Toronto-dominion Bank · TSX:TD
Toronto-dominion Bank — TD Bank Financial Group — Investor Presentation (June 2008)
74 slides from Toronto-dominion Bank's investor presentation, Jun 19, 2008
Slide 1: Building the better bank
Buidling the better bank Tim Thompson SVP Investor Relations TD Bank Financial Group 1
Slide 2: Caution Regarding Forward-looking Statements
Caution Regarding Forward-looking Statements From time to time, the Bank makes written and oral forward-looking statements, including in this presentation, in other filings with Canadian regulators or the U.S. Securities and Exchange Commission (SEC), and in other communications. In addition, the Ba
Slide 3: TD Bank Financial Group In Perspective
TD Bank Financial Group In Perspective North Canadian TDBFG American Peers2 Peers3 Q2 2008 Total Assets US$500B 2nd 7th Q2 2008 Total Deposits US$347B 2nd 7th May 30/08 Market Cap US$58B 2nd 6th Adj. Net Income US$4.1B1 2nd 8th - Trailing 4 Qtrs (Q307-Q208) Q2 2008 Tier 1 Capital % 9.1% 5th 5th A to
Slide 4: TDBFG YTD 2nd Qtr. 2008 and Timeline
TDBFG YTD 2nd Qtr. 2008 Adjusted Earnings1 Total Revenue C$2.0B C$7.0B Wealth Management 19% TDW Canada U.S. Wealth TD AMTD Retail Management 12% 7% 19% 15% Canadian P&C U.S. P&C Canadian P&C 12% 58% 13% U.S. P&C 57% Wholesale Wholesale 14% 12% 88% Retail 1. Based on adjusted results as described on
Slide 5: Key Messages: A leading North American bank
Ed Clark President & CEO TD Bank Financial Group Key Messages 1. A leading North American bank 2. The leader in service & convenience 3. Leverage all TD businesses 4. Build the franchise 10 5
Slide 6: Strong Market Position
Strong Market Position Asset Quality – Conservative lending practices Largely avoided: Subprime mortgage market Exotic mortgage products Third-party asset origination Geographic Footprint – U.S. Northeast Largely avoided: Lending outside of footprint Brokered or correspondent lending Funding Mod
Slide 7: Key Messages: Own the convenience and service space
Bharat Masrani President & CEO TD Commerce Bank Key Messages 1. Own the convenience and service space 2. A growth story with significant opportunities 3. A positive outlier from an asset quality perspective 4. Integration is on track 5. We will deliver on financial commitments 14 7
Slide 8: Integration Update
Integration Update Leadership team announced Major systems and technology decisions made Multiple state and federal charters merged into one national charter Together as one bank from a systems and people perspective On track Achieve $310 million in cost synergies On track Systems conversion planned
Slide 9: Building the Brand
Building the Brand John Cunningham Marketing TD Commerce Bank Key Messages 1. Successfully integrate two legacy brands 2. Retain a strong BRAND culture 3. Launch new brand with commitment to preserve & expand 18 9
Slide 10: The Marketing Mission
The Marketing Mission Protect our Brand Refine our Brand Leverage our Brand Our Brand must be pervasive and compelling 19 Brand Positioning Match Game Not Your Typical Bank Leading the Way Are You With _________ Let’s Get It Done America’s Neighborhood Bank Tap Into the Glow Bank of Opportunit
Slide 11: What is America's Most Convenient Bank?
Introducing… 21 What is America’s Most Convenient Bank? Unparalleled Convenience and Legendary Customer Service Open 7 days/361 days per year Most convenient in markets we are in Open early, open late Live Customer service – 24/7/365 Penny Arcade – FREE coin counting Instant issue debit
Slide 12: Launching the New Brand
Launching the New Brand Prototypes Consistent brand execution 23 Launching the New Brand Merchandising ATM Door Handles Penny Arcade Signage Focusing on the details 24 12
Slide 13: Creating a Love Brand: Robust Launch Plan
Creating a “Love Brand” Mementos so you remember us 25 Robust Launch Plan Mass media campaign timed with store re-branding changes Grass roots events to our Customers and prospects Continue to support store openings Tracking success and measuring results of our investment Comprehensive, coor
Slide 14: On-Going Branding Mission
On-Going Branding Mission Combine external brand with internal execution Develop creative materials that unleash the essence of the convenience brand Create with “Stand Out” marketing Further TD Commerce as a “Love Brand”… “I My Bank! Brand success activities 27 Key Messages 1. Successfully
Slide 15: Retail Integration and Operations
Linda Verba Retail Integration and TD Commerce Bank Key Messages 1. is a key differentiator 2. Can’t easily be replicated 3. Delivering the experience EVERYWHERE 4. Leverage across all of TD Commerce 30 15
Slide 16: It's All About Fun: In the Retail Stores
It’s All About … Fuses the internal culture with the external brand It’s our rally cry… gives every employee a sense of purpose Provides an awesome opportunity to Catch’em Doin’ It Right! Pervasive… Land of The essence of our culture FUN!!! is everywhere 31 In the Retail Stores… Image/Br
Slide 17: Through All Channels: Convenience Every Day
Through All Channels… Per Month Teller transactions 49.0% Online logins 22.5% ATM transactions 17.6% YES-2000 calls 9.0% CCS calls 2.1% (Customer Service) Opportunities to surprise and delight through all touch points 33 Convenience Every Day Commerce Bank Teller Transactions (Thousands, per hour, p
Slide 18: What gets measured gets done; Penny in Every Store
What gets measured…..gets done! Shops by Market 95% 94% 92% 92% 91% 90% 89% 86% 86% 84% 12% Goal = 70% 88% Typical WOW! bank FL NY NO WC/CT LI DC PA Central SH SNJD 6,095 Monthly Transactions per Teller FTE 3,363 2,191 Banks <$500M Banks>$500M Commerce Quality • Consistency • Productivity ABA Retail
Slide 19: Through Customer Service Reps and in the Back Room
Through Customer Service Reps… Quick switch account opening Instant card issue – debit / credit Certified consumer lenders #1 gift card issuer Instant check / statement request fulfillment Free notary services More opportunities to surprise and delight 37 And in the Back Room Encourage
Slide 20: Through Centralized Customer Service
Through Centralized Customer Service Service delivered by >1,100 local agents: 24/7/365 Real people delivering 39 With Calls Answered by Real People… High Touch Calls answered by real people One on one agent coaching Team huddles Continuous training Quality observations Mystery shops Hig
Slide 21: Grand Openings
is… Grand Openings Retailtainment… Green Fridays 41 the Result… 42 21
Slide 22: Fans Not Customers; Highest in Customer Satisfaction
Fans Not Customers… Legendary Service Creates Passionate Fans! 43 3 Years in a Row… 2006 2007 2008 Highest in Customer Satisfaction! 44 Visit jdpower.com. 22
Slide 23: Distribution Strategy
Key Messages 1. is a key differentiator 2. Can’t easily be replicated 3. Delivering the experience EVERYWHERE 4. Leverage across all of TD Commerce 45 Distribution Strategy Fred Graziano Regional Retail Banking TD Commerce Bank 23
Slide 24: Customer Centric Model
Key Messages 1. Customer Centric Model 2. De Novo strategy: Grow the footprint 3. Distinctive TD Commerce Bank stores 4. Re-branding strategy 47 Customer Centric Model 4. Service 1. Decentralized drives delivery model growth 3. Award winning customer 2. Unique retail service focus 48 24
Slide 25: Commerce Bank: Leader in Same Store Deposit Growth
Commerce Bank – A Leader in Same Store Deposit Growth Annual Growth Average Average Deposits Growth (%) $110 14% $67 $71 $51 1% (1%) (2%) National Regional All FDIC Commerce National Regional All FDIC Commerce Banks Banks Banks Bank Banks Banks Banks Bank (median) (median) (median) (median) TD Comme
Slide 26: De Novo Strategy; Distinct Stores
De Novo Strategy Goal and Strategy Our Experience Goal: Top 3 deposit share Half of current stores per market ̶ operate in markets where we exceed 10% share of Markets prioritized by store count highest opportunity for ̶ in these markets our retail ̶ incremental deposits deposits average 125%
Slide 27: Re-Branding Strategy
53 Re-Branding Strategy Quality enhancements to interior & exterior architecture Open space design to better serve clients’ needs A Re-Branded Signature features such as Bank Penny Arcade Signage & identity package for North American brand consistency Consistent customer experience 54 27
Slide 28: Existing Interior
Existing Interior 55 Existing Interior Incorporate consistent TD Commerce design standards Customer comfort items Focus customer designation 56 28
Slide 29: Existing Interior
Existing Interior 57 Existing Interior Incorporate Penny Arcade & other features Strategically located messaging Create depth through accent color 58 29
Slide 30: Existing Interior
Existing Interior 59 Existing Interior Photo mural anchors store to community Remove visual barriers Create quality customer touch points 60 30
Slide 31: Existing Exterior
Existing Exterior 61 Proudly present our brand 62 31
Slide 32: Commercial
Key Messages 1. Customer Centric Model 2. De Novo strategy: Grow the footprint 3. Distinctive TD Commerce Bank stores 4. Re-branding strategy 63 Commercial Bob Falese Commercial Banking TD Commerce Bank Brendan O’Halloran Regional Head, USA TD Securities 32
Slide 33: Commercial Lending and Deposit Products Growth
Key Messages 1. Strong credit culture 2. Building commercial relationships and recurring income through direct origination and increased product sales 3. Demonstrated asset growth balanced with credit quality through the cycles 4. Positive outlier on credit quality 65 Commercial Lending & Deposit Pr
Slide 34: Commercial Banking: Granular Loan Portfolio
Commercial Banking: Granular Loan Portfolio Relationship Size $0 - $1MM $1MM+ - $10MM $10MM + Total Commercial Number of 46,000 6,000 900 52,900 Relationships Average Commitment $159 $2,973 $23,117 $856 ($000's) Average Outstanding $123 $2,199 $13,580 $579 ($000's) Our base: Targeted Large number of
Slide 35: Leveraging Strengths, Growth Initiatives
Leveraging Strengths, Growth Initiatives = Leverage the + combination to drive revenue growth Future Initiatives: Leverage Current Initiatives Expanded Product Suite Foreign exchange Debt capital markets Loan syndications and trading Interest rate derivatives Investment banking sector expe
Slide 36: Investment Real Estate Portfolio
U.S. Commercial Banking: Investment Real Estate Portfolio TD Commerce Bank Office SE FL 2% Metro 7% Retail Other 1 % Washington 1% 6% MA NJ 15 % 28% Investment Residential Real Estate 6% For Sale 36% 4% Apartment Northern CT 4% NE 15% 11% Industrial 3% Hotel Metro PA Metro NY 6% 13% 14% All Other We
Slide 37: Strong Credit Metrics
Strong Credit Metrics NPL/Total Loans NPA/Total Assets (basis points) (basis points) Q1/08 Q1/08 Peer Peer Average: Average: 116 116 Q1/08 Q1/08 Peer Peer 70 68 Average: Average: 83 83 44 39 34 36 29 33 22 18 19 14 2003 2004 2005 2006 2007 Q1/08 2003 2004 2005 2006 2007 Q1/08 1. ACL = Allowance for
Slide 38: Driving Retail Sales
Key Messages 1. Strong credit culture 2. Building commercial relationships and recurring income through direct origination and increased product sales 3. Demonstrated asset growth balanced with credit quality through the cycles 4. Positive outlier on credit quality 75 Driving Retail Sales Suzanne Po
Slide 39: Expanding Hours in 253 Stores
Key Messages 1. Convenience pays 2. Sales discipline & focus 3. Leverage opportunities across TD Commerce 4. Complementary customer programs 77 TD Banknorth Expanding Hours in 253 Stores line Total en d +21,000 Tr Retained +14,000 New +7,000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
Slide 40: Own the Convenience Space; Disciplined Approach to Sales
Own the Convenience Space: TD Banknorth Footprint Mid-Atlantic: match Commerce “convenience” Objective: + lead each market in New England: convenience continue to add hours and people Will be America’s Most Convenient Bank 79 A Disciplined Approach to Driving Sales 1. Sales tracking 2. Referrals Sal
Slide 41: Creating Channel Wide Sales Focus
Creating Channel Wide Sales Focus Business Strategy Automated daily reporting Transparent les Sales Sa nue Individual line of sight Effort v e Re Team and employee goals Referrals Customer WOW! Index Implement “Sales Revenue” System 81 TD Banknorth Referrals to Business Partners in 2008 We
Slide 42: Variable Compensation Drives Growth
Variable Compensation Drives Growth Mortgages 1. Converting customers Sustained improvement in applications into FANS! Trend 2. Growing our revenue 3. Growing our book of business 4. Growing our customer base Q1 Q1 ‘07 >200% increase ‘08 Q108/Q107 A balanced approach 83 Disciplined Approach to Sales
Slide 43: Leveraging Commerce Customers
Leveraging Commerce Customers Home equity teller referrals 40 pilot stores (20 in metro NY & 20 in metro Philly) Training delivered by sales leaders Daily reporting Results Averaged over 100 referrals per store per day 9% conversion rate 50% approval rate +$40MM in approved home equiti
Slide 44: Customer Index: Listening to Our Customers
Customer Index: Listening to Our Customers % Extremely Likely to Recommend % Very Likely to Recommend % Somewhat Likely to Recommend % Not Very Likely to Recommend % Not At All Likely to Recommend Customer WOW! Index % Extremely Likely (Fans) Less Likely = Net Fans Complementary customer programs
Slide 45: Retail Lending
Key Messages 1. Convenience pays 2. Sales discipline & focus 3. Leverage opportunities across TD Commerce 4. Complementary customer programs 89 Retail Lending Mike Copley Retail Lending Products TD Commerce Bank 45
Slide 46: TD Commerce Bank: Retail Lending Portfolio
Key Messages 1. Maintain conservative credit culture 2. Significant opportunity across both footprints 3. Leverage best of both organizations 91 TD Commerce Bank: Retail Lending Portfolio TD Commerce Bank Total Consumer Portfolio: $15.9B Outstanding Product/Portfolio Mix Geographic Distribution Cred
Slide 47: Retail Lending Portfolio; Consumer Lending Growth Opportunity
TD Commerce Bank: Retail Lending Portfolio Original FICO score distribution* FIC O Score Consumer Portfolio: $15.9B 100% 700+ ̶ Strong average original FICO 620-699 80% scores: 745 < 620 ̶ Stronger average original FICO 60% scores for real estate secured: 746 40% ̶ Delinquencies trending up, but wit
Slide 48: Residential Mortgage and Credit Card Opportunity
Residential Mortgage: Simplified Product, Service TD Commerce Bank Average Loan Volume (B) $8.2 $4.4 $4.7 1 Current 2009E 2013E 1 If TD Commerce achieves 50% of loan originations via multiple direct channels Potential opportunity to double the portfolio within five years 95 Building a North American
Slide 49: Retail Deposits
Key Messages 1. Significant opportunity across both footprints 2. Maintain excellent credit quality 3. Leverage best of both organizations 97 Retail Deposits Tom Dyck Retail Deposit Products TD Commerce Bank 49
Slide 50: TD Banknorth Household Origination Opportunity
Key Messages 1. Deposit growth opportunity 2. Meeting Commitments 3. Leverage both organizations to deliver best-in-class platform and processes 99 TD Banknorth Household Origination Opportunity New Household Origination Rate1 21.7% National Average 10.7% 12.9% Commerce Bank TD Banknorth 1November 2
Slide 51: Commerce Bank Cross-Sell Opportunity
Commerce Bank Cross-Sell Opportunity Average Balance per Household1 $19,074 National Average $18,894 $9,459 Commerce Bank TD Banknorth 1As of November 2007 Maturing stores = deposit opportunity: $19 billion Source: BAI 101 Easy to Understand / Sell Products 2007 Retail Deposit Growth 9.9% 4.4% 1.4%
Slide 52: Leverage Account Opening; Margin Management
Leverage the Commerce Bank Account Opening Process Reaction to Receiving Card Immediately After Opening Checking Account Like it a lot 61% 86% Like it a little 25% Dislike it a lot/little 6% Don’t know 8% Simple, fast and easy Source: VISA Inc. 103 Adopt Best in Class Margin Management Cumulative TD
Slide 53: Fee Management; Customer Advocacy Improved
Leverage the TD Banknorth Approach to Fee Management Fees Per Account / Business Day $0.70 Competitive Market Positioning $0.50 $0.47 $0.44 TD Commerce TD Commerce TD Commerce 1 Industry Average Today 4Q2008E 4Q2009E Source: Carreker Fee Income Study clients: 18 clients (8 of which are in the Northe
Slide 54: Close Product Gaps
Close Product Gaps Highly competitive products 107 Key Messages 1. Deposit growth opportunity 2. Meeting Commitments 3. Leverage both organizations to deliver best-in-class platform and processes 108 54
Slide 55: Business & Government Banking
Business & Government Banking Wendy Suehrstedt Government Banking, Business Banking and Merchant Services TD Commerce Bank Key Messages 1. Significant growth opportunities 2. Leverage best-in-class & growing distribution network 3. Leverage best products, product management expertise 4. customer exp
Slide 56: Opportunity: Significant Business Banking
Agenda Business Banking Government Banking 111 Opportunity: Significant Business Banking Customers Within 5 Miles of Our Stores Total: 2.2 MM Move penetration from Potential Customers 16% to 20% Growth Potential $1.75 B TD Commerce incremental share deposits 16% 345,000 customers $1 B incremental lo
Slide 57: Opportunity: Existing Customer Base
Opportunity: Existing Customer Base Deposit Balances Per Business Customer 99% 92% Potential Growth $500MM incremental deposits Commerce TD Banknorth Penetration rate Loan Balances Per Business Customer 19% Potential Growth 6% $1.5B incremental loan balances Commerce TD Banknorth Penetration rate Go
Slide 58: Leverage Best in Class Distribution and Products
Leverage Best in Class Distribution TD Commerce Bank Business Banking operating model: Highly integrated with Retail ̶ Focus on service and convenience Sales force ̶ 1,100 knowledgeable Store Managers ̶ 75 specialized Business Banking Officers Centralized underwriting and portfolio management
Slide 59: Deliver Customer Experience
Deliver Customer Experience Customer focus groups Customer Experience Index Convenience Unwavering customer focus Customer experience Surprise and delight customers everywhere 117 Agenda Business Banking Government Banking 118 59
Slide 60: Building On Proven Strengths; Significant Opportunities
Building On Proven Strengths Operating Model ̶ Experienced, proven sales force ̶ Highly integrated with Retail ̶ Leveraging TD’s Treasury and Product Management expertise ̶ Leveraging Best of Breed Cash Management services Areas of Opportunity ̶ Maintain existing customers where #1 ̶ Grow share
Slide 61: Wealth Management
Key Messages 1. Significant growth opportunities 2. Leverage best-in-class & growing distribution network 3. Leverage best products, product management expertise 4. customer experience 121 Wealth Management Bill Fulton Wealth Management U.S.A. TD Commerce Bank 61
Slide 62: Universal Banking Framework
Key Messages 1. Significant opportunity 2. Universal banking framework 3. Capability build out required 4. Become #1 Wealth Management provider to TD Commerce customers 123 Universal Banking Framework Private Client Services Insurance Wealth Management Financial Advisory Self Serve (TD AMERITRADE) I
Slide 63: Retail Referral Results
Retail Referral Results Private Client $ 1 @TD + $ 2.78 External = $3.78 Services Financial $ 1 @TD + $ 1.20 External = $2.201 Advisory Incremental opportunity to attract assets 1 Based on TD Banknorth experience 125 Private Client Services and Financial Advisory: Clear Priorities Private Client Ser
Slide 64: Measuring Success; Financial Advisory 3 Year Goals
Measuring Success Annual Growth Dec 31, 2007 Target Customers 130,000 10-15% Revenue $117MM 10-15% Assets $39B 10-15% Employees 550 10-15% Advisors 330 10-15% Double-Digit Growth Potential 127 Financial Advisory 3 Year Goals Number of Fee Based vs. Financial Advisors Transactional Revenue 280 Transa
Slide 65: Insurance
Key Messages 1. Significant opportunity 2. Universal banking framework 3. Capability build out required 4. Become #1 Wealth Management provider to TD Commerce customers 129 Insurance Joe Fico TD Banknorth Insurance 65
Slide 66: TD Banknorth Insurance: Located Around Bank's Footprint
Key Messages 1. Leverage Canadian insurance competencies 2. Implement call center strategy to drive customer penetration 3. Insurance purchasing made easy at TD Commerce Bank 4. Leverage our size and experience 131 TD Banknorth Insurance: Located Around Bank’s Footprint Total premium dollars $594
Slide 67: Full Service Broker; Complementary Business Models
Full Service Broker $MM Premium1 Revenue Breakdown1 Personal Lines: $166 Personal Lines: $30 Commercial Lines: $190 Commercial Lines: $26 Employee Group Benefits: $238 Employee Group Benefits: $10 Total Premium Dollars: $594 Total revenue approximately $66 Well balanced across all lines 1 Premium an
Slide 68: Achieving Our Goals
Achieving Our Goals Goals Steps Penetrate 10% of Bank Leverage call center capabilities customer base in 2 years across our entire footprint Round out our product Import consumer protection offerings to U.S. customers products from Canada Offer consumers complete Leverage competencies of
Slide 69: Leveraging TD AMERITRADE
Leveraging TD AMERITRADE David Boone TD Bank USA & Corporate Development TD Commerce Bank John Bunch President, Retail Distribution TD AMERITRADE Key Messages 1. Significant opportunity 2. Universal banking framework 3. Leverage best available options 4. Grow share of client assets 138 69
Slide 70: A Strong Foundation; TD's Expanding U.S. Footprint
A Strong Foundation #1 in online retail trades per day $320B in client assets with strong traction in asset gathering 3rd largest provider of brokerage services to registered investment advisors Highly profitable and significant cash generator ̶ 35% CAGR in earnings per share over past 5 yea
Slide 71: Our Strategy; Banking Products Offered to TDA Clients
Our Strategy A unique combination + in the US Financial Services industry Self-Directed Potential Banking Cash Management Services Brokerage Opportunity Opportunity • >$30B TD AMERITRADE • New and existing • In-store sales client assets banking products to and marketing of TD AMERITRADE TD AMERITRAD
Slide 72: Self-Directed Brokerage Offer Expansion
Self-Directed Brokerage Offer Expansion Introduce TD AMERITRADE self- directed brokerage accounts to TD Commerce Bank customers Pilot launched in the Greater Boston market – will be expanded to 10-20 stores by Q4 2008 TD AMERITRADE referrals will be part of store level incentives & compensatio
Slide 73: Multiple Drivers of Earnings Growth
Overview Colleen Johnston EVP & CFO TD Bank Financial Group Multiple Drivers of Earnings Growth TD Commerce Bank Earnings Drivers $ millions Q3/08E1 Accelerating organic Total revenue $1,050 growth Provision for credit losses 75 Improving lending F 2009E spreads Non-interest expenses 660 $1.2B
Slide 74: Building The Better Bank
Building The Better Bank WD Bank Financial Group LE, 74
TD Bank Financial Group — Investor Presentation (June 2008) on 6ix