THIRD QUARTER FINANCIAL HIGHLIGHTS, compared with the third quarter a year ago: - Reported diluted earnings per share(1) were $1.21, compared with $1.51. - Adjusted diluted earnings per share(2) were $1.35, compared with $1.60. - Reported net income(1) was $997 million, compared with $1,103 million. - Adjusted net income(2) was $1,115 million, compared with $1,164 million. YEAR-TO-DATE FINANCIAL HIGHLIGHTS, nine months ended July 31, 2008, compared with the corresponding period a year ago: - Reported diluted earnings per share(1) were $3.65, compared with $3.98. - Adjusted diluted earnings per share(2) were $4.12, compared with $4.34. - Reported net income(1) was $2,819 million, compared with $2,903 million. - Adjusted net income(2) was $3,148 million, compared with $3,168 million. THIRD QUARTER ADJUSTMENTS (ITEMS OF NOTE) The third quarter reported diluted earnings per share figures include the following items of note: - Amortization of intangibles of $111 million after tax (13 cents per share), compared with $91 million after tax (13 cents per share) in the third quarter last year. The $111 million was net of a related tax benefit in the future tax liability of $21 million, arising as the combined overall tax rate for U.S. Personal and Commercial Banking declined as a result of the Commerce Bancorp, Inc. (Commerce) acquisition. - A gain of $22 million after tax (3 cents per share) due to the change in fair value of credit default swaps hedging the corporate loan book, net of provision for credit losses, compared with a gain of $30 million after tax (4 cents per share) in the same quarter last year. - Restructuring and integration charges of $15 million after tax (2 cents per share), relating to the acquisition of Commerce. - A negative impact of $14 million (2 cents per share) on the provision for income taxes of a reduction in future income tax assets associated with the Commerce acquisition. All dollar amounts are expressed in Canadian currency unless otherwise noted. (1) Reported results are prepared in accordance with Canadian generally accepted accounting principles (GAAP). (2) Reported and adjusted results referenced in this press release and Report to Shareholders are explained under the "How the Bank Reports" section.

TORONTO, Aug. 28 /PRNewswire-FirstCall/ - TD Bank Financial Group (TDBFG) today announced its financial results for the third quarter ended July 31, 2008. Overall results for the quarter reflected solid earnings contributions from TDBFG's personal and commercial banking operations in both Canada and the United States and its Wealth Management segment, while the performance of Wholesale Banking was affected by continuing challenges in financial markets. TDBFG also announced its quarterly dividend will be raised to 61 cents from 59 cents per fully paid common share for the quarter ended October 31, 2008, representing an increase of 3.4%.

"Our retail businesses in both Canada and the U.S. led the way for us again this quarter - delivering over $1 billion in combined net income," said Ed Clark, TD Bank Financial Group President and Chief Executive Officer. "Our strategy is delivering steady performance in tough market conditions while allowing us to continue investing in future growth."

THIRD QUARTER BUSINESS SEGMENT PERFORMANCE

Canadian Personal and Commercial Banking

TD Canada Trust posted record earnings of $644 million in the third quarter, up 8% over the same period last year. The quarter was defined by strong volume growth across most Canadian Personal and Commercial Banking operating businesses. Core banking, real estate secured lending, credit cards and business banking led earnings growth.

"Our TD Canada Trust franchise achieved a record quarter - in volume growth, customer satisfaction levels and efficiency. These very strong results were delivered while we continued to invest in the business, opening 11 new branches and supporting our longer-hours strategy," said Clark. "We are certainly feeling good about these results and our position as the leader in service and convenience in banking, which was highlighted by TDCT's winning of the J.D. Power customer-satisfaction award for the third year in a row."

Wealth Management

Wealth Management, including TDBFG's equity share in TD Ameritrade, earned $201 million in the quarter, up 9% year over year. As previously announced, TD Ameritrade contributed $74 million in earnings to the segment. In Canada, strong volumes in discount brokerage were moderated by a lower-commission strategy, while current market conditions impacted revenues in full-service brokerage.

"We are pleased with how the investments we've made in our Wealth Management platform are positioning us for future growth," said Clark. "As we expand our U.S. wealth business, we look forward to taking advantage of our diversified offering to become the number-one wealth management provider to TD Bank customers."

U.S. Personal and Commercial Banking

U.S. Personal and Commercial Banking, which now includes the earnings contribution from Commerce, generated $273 million in adjusted net income. The combination of TD Banknorth and Commerce (to be known as TD Bank) saw growth in commercial loans while overall asset quality remained solid. As previously announced, the rebranding as TD Bank, America's Most Convenient Bank, will begin in the fall of 2008 and is expected to be completed in 2009.

"We're very pleased to see our U.S. Personal and Commercial operations coming together as planned, exceeding our earnings expectations and creating a first-rate U.S. franchise that is positioned to grow organically and deliver long-term value to TD shareholders," said Clark. "We expect the quality of TD Bank's loan portfolio will continue to set us apart as we operate in a challenging environment."

Wholesale Banking

Wholesale Banking earned $37 million in the third quarter. As previously announced, TD Securities identified incorrectly priced financial instruments that led to a cumulative impact in the quarter of $96 million before tax. Wholesale's underlying business performance in the quarter showed strength in fixed income trading, while equity trading revenues and securities gains were lower.

"This was a tough quarter for our wholesale bank. The mispricing that occurred is particularly disappointing and not consistent with our strong risk-management culture. We're continuing to work on a thorough review of our risk practices across the organization to ensure we minimise the risk of this kind of thing happening again," said Clark. "Looking forward, TD Securities remains focused on producing high-quality earnings and solidifying its position as a top-three dealer in Canada."

Conclusion

"Our retail businesses on both sides of the border - which again produced more than 90% of our earnings this quarter - continued to perform very well, providing TD with a solid base of consistent earnings," said Clark. "In what continues to be a tough environment for banks, we're showing our strategy is working."

"Our commitment to growth is reflected in the increase to our dividend. We've said all along that our dividend will grow in line with our earnings over the medium term. The increase this quarter demonstrates the Board's confidence in the strength and stability of our earnings as we head into 2009."

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

From time to time, the Bank makes written and oral forward-looking statements, including in this document, in other filings with Canadian regulators or the U.S. Securities and Exchange Commission (SEC), and in other communications. In addition, the Bank's senior management may make forward-looking statements orally to analysts, investors, representatives of the media and others. All such statements are made pursuant to the "safe harbour" provisions of the U.S. Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Forward-looking statements include, among others, statements regarding the Bank's objectives and targets for 2008 and beyond, and strategies to achieve them, the outlook for the Bank's business lines, and the Bank's anticipated financial performance. The forward-looking information contained in this document is presented for the purpose of assisting our shareholders and analysts in understanding our financial position as at and for the periods ended on the dates presented and our strategic priorities and objectives, and may not be appropriate for other purposes. The economic assumptions for 2008 for each of our business segments are set out in the 2007 Annual Report under the headings "Economic Outlook" and "Business Outlook and Focus for 2008", as updated in the subsequently filed quarterly Reports to Shareholders. Forward-looking statements are typically identified by words such as "will", "should", "believe", "expect", "anticipate", "intend", "estimate", "plan", "may" and "could". By their very nature, these statements require us to make assumptions and are subject to inherent risks and uncertainties, general and specific, which may cause actual results to differ materially from the expectations expressed in the forward-looking statements. Some of the factors - many of which are beyond our control - that could cause such differences include: credit, market (including equity and commodity), liquidity, interest rate, operational, reputational, insurance, strategic, foreign exchange, regulatory, legal and other risks discussed in the Bank's 2007 Annual Report and in other regulatory filings made in Canada and with the SEC; general business and economic conditions in Canada, the U.S. and other countries in which the Bank conducts business, as well as the effect of changes in monetary policy in those jurisdictions and changes in the foreign exchange rates for the currencies of those jurisdictions; the degree of competition in the markets in which the Bank operates, both from established competitors and new entrants; the accuracy and completeness of information the Bank receives on customers and counterparties; the development and introduction of new products and services in markets; developing new distribution channels and realizing increased revenue from these channels; the Bank's ability to execute its strategies, including its integration, growth and acquisition strategies and those of its subsidiaries, particularly in the U.S.; changes in accounting policies (including future accounting changes) and methods the Bank uses to report its financial condition, including uncertainties associated with critical accounting assumptions and estimates; changes to our credit ratings; global capital market activity; the Bank's ability to attract and retain key executives; reliance on third parties to provide components of the Bank's business infrastructure; the failure of third parties to comply with their obligations to the Bank or its affiliates as such obligations relate to the handling of personal information; technological changes; the use of new technologies in unprecedented ways to defraud the Bank or its customers; legislative and regulatory developments; change in tax laws; unexpected judicial or regulatory proceedings; continued negative impact of the U.S. securities litigation environment; unexpected changes in consumer spending and saving habits; the adequacy of the Bank's risk management framework, including the risk that the Bank's risk management models do not take into account all relevant factors; the possible impact on the Bank's businesses of international conflicts and terrorism; acts of God, such as earthquakes; the effects of disease or illness on local, national or international economies; and the effects of disruptions to public infrastructure, such as transportation, communication, power or water supply. A substantial amount of the Bank's business involves making loans or otherwise committing resources to specific companies, industries or countries. Unforeseen events affecting such borrowers, industries or countries could have a material adverse effect on the Bank's financial results, businesses, financial condition or liquidity. The preceding list is not exhaustive of all possible factors. Other factors could also adversely affect the Bank's results. For more information, see the discussion starting on page 59 of the Bank's 2007 Annual Report. All such factors should be considered carefully when making decisions with respect to the Bank, and undue reliance should not be placed on the Bank's forward-looking statements as they may not be suitable for other purposes. The Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by or on its behalf, except as required under applicable securities legislation.

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

MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE

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This Management's Discussion and Analysis (MD&A) is presented to enable readers to assess material changes in the financial condition and operational results of TD Bank Financial Group (the Bank) for the three and nine months ended July 31, 2008, compared with the corresponding periods. This MD&A should be read in conjunction with the Bank's unaudited Interim Consolidated Financial Statements and related Notes included in this Report to Shareholders and with our 2007 Annual Report. This MD&A is dated August 27, 2008. Unless otherwise indicated, all amounts are expressed in Canadian dollars and have been primarily derived from the Bank's Annual or Interim Consolidated Financial Statements prepared in accordance with Canadian generally accepted accounting principles (GAAP). Certain comparative amounts have been reclassified to conform to the presentation adopted in the current period. Additional information relating to the Bank is available on the Bank's website www.td.com, as well as on SEDAR at www.sedar.com and on the U.S. Securities and Exchange Commission's (SEC's) website at www.sec.gov (EDGAR filers section).

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

HOW WE PERFORMED

Corporate Overview

The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Financial Group. The Bank serves approximately 17 million customers in four key businesses operating in a number of locations in key financial centres around the globe: Canadian Personal and Commercial Banking, including TD Canada Trust, as well as the Bank's global insurance operations; Wealth Management, including TD Waterhouse Canada, TD Waterhouse U.K. and the Bank's investment in TD Ameritrade; U.S. Personal and Commercial Banking through TD Banknorth and Commerce (to be known together as TD Bank); and Wholesale Banking, including TD Securities. The Bank also ranks among the world's leading on-line financial services firms, with more than 5.5 million on-line customers. The Bank had $509 billion in assets as at July 31, 2008. The Bank is headquartered in Toronto, Canada. The Bank's common stock is listed on the Toronto Stock Exchange and the New York Stock Exchange under symbol: TD, as well as on the Tokyo Stock Exchange.

How the Bank Reports

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

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

Operating Results - Reported ------------------------------------------------------------------------- For the nine For the three months ended months ended -------------------------------- --------------------- (millions of July 31 Apr. 30 July 31 July 31 July 31 Canadian dollars) 2008 2008 2007 2008 2007 ------------------------------------------------------------------------- Net interest income $2,437 $1,858 $1,783 $6,083 $5,116 Other income 1,600 1,530 1,899 4,946 5,615 ------------------------------------------------------------------------- Total revenue 4,037 3,388 3,682 11,029 10,731 Provision for credit losses (288) (232) (171) (775) (506) Non-interest expenses (2,701) (2,206) (2,216) (7,135) (6,734) ------------------------------------------------------------------------- Income before provision for income taxes, non-controlling interests in subsidiaries and equity in net income of an associated company 1,048 950 1,295 3,119 3,491 Provision for income taxes (122) (160) (248) (517) (700) Non-controlling interests in subsidiaries, net of income taxes (8) (9) (13) (25) (87) Equity in net income of an associated company, net of income taxes 79 71 69 242 199 ------------------------------------------------------------------------- Net income - reported 997 852 1,103 2,819 2,903 Preferred dividends (17) (11) (2) (36) (15) ------------------------------------------------------------------------- Net income available to common shareholders - reported $980 $841 $1,101 $2,783 $2,888 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Reconciliation of Non-GAAP Financial Measures(1) Adjusted Net Income to Reported Results ------------------------------------------------------------------------- Operating results - For the nine adjusted For the three months ended months ended -------------------------------- --------------------- (millions of July 31 Apr. 30 July 31 July 31 July 31 Canadian dollars) 2008 2008 2007 2008 2007 ------------------------------------------------------------------------- Net interest income $2,437 $1,858 $1,783 $6,083 $5,116 Other income(2) 1,566 1,529 1,853 4,886 5,566 ------------------------------------------------------------------------- Total revenue 4,003 3,387 3,636 10,969 10,682 Provision for credit losses(3) (288) (232) (171) (758) (506) Non-interest expenses(4) (2,512) (2,041) (2,085) (6,659) (6,287) ------------------------------------------------------------------------- Income before provision for income taxes, non-controlling interests in subsidiaries and equity in net income of an associated company 1,203 1,114 1,380 3,552 3,889 Provision for income taxes(5) (175) (220) (282) (670) (844) Non-controlling interests in subsidiaries, net of income taxes(6) (8) (9) (14) (25) (111) Equity in net income of an associated company, net of income taxes(7) 95 88 80 291 234 ------------------------------------------------------------------------- Net income - adjusted 1,115 973 1,164 3,148 3,168 Preferred dividends (17) (11) (2) (36) (15) ------------------------------------------------------------------------- Net income available to common shareholders - adjusted 1,098 962 1,162 3,112 3,153 ------------------------------------------------------------------------- Items of note affecting net income, net of income taxes: Amortization of intangibles(8) (111) (92) (91) (278) (254) TD Banknorth restructuring, privatization and merger-related charges(9) - - - - (43) Restructuring and integration charges relating to the Commerce acquisition(10) (15) (30) - (45) - Change in fair value of credit default swaps hedging the corporate loan book, net of provision for credit losses(11) 22 1 30 48 32 Other tax items(12) (14) - - (34) - Provision for insurance claims(13) - - - (20) - ------------------------------------------------------------------------- Total items of note (118) (121) (61) (329) (265) ------------------------------------------------------------------------- Net income available to common shareholders - reported $980 $841 $1,101 $2,783 $2,888 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Certain comparative amounts have been reclassified to conform to the presentation adopted in the current period. (2) Adjusted other income excludes the following items of note: third quarter 2008 - $34 million gain due to change in fair value of credit default swaps (CDS) hedging the corporate loan book; second quarter 2008 - $1 million gain due to change in fair value of CDS hedging the corporate loan book; first quarter 2008 - $55 million gain due to change in fair value of CDS hedging the corporate loan book; $30 million provision for insurance claims, as explained in footnote 13; third quarter 2007 - $46 million gain due to change in fair value of CDS hedging the corporate loan book. (3) Adjusted provision for credit losses excludes the following item of note: first quarter 2008 - $17 million related to the portion that was hedged via the CDS. (4) Adjusted non-interest expenses excludes the following items of note: third quarter 2008 - $166 million amortization of intangibles; $23 million restructuring and integration charges, as explained in footnote 10; second quarter 2008 - $117 million amortization of intangibles; $48 million restructuring and integration charges; first quarter 2008 - $122 million amortization of intangibles; third quarter 2007 - $131 million amortization of intangibles. (5) For reconciliation between reported and adjusted provision for income taxes, refer to the reconciliation table on page 12. (6) Adjusted non-controlling interests excludes the following items of note: third quarter 2007 - $1 million amortization of intangibles. (7) Adjusted equity in net income of an associated company excludes the following items of note: third quarter 2008 - $16 million amortization of intangibles; second quarter 2008 - $17 million amortization of intangibles; first quarter 2008 - $16 million amortization of intangibles; third quarter 2007 - $11 million amortization of intangibles. (8) Amortization of intangibles primarily relates to the Canada Trust acquisition in 2000, the TD Banknorth Inc. (TD Banknorth) acquisition in 2005 and its privatization in 2007, Commerce Bancorp, Inc (Commerce) acquisition in 2008, the acquisitions by TD Banknorth of Hudson United Bancorp (Hudson) in 2006 and Interchange Financial Services Corporation (Interchange) in 2007, and the amortization of intangibles included in equity in net income of TD Ameritrade. See additional information in the amortization of intangibles table on the following page. (9) The TD Banknorth restructuring, privatization and merger-related charges include the following: $31 million restructuring charge, which primarily consisted of employee severance costs, the costs of amending certain executive employment and award agreements and write-down of long-lived assets due to impairment, included in U.S. Personal and Commercial Banking; $4 million restructuring charge related to the transfer of functions from TD Bank USA, N.A. (TD Bank USA) to TD Banknorth, included in the Corporate segment; $5 million privatization charges, which primarily consisted of legal and investment banking fees, included in U.S. Personal and Commercial Banking; and $3 million merger-related charges related to conversion and customer notices in connection with the integration of Hudson and Interchange with TD Banknorth, included in U.S. Personal and Commercial Banking. In the Interim Consolidated Statement of Income, the restructuring, privatization and merger-related charges are included in non-interest expenses. (10) As a result of the acquisition of Commerce and related restructuring and integration initiatives undertaken, the Bank incurred restructuring and integration charges. Restructuring charges consisted of employee severance costs, the costs of amending certain executive employment and award agreements and the write-down of long-lived assets due to impairment. Integration charges consisted of costs related to employee retention, external professional consulting charges and marketing (including customer communication and rebranding). In the Interim Consolidated Statement of Income, the restructuring and integration charges are included in non-interest expenses. (11) The Bank purchases CDS to hedge the credit risk in Wholesale Banking's corporate lending portfolio. These CDS do not qualify for hedge accounting treatment and they are measured at fair value with changes in fair value recognized in current period's earnings. The related loans are accounted for at amortized cost. Management believes that this asymmetry in the accounting treatment between CDS and loans would result in periodic profit and loss volatility which is not indicative of the economics of the corporate loan portfolio or the underlying business performance in Wholesale Banking. As a result, the CDS are accounted for on an accrual basis in the Wholesale Banking segment and the gains and losses on the CDS, in excess of the accrued cost, are reported in the Corporate segment. Adjusted earnings excludes the gains and losses on the CDS in excess of the accrued cost. When a credit event occurs in the corporate loan book that has an associated CDS hedge, the PCL related to the portion that was hedged via the CDS is netted against this item of note. During the prior quarter, the change in the fair value of CDS, net of PCL, resulted in a net gain of $38 million before tax ($25 million after tax). The item of note included a change in fair value of CDS of $55 million before tax ($36 million after tax), net of PCL of approximately $17 million before tax ($11 million after tax). (12) Third quarter 2008 - As a result of the Commerce acquisition, the combined overall tax rate for U.S. Personal and Commercial Banking segment declined, resulting in a negative impact on future income tax assets of $14 million related to non-intangible future income tax assets. First quarter 2008 - The negative impact of the scheduled reductions in the income tax rate, resulting in a decrease of $20 million in the net future income tax assets. (13) The provision for insurance claims relates to a court decision in Alberta. The Alberta government's legislation effectively capping minor injury insurance claims was challenged and held to be unconstitutional earlier this calendar year. While the government of Alberta has appealed the decision, the ultimate outcome remains uncertain. As a result, the Bank accrued an additional actuarial liability for potential claims in the first quarter of 2008. Reconciliation of Reported Earnings per Share (EPS) to Adjusted EPS(1) ------------------------------------------------------------------------- For the nine For the three months ended months ended -------------------------------- --------------------- July 31 Apr. 30 July 31 July 31 July 31 (Canadian dollars) 2008 2008 2007 2008 2007 ------------------------------------------------------------------------- Diluted - reported $1.21 $1.12 $1.51 $3.65 $3.98 Items of note affecting income (as above) 0.14 0.16 0.09 0.43 0.36 Items of note affecting EPS only(2) - 0.04 - 0.04 - ------------------------------------------------------------------------- Diluted - adjusted $1.35 $1.32 $1.60 $4.12 $4.34 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic - reported $1.22 $1.12 $1.53 $3.68 $4.02 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) EPS is computed by dividing net income available to common shareholders by the weighted-average number of shares outstanding during the period. As a result, the sum of the quarterly EPS may not equal to year-to-date EPS. (2) The diluted EPS figures do not include Commerce earnings for the month of April 2008 due to a one month lag between fiscal quarter ends, while share issuance on close resulted in a one-time negative earnings impact of 4 cents per share. Amortization of Intangibles, Net of Income Taxes ------------------------------------------------------------------------- For the nine For the three months ended months ended -------------------------------- --------------------- (millions of July 31 Apr. 30 July 31 July 31 July 31 Canadian dollars) 2008 2008 2007 2008 2007 ------------------------------------------------------------------------- Canadian Personal and Commercial Banking $46 $37 $41 $104 $135 ------------------------------------------------------------------------- U.S. Personal and Commercial Banking: Reported amortization of intangibles 42 32 32 107 72 Less: non-controlling interest - - 1 - 9 ------------------------------------------------------------------------- Net amortization of intangibles 42 32 31 107 63 TD Ameritrade (included in equity in net income of an associated company) 16 17 11 49 35 Other 7 6 8 18 21 ------------------------------------------------------------------------- Amortization of intangibles, net of income taxes(1) $111 $92 $91 $278 $254 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Amortization of intangibles is included in the Corporate segment.

Economic Profit and Return on Invested Capital

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

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

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

The following table reconciles between the Bank's economic profit, return on invested capital and adjusted net income. Adjusted results, items of note and related terms are discussed in the "How the Bank Reports" section.

Reconciliation of Economic Profit, Return on Invested Capital and Adjusted Net Income ------------------------------------------------------------------------- For the nine For the three months ended months ended -------------------------------- --------------------- (millions of July 31 Apr. 30 July 31 July 31 July 31 Canadian dollars) 2008 2008 2007 2008 2007 ------------------------------------------------------------------------- Average common equity $29,065 $25,593 $20,771 $25,198 $20,478 Average cumulative goodwill/intangible assets amortized, net of income taxes 4,171 4,082 3,857 4,091 3,785 ------------------------------------------------------------------------- Average invested capital $33,236 $29,675 $24,628 $29,289 $24,263 Rate charged for invested capital 9.3% 9.3% 9.4% 9.3% 9.4% ------------------------------------------------------------------------- Charge for invested capital $(777) $(679) $(584) $(2,039) $(1,706) ------------------------------------------------------------------------- Net income available to common shareholders - reported $980 $841 $1,101 $2,783 $2,888 Items of note affecting net income, net of income taxes 118 121 61 329 265 ------------------------------------------------------------------------- Net income available to common shareholders - adjusted $1,098 $962 $1,162 $3,112 $3,153 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Economic profit $321 $283 $578 $1,073 $1,447 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Return on invested capital 13.1% 13.2% 18.7% 14.2% 17.4% ------------------------------------------------------------------------- -------------------------------------------------------------------------

Significant Events in 2008

Acquisition of Commerce Bancorp, Inc.

On March 31, 2008, the Bank acquired 100% of the outstanding shares of Commerce for purchase consideration of $8.5 billion, paid in cash and common shares. As a result, $57.1 billion of assets (including additional goodwill of approximately $6.4 billion and intangible assets of $1.5 billion) and $48.6 billion of liabilities were included in the Bank's Consolidated Balance Sheet. The allocation of the purchase price is subject to finalization.

Commerce is reported in the U.S. Personal and Commercial Banking segment.

For details, see Note 20 to the Interim Consolidated Financial Statements for the quarter ended July 31, 2008.

The fiscal periods of Commerce and the Bank are not co-terminus. Commerce's results for each calendar quarter are consolidated on a one month lag with the Bank's results for the fiscal quarter. This is in the normal course of the Bank's financial reporting and TD Banknorth is reported in a similar manner. Because the Commerce transaction closed on March 31, due to the one month lag, the Bank's second quarter results did not include any results of Commerce. However, $48 million before tax ($30 million after tax) restructuring and integration charges incurred in April 2008 were included in the Bank's results for the quarter ended April 30, 2008 because they represent material U.S. Personal and Commercial Banking events for the quarter ended April 30, 2008.

As previously disclosed, the projected earnings of U.S. Personal and Commercial Banking segment is estimated to be at least $750 million in 2008 and a minimum of $1,200 million in 2009(1).

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

FINANCIAL RESULTS OVERVIEW

Performance Summary

An overview of the Bank's performance on an adjusted basis for the third quarter of 2008 against the financial shareholder indicators included in the 2007 Annual Report is outlined below. Shareholder performance indicators help guide and benchmark the Bank's accomplishments. For the purposes of this analysis, the Bank utilizes adjusted earnings, which exclude items of note from the reported results that are prepared in accordance with Canadian GAAP. Reported and adjusted results and items of note are explained under the "How the Bank Reports" section.

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

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

Prior quarter comparison ------------------------

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

Year-to-date comparison -----------------------

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

Net Interest Income

Year-over-year comparison -------------------------

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

Prior quarter comparison ------------------------

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

Year-to-date comparison -----------------------

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

Other Income

Year-over-year comparison -------------------------

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

Prior quarter comparison ------------------------

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

Year-to-date comparison -----------------------

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

Provision for Credit Losses

Year-over-year comparison -------------------------

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

Prior quarter comparison ------------------------

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

Year-to-date comparison ----------------------- On a year-to-date basis, provision for credit losses increased $269 million, from $506 million in the same period last year. The increase was primarily due to higher specific provisions in the Canadian Personal and Commercial Banking and Wholesale Banking segments, and higher general provisions in the U.S. Personal and Commercial Banking segment. Provision for Credit Losses ------------------------------------------------------------------------- For the nine For the three months ended months ended -------------------------------- --------------------- (millions of July 31 Apr. 30 July 31 July 31 July 31 Canadian dollars) 2008 2008 2007 2008 2007 ------------------------------------------------------------------------- Net new specifics (net of reversals) $260 $244 $181 $771 $586 Recoveries (30) (33) (40) (95) (108) ------------------------------------------------------------------------- Provision for credit losses - specifics 230 211 141 676 478 Change in general allowance VFC 16 16 12 47 34 U.S. Personal and Commercial Banking 42 5 18 51 (6) Other - - - 1 - ------------------------------------------------------------------------- Total $288 $232 $171 $775 $506 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Non-Interest Expenses and Efficiency Ratio Year-over-year comparison -------------------------

Reported non-interest expenses for the third quarter were $2,701 million, an increase of $485 million, or 22%, compared with the third quarter last year. Adjusted non-interest expenses of $2,512 million, increased $427 million, or 20%, compared with the third quarter last year. This increase was largely driven by growth in U.S. Personal and Commercial Banking resulting from the first-time inclusion of Commerce results, as well as growth in Canadian Personal and Commercial Banking.

The reported efficiency ratio was 66.9%, compared with 60.2% in the third quarter last year. The Bank's adjusted efficiency ratio was 62.8%, compared with 57.3% in the same period last year.

Prior quarter comparison ------------------------

Reported non-interest expenses increased $495 million, or 22%, compared with the prior quarter. Adjusted non-interest expenses increased $471 million, or 23%. The increase was a result of higher expenses, primarily in U.S. Personal and Commercial Banking due to the first-time inclusion of Commerce results.

The reported efficiency ratio was 66.9%, compared with 65.1% in the prior quarter. The Bank's adjusted efficiency ratio was 62.8% compared with 60.3% in the prior quarter.

Year-to-date comparison -----------------------

On a year-to-date basis, reported non-interest expenses of $7,135 million were up $401 million, or 6%, compared with the same period last year, with the growth in amortization of intangibles accounting for $44 million of the increase. The current year-to-date reported expenses included $71 million of restructuring and integration charges attributable to the Commerce acquisition while the prior year-to-date period included $67 million in charges related to the privatization of TD Banknorth and the transfer of functions from TD Bank USA, N.A. to TD Banknorth. Adjusted non-interest expenses were $6,660 million, an increase of $373 million, or 6%, due to increases in the Canadian Personal and Commercial Banking, U.S. Personal and Commercial Banking, Wealth Management and Corporate segments. Canadian Personal and Commercial Banking expenses increased due to investments in new branches, higher staffing costs associated with longer branch hours and higher employee compensation. U.S. Personal and Commercial Banking accounted for the greatest portion of the year-to-date increase, primarily due to the first-time inclusion of Commerce results.

The reported efficiency ratio was 64.7%, compared with 62.8% in the same period last year. The Bank's adjusted efficiency ratio was 60.7%, compared to 58.9% in the same period last year.

Taxes

As discussed in the "How the Bank Reports" section, the Bank adjusts its reported results to assess each of its businesses and to measure overall Bank performance. As such, the provision for income taxes is stated on a reported and an adjusted basis.

The Bank's reported effective tax rate was 11.6% for the third quarter, compared with 19.2% in the same quarter last year, and 16.8% in the prior quarter. On a year-to-date basis, the Bank's reported effective tax rate was 16.6%, compared with 20.1% in the same period last year. The period over period tax rate reduction was primarily due to a significantly lower effective tax rate on international operations, which includes the tax synergies related to the Commerce acquisition.