142ND ANNUAL REPORT 1997

Transcription

1 142ND ANNUAL REPORT 1997

2 Corporate Profile The -Dominion Bank, also known as TD Bank or TD, and collectively with its subsidiaries referred to as TD Bank Financial Group, a chartered bank subject to the provisions of the Bank Act of Canada, was formed on February 1, 1955 through the amalgamation of The Bank of, chartered in 1855, and The Dominion Bank, chartered in At October 31, 1997, TD ranked as the fifth largest Canadian bank in terms of total assets and common shareholders equity and the fourth largest in market capitalization. In Canada, TD Bank Financial Group serves individuals, businesses, financial institutions and governments with a full range of financial products and services delivered through TD Access electronic services, including the Green Machine, telephone banking, PC banking and INTERAC direct payment, and through our network of approximately 900 branches and subsidiaries. 1 FINANCIAL HIGHLIGHTS 2 LETTER TO SHAREHOLDERS 6 TD IN THE COMMUNITY 7 KEY FINANCIAL PERFORMANCE MEASURES AND GOALS 8 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE 8 Review of TD s businesses 18 Business performance 22 Risk management 27 Capital management 29 Supplementary information Internationally, the Bank offers a broad range of credit, non-credit and financial advisory services to businesses, multinational corporations, governments and correspondent banks through offices and subsidiaries in the U.S. and in other financial capitals including Hong Kong, Jakarta, London, Mexico City, Mumbai, Santiago, Singapore, Taipei, Tokyo and through our subsidiary in Australia. Also, the Bank provides discount brokerage services in Canada, United States, Australia, Hong Kong and United Kingdom. Worldwide, TD Bank Financial Group employs over 32,000 people. 36 GLOSSARY OF FINANCIAL AND BANKING TERMS 37 FINANCIAL RESULTS 73 CORPORATE GOVERNANCE 75 TD PEOPLE 85 SHAREHOLDER AND INVESTOR INFORMATION

3 FINANCIAL HIGHLIGHTS 1 Results of operations % increase Five-year (decrease) growth /1996 rate (millions of dollars) Total revenue (TEB) $ 5,633 $ 4,352 $ 3,959 $ 3,739 $ 3, % Total taxes 1 1, Net income 1, Per common share Net income $ 3.54 $ 2.95 $ 2.51 $ 2.14 $ % Dividends Book value Market price close Total market return 68.3% 36.2% 20.1% 1.4% 20.1% Financial ratios Efficiency ratio 60.0% 61.0% 61.0% 59.1% 65.1% Provision for credit losses as a % of net average loans Tier 1 capital to risk-weighted assets Net common equity as a % of risk-weighted assets Dividend yield Return on common equity Financial position at year end (billions of dollars) Total assets $ $ $ $ 99.8 $ % Total equity Common equity Market capitalization Ratings of senior debt Moody s Aa2 Aa2 Aa2 Aa2 Aa2 Standard and Poor s AA AA AA AA AA 1 Consists of current income and other taxes. 2 Includes customers liability under acceptances and securities purchased under resale agreements. Net income and dividends per share Book value and closing market price per share $4 $ Net income Dividends per share Book value Closing market price

4 2 LETTER TO SHAREHOLDERS We re Here To Help Make It Easier The eight short words on the front cover of this annual report We re here to help make it easier speak volumes to the culture, attitude and strategies of TD Bank. Those words are a commitment to customers a commitment to help make their financial lives easier by providing them with the financial products and services they want, when and where they want them, the advice they want, the help they want in managing their financial affairs as simply, conveniently and cost effectively as possible. We have been reshaping the businesses of the TD Bank Financial Group to deliver. We know that helping to make it easier for customers will spur the growth of our businesses and build value for shareholders. While focusing on making it easier and building value, our businesses reported very good results in Earnings per share were up 20% to $3.54, and return on equity improved to 16.6% from 15.4% in As net earnings rose to $1,088 million, total taxes climbed 47% to $1,106 million; 83% of these taxes (ranging from income tax to capital and payroll taxes) were paid in Canada, although 30% of our income was earned abroad. In 1997, we nearly doubled our charitable donations. Going forward, TD s donations program will be based on 1.25% of after-tax profit on a five-year rolling average so, as profits grow, so will donations, which support the important initiatives such as those outlined on the TD in the Community page following this letter. A buoyant economy and recovery of consumer confidence in Canada especially in Ontario, TD s largest single market made a major contribution to our record level of earnings. What we find particularly significant is the exceptional growth we achieved in businesses we targeted for expansion, and the progress we made towards achieving our long term goals. Accelerating growth in 1997 In last year s report, we stated that we were accelerating investment in high growth, high return areas where we believe we can achieve success. To this end, we structured TD Bank Financial Group to focus on individual business lines each with its own management, resources and strategies (detailed in the Review of TD s Businesses), and we established three strategic priorities: investing in our wealth management businesses; repositioning our retail banking network; and expanding our investment dealer, TD Securities.

5 LETTER TO SHAREHOLDERS 3 In 1997, we made considerable progress in pursuit of each of these priorities: Some of the key products and services that the Bank offers to customers are illustrated throughout the annual report all demonstrate our belief that We re here to help make it easier. Investing in wealth management businesses With changing demographics particularly the aging of the baby boomer generation wealth management has become the growth field of retail financial services. TD has been growing rapidly to meet our customers wealth management needs. In 1997, we made impressive gains through internal growth and expansion with our mutual funds business, with TD Evergreen, our full service retail investment firm, and with Green Line Investor Services, Canada s #1 discount broker. Of particular note, we made substantial investments in the development of our international discount brokerage business. Following the acquisition of Waterhouse Investor Services in the United States just before the 1996 year end, we took advantage of acquisition opportunities in 1997 to develop a global franchise in discount brokerage. In the second quarter, we acquired Pont Securities Australia s leading discount broker, which subsequently acquired Rivkin Croll Smith, another significant Australian firm. Also in the fourth quarter, Waterhouse agreed to acquire Kennedy, Cabot & Co., a major discount broker in California and we opened a Green Line operation in London, England. With these acquisitions, TD has built on its position as the third largest discount broker in the world and has opened up new opportunities for global investing by our customers in North America and around the world. We have the size, scope, scale and technologies to generate considerable value in this field, and we will actively pursue further growth opportunities. Repositioning retail banking In retail banking, we have been repositioning our branches and the electronic delivery channels of TD Access to better serve our customers and to increase revenues while reducing costs. To this end, we have been transforming our branches from transaction centres to sales, service and advice centres while increasing the convenience of TD Access, and lowering the customer charges for using our electronic services. TD ACCESS TD Bank Products and Services Available to customers 24 hours a day and seven days a week, TD Access makes it easier for customers to execute transactions and buy an increasing range of products and services via telephones, personal computers, debit cards and Green Machines (our automated banking machines). TD Access establishes TD as a leader in electronic banking, with close to a million customers using TD Access Telephone Banking and over 100,000 TD Access PC Banking accounts, our integrated personal banking, business banking and brokerage PC package. INTERAC PC BANKING GREEN MACHINE TELEPHONE BANKING INTERNET

6 4 LETTER TO SHAREHOLDERS This is a multi-year, multi-stage process, but we believe we are already well ahead of the competition in building the value of our retail banking franchise. As well as achieving record results in retail banking, we made market share gains in personal loans, personal deposits, residential mortgages and credit cards. Equally as important, TD ranked first in independent surveys among the five largest banks for customer satisfaction in our branches and first in mutual fund advice delivered through the branches. As well, TD Access Telephone Banking and TD Access PC Banking have far exceeded expectations and put TD at the forefront of electronic banking usage in Canada. To meet the changing needs of small business customers, we simplified the credit application process and expanded the product line and delivery network of our TD Main$treet Banking program, which provides business owners with a single contact point for their business and personal banking needs at the branch of their choice. To help make it easier for mid-sized (or commercial) business customers, we began centralizing and automating administrative procedures and expanding our industry specialization group enabling our relationship managers to increase their focus on value added service and advice. Building TD Securities In 1997, we firmly established TD Securities as a top-five investment dealer in Canada. With our specific focus on industry specialization and an integrated corporate and investment banking approach, we made significant gains in our fixed income, investment banking and equities businesses. Our international profile is also rising: TD Securities was the #1 Canadian dealer in the international Eurobond market in 1997 and has been ranked in the latest Euromoney Survey as the 9th overall best Eurobond house as rated by its peers. As well, we were awarded the lead Canadian underwriting position in the global share issue of Telecom Italia S.p.A. one of the largest share offerings ever completed. The people who are helping to make it easier It is the people of TD who are helping to make it easier for customers and who developed and executed the operating strategies detailed in the Review of TD s Businesses. Their efforts have been exceptional as they have learned new skills, entered new fields and broken new ground in our industry. In an era of rapid change in banking, we believe our people are managing change better than any of our competitors. We have made major investments in new training programs to support these efforts. Capital strategies We remain committed to returning excess capital to shareholders if current opportunities do not meet our objectives for building value. However, in the latter part of 1997, we discontinued our share repurchase program and increased our capital levels in response to new guidelines issued by the Office of the Superintendent of Financial Institutions Canada requiring banks to increase their Tier 1 capital ratios to 7% and their total capital ratios to 10%.

7 LETTER TO SHAREHOLDERS 5 Looking forward The economic outlook for Canada is highly positive and is strengthened by the excellent record of deficit reduction by the federal and provincial governments. With continued low inflation and interest rates and declining unemployment, we expect 1998 to be a good year for TD customers. By continuing with our strategies, it should be another strong year for TD. We have a great deal to look forward to in 1998 and beyond. We believe we have the strongest prospects among Canada s banks because we have positioned ourselves for the future investing in growth businesses, developing electronic alternatives and working to help make it easier for our customers. Richard M. Thomson Chairman A. Charles Baillie President and Chief Executive Officer, Canada November 20, 1997 A. Charles Baillie, President since 1995 and Chief Executive since February 1st of this year will become Chairman and Chief Executive Officer on February 1st, Richard M. Thomson, Chairman of TD since 1978, will retire on January 31, As Chief Executive of TD for two decades from 1977 to early in 1997 Mr. Thomson led the Bank through an extraordinary era of challenge and change. He will continue to serve TD as a member of the Board of Directors. TD EVERGREEN EXPANSION TD Bank Products and Services TD Evergreen, the fastest growing full service investment provider in Canada, expanded rapidly on all fronts in We boosted our salesforce by 50% to over 300, added 13 new offices for a total of 51 across Canada and achieved 58% growth in assets under administration, which exceeded $9 billion by year end. While growing rapidly, we made it easier for customers when we became the first full service firm in Canada to provide clients with internet access to their account information with TD Evergreen IQ. Within IQ s first month, close to 1,000 clients signed on.

8 6 TD IN THE COMMUNITY Contributing to the growth and vitality of our communities is a core value at TD. And we strongly believe that if we really want to make a difference over the long term, we must look to the needs of children. That is why we have chosen to focus our support on programs which benefit children and youth. In doing so, we hope to help ensure a bright future for Canada and the communities where we operate. Through our Community Giving Program, each year TD gives to hundreds of charities across Canada. While donations are made in all areas, a substantial portion of the growth in our annual budget is allocated for organizations focusing on children and youth. To ensure the donations we make are directly responsive to local communities, decisions on many of our donations are made at the regional or branch level. TD s national sponsorship program is focused on children s safety, with an emphasis on programs that have the greatest possible impact on local communities and on the lives of children. During the past three years, we have developed sponsorship relationships with two major national charities, Block Parent Program of Canada and the Children s Miracle Network. little bo peep has lost her sheep and with your help she ll find them. Come in and find out how easy it is to become a Block Parent. We are now in our third year as national sponsor of the Block Parent Program of Canada. By promoting this program across the country, we hope to recruit more Block Parents and create safer communities for children. TD s involvement with Block Parent has been embraced by our employees in local communities. Working together at the grass roots level, Block Parent volunteers and TD branch representatives have held various community events which have helped to raise public awareness of the Block Parent Program and expand the network of homes that children can turn to in times of distress. TD is also proud to be a national sponsor of the Children s Miracle Network (CMN), a network of children s hospitals and foundations which serve over 2 million children each year in Canada. CMN is a cause very close to the hearts of our employees. Each year, TD employees hold hundreds of special events to raise money for their local CMN hospital or foundation. It is through their dedication that we are able to help generate awareness of CMN and raise funds which help provide vital services for children. Working Mir cles for Children s Hospitals

9 KEY FINANCIAL PERFORMANCE MEASURES AND GOALS 7 Return on equity This ratio measures the earnings generated by TD on its shareholders funds. It is calculated by dividing net income applicable to common shares by average common shareholders equity. Strong earnings growth improved TD s return on equity to 16.6% in 1997 from 15.4% in 1996 and 14.3% in TD s goal for 1998 is to achieve a return on equity of 16% to 18% TD Bank Six major Canadian banks 1 Efficiency ratio This ratio measures non-interest expenses as a percentage of revenue (TEB) the lower the percentage the better the efficiency. In 1997 the ratio was 60.0%, down from 61.0% in After excluding the impact of the $200 million increased securities gains realized in the fourth quarter, goodwill and one-time costs, the efficiency ratio was 61.2%. TD s goal is to improve the efficiency ratio to 58% in the medium term TD Bank Six major Canadian banks 1 Provision for credit losses as a % of net average loans This ratio represents the provision for credit losses expressed as a percentage of average loans. Although this ratio increased from.18% in 1996 to.35% in 1997, the quality of TD s loan portfolio has continued to improve. The increase in 1997 is due to a $200 million special charge for general credit loss provisions recorded by the Bank in the fourth quarter. Excluding the effect of this special charge, the ratio would have been.16%. TD s goal is to average a.30% ratio over an entire credit cycle, a challenging target, but achievable given its focus on quality asset growth TD Bank Six major Canadian banks figures for six major Canadian banks for the nine months ended July 31, Includes customers liability under acceptances and securities purchased under resale agreements.

10 8 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE Review of TD s businesses This review covers the operations and activities of the distinct and focused businesses that combine to form TD Bank Financial Group. Organized around our retail and wholesale customer bases, these businesses are responsible for developing strategies and goals in line with our corporate strategic priorities and delivering results. We made progress on all fronts in 1997, with particularly strong growth in our wealth management and investment banking businesses. TD Bank Financial Group in 1997 RETAIL BUSINESSES WHOLESALE BUSINESSES Personal and Wealth Management Investment Banking Corporate Banking Commercial Banking Services Retail Branch Banking Provides a range of financial services to 4 million households, small business and commercial clients through 904 branches in Canada. Discount Brokerage Green Line Investor Services, Canada s largest, with over 30 offices across Canada, and in Hong Kong and London, 600,000 accounts and $17 billion assets under administration. Waterhouse Investor Services, 4th largest in the U.S., with 102 branches, 775,000 accounts and US$25 billion assets under administration. Pont Securities, Australia s leader, with 8 branches and 55,000 accounts. Corporate Finance Investment banking, and mergers and acquisition advisory services through offices across Canada and in New York. Corporate Lending Credit and loan syndication services focused on the media and telecommunications, forestry, utilities and project finance, mining and health care industries through 14 offices in major global markets. Alternate Retail Banking Provides electronic services through TD Access, with close to 1 million telephone banking registered customers, 100,000 computer banking accounts, 3 million debit cards and 2,038 Green Machines. Credit Card Services Provides a range of TD Visa products, with over 2 million accounts. Trust Services TD Trust, with assets under administration of $4 billion, provides a range of trust and investment management services through TD branches. Insurance TD Life markets insurance products via direct mail and electronic channels. Full Service Investment Firm TD Evergreen, with 51 offices, 110,000 accounts and $9 billion in assets under administration. Mutual Funds Green Line Family of No-Load Mutual Funds, #6 in Canada with $13 billion assets in 33 funds. Investment Management TD Investments with $21 billion assets under administration provides investment management to a wide range of institutional investors and corporations and is Canada s leader in quantitative management. Foreign Exchange Foreign exchange trading and marketing through offices in, London, New York, Tokyo, Taipei, Singapore and Sydney. Equities Sales, trading and research for institutional clients through offices in, Montreal, New York and London; equities underwriting and distribution; equity derivatives. Fixed Income and Derivatives Provides fixed income, derivatives (including credit derivatives) and capital markets products through offices in Canada, New York, London, Singapore and Australia. Merchant Banking With a capital commitment of $1 billion, provides equity and subordinated loans through TD Capital Group Ltd. and SCC Canada (a joint venture of TD Bank and Sirrom Capital Corporation of the U.S.) Trade Finance and Correspondent Banking Serves corporate and commercial clients through offices across Canada and in Houston, London, Mexico City, Santiago, Singapore, Hong Kong and Jakarta. Cash Management and Payroll Services Electronic services for corporate and commercial clients in Canada and the U.S. Equity Investing Holds TD s own equity portfolio. the businesses of TD Securities, our integrated investment dealer

11 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE 9 NET INCOME BY MAJOR BUSINESS SEGMENTS (millions of dollars) Retail Personal and commercial banking $ 466 $ 329 Wealth management services Total retail Wholesale Investment banking Corporate banking Total wholesale Retail and wholesale 1, Other (107) 17 Total $ 1,088 $ 914 Basis of presentation: Interest revenues and expenses are allocated to loan and deposit balances, and indirect expenses and associated revenues are allocated to business segments, using appropriate allocation formulas applied on a consistent basis. Residual unallocated amounts and the special charge for general credit loss provisions are reported in Other. Earned in: Canada $ 763 $ 679 United States Other international Total $ 1,088 $ 914 RETURN ON EQUITY BY MAJOR BUSINESS SEGMENTS Retail Personal and commercial banking 23% 16% Wealth management services Total retail Wholesale Investment banking Corporate banking Total wholesale Retail and wholesale Total 17% 15% TD SECURITIES REVENUE (millions of dollars) Retail operations $ 704 $ 297 Fixed income and derivative trading Equities and structured finance Underwriting Money market and funding Foreign exchange Merchant banking Advisory and placement fees Other Total $ 1,489 $ 768

12 10 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE TD s retail businesses in 1997 Personal and Commercial Banking Continued economic growth in Canada coupled with low inflation and interest rates led to the return of consumer confidence in 1997 which in turn contributed to strong growth in demand for mortgages and retail lending products as well as savings and investment products. In this buoyant environment, TD gained market share in all core areas of personal banking. This was in large part due to our successful pursuit of strategies to increase alternative distribution channels for customers while transforming our branches from transaction centres to sales, service and advice centres HIGHLIGHTS revenues up 12%, net income up 42% market share gains in mortgages, personal lending, deposits, credit cards #1 ranking for personal customer service of major banks #1 ranking in mutual funds advice of major banks successful first year for TD Access PC Banking over 100,000 accounts launched two new credit cards launched new TD Main$treet Banking products for small business increased industry focus in commercial bank reduced teller transactions by 6% through shift to electronic channels opened in-store branches Retail branch banking During 1997, we increased our focus on our distinct markets personal, small business and mid-market commercial and on sales, service, customer segmentation and relationship management. At the same time, we succeeded in reducing branch-based administration and transactions. The gains we achieved in market share and our leadership in customer service and branch based mutual funds advice demonstrate the success of these strategies. Specifically, we: expanded our Personal Banker program, with 625 relationship managers dedicated to meeting the complex financial needs of high value households; piloted new branch concepts, including supermarket-based branches, to explore opportunities to reach more customers personally; created a new division to focus on the particular needs of the mid-market commercial customer generally businesses with sales of $5 million to $50 million, and borrowing needs of over $250,000; tailored TD Main$treet Banking services for small business, now available through all TD branches. With more automated processes and simplified applications for customers, we made significant progress in small business loan approvals, increased lending, and achieved the highest overall satisfaction rating from business customers among the five largest banks according to a study by the Canadian Bankers Association. As well, we introduced two important new products for small businesses the TD Venture Line of Credit Visa card and TD Businessline, a simple and cost competitive credit line delivered by way of overdraft. Alternate retail banking We worked on making it easier and less expensive for customers in 1997 by building greater convenience into our telephone, PC, Green Machine and card based delivery channels and by offering an increasing range of banking products through these channels, which are grouped under the new brand name TD Access. Collectively, TD Access represents a strong and growing electronic bank which has enjoyed a huge rise in customer usage during the year. As well as making it easier for customers, we have also made it more financially attractive to use alternate channels by lowering charges for most TD Access services. The greatest growth was seen in TD Access Telephone Banking, which grew by over 40% to close to 1 million registered customers, and TD Access PC Banking which registered over 100,000 accounts in its first year of operation. The increase in usage has helped reduce more expensive branch-based personal transactions by 6% year-over-year. As well, we introduced further banking services to Waterhouse customers in the United States offering residential mortgages and a no-fee Waterhouse credit card in addition to the established chequing and savings accounts. Credit card services Our credit card business enjoyed a year of exceptional growth in 1997, with record revenues, increased profitability and a substantial gain in market share. We introduced

13 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE 11 PERSONAL AND COMMERCIAL BANKING (millions of dollars) Net interest income (TEB) $ 2,095 $ 1,862 Other income Total revenue 2,828 2,535 Provision for credit losses Non-interest expenses 1,911 1,820 Net income before taxes Income taxes (TEB) Net income $ 466 $ 329 OUTLOOK We believe another good year lies ahead for retail customers of TD and for our retail banking businesses. To outperform the competition in 1998, we will continue to expand the Personal Banker program, accelerate relationship management for commercial customers, increase and improve the effectiveness of our training programs, pilot different branch models and further develop our outstanding alternate delivery channels. Selected volumes and ratios Average loans and customers liability under acceptances ($ billions) $ 53 $ 49 Average deposits ($ billions) Full-time equivalent staff at October 31 15,482 15,562 Return on equity 23% 16% Efficiency ratio 68% 72% two new credit cards during the year: the TD Gold Select Visa card Canada s first major no-fee Gold Visa card, which had a highly successful launch and, just before year end, the no-fee TD Venture Line of Credit Visa card for small business. Trust services Revenues and income improved in our trust business in 1997, and we developed strategies to provide coordinated private banking, trust, estate planning and investment management services for high value customers. To this end, trust services are being transferred to Wealth Management Services in fiscal Financial review Both net interest income (which increased by 13% to $2,095 million) and other income (up 9% to $733 million) contributed to the record level of net income, up 42% to $466 million. The increase in net interest income reflected asset growth of 9%. Our insurance and credit card businesses were significant contributors to the improvement in other income. During the year we securitized $2 billion of our residential mortgage portfolio, to enhance liquidity and ultimately improve our capital ratio; average mortgage assets increased by 10%, or 13% when including the securitized mortgages. Non-interest expenses rose by 5%, reflecting the investments we have been making in technology and in our branches in pursuit of our strategies. Despite this rise, the efficiency ratio improved to 68% from 72% in 1996 as revenue growth outpaced expense growth. Ranked #1 in personal customer service for TD branches Personal customer service (%) TD Bank Other four major banks Source: Dialogue Canada

14 12 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE TD s retail businesses in 1997 Wealth Management Services Growth trends in the wealth management market for individual Canadians accelerated in 1997 driven by economic growth, low inflation and low interest rates as well as the favourable demographics of the aging baby boomer population which is now actively investing for retirement. In this environment, we made gains in building each of our wealth management businesses in Canada in 1997 while further developing global opportunities in discount brokerage HIGHLIGHTS revenues up 154%, net income up 50% successful launch of WebBroker internet trading at Green Line and Waterhouse agreed to acquire Kennedy, Cabot & Co., a major Californian discount broker became #1 discount broker in Australia with acquisition of Pont Securities and agreement to acquire Rivkin Croll Smith Waterhouse ranked #1 discount broker in U.S. by Wall Street Journal s Smart Money magazine expanded TD Evergreen and launched IQ internet service #1 again in mutual fund mystery shopping survey Discount brokerage Trading volumes, revenues and assets under management grew by 219%, 194%, and 59% respectively for our discount brokerage business, as we enhanced TD s position as the #1 discount broker in Canada, #4 in the U.S. and #3 worldwide with a number of strategic initiatives in International development is a priority and we have been taking advantage of acquisition opportunities, as we believe our business model and leadership in technology position us to expand successfully on a global basis. To this end in 1997, we: agreed to acquire Kennedy, Cabot & Co., a leading discounter in the highly attractive California market, for $214 million. This acquisition will add 15 branches to the Waterhouse network and expand our account base in the U.S. by 25%. expanded globally with the second quarter acquisition of Pont Securities, Australia s leading discount broker, for $32 million and with the subsequent agreement to acquire Rivkin Croll Smith for $24 million another significant Australian firm which will be merged with Pont for a combined market share of 50%. opened a Green Line office in London a market where discount brokerage has exceptional long-term growth opportunities. While growing internationally, we expanded our North American businesses, achieving record trading volumes at both Green Line and Waterhouse. Waterhouse was singled out by the Wall Street Journal s Smart Money magazine as the #1 discount broker in the U.S. for the best combination of price, products and service. We also provided customers of Green Line and Waterhouse with enhanced low cost electronic options through WebBroker, our internet trading program. Customer response to this new delivery channel greatly exceeded expectations. Full service investment firm TD Evergreen maintained its position as Canada s fastest growing full service investment firm in 1997, adding 13 new offices for a total of 51 and 110 new salespeople for a total of 310. Assets under administration increased 58% to over $9 billion and trading volumes and revenues were up by over 70%. As well with the launch of TD Evergreen IQ (Investor Queries) in the fourth quarter TD Evergreen became the first full service advisor in Canada to provide clients with direct on-line internet access to their account information. Mutual funds TD s Green Line Family of No-Load Mutual Funds maintained its position as the second largest fund group of Canada s major banks, achieving growth of 37% in assets under administration which increased to $13 billion and 66% in net income. Our focus on strong fund performance contributed to the gains. As well, we maintained our sales leadership through our branch network. For the third year in a row, TD branches were ranked #1 among major financial institutions in customer service and advice for mutual funds reflecting our emphasis on education.

15 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE 13 WEALTH MANAGEMENT SERVICES (millions of dollars) Net interest income (TEB) $ 137 $ 58 Brokerage commissions and management fees Total revenue Provision for credit losses 3 Non-interest expenses Net income before taxes Income taxes (TEB) Net income $ 85 $ 57 OUTLOOK Economic and demographic trends indicate continued strong growth in the wealth management market in Canada and in the discount brokerage market worldwide. We intend to seek out and take full advantage of further opportunities. In North America, we will continue the aggressive expansion of TD Evergreen, expand private investment and trust management services, develop direct sales channels for our mutual funds and integrate the acquisition of Kennedy, Cabot & Co. in California. Internationally, we will explore opportunities for entering new markets in discount brokerage while integrating Rivkin Croll Smith in Australia and moving toward local market trading in Hong Kong and London. Selected volumes and ratios Assets under administration at October 31 ($ billions) Retail brokerage $ 54 $ 34 Mutual funds Institutional and other Full-time equivalent staff at October 31 4,502 3,810 Return on equity 10% 42% Efficiency ratio 78% 72% Investment management TD Investments, which serves pension funds as well as other institutional and private clients and TD s mutual funds, grew rapidly during the year as assets under administration increased by 90% propelled by our leadership in quantitative (indexed) investment management. Financial review With record trading volumes in our brokerage businesses, the inclusion of results of Waterhouse and Pont, record mutual fund sales and the growth of TD Investments, revenues soared by 154% to $911 million in Net income grew by 50% to $85 million, despite the $29 million acquisition cost for Pont and $28 million goodwill amortization relating to Waterhouse. Adjusted for acquisition and goodwill costs, net income grew by 147%. The decline in return on equity to 10% in 1997 from 42% in 1996 is primarily due to these costs and the significant amount of capital allocated to support the goodwill that arose from the 1996 acquisition of Waterhouse. Revenue by business line (% contribution) Investment management Mutual funds Full service brokerage Discount brokerage 96 97

16 14 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE TD s wholesale businesses in 1997 Investment Banking Strong capital markets in North America and favourable economic conditions for the major industry groups we serve created a highly positive environment in We took advantage of the buoyant markets to expand aggressively and build market share, doubling net income and establishing TD Securities solidly in the top five of Canada s securities dealers HIGHLIGHTS revenues up 89%, net income up 140% major gains in fixed income market share in Canada #1 Canadian dealer and #9 worldwide in Eurobond business equities and derivatives revenues double led a record number of merchant banking, and mergers and acquisitions transactions Corporate finance Through our integrated approach with corporate banking and our distinct focus on key industry segments such as communications, mining, forestry and technology, we boosted revenues and made major gains in our mergers and acquisitions business, particularly in forestry and communications. As well, our industry focus is gaining recognition internationally: during the year, we were awarded the lead Canadian underwriting position in the global share offering of Telecom Italia S.p.A. one of the largest equity offerings ever completed. Equities Our equities business made significant gains in 1997, particularly in institutional sales and trading and we once again received the #1 ranking for growth momentum in the annual Brendan Wood International survey. We have been actively building our research capabilities, covering all major industry groups in Canada and expanding coverage in the United States and London. As well, our share of equity underwriting syndicates increased substantially in 1997, reflecting our strong investment banking coverage and recognition of our institutional and retail distribution capabilities. Fixed income We made impressive strides in our fixed income business in 1997 in all debt markets in Canada, the high yield market in New York and the international Eurobond market in London, where we became the first and only Canadian dealer to break into the top ten, worldwide. We were the most active dealer in Canadian, Australian and New Zealand dollar-denominated Eurobond issues with major issues for the Canadian federal government, the World Bank, and the U.S. Federal National Mortgage Association (Fannie Mae). Our asset securitization, high yield and fixed income derivatives businesses also grew strongly in Merchant banking TD was once again one of the most active merchant banks in Canada in 1997, as TD Capital Group increased its portfolio to $874 million in commitments. During the year, we broadened our reach and increased our participation in venture lending through the introduction of SCC Canada. A joint venture with Sirrom Capital Corporation of the U.S., SCC Canada provides venture loans to the small and mid-sized business market. Combined, our merchant banking businesses have a capital commitment of over $1 billion and by year end we were closing transactions at the rate of one per week for a total of 41 in 1997.

17 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE 15 INVESTMENT BANKING (millions of dollars) Net interest income (TEB) $ 269 $ 143 Trading, underwriting and advisory fees and investment securities gains Total revenue 1, Provision for credit losses 1 Non-interest expenses Net income before taxes Income taxes (TEB) Net income $ 297 $ 123 OUTLOOK As economic growth continues in North America in 1998, we will continue to build aggressively pursuing our successful strategies of industry specialization, focusing on the sources of capital, and integrated corporate and investment banking. In particular, we will pursue opportunities to expand the businesses we have established in the United States, develop new niches in Asian markets, further strengthen our research capabilities and work with TD s Wealth Management businesses to ensure competitive retail placement for our issuing clients. Selected volumes and ratios Full-time equivalent staff at October 31 1,274 1,022 Return on equity 36% 15% Efficiency ratio 50% 61% Financial review Revenues climbed by 89% to $1,024 million and net income more than doubled to $297 million for the year. This was the result of $200 million of special investment securities gains we realized in the fourth quarter as we took advantage of favourable market conditions and strong growth in our fixed income, underwriting, funding and equities business lines. With revenue gains exceeding expense increases by a considerable margin, the efficiency ratio improved by 11 percentage points from After excluding the impact of the $200 million securities gains, the efficiency ratio was 62%. Return on equity improved dramatically to 36% as the growth in net income was achieved with minimal additional capital allocations. High growth businesses (% revenue growth year over year) Fixed income Equities High yield Investment banking Merchant banking 50 0

18 16 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE TD s wholesale businesses in 1997 Corporate Banking Corporate clients continued the trend towards disintermediation in 1997 accessing financing directly in capital markets rather than through banking intermediaries. This trend, combined with low interest rates and global competition for quality corporate credit placed further pressure on lending margins. In response, we built on our integrated corporate and investment banking approach and our industry specializations, built market share in loan syndications and increased our presence in key global markets on behalf of clients HIGHLIGHTS #1 in loan syndications of Canadian banks credit quality up solid growth in trade finance a leading cash management bank in the institutional market in Canada #1 market share in electronic data interchange of all the major banks, #2 in electronic funds transfer Corporate lending To meet client needs and maximize returns in 1997, we worked closely with TD Securities, developing integrated corporate and investment banking solutions. Thus, while delivering corporate credit, which remains a core product for clients, we have assisted them in the process of disintermediation by providing them with other financing alternatives. During the year, we strengthened our industry expertise on a global basis in the growth sectors of media and telecommunications, forest products, utilities and project finance, mining and health care. Our expertise in these areas has helped us manage credit risk effectively, as indicated by continuing improvements in our loan loss record. Managing risk and capital have become increasingly important in light of lower margins, higher regulatory capital requirements and capital taxes. Of particular note in 1997 was the continued strength and growth of our loan syndication business where TD was the #1 Canadian bank in As syndications spread the risk of a major corporate loan among a group of lenders, they enable us to meet client credit needs with a lower capital requirement while generating healthy fee income. As well during 1997, we increased selected country risk limits to support our clients global expansion activities. Trade finance and correspondent banking Our International Trade Services Group delivered solid growth in revenues and income in 1997, as Canadian businesses increased their importing and exporting activities. To serve customers better in global growth markets, we opened a new trade service office in London, a representative office in Jakarta, Indonesia and a full service branch in Mumbai, India. We also expanded our presence in Hong Kong, Singapore and Latin America. As well, we increased our focus on mid-market and small business customers in Canada working with and through the retail branch system to help clients reduce risk as they enter global markets. Cash management and payroll services In 1997, TD continued as a leader in providing cash management services to our corporate customers. This leadership was confirmed by our #1 position in market share of all the major banks in electronic data interchange, and #2 in electronic funds transfer. During the year, we further enhanced service to clients with the development of Business Window for Windows providing the corporate sector and commercial clients with direct access to a wide variety of transactions as well as account balances. We also successfully targeted the small business market with TD Access Business Telephone Banking, signing up 16,000 customers by year end and helping to accelerate this segment s shift to electronic transactions.

19 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE 17 CORPORATE BANKING (millions of dollars) Net interest income (TEB) $ 558 $ 562 Credit and advisory fees and investment securities gains Total revenue Provision for credit losses Non-interest expenses Net income before taxes Income taxes (TEB) Net income $ 347 $ 388 OUTLOOK Although we anticipate further growth in global economies and global trade in 1998, we expect growth of demand for corporate credit to be moderate at best, given disintermediation and we expect competitive pressures to continue. Our major challenge will be to meet client needs for credit and improve returns in the face of regulatory capital requirements. To this end, we aim to further develop our integrated approach with TD Securities while managing capital effectively and reducing risk further through the use of loan trading, syndications, derivatives and securitizations. Selected volumes and ratios Average loans and customers liability under acceptances ($ billions) Full-time equivalent staff at October 31 1,171 1,088 Return on equity 13% 14% Efficiency ratio 23% 20% Financial review Syndications revenue reached a record high 14% of total corporate banking revenue as our emphasis on achieving a satisfactory risk-adjusted return on capital increased. Net interest income decreased by only $4 million despite lower margins caused by intense competition. Credit losses increased by $48 million with $39 million of this increase resulting from an increase in general credit loss provisions. However, the credit quality of the portfolio improved during 1997 which should result in lower loan losses in the future. The efficiency ratio remained strong, in spite of compensation inflation and ongoing investment in overseas operations and technology. Net income was down from the record high of 1996 reflecting higher general credit loss provisions, the increase in operating expenses and a 1.4% increase in effective tax rates. Capital requirements were down by 6% from 1996 which partly offset the impact of lower net income on return on equity. Underwriting and syndication (as % of total revenue)

20 18 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE Business performance Figures 1 4 Overview In 1997, TD earned $1,088 million, up 19% from 1996 and 37% from This year s growth in net income arose from: a $901 million increase in other income, more than half of which occurred in investment and securities services, primarily due to strong financial markets and the inclusion of Waterhouse for the first time in 1997; and a $355 million increase in net interest income. These major gains were partially offset by: a $729 million increase in non-interest expenses, with Waterhouse being the largest single factor; a $208 million increase in the provision for credit losses, which included a $200 million special charge for general credit loss provisions; and a $145 million increase in income taxes. F igure 1 NET INTEREST RATE MARGIN (TEB) (millions of dollars) Average Net Average Net Average Net earning interest earning interest earning interest assets income Margin assets income Margin assets income Margin Canada $ 86,689 $ 2, % $ 74,882 $ 2, % $ 72,171 $ 2, % United States 25, , , Other international 14, , , Total Bank $126,897 $ 2, % $102,801 $ 2, % $ 94,251 $ 2, % Percentage increase (decrease) over previous year 23.4% 14.6% 9.1% 4.2% 8.8% (2.4%) Net interest rate margin Average earning assets grew 23% to $126.9 billion. However, the growth in lower margin trading securities and securities purchased under resale agreements, the low interest rate environment and heightened competition in consumer and business lending contributed to the 14 and 21 basis point declines in margin in Canada and the U.S. respectively. Net income (billions of dollars) Securities (billions of dollars) Loans and deposits (billions of dollars) Securities Securities purchased under resale agreeements Loans Deposits

21 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE 19 Figure 2 OTHER INCOME (millions of dollars) Five-year growth rate Investment and securities services $ 952 $ 440 $ 267 $ 230 $ % Credit fees Net investment securities gains (60) 100+ Trading income Service charges Card services Other Total $ 2,650 $ 1,749 $ 1,461 $ 1,179 $ % Percentage increase over previous year 51.5% 19.7% 23.9% 25.4% 9.8% 1 Other includes non-trading foreign exchange revenues, payroll and cash management services, property rental income, insurance and trust fees. Other income Other income grew by $901 million in Most of this growth arose from: a $512 million increase in investment and securities services, which includes TD s wealth management businesses and fee businesses within investment banking. The addition of Waterhouse Investor Services, Inc. at the end of 1996 contributed substantially to this increase, as did the Bank s full service investment firm, TD Evergreen, and its mutual funds business; and a $226 and $84 million increase in net investment securities gains and trading income respectively, due to favourable market conditions. Despite increasing volumes of business, service charge revenue has increased only marginally. This is because TD, in its efforts to help make banking easier, has provided customers with new electronic banking options at a reduced level of service charges. WEBBROKER TD Bank Products and Services Both Green Line and Waterhouse made things easier for discount brokerage customers in 1997 with the introduction of WebBroker a simple, convenient, low cost and highly successful internet trading program which has gained exceptional customer response. With WebBroker, we have set a new standard in our industry Barron s magazine ranked Waterhouse s WebBroker as the #1 discount brokerage internet package in the U.S.

22 20 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE F igure 3 NON-INTEREST EXPENSES AND EFFICIENCY RATIO (millions of dollars) Five-year growth rate Salaries and staff benefits Salaries $ 1,686 $ 1,337 $ 1,210 $ 1,116 $ % Staff benefits Salaries and staff benefits total 1,826 1,452 1,305 1,221 1, Occupancy Rent Depreciation Other Occupancy total Equipment Rent Depreciation Other Equipment total Other Marketing and business development Professional and advisory services Communications Capital and business taxes Brokerage related fees Deposit insurance premiums Postage Travel and relocation Other Other total Expenses before restructuring 3,383 2,654 2,413 2,209 2, Restructuring 140 Total $ 3,383 $ 2,654 $ 2,413 $ 2,209 $ 2, % Percentage increase 27.5% 10.0% 9.3% 2.0% 22.0% Efficiency ratio Net interest income (TEB) $ 2,983 $ 2,603 $ 2,498 $ 2,560 $ 2,384 Other income 2,650 1,749 1,461 1, Total revenue (TEB) 5,633 4,352 3,959 3,739 3,324 Non-interest expenses 3,383 2,654 2,413 2,209 2,165 Deduct (add) one-time costs or (credits) and goodwill (20) 198 Adjusted expenses $ 3,326 $ 2,654 $ 2,384 $ 2,229 $ 1,967 Efficiency ratio 60.0% 61.0% 61.0% 59.1% 65.1% Efficiency ratio excluding goodwill and one-time costs 59.0% 61.0% 60.2% 59.6% 59.2% 1 One-time costs, credits and goodwill relate to the acquisition of new businesses. Non-interest expenses Non-interest expenses increased by $729 million in The increase is primarily attributable to: the inclusion of Waterhouse in the 1997 financial results for the first time; performance related compensation tied to TD s strong growth in revenues; marketing expenditures, particularly in broadcast media and other forms of advertising; brokerage related fees, resulting from increased trading volumes; goodwill charges relating to Waterhouse; and investments in telephone, card and electronic banking services to help make banking easier and more convenient for customers. After excluding the impact of the $200 million increased security gains realized in the fourth quarter and excluding goodwill and one-time costs, the efficiency ratio was 61.2% compared to 61.0% in 1996.

23 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE 21 F igure 4 TAXES (millions of dollars) Current income taxes $ 735 $ 409 $ 467 $ 382 $ 278 Other taxes Payroll taxes Deposit insurance premiums Capital taxes GST and provincial sales taxes Municipal and business taxes Total other taxes Total taxes $ 1,106 $ 752 $ 787 $ 675 $ 545 Canada $ 922 $ 638 $ 666 $ 569 $ 466 United States Other international Total taxes $ 1,106 $ 752 $ 787 $ 675 $ 545 Taxes as a % of net income before taxes 52.6% 42.9% 50.2% 49.3% 77.3% Taxes Banks are one of the most heavily taxed business sectors in Canada. As shown in the graph below, if Canadian banks were taxed on their Canadian operations like credit unions or manufacturers are taxed, or like banks are taxed in the U.S. and U.K., they would have considerably more resources for initiatives such as new technology or for providing returns to investors. As the industry s earnings, expenditures and capital grow, so do tax revenues collected by governments. Nevertheless, several governments increased bank capital taxes even further in Capital taxes already accounted for most of the disparities reflected in the graph below. These disparities have since increased and will increase further as various measures take full effect. During 1997 the federal government extended its temporary surtax on banks capital for the second time. Ontario followed this lead by extending its own capital surtax for another year. Furthermore, Ontario and Saskatchewan introduced other changes that significantly increased their effective capital tax rates on banks. The impact of these increases is evident in the capital tax expense figures shown above. In addition, TD normally reports income earlier for tax purposes than it does for accounting. For example, loan loss provisions are not fully deductible at the time they are recorded. Similarly, tax is payable in Canada on unrealized gains and losses on most equity investments even though such gains and losses have not been realized and therefore, have not been reported in the financial statements. As a result, taxes currently payable exceed taxes provided in the income statement. At October 31, 1997 the cumulative amount of these advance payments of tax was $264 million, most of which has been paid in Canada. Components of the deferred tax asset are shown in Note 14 to the consolidated financial statements. Canadian bank taxes and levies compared (%) Canadian credit union Canadian manufacturer U.K. bank U.S. bank Canadian bank Taxes and levies Net income available to shareholders Source: March 1997 study prepared by KPMG for the Canadian Bankers Association, based on a composite of major Canadian banks operations in Canada for 1994.

24 22 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE Risk management Overview One of TD s key objectives is to be the best risk manager among major Canadian banks. This requires a well-established infrastructure to manage the major business risks to which TD is exposed. A fundamental principle is the involvement of qualified risk management professionals acting independently from the business units to establish a policy framework and define TD s risk limits. Policies and strategies for managing each of the major financial risks are reviewed at least annually by a Risk Policy Committee, comprised of TD s senior executives. They are also reviewed by the Board of Directors. TD s risk management performance is monitored by the Audit Committee. Credit risk Credit risk is the risk that TD will incur a loss as a result of a counterparty s failure to meet its obligation. Direct loans, commitments to extend credit, settlement exposures, derivative transactions and securities inventories are all subject to credit risk. TD s traditional products focus on the business of taking credit risk. The key objective in managing this risk is to ensure that TD is adequately compensated for the risks assumed and to limit the annual average losses on credit exposures of all types to.30% of net average loans, customers liability under acceptances and securities purchased under resale agreements over a complete business cycle. Risk Management Division, headed by the Deputy Chairman, establishes policies and procedures for the management of credit risk and is responsible for: guidelines to limit portfolio concentrations of credit exposure in relation to common equity by country, industry and affiliated group; approval of discretionary limits to approve credit lines accorded to officers throughout TD; control of all major credit decisions; formulation of standards for the measurement of credit exposure; approval of the application of score carding techniques in the adjudication of personal credit; approval of all policies pertaining to all products and services which have credit risk; establishing risk rating criteria for business accounts based on a ten-category rating system; an obligatory annual review of each loan being conducted under the direction of TD s senior risk management personnel, including a review of the risk rating on the account; and review of each classified business credit exposure at least quarterly. Classified credit exposures are those on which the risk of loss to TD is considered higher than its normal standards. When in management s opinion TD no longer has reasonable assurance as to the timely collection of the full amount of the principal and interest of a loan, such a loan is classified as impaired. Specific provisions are established for impaired loans when it is felt that a loss will be incurred or when the estimated value based on discounting expected future cash flows is less than the recorded value. More details on impaired loans are provided in figure 14 of the Management discussion and analysis of operating performance and Note 1, subsections (e) and (f), and Note 3 of the Notes to consolidated financial statements. All major credit policies and procedures are reviewed and approved annually by the Board of Directors. General provisions are established on an annual basis to reflect the risk of credit loss inherent in the portfolio but which has not yet been specifically identified. During the fourth quarter of 1997, TD realized unusually large gains on the sale of investment securities and utilized $200 million of these gains to increase its general provision for credit losses in response to a new policy issued by the Office of the Superintendent of Financial Institutions Canada (OSFI). The policy permits the inclusion of general allowances for credit losses as part of regulatory Tier 2 capital up to a maximum of.625% of TD s risk-weighted assets. As at October 31, 1997 TD had a general allowance of $402 million, up from $159 at the end of This level of general allowance represents.39% of TD s risk-weighted assets. A Risk Adjusted Return on Capital (RAROC) model is employed to assess the return on individual credit relationships in relation to the structure and maturity of the loan and creditworthiness of the borrower.

25 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE 23 Provision for credit losses The quality of TD s loan portfolio remained strong in 1997 as economic conditions improved. Excluding the $200 million special increase in TD s general allowance for credit losses, the 1997 provision for credit losses was $160 million, $8 million above the 1996 provision and down $20 million from 1995 (for more details on TD s provision for credit losses, reference can be made to Figure 16 Provision for credit losses). This provision represents.16% of average loans, customers liability under acceptances and securities purchased under resale agreements the third consecutive year in which losses were less than our.30% target for losses over a complete business cycle. Market risk Through trading businesses, TD enters into transactions which expose it to market risk, which can be defined as the risk of loss resulting from changes in the values of financial instruments. Market risk includes exposure to interest rates, foreign exchange rates, and equity and commodity prices. TD s Risk Management Division establishes policies and procedures for the management of all market risks. In addition, a Market Risk Committee has been established to provide a peer review of the market risks inherent in the Bank s trading businesses. This committee is co-chaired by the President of TD Securities Inc. and the Senior, Market Risk Policy, and includes members of senior management of TD Securities Inc. and Risk Management Division. Based on the rapid changes occurring in TD s businesses, the market risk management process has evolved to become a strategic part of the business planning process. TD will commence new trading operations and expand existing trading businesses only if the infrastructure is in place to monitor, control and manage the market risk. TD s trading revenue is generated through four principal activities: Market-making: Servicing the needs of clients by making markets in a large number of traded products. TD profits from the spread between bid and ask prices. Market making tends to be a business in which profitability is driven by trading volumes. Sales: Providing financial products to clients. This results in either price mark-ups or commissions. Similar to market-making, this activity s profitability is driven by volume. Arbitrage: Taking positions in certain markets and offsetting that risk in other related markets. TD profits through knowledge of various markets and the interrelationship of those markets which allows it to exploit pricing anomalies. Positioning: Taking certain positions in financial markets in anticipation of changes in those markets. This strategy is the riskiest of the four core activities. However, this is the least utilized strategy and is employed selectively. Market risk positions are managed within established limits by each trading desk and business head. The Risk Management Division, which is independent from the trading functions, oversees the measurement and reporting of market risk. It is also responsible for the development of all policies related to market risk. These responsibilities include: the establishment of methodologies to measure and monitor established limits; the approval of new or additional trading limits; the approval of any major excess over trading limits; approval of all new trading products; independent testing of all trading models; the establishment of volatility and correlation parameters of market rates and prices for the estimation of market risk; and stress testing the portfolio to determine the effect of large unusual market moves. All major market risk policies and procedures are reviewed and approved annually by the Board of Directors. Trading limits are consistent with both the approved business plan for a particular business and TD s tolerance for the market risk associated with that business. The type of limit structure adopted depends on the individual business. The market risk limits for TD s various businesses include Value at Risk (VAR), notional limits, spread limits, yield curve shift limits, loss exposure limits and stop loss limits. Where VAR limits are applied, risk is expressed as the dollar amount that a one day change in the market value of a trading portfolio will not be exceeded more than 1% of the time. The Bank believes that the use of non-statistical measures and stop loss limits reduce the likelihood that trading losses will reach VAR limits. If during the course of a trading day a trading desk determines that a limit will be breached, the trader is required to obtain pre-approval to carry the position. At the end of each day, reports reflecting TD s trading exposures are reviewed by the Risk Management Division and compared with the appropriate limits. If an excess has occurred, the trading desk will be required to bring its position within limits immediately,

26 24 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE unless an exception is granted. All large deviations from existing limits require the approval of the Risk Management Division. The Bank for International Settlements has issued an amendment to the 1988 Capital Accord that sets out a framework for calculating the regulatory capital requirements for market risk. The market risks pertaining to this requirement include those associated with interest rate and foreign exchange trading. The amendment to the 1988 Capital Accord will take effect January 1, TD will be required to report its capital ratios to OSFI for credit and market risk on January 31, 1998 and at the end of each fiscal quarter thereafter. The Bank does not expect these changes to result in an increased regulatory capital requirement. Asset liability management When meeting the banking needs of clients, TD enters into transactions which expose it to market risk. TD s objective is to achieve stable earnings growth and to reduce the risk to earnings through active management of its asset and liability positions. The Asset Liability Management (ALM) area within Risk Management Division measures and manages these banking business market risks. The Asset Liability Committee (ALCO) oversees the management of liquidity and interest rate risk and directs ALM in its activity. The ALCO is chaired by the President and Chief Executive Officer, and includes senior executives. The Foreign Currency Exposure Committee (FCEC) oversees and directs ALM in managing non-trading foreign exchange risk. The FCEC is chaired by the Deputy Chairman. Interest rate risk Interest rate risk is measured by the extent to which changes in market interest rates impact margins, net interest income and the economic value of TD s assets, liabilities and shareholders equity. To the extent that the repricing characteristics of assets differ from liabilities, net interest income will increase or decrease as a result of movements in underlying market interest rates. ALCO manages interest rate risk through actively managing the repricing characteristics of its asset and liability positions. These positions are managed within limits that are specified in TD s interest rate risk management policies. These policies limit the potential negative impact that adverse changes in interest rates can have on current earnings and on the value of TD s interest sensitive assets and liabilities. The policies for interest rate risk management are reviewed and approved annually by the Board of Directors. When deciding on interest rate risk positioning, ALCO considers, among other things, current economic forecasts, the expected direction of interest rates and the shape of the yield curve and market spreads between assets and liabilities of the same and different maturities. Changes in positions are usually accomplished through changes in TD s funding mix and/or asset maturity profile and/or through hedging with derivative products (primarily interest rate swaps, futures and options). ALCO employs a wide range of interest rate risk measurement and analysis methods when assessing the impact of repositioning decisions. These methods include gap reporting, sensitivity analysis and simulation modeling. Gap reporting measures the expected repricing or maturity mismatch between assets, liabilities and off-balance sheet instruments within specified time periods across the entire maturity profile. Sensitivity analysis measures the impact of interest rate changes on current earnings and on the economic value of TD s interest sensitive assets and liabilities. Currently, sensitivity analysis includes assessing the impact of a 100 basis point (i.e. 1%) change in rates across the entire yield curve as well as analysis incorporating a much larger non-parallel shift in rates employing a two standard deviation movement over a three month time frame. Simulation modeling involves forecasting new and renewing business volumes against various future interest rate environments and calculating the impact on the future earnings and economic valuations as well as estimating TD s sensitivity to additional subsequent interest rate changes. Of importance in the management and measurement of non-trading interest rate risk is the establishment of appropriate and accurate repricing characteristics for every asset and liability product offered to clients.

27 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE 25 Many of the products offered to retail banking customers have options embedded in them, such as the option to pre-pay a mortgage before the contractual maturity date or the option to cash out certain term deposits before maturity. Estimation of how customers will use these options is required for the measurement of interest rate risk because changes in the use of these options can materially change the repricing characteristics of these products. As well, the use of these options can and does change significantly with various changes in rates. For example, a customer who holds an encashable term deposit may decide to hold it to maturity if rates do not change. However, if rates increase by 100 basis points (up 1%) then the customer may decide to cash out early and redeposit the funds at a higher rate. Estimation of expected customer behaviour under various future interest rate scenarios incorporates analysis of behaviour during previous interest rate cycles and current demographics. This leads to the continual updating of customer behaviour assumptions in the Bank s interest rate risk measurement models and systems. In 1996, TD increased its Canadian currency interest rate risk position moderately to take advantage of the decline in Canadian rates. During 1997 the Bank maintained a fairly constant position in order to continue to take advantage of the positively sloping yield curve (whereby longer term assets funded by shorter term deposits have earned a larger interest margin). The positive contribution from this position somewhat offsets the reduced returns on core deposits and shareholders equity caused by lower market interest rates. An immediate and sustained 100 basis point (or 1%) increase in rates as at October 31, 1997 would have decreased the economic value of shareholders equity by $158 million (versus $146 and $98 million at October 31, 1996 and 1995 respectively). The same 100 basis point increase would have decreased income after tax by $15 million (versus $9 and $26 million in 1996 and 1995 respectively). Foreign exchange risk Foreign exchange risk is measured by the extent to which changes in foreign currency rates affect the value of the assets, liabilities and shareholders equity that are denominated in foreign currencies. Foreign exchange risk arises when foreign currency assets are greater or less than the liabilities in that currency. This situation creates a foreign currency open position. All major foreign exchange risk policies and procedures are reviewed and approved annually by the Board of Directors. In order to manage foreign exchange risk, foreign currency open positions are minimized and the ratio of foreign currency investments in TD subsidiaries to total foreign currency assets is maintained at a level that is close to the total Bank s common equity to assets ratio. TD does not actively speculate in foreign exchange and has established specific foreign exchange risk management policies. Liquidity risk The objective of sound and prudential liquidity management is to ensure that funds will be available at all times to honour all cash outflow obligations as they become due. Liquidity risk is the risk of default that could occur if TD does not have sufficient funds available to meet all its cash outflow obligations as they come due. The management of liquidity risk is the responsibility of ALCO. To minimize liquidity risk, it ensures that core and long-term deposits are maintained at a very high proportion of total deposits relative to that represented by wholesale demand, notice and short-term deposits. TD also maintains liquid assets in both Canadian and foreign currencies at prudential levels to ensure that cash can quickly be made available to honour its obligations. The Bank has specific policies regarding required liquid asset coverage of short-term wholesale deposits. As well, TD s prudent funding management recognizes the impact of large single depositors and ensures that there is no reliance on one customer or small group of customers. Liquidity management also recognizes the impact of potential cash outflows arising from irrevocable commitments to fund new assets or from customers liability under acceptances falling into bank loans. As at October 31, 1997, TD s liquidity was supported by $8.6 billion and US$3.7 billion in highly liquid Canadian and U.S. assets respectively (compared to $10.9 billion and US$4.2 billion respectively at October 31, 1996). These assets include Canadian and U.S. government bonds and treasury bills, deposits with the Bank of Canada, top investment grade customers liability under acceptances and commercial paper. In the event of a liquidity crisis, contingency plans are in place to ensure TD continues to honour all cash outflow obligations. TD s liquidity management policies are reviewed and approved annually by the Board of Directors.

28 26 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE Operational risk Operational risk is managed through strong internal controls, which include regular internal audits by TD s Audit Division. Operational risk is the risk of loss resulting from errors or fraud. These risks are mitigated through: internal controls designed to prevent employees from performing incompatible functions, safeguard assets, ensure that transactions are recorded correctly and financial statements are accurately prepared and verify that TD is in compliance with regulations; TD s Audit Division which performs regular audits to ensure that internal controls are functioning adequately and that correct accounting procedures are being followed; trained and competent personnel; systems supported by competent and well-trained professionals; and continual upgrades of TD s systems and procedures. The Year 2000 computer problem poses a major challenge to all businesses. The problem arises because most existing computer systems cannot accurately interpret dates beyond If left unchanged many systems will either fail or provide incorrect results. Given the seriousness of this issue and the potential impact it could have on operations and customer service, TD started working on a solution in A plan and the necessary resources are in place to ensure that there will be no disruption in the Bank s services and systems as a result of the Year 2000 computer problem. In the event of a disruption of service, contingency plans are in place to ensure business operations will continue.

29 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE 27 Capital management Figures 5 6 F igure 5 CAPITAL STRUCTURE AND RATIOS AT YEAR END (millions of dollars) Tier 1 capital Retained earnings $ 5,460 $ 4,840 $ 4,636 Common shares 1,297 1, Qualifying preferred shares Less: unamortized goodwill Total Tier 1 capital 6,781 6,157 6,053 Tier 2 capital Subordinated notes 3,391 2,685 2,404 General allowance for credit losses 402 Less: amortization of subordinated notes Total Tier 2 capital 3,686 2,626 2,375 Other deductions 13 Total capital $ 10,454 $ 8,783 $ 8,428 Capital ratios To total assets Common shareholders equity 4.1% 4.9% 5.1% Total shareholders equity To risk-weighted assets Net common shareholders equity Tier 1 capital Tier 2 capital Total capital Assets to capital multiple U.S. basis Tier 1 capital 6.4% 6.6% 7.2% Total capital Includes the November 1, 1996 issuance of a $350 million subordinated note. 2 Total assets plus off-balance sheet credit instruments such as letters of credit and guarantees less investments in associated corporations and goodwill divided by total capital. Capital structure and ratios Capital management controls the acquisition, maintenance and retirement of capital. The objectives are to provide sufficient capital to maintain the confidence of investors and depositors while providing a satisfactory return to common shareholders, who provide the vast majority of the capital. Adequate capital is critical to the continuing operations of TD, as evidenced by the fact that under the Bank Act, most capital decisionmaking is reserved for the Board of Directors. Management of TD s capital includes the following specific objectives: to be an adequately capitalized financial institution as defined by relevant regulatory authorities and as compared to its peer group; to maintain strong ratings; to achieve the lowest overall cost of capital consistent with preserving the appropriate mix of capital elements; to ensure that sufficient and appropriate capital is either at hand or readily available at reasonable cost to facilitate expansion and provide sufficient protection against unexpected events; and to provide a satisfactory return to common shareholders. The $1.7 billion increase in total capital in 1997 resulted from: earnings after dividends of $722 million; an increase of $658 million in subordinated notes; and a $402 million inclusion of TD s general allowance for credit losses, now permitted by the Office of the Superintendent of Financial Institutions Canada (OSFI). Capital ratios provide measures of financial strength and flexibility. OSFI measures the capital adequacy of Canadian banks in accordance with its instructions for determining risk-adjusted capital and risk-weighted assets and off-balance sheet exposures. The risk-based approach is based on the Bank for International Settlements agreed framework for achieving a more consistent measurement of capital adequacy and standards for banks engaged in international business. This approach does not take into account TD s unrealized pre-tax gains on security and real estate investments. These were estimated at $674 million and $310 million, respectively, at October 31, 1997.

30 28 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE TD management regards the ratio of net common shareholders equity to risk-weighted assets as the most important benchmark of capital adequacy since it excludes preferred shares which are sometimes regarded as not possessing the same capital quality as common equity. In addition, the ratio deducts intangible assets, principally goodwill, which are also deducted from Tier 1 capital, in order to facilitate comparison among Canadian banks. While TD s ratio of net common shareholders equity to risk-weighted assets has been affected by the deduction of $522 million in goodwill, the year-end ratio of 6.1% is comparable to or better than the other major Canadian banks. TD has made arrangements to increase Tier 1 capital by $350 million through a preferred share issue of a newly incorporated subsidiary. It is anticipated that regulatory approval will be received in the first quarter of fiscal Had the regulatory approval occurred as at October 31, 1997, the Bank s Tier 1 and total capital ratios would have been 6.9% and 10.5% respectively. Regulatory environment OSFI has expressed a preference that Tier 1 capital and total capital ratios of Canadian banks return to their 1995 levels of 7% and 10% respectively. The Bank is expected to make continued progress in meeting these levels in fiscal F igure 6 RISK-WEIGHTED ASSETS AT YEAR END (millions of dollars) Risk- Risk- Riskweighted weighted weighted Balance balance Balance balance Balance balance Balance sheet assets Cash resources $ 7,587 $ 1,414 $ 5,216 $ 862 $ 4,351 $ 765 Securities purchased under resale agreements 23, , ,363 Securities 33,422 17,949 24,224 10,785 22,128 8,557 Loans 79,702 46,745 72,391 46,568 66,295 42,125 Customers liability under acceptances 7,036 7,036 6,411 6,411 6,297 6,297 Other assets 12,784 4,922 8,992 3,524 9,911 2,962 Total balance sheet assets $ 163,852 78,073 $ 130,297 68,152 $ 115,345 60,706 Credit instruments Guarantees and standby letters of credit 7,139 5,807 5,455 Documentary and commercial letters of credit Note issuance facilities/revolving underwriting facilities Commitments to extend credit 14,689 13,593 12,590 Total credit instruments 22,047 19,566 18,228 Derivative instruments Interest rate contracts Forward rate agreements Swaps 1, Options purchased Total interest rate contracts 1,277 1, Foreign exchange contracts Forward contracts 1, ,623 Swaps Cross-currency interest rate swaps Options purchased Total foreign exchange contracts 2,013 1,515 2,169 Other contracts Impact of netting agreements (910) Total derivative instruments 2,765 2,678 3,200 Total risk-weighted assets $ 102,885 $ 90,396 $ 82,134

31 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE 29 Risk-weighted assets With the growth in total assets of $33.6 billion in 1997 and $15 billion in 1996, TD s risk-weighted assets increased by $12.5 billion in 1997 and $8.3 billion in The 1997 increase is primarily due to increased securities holdings that resulted from expanded activity in trading portfolios. When risk assessments are made, balance sheet and off-balance sheet exposures are reviewed collectively. The variety of methods used to monitor and control the various financial risks to which TD is exposed are outlined in the introduction to the risk management section of the Management discussion and analysis of operating performance. Supplementary information Figures 7 19 F igure 7 CONSOLIDATED STATEMENT OF INCOME (TEB) (millions of dollars) Canada United States Other international Total Net interest income $ 2,391 $ 2,167 $ 255 $ 219 $ 176 $ 81 $ 2,822 $ 2,467 $ 2,378 Taxable equivalent adjustment Net interest income (TEB) 2,552 2, ,983 2,603 2,498 Provision for credit losses (5) 30 3 (3) Net interest income after credit loss provision (TEB) 2,190 2, ,623 2,451 2,318 Other income 1,885 1, ,650 1,749 1,461 Net interest and other income (TEB) 4,075 3, ,273 4,200 3,779 Non-interest expenses 2,686 2, ,383 2,654 2,413 Net income before provision for income taxes (TEB) 1,389 1, ,890 1,546 1,366 Imputed income taxes on grossed-up income (1) Net income $ 763 $ 679 $ 222 $ 165 $ 103 $ 70 $ 1,088 $ 914 $ 794 Percentage contribution to consolidated net income 70.1% 74.3% 20.4% 18.0% 9.5% 7.7% 100% 100% 100% F igure 8 EARNINGS PER COMMON SHARE ANALYSIS Prior year s earnings per common share $ 2.95 $ 2.51 $ 2.14 Increase (decrease) Net interest income (TEB) asset growth Net interest income (TEB) margin (.77) (.41) (.67) Provision for credit losses (.69) Other income Non-interest expenses (2.44) (.88) (.68) Income taxes (TEB) (.57) (.22) (.24) Preferred dividends Current year s earnings per common share $ 3.54 $ 2.95 $ 2.51 Number of common shares (millions) at year-end Number of common shares (millions) average

32 30 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE F igure 9 AVERAGE BALANCES AND INTEREST RATES (TEB) (millions of dollars) Assets Average Average Average Average Average Average balance Interest rate balance Interest rate balance Interest rate Deposits with banks $ 4,957 $ % $ 3,914 $ % $ 3,306 $ % Securities purchased under resale agreements 18, , , Securities Investment 12, , , Trading 14, , , Total securities 27,147 1, ,952 1, ,329 1, Loans Residential mortgages 30,110 2, ,331 2, ,830 2, Consumer instalment and other personal 5, , , Credit card 4, , , Business and government 35,593 2, ,597 2, ,849 2, Total loans 76,563 5, ,343 5, ,354 5, Total earning assets 126,897 7, ,801 7, ,251 7, Customers liability under acceptances 7,141 6,247 5,997 Other assets 12,359 7,981 9,720 Total assets $146,397 $ 7, % $ 117,029 $ 7, % $ 109,968 $ 7, % Liabilities Deposits Banks $ 13,332 $ % $ 10,924 $ % $ 12,057 $ % Personal 40,113 1, ,204 1, ,657 2, Business and government 45,438 1, ,763 1, ,379 1, Total deposits 98,883 3, ,891 3, ,093 4, Subordinated notes 3, , , Securities sold short or under repurchase agreements 21, , , Other interest bearing liabilities Total interest bearing liabilities 123,549 5, ,816 4, ,805 4, Acceptances 7,141 6,247 5,997 Other liabilities 8,708 6,587 8,194 Equity preferred common 6,458 5,821 5,353 Total liabilities $146,397 $ 5, % $ 117,029 $ 4, % $ 109,968 $ 4, % Total net interest income $ 2, % $ 2, % $ 2, % F igure 10 ANALYSIS OF CHANGE IN NET INTEREST INCOME (TEB) (millions of dollars) 1997 vs vs Favourable (unfavourable) Favourable (unfavourable) due to change in due to change in Average Average Net Average Average Net volume rate change volume rate change Total earning assets $ 1,560 $ (1,031) $ 529 $ 557 $ (485) $ 72 Total interest bearing liabilities (1,316) 1,167 (149) (453) Net interest income $ 244 $ 136 $ 380 $ 104 $ 1 $ 105

33 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE 31 F igure 11 LOANS AND CUSTOMERS LIABILITY UNDER ACCEPTANCES AT YEAR END (millions of dollars) Canada United States Other international Total By sector Residential mortgages $ 30,442 $ 28,624 $ $ $ $ $ 30,442 $ 28,624 $ 26,327 Consumer instalment and other personal 9,563 7,791 1, ,347 8,587 7,088 Credit card 2,389 2,145 2,389 2,145 2,059 Total residential and personal 42,394 38,560 1, ,178 39,356 35,474 Real estate development Commercial and industrial 1,974 2, ,205 2,708 3,415 Residential 1,153 1, ,164 1,239 1,258 Retail Total real estate 3,710 3, ,991 4,662 5,439 Communication ,359 2,333 1,992 1,633 5,273 4,484 3,995 Financial 2,016 1, , ,950 3,622 3,199 Utilities ,890 1,566 1,779 1,063 3,957 2,833 2,373 Cable television ,285 1, ,858 2,460 2,370 Food, beverage and tobacco 1,729 1, ,025 2,255 2,128 Forestry 1,427 1, ,121 1,941 1,872 Oil and gas 1,860 1, ,808 1,885 1,864 Metals and mining 999 1, ,461 1,652 1,409 Health and social services ,933 1,401 1,379 Agriculture 1,507 1, ,531 1,321 1,335 Chemical ,304 1,283 1,082 Automotive 1, ,536 1,114 1,020 Transportation , Apparel and textile Retail Construction Appliance and electrical Government Hotels All other loans 3,077 2, ,210 4,016 3,045 Total business and government 23,880 22,024 10,367 11,370 8,313 6,052 42,560 39,446 37,118 Total 1 $ 66,274 $ 60,584 $12,135 $ 12,156 $ 8,329 $ 6,062 $ 86,738 $ 78,802 $ 72,592 Percentage growth 9.4% 4.8% (.2)% 9.3% 37.4% 65.4% 10.1% 8.6% 2.3% By location of ultimate risk % mix % mix % mix Canada Atlantic $ 2,277 $ 2,178 $ 2, Québec 5,549 5,534 5, Ontario 38,392 35,607 31, Prairies 10,500 8,940 9, British Columbia 9,212 8,329 7, Total Canada 65,930 60,588 55, United States 11,504 10,091 13, Other international United Kingdom 2,839 4,056 1, Europe other Australia and New Zealand 2,486 1, Japan Asia other 1, Latin America and Caribbean 1, Other Total other international 9,304 8,123 3, Total $ 86,738 $ 78,802 $ 72, Percentage growth over previous year Canada 8.8% 9.8%.2% U.S. and other international Total 10.1% 8.6% 2.3% 1 There were no material loans restructured or renegotiated against which provisions have been established. The Bank does not have sovereign risk loans against which provisions have been established.

34 32 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE F igure 12 REAL ESTATE DEVELOPMENT LOANS AND CUSTOMERS LIABILITY UNDER ACCEPTANCES (millions of dollars) Net Net Impaired impaired Impaired impaired as a % of as a % of Total Gross Net total Total Gross Net total Domestic Commercial/industrial $ 1,974 $ 52 $ $ 2,133 $ 159 $ Residential 1, , Retail Total domestic 3, , United States Commercial/industrial Residential Retail Total United States Other international Commercial/industrial Residential Retail Total other international Total U.S. and other international Total $ 3,991 $ 104 $ $ 4,662 $ 396 $ F igure 13 LOANS TO SMALL AND MID-SIZED BUSINESS CUSTOMERS (millions of dollars) Loans authorized Amount outstanding Loan amount (thousands of dollars) 0 24 $ 288 $ 267 $ 251 $ 186 $ 179 $ ,301 2,200 2,174 1,538 1,491 1, ,134 2,094 2,024 1,339 1,327 1, ,533 2,372 2,270 1,379 1,307 1,328 1,000 4,999 7,134 6,617 6,347 3,268 3,132 3,278 Total 1 $ 15,758 $ 14,880 $ 14,352 $ 8,636 $ 8,348 $ 8,575 1 Personal loans used for business purposes are not included in these totals. NEW TD VISA CARDS TD Bank Products and Services Two new TD Visa cards were introduced during the year to meet the needs of different customer segments. TD Gold Select Visa card is Canada s first major no-fee Gold Visa card, and features a broad range of benefits including travel discounts. The TD Venture Line of Credit Visa card was designed specifically as a cost effective and useful product for the small business customer and features no annual, set-up or administrative fees, a competitive interest rate of prime plus 4% and a credit limit of up to $50,000.

35 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE 33 F igure 14 IMPAIRED LOANS LESS ALLOWANCE FOR CREDIT LOSSES AT YEAR END (millions of dollars) Canada United States Other international Total By sector Residential mortgages $ 36 $ 52 $ $ $ $ $ 36 $ 52 $ 43 Consumer instalment and other personal Credit card (15) (12) (15) (12) (12) Total residential and personal Real estate development Commercial and industrial Residential Retail Total real estate Communication 6 9 (1) Financial (4) Utilities Forestry Oil and gas (2) 1 (2) 1 4 Metals and mining Food, beverage and tobacco Health and social services Agriculture Chemical Automotive Apparel and textile Retail Appliance and electrical Construction Transportation Hotels All other loans Total business and government Total net impaired loans before general provisions $ 271 $ 303 $ 52 $ 200 $ $ $ 323 $ 503 $ 863 Less: general provisions Total net impaired loans $ (79) $ 344 $ 704 Net impaired loans as a % of common equity (1.2)% 5.6% 12.8% By location % mix % mix % mix Canada Atlantic $ 4 $ 5 $ Québec Ontario Prairies British Columbia Total Canada United States Other international United Kingdom 3.3 Total other international 3.3 Total net impaired loans before general provisions Less: general provisions Total net impaired loans $ (79) $ 344 $ 704 Net impaired loans as a % of net loans 1 (.1)%.4%.9% 1 Includes customers liability under acceptances and securities purchased under resale agreements. F igure 15 IMPACT ON NET INTEREST INCOME DUE TO IMPAIRED LOANS (millions of dollars) Reduction in net interest income due to impaired loans $ 64 $ 79 $ 137 Recoveries (13) (44) (81) Net reduction $ 51 $ 35 $ 56

36 34 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE F igure 16 PROVISION FOR CREDIT LOSSES (millions of dollars) Canada United States Other international Total By sector Residential mortgages $ 6 $ 6 $ $ $ $ $ 6 $ 6 $ 9 Consumer instalment and other personal Credit card Total residential and personal Real estate development Commercial and industrial (51) 15 (29) 9 (1) (80) Residential (6) (17) 1 (6) (16) 20 Retail Total real estate (56) 3 (23) 20 (1) (79) Communication (4) (5) (2) 7 (5) 48 Financial (4) Utilities (2) Cable television 1 1 (1) Food, beverage and tobacco (10) (10) 8 Forestry (110) Metals and mining (7) (2) (9) (2) Health and social services Agriculture Chemical (3) 5 (3) 5 5 Automotive Apparel and textile 5 (3) (1) 5 (4) (1) Retail (12) Appliance and electrical (1) (1) 1 Construction Transportation 2 6 (1) Hotels (3) (3) (5) All other 3 9 (2) 3 7 (1) Total business and government (7) 30 3 (3) Total before special general provision $ 164 $ 125 $ (7) $ 30 $ 3 $ (3) $ 160 $ 152 $ 180 Special general provision 200 Total $ 360 $ 152 $ By location % mix % mix % mix Canada Atlantic $ $ 2 $ Québec (17) 3 30 (4.7) Ontario Prairies (3) 8 3 (.8) British Columbia (5) 37 (4) (1.4) 24.3 (2.2) Total Canada United States (7) (1.9) Other international United Kingdom 1 (3) (6).2 (1.9) (3.3) Australia 2 (11).5 (6.1) Total other international 3 (3) (17).7 (1.9) (9.4) Special general provision Total $ 360 $ 152 $ Provision for credit losses as a % of net average loans 1 Canada Residential mortgages.02%.02%.03% Personal Business and other Total Canada United States (.04) Other international.04 (.06) (.45) Special general provision.20 Total.35%.18%.23% 1 Includes customers liability under acceptances and securities purchased under resale agreements.

37 MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE 35 F igure 17 CURRENT REPLACEMENT COST OF DERIVATIVES (millions of dollars) Canada United States Other international Total By sector Financial $ 2,813 $ 2,286 $ 592 $ 525 $ 2,207 $ 1,969 $ 5,612 $ 4,780 $ 5,854 Government Other , Current replacement cost $ 4,043 $ 3,403 $ 728 $ 674 $ 2,617 $ 2,044 7,388 6,121 6,962 Impact of netting agreements 2,747 Current replacement cost (after netting agreements) $ 4,641 $ 6,121 $ 6,962 F igure 18 TOTAL ASSETS AT YEAR END BASED ON LOCATION OF ULTIMATE RISK (millions of dollars) % mix % mix % mix Canada $ 102,959 $ 90,643 $ 88, United States 39,586 26,425 20, Total Canada and United States 142, , , United Kingdom 6,008 4,424 1, Europe other 4,538 1,995 1, Australia and New Zealand 4,686 2,588 1, Japan 2,498 2,261 1, Asia other 1,956 1, Latin America and Caribbean 1, Other Total assets $ 163,852 $ 130,297 $ 115, F igure 19 ASSETS UNDER ADMINISTRATION (millions of dollars) /1996 % increase (decrease) Personal and commercial banking $ 24,850 $ 20,859 $ 12, Wealth management services Retail brokerage Canada 25,680 18,103 15, Retail Brokerage United States 28,741 16, Total retail brokerage 54,421 34,387 15, Mutual funds Canada 13,039 9,507 5, Mutual funds United States 6,276 3, Total mutual funds 19,315 13,254 5, Institutional and other 24,742 14,658 15, Total wealth management services 98,478 62,299 36, Investment banking 1,816 1, Total assets under administration before institutional and pension custody business 125,144 84,565 48, Institutional and pension custody business sold in ,831 Total assets under administration $ 125,144 $ 84,565 $ 98,

38 36 GLOSSARY OF FINANCIAL AND BANKING TERMS Assets under administration: Assets which are owned by customers for which the Bank provides management and custodial services. Average earning assets: The average of deposits with other banks, loans and securities based on daily or weekly balances for the period ending October 31 in each fiscal year. Average total assets: The average of total assets based on daily or weekly balances for the period ending October 31 in each fiscal year. Basis point: A measurement unit defined as one hundredth of one per cent. Commitments to extend credit: Credit facilities provided to customers which are usually for a specified term and interest rate. Current replacement cost: The estimated amount that would be received by the Bank if the contracts were sold. Derivative financial instruments: See individual definitions of financial futures, foreign currency, interest rate and equity options, foreign exchange forward contracts, forward rate agreements and interest rate and cross-currency swaps. Dividend yield: Dividends per common share divided by current year s opening market price per common share. Documentary and commercial letters of credit: Written undertakings by the Bank on behalf of its customers (normally importers), authorizing a third party (normally an exporter) to draw drafts on the Bank up to a stipulated amount under specific terms and conditions to facilitate international trade. Earnings per common share: Net income for the year (after the deduction of preferred share dividends), divided by the daily average equivalent of fully paid common shares outstanding. Efficiency ratio: Non-interest expenses as a percentage of the sum of net interest income on a taxable equivalent basis and other income. Financial futures: Future commitments to purchase or deliver securities or money market instruments on a specified future date at a specified price. The instruments are obligations between the Bank and the organized exchange upon which the contract is traded. Foreign currency, interest rate and equity options: Agreements between two parties in which the writer of the option grants the buyer the future right, but not the obligation, to buy or to sell, at or by a specified date, a specific amount of a financial instrument or commodity at a price agreed when the option is arranged. Foreign exchange forward contracts: Commitments to purchase or sell foreign currencies for delivery at a specified date in the future at a fixed rate. Forward rate agreements: Contracts fixing an interest rate to be paid or received on a notional deposit of specified maturity commencing at a specified future date. Guarantees and standby letters of credit: Commitments issued by the Bank guaranteeing the obligations or performance of its customers to third parties and for which the Bank has recourse against its customers. Impaired loans: Loans, where in management s opinion, there has been a deterioration of credit quality to the extent that the Bank no longer has reasonable assurance as to the timely collection of the full amount of principal and interest. Interest on impaired loans subsequently received is recorded as interest income only when management has reasonable assurances as to the timely collection of the full amount of the principal and interest. Included in impaired loan figures are: loans, term preferred shares, income debentures, small business bonds, small business development bonds that qualify as loan substitutes, deposits with banks and derivative financial instruments. Interest rate and cross-currency swaps: Transactions that generally involve the contractual exchange of fixed and floating rate interest payment obligations and/or currencies, on a specified amount of notional principal for a specified period of time. Interest rate sensitive assets/liabilities: Earning assets and interest bearing liabilities that mature or are repriced within specified time frames, or have interest rates that float in relation to a base rate such as the Bank s prime rate. Liquidity: The ability to meet on time all deposit withdrawals, debt maturities and commitments to provide credit through the provision of assets readily convertible to cash, or the capacity to borrow and refund maturing liabilities. Location of ultimate risk: The location of residence of the customer or, if guaranteed, the guarantor. However, where the customer or guarantor is a branch office, the location of residence of the head office is used, and where most of the customer s or guarantor s assets or the security for the asset are situated in a different country, that country is deemed to be the location of ultimate risk. Foreign currency assets are not necessarily utilized in or repaid from the geographic areas in which they are included. Net common equity: Common shareholders equity less intangible assets. Net interest income: The difference between interest income on earning assets and interest expense on interest bearing liabilities. Net interest rate margin: Net interest income on a taxable equivalent basis before net investment securities gains (losses) as a percentage of average earning assets. Note issuance facilities and revolving underwriting facilities: Undertakings from the Bank where a customer issues short-term notes and is unable to sell the notes at a prescribed price, the Bank will buy them at that price. Notional principal: A reference amount on which payments for derivative financial instruments are based. Provision for credit losses: Amount added to the allowance for credit losses to bring it to a level that management considers adequate to absorb all credit related losses in its portfolio. Repurchase agreements: The sale of a security with the commitment by the seller to repurchase the security at a specified price. Return on assets: Net income as a percentage of average total assets, which indicates how effectively a bank has used its total resources. Return on common equity: Net income applicable to common shareholders as a percentage of average common shareholders equity. A broad measurement of a bank s effectiveness in employing shareholders funds. Risk-adjusted (BIS) capital: Consists of Tier 1 and Tier 2 capital as defined by OSFI under the Bank for International Settlements (BIS) framework. Tier 1 capital is common shareholders equity plus qualifying non-cumulative perpetual preferred shares less goodwill. Tier 2 capital includes subordinated debt, general allowance for credit losses and other preferred shares, less investments in associated corporations and amortization of subordinated notes. Risk-weighted assets: Assets calculated by applying a predetermined risk-weight factor to the face amount of each asset and the notional principal amount of each off-balance sheet contract. The risk-weight factors are established by OSFI to convert assets and off-balance sheet exposures to a comparable risk level. Securities purchased under resale agreements: The purchase of a security, normally a government bond, with the commitment by the buyer to resell the security to the original seller at a specified price. Taxable equivalent basis (TEB): A conversion process whereby non-taxable income (income from Canadian securities including common and preferred shares, income debentures, term preferred shares and shares in affiliates) received by the Bank is adjusted to an equivalent before-tax basis. Total market return: The change in market price plus dividends paid during the year as a percentage of the current year s opening market price per common share.

39 FINANCIAL RESULTS 37 CONSOLIDATED FINANCIAL STATEMENTS 38 Financial reporting responsibility 38 Auditors report to the shareholders 39 Consolidated balance sheet 40 Consolidated statement of income 41 Consolidated statement of changes in shareholders equity 42 Consolidated statement of changes in financial position 43 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 67 PRINCIPAL SUBSIDIARIES 68 TEN-YEAR STATISTICAL REVIEW 72 REPORTED QUARTERLY RESULTS TD MAIN$TREET BANKING TD Bank Products and Services TD Main$treet Banking is well on its way to making it easier for our small business customers by providing them with the ability to do their personal and business banking through any TD branch or electronic delivery channel. Responding to the needs of this vital and growing market segment, we introduced two new simple and cost-effective credit products in 1997 the TD Businessline line of credit, and the TD Venture Line of Credit Visa card.

40 38 FINANCIAL RESULTS Consolidated financial statements Financial reporting responsibility The consolidated financial statements of The - Dominion Bank and related financial information presented elsewhere in this Annual Report have been prepared by management, which is responsible for their integrity, consistency, objectivity and reliability. Generally accepted accounting principles as well as the requirements of the Bank Act and the related regulations have been applied and management has exercised its judgement and made best estimates where deemed appropriate. The Bank s accounting system and related internal controls are designed, and supporting procedures maintained, to provide reasonable assurance that financial records are complete and accurate and that assets are safeguarded against loss from unauthorized use or disposition. These supporting procedures include the careful selection and training of qualified staff, the establishment of organizational structures providing a well-defined division of responsibilities and accountability for performance, and the communication of policies and guidelines of business conduct throughout the Bank. The Bank s Board of Directors, acting through the Audit Committee which is comprised of directors who are not officers or employees of the Bank, oversees management s responsibilities for the financial reporting and internal control systems. The Bank s Chief Auditor, who has full and free access to the Audit Committee, conducts an extensive program of audits in coordination with the Bank s shareholders auditors. This program is an integral part of the system of internal control and is carried out by a professional staff of auditors. The Superintendent of Financial Institutions Canada makes such examination and enquiry into the affairs of the Bank as he may deem necessary to satisfy himself that the provisions of the Bank Act, having reference to the safety of the depositors and shareholders of the Bank, are being duly observed and that the Bank is in a sound financial condition. Ernst & Young and Price Waterhouse, the shareholders auditors, have audited our consolidated financial statements. They have full and free access to, and meet periodically with, the Audit Committee to discuss their audit and matters arising therefrom such as comments they may have on the fairness of financial reporting and the adequacy of internal controls. A. Charles Baillie William T. Brock President and Deputy Chairman Chief Executive Officer Auditors report to the shareholders We have audited the Consolidated balance sheet of The -Dominion Bank as at October 31, 1997 and the Consolidated statements of income, changes in shareholders equity and changes in financial position for the year then ended. These financial statements are the responsibility of the Bank s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Bank as at October 31, 1997 and the results of its operations and the changes in its financial position for the year then ended in accordance with generally accepted accounting principles, including the accounting requirements of the Superintendent of Financial Institutions Canada. The consolidated financial statements for the years ended October 31, 1996 and 1995 were audited by Ernst & Young and KPMG who expressed an opinion thereon without reservation in their report dated November 28, Ernst & Young Chartered Accountants, Canada November 20, 1997 Price Waterhouse Chartered Accountants

41 FINANCIAL RESULTS 39 Consolidated balance sheet As at October 31 (millions of dollars) ASSETS Cash resources Cash and deposits with Bank of Canada $ 517 $ 906 Deposits with other banks Interest bearing 6,387 3,843 Non-interest bearing ,587 5,216 Securities purchased under resale agreements 23,321 13,063 Securities (Note 2) Investment 12,611 10,723 Trading 20,811 13,501 33,422 24,224 Loans (net of allowance for credit losses) (Note 3) Residential mortgages 30,442 28,624 Consumer instalment and other personal 11,347 8,587 Credit card 2,389 2,145 Business and government 35,524 33,035 79,702 72,391 Other Customers liability under acceptances 7,036 6,411 Land, buildings and equipment (Note 4) 1,505 1,350 Other assets (Note 5) 11,279 7,642 19,820 15,403 Total assets $ 163,852 $ 130,297 LIABILITIES Deposits (Note 6) Personal $ 44,044 $ 43,546 Banks 16,268 14,164 Business and government 50,314 29, ,626 87,563 Other Acceptances 7,036 6,411 Securities sold short or under repurchase agreements 24,839 18,170 Other liabilities (Note 7) 10,657 9,139 42,532 33,720 Subordinated notes (Note 8) 3,391 2,335 SHAREHOLDERS EQUITY Capital stock (Note 9) Preferred Common 1,297 1,305 Retained earnings 5,460 4,840 7,303 6,679 Total liabilities and shareholders equity $ 163,852 $ 130,297 A. Charles Baillie William T. Brock President and Deputy Chairman Chief Executive Officer

42 40 FINANCIAL RESULTS Consolidated statement of income For the years ended October 31 (millions of dollars) Interest income $ 7,826 $ 7,322 $ 7,266 Interest expense 5,004 4,855 4,888 Net interest income (Note 11) 2,822 2,467 2,378 Provision for credit losses (Note 3) Net interest income after credit loss provision 2,462 2,315 2,198 Other income Investment and securities services Credit fees Service charges Trading income (Note 12) Card services Net investment securities gains Other ,650 1,749 1,461 Net interest and other income 5,112 4,064 3,659 Non-interest expenses Salaries and staff benefits (Note 13) 1,826 1,452 1,305 Occupancy including depreciation Equipment including depreciation Other ,383 2,654 2,413 Income before provision for income taxes 1,729 1,410 1,246 Provision for income taxes (Note 14) Net income 1, Preferred dividends Net income applicable to common shares $ 1,057 $ 882 $ 756 Per common share (Note 10) Net income $ 3.54 $ 2.95 $ 2.51 Dividends

43 FINANCIAL RESULTS 41 Consolidated statement of changes in shareholders equity For the years ended October 31 (millions of dollars) Preferred shares (Note 9) Balance at beginning of year $ 534 $ 535 $ 397 Proceeds from share issues 225 Share redemptions (85) Translation adjustment on shares issued in a foreign currency 12 (1) (2) Balance at end of year Common shares (Note 9) Balance at beginning of year 1, Issued on acquisition of a subsidiary Proceeds from shares issued on exercise of options Shares purchased for cancellation (30) (48) Balance at end of year 1,297 1, Retained earnings before foreign currency translation Balance at beginning of year 4,805 4,593 4,107 Net income 1, Preferred dividends (31) (32) (38) Common dividends (335) (302) (265) Shares purchased for cancellation (222) (375) Stock options settled in cash (6) Other 6 7 (5) Balance at end of year 5,305 4,805 4,593 Foreign currency translation Balance at beginning of year Translation adjustments 97 (18) (9) Income taxes applicable to translation adjustments (4) Balance at end of year Retained earnings at end of year after foreign currency translation 5,460 4,840 4,636 Total common equity 6,757 6,145 5,518 Total shareholders equity $ 7,303 $ 6,679 $ 6,053

44 42 FINANCIAL RESULTS Consolidated statement of changes in financial position For the years ended October 31 (millions of dollars) Cash flows provided by (used in) operating activities Net income $ 1,088 $ 914 $ 794 Adjustments to determine net cash flows Provision for credit losses Depreciation and amortization Deferred income taxes (116) 77 (12) Net investment securities gains (329) (103) (92) Changes in accrued interest Increase in interest receivable (164) (126) (164) Increase (decrease) in interest payable (2) (69) 395 Net decrease in deferred loan fees (9) (16) (23) Net increase in trading securities (7,310) (2,578) (3,541) Net increase (decrease) in current income taxes payable 74 (37) (133) Net increase (decrease) in other items and accruals (1,812) Net cash used in operating activities (8,062) (1,023) (1,828) Cash flows provided by (used in) financing activities Net increase in deposits 23,063 4, Net increase in securities sold under repurchase agreements 3,392 8,492 1,364 Net increase in securities sold short 3, ,494 Net increase (decrease) in debt of subsidiaries 39 (11) (52) Issuance of subordinated notes 1, Repayment of subordinated notes (515) (66) (265) Common shares issued on exercise of options Common shares issued on acquisition of a subsidiary Common shares purchased for cancellation (252) (423) Common stock options settled in cash (6) Issuance of preferred shares 225 Redemption of preferred shares (85) Dividends paid on preferred shares (31) (32) (38) common shares (335) (302) (265) Other financing 18 (9) (8) Net cash provided by financing activities 30,243 13,230 6,056 Cash flows provided by (used in) investing activities Increase in balances on deposit with other banks (2,760) (546) (968) Activity in investment securities Purchases (18,376) (11,525) (10,405) Proceeds from maturities 11,464 6,424 4,293 Proceeds from sales 5,353 6,707 6,876 Net increase in loans (9,807) (5,517) (356) Proceeds from mortgage loan securitizations 1,969 Land, buildings and equipment net purchases (155) (155) (180) Net increase in securities purchased under resale agreements (10,258) (6,489) (3,627) Acquisition of a subsidiary (726) Net cash used in investing activities (22,570) (11,827) (4,367) Net increase (decrease) in cash and cash equivalents (389) 380 (139) Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year represented by cash and deposits with Bank of Canada $ 517 $ 906 $ 526 Supplementary disclosure of cash flow information Amount of interest paid during the year $ 5,006 $ 4,924 $ 4,493 Amount of income taxes paid during the year

45 FINANCIAL RESULTS 43 Notes to consolidated financial statements Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Bank Act The Bank Act stipulates that the consolidated financial statements are to be prepared in accordance with generally accepted accounting principles, except as specified by the Superintendent of Financial Institutions Canada. The accounting principles followed by the Bank conform with accounting principles generally accepted in Canada, including the accounting requirements of the Superintendent of Financial Institutions Canada. Note 24 to the consolidated financial statements describes and reconciles the differences between generally accepted accounting principles in Canada and in the United States. The significant accounting policies and practices followed by the Bank are: (a) Basis of consolidation The consolidated financial statements include the assets and liabilities and results of operations of subsidiaries, namely corporations effectively controlled by the Bank. The purchase method is used to account for all business acquisitions. The difference between the acquisition cost of an investment and the fair value of the net assets acquired represents goodwill which is amortized to income over a period not to exceed 20 years. The unamortized balance of goodwill is included in other assets. Goodwill is written down to fair value when a permanent impairment in value is indicated by the expected cash flows from each subsidiary. Interests in joint ventures are recognized using the proportionate consolidation method. Under this approach, the Bank s share of assets, liabilities, revenues and expenses of joint ventures are reported on a lineby-line basis. Corporations over which the Bank has significant influence are reported in investment securities in the Consolidated balance sheet and are accounted for using the equity method of accounting. The Bank s share of earnings of such corporations is reported in income from securities within interest income in the Consolidated statement of income. (b) Use of estimates in the preparation of financial statements The preparation of the consolidated financial statements of the Bank requires management to make estimates and assumptions based on information available as of the date of the financial statements. Therefore, actual results could differ from those estimates. (c) Translation of foreign currencies Foreign currency assets and liabilities are translated into Canadian dollars at prevailing year-end rates of exchange. Foreign currency income and expenses are translated into Canadian dollars at the average exchange rates prevailing throughout the year. Unrealized translation gains and losses related to the Bank s investment positions in foreign operations, net of any offsetting gains or losses arising from economic hedges of these positions and applicable income taxes, are included in a separate component of shareholders equity. All other unrealized translation gains and losses and all realized gains and losses are included in other income in the Consolidated statement of income. (d) Securities Investment account securities, excluding loan substitutes, are securities where the Bank s original intention is to hold to maturity or until market conditions render alternative investments more attractive, and which are generally available for sale. They are carried at cost or amortized cost, adjusted to recognize other than temporary impairment in the underlying value. Gains and losses realized on disposal are determined on the average cost basis. Such gains, losses and write-downs are included in other income. Trading account securities, including trading securities sold short included in liabilities, are carried at market values. Gains and losses on disposal and adjustments to market are reported in other income. Loan substitutes are securities which have been structured as after-tax instruments rather than conventional loans in order to provide the issuers with a borrowing rate advantage and are identical in risk and security to bank loans of comparable term. Loan substitutes are carried at cost less any allowance for anticipated credit losses as described in (f). (e) Loans Loans are stated net of unearned income and an allowance for credit losses. Interest income is recorded on the accrual basis until such time as the loan is classified as impaired. Interest on impaired loans subsequently received is recorded as income only when management has reasonable assurance as to the timely collection of the full amount of the principal and interest.

46 44 FINANCIAL RESULTS An impaired loan is any loan where, in management s opinion, there has been a deterioration of credit quality to the extent that the Bank no longer has reasonable assurance as to the timely collection of the full amount of the principal and interest. In addition, any loan where a payment is contractually past due 90 days is classified as impaired, other than a deposit with a bank, a consumer instalment loan, a credit card loan, or a loan that is guaranteed or insured by Canada, the provinces or an agency controlled by these governments. Deposits with banks and consumer instalment loans are considered impaired when a payment is contractually past due 21 and 31 days respectively. Credit card loans with payments 180 days in arrears are entirely written off. Loan origination fees are considered to be adjustments to loan yield and are deferred and amortized to interest income over the term of the loan. Commitment fees are amortized to other income over the commitment period when it is unlikely that the commitment will be called upon; otherwise, they are deferred and amortized to interest income over the term of the resulting loan. Loan syndication fees are recognized in other income unless the yield on any loans retained by the Bank is less than that of other comparable lenders involved in the financing. In such cases an appropriate portion of the fee is deferred and amortized to interest income over the term of the loan. (f ) Allowance for credit losses An allowance is maintained which is considered adequate to absorb all credit-related losses in a portfolio of items which are both on and off the Consolidated balance sheet. Assets in the portfolio which are included in the Consolidated balance sheet are deposits with banks, loans, mortgages, loan substitutes, securities purchased under resale agreements and acceptances. Items not included in the Consolidated balance sheet and referred to as offbalance sheet items include guarantees, letters of credit and derivative financial instruments. The allowance is deducted from the applicable asset in the Consolidated balance sheet except for acceptances and off-balance sheet items. The allowance for acceptances and for off-balance sheet items is included in other liabilities. The allowance consists of specific and general provisions. Specific provisions include all the accumulated provisions for losses on particular assets required to reduce the book values to estimated realizable amounts in the ordinary course of business. The accumulated provisions for losses on particular off-balance sheet items are also included in specific provisions. General provisions include all the accumulated provisions for losses which are prudential in nature and cannot be determined on an item-by-item basis. These provisions are established to absorb credit losses in a portfolio of on and off-balance sheet items where, in management s opinion, there exists a potential for impairment. Actual write-offs, net of recoveries, are deducted from the allowance for credit losses. The provision for credit losses, which is charged to the Consolidated statement of income, is added to bring the allowance to a level which management considers adequate to absorb credit-related losses in its portfolio of on and off-balance sheet items. (g) Mortgage loan securitizations Mortgage loan securitizations involve the sale of mortgages to a special purpose trust. Proceeds on sale are computed as the aggregate of the initial cash consideration and the present value of any additional proceeds. Gains are deferred to the extent of the recourse provided by the Bank to the trust, and are recognized only when there is no further recourse obligation. Losses require immediate recognition. (h) Securities purchased under resale and sold under repurchase agreements Securities purchased under resale agreements consist of the purchase of a security, normally a government bond, with the commitment by the Bank to resell the security to the original seller at a specified price. Securities sold under repurchase agreements consist of the sale of a security with the commitment by the Bank to repurchase the security at a specified price. Securities purchased under resale and sold under repurchase agreements are carried at cost on the Consolidated balance sheet. The difference between the sale price and the agreed repurchase price on a repurchase agreement is recorded as interest expense. Conversely, the difference between the cost of the purchase and the predetermined proceeds to be received on a resale agreement is recorded as interest income. (i) Acceptances The potential liability of the Bank under acceptances is reported as a liability in the Consolidated balance sheet. The Bank s recourse against the customer in the event of a call on any of these commitments is reported as an offsetting asset of the same amount. (j) Land, buildings and equipment Land is reported at cost. Buildings, equipment and leasehold improvements are reported at cost less accumulated depreciation. Gains and losses on disposal are reported in other income. Depreciation methods and rates by asset category are as follows:

47 FINANCIAL RESULTS 45 Asset Depreciation method Rate Buildings Declining balance 5% or 10% Computer equipment Declining balance 30% Furniture, fixtures and other equipment Declining balance 20% Mainframe central processing units Straight-line 4 years Mainframe operating systems Straight-line 3 years Leasehold improvements Straight-line estimated useful life (k) Derivative financial instruments Derivative financial instruments include interest rate and foreign exchange contracts. These instruments are traded by the Bank and are also used to modify interest rate and foreign currency exposures. To be designated as a nontrading derivative contract and receive hedge accounting treatment, the contract must substantially offset the effects of price, interest rate or foreign exchange rate exposures to the Bank, must be documented at inception as a nontrading derivative contract, and must have a high correlation at inception and throughout the contract period between the derivative contract and the Bank s exposure. If these criteria are not met the contract is designated as a trading derivative. Trading derivatives are entered into by the Bank to meet the needs of its customers and to take trading positions. Derivative trading portfolios are marked to market with the resulting realized and unrealized gains or losses recognized immediately in other income. The market value for interest rate swaps including cross-currency interest rate swaps is determined net of a deferral, which recognizes the need to cover credit and administrative expenses over the life of each contract. Non-trading derivatives are entered into by the Bank in order to meet the Bank s funding and investing strategies. This is accomplished by modifying one or more characteristics of the Bank s risk related to on-balance sheet financial instruments. Unrealized gains and losses on non-trading derivatives are accounted for on a basis consistent with the related on-balance sheet financial instrument. Realized gains and losses resulting on the early termination, sale, maturity or extinguishment of such derivatives are generally deferred and amortized over the remaining term of the related on-balance sheet instruments. Premiums on purchased options are deferred at inception and amortized into other income over the contract life. (l) Provision for income taxes The Bank follows the tax allocation method of providing for income taxes. The cumulative difference between tax calculated on this basis and taxes currently payable arises from timing differences which result in deferred income taxes. (m) Pension and other post-retirement employee benefits The Bank s principal pension plan is The Pension Fund Society of The -Dominion Bank for which membership is voluntary and funding is provided by contributions from the Bank and members of the plan. Each year, actuarial valuations are made of the pension plans maintained by the Bank to determine the present value of the accrued pension benefits. Pension plan assets are valued at market values. Pension costs are determined based upon separate actuarial valuations using the projected benefit method pro-rated on service and management s best estimates rather than on valuations for funding purposes. Pension expense includes the cost of pension benefits for the current year s service, interest expense on pension liabilities, income on plan assets and the amortization of pension adjustments on a straight-line basis over the expected average remaining service life of the employee group. The cumulative difference between pension expense and funding contributions is reported in other assets. The Bank also provides certain health care and life insurance benefits for its employees upon retirement. Eligible employees are those who retire from the Bank at normal retirement age. The cost of these benefits is recognized as incurred by the retirees.

48 46 FINANCIAL RESULTS Note 2 SECURITIES Securities maturity schedule at year end (millions of dollars) Investment securities Remaining term to maturity Within 1 to 3 3 to 5 5 to 10 Over 10 No specific year years years years years maturity Total Total Securities issued or guaranteed by Canada $ 1,344 $ 438 $ 35 $ 59 $ $ 20 $ 1,896 $ 1,961 Provinces Total 1, ,324 2,227 Other debt securities Canadian issuers U.S. federal government 4, ,371 3,834 Other foreign governments Other issuers , Total 5, ,425 5,161 Equity securities Preferred shares ,630 1,930 Common shares 2,232 2,232 1,405 Total ,078 3,862 3,335 Total investment securities 6,496 1, ,256 12,611 10,723 Trading securities Securities issued or guaranteed by Canada 1, ,155 4,445 5,487 Provinces ,376 1,240 Total 1, ,033 1,654 5,821 6,727 Other debt securities Canadian issuers ,803 1,757 U.S. federal government Other foreign governments , Other issuers 1,782 1, , ,358 2,321 Total 2,593 2,205 1,605 3, ,888 4,457 Equity securities Preferred shares 1,129 1, Common shares 2,973 2,973 2,158 Total 4,102 4,102 2,317 Total trading securities 4,478 2,863 2,196 4,565 2,551 4,158 20,811 13,501 Total securities 1 $ 10,974 $ 4,652 $ 2,891 $ 4,867 $ 2,624 $ 7,414 $33,422 $24,224 1 Includes loan substitutes in the amount of $163 million (1996 $177 million).

49 FINANCIAL RESULTS 47 Securities Unrealized gains and losses (millions of dollars) Gross Gross Estimated Gross Gross Estimated Book unrealized unrealized market Book unrealized unrealized market value gains losses value value gains losses value Investment securities Issued or guaranteed by Canada $ 1,896 $ 14 $ $ 1,910 $ 1,961 $ 12 $ $ 1,973 Provinces U.S. federal government 4, ,372 3, ,819 Other debt 2, ,051 1, ,330 Equity 3, ,521 3, ,654 Total investment securities 12, ,285 10, ,046 Trading securities 20,811 20,811 13,501 13,501 Total securities $ 33,422 $ 691 $ 17 $ 34,096 $ 24,224 $ 349 $ 26 $ 24,547 Note 3 LOANS, IMPAIRED LOANS AND ALLOWANCES FOR CREDIT LOSSES Loans and impaired loans (millions of dollars) Gross Allowance for credit losses Net Gross amount Specific General amount impaired 1997 of loans provisions provisions Total of loans loans Residential mortgages $ 30,457 $ 13 $ 2 $ 15 $ 30,442 $ 49 Consumer instalment, credit card and other personal 13, , Business and government 35, , Total $ 80,287 $ 183 $ 402 $ 585 $ 79,702 $ Residential mortgages $ 28,637 $ 13 $ $ 13 $ 28,624 $ 65 Consumer instalment, credit card and other personal 10, , Business and government 33, , Total $ 72,820 $ 270 $ 159 $ 429 $ 72,391 $ Average gross impaired loans during the year $ 845 $ 954 Net impaired loans at year end $ (79) $ 344 Recoveries recorded as income on impaired loans $ 13 $ 44 Included in gross residential mortgages are Canadian government-insured mortgages of $15,276 million at October 31, 1997 (1996 $11,604 million). Gross impaired loans include foreclosed assets held for sale with a gross carrying value of $93 million at October 31, 1997 (1996 $151 million) and a related allowance of $5 million (1996 $7 million). Loans are reported net of unearned income of $118 million (1996 $127 million).

50 48 FINANCIAL RESULTS Allowance for credit losses (millions of dollars) Balance at beginning of year $ 429 $ 427 Write-offs (340) (264) Recoveries Provision for credit losses charged to the Consolidated statement of income Balance at end of year $ 585 $ 429 Note 4 LAND, BUILDINGS AND EQUIPMENT (millions of dollars) Accumulated Net book Net book Cost depreciation value value Land $ 179 $ $ 179 $ 159 Buildings 1, Computer equipment Furniture, fixtures and other equipment Leasehold improvements $ 2,570 $ 1,065 $ 1,505 $ 1,350 Accumulated depreciation at the end of 1996 was $975 million. Note 5 OTHER ASSETS (millions of dollars) Market revaluation of trading derivative financial instruments (Note 17) $ 6,489 $ 4,653 Accounts receivable, prepaid expenses and other items 1, Accrued interest 1, Amounts receivable from brokers Unamortized goodwill Waterhouse Investor Services, Inc Mortgages sold with recourse to Green Line mutual funds Deferred income taxes (net) (Note 14) Prepaid pension expense (Note 13) $ 11,279 $ 7,642 1 Amortization of goodwill included in Other non-interest expenses in the Consolidated statement of income was $28 million (1996 nil).

51 FINANCIAL RESULTS 49 Note 6 DEPOSITS (millions of dollars) Demand Notice Term Total Total Personal $ 4,228 $ 16,289 $ 23,527 $ 44,044 $ 43,546 Government of Canada or provinces Business 5,241 6,389 38,010 49,640 29,062 Banks 1, ,786 16,268 14,164 Total $ 11,039 $ 22,885 $ 76,702 $ 110,626 $ 87,563 Non-interest bearing deposits included above In domestic offices $ 1,498 $ 765 In foreign offices Interest bearing deposits included above In domestic offices 70,420 61,483 In foreign offices 37,454 24,180 U.S. federal funds purchased Total $ 110,626 $ 87,563 Note 7 OTHER LIABILITIES (millions of dollars) Market revaluation of trading derivative financial instruments (Note 17) $ 6,485 $ 4,786 Accrued interest 1,366 1,368 Accounts payable, accrued expenses and other items 1,136 1,154 Amounts payable to brokers Obligations related to mortgages sold with recourse Liabilities of subsidiaries other than deposits Cheques and other items in transit, net Accrued salaries and payroll deductions $ 10,657 $ 9,139

52 50 FINANCIAL RESULTS Note 8 SUBORDINATED NOTES The notes are direct unsecured obligations of the Bank and are subordinated in right of payment to the claims of depositors and certain other creditors of the Bank. Where appropriate, the Bank has entered into interest rate options, interest rate swaps and currency swaps to modify the related interest rate and foreign currency risks. (millions of dollars) Foreign Interest Maturity Redeemable currency Outstanding October 31 rate (%) date beginning amount Dec to Feb $ 3 $ Apr Yen 5 billion Various 2 Aug to Oct Dec Dec Various 3 Jan to Feb Mar Mar May May 2002 May May 2002 May Various 4 June 2002 to Sept Sept Sept Floating rate 5 Oct US$150 million Floating rate 6 Aug US$150 million Floating rate 7 Oct Dec July Aug Aug US$150 million Sept Sept Oct Oct Jan Jan US$300 million Mar Mar US$200 million Sept Sept Aug US$150 million Oct US$150 million Nov US$100 million Jan US$150 million Dec Dec $ 3,391 $ 2,335 1 Interest is payable in Australian dollars. 2 Interest is payable at various rates, from 1.13% to 5.00%. 3 Interest is payable at various rates, from 1.13% to 3.05%. 4 Interest is payable at various rates, from.13% to 2.95%. 5 Interest at six-month U.S. dollar LIBOR less.13%, subject to minimum and maximum rates of 5% and 10% respectively. 6 Interest at three-month U.S. dollar LIBOR, subject to a minimum of 4.10%. 7 Interest at three-month customers liability under acceptance rate less.30%, subject to minimum and maximum rates of 6.50% and 9% respectively. Repayment schedule The aggregate maturities of the Bank s subordinated notes, assuming the earlier of the date of maturity or retraction at the holders option under the terms of issue, are as follows: (millions of dollars) Within 1 year $ 3 $ 16 Over 1 to 2 years 60 3 Over 2 to 3 years 7 63 Over 3 to 5 years Over 5 years 3,076 2,235 $ 3,391 $ 2,335

53 FINANCIAL RESULTS 51 Note 9 CAPITAL STOCK The share capital of the Bank consists of: Authorized An unlimited number of Class A First Preferred Shares, without par value, issuable in series. An unlimited number of common shares, without par value. (millions of dollars) Issued and fully paid Included in Tier 1 capital 7,000,000 Non-cumulative Redeemable Class A First Preferred Shares, Series G (US$175 million) $ 246 $ 234 9,000,000 Non-cumulative Redeemable Class A First Preferred Shares, Series H Non-cumulative Redeemable Class A First Preferred Shares, Series Y Total preferred shares ,946,199 common shares ( ,702,896) 1,297 1,305 $ 1,843 $ 1,839 Preferred shares None of the outstanding preferred shares are redeemable at the option of the holder. Redemptions of all preferred shares are subject to the prior approval of the Superintendent of Financial Institutions Canada. Class A First Preferred Shares, Series G Between April 30, 2001 and April 30, 2002, the Bank has the option of redeeming the outstanding Series G shares for US$ After April 30, 2003, the redemption price is reduced to US$25.00 together with declared and unpaid dividends to the date of redemption. On or after April 30, 2001, the Bank may convert the outstanding Series G shares in whole or in part into common shares, determined by dividing the then applicable redemption price per Series G share together with declared and unpaid dividends to the date of conversion by the greater of US$1.00 and 95% of the U.S. dollar equivalent of the average trading price of such common shares at that time. On or after January 31, 2004, each Series G share may, at the option of the holder, be converted quarterly into common shares as described above. By giving at least 40 days of notice prior to the date of conversion to all holders who have given a conversion notice, the Bank may redeem or find substitute purchasers at the purchase price of US$25.00 cash per share together with declared and unpaid dividends to the date of conversion. Class A First Preferred Shares, Series H Between April 30, 2002 and April 30, 2003, the Bank has the option of redeeming the outstanding Series H shares for $ After April 30, 2004, the redemption price is reduced to $25.00 together with declared and unpaid dividends to the date of redemption. On or after April 30, 2002, the Bank may convert the outstanding Series H shares in whole or in part into common shares, determined by dividing the then applicable redemption price per Series H share together with declared and unpaid dividends to the date of conversion by the greater of $1.00 and 95% of the average trading price of such common shares at that time. On or after January 31, 2005, each Series H share may, at the option of the holder, be converted quarterly into common shares as described above. By giving at least 40 days of notice prior to the date of conversion to all holders who have given a conversion notice, the Bank may redeem or find substitute purchasers at the purchase price of $25.00 cash per share together with declared and unpaid dividends to the date of conversion. Class A First Preferred Shares, Series Y Series Y shares are redeemable at the option of the Bank for their stated value together with declared and unpaid dividends to the date of redemption. The Bank has the option of converting the outstanding Series Y shares in whole or in part into common shares, determined by dividing $1 million together with declared and unpaid dividends to the date of conversion by the greater of $1.00 and 95% of the average trading price of such common shares at that time.

54 52 FINANCIAL RESULTS On or after April 1, 1999, each Series Y share may, at the option of the holder, be converted monthly into common shares as described above. By giving at least two days of notice prior to the date of conversion to all holders who have given a conversion notice, the Bank may redeem or find substitute purchasers at the purchase price of $1 million cash per share together with declared and unpaid dividends to the date of conversion. Dividend rates on preferred shares The dividend rates for the preferred shares are: (i) Series G, quarterly rate of US$.3375 per share. (ii) Series H, quarterly rate of $ per share. (iii) Series Y, calculated monthly based upon 72% of the one-month customers liability under acceptance rate on the last business day of the preceding month. Common shares Number outstanding at beginning of year 302,702, ,402,561 Issued on acquisition of a subsidiary 28,278 16,699,200 Issued on exercise of options 1,092, ,705 Purchased for cancellation (6,877,500) (16,065,570) Number outstanding at end of year 296,946, ,702,896 Stock options Under the Bank s stock option plan, options on common shares may be issued to certain employees for terms of 10 years, vesting over a four-year period and exercisable at the market price of the shares on the date the options were issued. Outstanding options have exercise prices ranging from $16.37 to $34.90, remaining weighted average life of 5.75 to 9.75 years, and expire on dates ranging from April 2000 to March At October 31, 1997, a total of 7,517,725 common shares have been reserved for future issuance under the stock option plan. During 1997 the plan administration was modified to allow employees to elect to receive cash for the options equal to their intrinsic value, being the difference between the option exercise price and the current market value of the shares. A summary of the Bank s stock option activity and related information for the years ended October 31 is as follows: Weighted Weighted Weighted average average average exercise exercise exercise 1997 price 1996 price 1995 price Number outstanding, beginning of year 9,161,020 $ ,213,325 $ ,961,900 $ Granted 2,476, ,738, ,622, Exercised cash (209,925) shares (1,092,525) (666,705) (201,450) Forfeited (134,625) (124,500) (169,125) Number outstanding, end of year 10,200,445 $ ,161,020 $ ,213,325 $ Exercisable, end of year 4,333,345 $ ,709,376 $ ,532,425 $ 18.19

55 FINANCIAL RESULTS 53 Dividend restrictions The Bank is prohibited by the Bank Act from declaring any dividends on its preferred or common shares if there are reasonable grounds for believing that the Bank is, or the payment would cause the Bank to be, in contravention of the capital adequacy and liquidity regulations of the Bank Act or directions of the Superintendent of Financial Institutions Canada. In addition, the ability to pay common share dividends is restricted by the terms of the outstanding preferred shares whereby the Bank may not pay dividends on its common shares without the approval of the holders of the outstanding preferred shares unless all dividends on the preferred shares have been declared and paid or set apart for payment. Currently these limitations do not restrict the payment of dividends on preferred or common shares. Note 10 NET INCOME PER COMMON SHARE Net income per common share is calculated based on net income less preferred share dividends and the average number of common shares outstanding during the year of 298,704,882 ( ,550,937). Note 11 NET INTEREST INCOME (millions of dollars) Interest income Loans $ 6,310 $ 6,036 $ 6,106 Securities Dividends Interest 1, Deposits with banks ,826 7,322 7,266 Interest expense Deposits 3,892 3,958 4,286 Subordinated notes Other liabilities ,004 4,855 4,888 Net interest income $ 2,822 $ 2,467 $ 2,378

56 54 FINANCIAL RESULTS Note 12 TRADING RELATED INCOME The accounting for trading instruments is described in Note 1(d) under Securities and 1(k) under Derivative financial instruments. Trading related income includes both trading income and net interest income derived from trading instruments. Trading income excludes the portion of income earned on foreign exchange transactions which is not considered part of the Bank s trading activities. (millions of dollars) Net Trading Net Trading Net Trading Trading interest related Trading interest related Trading interest related income income income income income income income income income Interest rate contracts $ 174 $ 66 $ 240 $ 102 $ 7 $ 109 $ 65 $ (20) $ 45 Foreign exchange contracts Other contracts (20) (15) 18 (4) 14 Total $ 270 $ 78 $ 348 $ 186 $ (12) $ 174 $ 150 $ (22) $ 128 Note 13 PENSIONS Retirement benefits are based upon the length of service and the final five years average salary of the employees. The Bank s principal pension plan is funded by contributions from the Bank and from the members of the plan. In accordance with legislation, the Bank contributes amounts determined on an actuarial basis to the plan and has the ultimate responsibility for ensuring that the liabilities of the plan are adequately funded over time. The following table presents the financial position of the Bank s pension plan at October 31. (millions of dollars) Vested benefit obligation $ 985 $ 847 $ 730 Accumulated benefit obligation Projected benefit obligation for services rendered to date 1, Plan assets at fair value 1,202 1, Excess of plan assets over projected benefit obligation Unrecognized net loss from past experience, different from that assumed, and effects of changes in assumptions (15) 4 67 Unrecognized prior service costs Unrecognized transition amount (65) (82) (90) Prepaid pension expense $ 80 $ 72 $ 71 Annual expense Net pension expense includes the following components: Service cost benefits earned $ 18 $ 14 $ 11 Interest on projected benefit obligation Actual return on plan assets (223) (219) (84) Net amortization and deferral (3) Canadian pension expense (8) (1) (15) International pension expense Pension expense 2 1 (13) Canada and Québec pension plan contribution Total pension expense $ 23 $ 20 $ 5 Actuarial assumptions Weighted average discount rate for projected benefit obligation 6.5% 7.3% 8.3% Weighted average rate of compensation increase Weighted average expected long-term rate of return on plan assets

57 FINANCIAL RESULTS 55 Note 14 PROVISION FOR INCOME TAXES (millions of dollars) Net income before provision for income taxes: Canada $ 1,227 $ 1,066 $ 885 United States Other international Total $ 1,729 $ 1,410 $ 1,246 The provision for income taxes is included in the following financial statements: Consolidated statement of income Canada $ 465 $ 387 $ 332 United States Other international 14 (1) 5 Total $ 641 $ 496 $ 452 Consolidated statement of changes in shareholders equity (22) (10) 2 Total provision for income taxes $ 619 $ 486 $ 454 Current income taxes Federal $ 404 $ 222 $ 254 Provincial Foreign Deferred income taxes Federal (89) 55 (13) Provincial (33) 20 (5) Foreign (116) 77 (13) $ 619 $ 486 $ 454

58 56 FINANCIAL RESULTS The provision for income taxes shown in the Consolidated statement of income is less than that obtained by applying statutory tax rates to the net income before provision for income taxes for the following reasons: Canadian statutory income tax rate 43.1% 43.0% 42.9% Decrease resulting from: Dividends from taxable Canadian corporations (5.3) (5.5) (5.6) Other net (.7) (2.3) (1.0) Effective income tax rate 37.1% 35.2% 36.3% The net deferred tax asset which is reported in other assets comprises both assets and liabilities as follows: (millions of dollars) Assets Premises and equipment $ (6) $ 7 $ (17) Allowance for credit losses Deferred income Securities Other Liabilities Pension fund (36) (32) (31) Other (2) (10) (7) (38) (42) (38) Deferred income tax asset $ 264 $ 148 $ 225

59 FINANCIAL RESULTS 57 Note 15 FAIR VALUE OF FINANCIAL INSTRUMENTS (millions of dollars) Carrying Estimated Carrying Estimated Consolidated balance sheet value fair value value fair value Assets Securities $ 33,422 $ 34,096 $ 24,224 $ 24,547 Loans 79,702 80,154 72,391 73,176 Liabilities Deposits 110, ,152 87,563 88,210 Subordinated notes 3,391 3,469 2,335 2,359 The aggregate of the estimated fair value amounts presented does not represent management s estimate of the underlying value of the Bank. Moreover, fair values disclosed represent estimates of value made at a specific point in time and may not be reflective of future fair values. Fair values are based on the following methods of valuation and assumptions: In the case of items which are short-term in nature or contain variable rate features, fair value is considered to be equal to carrying value. These items are not listed above. Details of the estimated fair value of derivative financial instruments are provided in Note 17. The estimated fair value of securities is determined as the estimated market values reported in Note 2. The estimated fair value of loans reflects changes in general interest rates which have occurred since the loans were originated and changes in the creditworthiness of individual borrowers. For fixed rate loans, estimated fair value is determined by discounting the expected future cash flows related to these loans at market interest rates for loans with similar credit risks. The estimated fair value of term deposits is determined by discounting the contractual cash flows using interest rates currently offered for deposits with similar terms. The estimated fair value of the subordinated notes is determined by reference to quoted market prices.

60 58 FINANCIAL RESULTS Note 16 INTEREST RATE RISK The following table sets out the assets, liabilities and off-balance sheet instruments on the date of the earlier of contractual maturity or repricing date. Use of this table to derive information about the Bank s interest rate risk position is limited by the fact that customers may choose to terminate their financial instruments at a date earlier than contractual maturity or repricing date. Examples of this include mortgages, which are shown at contractual maturity but which often prepay earlier, and certain term deposits, which are shown at contractual maturity but which are often cashed before their contractual maturity. Adjusting the total positions for expected prepayments and early withdrawals and reclassifying trading securities to the floating rate category in accordance with the way in which the Bank manages the risk, results in a decrease in the interest sensitive position within one year to $6.9 billion from the $21.1 billion reported below as at October 31, 1997 (1996 $4.7 billion from $14.7 billion). Interest rate risk (billions of dollars) Total Non- Floating Within 3 months within 1 year to Over interest 1997 rate 3 months to 1 year 1 year 5 years 5 years sensitive Total Assets Cash resources $ 2.0 $ 3.8 $ 1.0 $ 6.8 $.1 $ $.7 $ 7.6 Effective yield 5.2% 5.1% 6.9% Loans $ 17.0 $ 21.9 $ 13.2 $ 52.1 $ 25.3 $ 1.7 $.6 $ 79.7 Effective yield 6.0% 6.5% 7.2% 7.3% Securities purchased under resale agreements $ 2.4 $ 18.3 $ 2.5 $ 23.2 $.1 $ $ $ 23.3 Effective yield 4.3% 4.5% 5.7% Investment securities $.9 $ 2.8 $ 3.5 $ 7.2 $ 2.7 $.3 $ 2.5 $ 12.7 Effective yield 2.0% 5.0% 4.6% 2.8% Trading securities $ $ 2.6 $ 2.2 $ 4.8 $ 4.6 $ 6.7 $ 4.7 $ 20.8 Effective yield 4.5% 4.2% 4.7% 5.8% Other $ 14.0 $.1 $ $ 14.1 $ $ $ 5.7 $ 19.8 Total assets $ 36.3 $ 49.5 $ 22.4 $ $ 32.8 $ 8.7 $ 14.2 $ Liabilities and shareholders equity Deposits $ 29.5 $ 43.1 $ 21.9 $ 94.5 $ 10.7 $.2 $ 5.2 $ Effective yield 4.9% 5.0% 5.9% 3.5% Subordinated notes $ $ $.2 $.2 $ 2.0 $ 1.2 $ $ 3.4 Effective yield 8.0% 6.8% 6.7% Securities sold short or under repurchase agreements $ 2.8 $ 12.4 $ 2.7 $ 17.9 $ 2.4 $ 3.4 $ 1.1 $ 24.8 Effective yield 4.7% 3.8% 4.6% 5.6% Other $ 13.8 $ $ $ 13.8 $ $ $ 3.9 $ 17.7 Shareholders equity $.1 $ $ $.1 $ $ $ 7.3 $ 7.4 Total liabilities and shareholders equity $ 46.2 $ 55.5 $ 24.8 $ $ 15.1 $ 4.8 $ 17.5 $ On-balance sheet position $ (9.9) $ (6.0) $ (2.4) $ (18.3) $ 17.7 $ 3.9 $ (3.3) $ Total pay side instruments 1 $ $ (19.4) $ (6.3) $ (25.7) $ (2.9) $ (.6) $ $ (29.2) Effective yield 4.7% 5.4% 5.0% 6.5% Total receive side instruments 1 $ $ 17.1 $ 5.8 $ 22.9 $ 6.1 $.2 $ $ 29.2 Effective yield 5.1% 5.5% 5.6% 3.4% Off-balance sheet position $ $ (2.3) $ (.5) $ (2.8) $ 3.2 $ (.4) $ $ Net position $ (9.9) $ (8.3) $ (2.9) $ (21.1) $ 20.9 $ 3.5 $ (3.3) $ 1 Notional principal amounts

61 FINANCIAL RESULTS 59 Interest rate risk by currency (billions of dollars) Total Non- Floating Within 3 months within 1 year to Over interest 1997 rate 3 months to 1 year 1 year 5 years 5 years sensitive Total Canadian currency on-balance sheet position $ (15.7) $ 1.3 $ (.2) $ (14.6) $ 15.4 $ 1.7 $ (4.2) $ (1.7) Foreign currency on-balance sheet position 5.8 (7.3) (2.2) (3.7) On-balance sheet position (9.9) (6.0) (2.4) (18.3) (3.3) Canadian currency off-balance sheet position (6.6) (.8) (7.4) 1.4 (.5) (6.5) Foreign currency off-balance sheet position Off-balance sheet position (2.3) (.5) (2.8) 3.2 (.4) Net position $ (9.9) $ (8.3) $ (2.9) $ (21.1) $ 20.9 $ 3.5 $ (3.3) $ Interest rate risk (billions of dollars) Total Non- Within 3 months within 1 year to Over interest months to 1 year 1 year 5 years 5 years sensitive Total Total assets $ 66.7 $ 21.5 $ 88.2 $ 28.3 $ 3.4 $ 10.4 $ Total liabilities and shareholders equity On-balance sheet position (17.9) 3.9 (14.0) (2.9). Off-balance sheet position (1.7) 1.0 (.7) (.5) Net position $ (19.6) $ 4.9 $ (14.7) $ 15.9 $ 1.7 $ (2.9) $ Note 17 DERIVATIVE FINANCIAL INSTRUMENTS The Bank enters into derivative financial instruments, as described below, for trading and for asset/liability management purposes. Interest rate and cross-currency swaps are transactions that generally involve the contractual exchange of fixed and floating rate interest payment obligations and/or currencies on a specified amount of notional principal for a specified period of time. Forward rate agreements are contracts fixing an interest rate to be paid or received on a notional amount of specified maturity commencing at a specified future date. Foreign exchange forward contracts are commitments to purchase or sell foreign currencies for delivery at a specified date in the future at a fixed rate. Financial futures are future commitments to purchase or deliver securities or money market instruments on a specified future date at a specified price. Futures are traded in standardized amounts on organized exchanges and are subject to daily cash margining. Foreign currency and interest rate options are agreements between two parties in which the writer of the option grants the buyer the future right, but not the obligation, to buy or to sell, at or by a specified date, a specific amount of a financial instrument at a price agreed when the option is arranged. The writer receives a premium for selling this instrument. Notional principal amounts, upon which payments are based, are not indicative of the credit risk associated with derivative financial instruments.

62 60 FINANCIAL RESULTS Over-the-counter and exchange traded derivative financial instruments (millions of dollars) Trading Over-the- Exchange Notional principal counter traded Total Non-trading Total Total Interest rate contracts Futures $ $ 58,184 $ 58,184 $ 28 $ 58,212 $ 42,303 Forward rate agreements 18,358 18, ,320 39,577 Swaps 201, ,028 12, , ,914 Options written 30,862 5,316 36, ,419 42,517 Options purchased 35,019 6,707 41, ,233 42,886 Foreign exchange contracts Forward contracts 183, ,638 10, , ,160 Swaps 2,842 2, ,909 3,110 Cross-currency interest rate swaps 24,257 24,257 4,407 28,664 16,752 Options written 8,845 8,845 8,845 11,587 Options purchased 8,540 8,540 8,540 10,770 Other contracts 9,064 9,064 4,706 13,770 2,524 Total $ 522,453 $ 70,207 $ 592,660 $ 33,468 $ 626,128 $ 557,100 Included in non-trading derivatives are $28 million of exchange traded derivatives. Derivative financial instruments by term to maturity (millions of dollars) Remaining term to maturity Within 1 to 3 3 to 5 Over Notional principal 1 year years years years Total Total Interest rate contracts Futures $ 44,412 $ 13,800 $ $ $ 58,212 $ 42,303 Forward rate agreements 17,990 1,330 19,320 39,577 Swaps 76,307 63,174 39,857 34, , ,914 Options written 19,741 11,786 2,896 1,996 36,419 42,517 Options purchased 24,884 10,740 3,781 2,828 42,233 42,886 Foreign exchange contracts Forward contracts 188,553 5, , ,160 Swaps ,250 2,909 3,110 Cross-currency interest rate swaps 4,495 6,532 6,352 11,285 28,664 16,752 Options written 7,754 1, ,845 11,587 Options purchased 7,487 1, ,540 10,770 Other contracts 8,759 4, ,770 2,524 Total $ 400,922 $ 120,047 $ 53,646 $ 51,513 $ 626,128 $ 557,100 The Bank is exposed to market risk as a result of price volatility in the derivatives markets relating to movements in interest rates and foreign exchange rates. This risk is managed by senior officers responsible for the Bank s trading business and is monitored separately by the Bank s Risk Management Division. The estimated fair value of derivative financial instruments is based on quoted market rates for exchange traded instruments plus or minus daily margin settlements and net gains or losses for over-the-counter derivative financial instruments. The net gains or losses on over-thecounter derivative financial instruments are calculated as the net present value of contractual cash flows using prevailing market rates on underlying instruments with similar maturities and characteristics. The fair value for trading interest rate swaps including cross-currency interest rate swaps is determined net of a deferral, which recognizes the need to cover credit and administrative expenses over the life of the contract.

63 FINANCIAL RESULTS 61 Fair value of derivative financial instruments (millions of dollars) Average 1 fair value for the year Year-end fair value Year-end fair value Positive Negative Positive Negative Positive Negative Derivative financial instruments held or issued for trading purposes: Interest rate contracts Forward rate agreements $ 11 $ 20 $ 5 $ 14 $ 30 $ 37 Swaps 2,374 2,314 3,034 2,998 2,042 2,040 Options written Options purchased Total interest rate contracts 2,605 2,496 3,401 3,314 2,236 2,188 Foreign exchange contracts Forward contracts 1,761 1,683 1,807 1,956 1,661 1,653 Swaps Cross-currency interest rate swap Options written Options purchased Total foreign exchange contracts 2,643 2,479 2,915 2,965 2,394 2,362 Other contracts Fair value trading $ 5,305 $ 5,192 $ 6,489 $ 6,485 $ 4,653 $ 4,786 Derivative financial instruments held or issued for non-trading purposes: Interest rate contracts Forward rate agreements $ 1 $ $ $ Swaps Options written Options purchased Total interest rate contracts Foreign exchange contracts Forward contracts Swaps Cross-currency interest rate swaps Total foreign exchange contracts Fair value non-trading ,468 1,320 Total fair value $ 7,388 $ 6,835 $ 6,121 $ 6,106 1 The average fair value of trading derivative financial instruments for the year ended October 31, 1996 was: Positive $4,297 and Negative $4,217. Averages are calculated on a monthly basis. Credit risk on derivative financial instruments is the risk of a financial loss occurring as a result of a default of a counterparty on its obligation to the Bank. The treasury credit area is responsible for the implementation of and compliance with credit policies established by the Bank for the management of derivative credit exposures. The current replacement cost, which is the positive fair value of all outstanding derivative financial instruments, represents the Bank s maximum derivative credit exposure. Potential future exposure is calculated by applying factors supplied by the Superintendent of Financial Institutions Canada to the notional principal amount of the instruments. The credit equivalent amount is the sum of the current replacement cost and the potential future exposure.

64 62 FINANCIAL RESULTS Credit exposure of derivative financial instruments at year end (millions of dollars) 1997) 1996 Current Potential Credit Current Potential Credit replace- future equivalent replace- future equivalent ment cost exposure amount ment cost exposure amount Interest rate contracts Forward rate agreements $ 6 $ 6 $ 12 $ 30 $ 12 $ 42 Swaps 3,227 1,017 4,244 2, ,584 Options purchased Total interest rate contracts 3,599 1,138 4,737 3, ,061 Foreign exchange contracts Forward contracts 2,316 1,810 4,126 2,076 1,696 3,772 Swaps Cross-currency interest rate swaps 964 1,535 2, ,368 Options purchased Total foreign exchange contracts 3,616 3,663 7,279 2,951 2,893 5,844 Other contracts , Total derivative financial instruments $ 7,388 $ 5,740 $ 13,128 $ 6,121 $ 3,996 $ 10,117 Less impact of master netting agreements 2,747 1,344 4,091 $ 4,641 $ 4,396 $ 9,037 Note 18 CONTINGENT LIABILITIES AND COMMITMENTS (a) In the normal course of business, the Bank enters into various commitments and contingent liability contracts. The credit instruments reported below are not reflected in the Consolidated balance sheet. Credit instruments (millions of dollars) Guarantees and standby letters of credit $ 7,407 $ 6,496 Documentary and commercial letters of credit Commitments to extend credit 1 45,310 39,019 $ 53,516 $ 46,053 1 Consists of unused portions of commitments to extend credit in the form of loans, customers liability under acceptances, guarantees and letters of credit.

65 FINANCIAL RESULTS 63 (b) The premises and equipment net rental expense charged to net income for the year ended October 31, 1997 was $234 million (1996 $210 million). The Bank has obligations under long-term non-cancellable leases for premises and equipment. Future minimum operating lease commitments for equipment where the annual rental is in excess of $25 thousand and for premises are as follows: (millions of dollars) 1998 $ and thereafter 86 $ 479 (c) The Bank and its subsidiaries are involved in various legal actions, the outcome of which is indeterminable. In management s opinion, the ultimate disposition of these actions will not have a material adverse effect on the financial condition of the Bank. (d) In the ordinary course of business, securities and other assets are pledged against liabilities. As at October 31, 1997 securities and other assets with a carrying value of $28.2 billion (1996 $17.9 billion) were pledged in respect of securities sold short or under repurchase agreements. In addition, as at October 31, 1997 assets with a carrying value of $1 billion (1996 $.9 billion) were deposited for the purposes of participation in clearing and payment systems and depositories or to have access to the facilities of central banks in foreign jurisdictions, or as security for contract settlements with derivative exchanges or other derivative counterparties. Note 19 CONCENTRATION OF CREDIT RISK Concentration of credit risk exists where a number of borrowers or counterparties are engaged in similar activities, are located in the same geographic area or have comparable economic characteristics. Their ability to meet contractual obligations may be similarly affected by changing economic, political or other conditions. Management considers the following concentrations to be within acceptable limits. On-balance sheet assets Of the total loans outstanding at September 30, 1997, 74% were to borrowers in Canada, with the largest concentration in Ontario (49%), and 16% to borrowers in the United States. At September 30, 1996, loan concentration was 76% in Canada (including 43% in Ontario) and 15% in the United States. No single industry accounted for more than 7% of total loans and customers liability under acceptances (1996 6%).

66 64 FINANCIAL RESULTS Off-balance sheet financial instruments (a) Credit instruments At October 31, 1997, the Bank had commitments and contingent liability contracts valued at $53,516 million, of which 28% related to Canada ( %), 56% to the United States ( %) and 12% to the United Kingdom ( %). (b) Derivative instruments At October 31, 1997, the current replacement cost of derivative financial instruments amounted to $7,388 million (1996 $6,121 million), of which approximately 55% related to Canada ( %), 10% to the United States ( %), 18% to the United Kingdom ( %) and 13% to Japan ( %). The largest concentration by counterparty type was with other financial institutions, which accounted for 76% of the total ( %). Note 20 RELATED PARTY TRANSACTIONS The Bank makes loans to its officers, employees and directors and their affiliates. The amounts outstanding are as follows: (millions of dollars) Mortgage loans $ 745 $ 690 Other loans Note 21 ACQUISITION OF WATERHOUSE INVESTOR SERVICES, INC. On October 15, 1996, the Bank acquired Waterhouse Investor Services, Inc., a discount broker operating in the United States. All of the outstanding common shares of Waterhouse were acquired in exchange for a combination of cash and common shares of the Bank. The transaction was accounted for using the purchase method. Goodwill arising from the transaction is being amortized to non-interest expenses over the expected period of benefit of 20 years. (millions of dollars) Purchase consideration: Cash $ 267 Common shares Less: Fair value of net assets acquired 204 Goodwill $ 522 Note 22 COMPARATIVE FIGURES Comparative figures have been reclassified to conform with the presentation adopted in 1997.

67 FINANCIAL RESULTS 65 Note 23 SUBSEQUENT EVENTS (a) Discount brokerage acquisition On November 7, 1997, Waterhouse Investor Services, Inc., the Bank s wholly owned U.S. discount brokerage subsidiary, acquired the business of Kennedy, Cabot & Co., a California-based discount broker, for cash of US$155 million. (b) Preferred share issue The Bank has incorporated a new subsidiary, which intends to issue preferred shares up to the amount of $400 million. Subject to regulatory approval, the share issue will be eligible as Tier 1 regulatory capital. Note 24 RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES The consolidated financial statements of the Bank are prepared in accordance with accounting principles generally accepted in Canada, including the accounting requirements of the Superintendent of Financial Institutions Canada (Canadian GAAP). Material differences at October 31 between Canadian GAAP and accounting principles generally accepted in the United States (U.S. GAAP) are described below. Net income (millions of dollars) Net income based on Canadian GAAP $ 1,088 $ 914 $ 794 Stock-based compensation (104) Post-retirement benefits (13) (11) Net income based on U.S. GAAP $ 971 $ 903 $ 794 Earnings per common share U.S. GAAP $ 3.15 $ 2.91 $ 2.51 Canadian GAAP Shareholders equity (millions of dollars) Shareholders equity based on Canadian GAAP $ 7,303 $ 6,679 Stock-based compensation (98) Net unrealized gains on investment securities Post-retirement benefits (24) (11) Shareholders equity based on U.S. GAAP $ 7,576 $ 6,794

68 66 FINANCIAL RESULTS Stock-based compensation During 1997, the employee stock option plan administration was modified to allow option holders to elect to receive cash for the options equal to their intrinsic value, being the difference between the option exercise price and the current market value of the shares. In accounting for stock options with this feature, U.S. GAAP requires expensing the annual change in the intrinsic value of the stock options. For options that have not fully vested, the change in intrinsic value is amortized over the remaining vesting period. The impact of the plan administration modification on 1997 U.S. GAAP net income includes a catch-up adjustment of $31 million for options issued in prior periods. Under Canadian GAAP, no expenses are recorded and cash payments to option holders are charged to retained earnings. Net unrealized gains on investment securities Under U.S. GAAP, the Bank accounts for all investment account securities as available for sale and reports them at estimated fair value with unrealized gains and losses reported net of taxes in a separate component of shareholders equity. Under Canadian GAAP, investment account securities are carried at cost or amortized cost, with gains or losses only recognized when sold. Post-retirement benefits U.S. GAAP requires the accrual of the cost of postemployment and post-retirement benefits other than pensions. Under Canadian GAAP, the costs are expensed as incurred. Cash flow statement Under Canadian GAAP, cash flows provided by the issuance of common shares and cash flows used in the acquisition of Waterhouse are presented separately in the Consolidated statement of changes in financial position as financing and investing activities respectively. Under U.S. GAAP, these amounts are presented as net cash used in the acquisition of a subsidiary under investing activities in the amount of $267 million. Note 25 FUTURE ACCOUNTING CHANGES The effective dates noted below are the dates on which new accounting standards must be implemented. Earlier implementation is permitted and the Bank will assess each standard separately to determine the year of adoption. Segmented information A new accounting standard has been issued in both Canada and the U.S. effective for fiscal year The standard will require an entity to report business segment results consistent with the existing management organization. Reportable business segments are those whose revenues, profits, or assets comprise at least 10% of the total of all operating segments. Disclosure of general information about the products and services from which each reportable business segment derives its revenues and quantitative information detailing components of profit/loss and assets are required. Information disclosed under this standard will be similar to that currently disclosed by the Bank in the Review of TD s Businesses section. Corporate income taxes A new Canadian accounting standard has been issued, effective for fiscal year This standard will harmonize Canadian and U.S. corporate income tax accounting. The standard will require measurement of future income tax assets and liabilities at tax rates expected to apply when the asset is realized or the liability settled; drawdowns would be measured using the actual tax rates in effect during the period of reversal. The Bank does not anticipate a significant impact from the new standard.

69 FINANCIAL RESULTS 67 Principal subsidiaries (thousands of dollars) Book value of all shares Canadian Head office owned by the Bank Business Windows Inc., Canada $ First Nations Bank of Canada (89%) Saskatoon, Canada 8,000 Green Line Investor Services (Hong Kong) Inc., Canada 683 TD Asset Finance Corp., Canada TD Asset Management Inc., Canada 1,974 TD Capital Group Limited, Canada 246,021 TD Factors Limited Edmonton, Canada TD Finance Ltd., Canada TD Futures Inc., Canada TD Mortgage Corporation, Canada 453,003 TD Mortgage Investment Corporation Calgary, Canada TD Nordique Inc. Calgary, Canada 100 TD Pacific Mortgage Corporation, Canada 102,000 TD Securities Inc., Canada 160,018 TD Trust Company, Canada 20,000 Dominion General Insurance Company, Canada 10,007 Dominion Life Insurance Company, Canada 10,000 Dominion Realty Limited, Canada 54,494 United States -Dominion Holdings (U.S.A.), Inc. Houston, U.S.A. 514,068 TD Securities (USA) Inc. New York, U.S.A. The -Dominion Bank Trust Company New York, U.S.A. Dominion Capital (U.S.A.), Inc. New York, U.S.A. Dominion Funding Inc. Houston, U.S.A. Dominion (New York), Inc. New York, U.S.A. -Dominion (Texas), Inc. Houston, U.S.A. Dominion Investments, Inc. Houston, U.S.A. Waterhouse Investor Services, Inc. New York, U.S.A. 736,310 National Investor Services Corp. New York, U.S.A. Washington Discount Brokerage Corp. New York, U.S.A. Waterhouse National Bank New York, U.S.A. Waterhouse Securities, Inc. New York, U.S.A. Waterhouse, Nicoll & Associates, Inc. New York, U.S.A. Other foreign Dominbank Nominees Limited London, England Green Line Holdings (Australia) Pty Ltd Melbourne, Australia 30,115 Pont Securities Limited Sydney, Australia Green Line Investor Services (U.K.) Limited London, England 528 TD Ireland Shannon, Ireland 200,000 TD Reinsurance (Barbados) Inc. Bridgetown, Barbados 5,200 Dominion Australia Limited Melbourne, Australia 206,448 Dominion Securities Pty. Limited Melbourne, Australia Dominion Bank Europe Limited London, England 35,210 Dominion International Inc. Bridgetown, Barbados 190,573 TD Trust (Bermuda) Limited Hamilton, Bermuda Dominion Investments B.V. Amsterdam, The Netherlands 448,433 Dominion Holdings (U.K.) Limited London, England Dominion Finance (UK) Limited London, England Dominion (United Kingdom) Limited London, England Dominion International Limited London, England Dominion Investments Limited London, England Dominion (South East Asia) Limited Singapore, Singapore 577,126 Unless otherwise noted, the Bank, either directly or through its subsidiaries, own 100% of the issued and outstanding voting shares of the companies listed.

70 68 FINANCIAL RESULTS Ten-year statistical review (millions of dollars) Consolidated balance sheet Assets Cash resources $ 7,587 $ 5,216 $ 4,351 $ 3,148 Securities purchased under resale agreements 23,321 13,063 6,363 2,736 Securities 33,422 24,224 22,128 19,310 Loans 49,260 43,767 39,968 40,945 Residential mortgages 30,442 28,624 26,327 25,180 Customers liability under acceptances 7,036 6,411 6,297 4,809 Land, buildings, equipment and other assets 12,784 8,992 9,911 3,631 Total $163,852 $130,297 $115,345 $ 99,759 Liabilities Deposits personal $ 44,044 $ 43,546 $ 41,551 $ 41,181 other 66,582 44,017 39,580 39,282 Acceptances 7,036 6,411 6,297 4,809 Securities sold short or under repurchase agreements 24,839 18,170 9,725 3,637 Other liabilities 10,657 9,139 9,735 2, , , ,888 91,810 Subordinated notes 3,391 2,335 2,404 2,510 Shareholders equity Capital stock preferred common 1,297 1, Retained earnings 5,460 4,840 4,636 4,163 7,303 6,679 6,053 5,439 Total $163,852 $130,297 $115,345 $ 99,759 Consolidated statement Interest income $ 7,826 $ 7,322 $ 7,266 $ 5,814 of income Interest expense 5,004 4,855 4,888 3,363 Net interest income 2,822 2,467 2,378 2,451 Provision for credit losses Net interest income after credit loss provision 2,462 2,315 2,198 2,106 Other income Investment and securities services Credit fees Service charges Trading income Card services Net investment securities gains Other ,650 1,749 1,461 1,179 Net interest and other income 5,112 4,064 3,659 3,285 Non-interest expenses Salaries and staff benefits 1,826 1,452 1,305 1,221 Occupancy including depreciation Equipment including depreciation Restructuring Other ,383 2,654 2,413 2,209 Income before provision for income taxes 1,729 1,410 1,246 1,076 Provision for income taxes Net income 1, Preferred dividends Net income applicable to common shares $ 1,057 $ 882 $ 756 $ 643

71 FINANCIAL RESULTS Ten-year growth rate $ 1,791 $ 2,523 $ 2,129 $ 1,149 $ 1,296 $ 1, , ,140 10,852 7,380 4,882 4,888 5, ,041 35,527 35,591 36,797 34,932 31, ,002 18,252 16,577 15,311 13,520 11, ,166 3,960 5,686 7,009 6,999 6, ,334 2,562 1,542 1,752 1,434 1, $ 85,011 $ 74,133 $ 68,905 $ 66,900 $ 63,069 $ 59, $ 40,394 $ 30,513 $ 29,661 $ 28,224 $ 26,102 $ 22, ,345 29,178 25,012 23,859 23,081 24, ,166 3,960 5,686 7,009 6,999 6, ,554 1, ,357 2,757 2,012 1,716 1,696 1, ,816 67,558 63,202 61,334 58,068 55, ,179 1, ,731 3,682 3,505 3,285 2,966 2, ,016 5,015 4,878 4,714 4,397 3,756 8 $ 85,011 $ 74,133 $ 68,905 $ 66,900 $ 63,069 $ 59, $ 5,385 $ 5,229 $ 6,326 $ 6,855 $ 6,428 $ 5, ,122 3,134 4,288 4,927 4,564 3, ,263 2,095 2,038 1,928 1,864 1, (10) 1,663 1,552 1,553 1,575 1,633 1, (60) ,603 2,409 2,387 2,434 2,454 2, , ,165 1,774 1,636 1,549 1,436 1, ,018 1, $ 246 $ 376 $ 453 $ 543 $ 661 $

72 71 70 FINANCIAL RESULTS (millions of dollars) Consolidated statement Common shares of changes in shareholders Balance at beginning of year $ 1,305 $ 882 $ 879 equity Shares issued Shares purchased for cancellation (30) (48) Balance at end of year 1,297 1, Retained earnings Balance at beginning of year 4,840 4,636 4,163 Net income 1, Preferred dividends (31) (32) (38) Common dividends (335) (302) (265) Income taxes Unrealized net foreign currency translation gains (losses), net of income taxes 120 (8) (13) Shares purchased for cancellation (222) (375) Stock options settled in cash (6) Other 6 7 (5) Balance at end of year 5,460 4,840 4,636 Total common equity 6,757 6,145 5,518 Preferred shares Balance at beginning of year Proceeds from share issues 225 Share redemptions (85) Translation adjustment on shares issued in a foreign currency 12 (1) (2) Balance at end of year Total equity $ 7,303 $ 6,679 $ 6,053 Other statistics Per common share 1 Net income 1 $ 3.54 $ 2.95 $ Dividends Book value Closing market price Closing market price to book value Closing market price appreciation 64.8% 32.0% 15.9% 7 Total market return Performance ratios 8 Return on common equity 16.6% 15.4% 14.3% 9 Return on assets Efficiency ratio Net interest rate margin (TEB) Common dividend payout ratio Dividend yield Price earnings ratio Asset quality 15 Net impaired loans as a % of net loans 3 (.1)%.4%.9% 16 Net impaired loans as a % of common equity (1.2) Provision for credit losses as a % of net average loans Average total assets $146,397 $117,029 $109,968 Capital ratios 19 Tier 1 capital to risk-weighted assets 6.6% 6.8% 7.4% 20 Total capital to risk-weighted assets Common equity to total assets Net common equity to risk-weighted assets Other 23 Number of common shares outstanding (thousands) 1 296, , , Market capitalization (millions) $ 15,337 $ 9,490 $ 7, Number of employees 28,001 26,815 25, Number of Bank branches Number of brokerage offices Number of Green Machines 2,038 1,991 1,966 1 The per share figures have been adjusted to reflect the one-for-one stock dividend approved by the Board of Directors on May 25, Efficiency ratio excluding goodwill and one-time costs or credits. 3 Includes customers liability under acceptances and securities purchased under resale agreements.

73 FINANCIAL RESULTS $ 877 $ 877 $ 877 $ 877 $ 877 $ 875 $ ,731 3,682 3,505 3,285 2,966 2,534 2, (40) (29) (32) (44) (53) (34) (27) (238) (229) (229) (229) (229) (214) (152) (152) (16) 4 (12) (26) (17) (3) (1) 4,163 3,731 3,682 3,505 3,285 2,966 2,534 5,042 4,608 4,559 4,382 4,162 3,843 3, (248) (48) (40) (131) (2) (2) (74) $ 5,439 $ 5,016 $ 5,015 $ 4,878 $ 4,714 $ 4,397 $ 3,756 $ 2.14 $.82 $ 1.25 $ 1.51 $ 1.80 $ 2.20 $ (2.4)% 15.9% (2.0)% 20.3% (28.1)% 15.9% 46.7% (24.5) % 5.4% 8.4% 10.6% 13.5% 18.2% 20.0% % 1.8% 2.7% 2.3% 1.4%.8%.8% $ 95,320 $ 82,026 $ 70,343 $ 68,992 $ 66,468 $ 62,376 $ 58, % 6.7% 7.4% 7.2% 6.5% 6.3% 5.9% , , , , , , ,823 $ 6,175 $ 6,323 $ 5,459 $ 5,570 $ 4,631 $ 6,437 $ 5,510 25,767 25,603 23,514 24,003 24,560 23,881 22, ,891 1,858 1,663 1,

74 72 FINANCIAL RESULTS Reported quarterly results Quarter ended Quarter ended October 31 July 31 April 30 January 31 October 31 July 31 April 30 January 31 (millions of dollars) Net interest income (TEB) $ 798 $ 739 $ 726 $ 720 $ 692 $ 659 $ 613 $ 639 Provision for credit losses Net interest income after credit loss provision Other income Net interest and other income 1,446 1,356 1,251 1,220 1,138 1,041 1,013 1,008 Non-interest expenses Net income before provision for income taxes Imputed income taxes on grossed-up income Net income $ 289 $ 295 $ 240 $ 264 $ 249 $ 223 $ 220 $ 222 Applicable to common shares Per common share Net income $.95 $.96 $.78 $.85 $.81 $.73 $.70 $.71 Dividends Return on common equity 16.8% 17.8% 15.2% 16.4% 16.3% 14.8% 15.1% 15.2% (billions of dollars) Average earning assets $ 137 $ 130 $ 124 $ 117 $ 108 $ 106 $ 100 $ 97 Average total assets Net interest income (TEB) as a % of: Average earning assets 2.31% 2.26% 2.40% 2.45% 2.54% 2.48% 2.49% 2.62% Average total assets INTEGRATED CORPORATE & INVESTMENT BANKING TD Bank Products and Services A prime example of our integrated corporate and investment management approach and our focus on industry specialization was TD s participation in the multi-stage TimberWest Trust transaction. This was one of the major forest products deals of 1997, involving the purchase of TimberWest Forest and Pacific Forest Products. TD Bank led the senior bank financing... TD Capital, our Merchant Bank, provided subordinated debt... and TD Securities was an advisor and led a successful issue of equity trust units. NEW ISSUE TimberWest Timber Trust $275,000,000 Trust Units November, 1997

75 CORPORATE GOVERNANCE 73 CORPORATE GOVERNANCE PRACTICES TD s Board of Directors and management have established corporate governance practices that are appropriate for one of the world s leading financial institutions. The Board of Directors oversees the management of the business and affairs of the Bank. The Board s duties and objectives are to protect the assets of the Bank and assure its viability, to enhance profitability and facilitate the development of business, and to ensure the effective operation of the Bank. Each Director is accountable to the shareholders and the other Directors. The Board makes all major policy decisions for the Bank, including those set out below. Many Board functions are carried out by the five committees of the Board. The Board and its committees perform these main functions: monitoring the effectiveness of the Bank s corporate governance practices and approving any necessary changes, approving Bank strategies and overseeing their implementation, setting performance objectives and monitoring results, approving compensation for senior officers and compensation policies for the Bank, approving operating and capital budgets, and specific requests for major capital expenditures, overseeing the proper management of business risks, ensuring proper financial reporting and financial control systems are operating, and approving the quality and sufficiency of information provided to the Directors, reviewing control and audit procedures, overseeing communications with shareholders and other stakeholders, including approving the quarterly financial statements, annual financial statements, Annual Report and Annual Information Form, overseeing succession planning and approving succession decisions for senior officers, establishing general Bank policies, and performing other tasks required by law. The effectiveness of the Board and the committees is assessed annually by each Director. The Corporate Governance Committee considers Directors comments and then proposes modifications to improve the Board and committee functions, and the Bank s corporate governance processes. The Directors are elected to exercise their independent judgement on all issues concerning the Bank. At least two-thirds of all Directors are unaffiliated with and unrelated to the Bank. The determination of each Director s status is made in accordance with the Bank Act affiliation rules and by reviewing whether the size and importance of the business or other relationships of the Director and the Director s spouse with the Bank could reasonably give rise to a perception of a lack of independence for the Director. The Board and committees can meet in the absence of management at their discretion. In accordance with the Bank s corporate governance policies the Board, committees, and individual Directors can retain independent advisors for any matter relating to the Bank. No Bank officers may be appointed to the Audit, Conduct Review, Corporate Governance or Management Resources and Compensation Advisory committees. The Board expects the Chief Executive Officer and the Bank s other officers to manage all aspects of the Bank s business and affairs to achieve the Bank s objectives, and rates their performance accordingly. Management s discussion and analysis of the Bank s operating performance is included in this Annual Report, commencing at page 8. The Bank s Shareholder Relations department provides information to and responds to inquiries from shareholders. Shareholder inquiries or suggestions are forwarded to the appropriate committee or person. The Bank has established toll free lines by which shareholders, customers and others can receive information from and contact the Bank: various telephone numbers are provided on page 85 of this Annual Report. The Bank has also appointed an Ombudsman to assist customers with the resolution of complaints or disputes with the Bank. The Bank s corporate governance practices comply with the Guidelines for Improved Corporate Governance in Canada adopted by The Stock Exchange and the Montréal Exchange.

76 74 CORPORATE GOVERNANCE BOARD OF DIRECTORS BOARD COMMITTEES Richard M. Thomson Chairman A. Charles Baillie President and Chief Executive Officer William T. Brock Deputy Chairman M. Norman Anderson President Norman Anderson & Associates Ltd. Vancouver *Philippe de G.Beaubien Chairman of the Board Telemedia Inc. Montréal G. Montegu Black Chairman and President Txibanguan Limited André Chagnon Chairman of the Board and Chief Executive Officer Le Groupe Vidéotron ltée Montréal Marshall A. Cohen Counsel Cassels Brock & Blackwell *Gail Cook-Bennett Vice Chair Bennecon Ltd. Wendy K. Dobson Professor and Director Centre for International Business Faculty of Management University of Marsha P. Hanen President and Vice-Chancellor The University of Winnipeg Winnipeg The Honourable E. Leo Kolber Member Senate of Canada Montréal Pierre H. Lessard President and Chief Executive Officer Métro-Richelieu Inc. Montréal Brian F. MacNeill President and Chief Executive Officer IPL Energy Inc. Calgary James A. Pattison Chairman, President and Chief Executive Officer The Jim Pattison Group Vancouver Roger Phillips President and Chief Executive Officer IPSCO Inc. Regina Robert J. Richardson Corporate Director North Bay Edward S. Rogers President and Chief Executive Officer Rogers Communications Inc. Helen K. Sinclair Chief Executive Officer BankWorks Trading Inc. Donald R. Sobey Chairman Empire Company Limited Stellarton, Nova Scotia Michael D. Sopko Chairman and Chief Executive Officer Inco Limited John M. Thompson Senior and Group Executive IBM Corporation Somers, New York George W. Watson President and Chief Executive Officer TransCanada PipeLines Limited Calgary *Adam H. Zimmerman Corporate Director Audit Committee MEMBERSHIP: G. Montegu Black Chairman Wendy K. Dobson Marsha P. Hanen Brian F. MacNeill Roger Phillips Helen K. Sinclair George W. Watson This committee reviews the audited financial statements of the Bank before they are approved by the Board, reviews, evaluates and approves internal control procedures, and reviews any investments and transactions which could adversely affect the well-being of the Bank. It also monitors the Bank s risk management performance and regulatory compliance program. The committee regularly meets with the shareholders auditors, Superintendent of Financial Institutions Canada, the Bank s Chief Financial Officer, Chief Auditor and, Corporate Compliance in the conduct of its duties. Conduct Review Committee MEMBERSHIP: G. Montegu Black Chairman Wendy K. Dobson Marsha P. Hanen Brian F. MacNeill Roger Phillips Helen K. Sinclair George W. Watson This committee reviews procedures for transactions with related parties of the Bank, as defined by the Bank Act, and ensures that any such transactions which have a material effect on the stability or solvency of the Bank are identified. In addition, it monitors procedures established by the Board to resolve conflicts of interest situations and for restricting the use of confidential information, monitors procedures relating to disclosure of information to customers of the Bank that is required to be disclosed by the Bank Act, and monitors the functions of the Bank s Ombudsman. Corporate Governance Committee MEMBERSHIP: Executive Committee MEMBERSHIP: A. Charles Baillie Chairman M. Norman Anderson Robert J. Richardson Philippe de G. Beaubien Donald R. Sobey G. Montegu Black Richard M. Thomson E. Leo Kolber Adam H. Zimmerman James A. Pattison This committee reviews and makes recommendations in respect of the Bank s general operating and corporate strategies. It receives and studies reports on present and future trends in financial services and makes such recommendations and plans based on such reports and studies as may be appropriate to ensure that the Bank and its subsidiaries are prepared to compete effectively in the future. Management Resources and Compensation Advisory Committee MEMBERSHIP: Donald R. Sobey Chairman M. Norman Anderson E. Leo Kolber Philippe de G. Beaubien Gail Cook-Bennett James A. Pattison John M. Thompson This committee reviews and approves executive compensation policies and practices and the Bank s benefit plans. It reviews significant organizational changes, monitors succession planning, and reviews and recommends to the Board candidates for senior officers appointments. The committee recommends to the Board terms and conditions of any incentive or deferred compensation plans for officers of the Bank, and also reviews executive pension plans and loans to senior officers. Robert J. Richardson Chairman André Chagnon Marshall A. Cohen Edward S. Rogers Michael D. Sopko Adam H. Zimmerman *Not standing for re-election on January 28, This committee is responsible for corporate governance issues, including structures and procedures for the independent functioning of the Board. It recommends criteria for the composition of the Board and the number of Directors. It also identifies candidates to be Directors, reviews their qualifications, annually assesses the contribution of each Director, recommends to the Board a slate of Directors for election at the Annual Meeting, and recommends to the Board candidates to fill vacancies on the Board which occur between Annual Meetings.

77 TD PEOPLE 75 Chairman Richard M. Thomson SENIOR OFFICERS* President and Chief Executive Officer A. Charles Baillie Deputy Chairman William T. Brock Vice Chairmen: Robert P. Kelly Sydney R. McMorran Executive s: G.F. Kym Anthony Allen W. Bell Oakville L. Arthur English Kenneth B. Foxcroft Mississauga J. Duncan Gibson North York W. Keith Gray Stephen D. McDonald North York Corporate Senior s: TD Securities, New York Peter A.E. Bethlenfalvy New York, New York Credit Pierre de G. Boulanger General Counsel and Secretary R. Glenn Bumstead Mississauga TD Evergreen Jeffrey R. Carney Central Computer Services James E. Chamberlain Oakville Public Affairs and Corporate Communications Heather E. Conway Audit John T. Davies Mississauga Treasury Services Kenneth L. Dowd Operations Michael A. Foulkes Scarborough TD Economics Ruth Getter National Sales Brian J. Haier Etobicoke Institutional Equities/ Structured Finance Kenneth C. Hight Oakville Ombudsman A. Douglas King Main$treet Banking John L. Leckie Willowdale Electronic Banking J. David Livingston Mississauga TD Trust Charles F. Macfarlane Agincourt Merchant Banking John B. MacIntyre Visa Walt M. Macnee Investment Management Robert F. MacLellan Finance Daniel A. Marinangeli Corporate Banking Bharat Masrani London, England Market Risk Policy Jason A. Marks Institutional and Community Relations Robert J. McGavin Cheltenham Compliance Christopher A. Montague Oakville Systems Research and Development Somasundar K. Mosur Mississauga Assistant General Counsel I. Alexander Norton Etobicoke TD Securities Services Gerard J. O Mahoney Oakville Investment Management Barbara B. Palk Investment Banking Andrea S. Rosen Real Estate Operations Ronald E. Ruest Willowdale Insurance Dunbar Russel Green Line Investor Services John G. See Oakville Mortgages Bruce M. Shirreff Etobicoke Commercial Jeff Somerville Data Processing James R. Sorensen Oakville Risk Management Policy Group Thomas R. Spencer Telecommunications Services A. Paul Stephens Don Mills Personal Lending and Asset Based Lending Stephen W. Stewart Aurora Marketing Christine Thompson TD Asset Management J. Mark Wettlaufer Investment Banking Mark G. Wheaton Investment Banking Donald A. Wright Canada Senior s: Atlantic Margo M. McConvey Mississauga Québec Robert R. Laverdure Westmount Greater Area A. Blair Slade Oakville Ontario Paul A. McGrath Ontario Central John C. Fitzpatrick TD Centre Branch Tasker S. Kelsey Manitoba and Saskatchewan James M. Babcock Winnipeg Alberta R. Iain P. Strump Calgary Pacific James F. Hudson Vancouver U.S.A. Senior s: U.S.A. Division Michael P. Mueller Cranbury, New Jersey Communications Finance Ian S. Crowe Darien, Connecticut *The senior officers listed above include their municipality of residence as of October 31, **All of the senior officers listed have held management or senior management positions with the Bank for the past five years, except for the following officers, each of whom previously held management or senior management positions with another financial institution, investment counsellor, public relations firm or law firm during the past five years: G.F.K. Anthony, H.E. Conway, C.F. Macfarlane, R.F. MacLellan, J.A. Marks, C.A. Montague, A.S. Rosen, D. Russell, S.W. Stewart, C. Thompson, M.G. Wheaton and D.A. Wright. CORPORATE DIVISIONS Alternate Retail Banking Executive L. Arthur English VISA Senior Walt M. Macnee Visa Centres Geoffrey E. Butler Associate National Merchant Sales Richard I. Mathes ELECTRONIC BANKING Senior J. David Livingston s: Green Direct Barbara I. Cromb Interactive Services Steve L. Gesner Telephone Banking David I. Morton Associate Vice Presidents: Automated Banking Machines Jane A. Dekkers PC Access David Dunford PERSONAL LENDING AND ASSET BASED LENDING Senior Stephen W. Stewart s: Credit Centre J.G. (Garry) Johnson Personal Lending Nick J. Stitt Associate Vice Presidents: Sales and Marketing, Asset Based Lending Gail P. Carleton National Recovery Team Anthony J. Teresi TD LIFE INSURANCE COMPANY President, TD Life Dunbar Russel Sales and Distribution Len Logozar HUMAN RESOURCES William B. Cheshire FINANCE Susan G. Abbott Audit Senior and Chief Auditor John T. Davies s: Credit Risk Audit William E. Evens Retail Bank Audit Stephen H. Hill TD Securities Audit Gordon W. Piercey Associate s: Audit Strategy and Education Pankaj Puri Credit Risk Audit David A. Benson Retail Bank Audit Ronan J. Grogan Sean P. McGoldrick Corporate & Public Affairs Senior s: Institutional and Community Relations Robert J. McGavin Public Affairs and Corporate Communications Heather E. Conway Corporate Banking TORONTO Executive Stephen D. McDonald John F. Coombs Associate Vice Presidents: Joanne M. Berry David M. Fisher Lisa A. Reikman Craig A. Scott Irene U. Subocz Jeremy M. Walker VANCOUVER Managing Director James I. Bruce Senior Manager Donald C. Morrison CALGARY Managing Director Murray T. Wilson Associate Norman D. Birbeck MONTRÉAL Managing Director Jean Longpre Associate Yves R. Bergeron U.S.A. 31 West 52nd St. New York, New York NEW YORK Senior Michael P. Mueller HOUSTON Associate Carole A. Clause London, England Triton Court 14/18 Finsbury Square London, EC2A 1DB England Senior and Co-Head, Europe Bharat B. Masrani s: Howard M. Baker Trevor W. Bull Michael S. Redferne Associate A. Douglas Waldron Dominion Australia Limited Level Bourke St. G.P.O. Box 1838Q Melbourne, Victoria 3001, Australia and Managing Director Steven H. Fryer Associate s: Paul A. Birch Andrew J. Field Singapore 1 Temasek Ave Millennia Tower Singapore, and Managing Director, Corporate Banking, Asia Michael F.P. Walzak Associate s: Jeffrey A. Corrigan David Lewing Wolfgang A. Mersch Santiago, Chile World Trade Centre Nueva Tajamar 555 Oficina 1401 Santiago, Chile Senior Representative Stephen C. Guthrie Hong Kong Hutchison House 18th Floor 10 Harcourt Rd. Central G.P.O. Box 7854 Hong Kong Representative K.L. Chan Jakarta, Indonesia Plaza Mashill, Floor 9 Jalan Jend. Sudirman, Kav. 25 Jakarta Indonesia Senior Representative Francis A. Lutz

78 76 TD PEOPLE Mexico City, Mexico Avenida Paseo de la Reforma th Floor Colonia Cuauhtemoc Mexico D.F. Codigo Postal Mexico City, Mexico Associate Paul V. D Agata Mumbai, India 86 Free Press House 8th Floor Free Press Journal Rd. 215 Nariman Point Mumbai, India Deputy Country Head Ajai K. Bambawale Taipei, Taiwan 363 Fu-Hsing North Rd. 13th Floor P.O. Box Taipei, Taiwan Corporate Banking Jerry Chang Trade Finance and Correspondent Banking Services A. Parker Gallant Associate s: Stephen N. Cullen George L. Van Vliet Cash Management Services Ian B. Struthers Associate s: Douglas E. Langford Thomas G. Phipps TD Payroll Services Richard A. Lunny Associate s: David Avrahami Steve W. Fleming Mark King International Centre and Manager George E. Tabet Finance and Risk Management Henry A. McKinlay Associate F. David Bickley Human Resources Marshall R. Lewis Associate s: Warren W. Bell Richard C. Campbell Operations Raymond A. Day Investment Banking TORONTO Executive s: G.F. Kym Anthony Kenneth B. Foxcroft Senior s: Kenneth L. Dowd Kenneth C. Hight John B. MacIntyre Andrea S. Rosen Mark G. Wheaton Donald A. Wright TD SECURITIES -Dominion Centre P.O. Box 100, Ontario M5K 1G8 Chair and Chief Executive Officer G.F. Kym Anthony President and Chief Operating Officer Donald A. Wright Deputy Chairs: Kenneth B. Foxcroft Kenneth C. Hight Vice Chairs: Roland A. Cardy Keith D. Honeyborne Michael MacBain John B. MacIntyre Richard H. McCoy Andrea S. Rosen Mark G. Wheaton Chief Information Officer Kenneth L. Dowd Chief Financial Officer Henry A. McKinlay Managing Directors: J. David Beattie Michael R. Binette Stephen T. Boutilier Christopher H. Brown Jeremy H. Burge Robert E. Burgess R. Denys Calvin Stephen F. Clarke Christopher C. Coderre Raymond A. Day G. Stephen Dembroski Stephen J. Dent Paul C. Douglas Thomas A. Eisenhaer Clifford G. Feehan William J. Furlong Moya M. Greene Maurice J. Hanley James Hubbs Martine M. Irman Faroukh E. Kanga Joel Kazman Richard J. Kostoff Marshall R. Lewis Steven MacDougall Brian P. Manson James G. McMinn Andrew W. McNair Patrick B. Meneley David M. Montanera Bimal Morjaria Michael P. Nedham William F. Quinn David M. Reese Joseph G. Serpe Shuaib Shariff Antony H. Solomon Steven L. Tennyson Natalie K. Townsend Michael P. Wissell Robert T. Wright John Wm. Young MONTRÉAL Managing Director Jean Longpré CALGARY Managing Director Murray T. Wilson VANCOUVER Managing Directors: James I. Bruce Lee E.R. Davis LONDON, ENGLAND Vice Chair and Co-Head, Europe Lance D.G. Uggla Managing Directors: Shane Akeroyd Howard M. Baker Kevin A. Gould Bruce R. Hilland Craig T. Marthinsen Wolf K. Raymer Michael S. Redferne Hugh Whittle SYDNEY, AUSTRALIA Level 24 9 Castlereagh St. Sydney, Australia 2001 s and Directors: Geoff W. Oberg Christopher J. Pashley HONG KONG Peter J. Rodrigues SINGAPORE Managing Director Henry A. Schindele TAIPEI, TAIWAN Charles J. Chen TOKYO, JAPAN Kamiyacho Mori Building, 16th Floor 3 20 Toranomon 4 chome, Minato-ku Tokyo 105, Japan Managing Director and Chief Represenative Hiroyuki Tanioka and Director, Branch Manager David Chang U.S.A. NEW YORK Senior Michael P. Mueller TD SECURITIES (USA) INC. 31 West 52nd St. New York, New York President and Chief Operating Officer Peter A.E. Bethlenfalvy Vice Chair Ian S. Crowe Managing Directors: Richard F. Allen Rod F. Ashtaryeh Marc L. Baum Kshitij V. (Ben) Bendre Randall C. Bingham Julian M. Bott Laurel A. Brien Kathryn L. Dunn Melissa S. Glass Jeffery H. Glasse Deborah Gravinese Mark L. Grotevant P. Joseph Hegener Derrick L. Herndon Carlton M. Higbie Victor J. Huebner Paul W. Huyer Wade C. Jacobson Paul A.N. Klie Daniel H. Kochav George T. Laub Linda A. Lavin Yanxiu (Matthew) Li Laurie Macdonald Richard J. MacDonald David S. McCann Amy L. Miller David N. Neuhaus Brendan J.O Halloran Brian G. O Reilly Gordon A. Paris Ethel M. Patterson Paul P. Ponzo Michael S Reddy Thomas W. Regan Brian A. Rich Peter T. Veru Eugene L. Wolfson CHICAGO Three First National Plaza, Suite 1900 Chicago, Illinois Managing Director Dylan T. MacKenzie HOUSTON 909 Fannin St. Houston, Texas Managing Director Mark M. Green Investment Management TORONTO Senior s: Robert F. MacLellan Barbara B. Palk Satish C. Rai Associate s: Robert G. Cassels Clare O. Kyle Douglas F. Warwick Finance Senior Daniel A. Marinangeli s: Business Planning Donald G. Allan Chief Accountant Christopher J. Woodward Financial Analysis David E. Kay Taxation Judith M. Bussey Associate Vice Presidents: Deputy Chief Accountant Colm J. Freyne Offshore and Canadian Tax A.M. Fiorita-Shabaga Group Human Resources Executive Allen W. Bell s: Human Resources Advisory Group Edward G. Donaldson Resourcing and Employee Relations Robin A. Dines Employee Services Ross J. Thompson Resourcing Art J. Filip Human Resources Development David F. Morrison Employee Relations Rosemary B. Regan Associate s: Employee Services Dennis R. Field Executive Compensation Ronda L. Fox Cash Compensation Donna S. Hill Compensation Design Bernadine Martenson Legal Senior, General Counsel and Secretary R. Glenn Bumstead Senior and Assistant General Counsel I. Alexander Norton Associate s: Corporate and Commercial Cameron A. Beheshti Adriana G. Groskopf Sandra M. Mundy Litigation Peter K. Moffatt Colin C. Taylor COMPLIANCE Senior Christopher A. Montague s: Corporate Compliance Geoffrey Horrocks Compliance Susan L. Johnston Associate s: Compliance Christopher D. Climo Paul B. Riccardi Operations Senior Michael A. Foulkes Branch Operations Mart Raigla Central Computer Services Senior James E. Chamberlain Phillip D. Ginn Telecommunications Services Senior A. Paul Stephens Associate s: Hardware Services Ronald W. Casey Information System Security Tim J. Clague Software Services Margaret A. Harvey David H. Tan Data Processing Senior James R. Sorensen Systems Research and Development Senior Somasundar K. Mosur s: Matthew Giliberto Robert W. Hollis Claudia Radasanu Donald N. Tyrrell Service/Quality Associate Michael T.H. Whyte Branch Services/Credit Administration Centres: Associate Gordon Forfar BARRIE Mark Harris CALGARY Gregory Barrow EDMONTON Les Major HALIFAX Janice Rice KINGSTON Lianne Glendinning LONDON James Eakins MISSISSAUGA Cindy Harrison MONTRÉAL Eralda Romani NORTH YORK Peter Chard PACIFIC Gay J. Hall TORONTO Lou Santamaria TORONTO King and Bay Janice Munro WINNIPEG David White Finance and Administration Associate s: Ross A. Deebank Leslie I. Lauer Human Resources M. Bart Reilly Associate Karen Ganzlin Real Estate Senior and President, TD Realty Ronald E. Ruest s: Real Estate Operations David A. Moore Real Estate Investments Michael W. Price Architect s Department and Chief Architect J. Michael O. Grey

79 TD PEOPLE 77 Retail Branch Banking Vice Chairman Robert P. Kelly COMMERCIAL Senior Jeff Somerville s: Human Resources Peter D. McAdam National Accounts Group J. David Sloan Associate Sales and Service Rabena Bacchus MAIN$TREET BANKING Senior John L. Leckie Associate s: Business Development H. Jeannette Vanden Heuvel Credit A.I. (Alistair) Yule NATIONAL SALES Senior Brian J. Haier Associate Branch Development William R. Butcher MARKETING Senior Christine Thompson Associate s: Deposits Catherine Taylor Marketing Services Laurence A. Boucher MORTGAGES Senior Bruce M. Shirreff s: Mortgage Development J. Michael Braid National Sales J. David May Ontario Mortgage Operations John W. Schipper Associate Mortgage Funding and Servicing and Securitization Larry B. Hyett FIRST NATIONS BANK OF CANADA President David M. Ross TD TRUST Senior Charles F. Macfarlane s: National Sales and Personal Trust Services Lewis D. Hutchinson Investment Services Robert J. Gorman Private Client Services Merle Kriss Regional Manager Western Canada Bruce Noble Branch Managers: CALGARY Bruce Duplessis HALIFAX Claudette Best MONTRÉAL Deborah Lorant TORONTO AND ONTARIO REGION Andrea Nauff VICTORIA Joe Taylor FINANCE Harold J. Keller HUMAN RESOURCES Kenneth G. Peaker Risk Management ASSET AND LIABILITY MANAGEMENT David S. Tanner CAPITAL FINANCE Peter J. Aust CREDIT Senior Pierre de G. Boulanger s: Cathy L. Backman Mark R. Chauvin Vern K. Davis William E. Duke Allan G. Fraser Joan M. Goodman James C. McCarthy Arch J.H. McLean John M. Madge Paul I. Verwymeren Associate Nancy Roitman RISK MANAGEMENT POLICY GROUP Senior s: Thomas R. Spencer Market Risk Policy Jason A. Marks Quantitative Finance Barton J. Sisk Associate Credit Risk Management Nadine M. Gilchrist TD Economics Senior and Chief Economist Ruth Getter and Deputy Chief Economist Peter L. Drake Wealth Management Services Executive Vice Presidents: J. Duncan Gibson Investor Services W. Keith Gray s: Development and Operational Support David H. Turner Associate s: System and Product Development Richard G. Saville Systems Support William E. Charters GREEN LINE INVESTOR SERVICES Senior John G. See s: Administration Robert S. Hamilton National Retail Sales Suzanne Deuel Regional Managers: Central Canada Associate Doug Carmichael Western Canada Associate Bruce R. Shewfelt Branch Managers: BEAVER CREEK Harry Rollo CALGARY Steve Hamel EDMONTON Philip McAvoy HALIFAX Juanita Watson HAMILTON Linda North KELOWNA Phil Rocca KINGSTON Barb Varro KITCHENER Scott Dart LAVAL Sylvie Bélanger LONDON Doug Patterson MARKHAM Helen Cheung MONTRÉAL Debi McMillan NANAIMO Thrina Howes OAKVILLE James Best OTTAWA Bryan Trudell QUÉBEC CITY Roger Goulet RED DEER David Zubot REGINA Jason Scott RICHMOND Kevin Neill SAINT JOHN Roy Wolker ST. JOHN S Chris Peddigrew SASKATOON Nancy Herman SUDBURY Joanne Proulx THUNDER BAY Brad Coslett TORONTO Mary Helen Morra TORONTO INVESTOR CENTRE Brian Morrison VANCOUVER Doris Gnandt CHINATOWN, VANCOUVER Heidi Lau VANCOUVER INVESTOR CENTRE Corey MacEachern VICTORIA Sean Reilly WHITBY Pascale Walpole WHITE ROCK Mark Heaney WINDSOR Joe Bertotti WINNIPEG Kelly Jacob YORK MILLS Wade Brackenbury HONG KONG Marc Lee LONDON, ENGLAND Jeff Dowling PONT SECURITIES, AUSTRALIA and Managing Director Allen G. Bessel TD ASSET MANAGEMENT INC. Senior J. Mark Wettlaufer s: Financial Planning Elizabeth Grudzinski National Sales Paul Boivin Research and Risk Containment Karl H. Schulz Associate s: Marketing Services Tom G. Hill Product Development and Systems Einar Medri TD SECURITIES SERVICES Senior Gerard J. O Mahoney s: Mutual Fund Services Jerry K. Beniuk Securities Administration Lise N. Arnett Associate s: Account Management Larry W. Saunders Mutual Fund Services Stuart A. Reynolds WATERHOUSE INVESTOR SERVICES INC. Chairman and Chief Executive Officer Lawrence M. Waterhouse, Jr. President and Chief Operating Officer Frank J. Petrilli Executive s: Administration M. Bernard Siegel Development Charles A. Zabatta Finance and Chief Financial Officer B. Kevin Sterns Human Resources A. Wayne Kyle Information Services Frank E. Conti Legal and General Counsel Richard H. Neiman Marketing Randall M. Miller WATERHOUSE SECURITIES INC. President John H. Chapel Branch Managers: ALBANY Peter Van Erp ALBUQUERQUE Todd Stephens ARLINGTON Sean Murphy ATLANTA Hunt Purdy Service Centre Steve Robinson ATLANTA NORTH METRO Steve Wagner AUSTIN Kathryn Kramer BALTIMORE Ed Gray III BELLEVUE Jeffrey Carlson BETHESDA Forrest Robertson III BIRMINGHAM Steve Fenwick BOCA RATON Dan Pagano BOISE Doug Carter BOSTON Don McDonough BOSTON BACK BAY Jay Pettinelli BUFFALO Chris King CENTURY CITY John Tagliaferri CHARLOTTE Rich Freitag CHATHAM/ SHORT HILLS Mark Dudash CHERRY HILL Mike Curly CHICAGO 135 South LaSalle St. Chip Graf 401 North Michigan Ave. Tony Link Service Centre Greg Kleva CINCINNATI Frank Preissle CLEVELAND David Ionno COLUMBIA Bob Harding COLUMBUS Todd Doherty CUPERTINO Matt Maley DALLAS Tim Boyd DENVER Ward Wise DES MOINES Skip Storm DETROIT Lisa Hachigan EDISON Gene O Leary FOREST HILLS Brett Fiden FORT LAUDERDALE Mike Arena FORT WORTH Wilfred Lampka GARDEN CITY Ken Sherman HARTFORD Christopher Carroll HARRISBURG Kevin O Sullivan HONOLULU Ku ulani Seto HOUSTON Galleria 350 Post Oak Blvd. Kevin Clary 910 Travis St. Amy McGovern INDIANAPOLIS Matt Bien IRVINE Kenneth Williams JACKSON Kelley Huguley JACKSONVILLE Kim Riddleburger JERSEY CITY Service Centre Gerry Kane KANSAS CITY Carrie Braxdale KING OF PRUSSIA Eric Fortuna Finance Kathleen A. O Donnell Human Resources David W. McCaw

80 78 TD PEOPLE LAS VEGAS Monty Killian LITTLE ROCK Kris Kempski LOS ANGELES Rodney Thompson LOUISVILLE Kevin Lauch MANCHESTER Rick Senatore MELVILLE Chris Beatrice MEMPHIS Jerome Johnson MIAMI Ray Podolla MILWAUKEE Don Dahlman MINNEAPOLIS Rick Straub NAPLES Krista Cardinale NASHVILLE Scott Murphy NEW ORLEANS David Pedroza NEW YORK 55 Broadway Beth Sum 1 Chase Manhattan Place, Advisor Service Tom Nally New York Service Centre Glenn DePalma 250 Park Ave. John Willis 100 Wall St. John Murray 33 Whitehall St. Glenn Gioia NORFOLK Charles Ripley NORTHBROOK Randy Dietke OKLAHOMA CITY Doug Floyd ORLANDO Jim Kauchak OXNARD Susan Kim PALM BEACH Scott Weider PARAMUS Alan Gradski PHILADELPHIA Eric Bayne PHOENIX Mike Neill Service Centre Linda Hicks PORTLAND Pat Blume PRINCETON Nora Harrison RIVERSIDE John Stumpf ROLLING MEADOWS Peter Orth SACRAMENTO Ken Bielejeski ST. LOUIS Peter Moore SALT LAKE CITY David Cone SAN ANTONIO Tom Kolodzinski SAN DIEGO Ken Skolnik SAN FRANCISCO 235 Montgomery St. Jeff Pontino 400 Montgomery St. Mike Arredondo SAN JOSE Bryan Digel SANTA CLARA John Davis SEATTLE Steve Bissett STAMFORD Michael Carroll SYRACUSE Brett Mirliani TAMPA Chuck Wilson TROY Jeff Mcade WALNUT CREEK Eric Tessell WASHINGTON, D.C. Solon Vlasto WHITE PLAINS Ivan Luburic WILMINGTON Michelle Snyder WATERHOUSE NATIONAL BANK Executive Ronald C. Hodges WATERHOUSE ASSET MANAGEMENT Senior s: David Hartman Michele Teichner NATIONAL INVESTOR SERVICES CORPORATION Chairman and Chief Executive Officer Peter A. Wigger President and Chief Operating Officer Joseph N. Barra TD EVERGREEN Senior Jeffrey R. Carney and National Sales Manager Robert L. Strickland, Operations and Technical Support William J. Henderson Offices: BARRIE Rodney Burns BEAVER CREEK Donald Mok CALGARY Martin Chambers CHARLOTTETOWN Ian Saunders COURTENAY Bob Hanley EDMONTON Fred Esposito EDMONTON II Frank Grisdale HALIFAX Geoff Black HAMILTON Steve Walorny KELOWNA (RICHTER) Spencer Thompson KELOWNA (LEON) Robert Mabey KINGSTON David Potter LAWRENCE PARK John Pendrith LETHBRIDGE Patrick Bartoshyk LONDON (GALLERIA) Don Little LONDON (TALBOT) Cam Robinson MONCTON Steve Haines MISSISSAUGA Albert Brandstatter MONTRÉAL Earl Agulnik Cliff Noonoo NANAIMO Bob Harder NORTH YORK Eric Clifton Bob Gibson OAKVILLE John Wells OTTAWA Scott Kendall OWEN SOUND Don Desjardine PENTICTON Harry Levant QUÉBEC CITY Denys Bourbeau RED DEER Tim Wiltzen REGINA Kenneth Froh RICHMOND Carol Leong ST. CATHARINES Hank Wissenz SAINT JOHN Steve Haines ST. JOHN S, NFLD. Kevin Breen SARNIA Richard Maaten SASKATOON Robert Meaden SCARBOROUGH Simon Tam SUDBURY Dan McCartney THUNDER BAY Michael Whistle TORONTO York Michael Franceschini King St. Inez Phair University Ave. Dale Johnston Wellington St. Colman O Brien UNIONVILLE Anthony Mangione VANCOUVER David Babbitt VANCOUVER II Peter Lee VICTORIA Corny O Connell WATERLOO Edward Lynch WELLINGTON Don Eastmure WHITBY Paul Gawne Marilyn Goodhand WHITE ROCK Rob Wells WINDSOR Craig Mallender WINNIPEG Jim Coldwell Mackie Love PROVIDENCE Kevin Sullivan RALEIGH Michael Gallo RICHMOND Tim Kelly

81 TD PEOPLE CANADA 79 ATLANTIC -Dominion Bank Building 1791 Barrington St. P.O. Box 785 Halifax, Nova Scotia B3J 2V2 (902) Senior Margo M. McConvey Credit Michael P. Blaesing Associate Human Resources Judith A. Griffith s and Regional Managers: Central and Northern New Brunswick Region Brian D. Fitzpatrick Halifax Metro South Region William B. Fullerton Nova Scotia and Prince Edward Island Region Ross A. MacDonald Branch Managers: NEWFOUNDLAND CORNER BROOK Nancy R. Luscombe GANDER Dan C. Culligan MARYSTOWN Leslie M. Fudge MOUNT PEARL R.Ted Langer ST. JOHN S 140 Water St. Joseph A. White 95 Bonaventure Ave. Derek T. Butt 58 Kenmount Rd. John S. Woodford NOVA SCOTIA AMHERST Carol H. Hurley BEDFORD Bern C. Pelley BRIDGEWATER William McInnis DARTMOUTH 6 Forest Hills Pkwy. Roger S. Wheeler 97 Portland St. Leo P. MacIntosh HALIFAX 1785 Barrington and George Sts. Colin C. MacKinnon 7071 Bayers Rd. Kirk D. Milligan 278 Lacewood Dr. J. Bruce Donaldson 5415 Spring Garden Rd. James L. Copeland KENTVILLE Carolyn M. Hirschfeld LOWER SACKVILLE Judith A. Grice NEW GLASGOW 156 Riverside Pkwy. Brian R. Ostroski PORT HAWKESBURY James D. MacDonald TRURO 22 Inglis Place Steve C. Tufts YARMOUTH James Crosby PRINCE EDWARD ISLAND CHARLOTTETOWN J. Mike Cronkhite PARKDALE Keith R. Merry SUMMERSIDE David W. Owen NEW BRUNSWICK BATHURST Paddy F. O Neill CAMPBELLTON Patrick Jiggens EDMUNDSTON Gerry P. Grandbois FREDERICTON 525 Prospect St. W. Keir Clark 494 Queen St. Alvin C. Campbell 77 Westmorland St. Colin W. Tucker MONCTON 860 Main St. Michael Johnson 1199 Main St. Reginald S. Legge NEWCASTLE Richard Kenny OROMOCTO Frank D. Cobbett QUISPAMSIS Brian W. Munroe RIVERVIEW Shelley L. Cleversey SAINT JOHN 2 King St. Wayne D. Arseneault 78 Main St. Thomas E. Davidson SUSSEX Timothy W. Houck WOODSTOCK Michael D. Brown QUÉBEC 500 Saint-Jacques St. P.O. Box 6009 Montréal, Québec H3C 3B7 (514) Senior Robert R. Laverdure s: Human Resources Suzanne Sévigny Risk Management William E. Duke Sales and Service Francois P. Hudon Manager Trade Services and Correspondent Banking Stephen Luxenburg s and Regional Managers: Central Region Suzanne E. Poole Northeast Region Robert C. Kiernan Southeast Region Guy Benoît West Region André Robillard Branch Managers: Commercial Banking Centres: MONTRÉAL 433 Chabanel St. W. James S. Coristine 500 St-Jacques and McGill Sts. Louis Larivière 3590 Saint-Laurent Blvd. and Prince-Arthur St. Joseph J. Mete LAVAL 3080 Le Carrefour Blvd. Michel Dubé SAINT-LAURENT 3773 Côte-Vertu Blvd. Bruno B. Ciolfi Full Service Branches: AYLMER Michel Arpin CHICOUTIMI Richard Giguère DRUMMONDVILLE Francois Charbonneau GASPÉ Jean-Charles Bélanger GREENFIELD PARK Florent Henley HULL Mario Delarosbil KIRKLAND Berchmans Fraser MONTRÉAL 1401 Bleury and Ste-Catherine Sts. Serge Guay 8200 Décarie Blvd. and Royalmount St. Normand Belcourt 7373 Langelier Blvd. Rocco Caruso QUÉBEC Le Complexe St-Amable Michel Gauvin ROUYN-NORANDA Guy Tremblay SAINT-JEAN Stéphane Verkempinck SHERBROOKE 2815 King St. W. Serge Miron TRACY Henri Paul Bouchard VAL-D OR Laurent Lecomte Personal Branches: MONTRÉAL AREA 5800 Cavendish Mall Cindy Zappavigna 4824 Côte-des-Neiges Rd. Zareh Osganion 5900 Côte-des-Neiges Rd. and de la Peltrie St. Drew Wawin 449 Jean-Talon and Querbes Sts. Helen Tiritidis 5872 Léger Blvd. Ronald Fisher 1241 Peel St. Gary Dunne 8101 Pie-IX Blvd. and Jarry St. Antonio Scalia 5295 Queen Mary Rd. and Décarie Blvd. Denis Bariteau 1601 Ste-Catherine St. W. and Guy St. Jacques Racette 6930 St-Hubert and Bélanger Sts. Lucy Pope 2959 Sherbrooke St. E. Lise Lévesque 7920 Sherbrooke St. E. Sylvie Vallières 1130 Sherbrooke St.W. Luc Bossé 6505 Somerled Ave. and Cavendish Blvd. Peter Staniforth 2001 University St. Michael D Ambra 5499 Victoria and Dupuis Aves. Zareh Osganian BROSSARD Lorraine Turgeon CHÂTEAUGUAY DEUX-MONTAGNES Jean-Marie Dath DOLLARD-DES-ORMEAUX Heather Bussières DORVAL Robert Reddy GATINEAU Paul Clarke GRANBY Hélène Seewaldt LACHINE Lucie Medeiros LASALLE Antonio Scarfo LAVAL 326 de la Normandie Rd. Denis Drolet 4865 Notre-Dame Blvd. and Melville St. Brian Tracey LONGUEUIL 2665 Chambly Rd. Lynda Girard 1999 Roland- Therrien Blvd. Danielle Brossard MALARTIC Diane Roy OUTREMONT 1000 Bernard Ave. and Hutchison St. Ingo Medvescek 1555 Van Horne and McEachran Aves. Pietro Maltraversa PIERREFONDS Jacques Gagnon POINTE-CLAIRE 317 Brunswick Blvd. Gérald DesForges 265A St-John Blvd. Neil Hawthorn QUÉBEC Charlesbourg Elizabeth Soares 9445 de l Ormière Blvd. and Blain St. Yves Geneau 1170 Lebourgneuf Blvd. Manon Dallaire Sainte-Foy Stéphane Hamelin REPENTIGNY Yves Morrisseau RIVIÈRE-DES-PRAIRIES Peter Moncada SAINT-JÉRÔME Jasmine Bastien SAINT-LAMBERT Richard LaFerrière SAINT-LAURENT 901 Décarie Blvd. and Decelles St. Shannon Day 2065 Saint-Louis Ave. and Gratton St. Claude Papasian SHERBROOKE Place Fleurimont Roger Girard TOWN OF MOUNT ROYAL 1201 Laird and Canora Blvds. Todd Church VERDUN Linda Dupont WESTMOUNT 1289 Greene Ave. Debra Beaudet 5002 Sherbrooke St. W. and Claremont Ave. Jean-Claude Nahal GREATER TORONTO AREA (GTA) P.O. Box 1 -Dominion Centre 222 Bay St. W., Ontario M5K 1A2 (416) Senior A. Blair Slade s: Sales and Service Mason J. Coates Human Resources Alexandra P. Dousmanis-Curtis Regional Managers: Durham Region J. Mark Foerster Etobicoke Region Michael A. Devine Hamilton/Burlington Region John G. Herald Heritage North Region Mary C. Chung Mississauga South/Oakville Region Mark W. Clearihue North Peel Region Barry D. McLeod North York Region Richard G. Healy Core Region S. Mary Hatch East Region Gerald D. McGhee North Region Johanna Geuzebroek West Region Sharon J. Jorgens Scarborough Region Chantelle Small Upper North Region Frank Malone TD Centre Retail Banking Associate Ian A. Cruikshank Branch Managers: Personal Branches: AGINCOURT Agincourt Mall Esther Yeung Pickering Town Centre J. Dennis Laird 2561 Victoria Park Ave. near Sheppard Ave. E. Harry Sullivan AJAX 105 Bayly St. W. and Monarch Heather Pritchard Durham Centre Brian A. Trigg ANCASTER Zora Milovanov AURORA Yonge St. Lisa J. Rettie Bayview Ave. William E. McKinney BOLTON Effie J. Vickery BOWMANVILLE Steve Fitzgerald BRADFORD Isilda Dendrinos BRAMPTON Supercentre Personal Banking Centre J. Derek McIlveen Bartley s Square Iana Alexander College Plaza Julie-Ann Conacher Dixie and Orenda Michael Carter Hwy. 10 and Bovaird Lidia Sportello 1 Queen St. E. and Main St. Domenic D Amario SYDNEY Sandy H. Scott

82 80 TD PEOPLE CANADA Sandalwood Plaza Gina Alpous Springdale Square Shopping Centre Wanda Goodman BURLINGTON 457 Brant St. Jiuliano Giardelli 4031 Fairview St. and Walker s Line Karen M. McCarthy 463 Guelph Line and New St. M. Rose Duarte Maple Mews Brenda May Super Centre Thomas J. Nicholas Tyandaga Plaza Jennifer Kuenzie-Weiler CARLISLE Bernadette DiFilippo DON MILLS Don Mills Shopping Centre Phil Fragale 939 Lawrence Ave. Sub to Don Mills Shopping Centre Donwoods Plaza Lucy Ann Johnson Parkwoods Village Ayaz Bhanji 801 York Mills Rd. and Leslie St. Lindy Vaage DOWNSVIEW 2709 Jane St. and Sheppard Ave. W. Mario Minchella 580 Sheppard Ave. W. and Bathurst St. Zemira Fernandes- McLeod 1050 Wilson Ave. and Keele St. Vince Crudele York Plaza Michael Leo DUNDAS Mark Russell ERIN William J. Lorriman ETOBICOKE 3014 Bloor St. W. and Royal York Rd. Sandor J. Bayzat 430 Brown s Line and Horner Ave. Roger Sholdice 327 Burnhamthorpe Rd. and Martin Grove Rd. Irene Macer 4242 Dundas St. W. and Royal York Rd. Luisa Tomasone Glen Agar Plaza Jennifer Rutledge 1735 Kipling Ave. and Dixon Rd. Frank J. McDermott 3567 Lakeshore Blvd. W. and Long Branch Ave. Daniel J. Sheridan 3003 Lakeshore Blvd. W. and Ninth St. Marilyn Brown 2802 Lakeshore Blvd. W. and Third St. Merle McCaw The Mutual Group Centre Walter Rojenko North Kipling Plaza Roger Ho Sing 742 The Queensway and Royal York Rd. Eva Pomponi Renforth Mall Domenic DiPaola Richview Square Gerald R. Bond Sherway Gardens David Perks Thistletown Plaza Sanjeet Kainth HAMILTON 432 Aberdeen Ave. and Dundurn St. Michael Eaton 540 Concession and East 21st Sts. Jan Engbers 330 Grays Rd. and Barton St. E. Melissa Hicks/ Tammy Petter* (*Job Partnership) 194 James St. S. and Robinson St. Rene Quercia 290 Kenilworth Ave. N. and Barton St. Angela Deganis 1005 King St. W. and Marion St. Irene Wojtow-Dmyterko Mall Road Centre 65 Mall Rd. Robert E. Taylor Mountain Plaza 679 Upper James St. Richard L. Massie KING CITY Sylvia Stoikos MAPLE Dino DiMarco MARKHAM Markham Shopping Centre Roger E. Maher 7200 Markham Rd. and Denison St. Claire Farah Markham Supercentre Yvonne Weston Markham Town Square Gerry Lewis 1 Masseyfield Gate and Warden Ave. Linda Tam 3 Wootten Way N. and Hwy. 7 Virginia Leung MISSISSAUGA Applewood Village Shopping Centre Joanne E. Hutchinson 620 Bloor St. E. and Mississauga Valley Blvd. Laurie Tamas 800 Burnhamthorpe Rd. W. and Wolfedale Rd. Gary K. Brewer 3643 Cawthra Rd. and Burnhamthorpe Rd. Connie Johnson 325 Central Parkway W. Charlene Michelini Credit Valley Town Plaza Brian Wood 3415 Dixie Rd. and Bloor St. E. Anne Foerster 1145 Dundas St. E. and Palstan Rd. Ronald J. Cotnam Erin Mills Town Plaza Franca Berlingieri Erinwood Shopping Centre Robert A. MacRae Golden Square Centre Joanne Choi 2550 Hurontario St. and King St. W. Heidi Robinson Inverhouse Plaza Patti Teramoto 88 Lakeshore Rd. E. Anthony Amott Mississauga Centre 20 Milverton Drive and Hwy. 10 Robin Hill Mississauga Market Place Judy Clearihue Park Royal Shopping Centre Theresa Bird Rockwood Shopping Centre Ian Murray Westdale Mall Peter H. Bedford Westwood Mall C. Ward Hargreaves Windwood Market Karen Larmer GEORGETOWN Douglas A. Woods MOUNT ALBERT Anthony Macko NEWMARKET 404 Town Centre Patricia Ryan Upper Canada Mall Jim N. Sproul Yonge St. Kent Chapman NOBLETON Anna Roberts NORTH YORK North York City Centre Geoff Michie 280 Sheppard Ave. E. Rowena Chan 701 Sheppard Ave. E. Yonge and Finch Geoff Michie 4841 Yonge St. Sheppard Centre John A. Marvin OAKVILLE Bronte Sandy Sharman Glen Abbey John G. Doerffer Hopedale Mall Diane Marcotte Iroquois Shore and Trafalgar Russell M. Snyder 166 Lakeshore Rd. E. and Thomas St. Janice Hourigan 283 Lakeshore Rd. E. and Trafalgar Rd. Thomas W. Savoy 201 Oak Walk Drive Josie Altobelli-Hayes Upper Oakville Place John F. Adams OSHAWA Beatrice Corners Plaza Robin Drake 601 King St. E. Chris Dunn Kingsway Village Karen Roberts King Park Plaza Debra Craig 455 Simcoe and Mill Sts. Robert Gardner 285 G Taunton Rd. E. and Ritson Rd. N. Shane Lawrence PICKERING Amberlea Shopping Centre Brent Holmes 1900 Dixie Rd. and Finch Joanne Kwan REXDALE 2038 Kipling Ave. and Rexdale Blvd. John Power RICHMOND HILL 9019 Bayview Ave. and Blackmore Helen Chan Hillcrest Mall 9350 Yonge St. Joseph Sframeli Leslie St. and 16th Ave. Irene Leung Upper Yonge Place Don Roberts Yonge and Centre Sts. Jim Parkhill Yonge St. Anna Roberts SCARBOROUGH 2101 Brimley Rd. and Sheppard Ave. E. Anthony Cheung 966 Brimorton Dr. and Orton Park Rd. Ruby Lee Consilium Place Winifred Tang 2428 Eglinton Ave. E. and Kennedy Rd. Ronald G. Hogg 120 Ellesmere Rd. and Pharmacy Ave. Thomas Palantzas 3487 Kingston and Markham Rds. Jennifer Cheddie 2857 Kingston Rd. and St. Clair Ave. E. Veda Singh Malvern Phil Whitworth 697 McCowan Rd. and Lawrence Ave. E. Milind Jog 900 Middlefield Rd. Edward Wong Pharmacy and 7 Glendinning Aves. Jacqui MacNeil Ravine Park Plaza Denise Gauld 5005 Steeles Ave. E. and Brimley Rd. Bernice Jean Village Square Henry Kwong STONEY CREEK 54 King St. E. Sean Thomas STOUFFVILLE 6236 Main St. James G. Hassard Stouffville Plaza David Morrison STREETSVILLE 135 Queen St. N. Michael Beaver 175 Queen St. S. Faye Doerffer THORNHILL 1450 Clark Ave. W. and Dufferin St. Terry Lapadula 441 Clark Ave. W. and Hilda Ave. Dale Penney Royal Orchard Shopping Centre Mary Pember Royal Orchard Loan and Mortgage Centre Sub to Royal Orchard Shopping Centre TORONTO 165 Avenue Rd. and Davenport Rd. Dorothy Ingram 1705 Avenue Rd. and Fairlawn Ave. Stella Clark 1635 Avenue Rd. Sub to 1705 Avenue Rd. and Fairlawn Ave Bathurst St. and Glencairn Ave. Ken Lacroix 1591 Bayview Ave. Paul Plecash 565 Bloor St. W. and Bathurst St. Gary Shelswell 120 Bloor St. E. and Church St. Vince Clarke 979 Bloor St. W. and Dovercourt Rd. Cecil Hayes 2440 Bloor St. W. and Jane St. Charity Cansfield 2220 Bloor St. W. and Runnymede Rd. Dan Mattiussi 420 Bloor St. E. and Sherbourne Rd. Marcia Williamson City Hall Randy Bonner 274 Coxwell Ave. and Gerrard St. Anna Marziliano 1050 Coxwell Ave. and O Connor Dr. Gary Hinchcliffe 890 Danforth Ave. and Dewhurst Blvd. Andrée Athanasiou 3450 Danforth Ave. and Danforth Rd. Jacqueline Chapman 480 Danforth and Logan Aves. Allen Chan 2080 Danforth and Woodbine Aves. Shirley E. Samis 421 Donlands Ave. and O Connor Dr. Nadia Iacobelli Dufferin and Apex Libero Velardo 2945 Dundas St. W. and Medland St. Winston Steele 1140 Dundas St. W. and Ossington Ave. Maria Schieda Dundas and Runnymede Plaza Joe Puccia 501 Dundas St. W. and Spadina Ave. Frank Woo 657 Dupont and Christie Sts. Hazel M. Edwards 1245 Dupont and Dufferin Sts. Olga King 878 Eglinton Ave. E. and Laird Dr. Melanie Sherwood 656 Eglinton Ave. W. Deborah Fava 313 Eglinton Ave. W. and Avenue Rd. Patrick Iuorio 846 Eglinton Ave. W. and Bathurst St. Bonnie Plecash 949 Eglinton Ave. W. and Rostrevor Rd. Sub to Eglinton and Bathurst 1840 Eglinton Ave. W. and Dufferin St. Elio Pascuzzo 518 Eglinton Ave. W. and Heddington Ave. Sharron Neeson 2623 Eglinton Ave. W. and Keele St. Grace Salema Eglinton Square and Victoria Park Ave. Dave Calvert Forest Hill Village Sheila Wilkes King St. and Yonge St. Marion Thompson 161 King St. E. and Jarvis St. Charles Sookoo 1448 Kingston Rd. and Warden Ave. Fauzia Khan

83 TD PEOPLE CANADA Lawrence Ave. W. and Keele St. Carmine Martone Maclean Hunter Building 777 Bay St. and College Kim O Brien 246 Marlee and Stayner Aves. Freda Santonato 321 Moore Ave. near Bayview Ave. Debby Young Mooredale 404 Summerhill Ave. Patricia Dawidowich 45 Overlea Blvd. Vince Mannella 1068 Pape and Gamble Aves. Lynda Norman 686 Queen St. W. and Euclid Ave. Joseph Totino 1435 Queen St. W. and Jameson Ave. Arthur V. Valve 2169 Queen St. E. and Lee Ave. Tom Horn 904 Queen St. E. and Logan Ave. John D Alessandris 501 Rogers Rd. and Old Weston Rd. Kevin Luchenski 421 Roncesvalles and Howard Park Aves. Anne Denkovski 948 St. Clair Ave. W. Domenic Saragosa 510 St. Clair Ave. W. and Bathurst St. Dolly Van Demark 687 St. Clair Ave. W. and Christie St. Catherine Lawes Westclair Thorncliffe Market Place Vince Mannella 465 University Ave. and Dundas St. W. John Baird 70 University Ave. and Wellington St. Marina Fante Victoria Park Ave. and 3100 St. Clair Ave. E. Robert G. Gardner 3174 Yonge St. and Bedford Rd. Jay Nicholson 2263 Yonge St. and Eglinton Ave. W. Doug Bray 1148 Yonge St. and Marlborough Ave. Paula Fairlie 3415 Yonge St. and Teddington Park Ave. Heather Wilson UXBRIDGE Darcy Joyce WATERDOWN Jack W. Murphy WESTHILL Morningside Mall Murray G. Yule WESTON Finchdale Plaza Gerry Grewal 1746 Jane St. and Patika Horaine Carty West Finch Finch and Arrow Ross Bruno WHITBY 404 Dundas St. W. Gary J. Dailey Dundas St. E. and Thickson Rd. N. Paulette Winders Whitby Town Square John Sautner WILLOWDALE 6209 Bathurst St. and Steeles Ave. Doug Hand 3757 Bathurst St. and Wilson Ave. Guy Stevenson Bayview Mall Lorraine Kenney 3555 Don Mills Rd. and Finch Ave. E. Ellen M. Templeton Fairview Mall Anthony Viola 5875 Leslie St. and Dexter Blvd. Wendy Gamoyda 5928 Yonge St. and Drewry Ave. Silvia Kruzic WOODBRIDGE Market Lane Paul Natale Woodbridge Mall Vic Di Marco Pine Valley Shopping Centre Frank Tristani GTA COMMERCIAL BANKING CENTRES Senior Jeff Somerville Branch Managers: BRAMPTON 8125 Dixie and Orenda Rds. Nora Guinane DON MILLS 1470 Don Mills Rd. and York Mills Rd. Wally J. Robinson DOWNSVIEW Keele St. and Steeles Ave. James M. Norwood 3931 Keele St. and Finch Ave. W. Sub to Keele and Steeles HALTON 5515 North Service Rd. Syd Boyd HAMILTON Jackson Square John Van Rooijen MARKHAM 7085 Woodbine Ave. near Steeles Ave. Douglas A. Pallett MISSISSAUGA Mississauga Centre 20 Milverton Dr. and Hwy. 10 Leonard J. Mines 1500 Meyerside and Dixie Sub to Mississauga Centre Teresa Lefevre NEWMARKET Yonge St. Randy Flewelling OSHAWA King and Simcoe Sts. Patrick J. Kelly REXDALE 2038 Kipling Ave. and Rexdale Blvd. R. Leslie McBryer RICHMOND HILL Beaver Creek 500 Hwy. 7 E. Rex Waylen SCARBOROUGH Consilium Place Stelio Zupancich 1900 Ellesmere Rd. and Bellamy Rd. N. Sub to Consilium Place Joanne Nosworthy SOUTH ETOBICOKE 1315 The Queensway and Kipling Ave. Harry A. Nigalis TORONTO -Dominion Centre Branch Senior Tasker S. Kelsey Commercial Banking Services Martin Holland 77 Bloor St. W. and Bay St. David W. Hanna Dufferin and Apex Peter S. De Simio 1 King St. W. and Yonge St. Stephen A. Secord 443 Queen St. W. and Spadina Ave. Philip A. Boskill St. Clair Centre 2 St. Clair Ave. E. David W. Hanna 1492 Victoria Park Ave. and O Connor Dr. Peter A. Watt York St. and 141 Adelaide St. W. Vince A. Aguanno WESTON West Finch Finch Ave. and Arrow Rd. Jim Coccimiglio 4999 Steeles Ave. W. and Weston Rd. Sub to West Finch WOODBRIDGE Pine Valley Shopping Centre Peter Watts ONTARIO P.O. Box 1 -Dominion Centre 55 King St. W. and Bay St., Ontario M5K 1A2 (416) Senior Paul A. McGrath s: Credit Roseann Barry Human Resources Paul H. Pettingill Sales and Service Peter B. McWhirter Regional Managers: Bluewater Region Larry Seeley Central East Region Judith L. Rix Central North Region Dave Bolton Central West Region Dave Ryder Georgian Bay North Region Paul J. Pierson Guelph/Georgian Bay South Region Colin F. MacDonald Kitchener/Waterloo/ Cambridge Region Brian Bennett London Region Kevin E. Switzer Niagara/Brantford Region Harry W. Norton Ottawa East Region Eli Boucher Ottawa West Region Gary S. Walsh Upper North Region Gerry Williamson Essex-Kent County Region Bernice Holsey Branch Managers: Commercial Banking Centres: BARRIE Dunlop and Owen Sts. G. Stewart McBoyle BRANTFORD Market and Darling Sts. Ken Popelas CAMBRIDGE Main and Mill Sts. Peter Uffelman CHATHAM 75 King St. W. Randy Clemens GUELPH Wyndham and Macdonell Sts. Craig Bremner KITCHENER/WATERLOO King and Francis Sts. James H. Dunnigan LONDON Richmond and King Sts. Mike J. Alfieri OTTAWA 100 Sparks St. John Herrity ST. CATHARINES 31 Queen St. Robert W. Sutter SARNIA 1210 London Rd. Richard Turenne SUDBURY 54 Durham St. Gary L. Welland WALLACEBURG James and Duncan Sts. Leo Brown WINDSOR Ouellette Ave. and Wyandotte St. George M. Sandala Personal Branches: AMHERSTBURG Janet M. Willoughby ARNPRIOR R.B. (Bob) Sage ARTHUR Janice Lamont BALA Sharon A. Stewart BARRIE A & M Plaza David Jardine Bayfield Mall Elizabeth Ritchie 263 Bradford St. Kozlov Centre Mark Calder BELLEVILLE North Front and College Sts. Vera McDonald BETHANY Janet H. Cain BRANTFORD Fairview Park Plaza Chris Popelas 185 King George Rd. Lea Fogg Mohawk Shopping Centre Keith W. Noyce BROCKVILLE Kim Benson CAMBRIDGE Westgate Shopping Centre Mary Lou Schlimme CARDINAL Elizabeth R. Baldwin COLDWATER Charles S. Alexander COPPER CLIFF Karol Beasley CORNWALL 61 9th St. E. Elizabeth A. Graham Trudel CREEMORE Richard E. Kelly CUMBERLAND Rosanne Beamish DELTA DRESDEN Peter Nighswander FEVERSHAM Joan E. McIntyre FONTHILL Tom Briggs FORT ERIE Dennis Honsberger GARSON Adeline Balez GLOUCESTER 2544 Bank St. Emily Manolakos Blackburn Hamlet Michael G. Lee 1980 Ogilvie Rd. William C. Jewell 2325 St. Joseph and Orleans Blvds. A. Jane Brady GUELPH Eramosa Rd. and Stevenson St. Janet Howell 496 Edinburgh Rd. S. Conny Difruscia HANOVER Rick Dodd HAVELOCK Sylvia Hall HAWKESBURY Daniel Demers KANATA Marc Rouleau KEENE Ann Goody KINGSTON Bayridge Centre Plaza Joyce E. Webster Kingston Shopping Centre Edward W. Cahoon LaSalle Shopping Centre Joseph J. Dorrington KITCHENER Dutch Boy Shopping Centre Paul L. O Reilly Eastwood Square Nancy Gill 385 Fairway Rd. S. and Wilson Paul Dieterle 851 Fischer Hallman Rd. Janet Gridgeman Highland Hills Mall Richard Bolzon King and Francis Sts. Sam Alfieri Stanley Park Mall Murney Brooks LAMBETH Doug McGregor LASALLE Ben Nardone LEVACK Donna Remeikis LITTLE CURRENT Sharon Alkenbrack LIVELY Eric M. Thall LONDON Adelaide St. S. and Commissioners Rd. Kate Brooks

84 82 TD PEOPLE CANADA Century Centre Plaza Sue Decicco 1240 Commissioners Rd. W. Erwin Lanaus Dundas and Adelaide Sts. Rita Nicholson Dundas and Clarke Sideroad Brian Elliot 101 Fanshawe Park Rd. E. Frank Decicco Hamilton Rd. and Hale St. Gerry M. Johnstone Huron Market Place Allan J. Ralph Nelson Plaza Brian Elliot Richmond and King Sts. Doug Galbraith Wharncliffe Rd. N. and Oxford St. Michael O Dell Wonderland Rd. N. and Viscount David White MACTIER Susan McEachern MARKDALE Nita Flannigan MARMORA Brian Watson MILLBROOK Elaine L. Hughey NAKINA Lorraine Furlong NEPEAN Barrhaven Nancy McCoy Bayshore Shopping Centre J. Donald Willison Emerald Plaza David J. Morton NEW HAMBURG Peter VanMeerbergen NIAGARA FALLS 5799 Main St. Lib Zappitelli 4424 Queen St. Gregory Shupe NORTH BAY 3021 Cassels St. Terrance Whalen OMEMEE Laraine Scully ORILLIA Patricia M. Grieve OTTAWA Bank St. and Glen Ave. Kenneth Brown Carling and Churchill Aves. Neil Campbell Elgin and Somerset Sts. Theresa Breen Lincoln Heights Galleria Joseph Lollar 888 Meadowlands Dr. Eileen Vaughan Montreal Rd. and St. Laurent Blvd. David W. Poff Rideau St. and King Edward Ave. Normand Bourdeau 2269 Riverside Dr. E. Louise Lacasse 1182 St. Laurent Blvd. Larry J. Mullen 106 Sparks St. Kenneth McKeown Wellington St. and Holland Ave. Scott Chamberlain Westboro Neil Campbell PENETANGUISHENE Tony Orecchio PERTH Bryan Rothery PETAWAWA Marie Denoble Evans PETERBOROUGH 830 Monaghan Rd. and Lansdowne Victoria E. Duncan PICTON Lawrence R. Tilling PORT COLBORNE Rob Cefaratti PORT HOPE Donald G. Ralph ST. CATHARINES Garden City Plaza Howard Vant 270 Geneva St. Howard Vant The Pen Glendale Ave. Hans Ambachtsheer 31 Queen St. Brian Stewart SARNIA Cathcart Blvd. and Colborne Rd. Patricia Wattie SAULT STE. MARIE Market Square Susan Yurechuk SEELEY S BAY Esther Powell SOUTH PORCUPINE Donna St. Denis STROUD Diane Rowat SUDBURY Elm Town Square Cathy Hutton Falconbridge Plaza Joseph MacDonald North End Joyce Kyryluk Plaza 69 Shopping Centre Raymond G. Desramaux President Motor Hotel Michael Preen THUNDER BAY County Fair Plaza Kathryn Lindsay McIntyre Centre 1186 Memorial Ave. Barbara Oleksuk 231 Red River Rd. Keith W. Pinn 129 W. Frederica St. Donald C. Fisher UXBRIDGE Charles Lundy WALKERVILLE Annette Wright WALLACEBURG Leo Brown WALPOLE ISLAND Rose John WASAGA BEACH Robert Brockwell WATERLOO Marsland Centre Cindy Uffelmann University Ave. E. and Weber St. Jacqueline Brockelhurst Waterloo Town Square Cindy Uffelmann Weber St. N. and Northfield Dr. James C. Deneau WELLAND 144 E. Main St. Larry J. Kent 800 Niagara St. N. Brenda Caird WINDSOR 3281 Dougall Ave. Ralph B. Attwater Eastown Shopping Centre Tim Sullivan Ottawa St. and Gladstone Ave. Kim Pepin Ouellette Ave. and Wyandotte St. Dave Robertson St. Clair Beach Al Whitehead Tecumseh Rd. E. and Aubin Rd. Catherine Bridle Tecumseh Blvd. W. and Victoria Ave. Carla Pieniazek 305 Victoria Ave. Diane Bondy Wyandotte St. W. and Rankin Ave. Georgina Belcher WYOMING Colleen Proctor-Gibson Full Service Branches: ALLISTON John Logue BANCROFT William C. Golden BEAVERTON James E. Dwyer BELLEVILLE Front and Bridge Sts. James J. Dowling BRACEBRIDGE Alan F. Helmer BROCKVILLE Johan H. Van Rooijen BURFORD Ed Fabian CAMPBELLFORD Catherine Svetec CHESTERVILLE Eldon D. Moss COBOURG Thomas McLean COLLINGWOOD Tim Dwyer CORNWALL 41 Second St. W. Wil Gibson DELHI George Hirsch DORCHESTER Scott Thomson DUNNVILLE Tim Sparrow ELLIOT LAKE Paul Rowan ELMIRA Rick Charnuski ELORA Steve Lawton ESPANOLA Joseph J. D Agostino FOREST Roxanne Tivadar GANANOQUE Richard H. Tysick GERALDTON David J. Ball GRAND BEND Christine Thompson GRAVENHURST Brian J. O Hallarn GRIMSBY Randy S. MacMullan HARROW Dave Bell HUNTSVILLE C. Lyle Thompson INGERSOLL Donald Armstrong KERWOOD Anita Podolinsky KINCARDINE Peter Morris KINGSTON King and Brock Sts. Thomas P. Burnside KIRKLAND LAKE David K. Dickinson LEAMINGTON Mike Allen LINDSAY Charles L. Piercy LUCAN Stewart Cardiff MADOC James S. Roulston MARATHON Terrance J. Fox MEAFORD R. David Loucks MIDLAND Ross H. Davis MINDEN Mary Coneybeare MITCHELL Ray Rochon MOUNT FOREST Larry A. Parker NAPANEE Larry L. Holmes NEPEAN Stafford Rd. W. Mary Kay Hepburn NEW LISKEARD Michael R. Baxter NORTH BAY Main and Wyld Michael Clair ORILLIA William L. Belfour OTTAWA Minto Place Christine Doyle OWEN SOUND James T. Flannigan PARIS Richard Knapp PARRY SOUND Lynn R. Cullis PEMBROKE Gary F. Bloedow PETROLIA George Guild PETERBOROUGH Peterborough Square Elizabeth Orovan PORT ELGIN Timothy Eaton PRESCOTT H. Patrick Rowe RENFREW Bruce G. McLeod ST. MARY S Stewart Cardiff ST. THOMAS Ned Burford SAULT STE. MARIE Station Tower Robert N. Rintoul SEAFORTH Andrew Hiemstra SHELBURNE Stephen W. Cowan SIMCOE George Cornfield SMITHS FALLS Ronald D. Smith STAYNER Kevin D. Smith STRATFORD John Emans SUTTON WEST Elwin R. Earle THORNBURY Robert Webb TILLSONBURG Dave N. Brown THUNDER BAY Centennial Square Cheri Thomasson TIMMINS Jacques Arbic TRENTON Michael Watt WALKERTON Robert A. Haig WATERFORD Robert G. Sword WIARTON Larry W. Joyce WINGHAM William F. Peace WOODSTOCK Al Young MANITOBA AND SASKATCHEWAN -Dominion Centre 201 Portage Ave. and Main St. P.O. Box 7700 Winnipeg, Manitoba R3C 3E7 (204) Senior James M. Babcock s: Credit James T. Thibodeau Human Resource, Sales and Service Ron J. McInnis s and Regional Managers: Rural Manitoba and Northwestern Ontario Region Steven W. Stang Saskatchewan Northwest Region John B. McGonigal Saskatchewan Southeast Region T. Brian Hardy Winnipeg North Region Harry P. Verburg Winnipeg South Region Warren Dixon Branch Managers: ONTARIO Full Service Branches: ATIKOKAN Randy Moore DRYDEN Kimberley R. Finlayson FORT FRANCES James A. Kilmister Nestor Falls Sub to Fort Frances KENORA Dale S. Hrabec MANITOBA Commercial Banking Centres: WINNIPEG -Dominion Centre 201 Portage Ave. and Main St. P.O. Box 7700 Christopher D. Dyrda Norway House Sub to TD Centre Winnipeg Kildonan Crossing 1615 Regent Ave. William C. Speers South Winnipeg 1305 Pembina Hwy. and McGillivray Blvd. Bill J. Hodgson West-Row 1580 Dublin Ave. and St. James St. Kelly B. Simes Personal Branches: WINNIPEG Academy and Niagara Agnes E. Johnson Corydon and Niagara Craig Peel Corydon and Stafford Karen Brophey

85 TD PEOPLE CANADA 83 Dominion Shopping Centre William Wiens Garden City Shopping Centre Craig Cromie Henderson Hwy. and Hazel Dell Ave. Rebecca Differ Henderson Hwy. and Litz Place Lorne W. Dreger Kenaston Place Westley L. Simes Kirkbridge Centre Robert D. Barlow Lindenwoods Market Diane L. Olivier McLeod Village Shopping Centre Karen J. Beskal McPhillips St. and Inkster Blvd. J. Patrick McNeil Niakwa Village Shopping Centre Paul W. Paradis Notre Dame Ave. and Sherbrook St. Victor J. Kostenchuk Park West Shopping Centre Myles S. Buchanan 354 Portage Ave. Warren K. McLean Portage Ave. and Ainslie St. Barbara J. Kaisaris/ Georgine Gaudes 200 Regent Ave. W. V. James Leggett River Ave. and Osborne St. Jari J. Stromberg Rivertree Landing Elsie E. Kent Rupertsland Square Cheryl L. Saurette St. Mary s Rd. and Poplarwood Ave. Gerald M. Breton Sargent Ave. and Erin St. Terry M. Newton Tyndall Market Shopping Centre Glen E. Ominski Vista Place Lucille Haywood Westwood Village Doug R. Semler Full Service Branches: BRANDON 915 Rosser Ave. M. Ray Tomiak Victoria Ave. and 10th St. Glen E. Haigh CARTWRIGHT Frank P. Grzenda DAUPHIN Russel J. Grundy DELORAINE William J. Kitching PILOT MOUND Elaine Kendall PORTAGE LA PRAIRIE David D. Millar Carman Sub to Portage La Prairie ROSSBURN Darlene Richardson SELKIRK Edward J. Sitarz STEINBACH Beverley J. Thompson STONEWALL Raymond E. Evaniuk SWAN RIVER Larry G. Hames Benito Sub to Swan River Birch River Sub to Swan River Bowsman Sub to Swan River Minitonas Sub to Swan River TEULON Lorne S. McLarty THE PAS H. Dale Cox THOMPSON William S. Kitching SASKATCHEWAN Commercial Banking Centres: REGINA 1904 Hamilton St. Stewart C. Graham SASKATOON Saskatoon Square Ian McNaughton Full Service Branches: ALLAN Bradley D. Graham ASSINIBOIA David H. Malcolm Lafleche Sub to Assiniboia ESTEVAN Murray Bell GRAVELBOURG Jennifer E. Boire GRENFELL Allan Bucsis KAMSACK Jack M. Cherewyk KINDERSLEY Vernon J. Klassen KIPLING Gordon F. Gillies KYLE Weston L. Vibert LANGENBURG Michael Zorn MELFORT Arnold W. McAulay MONTMARTRE Rosemarie A. Douan MOOSE JAW Andre E. Beaudoin NORTH BATTLEFORD Leonard J. Smith Neilburg Sub to North Battleford PREECEVILLE Rodney C. Jensen Sturgis Sub to Preeceville PRINCE ALBERT Carlton Court Shopping Plaza Don Findlay REGINA Lakeside Plaza Shopping Centre Paul A. Monaghan River Heights Shopping Centre Anne L. Taylor Rosemont Shopping Centre Barrie J. Rink Sherwood Village Mall Jeffrey G. Jacobs Towers Mall Gregory Bennett Lakeside Plaza Shopping Centre Ernest E. Lalone Victoria Square Shopping Centre Paul A. Monaghan ROCANVILLE Victor J. Luther ROSETOWN Ronald D. Hughes SASKATOON The Centre at Circle and 8th Linda McLeod Confederation Park Plaza Dale M. Procyshen Grosvenor Park Shopping Centre G. Dale Bridges Primrose Plaza Dwight P. Buchholz SWIFT CURRENT Robert T. Gage WEYBURN Glen W. Letnes WOLSELEY Larry S. Lawryk YORKTON James F. Gallagher ALBERTA CALGARY 900 Home Oil Tower Ave. S.W. Calgary, Alberta T2P 2Z2 (403) EDMONTON 2501 Dominion Bank Tower Edmonton Centre Edmonton, Alberta T5J 2Z1 Senior R. Iain P. Strump s: Credit Thomas C. Young Human Resources Tim J. Ferrari Manager International Trade Services Cathy Davis s and Regional Managers: Alberta North Region Lorne R. Anderson Alberta South Region Allan Caldwell Calgary North Region Nancy J. Leary Calgary South Region J. Roy Jackson Edmonton North Region J. Gregory Gillis Edmonton South Region James S. Riddell Branch Managers: Commercial Banking Centres: CALGARY #2 Calgary Place Ave. S.W. Ernest Kapitza South Calgary th Ave. Joshua Borger Sunridge Business Park th St. N.E. Kevin Scott EDMONTON 148 Edmonton Centre Robert Charbonneau Mayfield Ave. Craig King South Edmonton nd Ave. John D. Touchie LETHBRIDGE #156, Ave. S. Michael McGuire Columbia Blvd. Sub to Ave. S. MEDICINE HAT 601 3rd St. and 6 Ave. S.E. Frank Clish RED DEER 4902 Gaetz Ave. Michael Donlevy Ave. Sub to 4902 Gaetz Ave. Personal Branches: CALGARY Asia Pacific Centre Louisa Leung Beacon Shopping Centre Gordon W. Martin Brae Centre Doug Jeffery Chinook Shopping Centre Gary Johnson Crowfoot Towne Centre Bruce Jacobs Forest Lawn Lyle G. Glass Lake Bonavista Shopping Centre Donald E. Huycke Market Mall Allan A. Jansen Northland Village Shopping Centre Sub to Market Mall Medical Centre Building David W. Sawers North Hill Shopping Centre John J. Stringle 2933 Richmond Rd. S.W. Mary McLean Riverside Georgina Anderson Sandstone Village Susan Byers Shawnessy Alan Frank Signature Park Donna Bradford Southland Crossing Ray J. Coueslan Sunalta Marla Kirby Thorncliffe Gary Cook Dominion Square Randy Edgerton EDMONTON Ave. Terry Minke Ave. Judy Breitkreitz Blue Quill Shopping Centre Lyle Arnelien Callingwood Elizabeth L. Mulligan Capilano Mall Colin R. Atkinson Crestwood Shopping Centre Debbie Brix Jasper Ave. Jeannie Beattie Jasper Gates Square Erwin Lehnert Kensington Crossing R. Michael Brown Londonderry Mall Dale Crellin Millwoods Bill Bullas Plaza 100 Shopping Centre Tony Robbins Pleasantview Shopping Centre Brian Ursu Riverbend Shopping Centre David King Rosslyn Shopping Centre Kenneth F. Wilson 1075 Westmount Shopping Centre Cary Ransome Whyte Ave. Margaret E. Gillies LETHBRIDGE College Value Mall Leroy Cranston MEDICINE HAT Southview Mall Mark H. Sorenson RED DEER Parkland Mall Darcy Hulston SPRUCE GROVE 98A McLeod Ave. Tim McCallen Full Service Branches: AIRDRIE John McKishnie BARRHEAD Herb Kopp BONNYVILLE Fred Farrell BROOKS Jonathan Jaikaran CAMROSE John Browne CARDSTON Edward J.T. Coatham COLD LAKE Don Canuel CORONATION Anthony Huysmans DRAYTON VALLEY Michael J. Adamchick ELK POINT Gloria Pundick FORT MCMURRAY Colin R. Atkinson GRANDE PRAIRIE Brian Bell Patterson Village Sub to Grande Prairie HANNA David Beckie HIGH PRAIRIE Philip Arnett HIGH RIVER Philip Arnett JASPER Cheryl Nelson LACOMBE H.Blaine Lindquist LEDUC Leslie J. Brownlee LLOYDMINSTER Gordon Henry MARWAYNE Glenn Fenrick MAYERTHORPE Greg Freeman OLDS Glen Mackey OYEN Glenda Steinley PEACE RIVER Ronald G. Worby ST. ALBERT Richard E. Johnson ST. PAUL Richard Lambert Saddle Lake Sub to St. Paul Vilna Sub to St. Paul SHERWOOD PARK Rick Sundell SMOKY LAKE Ernie W. Stark STETTLER Robert K. Wilkins STONY PLAIN Dennis J. Hnatiuk THREE HILLS William J. Anderson VEGREVILLE Richard Rutter VERMILLION Darren Kushner WESTLOCK Tammy Round WETASKIWIN Michael Baker YELLOWKNIFE Ernest T. Raves

86 84 TD PEOPLE CANADA PACIFIC Dominion Tower Pacific Centre P.O. Box Vancouver, British Columbia V7Y 1A2 (604) Senior James F. Hudson s: Asian Banking C. Tung Chan Commercial Sales and Service Arnold F. Fenrick Credit Robert A. Hamilton Human Resources Paula J. Phillips HONG KONG Associate Raymond Yu TAIPEI Managing Director Thomas Hiew Manager Trade Services and Correspondent Banking John P. Fulton Regional Managers: Downtown North Shore Region Associate George A. Ramsay Greater Vancouver East Region Peter G. Morrison Interior of B.C. Region Dietmar F. Kutschera Richmond, Surrey, Delta Region Edward J. Whitehead Upper Fraser Valley Region Joan P. McCarthy Vancouver Island Region Margaret A. Pound Vancouver West Region James E. Pelton Branch Managers: Commercial Banking Centres: ABBOTSFORD th Fraser Way Jonathon A. Dugdale BURNABY 1933 Willingdon Ave. Dan Gallant KAMLOOPS 299 3rd Ave. and Seymour St. Richard B.L. Hill KELOWNA 410 Bernard Ave. Alexander Poulus LANGLEY Bert Monsma NORTH VANCOUVER 1504 Lonsdale Ave. and 15th St. N. Michael Busch PRINCE GEORGE 400 Victoria St. and 4th Ave. Roy Willigar RICHMOND 5991 No. 3 Rd. Brian D. Fox SURREY Surrey City Centre King George VI Hwy. and 104th Ave. Brian Moist VANCOUVER Chinatown George Kwok Granville and Pender Sts. Alan K. Holton Granville St. and 12th Ave. Kenneth J. Bessason Tower Branch Pacific Centre David F. Ross VICTORIA 1080 Douglas and Fort Sts. Douglas W. Provost Personal and Full Service Branches: ALDERGROVE Debora Parkolub BURNABY Canada Way and Boundary Rd. Marilyne Mowbray Hastings St. and Rosser Ave. J. Corrie Noble Royal Oak Ave. and Rumble St. Kim Spreadbury Station Square Sandra McLellan CAMPBELL RIVER Michael G. Burfitt CHETWYND Tim Cox CHILLIWACK Victor K. Martens CLEARBROOK Debbie Kampff COQUITLAM Como Lake Village Shopping Centre William P. Hennan Coquitlam Town Centre Marc A. Carter London Village Bruce Hogg COURTENAY Tim C. Ackerman CRANBROOK Douglas J. Frioult DAWSON CREEK Loren Graham DELTA Delta Shoppers Mall John C. Yap Ladner Shopping Centre Ronald A. Allegretto Tsawwassen Cameron Lochhead DUNCAN York Langerfeld FERNIE Valerie Emond FORT ST. JOHN Bruce S. Tonkin GOLD RIVER Jonathan E. Pattie KAMLOOPS Aberdeen Mall Carol Candy KELOWNA Dilworth Shopping Centre Barry R. Christiansen Rutland Plaza 33 Janet Alexander LAKE COWICHAN Tracy Forrest LANGLEY Langley Mall Walter J. Beselt Mountainview Plaza Beverley Brown Murrayville Centre Brian Gordon MAPLE RIDGE Valley Fair Shopping Centre Richard H. Howard MISSION S. Brad Powell NANAIMO Beaufort Centre Fred Geater Metral Place Marion Woodward 140 Commercial St. J. Carmon Henderson NEW WESTMINSTER 713 Columbia St. Patrick McInnes Westminster Mall Diane Adkins NORTH VANCOUVER Edgemont Blvd. and Connaught Cres. Joyce Bayly Westview Shopping Centre Mary Ann Kertesz PARKSVILLE Wembley Mall Ronald A. Weisner PENTICTON Randall M. Guest PORT ALBERNI Barry R. Rathburn PORT COQUITLAM Lois M. Gooselaw PRINCE GEORGE College Heights Plaza Brian J. Ray PRINCE RUPERT Robert A. Halsall QUESNEL Rodney Wallace REVELSTOKE Charlene Roddick RICHMOND Continental Plaza Tony Cheng Richlea Square Shopping Centre Elaine Frechette Richmond Medical- Dental Centre Hayley Fan Steveston Station Sandy Simpson SALMON ARM Ralph Segreto SARDIS Helen Van Wyck SIDNEY Robert F. Sarson SURREY Cedar Hills Plaza Frank V. Costanco Guildford Place Shopping Centre Charles F. Molnar King s Cross Shopping Centre Gary S. Randhawa TERRACE Murray Mandzuk TRAIL Dale M. Stafinuk VANCOUVER 10th Ave. W. and Alma St. Mary Ann Watt 57th Ave. and Cypress St. Elaine Lattimore Broadway and Nanaimo Sts. Eric Mead Burrard St. and 4th Ave. Scott Haller Burrard and Davie Sts. Adeline Lauser Cambie St. and 18th Ave. Heikki Hollanti Cambie St. and 42nd Ave. David Yan Davie and Cardero Sts. Johneen Moldowan Dunbar and 26th St. Patti Kay Fraser St. and 17th Ave. John Wanless Fraser St. and 49th Ave. Karim Karmali Georgia and Richards Sts. Doris Smit Granville St. and 64th Ave. Wayne W. Joe Hastings and Kamloops Sts. Lawrence G. Marriot Kerrisdale Roy G. Crick Kingsway St. and Joyce Rd. Emily Cheng Main St. Casey Cheong Shaughnessy Louise Yeoh VERNON Larry P. Hogan VICTORIA Canwest Shopping Centre Carolyn R. Rioux Estevan Ave. Catherine A. Hall Fairfield Shopping Plaza Diane L. Murphy Gordonhead Patricia R. Stern McKenzie Ave. and Borden St. George Wright Oak Bay Horst M. Schauch Saanich Plaza Thomas R. Beales WEST VANCOUVER Marine and 18th Douglas W. Jamieson South Park Royal Shopping Centre Aly Karmali WHISTLER Todd Bassett WHITE ROCK Bryce McElroy WHITEHORSE John C. Stark WILLIAMS LAKE James R. Bowie Valleyview Mall Rick Holmes NO-LOAD MUTUAL FUNDS TD Bank Products and Services To meet the changing needs of Canadian retail investors, we have been adding to our Green Line Family with attractive new specialty funds. Just after year end, we launched four new funds: the Entertainment & Communications Fund and the U.S. Small-Cap Equity Fund (both advised by T. Rowe Price, a leading U.S. fund manager) and the Canadian Small-Cap Equity Fund and Green Line Premium Money Market Fund. This brings our Family of Funds to a total of 37.