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DATE

Thursday, Aug. 27, 2026 at 9:30 a.m. ET

CALL PARTICIPANTS

• Head of Investor Relations - Brooke Hales
• Group President and CEO - Raymond Chun
• Group Head, U.S. Banking - Leo Salom
• Chief Financial Officer - Kelvin Tran
• Chief Risk Officer - Ajai Bambawale
• Group Head, Canadian Personal Banking - Sona Mehta
• Group Head, Canadian Business Banking - Barbara Hooper
• Group Head, Wealth Management and Insurance - Paul Clark
• Group Head, Wholesale Banking - Tim Wiggan

TAKEAWAYS

• Adjusted Net Income -- $4.7 billion, representing a 21% increase year over year driven by record earnings in Canadian businesses and Wholesale Banking.
• Adjusted Diluted EPS -- $2.77, up 26% year over year reflecting strong revenue momentum and structural cost reductions.
• Revenue Growth -- 8% year over year, supported by market-driven businesses, margin expansion, and volume growth in Canadian banking.
• ROE -- 16.0%, increasing 280 basis points year over year as the bank continues to execute against its Investor Day targets.
• CET1 Ratio -- 14.3%, indicating organic capital accretion offset by the repurchase of 14.5 million common shares during the quarter.
• Canadian P&C Net Income -- $2,095 million, rising 7% year over year due to record deposit and loan volumes.
• Canadian P&C NIM -- up 3 basis points sequentially, driven by disciplined pricing in a competitive mortgage market.
• U.S. Banking Net Income -- $1,074 million, up 41% year over year on a reported basis reflecting best-in-class cumulative margin expansion.
• U.S. Net Interest Margin -- 3.47%, increasing 6 basis points sequentially on higher deposit and loan yields.
• Wholesale Banking Net Income -- $743 million, a reported increase of 87% year over year driven by heightened client activity and favorable market conditions.
• Wealth Management & Insurance Net Income -- $841 million, up 20% year over year on record assets and higher insurance earned premiums.
• Structural Cost Reductions -- $900 million realized in fiscal 2026, meeting the full-year objective ahead of schedule.
• AI Economic Value -- $200 million realized year to date, driven by predictive and generative AI use cases across the enterprise.
• U.S. Banking Loan Growth -- included a 20% increase in bank card balances, 15% growth in mid-market lending, and a 6% rise in home equity lending year over year.
• U.S. AML Remediation Expenses -- approximately $550 million for the fiscal year, supporting the strengthening of financial crimes risk management capabilities.
• Potential Capital Return -- $13 billion estimated for fiscal 2027, based on the excess capital available to reach a 13.0% CET1 ratio target.
• PCL Guidance -- expected to finish fiscal 2026 near the lower end of the 40 to 50 basis point range due to strong credit performance.
• Trade and Policy Reserves -- $500 million, set aside to navigate potential uncertainties in the Canada-U.S. trade environment.
• Canadian Business Loans -- up 8% year over year, reflecting the benefits of frontline distribution expansion.
• Wholesale Banking Deposits -- up 18% year over year, supported by momentum in building a global transaction banking platform.
• Wealth Management New Accounts -- up 26% year over year, with over 90% of TD Easy Trade onboarding occurring through digital channels.
• Efficiency Ratio -- 55.2%, net of insurance service expenses, aligning with the medium-term target shared at Investor Day.

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RISKS

• Chun stated, "developments over the past few days have added significant uncertainty to the Canadian -- to the Canada-U.S. trade relationship," noting potential impacts on interconnected economies.
• Salom noted, "The consent order is still in place and we are working hard to satisfy every aspect of that consent order," regarding the ongoing U.S. anti-money laundering remediation program.
• Bambawale warned that factors management will consider for future credit forecasting include "uncertainties, whether it's trade, whether it's the Middle East conflict or other factors."

SUMMARY

Management of The Toronto-Dominion Bank (TD -0.28%) reported record earnings in Canadian operations and Wholesale Banking, alongside sequential momentum in U.S. Banking. The bank achieved positive operating leverage for the fifth consecutive quarter, supported by structural cost reductions. Chief Executive Officer Raymond Chun highlighted capital flexibility, with a target to reach a 13.0% Common Equity Tier 1 ratio by the second half of fiscal 2027. The company is accelerating investments in artificial intelligence and organic growth initiatives while managing regulatory remediation in the U.S.

• U.S. store expansion: The bank plans to open 100 new branches by the end of calendar 2028 to strengthen its East Coast market position and deepen presence in critical MSAs.
• Regulatory remediation: Salom stated, "Overall, we remain confident in our remediation trajectory, and we see opportunities to accelerate elements of the remaining deliverables under our program."
• Wholesale momentum: Chun noted the wholesale segment has nearly doubled its quarterly revenue since the TD Cowen acquisition closed, stating, "We're just getting started in terms of what TD Securities can accomplish."
• AI implementation: The bank has scaled generative AI knowledge solutions to more than 20,000 client-facing colleagues and automated approximately one-third of manual processes in TD Auto Finance Canada.
• Credit quality: Bambawale indicated that underwriting discipline resulted in lower gross impaired loan formations, which decreased 2 basis points sequentially to 20 basis points.
• Strategic referrals: Wealth Management closed a record $24 billion in referrals year to date, highlighting the integration between retail branches and wealth units.

INDUSTRY GLOSSARY

• AML: Anti-money laundering; regulations and procedures designed to prevent the disguise of illegally obtained funds.
• CET1: Common Equity Tier 1; a primary measure of a bank's capital strength and financial resilience.
• CMT: Communications, Media, and Technology; a specific business vertical within the bank's wholesale lending operations.
• DSB: Domestic Stability Buffer; a capital reserve required by Canadian regulators to protect against systemic economic risks.
• FIG: Financial Institutions Group; a specialized client segment in corporate and investment banking.
• GIL: Gross impaired loans; the total value of loans where management no longer expects to collect full principal and interest.
• ISE: Insurance service expenses; costs incurred by the bank related to the provision of insurance coverage.
• MSAs: Metropolitan Statistical Areas; geographical regions with high population densities and close economic ties.
• MTO: Medium-term outlook; the timeframe and objectives management set for the bank's strategic targets.
• NIM: Net interest margin; the percentage difference between interest income earned and interest paid out.
• PCL: Provision for credit losses; funds set aside by the bank to cover potential loan defaults.
• PTPP: Pretax, pre-provision earnings; operating income before accounting for taxes and credit loss provisions.
• RESL: Real estate secured lending; credit products like mortgages and home equity lines backed by property collateral.
• RWA: Risk-weighted assets; a bank's assets adjusted for risk to determine minimum capital requirements.

Full Conference Call Transcript

Operator: Good morning, everyone. Welcome to the TD Bank Group Third Quarter 2026 Earnings Conference Call. I would now like to turn the meeting over to Ms. Brooke Hales, Head of Investor Relations. Please go ahead, Ms. Hales.

Brooke Hales: Thank you, operator. Good morning, and welcome to TD Bank Group's Third Quarter 2026 Results Presentation. We will begin today's presentation with remarks from Raymond Chun, the bank's CEO; followed by Leo Salom, Group Head, U.S. Banking; after which Kelvin Tran, the bank's CFO, will present our third quarter operating results. Ajai Bambawale, Chief Risk Officer, will then offer comments on credit quality, after which, we will invite questions from analysts on the phone. Also present today to answer your questions are Sona Mehta, Group Head, Canadian Personal Banking; Barbara Hooper, Group Head, Canadian Business Banking; Paul Clark, Group Head, Wealth Management and Insurance; and Tim Wiggan, Group Head, Wholesale Banking. Please turn to the next slide.

Our comments during this call may contain forward-looking statements, which involve assumptions and have inherent risks and uncertainties, actual results could differ materially. I would also remind listeners that the bank uses non-GAAP financial measures to arrive at adjusted results. The bank believes that adjusted results provide readers with a better understanding of how management views the bank's performance. Ray, Leo and Kelvin will be referring to adjusted results in their remarks. Additional information about non-GAAP measures and material factors and assumptions is available in our Q3 2026 MD&A. I will now hand the presentation over to Ray.

Raymond Chun: Thank you, Brooke, and good morning, everyone. Thanks for joining us. TD had a very strong quarter with record earnings in our Canadian businesses and Wholesale Banking and growing momentum in U.S. banking. Before I turn to our results, I want to acknowledge the developments over the past few days have added significant uncertainty to the Canadian -- to the Canada-U.S. trade relationship. Our economies are interconnected, and we are hopeful the two countries will ultimately find common ground. We will continue to be there for our clients in Canada, the U.S. and globally to support their growth as we navigate this uncertain environment. In Canada, trade tensions have not dampened investment opportunities as government seek to drive new activity.

In a report published earlier this week, TD Economics estimates more than $1 trillion in spending and possibly considerable more could be rolled out across Canada over the coming decade in a historic investment super cycle. We are very well positioned to benefit from this activity. As we unlock investment opportunities, we have the means to deploy capital to support our clients and the broader economy. Please turn to the next slide. In Q3, the bank delivered a strong quarter with record earnings of $4.7 billion and record EPS of $2.77. Revenue grew 8% year-over-year, driven by momentum in our markets-driven businesses, margin expansion and volume growth in Canadian Personal and Commercial Banking.

Impaired PCLs declined quarter-over-quarter, reflecting strong credit performance. We now expect total PCLs near the lower end of our prior 40 to 50 basis point range in fiscal 2026. Ajai will share more details in a few minutes. TD delivered positive operating leverage for the fifth consecutive quarter. The bank is driving structural cost reductions, while at the same time, accelerating investments across AI, innovation and frontline talent. Excluding variable compensation, FX and the U.S. strategic cards portfolio, expenses were up 1% year-over-year. We expect to achieve our 3% to 4% expense growth target for fiscal 2026. ROE was 16%, up 280 basis points year-over-year.

The bank is on track to significantly outperform its 6% to 8% EPS growth and 13% ROE target for fiscal 2026. However, provided that current macroeconomic conditions continue. In Q3, the bank's CET1 ratio was 14.3%, with strong organic capital accretion offset by consistent share buybacks. TD has significant capital flexibility. The lower DSB requirement and range create even more capital flexibility than we had before. We see growing deployment opportunities driven by the super cycle I mentioned earlier. TD is different than peers. We don't just start from a position of strength in capital. We also produce capital at a very strong rate. As a result, it will take time for the bank to reduce its CET1 ratio.

We continue to expect to reach 13% CET1 by the second half of fiscal 2027. We remain committed to returning excess capital to our shareholders. To illustrate the potential magnitude of capital return, assuming continued strong organic capital accretion and RWA growth in line with fiscal 2026 year-to-date, TD could return over $13 billion in capital in fiscal 2027 to reach a 13% CET1 ratio by the end of that year. We are in an enviable position. TD has the flexibility to return substantial capital to shareholders while meeting our ROE objectives and retaining significant capacity to invest in organic growth and support clients and businesses in our communities. Please turn to Slide 3.

Canadian Personal and Commercial Banking delivered deposit and loan growth supporting record earnings. In the personal bank, we saw acquisition momentum in day-to-day banking products, including a record Q3 in digital sales, which were up 17% year-over-year. Small business banking acquisition was up 13% year-over-year driven by our frontline distribution expansion and refreshed product lineup. In real estate secured lending, we grew loans 4% year-over-year through speed and specialization. We delivered record proprietary originations this quarter while maintaining disciplined pricing. We delivered strong performance in our business bank with loans and non-term deposits each up 8% year-over-year and commercial client acquisition up 10% year-to-date, reflecting the benefits of our distribution expansion.

This quarter marked an important inflection point for our U.S. Banking segment with total loans positive sequentially. The team continued to execute against the organic growth strategies we laid out at Investor Day. U.S. bank card balances, mid-market lending and home equity lending were up 20%, 15% and 6% year-over-year, respectively. In our U.S. wealth business, we delivered record mass affluent investment assets driven by net asset growth and market appreciation. As we look ahead, branch expansion remains an important component of our growth strategy in the U.S.

Consistent with the branch repositioning plan shared at Investor Day, and subject to regulatory approval, we are focused on opening 100 new stores -- 100 new branches by the end of calendar 2028, with work ongoing to identify additional opportunities through 2030 as we continue to invest in organic growth opportunities. Wealth Management and Insurance delivered record revenue, earnings and assets. We have strong momentum in wealth with market share gains across advice, direct investing and ETFs. New accounts grew 26% year-over-year, highlighted by straight-through digital onboarding over 90% in TD Easy Trade. Trades per day were up 20% year-over-year. And in ETFs, we are on track to achieve our medium-term target of $54 billion in assets.

Our insurance business continues its leadership role in AI and is accelerating deployment across the bank. TD Insurance leads the Canadian industry in the scaled deployment of AI-powered vehicle damage estimation for auto claims, simplifying and accelerating repairs for our clients. Wholesale Banking delivered record revenue and earnings this quarter, reflecting the strength of our client franchise and product depth and favorable market conditions. TD Securities continued to strengthen its position as a trusted adviser on critical and complex global transactions. Our performance this quarter reflects the confidence clients have in our people, capabilities and execution across markets, financing and advisory solutions. This continued to drive market share gains.

Calendar year-to-date, TD Securities placed in the top 10 in the U.S. equity and equity-linked league tables. We also saw continued momentum in building a world-class integrated global transaction bank for our commercial and corporate clients with deposits up 18% year-over-year. Our growing wholesale bank is an important driver of fee income acceleration and revenue diversification for TD. Please turn to Slide 4. We made significant progress in deepening client relationships on both sides of the border. The Canadian personal bank again achieved record penetration rates for both consumer and small business credit cards this quarter, and wealth closed a record $24 billion in referrals year-to-date.

In the U.S., we expanded our TD Premier program, which deepens relationships by bringing together our mass affluent clients' banking and wealth needs. TD Premier is designed to drive organic growth, delivering acquisition on both sides of the balance sheet and accelerating the powerful referral engine from our retail branches. We continue to innovate to make TD simpler and faster. We have scaled genAI knowledge management solutions across Canada with over 20,000 client-facing colleagues now supported by these capabilities. We're also leveraging AI to enhance the colleague and client experience in TD Auto Finance Canada. We have automated approximately 1/3 of the manual processes in funding and launching digital income verification to deliver credit decisions faster.

Finally, we continue to execute with discipline. Total bank ROE reached 16% this quarter, in line with the medium-term target we shared at Investor Day. This reflects strong momentum and disciplined expense and capital management across our businesses as TD continues to deliver on the commitments we've shared with you. This quarter's record results were also supported by favorable market conditions in our Wealth and Wholesale Banking businesses. We are executing against the strategies that we shared at Investor Day. In fact, in many cases, we're ahead of schedule with strong growth momentum across our businesses. We've already delivered on the $900 million in structural cost reductions that we targeted for fiscal '26.

We are on track for our $2 billion to $2.5 billion medium-term structural cost reduction target that we shared at Investor Day and, in fact, see potential upside as we fundamentally reset the cost base of the bank. TD is a top 10 bank in the U.S. With a stronger foundation and best-in-class talent, we are increasingly positioned to outcompete in our footprint. In Wholesale Banking, we have almost doubled our quarterly revenue since the TD Cowen acquisition closed, and capital markets still represents a smaller percentage of TD's revenue as compared to other G-SIB peers. We're just getting started in terms of what TD Securities can accomplish.

And in Canada, across our personal and business banks and in wealth, we are making the most significant investments in frontline distribution that TD has made in over a decade. These levers are unique to TD and position us to continue our growth momentum. I see significant upside for the bank in the coming years. Please turn to Slide 5. TD is accelerating its leadership in AI. The bank is increasingly emphasizing AI opportunities that transform end-to-end experiences, drive lower unit costs and are scalable across the enterprise. In the first wave, we are focused on significant opportunities in retail end-to-end credit, the software development life cycle and our contact centers.

We are scaling AI in our credit journeys to streamline application submission, automate document review processes and accelerate speed to decision. In technology, we're using AI to help our engineering teams build and deploy software faster, improving productivity and accelerating innovation and the delivery of new capabilities across the bank. And in our contact centers, we will leverage AI to simplify routine client interactions and provide colleagues with tools and insights that deliver simpler, more seamless client experiences. Importantly, each of these key transformation initiatives is intended to drive financial performance while enhancing the client and colleague experience. Three quarters into the year, we have essentially hit our fiscal 2026 target of $200 million in value from AI.

We expect to extract further value through the remainder of the year across predictive, generative and agentic AI use cases. Please turn to Slide 6. TD was ranked #1 on TIME's Canada's Best Companies of 2026 list. TD is back to winning. To our colleagues across the bank, your efforts have driven this recognition and the bank's strong results this quarter. Thank you for your -- continuing to deliver for our clients and shareholders every day. And with that, let me hand it over to Leo.

Leo Salom: Great. Thank you, Ray, and good morning, everyone. Please turn to Slide 7. As we move through the second half of fiscal 2026, we continue to make meaningful progress on our U.S. AML remediation program and importantly, continue to strengthen the overall effectiveness of our financial crimes risk management capabilities. For example, we're now benefiting from a more mature assessment of the U.S. bank's inherent financial crimes risk profile as well as more frequent transaction monitoring coverage assessments. Together, these enhancements provide greater visibility into emerging and evolving risks, help ensure our monitoring remains aligned to those risks and allows us to more dynamically respond to those risks.

We also are continuing to advance anti-trafficking and fraud detection capabilities through our investigative partnerships, further enhancing our ability to detect and respond to evolving financial crime threats. Finally, we strengthened our financial crimes risk training program through the rollout of specialized training courses for colleagues in higher-risk business lines, helping reinforce the consistent application of our policies, standards and controls across the organization. We also continue to make meaningful progress against the look-back activities required under the consent orders as reviews advanced across multiple populations this quarter. Overall, we remain confident in our remediation trajectory, and we see opportunities to accelerate elements of the remaining deliverables under our program. From a financial perspective, we expect our overall U.S.

AML remediation expenses for the year to be approximately $550 million, and we continue to expect overall fiscal 2026 expense growth for U.S. Banking to be in line with our mid-single-digit expense guidance. With that, I'll turn it over to Kelvin.

Kelvin Vi Tran: Thank you, Leo. Please turn to Slide 8. TD delivered record performance this quarter. We saw strong momentum across businesses with 8% top line growth. Strong execution, coupled with heightened client activity and favorable market conditions, led to robust growth in Wholesale Banking and Wealth. Across our P&C businesses, we continue to drive profitable growth and deepen relationships. Impaired PCLs declined quarter-over-quarter, reflecting strong credit performance. Expenses increased 4% year-over-year, with approximately 3% driven by variable compensation, foreign exchange and the impact of the U.S. strategic cards portfolio. This disciplined expense management reflects significant structural cost reductions, coupled with continued investments in business growth.

Our efficiency ratio, net of ISE, this quarter was 55.2%, in line with the medium-term target that we shared at Investor Day. Total bank PTPP was up 17% year-over-year after removing the impact of the U.S. strategic cards portfolio, FX and insurance service expenses. We've shared the details on Slide 23. Please turn to Slide 9. Canadian Personal and Commercial Banking delivered record revenue, PTPP and earnings. We achieved record deposits this quarter, reflecting 1% growth in personal deposits and 5% growth in business deposits. Strong deposit acquisition was driven by distribution expansion and TD's simpler and faster client experience. We also achieved record loans this quarter, reflecting 4% growth in personal volumes and 8% growth in business volumes.

We continue to focus on profitable growth in RESL with loans up 4% year-over-year. Strong business loan growth reflected continued investment in our frontline bankers and execution against our local advice-focused model. Our clients continue to demonstrate resilience through macroeconomic uncertainty. NIM was up 3 basis points sequentially. As we look forward to Q4, based on the current rate and competitive market dynamics, we expect net interest margin to modestly increase, similar to this quarter's results. Expenses rose 3% year-over-year, reflecting higher employee-related expenses. Across the Canadian personal and business banks, we delivered strong ROEs aligned with our medium-term targets as outlined at Investor Day. Please turn to Slide 10. In U.S.

Banking, earnings were up 11% year-over-year, and ROTCE expanded by over 210 basis points to 15.6%. Excluding sweeps in our government banking business, deposits were flat year-over-year. We are making progress against our Investor Day target of mid-single-digit growth for these deposits over the medium term. We remain confident in our strategy as we pull back on higher-cost deposits and lean into the strength of our non-term personal deposits and operating business deposit franchises. We continue to execute against the strategies laid out at Investor Day. Bank card balances rose 20% year-over-year, reflecting strong client spend. And in addition, in partnership with TD Securities, U.S. Banking continued to deepen relationships with middle market clients with commitments up 9% year-over-year.

Record net interest margin of 3.47% was up 6 basis points quarter-over-quarter, driven by higher loan margins, including higher revenue from the strategic cards platform conversion and higher deposit margins. Over the past 2 years, the U.S. Banking segment's cumulative NIM expansion has been best-in-class among money center and regional banking peers. As we look forward to Q4, we expect NIM to modestly increase. Expenses increased 6% year-over-year, reflecting conversion costs associated with the strategic cards portfolio, higher employee-related expenses and spend supporting business growth initiatives, partially offset by lower governance and control investments. We continue to expect approximately USD 2.9 billion in net income for fiscal 2026 for the U.S. Banking segment. Please turn to Slide 11.

Wealth Management and Insurance delivered record revenue, earnings and assets this quarter and continue to execute with discipline with an efficiency ratio, net of ISE, of 53%. In wealth, TD has an unparalleled pipeline from Direct Investing into advice. In Q3, Direct Investing referred $1.4 billion to advice, up 34% year-over-year, deepening relationships by serving more of our clients' needs. Insurance achieved strong earnings this quarter and is delivering significant structural cost reductions with over $100 million in savings relating to claims and severity management year-to-date. Please turn to Slide 12. Wholesale Banking delivered record revenue and earnings this quarter.

Our performance reflects the depth and diversification of the platform, including strength across equities, commodities, equity underwriting and advisory, combined with higher levels of client activity and favorable market conditions. The business delivered return on equity of 16.7%, reflecting this strong momentum, coupled with disciplined expense and capital management. Please turn to Slide 13. Corporate net loss for the quarter was $82 million, a smaller loss than the same quarter last year, reflecting higher revenue from treasury and balance sheet management activities. Please turn to Slide 14. The common equity Tier 1 ratio ended the quarter at 14.3%, down 3 basis points sequentially. We delivered strong organic capital accretion again this quarter.

The bank repurchased approximately 14.5 million common shares under its share buyback program in Q3, which reduced CET1 by 37 basis points. Model updates across our Canadian RESL, Canadian Business Banking and Wholesale Banking portfolios increased CET1 by 10 basis points this quarter. As Ray shared, TD has significant capital flexibility. The bank is positioned to return substantial capital to shareholders while meeting our ROE objectives and investing in organic growth and supporting clients and businesses in our communities. And with that, I will turn it over to Ajai.

Ajai Bambawale: Thank you, Kelvin, and good morning, everyone. The bank continued to exhibit strong credit performance this quarter. Please turn to Slide 15. Gross impaired loan formations were 20 basis points, a decrease of 2 basis points or $149 million quarter-over-quarter. The decrease was largely recorded in the U.S. and Canadian Commercial lending portfolios. Please turn to Slide 16. Gross impaired loans decreased $138 million or 3 basis points quarter-over-quarter to 51 basis points, driven by the U.S. and Canadian Commercial and Wholesale lending portfolios, partially offset by the impact of foreign exchange. Please turn to Slide 17. Recall that our presentation reports PCL ratios, both gross and net of the partner share of the U.S. strategic card PCLs.

We remind you that U.S. card PCLs recorded in the corporate segment are fully absorbed by our partners and do not impact the bank's net income. The bank's provision for credit losses was 37 basis points with the decrease of 6 basis points quarter-over-quarter, broadly reflected across the Wholesale, U.S. Banking and Canadian Personal and Commercial Banking segments. Please turn to Slide 18. Impaired PCLs were $865 million, a decrease of $108 million quarter-over-quarter. The decrease was primarily recorded across the business and government lending portfolios. The bank recorded a performing provision of $52 million this quarter, which was largely reflected in the Wholesale and Canadian Commercial lending portfolios. Please turn to Slide 19.

The allowance for credit losses increased $105 million quarter-over-quarter due to a $128 million impact of foreign exchange, a performing build reflective of volume growth and some credit migration, partially offset by resolutions driving lower impaired allowance across the business and government lending portfolios. Now to summarize the quarter. The bank exhibited strong credit performance as evidenced by lower gross impaired loans, gross impaired loan formations and PCLs. Looking forward, while results may vary by quarter and are subject to changes to economic conditions, I now expect total PCLs in 2026 to come in near the lower end of our previously guided range of 40 to 50 basis points.

The bank also remains well positioned to navigate the policy and trade environment through our prudent provisioning, including approximately $500 million in reserves set aside for policy and trade risks, our strong capital position and through-the-cycle underwriting standards that have served us well through challenging conditions in the past. With that, operator, we are now ready to begin the Q&A session.

Operator: [Operator Instructions] Matthew Lee with Canaccord Genuity, please go ahead.

Matthew Lee: You've talked about opening 100 new U.S. stores by the end of 2028. How should we think about the interaction between that growth plan and the ongoing AML remediation? Like does the regulatory process constrain that path of branch expansion at all? Are they completely separate tracks?

Leo Salom: Matt, let me take that one. So we are announcing today that we're planning on opening up 100 stores across our footprint from Maine to Florida and we intend to complete that by the end of calendar 2028. So just by way of context, that's very consistent with what we announced on Investor Day. As you know, we did consolidate about 91 stores over the past 2 years, and this reflects really the reinvestment back to reposition our footprint. You know we have a top 3 deposit share position on the East Coast. And this is really meant to reinforce that and focus on deepening our presence in critical MSAs up and down the East Coast.

Obviously, we're -- at the same time, I'll say that we're focused very much on our AML program. It still remains our #1 priority. We have made significant progress on that program. I'd say today, the degree of maturity and effectiveness of that program is much stronger. And as a result, in discussions with our regulators, et cetera, I feel quite comfortable to be able to announce today that we'll be opening up those 100 stores. You'll see we'll try to get some of that accelerated into 2027. I think the bulk of the openings would be in 2028.

But this is -- this is an exciting move forward, and it reflects the fact that we've made significant investments, and we're now in a position to be able to invest back into our respective communities.

Matthew Lee: Okay. But you wouldn't necessarily make any inferences in the asset cap that you're under in the U.S. and the branch openings?

Leo Salom: No. No, Matt. Let me be clear. The consent order is still in place and we are working hard to satisfy every aspect of that consent order, and there is no greater priority for me than resolving that comprehensively and urgently.

Operator: Gabriel Dechaine with National Bank, please go ahead.

Gabriel Dechaine: First question is on the capital plan. Ray, targeting 13% by the end of next year, what's going to change in the plan? The CET1 ratio is down 50 basis points over the past year, and we're talking about a more than 100 basis point haircut in the next 16 months.

Raymond Chun: Thanks for the question, Gabe. As I said at Investor Day and today, the way I think you should all think about the way we will be managing capital is that we are managing it differently. But our primary use of the capital will be for organic growth. And you're seeing some of that where we've deployed, organic growth in our Wholesale Banking business, and we'll continue to find some of those opportunities as you see some of the investment opportunities I do think that potentially will arise in the sort of super cycle of investment potential in Canada over the next decade. From there, again, primary organic growth.

And then we sort of say, are there opportunities then where we want to deploy capital and from an acquisition perspective, and it's not our priority right now, and I know I get lots of questions about it. But if there were selective opportunities in fee income areas that we've been clear from Investor Day, whether it's in Wealth Management, TD Securities, Insurance or our credit card businesses, we would look at those opportunities. But our primary goal right now is organic growth. And then ultimately, if we don't have a need for or have excess capital, Gabe, we've said that we would consistently return capital back to our shareholders.

And I see that playing through in 2027, and you see the amount of capital that we have -- would have available to return back to our shareholders. So all that to say, I think we're in an incredibly privileged position as an organization that we have the flexibility to do it all. I mean we can do -- invest in organic growth. We can look selectively if opportunity presents, which is not a priority for us right now from an acquisition but also, most importantly, return excess capital back to our shareholders.

Maybe I'll take a second and ask Tim to talk about sort of what he's doing in his business and you've seen the growth of the Wholesale business, but certainly from an opportunity as to how do we deploy our capital organically better. I do think Wholesale business, Gabe, is an area of opportunity for us.

Tim Wiggan: Yes. Thanks, Ray. I would maybe just point to the overall growth in RWA in the quarter was 10%, but I always like to compare that to revenue growth. So the revenue growth was 2.5x the RWA growth in the quarter. So we continue to grow with our clients, whether it be in FIG or CMT, energy across our diversified industry group. The key is doing more with those loans. And I think that's been the major theme that showed up in the quarter as it relates to deepening. And that certainly showed up on the revenue line and on the net income within the quarter.

And so I think that gives you one example of how we're utilizing our capital to continue to grow with our clients.

Gabriel Dechaine: Great. And then second question, margin/balance sheet growth kind of a question for mostly the U.S., and I don't want to gloss over the Canadian business here because it looks well positioned there, given the deposit growth dynamics, which are pretty impressive. But in the U.S., we're starting to see -- and maybe you can give some more granularity on the loan growth there that you're seeing in the core book.

But if I look at -- if I consider the U.S. as to be a growth driver over the next year from a lending standpoint, I shouldn't be too concerned about margin compression, considering you still have a lot of excess deposits, so you can be more selective in your funding strategy. And the reinvestment rate tailwind should still be around for a couple of years because the 7-year swap rates are still well above where they were 7 years ago and even less than 7 years ago. So you're giving the positive NIM commentary for Q4, I would assume that extends beyond that as well.

Leo Salom: Gabe, that's a very good summary. So let me just unpack that a bit. I'd say first, the quarter was a really strong quarter, and it begins to show the earnings power of the U.S. franchise. So NIAT up 11% on a year-on-year basis and 10% on a quarter-on-quarter basis. And we did achieve sequential total loan growth in the quarter. And we're beginning to see -- in our core loan growth acceleration, you saw the year-on-year growth of 3%, you saw the quarter-on-quarter growth suggesting some acceleration already.

And in the areas that we've said we're going to focus, and Ray highlighted some of those: our bank card business, our HELOC franchise, our core mid-market businesses, all of those saw very, very strong results in the quarter, and we're seeing some degree of acceleration. We're also seeing from a market perspective, greater loan demand, which is encouraging in terms of what we might expect in 2027 as well, particularly in our larger corporate and commercial banking client set. So I think that from a volume perspective, I feel quite comfortable. And that's before we get to the things that we're doing to deliberately strengthen our distribution and our coverage models.

For next year, I talked about the 100 stores, but beyond the 100 branches, we're also leaning in to increase the number of bankers, both in our Retail businesses, but as well as in our Commercial Banking businesses across a number of our critical verticals. You talked about NIM, and I think we are different than other banks in that we have a loan-to-deposit ratio of 76%. So we've been really deliberate about managing our overall NIM, selectively repricing higher-priced yielding clients and focusing on our core deposit growth. And that's allowed us to be able to do two things: fund the core loan growth but also be able to continue to drive marginal increases in terms of overall NIM.

As we look forward, Kelvin referenced it in his comments, I do think we will see NIM expansion in 2027, albeit slightly more modest than what we've seen in the last 2 quarters as we do begin to try to continue to take share in our respective markets, but long-winded way of saying, I think we've got great growth prospects going into 2027. And likewise, I think we can grow while still being able to maintain and modestly expand our NIM profile.

Operator: The next question comes from Doug Young with Desjardins.

Doug Young: So I was distracted, Ray, through some of your remarks, but I think you said 13 -- you could return $13 billion of capital to shareholders to get the CET1 ratio down to 13%. And I just want to confirm that when you say return capital to shareholders, that's just purely buybacks, that's incremental to the dividend. And then if that's correct, like how do you guys measure or think about buybacks relative to the impact on your book value per share given where valuations [ have gone. ]

Raymond Chun: Sorry, Doug, where we're just having some problems trying to hear. You're cutting in and out.

Doug Young: Sorry. Can you hear me better now?

Raymond Chun: Yes.

Unknown Executive: Yes, that's better.

Doug Young: Sorry, I -- not sure what's going on. No, I just wanted to confirm the $13 billion, Ray, that you talked about in terms of returning capital to shareholders, is that all -- is that buybacks, that's not including dividends? And the question also, just how do you measure that size of buybacks and the potential implications on just book value per share growth? Just trying to understand the mechanics there as well.

Raymond Chun: Just on the $13 billion, it is on specifically buybacks. And that's what we could do from a buyback. First, I just want to clarify that, Doug, right? And so that's -- I just wanted to give you the math on the excess capital that we would have available. And the way we look at it right now is, again, just from a capital management perspective, I said it in the earlier question that Gabe asked and so I won't repeat the answer. But our primary purpose for that capital would be to first look at organic growth opportunities. Tim talked about a few of those. We still think there's significant organic growth opportunities to deploy that capital.

And then if there was anything afterwards from an excess perspective, our commitment is to return that. And we still do think there's significant upside opportunity. And as you've seen in our results, we continue to show accelerated momentum. Doug, I just think back to -- it's almost been a year since our Investor Day where we laid out some of our targets and objectives. And I can tell you today that the team has more confidence today in not only delivering against those medium-term outlooks, but in many of those targets, we do see upside and tailwind. And so come next quarter, not only will we lay out for you the Q4 numbers.

But if there are any adjustments to our medium-term outlook, that's when we'll communicate some of that. So I hope that helps you.

Doug Young: That does. And then, Ajai, just -- looking at PCL, it's obviously tracking better than you had expected in your guidance for the year. Just specifically on the impaired side, I would say, but you can correct me if I'm wrong. Just as you reflect on the year and how things have tracked through the year, what has gone better than maybe you had anticipated when you set the guidance?

Ajai Bambawale: Yes. Let me walk you through what's going on in -- on the book. And as I said, the results of the bank are strong. They're actually better than our stated range, and I'll elaborate on why that's the case. If you look at delinquency levels across the bank, I'd call them stable, they're slightly higher on RESL, and you'll actually see them in the numbers. If you look at formations and GILs, they're down. If you look at impaired PCLs, they're down pretty much across all of our non-Retail portfolios, are slightly up for some of the consumer asset classes.

But if I answer the heart of your question, how come you're seeing all this good performance, I think it's a combination of factors, okay? You've got economic resilience. Economies have adapted better than we originally thought. You've got businesses and consumers that have also been resilient, and they have also adapted to the new environment. And on top of that, if you lay on TD's discipline and our underwriting standards, that combination gives you very good results, and that's what you're seeing this quarter.

Operator: Mike Rizvanovic with Scotiabank, please go ahead.

Mehmed Rizvanovic: Maybe just sticking with Ajai. Just wanted to maybe follow up on the credit question. And I'm certainly not trying to [ pin ] you on timing, but it seems like potentially, we're at the point where we're close to reaching that sort of peak credit losses in this current cycle. And I'm just wondering, like you've had some really good progress in the last couple of quarters. And is there anything anomalous in terms of what TD might be doing? Is it something in terms of being more proactive in managing risk? Can you just talk about maybe some of the sort of qualitative stuff that you've done the last little while?

Ajai Bambawale: I'd really bring it back to discipline, okay? If you remain disciplined through the cycle, it shows up in your results, and we've been very disciplined. And we've also been prudent, and I tried to bring that point out in my prepared remarks, and you just think about tariffs, okay? Right out of the gate, we went and said, where could this tariff story go? How do we build reserves? Now I know there's a lot of uncertainty, but we tried to get it right the first time. And that's what we've done with tariffs. Again, it's evolving, but we think we were prudent upfront. So it's a combination of factors, I'd say, that's leading to our results being strong.

And then just on peak, I mean, it's very difficult to call a peak. In many ways, I think we're past the peak. If you go back to 2025, you'll find Q2 '25 was a peak for total PCL at 58 bps. If you look at Q1 '25, our impaireds were 50 basis points. So in some ways, we are past the peak, okay? And I think with -- the numbers have come down. The question really is where do we go from here? And when will there be a new peak? And we're working on our forecast for next year, and we'll be coming back to you next quarter.

But the factors my team will consider, one is the strength of the portfolio, which we're calling out, but we'll also take into consideration the uncertainties, whether it's trade, whether it's the Middle East conflict or other factors. And again, on tariffs, we are already in a pretty good spot. So more to come next quarter, but I do feel we're very well positioned. Our reserves are 96 bps. As I said and emphasized, that includes $500 million for tariffs. Hope that's helpful to you.

Mehmed Rizvanovic: Yes. That's very helpful. And then just a quick one for Sona. Just in terms of the mortgage growth in the quarter or I guess it was more flattish this quarter sequentially. Can you maybe just talk about the spread dynamic? Is this just the market getting a bit more competitive and you're looking to protect spreads? Or is there something else sort of driving that flat result?

Sona Mehta: Yes, happy to take you a little deeper. So overall, I would say we've had a productive quarter in the RESL business. As you've heard me say before, we're really anchored on this notion that our strategy is built around speed and specialization, and we see that working. On the speed side, just briefly, we fully scaled our first RESL agentic AI capability, and it's absolutely delivering faster decisions. And so what we've been able to do is reinvest and build out our distribution network, adding more in-branch home borrowing specialists and building out our mobile mortgage specialist team over the past year. What's really excellent to see is, together, they've achieved record proprietary originations this quarter.

What I really love is that we haven't had to compromise on profitability. And so to the heart of your question, in fact, it's been quite the opposite. What we've been able to do is maintain disciplined pricing in spite of what's been a competitive market. And so you see this fueling both our NIM expansion and to the broader segment strategy, what you see is leading sequential NIM expansion, NII and PTPP growth. So I think we're sticking to our knitting. We're saying we are doing what we said we would, speed, specialization to drive profitable growth. I couldn't be prouder of the team's hard work.

Mehmed Rizvanovic: Okay. And then just on the spread, industry level, are you seeing spreads compress when you mentioned a bit more competition? Has it led to that dynamic to some degree?

Sona Mehta: What we've been able to do, because we have maintained discipline in pricing, we've been able to expand margins. So in spite of what's been the competitive summer market, so I would say we've been able to balance both, deliver margin expansion as well as RESL volume growth.

Operator: David Konrad with KBW, please go ahead.

David Konrad: I wanted to follow up on the strong quarter in the U.S. Banking group. The one area that really beat my expectations was the fee income, up pretty strongly quarter-on-quarter. And it's been a pretty volatile number, even negative first half of 2025. So maybe what drove the strong results this quarter and maybe the outlook for the fee income in the U.S. business?

Leo Salom: And Dave, are you talking about the U.S. Banking segment? Or are you talking about U.S. fees in the wholesale bank?

David Konrad: The U.S. Banking segment, the $584 million, yes.

Leo Salom: So maybe a couple of things. From a fee-based line perspective, the numbers you're seeing are probably actually a little understated in that, with the Nordstrom agreement that we signed, we actually saw a geography shift in some of the revenue recognition from the partnership from the fee line into NII, which trimmed the headline number you're seeing. To your point, we are seeing in our core fee line businesses, both in terms of retail, in terms of service fees and our core operating fees in retail as well as in our transactional banking areas for the commercial side, we are seeing mid-single-digit growth rates in terms of overall fee income on a year-on-year basis.

I'd probably -- if there's one area that I would highlight is really standing out for us is the partnership between the U.S. bank and the wholesale bank. So if you look at our mid-market business, which has had a really strong run, total balances are up 15%, commitments this quarter were up 9%, our transactional fee revenues in that subsegment were up 28%. And I'd say a portion of that, a very important portion is the synergy that we're creating between ourselves and being able to afford our corporate clients the ability to avail themselves of broader debt, equity, capital market capability and M&A advisory capabilities in the wholesale bank.

And I think we've just started to see the power of that model. I'm incredibly encouraged about what that's going to mean in 2027 and beyond.

Operator: Paul Holden with CIBC, please go ahead.

Paul Holden: Another question for Leo. So I don't think the opening of 100 new U.S. stores is necessarily new as you highlighted. But maybe you can give us some comfort around how that's going to impact, I guess, really PTPP or earnings growth over the next 2 years, right? Like it's roughly expanding the branch footprint by 10%. So it's significant. We all know you open a branch, day 1, it results in expenses with no revenue. So just trying to think through that and how that could impact, again, really the PTP growth over the next couple of years?

Leo Salom: Paul, let me just give you a sense of some of the areas that we're going to be investing in because I think it speaks to the optimism we have to continue to consolidate ourselves in the U.S. There's two or three pockets of significant investments we've got planned. The first is the stores. Clearly, we see that as an important part of expanding our footprint and ensuring that we are located in the demographically attractive areas within our existing MSAs. It's critically important as markets evolve that we remain relevant, and I think this is an important part of that equation.

Number two, we've been -- we were very clear on Investor Day that we want to increase our distribution coverage. That means more retail bankers, it's more financial advisers, selectively more mortgage officers. And in the commercial banking space, more vertically specific bankers supporting our specialized go-to-market strategies. In total, if I add that entire complement, we're probably going to add another 450 bankers to our existing ranks. That's a significant increase in terms of our overall footprint. And then finally, you've heard us talk about at Investor Day around our product strategy, the focus on core banking, on cards, and our Commercial Banking business. I say that because we're being purposeful in the investments we're making.

But likewise, as you heard us talk about at Investor Day, we are intending to self-fund a significant portion of that with our productivity agenda and the moderation in our G&C expenses over the course of 2027. So in many ways, if I just -- we'll give you more detailed guidance in the fourth quarter, but I fully intend to be able to deliver an expense profile -- an expense growth profile in 2027, despite the increased investment in growth initiatives that is lower than what we have posted in 2026.

So we are being very thoughtful about how to invest, how to accelerate our growth rate, but doing it in a responsible way and managing it within our existing expense envelope.

Raymond Chun: And Paul, maybe I can jump in for one second. And just at the enterprise level, but also what carried through to the business line, you're seeing the discipline that we've put on structural cost reduction across our organization. And we had a goal of $900 million in structural cost reduction this year. We're well ahead of that pace. The $2 billion to $2.5 billion that we had planned for over the MTO, we're significantly on track to get there sooner and certainly see upside on the $2 billion to $2.5 billion.

And so as you think -- as we said back in Investor Day, one of the things that we're trying to do is as we take the structural cost and the unit cost methodology of running this organization, we can actually take out enough cost that will allow us to fuel, in a flywheel effect, the right investments and still deliver from a PTPP, still deliver from an ROE perspective, so it can fund the future while delivering the discipline that we want on positive operating leverage and all of the financial metrics. And so you're seeing that actually come to fruition.

It's actually happening faster than what we had anticipated when we did Investor Day a year ago, but that structural cost reduction and the discipline we have around that is absolutely critical. It's an area of focus for every single leader at TD Bank, and you're seeing that play through both in expense discipline and hopefully you see it in our efficiency and operating leverage, and we'll continue that as we move forward in making some of these investments.

Paul Holden: Very, very helpful. And again, actually, very impressive that you can grow your store count by 10% without higher expense growth.

Operator: There are no more questions in the queue at this time. I would now like to return the call to Mr. Raymond Chun for closing remarks.

Raymond Chun: Thank you, operator, and thank you, everyone, for joining us today. We appreciate your questions and comments. In Q3, we delivered record earnings powered by robust revenue growth, strong credit performance and structural cost reduction. ROE was 16%, up 280 basis points year-over-year. I'm proud of our performance this quarter, and I'm confident TD will continue to deliver for its stakeholders. I look forward to connecting with you all again at the year-end. Thank you.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.