Toronto-Dominion Bank Earnings Call Insights: Aimia and Resi Exposure

Toronto-Dominion Bank (NYSE:TD) recently reported its third quarter earnings and discussed the following topics in its earnings conference call.


Ed Clark – Group President and CEO: I think we won’t, we really don’t get into the details of our deal with Aimia, since there really are two possible outcomes here. One is if you go along with Aimia as per – and that’s the deal that sensing our fact or two that we do this three-way deal. And when it’s clear, which one that we’re talking about then we’ll undoubtedly have some discussion with it and we can answer relevant questions at that time. I guess the way we look at it is that going along with Aimia is perfectly satisfactory outcome from our point of view. And we obviously – and we’re excited and delighted by the opportunity to have this card. On the other hand, I think if there’s a better deal to be done, you should always do a better deal. And so if there’s a possibility of a three-way deal that also works, then we recently would taking a look at that. And so I think we’re in the optimal position as if we can’t get a deal, a three-way deal we relied with the outcome, but if we can get a better deal by doing a three-way deal, we’ll do that too.

Michael Goldberg – Desjardins Securities: Do you have any protection against the value proposition being degraded?

Ed Clark – Group President and CEO: What I guess I’m saying is I just assume not – I mean, we can get a dozen questions on this, so I think when we had our positions to talk about the full details of the deal, we’re talking about the full details. But we’re confident that if we do either one of these deals we’re confident about the value proposition going ahead, we can answer that question.

Resi Exposure

John Reucassel – BMO Capital Markets: Just a question for Mark. Thanks for the clarity on the C$65 million. But if I look at C$65 million relative to your resi exposure in the prairies, it’s still roughly having 14 basis points on the total amount or 49 basis points on the uninsured portion. Is that fair to look at it that way? And so, why it seems awfully high? But maybe if you could give us some color on what this portfolio is, is it broker sourced or could you give us some more detail?

Mark Chauvin – Group Head and Chief Risk Officer: It’s as representative as any other part of our resi portfolio, but let me give you a little background behind the basis of the provision. We have identified a number of properties that have been severely damaged where we provided loans. And looking at that, we understand and although there’s certainty – there still is uncertainty, we know that the level of insurance that they have either through their own insurance or through what they’ll be paid under the Alberta recovery will be inadequate to cover or fully repair those properties. And then we also know that in certain cases, it’s a vacation property or rental property they aren’t eligible under the Alberta recovery. So going through this, we’ve just worked out the number that we think is very realistic, but it’s probably prone to come down further if further information comes out that says that the level of recovery for Alberta is maybe higher or other things like that. But it’s a pretty well thought out number based upon what we know is there now. But you really won’t know for sure over three or four quarters.

John Reucassel – BMO Capital Markets: Are they a mixture of HELOCs in mortgages or…?

Mark Chauvin – Group Head and Chief Risk Officer: They are a mixture of HELOCs and mortgages and they’re about roughly one-third uninsured, but otherwise they’re pretty typical of everything else we – well that is typical.

John Reucassel – BMO Capital Markets: Were they mainly broker sourced or were they…?

Mark Chauvin – Group Head and Chief Risk Officer: No. No, they were just generally sourced in their normal sequence. Their problem is, they were in the flood impacted areas.

Rudy Sankovic – SVP, IR: Operator, why don’t we turn to the phones, please?