TORONTO-DOMINION BANK $64 - Toronto symbol TD

TORONTO-DOMINION BANK $64 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; Shares outstanding: 858.8 million; Market cap: $55.0 billion; Price-to-sales ratio: 2.2; Dividend yield: 3.8%; SI Rating: Above Average) is the second-largest Canadian bank, with total assets of $557.2 billion. TD has now fully integrated Commerce Bancorp Inc. with its other U.S. banking operations. The bank paid $8.5 billion for Commerce in May 2008. It now operates as “TD Bank,” and has 1,028 branches from Maine to Florida. The U.S. banking business provides 16% of TD’s overall profits. If you include $276-million in integration costs and $576-million of writedowns of securities, TD’s earnings in the year ended October 31, 2009, fell 18.6%, to $3.1 billion from $3.8 billion in the prior year. Earnings per share fell 28.7%, to $3.47 from $4.87, on more shares outstanding. Revenue rose 21.8%, to $17.9 billion from $14.7 billion, as low interest rates spurred strong demand for new loans. Higher loan demand is helping TD offset rising loan-loss provisions, which jumped by 113.3% in 2009, to $2.5 billion from $1.1 billion. Like Royal Bank, most of the higher loan losses came from TD’s U.S. operations. Bad loans now account for 0.67% of TD’s total loans (Canada and the U.S.), up from 0.35% in the prior year. The stock trades at 11.9 times the $5.39 a share that TD will probably earn in 2010. TD Bank is a buy.