Toronto-Dominion Bank at RBC Capital Markets Canadian Bank CEO Conference Transcript

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

Question: Darko Mihelic - RBC Capital - Analyst : So I think there's an awful lot of things we can -- ground we can cover today. I think I want to absolutely start with one of the things we heard in the fourth-quarter call was that you're going to do a strategic review. And in that strategic review, you made the comment that all things are on the table. So I want to start off there and think about what does that mean. So for example, would you consider an exit of the US business? Would you consider a sale of the Schwab stake? Is anything like that being considered and/or probabilistic?

Question: Darko Mihelic - RBC Capital - Analyst : Have you determined anything yet?

Question: Darko Mihelic - RBC Capital - Analyst : And when we think about the deposit program that you have with Schwab, how critical is it for you? I mean, it's going to come due in 2036, I believe. Is that something that you'd like to renew? Is it some -- is it a business that is core, or is that also being considered?

Question: Darko Mihelic - RBC Capital - Analyst : And so as a result of the asset cap, the review there, I've received some concern from investors and say, look, will TD immediately try and match the type of EPS growth that they've done in the past? Will they try and work hard towards a relatively high ROE? And in order to do that, could that involve a very aggressive push in Canada in any shape, form, or fashion? So how would you respond to that sort of concern that some investors have that you might go a little aggressive in Canada?

Question: Darko Mihelic - RBC Capital - Analyst : Okay. Thank you for that. And I think I wanted to just come back to some of those things. But before I do, let me just -- I mean, we could sit here and dance around the topic of AML, but let's not dance around it. Let's talk about it a little bit.

Question: Darko Mihelic - RBC Capital - Analyst : So I wanted to give you the opportunity actually to talk about the AML remediation program. And maybe a couple of things that I think the audience would like to hear, first and foremost, is what can you share about the efforts so far? I'm thinking about hiring, technology, monitorship. What is it that you can share so far on the program? And then the second part of the question is I have a concern, as many do, that although you've outlined these costs, that these costs can creep as time goes on. So maybe you can talk about what you've done so far and then address the concept that there's going to be potentially some cost creep here.

Question: Darko Mihelic - RBC Capital - Analyst : Okay. Great. Thank you for the detail. And so one last question before I leave this whole topic. But it's one that as I sat through and I went through all of the details of the DOJ and the consent order and so on, there was one revelation in there that stuck with me, which was one of the things that you've done over a long period of time in the US was you had kept your AML budget flat over a very long period of time. And that was considered to be a fairly big breach of what they were looking for. But from my point of view, I thought to myself, well, if you did it for AML, it's possible you could be doing this elsewhere. It's possible that this might actually be a cultural thing at TD and that you might be suppressing budgets everywhere. So maybe you can speak to the decision-making process that led to suppressing that budget and speak to -- and I don't know how we can really dive into this, but speak to whether or not this is happening elsewhere at TD? 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: Darko Mihelic - RBC Capital - Analyst : Okay. Great. Thank you for that. Just one thing that popped into my mind, though, as you were giving the answer on talent and external benchmarking. From my point of view, you could have had the most talented person in the world sitting in that chair. But if you said, no, hold your budget flat, that person would hold their budget flat. So I would think that there also needs to be some sort of structural change so that the very talented people at AML have the freedom with which to increase the budget. What would your response be to that?

Question: Darko Mihelic - RBC Capital - Analyst : Okay. I wanted to shift gear now back to Canada.

Question: Darko Mihelic - RBC Capital - Analyst : You spoke about your strength in Canada. And we had an interesting discussion with Dave earlier about the renewal situation and interest rates dropping, and your bank has a very ambitious goal for mortgages in the country. So maybe you can talk a little bit about the state of the mortgage market as you see it, and what it is that TD will be doing here in the next year or two in the face of the great renewal.

Question: Darko Mihelic - RBC Capital - Analyst : And I'm going to try and quickly jam in some more questions here as we're running out of time. I promised I'd go to the floor, so I'll stick to my promise. I have a couple of questions on credit quality, but the questions from the floor, the first one that has been upvoted is, under an asset cap does the Schwab IDA agreement have less value to TD?

Question: Darko Mihelic - RBC Capital - Analyst : Okay. And the second question, I promise to do at least two from the floor. So how does TD -- this is an interesting one because I'm going to listen intently to your answer on this one. How does TD combat the record discount its shares are trading relative to peers?

Question: Darko Mihelic - RBC Capital - Analyst : Okay. I got time to sneak in one more question. So I think the -- you spoke earlier about you don't have to shift anything risk-wise. You don't have to go to the risk curve. So -- and I think of that as meaning, okay, PCLs, right? That's my immediate focus. 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: Darko Mihelic - RBC Capital - Analyst : Okay. That was a great discussion, Ray. So as always, I'm going to give you the last few minutes of the floor to leave us with the key messages that you'd like to leave us with.

Question: Darko Mihelic - RBC Capital - Analyst : All right. Great. Thank you very much. Thank you. DISCLAIMER Refinitiv reserves the right to make changes to documents, content, or other information on this web site without obligation to notify any person of such changes. In the conference calls upon which Event Transcripts are based, companies may make projections or other forward-looking statements regarding a variety of items. Such forward-looking statements are based upon current expectations and involve risks and uncertainties. Actual results may differ materially from those stated in any forward-looking statement based on a number of important factors and risks, which are more specifically identified in the companies' most recent SEC filings. Although the companies may indicate and believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate or incorrect and, therefore, there can be no assurance that the results contemplated in the forward-looking statements will be realized. THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS. IN NO WAY DOES REFINITIV OR THE APPLICABLE COMPANY ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY EVENT TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.