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Analyst PresentationQ2 1998 Performance
May 28, 1998 Dan Dan MarinangeliMarinangeliSenior Vice PresidentSenior Vice President
BANKFINANCIALGROUP
BANKBANKFINANCIALFINANCIALGROUPGROUP
Quarter Highlightsn Strong Revenue Growth - up 24% vs Q2/97n Other Income higher than Net Interest Incomen EPS at $1.00 up 28 % over Q2/97n Dividend to increase 2 cents in Q3/98 (2nd increase this year)n Credit losses forecast remains at $250 million for 1998.n Tier 1 ratio of 7.1% and total capital ratio of
10.7%n Unrealized securities gains at $ 965 million
EPS Growth:Outperforming
90
100
110
120
130
140
150
Q2/96 Q3/96 Q4/96 Q1/97 Q2/97 Q3/97 Q4/97 Q1/98 Q2/98
TD 4 Bank Peer
Notes: Data has been adjusted to exclude extraordinary items. Q2/98 peer data based on 3 banks.
Scale of 100
90
100
110
120
130
140
150
Q2/96 Q3/96 Q4/96 Q1/97 Q2/97 Q3/97 Q4/97 Q1/98 Q2/98
* Cash basis measurement is based on excluding goodwill expense. Data has been also been adjusted to exclude extraordinary items.
EPS Growth: Cash Basis *Scale of 100
ROE Cash Basis *
14
15
16
17
18
19
20
21
Q2/96 Q3/96 Q4/96 Q1/97 Q2/97 Q3/97 Q4/97 Q1/98 Q2/98
* Cash basis measurement is based on excluding goodwill expense. Data has been also been adjusted to exclude extraordinary items.
%
Net Common Equity to Risk-Weighted Assets: Rank #1
5.0
5.5
6.0
6.5
7.0
7.5
Q2/96 Q3/96 Q4/96 Q1/97 Q2/97 Q3/97 Q4/97 Q1/98 Q2/98
TD 4 Bank Peer
%
Note: Q2/98 peer data based on 3 banks.
General Reserves & Securities Surplus
0.62
1.09 1.051.17
1.37
Q2/97
Q3/97
Q4/97
Q1/98
Q2/98
% of RWA
630
1,062 1,0761,178
1,412
Q2/97
Q3/97
Q4/97
Q1/98
Q2/98
$ Millions
Q2 Peer Average of 3 banks: 1.02%
Strong Asset Quality
0.0
0.4
0.8
1.2
1993 1994 1995 1996 1997 Q1/98 Q2/98
TD 4 Bank Peer
% Ratio of PCL to Loans & BAs
Notes: Q2/98 peer data based on 3 banks. Excludes special general provisions
Margin Contribution
Basis Points Q2/97 Q1/98 Q2/98
1. Earning Assets - Excl.securities 155 152 154 and reverse repos
2. Deposits and equity 136 158 1633. Margin from intermediation 291 310 317
4. Effect of reverse repos , securities, gap earnings, other (51) (89) (110)
5. Total as reported 240 221 207
Expense Rationalization Q2/Q2 Q2/Q1
Reported Increase 20 % 8 %Less:n Investment Banking 11 5
n Wealth Management (base) 10 3
n Pont & Rivkin,Croll, Smith goodwill write-offs (4) (3)
n Other performance driven compensation - 1
Base Bank 3 % 2 %
Key Goals - How Did We Do?
ROE 16 -18% 17.3%
PCL/Loans & BAs 30 bps 22 bps
Efficiency - excl. goodwill 58% 61.0%
Customer service index 82.5 79.9
Goals Q2/98
Key Strategies – Update
Invest in wealthmanagement
business
11
Repositionretail banking
network
22
Build investmentbanking business
– TD Securities
33
Strategy #1Invest in WealthManagement
Wealth Management
224
337
Q2/97 Q2/98
Revenue$ millions
28
43
Q2/97 Q2/98
Net Income$ millions
Excluding Pont acquisition costsWealth Management
Wealth ManagementNet Income as % of Total
10.4%
14.0%
Q2/97 Q2/98
Wealth Management
Excluding Pont acquisition costs
0
50
100
150
200
250
300
350
Q2/96
Q3/96
Q4/96
Q1/97
Q2/97
Q3/97
Q4/97
Q1/98
Q2/98
TDIM
Mutual Funds
Evergreen/ Private Client
DiscountBrokerage
$ millions
Wealth Management
Wealth ManagementRevenue by Component
Mutual Funds
$6
$9
$12
$15
Q2/96 Q4/96 Q2/97 Q4/97 Q2/9816%
17%
18%
19%
20%
Volume Bank Mkt. Share
$ billionsWAF: 1.02% 1.05% 1.09% WAF: 1.02% 1.05% 1.09% 1.12% 1.16% 1.12% 1.16% 1.19% 1.19%
Wealth Management
0
20
40
60
80
100
120
140
Q2/96 Q3/96 Q4/96 Q1/97 Q2/97 Q3/97 Q4/97 Q1/98 Q2/98
TDIM
Mutual Funds
Evergreen/ Private ClientDiscountBrokerage
Wealth Management AssetsUnder Administration
$ billion
Wealth Management
Strategy #2Reposition RetailBanking Network
Retail Bank Network
114
93
Q2/97 Q2/98
Net Income $ millions
24%
18%
Q2/97 Q2/98
ROE %
Retail Bank
Residential Mortgages$ billions
$20
$25
$30
$35
Q2/96 Q4/96 Q2/97 Q4/97 Q2/9813%
14%
15%
Volume Mkt. Share
Insured mortgages
Q2/98: 70%
Q2/97: 42%
Note: Data includes securitized mortgages.
Retail Bank
Personal Loans & Cards
$6
$9
$12
$15
$18
Q2/96 Q4/96 Q2/97 Q4/97 Q2/9810%
12%
14%
Volume Mkt. Share
$ billions
Note: Data includes securitized loans.Retail Bank
Personal Deposits
$35
$40
$45
$50
Q2/96 Q4/96 Q2/97 Q4/97 Q2/9812%
13%
14%
Volume Mkt. Share
$ billions
Retail Bank
Strategy #3Build InvestmentBanking Business
$183
$346
Q2/97 Q2/98
Investment BankingRevenue$ millions
Investment Banking
Investment Banking
$42
$85
Q2/97 Q2/98
Net Income$ Millions
22%
30%
Q2/97 Q2/98
ROE%
Investment Banking
Investment Banking
162%
30%
TD 3 Bank Peer
Other Income Growth vs Q2/97
Investment bank revenue includes underwriting, brokerage, capital market fees, and trading income
Investment Banking
Presentation To Analysts
Frank J. PetrilliMay 28, 1998
Waterhouse Investor Services, Inc.
Waterhouse Investor Services, Inc.
Agenda
n Strength of the Franchise Measuresn Kennedy Cabot/Jack White Integrationn Branch Expansionn Electronic Brokeragen Dow Jones Index Fund
Waterhouse Investor Services, Inc.Average New Account Openings Per Day
0200400600800
10001200140016001800
4th Qtr '96
1st Qtr '97
2nd Qtr
'97
3rd Qtr '97
4th Qtr'97
1st Qtr '98
2nd Qtr
'98
Excluding Kennedy Cabot Including Kennedy Cabot
Waterhouse Investor Services, Inc.Total Accounts (in Thousands)
0
200
400
600
800
1000
1200
4th Qtr '96
1st Qtr '97
2nd Qtr '97
3rd Qtr '97
4th Qtr '97
1st Qtr '98
2nd Qtr '98
Excluding Kennedy Cabot Including Kennedy Cabot
Waterhouse Investor Services, Inc.Average Number of Trades Per Day
0
10000
20000
30000
40000
50000
4th Qtr '96
1st Qtr '97
2nd Qtr '97
3rd Qtr '97
4th Qtr '97
1st Qtr '98
2nd Qtr '98
PC Trades Touch Tone Trades Agent Trades Excluding KCC Kennedy Cabot
Waterhouse Investor Services, Inc.Customer Equity (in USD Billions)
$0.00
$5.00
$10.00
$15.00$20.00
$25.00$30.00$35.00
$40.00
$45.00
4th Qtr '96
1st Qtr '97
2nd Qtr '97
3rd Qtr '97
4th Qtr '97
1st Qtr '98
2nd Qtr '98
Excluding Kennedy Cabot Including Kennedy Cabot
Waterhouse Investor Services, Inc.Money Market Balances (in USD Billions)
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
4th Qtr '96
1st Qtr '97
2nd Qtr '97
3rd Qtr '97
4th Qtr '97
1st Qtr '98
2nd Qtr '98
Excluding Kennedy Cabot Including Kennedy Cabot
Waterhouse Investor Services, Inc.Margin Loans (in USD Millions)
$0
$500
$1,000
$1,500
$2,000
$2,500
4th Qtr '96
1st Qtr '97
2nd Qtr
'97
3rd Qtr '97
4th Qtr '97
1st Qtr '98
2nd Qtr
'98
Excluding Kennedy Cabot Including Kennedy Cabot
Waterhouse Investor Services, Inc.Comparison to Schwab
Factor by which Schwab is larger than Waterhouse
0
1
2
3
4
5
6
7
8
1st Qtr '97* 1st Qtr '98*0
1
2
3
4
5
6
7
8
1st Qtr '97* 1st Qtr '98*
# New Accounts Total # of Accounts
* Calendar Quarter Basis
Waterhouse Investor Services, Inc.Comparison to Schwab
Factor by which Schwab is larger than Waterhouse
0
1
2
3
4
5
6
7
1st Qtr '97* 1st Qtr '98*0
1
2
3
4
5
6
7
1 Qtr '97* 1st Qtr '98*
Total Trades Total Revenue Trades
* Calendar Quarter Basis
Waterhouse Investor Services, Inc.Comparison to Schwab
Factor by which Schwab is larger than Waterhouse
0
2
4
6
8
10
12
14
16
1st Qtr '97* 1st Qtr '980
2
4
6
8
10
12
14
16
1st Qtr '97* 1st Qtr '98*
Customer Assets - All Customers Customer Assets - PC Customers
* Calendar Quarter Basis
N/A
Waterhouse Investor Services, Inc.Comparison to Schwab
Factor by which Schwab is larger than Waterhouse
0
1
2
3
4
5
6
7
8
9
1st Qtr '97* 1st Qtr '98*0
1
2
3
4
5
6
7
8
9
1st Qtr '97* 1st Qtr '98*
Total Revenues Pre-Tax Income
* Calendar Quarter Basis
Waterhouse Investor Services, Inc.
Kennedy Cabot Integrationn KCC Clearing conversion completen KCC Integration plan in progress
- Money Market Funds (June ‘98)- Asset Management Account (June ‘98)- Touch-tone Trading (July ‘98)- PC Trading (Oct ‘98)
n Jack White deal to close May 29th
Waterhouse Investor Services, Inc.
Branch Expansionn Currently at 131 branchesn On track for 200 branches by year 2000n Business Development Offices pilot continuesn Asian/Hispanic branches opened
Waterhouse Investor Services, Inc.
Electronic Brokeragen 3rd largest electronic brokern 250,000 customers enabled for PC tradingn Enhanced version of webbroker launchedn Tripled capacity from late Octobern Morningstar mutual fund reports on-linen Expanded linkages (Quicken, Prodigy,
Microsoft Money)
Waterhouse Investor Services, Inc.
Dow Jones Index Fundsn Effective March 16th with SECn Marketing launch underway
Selected Asian ExposuresGross Outstanding Loans and other Credit Exposures
Millions of Canadian Dollars April 30, 1998
State Owned PrivateCountry Commercial Commercial Total TOTAL
Banks Banks Corporate
Dec 31/97 Apr 30/98 Dec 31/97 Apr 30/98 Dec 31/97 Apr 30/98 Dec 31/97 Apr 30/98
Indonesia 200 195 137 107 183 171 520 473
Malaysia 0 0 3 2 0 0 3 2
Philippines 19 0 16 7 22 34 57 41
South Korea 124 149 118 20 0 0 242 169
Thailand 23 1 63 27 7 7 93 35
Total 366 344 337 164 212 212 915 720
BANK FINANCIAL GROUP