Toronto-Dominion Bank Corporate Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Paul Holden - CIBC World Markets Inc. - Analyst : Thank you. Good morning. Ray, a number of times during your prepared remarks, you referred to organic opportunities. But then as part of the strategic review, you mentioned business mix, capital allocation. That, to me, suggests there's the possibility of acquisitions. Is that also a potential use of the additional capital?

Question: Paul Holden - CIBC World Markets Inc. - Analyst : That's great. And then just as you think about that focus on organic and a lower priority on acquisitions, I know you kind of outlined the thought process there. But one additional question on that. Like, does the ROE and sort of TD's prior ROE objectives versus where it sits today, does that play into the decision making as well, i.e., organic growth tends to be more ROE accretive than acquisitions?

Question: Paul Holden - CIBC World Markets Inc. - Analyst : Okay. Got it. And last quick one for me because it's a question I've received a number of times in the last month or two, is just with respect to regulatory approval on the share buyback. Is there any kind of regulatory risk here of not getting approval to execute on this? So my own assumption is you have all the required regulatory approvals in place. You're just waiting on TSX.

Question: Paul Holden - CIBC World Markets Inc. - Analyst : Okay. That's it for me. Thank you.

Question: Doug Young - Desjardins Securities Inc. - Analyst : Hi. Good morning. Just following on the ROE discussion, I mean, that the deal is dilutive to cash ROE, and I'm just curious if you agree with that. But -- and I know you haven't put out updated targets yet, but does this mean that the ROEs for TD structurally are going to be lower going forward? Or why shouldn't we think that would be the case?

Question: Doug Young - Desjardins Securities Inc. - Analyst : Okay. And then the other question I often get is it looks like the allocation of capital is going to be more pointed from an organic perspective into Canada, the capital markets. You mentioned that as well. But into Canada, I would assume that's Canadian banking but also potentially property and casualty insurance. And can you talk a little bit about the strategies there? I think you kind of did a little bit there. And then, yeah, you combat the view that you're going to be aggressive? Because that's what I hear often, is you're going to go aggressively into -- after these two markets, which inevitably could hurt margins.

Question: Doug Young - Desjardins Securities Inc. - Analyst : Appreciate the color. Thank you.

Question: Gabriel Dechaine - National Bank Financial - Analyst : Yeah. I got a similar line of questioning. Well, let's start with the easy ones. The buyback, what is your intention? I know regulatory approvals required, but would you expect to be active starting Q2?

Question: Gabriel Dechaine - National Bank Financial - Analyst : And you said -- I didn't catch what you said in your comments, Kelvin. Early calendar 2026 is when you expect it to be done?

Question: Gabriel Dechaine - National Bank Financial - Analyst : Okay. And then the commitment, I guess, is $8 billion, not a percentage share of stock, right? It's -- because obviously, that percent can change depending on what your stock price does.

Question: Gabriel Dechaine - National Bank Financial - Analyst : Got it. Okay. And then I do want to dig into this ROE, on the short-term drag, long-term upside, Ray. What's -- I can get my head around expanding the wholesale business. It's more balance sheet intensive, more lending and hiring teams, whatever. What I'm not quite, I guess, understanding is the organic growth potential in the Canadian business. We're talking about a lot of money here that you're going to be sitting on. How much do you need to actually fire up that organic growth engine? It seems like a pretty big investment.

Question: Gabriel Dechaine - National Bank Financial - Analyst : Got it. Okay. So just your -- the balance sheet elements of this organic growth strategy, capital for loans, et cetera, maybe some restructuring of the business, a variety of Canada, US, whatever. And also maybe more restructuring of the US balance sheet. Because you did one last year. There was some upfront cost to that capital hit, but then some benefit to that subsequently. Is that -- would those three be kind of in the plans?

Question: Gabriel Dechaine - National Bank Financial - Analyst : Okay. And then just quickly, the tax, what tax are you paying on this sale?

Question: Gabriel Dechaine - National Bank Financial - Analyst : Okay. And that's at what percentage?

Question: Gabriel Dechaine - National Bank Financial - Analyst : Okay. Well, that's pretty cool. All right. Take it easy. Thanks.

Question: Meny Grauman - Scotiabank GBM - Analyst : Hi. Good morning. I'm just trying to better understand that 116 basis points of CET capital net of buybacks that you're creating. And along the lines of Gabe's question, just trying to understand if I'm thinking about it correctly, I guess the first question is what minimum CET1 ratio are you managing to now?

Question: Meny Grauman - Scotiabank GBM - Analyst : Would 13% be a reasonable assumption?

Question: Meny Grauman - Scotiabank GBM - Analyst : Okay. And then in terms of sort of headwinds to your CET1 capital ratio, is there anything there that you're contemplating that maybe we're not fully appreciating? I guess, in the previous answer, you talked about potential room for restructuring. But is there anything else that you could highlight in terms of potential downsides or no downside to CET1 ratio that you're factoring in to your calculations as you hold back 116 basis points of this deal?

Question: Meny Grauman - Scotiabank GBM - Analyst : And then just in terms of the ability to generate organic capital on a quarterly basis, when I look at this, it would seem that maybe there's a signal here that we should expect that ability to generate excess capital on a quarterly basis to be lower or maybe even a lot lower going forward, at least temporarily. Would you be able to comment on that in terms of how you see that going forward?

Question: Meny Grauman - Scotiabank GBM - Analyst : Okay. Thank you very much.

Question: Sohrab Movahedi - BMO Capital Markets - Analyst : Okay. Thank you. Ray, I wanted to start just maybe if you could explain to us how did you decide on the size of the buyback. Why $8 billion? Why not $6 billion or $10 billion? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Sohrab Movahedi - BMO Capital Markets - Analyst : Yes. So if I can just double click on that. I mean, I think, for me, anyway, the obvious second question is, well, why now? And my working assumption is that you must have already identified redeployment -- organic, I guess, redeployment opportunities for the balance of the money that you're not putting towards buybacks. Am I right in that assumption? And would you be able to compare and contrast the potential growth and the speed with which you could be able to deploy organically this excess capital versus having retained the equity investment?

Question: Sohrab Movahedi - BMO Capital Markets - Analyst : I appreciate that. And that's very helpful, Tim. And I don't know who can take this one. But is it then fair to assume that the buyback program, once ratified and approved by the TSX and the regulator, there is no price sensitivity on this? You are intended to complete it within 12 months? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Sohrab Movahedi - BMO Capital Markets - Analyst : Yeah. Thank you very much. And Ray, I didn't mean to front run the strategic review, but you've been so open and forthright with it. It just feels like we're talking about it even if we don't have the details. Thank you very much and congratulations on getting this done.

Question: Lemar Persaud - Cormark Securities Inc. - Analyst : I want to ask about the deposit agreement. Obviously, it's been extended. I think it's what, now 2034, but I'll take that, anyways. Does this transaction affect that in any way? I suspect the answer is no. But then what are the longer-term implications when this thing comes up for renewal now that you no longer have an equity ownership in Schwab?

Question: Lemar Persaud - Cormark Securities Inc. - Analyst : Okay. So it doesn't -- we shouldn't read this as TD is going to become more aggressive on deposit gathering in the near term because of this -- the sale of the ownership. That's the incorrect conclusion here?

Question: Lemar Persaud - Cormark Securities Inc. - Analyst : Okay, thanks. And then just a different type of question here. How long would you guys give yourself to deploy that additional $12 billion before looking to extend the buyback? Like would it be fair to suggest that if we're sitting here next year, TD has done the 100 million. And there's still any leftover of that $12 billion, we should just assume that you're going to go out there and continue to buy back stock. Is that a fair assumption?

Question: Lemar Persaud - Cormark Securities Inc. - Analyst : Okay. That's fair. Okay. That's it for me. Thank you.