Toronto-Dominion Bank $64 - Toronto symbol TD

Toronto-Dominion Bank $64 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; Shares outstanding: 802.9 million; Market cap: $51.4 billion; SI Rating: Above average) is Canada’s second-largest bank, with assets of $503.6 billion. TD recently completed its acquisition of U.S.-based Commerce Bancorp for $8.5 billion in cash and stock. To put the purchase price in context, TD earned $973 million or $1.32 a share in its second fiscal quarter ended April 30, 2008. The acquisition doubled TD’s retail banking operations in the United States to around 1,100 branches. TD estimates that its larger U.S. operations will contribute $750 million to its earnings in fiscal 2008, and $1.2 billion in 2009. The bank originally planned to re-brand all of its U.S. operations as “TD Commerce Bank”. However, a legal challenge from a smaller bank with a similar name prompted TD to make this change. It’s unlikely that dropping the Commerce name will force TD to writedown any of the $6.1 billion in goodwill it recorded on the purchase. Concerns over rising mortgage defaults in the U.S. have weighed on TD’s stock price in the past few months. However, Commerce Bancorp’s conservative lending policies have limited its exposure to subprime mortgages. TD now trades at 10.9 times its forecast earnings of $5.86 a share. The $2.36 dividend yields 3.7%. TD Bank is a buy.