237 million (October 31, 2008 - $1,496 million) do not have quoted
        market prices and are carried at cost. The fair value of these equity
        securities was $2,433 million (October 31, 2008 - $1,782 million) and
        is included in the table above.


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

    The Bank maintains an allowance it considers adequate to absorb all
    credit-related losses in a portfolio of instruments that are both on and
    off the Interim Consolidated Balance Sheet. The allowance for loan
    losses, which includes allowance for deposits with banks, mortgages,
    acceptances and loans other than loans designated as trading under the
    fair value option, is deducted from loans on the Interim Consolidated
    Balance Sheet. The allowance for credit losses for off-balance sheet
    instruments, which relates to certain guarantees, letters of credit and
    undrawn lines of credit, is recorded in other liabilities. The change in
    the Bank's allowance for credit losses for the nine months ended July 31
    is shown in the following table.


    Allowance for Credit Losses
    -------------------------------------------------------------------------
                                                                       As at
                 ------------------------------------------------------------
                                 July 31, 2009                 July 31, 2008
                 ------------------------------------------------------------
    (millions of
     Canadian     Specific   General            Specific   General
     dollars)    allowance allowance     Total allowance allowance     Total
    -------------------------------------------------------------------------
    Allowance for
     credit losses
     at beginning
     of year          $352    $1,184    $1,536      $203    $1,092    $1,295
    Impact due to
     reporting-period
     alignment of
     U.S. entities(1)   22        29        51         -         -         -
    Provision for
     credit losses   1,197       553     1,750       676        99       775
    Write-offs      (1,108)        -    (1,108)     (699)        -      (699)
    Recoveries          77         -        77        95         -        95
    Foreign exchange
     and other
     adjustments(2)     (4)      (49)      (53)       17       (36)      (19)
    -------------------------------------------------------------------------
    Allowance for
     credit losses at
     end of period    $536    $1,717    $2,253      $292    $1,155    $1,447
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Consisting of:
    Allowance for
     loan losses(3)   $536    $1,443    $1,979      $292    $1,155    $1,447
    Allowance for
     credit losses
     for off-balance
     sheet
     instruments(3)      -       274       274         -         -         -
    -------------------------------------------------------------------------
    Allowance for
     credit losses at
     end of period    $536    $1,717    $2,253      $292    $1,155    $1,447
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) The impact due to alignment of reporting period of U.S. entities
        consists of the following: provision for credit losses - $80 million;
        write-offs - $35 million; recoveries - nil; and other - $6 million.
    (2) Includes foreign exchange rate changes, net of losses on loan sales.
    (3) Effective April 30, 2009, the allowance for credit losses for
        off-balance sheet instruments is recorded in other liabilities. Prior
        period balances have not been reclassified.

    Loans Past Due but not Impaired

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

    The table below represents loans that are past due but not impaired. With
    the exception of U.S. Personal and Commercial Banking, these amounts
    exclude loans that fall within the allowed grace period. U.S Personal and
    Commercial Banking may grant a grace period of up to 15 days. There were
    $2.0 billion as at July 31, 2009 (October 31, 2008 - $2.6 billion) of
    U.S. Personal and Commercial Banking loans that were past due up to 15
    days and are included in the 1-30 days category in the table below.


    Loans Past Due but not Impaired
    -------------------------------------------------------------------------
                                                                       As at
                                                               July 31, 2009
                                      ---------------------------------------
                                          1-30     31-60     61-89
    (millions of Canadian dollars)        days      days      days     Total
    -------------------------------------------------------------------------
    Residential mortgages                 $851      $376       $80    $1,307
    Consumer instalment and
     other personal                      3,219       543       138     3,900
    Credit card                            351        77        48       476
    Business and government              2,115       403       181     2,699
    -------------------------------------------------------------------------
    Total                               $6,536    $1,399      $447    $8,382
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                                       As at
                                                               Oct. 31, 2008
                                     ----------------------------------------
                                          1-30     31-60     61-89
    (millions of Canadian dollars)        days      days      days     Total
    -------------------------------------------------------------------------
    Residential mortgages                 $807      $357       $63    $1,227
    Consumer instalment and
     other personal                      3,234       570       131     3,935
    Credit card                            381        75        41       497
    Business and government              2,729       256        80     3,065
    -------------------------------------------------------------------------
    Total                               $7,151    $1,258      $315    $8,724
    -------------------------------------------------------------------------


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

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


    Securitization Activity
    -------------------------------------------------------------------------
    (millions of
     Canadian dollars)                                         July 31, 2009
    -------------------------------------------------------------------------
                     Residential                Credit Commercial
    For the three       mortgage   Personal       card   mortgage
     months ended          loans      loans      loans      loans      Total
    -------------------------------------------------------------------------
    Gross proceeds        $6,785       $784         $-         $-     $7,569
    Retained interests       280          6          -          -        286
    Cash flows received
     on retained
     interests               167         16          -          1        184
    -------------------------------------------------------------------------

    For the nine
     months ended
    -------------------------------------------------------------------------
    Gross proceeds       $21,643     $2,507         $-         $-    $24,150
    Retained interests       846          8          -          -        854
    Cash flows received
     on retained
     interests               338         54          -          2        394
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    (millions of
     Canadian dollars)                                          July 31, 2008
    -------------------------------------------------------------------------
                     Residential                Credit Commercial
    For the three       mortgage   Personal       card   mortgage
     months ended          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 nine
     months ended
    -------------------------------------------------------------------------
    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
    -------------------------------------------------------------------------

    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
    -------------------------------------------------------------------------
    (millions of
     Canadian dollars)                                         July 31, 2009
    -------------------------------------------------------------------------
                     Residential                Credit Commercial
    For the three       mortgage   Personal       card   mortgage
     months ended          loans      loans      loans      loans      Total
    -------------------------------------------------------------------------
    Gain on sale             $48         $5         $-         $-        $53
    Income on retained
     interests(1)             34          5          -          -         39
    -------------------------------------------------------------------------
    Total                    $82        $10         $-         $-        $92
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    For the nine
     months ended
    -------------------------------------------------------------------------
    Gain on sale            $227         $7         $-         $-       $234
    Income on retained
     interests(1)             84         15          -          -         99
    -------------------------------------------------------------------------
    Total                   $311        $22         $-         $-       $333
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    (millions of
     Canadian dollars)                                         July 31, 2008
    -------------------------------------------------------------------------
                     Residential                Credit Commercial
    For the three       mortgage   Personal       card   mortgage
     months ended          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 nine
     months ended
    -------------------------------------------------------------------------
    Gain on sale             $36        $37        $12         $-        $85
    Income on retained
     interests(1)             69         14         76          -        159
    -------------------------------------------------------------------------
    Total                   $105        $51        $88         $-       $244
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Income on retained interests excludes income arising from changes in
        fair values. Unrealized gains and losses on retained interests
        arising from changes in fair value are recorded in trading income.

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


    Key Assumptions
    -------------------------------------------------------------------------
                                                                        2009
                                   ------------------------------------------
                                   Residential              Credit Commercial
                                      mortgage  Personal      card  mortgage
                                         loans     loans     loans     loans
    -------------------------------------------------------------------------
    Prepayment rate(1)                   18.7%      5.2%       n/a      5.2%
    Excess spread(2)                       1.3       0.4       n/a       1.0
    Discount rate                          3.2       3.3       n/a       5.9
    Expected credit losses(3)                -         -       n/a       0.1
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                                        2008
                                   ------------------------------------------
                                   Residential              Credit Commercial
                                      mortgage  Personal      card  mortgage
                                         loans     loans     loans     loans
    -------------------------------------------------------------------------
    Prepayment rate(1)                   18.5%      6.0%     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
    -------------------------------------------------------------------------
    (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, 2009, there were maturities of
    previously securitized loans and receivables of $1,521 million (three
    months ended July 31, 2008 - $2,277 million). Proceeds from new
    securitizations were $6,048 million for the three months ended July 31,
    2009 (three months ended July 31, 2008 - $1,395 million). During the nine
    months ended July 31, 2009, there were maturities of previously
    securitized loans and receivables of $3,244 million (nine months ended
    July 31, 2008 - $7,121 million). Proceeds from new securitizations were
    $20,906 million for the nine months ended July 31, 2009 (nine months
    ended July 31, 2008 - $4,809 million).


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

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


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


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

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


    Capital Trust Securities
    -------------------------------------------------------------------------
                                                                       As at
                                                         --------------------
                                                           July 31,  Oct. 31,
    (millions of Canadian dollars)                            2009      2008
    -------------------------------------------------------------------------
    Trust units issued by TD Capital Trust
     (thousands of units)
      900 Capital Trust Securities - Series 2009(1)           $899      $894
    Trust units issued by TD Capital Trust II(2)
     (thousands of units)
      350 TD Capital Trust II Securities - Series 2012-1       350       350
    Trust units issued by TD Capital Trust III
     (thousands of units)
      1,000 TD Capital Trust III Securities - Series 2008(3)   987       990
    Debt issued by TD Capital Trust IV(2)
     (thousands of units)
      550 TD Capital Trust IV Notes - Series 1                 550         -
      450 TD Capital Trust IV Notes - Series 2                 450         -
    -------------------------------------------------------------------------
    (1) Included in Liability for Capital Trust Securities on the Interim
        Consolidated Balance Sheet.
    (2) Trust II and Trust IV are variable interest entities. As the Bank is
        not the primary beneficiary of the trusts, the Bank does not
        consolidate them. The senior deposit notes that were issued to Trust
        II and Trust IV are reflected in deposits on the Interim Consolidated
        Balance Sheet.
    (3) Included in non-controlling interests in subsidiaries on the Interim
        Consolidated Balance Sheet. See Note 7.

    TD Capital IV Notes

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

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

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

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


    Note 7: NON-CONTROLLING INTERESTS IN SUBSIDIARIES
    -------------------------------------------------------------------------
                                                                       As at
                                                         --------------------
                                                           July 31,  Oct. 31,
    (millions of Canadian dollars)                            2009      2008
    -------------------------------------------------------------------------
    REIT preferred stock, Series A                            $530      $523
    TD Capital Trust III Securities - Series 2008              987       990
    Other                                                       44        47
    -------------------------------------------------------------------------
    Total non-controlling interests in subsidiaries         $1,561    $1,560
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

    Shares Issued and Outstanding
    -------------------------------------------------------------------------
                                                                       As at
                                    -----------------------------------------
                                           July 31, 2009       Oct. 31, 2008
                                    -----------------------------------------
    (millions of shares and          Number of           Number of
     millions of Canadian dollars)      shares    Amount    shares    Amount
    -------------------------------------------------------------------------
    Common shares:
    Balance at beginning of year         810.1   $13,241     717.8    $6,577
    Issued on exercise of stock options    2.6       135       4.6       255
    Issued as a result of
     dividend reinvestment plan            6.8       324       4.6       274
    Issued for cash                       34.9     1,381         -         -
    Issued on the acquisition
     of Commerce                             -         -      83.3     6,147
    Impact of shares acquired
     for trading purposes(1)              (0.3)       (8)     (0.2)      (12)
    -------------------------------------------------------------------------
    Balance at end of period -
     common shares                       854.1   $15,073     810.1   $13,241
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Preferred shares (Class A):
    Series O                              17.0      $425      17.0      $425
    Series P                              10.0       250      10.0       250
    Series Q                               8.0       200       8.0       200
    Series R                              10.0       250      10.0       250
    Series S                              10.0       250      10.0       250
    Series Y                              10.0       250      10.0       250
    Series AA                             10.0       250      10.0       250
    Series AC                              8.8       220         -         -
    Series AE                             12.0       300         -         -
    Series AG                             15.0       375         -         -
    Series AI                             11.0       275         -         -
    Series AK                             14.0       350         -         -
    -------------------------------------------------------------------------
    Balance at end of period -
     preferred shares                    135.8    $3,395      75.0    $1,875
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Purchased by subsidiaries of the Bank, which are regulated securities
        entities in accordance with Regulation 92-313 under the Bank Act.

    COMMON SHARES

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

    PREFERRED SHARES

    5-Year Rate Reset Preferred Shares, Series AC

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

    5-Year Rate Reset Preferred Shares, Series AE

    On January 14, 2009, the Bank issued 12 million non-cumulative 5-Year
    Rate Reset Preferred Shares, Series AE for gross cash consideration of
    $300 million. Quarterly non-cumulative cash dividends, if declared, will
    be paid at a per annum rate of 6.25% for the initial period from and
    including January 14, 2009 to but excluding April 30, 2014. Thereafter,
    the dividend rate will reset every five years to equal the then five year
    Government of Canada bond yield plus 4.37%. Holders of the Series AE
    shares will have the right to convert their shares into non-cumulative
    Floating Rate Class A Preferred Shares, Series AF, subject to certain
    conditions, on April 30, 2014, and on April 30 every five years
    thereafter and vice versa. The Series AE shares are redeemable by the
    Bank for cash, subject to regulatory consent, at $25.00 per share on
    April 30, 2014 and on April 30 every five years thereafter. The Series
    AE shares qualify as Tier 1 capital of the Bank.

    5-Year Rate Reset Preferred Shares, Series AG

    On January 30, 2009, the Bank issued 15 million non-cumulative 5-Year
    Rate Reset Preferred Shares, Series AG for gross cash consideration of
    $375 million. Quarterly non-cumulative cash dividends, if declared, will
    be paid at a per annum rate of 6.25% for the initial period from and
    including January 30, 2009 to but excluding April 30, 2014. Thereafter,
    the dividend rate will reset every five years to equal the then five year
    Government of Canada bond yield plus 4.38%. Holders of the Series AG
    shares will have the right to convert their shares into non-cumulative
    Floating Rate Class A Preferred Shares, Series AH, subject to certain
    conditions, on April 30, 2014, and on April 30 every five years
    thereafter and vice versa. The Series AG shares are redeemable by the
    Bank for cash, subject to regulatory consent, at $25.00 per share on
    April 30, 2014 and on April 30 every five years thereafter. The Series AG
    shares qualify as Tier 1 capital of the Bank.

    5-Year Rate Reset Preferred Shares, Series AI

    On March 6, 2009, the Bank issued 11 million non-cumulative 5-Year Rate
    Reset Preferred Shares, Series AI for gross cash consideration of
    $275 million. Quarterly non-cumulative cash dividends, if declared, will
    be paid at a per annum rate of 6.25% for the initial period from and
    including March 6, 2009 to but excluding July 31, 2014. Thereafter, the
    dividend rate will reset every five years to equal the then five year
    Government of Canada bond yield plus 4.15%. Holders of the Series AI
    shares will have the right to convert their shares into non-cumulative
    Floating Rate Class A Preferred Shares, Series AJ, subject to certain
    conditions, on July 31, 2014, and on July 31 every five years thereafter
    and vice versa. The Series AI shares are redeemable by the Bank for cash,
    subject to regulatory consent, at $25.00 per share on July 31, 2014 and
    on July 31 every five years thereafter. The Series AI shares qualify as
    Tier 1 capital of the Bank.

    5-Year Rate Reset Preferred Shares, Series AK

    On April 3, 2009, the Bank issued 14 million non-cumulative 5-Year Rate
    Reset Preferred Shares, Series AK for gross cash consideration of
    $350 million. Quarterly non-cumulative cash dividends, if declared, will
    be paid at a per annum rate of 6.25% for the initial period from and
    including April 3, 2009 to but excluding July 31, 2014. Thereafter, the
    dividend rate will reset every five years to equal the then five year
    Government of Canada bond yield plus 4.33%. Holders of the Series AK
    shares will have the right to convert their shares into non-cumulative
    Floating Rate Class A Preferred Shares, Series AL, subject to certain
    conditions, on July 31, 2014, and on July 31 every five years thereafter
    and vice versa. The Series AK shares are redeemable by the Bank for cash,
    subject to regulatory consent, at $25.00 per share on July 31, 2014 and
    on July 31 every five years thereafter. The Series AK shares qualify as
    Tier 1 capital of the Bank.


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

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

    During the nine months ended July 31, 2009, the Bank complied with the
    OSFI guideline related to capital ratios and the assets-to-capital
    multiple. This guideline is based on the "International Convergence of
    Capital Measurement and Capital Standards - A Revised Framework"
    (Basel II) issued by the Basel Committee on Banking Supervision.
    Effective November 1, 2008, substantial investments held prior to
    January 1, 2007, which were previously deducted from Tier 2 capital, are
    deducted 50% from Tier 1 capital and 50% from Tier 2 capital. Insurance
    subsidiaries continue to be deconsolidated and reported as a deduction
    from Tier 2 capital.

    The Bank's regulatory capital position was as follows:


    Regulatory Capital Position
    -------------------------------------------------------------------------
                                                                       As at
                                                         --------------------
                                                           July 31,  Oct. 31,
    (millions of Canadian dollars)                            2009      2008
    -------------------------------------------------------------------------
    Tier 1 capital                                         $21,219   $20,679
    Tier 1 capital ratio(1)                                  11.2%      9.8%
    Total capital(2)                                       $27,906   $25,348
    Total capital ratio(3)                                   14.7%     12.0%
    Assets-to-capital multiple(4)                             16.6      19.3
    -------------------------------------------------------------------------
    (1) Tier 1 capital ratio is calculated as Tier 1 capital divided by
        risk-weighted assets (RWA).
    (2) Total capital includes Tier 1 and Tier 2 capital.
    (3) Total capital ratio is calculated as Total capital divided by RWA.
    (4) The assets-to-capital multiple is calculated as total assets plus
        off-balance sheet credit instruments, such as certain letters of
        credit and guarantees, less investments in associated corporations,
        goodwill and net intangibles, divided by Total adjusted capital.

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


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

    The following table summarizes the Bank's accumulated other comprehensive
    income (loss), net of income taxes, as at July 31:


    Accumulated Other Comprehensive Income (Loss), Net of Income Taxes
    -------------------------------------------------------------------------
                                                                       As at
                                                         --------------------
                                                           July 31,  Oct. 31,
    (millions of Canadian dollars)                          2009(1)     2008
    -------------------------------------------------------------------------
    Net unrealized loss on available-for-sale securities,
     net of hedging activities                               $(153)  $(1,409)
    Net unrealized foreign currency translation
     loss on investments in subsidiaries, net of
     hedging activities                                     (1,114)   (1,633)
    Net gain on derivatives designated
     as cash flow hedges                                     1,865     1,393
    -------------------------------------------------------------------------
    Accumulated other comprehensive income (loss)
     balance as at end of period                              $598   $(1,649)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) This includes the impact of other comprehensive income of U.S.
        entities for January 2009, as explained in Note 1, and consists of
        the following: unrealized gains on AFS securities, net of hedging
        activities - $199 million; unrealized foreign currency translation
        gains on investments in subsidiaries, net of hedging activities -
        $166 million; and losses on derivatives designated as cash flow
        hedges - $36 million.


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

    For the three and nine months ended July 31, 2009, the Bank recognized
    compensation expense for stock option awards of $8 million and
    $25 million, respectively (three and nine months ended July 31, 2008 -
    $5 million and $16 million, respectively).

    During the three months ended July 31, 2009 and July 31, 2008, there were
    no options granted by the Bank. During the nine months ended July 31,
    2009, 4 million (nine months ended July 31, 2008 - 2 million) options
    were granted by the Bank with a weighted-average fair value of $7.62 per
    option (nine months ended July 31, 2008 - $10.80 per option).

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


    Assumptions Used for Estimating Fair Value of Options
    -------------------------------------------------------------------------
                                                   For the nine months ended
                                                 ----------------------------
                                                           July 31   July 31
                                                              2009      2008
    -------------------------------------------------------------------------
    Risk-free interest rate                                   2.2%      3.8%
    Expected option life                                 5.6 years 5.5 years
    Expected volatility                                      23.9%     15.9%
    Expected dividend yield                                  3.00%     2.85%
    -------------------------------------------------------------------------


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

    The Bank's principal pension plans, The Pension Fund Society of the
    Toronto-Dominion Bank (the Society) and the TD Pension Plan (Canada) (the
    Plan), are defined benefit plans. The Society was closed to new members
    on January 30, 2009 and the Plan commenced on March 1, 2009. Benefits
    under the principal pension plans are determined based upon the period of
    plan participation and the average salary of the member in the best
    consecutive five years in the last 10 years of combined plan membership.

    The expenses for the Bank's pension plans and Principal Non-Pension Post-
    Retirement Benefit Plan are as follows:


    Principal Pension Plans Pension Expense
    -------------------------------------------------------------------------
                                           For the three        For the nine
                                            months ended        months ended
                                      ---------------------------------------
                                       July 31   July 31   July 31   July 31
    (millions of Canadian dollars)        2009      2008      2009      2008
    -------------------------------------------------------------------------
    Elements of pension plan expense
     before adjustments to recognize
     the long term nature of the cost:
      Service cost - benefits earned       $18       $21       $50       $58
      Interest cost on projected
       benefit obligation                   38        33       108        96
      Actual return on plan assets         (68)      (71)      342        36
      Plan amendments                        -         -         -         7
    Adjustments to recognize the
     long-term nature of plan cost:
      Difference between costs arising in
       the period and costs recognized
       in the period in respect of:
        Return on plan assets(1)            35        33      (443)     (150)
        Actuarial losses(2)                 13         5        18        10
        Plan amendments(3)                  (4)        2         7         -
    -------------------------------------------------------------------------
    Total                                  $32       $23       $82       $57
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) For the three months ended July 31, 2009, includes expected return on
        plan assets of $33 million (three months ended July 31, 2008 -
        $38 million) less actual return on plan assets of $68 million (three
        months ended July 31, 2008 - $71 million). For the nine months ended
        July 31, 2009, includes expected return on plan assets of
        $101 million (nine months ended July 31, 2008 - $114 million) less
        actual return on plan assets of $(342) million (nine months ended
        July 31, 2008 - $(36) million).
    (2) For the three months ended July 31, 2009, includes loss recognized of
        $13 million (three months ended July 31, 2008 - $5 million) less
        actuarial losses on projected benefit obligation of nil (three months
        ended July 31, 2008 - nil). For the nine months ended July 31, 2009,
        includes loss recognized of $18 million (nine months ended July 31,
        2008 - $10 million) less actuarial losses on projected benefit
        obligation of nil (nine months ended July 31, 2008 - nil).
    (3) For the three months ended July 31, 2009, includes amortization of
        costs for plan amendments of $(4) million (three months ended
        July 31, 2008 - $2 million) less actual cost amendments of nil (three
        months ended July 31, 2008 - nil). For the nine months ended July 31,
        2009, includes amortization of costs for plan amendments of
        $7 million (nine months ended July 31, 2008 - $7 million) less actual
        cost amendments of nil (nine months ended July 31, 2008 -
        $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)        2009      2008      2009      2008
    -------------------------------------------------------------------------
    CT Defined Benefit Pension Plan         $1        $1        $3        $3
    TD Banknorth Defined Benefit
     Pension Plan(1)                        (3)        1        (8)        -
    Supplemental employee
     retirement plans                        8         8        24        24
    -------------------------------------------------------------------------
    Total                                   $6       $10       $19       $27
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) TD Banknorth Defined Benefit Pension Plan was frozen as of December
        31, 2008, and no service credits can be earned after that date.


    Principal Non-Pension Post-Retirement Benefit Plan Expense
    -------------------------------------------------------------------------
                                           For the three        For the nine
                                            months ended        months ended
                                      ---------------------------------------
                                       July 31   July 31   July 31   July 31
    (millions of Canadian dollars)        2009      2008      2009      2008
    -------------------------------------------------------------------------
    Elements of non-pension plan expense
     before adjustments to recognize
     the long-term nature of the cost:
      Service cost - benefits earned        $2        $3        $6        $9
      Interest cost on projected
       benefit obligation                    5         6        15        17
    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         -         4
        Plan amendments                     (1)       (1)       (4)       (4)
    -------------------------------------------------------------------------
    Total                                   $6        $9       $17       $26
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash Flows

    The Bank's contributions to its pension plans and its Principal Non-
    Pension Post-Retirement Benefit Plan are as follows:


    Plan Contributions
    -------------------------------------------------------------------------
                                           For the three        For the nine
                                            months ended        months ended
                                      ---------------------------------------
                                       July 31   July 31   July 31   July 31
    (millions of Canadian dollars)        2009      2008      2009      2008
    -------------------------------------------------------------------------
    Principal pension plans               $505       $30      $554       $67
    CT Defined Benefit Pension Plan          -        (1)        -        (1)
    TD Banknorth Defined Benefit
     Pension Plan                            -         1         -         1
    Supplemental employee
     retirement plans                        6         1        12         8
    Principal Non-Pension
     Post-Retirement Benefit Plan            3         3         7         7
    -------------------------------------------------------------------------
    Total                                 $514       $34      $573       $82
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    As at July 31, 2009, the Bank expects to contribute an additional
    $66 million to its principal pension plans, nil to its CT Defined Benefit
    Pension Plan, nil to its TD Banknorth Defined Benefit Pension Plan,
    $7 million to its supplemental employee retirement plans and $2 million
    to its Principal Non-Pension Post-Retirement Benefit Plan by the end of
    the year. However, future contribution amounts may change upon the Bank's
    review of the current contribution levels during the year.


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

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


    Basic and Diluted Earnings per Share
    -------------------------------------------------------------------------
                                           For the three        For the nine
                                            months ended        months ended
                                      ---------------------------------------
    (millions of Canadian dollars,     July 31   July 31   July 31   July 31
     except as noted)                     2009      2008      2009      2008
    -------------------------------------------------------------------------
    Basic earnings per share
    Net income available to
     common shareholders                  $863      $980    $2,123    $2,783
    Average number of common shares
     outstanding (millions)              851.5     804.0     844.3     756.8
    Basic earnings per share
     (Canadian dollars)                  $1.01     $1.22     $2.51     $3.68
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Diluted earnings per share
    Net income available to
     common shareholders                  $863      $980    $2,123    $2,783
    -------------------------------------------------------------------------
    Average number of common shares
     outstanding (millions)              851.5     804.0     844.3     756.8
    Stock options potentially
     exercisable as determined
     under the treasury stock
     method(1) (millions)                  3.9       7.0       2.2       6.4
    -------------------------------------------------------------------------
    Average number of common shares
     outstanding - diluted (millions)    855.4     811.0     846.5     763.2
    -------------------------------------------------------------------------
    Diluted earnings per share(1)
     (Canadian dollars)                  $1.01     $1.21     $2.51     $3.65
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) For the nine months ended July 31, 2009, the computation of diluted
        earnings per share excluded weighted-average options outstanding of
        17.0 million with a weighted-average exercise price of $64.08 as the
        option price was greater than the average market price of the Bank's
        common shares. For the nine months ended July 31, 2008, the
        computation of diluted earnings per share excluded weighted-average
        options outstanding of 5.0 million with a weighted-average exercise
        price of $69.19 as the option price was greater than the average
        market price of the Bank's common shares.


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

    The Bank's operations and activities are organized around four key
    business segments: Canadian Personal and Commercial Banking, Wealth
    Management, U.S. Personal and Commercial Banking and Wholesale Banking.
    The Bank's other activities are grouped into the Corporate segment.
    Results for these segments for the three and nine months ended July 31
    are presented in the following tables:


    Results by Business Segment
    -------------------------------------------------------------------------
                                                                         U.S.
                           Canadian Personal                    Personal and
    (millions of              and Commercial          Wealth      Commercial
     Canadian dollars)             Banking(1)  Management(1) Banking(1)(2)(3)
    -------------------------------------------------------------------------
                                July    July    July    July    July    July
    For the three                 31      31      31      31      31      31
     months ended               2009    2008    2009    2008    2009    2008
    -------------------------------------------------------------------------
    Net interest income       $1,650  $1,485     $65     $89    $873    $759
    Non-interest income          797     777     497     520     263     267
    -------------------------------------------------------------------------
    Total revenue              2,447   2,262     562     609   1,136   1,026
    Provision for
     (reversal of)
     credit losses               290     194       -       -     183      76
    Non-interest expenses      1,170   1,129     424     421     783     610
    -------------------------------------------------------------------------
    Income (loss) before
     income taxes                987     939     138     188     170     340
    Provision for
     (recovery of)
     income taxes                310     295      43      61      (2)     96
    Non-controlling
     interests in
     subsidiaries, net
     of income taxes               -       -       -       -       -       -
    Equity in net income
     of an associated
     company, net of
     income taxes                  -       -      68      74       -       -
    -------------------------------------------------------------------------
    Net income (loss)           $677    $644    $163    $201    $172    $244
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total assets
    (billions of
     Canadian dollars)
      - balance sheet         $180.1  $170.5   $18.7   $14.8  $144.1  $117.6
      - securitized             53.3    39.1       -       -       -       -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                   Wholesale
                                   Banking(4)    Corporate(4)          Total
    -------------------------------------------------------------------------
                                July    July    July    July    July    July
    For the three                 31      31      31      31      31      31
     months ended               2009    2008    2009    2008    2009    2008
    -------------------------------------------------------------------------
    Net interest income         $527    $348   $(282)  $(244) $2,833  $2,437
    Non-interest income          349     (20)    (72)     56   1,834   1,600
    -------------------------------------------------------------------------
    Total revenue                876     328    (354)   (188)  4,667   4,037
    Provision for
     (reversal of)
     credit losses                32      30      52     (12)    557     288
    Non-interest expenses        326     281     342     260   3,045   2,701
    -------------------------------------------------------------------------
    Income (loss) before
     income taxes                518      17    (748)   (436)  1,065   1,048
    Provision for
     (recovery of)
     income taxes                191     (20)   (333)   (310)    209     122
    Non-controlling
     interests in
     subsidiaries, net
     of income taxes               -       -      28       8      28       8
    Equity in net income
     of an associated
     company, net of
     income taxes                  -       -      16       5      84      79
    -------------------------------------------------------------------------
    Net income (loss)           $327     $37   $(427)  $(129)   $912    $997
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total assets
    (billions of
     Canadian dollars)
      - balance sheet         $167.3  $181.6   $34.4   $24.3  $544.6  $508.8
      - securitized              3.9     2.7   (12.8)  (12.9)   44.4    28.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Results by Business Segment
    -------------------------------------------------------------------------
                                                                         U.S.
                           Canadian Personal                    Personal and
    (millions of              and Commercial          Wealth      Commercial
     Canadian dollars)             Banking(1)  Management(1) Banking(1)(2)(3)
    -------------------------------------------------------------------------
                                July    July    July    July    July    July
    For the nine                  31      31      31      31      31      31
     months ended               2009    2008    2009    2008    2009    2008
    -------------------------------------------------------------------------
    Net interest income       $4,680  $4,301    $203    $259  $2,767  $1,380
    Non-interest income        2,335   2,242   1,415   1,478     844     573
    -------------------------------------------------------------------------
    Total revenue              7,015   6,543   1,618   1,737   3,611   1,953
    Provision for
     (reversal of)
     credit losses               842     557       -       -     523     148
    Non-interest expenses      3,499   3,320   1,257   1,187   2,407   1,142
    -------------------------------------------------------------------------
    Income (loss) before
     income taxes              2,674   2,666     361     550     681     663
    Provision for
     (recovery of)
     income taxes                824     842     113     180      38     192
    Non-controlling
     interests in
     subsidiaries,
     net of income taxes           -       -       -       -       -       -
    Equity in net income
     of an associated
     company, net of
     income taxes                  -       -     193     229       -       -
    -------------------------------------------------------------------------
    Net income (loss)         $1,850  $1,824    $441    $599    $643    $471
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                   Wholesale
                                   Banking(4)    Corporate(4)          Total
    -------------------------------------------------------------------------
                                July    July    July    July    July    July
    For the nine                  31      31      31      31      31      31
     months ended               2009    2008    2009    2008    2009    2008
    -------------------------------------------------------------------------
    Net interest income       $1,909    $854 $(1,058)  $(711) $8,501  $6,083
    Non-interest income          426     510    (379)    143   4,641   4,946
    -------------------------------------------------------------------------
    Total revenue              2,335   1,364  (1,437)   (568) 13,142  11,029
    Provision for
     (reversal of)
     credit losses               157      96     228     (26)  1,750     775
    Non-interest expenses      1,070     893     883     593   9,116   7,135
    -------------------------------------------------------------------------
    Income (loss) before
     income taxes              1,108     375  (2,548) (1,135)  2,276   3,119
    Provision for
     (recovery of)
     income taxes                343      82  (1,132)   (779)    186     517
    Non-controlling
     interests in
     subsidiaries,
     net of income taxes           -       -      84      25      84      25
    Equity in net income
     of an associated
     company, net of
     income taxes                  -       -      43      13     236     242
    -------------------------------------------------------------------------
    Net income (loss)           $765    $293 $(1,457)  $(368) $2,242  $2,819
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Effective the third quarter ended July 31, 2008, the Bank transferred
        the U.S. insurance and credit card businesses to Canadian Personal
        and Commercial Banking, and the U.S. wealth management businesses to
        Wealth Management for management reporting purposes. Prior periods
        have not been reclassified as the impact was not material to segment
        results.
    (2) Commencing the third quarter ended July 31, 2008, the results of U.S.
        Personal and Commercial Banking include Commerce. For details, see
        Note 31 to the 2008 Annual Report.
    (3) As explained in Note 1, effective the second quarter ended April 30,
        2009, as a result of the alignment of reporting period of the U.S.
        entities, TD Banknorth and Commerce are consolidated using the same
        period as the Bank.
    (4) The taxable equivalent basis increase to net interest income and
        provision for income taxes, reflected in Wholesale Banking results,
        is reversed in the Corporate segment.


    Note 15: FINANCIAL INSTRUMENTS
    -------------------------------------------------------------------------

    Hedge Accounting

    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)        2009      2008      2009      2008
    -------------------------------------------------------------------------
    Fair value hedges
    Net gain arising from hedge
     ineffectiveness                      $1.2      $1.3     $21.1      $9.9
    -------------------------------------------------------------------------
    Cash flow hedges
    Net gain (loss) arising from
     hedge ineffectiveness                $0.3     $(0.9)    $(4.3)     $0.5
    -------------------------------------------------------------------------

    Portions of derivative gains (losses) that were excluded from the
    assessment of hedge effectiveness for fair value and cash flow hedging
    activities and the change in fair value related to these portions in each
    period are included in the Interim Consolidated Statement of Income. The
    effect of this exclusion was not significant for the three and nine
    months ended July 31, 2009.

    During the nine months ended July 31, 2009, there were no firm
    commitments that no longer qualified as hedges.

    Over the next twelve months, the Bank expects approximately $1.0 billion
    in net gains reported in other comprehensive income as at July 31, 2009
    to be reclassified to net income. The maximum length of time over which
    the Bank is hedging its exposure to the variability in future cash flows
    from anticipated transactions is 30 years. During the nine months ended
    July 31, 2009, there were no forecasted transactions that failed to
    occur.

    Financial Instruments Designated as Trading under the Fair Value Option

    Financial assets and financial liabilities, other than those classified
    as trading, may be designated as trading under the fair value option if
    fair values are reliably measurable, the asset or liability meets one or
    more of the criteria set out in Note 2 to the 2008 Consolidated Financial
    Statements, and the asset or liability is so designated by the Bank on
    initial recognition.

    The total fair value of the securities designated as trading under the
    fair value option was $3,090 million as at July 31, 2009 (October 31,
    2008 - $6,402 million). These securities are recorded in trading
    securities on the Consolidated Balance Sheet.

    The total fair value of the loans designated as trading under the fair
    value option was $362 million as at July 31, 2009 (October 31, 2008 -
    $510 million). These loans are recorded in business and government loans
    on the Consolidated Balance Sheet.

    During the three months ended July 31, 2009, income (loss) representing
    net changes in the fair value of financial assets designated as trading
    under the fair value option was $(103) million (three months ended July
    31, 2008 - $(10) million). During the nine months ended July 31, 2009,
    income (loss) representing net changes in the fair value of financial
    assets designated as trading under the fair value option was $232 million
    (nine months ended July 31, 2008 - $(54) million). Income (loss) from
    financial instruments designated as trading under the fair value option
    is recorded in other income in the Consolidated Income Statement. This
    income (loss) is primarily offset by the changes in the fair value of
    derivatives used to economically hedge these assets and are recorded in
    other income in the Consolidated Income Statement.


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

    As a result of the acquisition of Commerce and related restructuring and
    integration initiatives, the Bank incurred integration charges of
    $109 million and $265 million during the three and nine months ended
    July 31, 2009, respectively. Integration charges consisted of costs
    related to resources dedicated to the integration, employee retention
    costs, external professional consulting charges, marketing costs
    (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.

    During the first quarter ended January 31, 2009, the Bank incurred
    $27 million of restructuring charges. Restructuring charges consisted of
    estimated lease termination costs for approximately 50 legacy TD
    Banknorth branches that were closed and consolidated with nearby branches
    in connection with the Commerce integration. In the Interim Consolidated
    Statement of Income, the restructuring charges are included in
    restructuring costs. No restructuring charges were recorded in the second
    quarter ended April 30, 2009 and the third quarter ended July 31, 2009.
    As at July 31 2009, the remaining balance of the restructuring liability
    related to the acquisition of Commerce was $28 million. Restructuring and
    integration charges included in the Interim Consolidated Statement of
    Income are presented in the following table:


    Commerce Restructuring and Integration Charges
    -------------------------------------------------------------------------
                                           For the three        For the nine
                                            months ended        months ended
                                      ---------------------------------------
                                       July 31   July 31   July 31   July 31
    (millions of Canadian dollars)        2009      2008      2009      2008
    -------------------------------------------------------------------------
    Restructuring costs                     $-        $-       $27       $48
    Integration charges(1)                 109        23       265        23
    -------------------------------------------------------------------------
    (1) These amounts do not include integration charges of $25 million
        included directly in retained earnings, in the second quarter this
        year, as a result of the alignment of reporting period of U.S.
        entities, as explained in Note 1.


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

    Other non-interest expenses include the following:

    a)  A special assessment charge of $55 million before tax ($35 million
        after tax) or US$49 million before tax (US$31 million after tax) was
        included in the third quarter ended July 31, 2009, which was
        finalized by the Federal Deposit Insurance Corporation (FDIC), in the
        U.S., on May 22, 2009.

    b)  A charge in the second quarter ended April 30, 2009 for settlement of
        TD Banknorth shareholder litigation. Upon the announcement of the
        privatization of TD Banknorth in November 2006, certain minority
        shareholders of TD Banknorth initiated class action litigation
        alleging various claims against the Bank, TD Banknorth and TD
        Banknorth officers and directors. The parties agreed to settle the
        litigation in February 2009 for $61.3 million (US$50 million) of
        which $3.7 million (US$3 million) had been previously accrued on
        privatization. The Court of Chancery in Delaware approved the
        settlement of the TD Banknorth Shareholders' Litigation effective
        June 24, 2009, and the settlement became final.


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

    Commerce Bancorp, Inc.

    During the nine months ended July 31, 2009, goodwill decreased by
    $56 million to $6,274 million, primarily due to the completion of the
    valuation of the loan portfolio and a corresponding future income tax
    liability. The purchase price allocation, including the valuation of the
    assets and liabilities, was completed on March 31, 2009. There were no
    changes to goodwill in the current quarter.

    TD AMERITRADE Holding Corporation

    As at July 31, 2009, the Bank's reported investment in TD AMERITRADE
    Holding Corporation (TD Ameritrade) was 45.2% of the issued and
    outstanding shares of TD Ameritrade.

    As a result of the issuance of shares on June 11, 2009 by TD Ameritrade
    in connection with its acquisition of thinkorswim Group Inc., the Bank's
    ownership position in TD Ameritrade decreased from 47.5% as at April 30,
    2009 to 45.2% as at July 31, 2009.

    On January 24, 2009, the limit in the Bank's beneficial ownership of TD
    Ameritrade under the Stockholders' Agreement increased from 39.9% to 45%.
    Pursuant to the terms of the Stockholders' Agreement, the Bank will not
    exercise the voting rights in respect of any shares held in excess of the
    45% limit. On March 2, 2009, the Bank took delivery of 27 million shares
    in settlement of its amended hedging arrangement with Lillooet Limited
    (Lillooet) at a hedged cost to the Bank of US$515 million. As Lillooet
    was consolidated in the Bank's Consolidated Financial Statements, the
    replacement of the amended hedge arrangement with the direct ownership of
    the 27 million shares had no material impact on the Bank.


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

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


    SHAREHOLDER AND INVESTOR INFORMATION

    Shareholder Services

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

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

    General Information

    Contact Corporate & Public Affairs:
    416-982-8578

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

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

    Quarterly Earnings Conference Call
    

TD Bank Financial Group will host an earnings conference call in Mount Laurel, New Jersey on August 27, 2009. The call will be webcast live via TDBFG's website at 3 p.m. ET. The call and webcast will feature presentations by TDBFG executives on the Bank's financial results for the 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/qr_2009.jsp on August 27, 2009, before 12 p.m. ET. A listen-only telephone line is available at 416-644-3414 or 1-800-733-7560 (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 p.m. ET on August 27, 2009, until September 27, 2009, by calling 416-640-1917 or 1-877-289-8525 (toll free). The passcode is 21311158 followed by the number sign.

    
    Annual Meeting

    Thursday, March 25, 2010
    Fairmont Le Château Frontenac
    Quebec City, Quebec

    About TD Bank Financial Group
    

The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Financial Group. TD Bank Financial Group is the sixth largest bank in North America by branches and serves approximately 17 million customers in four key businesses operating in a number of locations in key financial centres around the globe: Canadian Personal and Commercial Banking, including TD Canada Trust and TD Insurance; Wealth Management, including TD Waterhouse and an investment in TD Ameritrade; U.S. Personal and Commercial Banking through TD Banknorth and TD Bank, America's Most Convenient Bank; and Wholesale Banking, including TD Securities. TD Bank Financial Group also ranks among the world's leading online financial services firms, with more than 5.5 million online customers. TD Bank Financial Group had $545 billion in assets on July 31, 2009. The Toronto-Dominion Bank trades under the symbol "TD" on the Toronto and New York Stock Exchanges.

SOURCE TD Bank Group

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


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