The Toronto-Dominion Bank 40F 2024 Annual report | TD Filing

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 1

CONSOLIDATED FINANCIAL STATEMENTS

Page

Management’s Responsibility for Financial Information

Report of Independent Registered Public

Accounting Firm – Public Company Accounting

Oversight Board Standards (United States)

Report of Independent Registered Public

Accounting Firm – Internal Control over

Financial Reporting

Consolidated Financial Statements

Consolidated Balance Sheet

Consolidated Statement of Income

Consolidated Statement of Comprehensive

Income

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to Consolidated Financial Statements

Note 1

Nature of Operations

Note 2

Summary of Material Accounting Policies

Note 3

Significant Accounting Judgments, Estimates,

and Assumptions

Note 4

Current and Future Changes in Accounting

Policies

Note 5

Fair Value Measurements

Note 6

Offsetting Financial Assets and Financial Liabilities

Note 7

Securities

Note 8

Loans, Impaired Loans, and Allowance for

Credit Losses

Note 9

Transfers of Financial Assets

Note 10

Structured Entities

Note 11

Derivatives

Note 12

Investment in Associates and Joint Ventures

Note 13

Significant Transactions

Note 14

Goodwill and Other Intangibles

Note 15

Land, Buildings, Equipment, Other Depreciable

Assets, and Right-of-Use Assets

Note 16

Other Assets

Note 17

Deposits

Note 18

Other Liabilities

Note 19

Subordinated Notes and Debentures

Note 20

Equity

Note 21

Insurance

Note 22

Share-Based Compensation

Note 23

Employee Benefits

Note 24

Income Taxes

Note 25

Earnings Per Share

Note 26

Provisions, Contingent Liabilities, Commitments,

Guarantees, Pledged Assets, and

Collateral

Note 27

Related Party Transactions

Note 28

Segmented Information

Note 29

Interest Income and Expense

Note 30

Credit Risk

Note 31

Regulatory Capital

Note 32

Information on Subsidiaries

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 2

FINANCIAL RESULTS

Consolidated Financial Statements

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL

INFORMATION

The management of The Toronto-Dominion Bank and its subsidiaries (the “Bank”)

is responsible for the integrity, consistency, objectivity,

and reliability of the

Consolidated Financial Statements of the Bank

and related financial information as

presented. International Financial Reporting

Standards as issued by the

International Accounting Standards Board,

as well as the requirements of the

Bank Act

(Canada),

and related regulations have been applied

and management has

exercised its judgment and made best estimates

where appropriate.

The Bank’s accounting system and related internal

controls are designed, and supporting procedures

maintained, to provide reasonable assurance

that

financial records are complete and accurate,

and that assets are safeguarded against

loss from unauthorized use or disposition.

These supporting procedures

include the careful selection and training

of qualified staff, the establishment of organizational

structures providing a well-defined division

of responsibilities and

accountability for performance, and the

communication of policies and guidelines

of business conduct throughout the Bank.

Management has assessed the effectiveness of the

Bank’s internal control over financial reporting

as at October 31, 2024,

using the framework found in

Internal Control – Integrated Framework issued

by the Committee of Sponsoring Organizations

of the Treadway Commission 2013 Framework. Based upon

this

assessment, management has concluded

that as at October 31, 2024,

the Bank’s internal control over financial reporting

is effective.

The Bank’s Board of Directors, acting through the

Audit Committee, which is composed entirely

of independent directors, oversees management’s

responsibilities for financial reporting. The

Audit Committee reviews the Consolidated

Financial Statements and recommends them

to the Board for approval.

Other responsibilities of the Audit Committee

include monitoring the Bank’s system of internal

control over the financial reporting process

and making

recommendations to the Board and shareholders

regarding the appointment of the external

auditor.

The Bank’s Chief Auditor, who has full and free access to the Audit

Committee, conducts an extensive program

of audits. This program supports the

system of

internal control and is carried out by a professional

staff of auditors.

The Office of the Superintendent of Financial

Institutions Canada, makes such examination

and enquiry into the affairs of the Bank as deemed

necessary to

ensure that the provisions of the

Bank Act (Canada)

, having reference to the safety of the depositors,

are being duly observed and that the Bank

is in sound

financial condition.

Ernst & Young LLP,

the independent auditors appointed by

the shareholders of the Bank, have audited

the effectiveness of the Bank’s internal control over

financial reporting as of October 31, 2024, in addition

to auditing the Bank’s Consolidated Financial

Statements as of the same date. Their

reports, which

expressed unqualified opinions, can be found

on the following pages. Ernst & Young LLP have full and free access

to, and meet periodically with, the Audit

Committee to discuss their audit and

matters arising therefrom, such as, comments

they may have on the fairness of financial

reporting and the adequacy of

internal controls.

Bharat B. Masrani

Kelvin Tran

Group President and

Group Head and

Chief Executive Officer

Chief Financial Officer

Toronto, Canada

December 4, 2024

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TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

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REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of The Toronto-Dominion Bank

Opinion on the Consolidated Financial

Statements

We have audited the accompanying Consolidated

Balance Sheets of The Toronto-Dominion Bank (TD) as of October 31, 2024

and 2023, the related Consolidated

Statements of Income, Comprehensive

Income, Changes in Equity, and Cash Flows for the years then

ended, and the related notes (collectively referred

to as the

“consolidated financial statements”). In our opinion,

the consolidated financial statements present

fairly, in all material respects, the consolidated financial position

of TD at October 31, 2024 and 2023, its

consolidated financial performance and its

consolidated cash flows for the years then ended,

in conformity with

International Financial Reporting Standards

(IFRS) as issued by the International Accounting

Standards Board.

We also have audited, in accordance with the

standards of the Public Company Accounting

Oversight Board (United States) (PCAOB),

TD’s internal control over

financial reporting as of October 31, 2024, based

on criteria established in Internal Control –

Integrated Framework issued by the Committee

of Sponsoring

Organizations of the Treadway Commission (2013 framework)

and our report dated December 4, 2024,

expressed an unqualified opinion

thereon.

Basis for Opinion

These consolidated financial statements are

the responsibility of TD’s management. Our responsibility

is to express an opinion on TD’s consolidated

financial

statements based on our audits. We are a public

accounting firm registered with the PCAOB

and are required to be independent with respect

to TD in accordance

with the U.S. federal securities laws and

the applicable rules and regulations of the

Securities and Exchange Commission

and the PCAOB.

We conducted our audits in accordance with

the standards of the PCAOB. Those standards

require that we plan and perform the audit

to obtain reasonable

assurance about whether the financial

statements are free of material misstatement,

whether due to error or fraud. Our audits

included performing procedures to

assess the risks of material misstatement

of the financial statements, whether due

to error or fraud, and performing procedures

that respond to those risks. Such

procedures included examining, on a test basis,

evidence regarding the amounts and disclosures

in the consolidated financial statements.

Our audits also included

evaluating the accounting principles used and

significant estimates made by management,

as well as evaluating the overall presentation

of the consolidated

financial statements. We believe that our audits

provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below

are matters arising from the current period

audit of the consolidated financial statements

that were communicated

or required to be communicated to the audit

committee and that: (1) relate to accounts

or disclosures that are material to the consolidated

financial statements,

and (2) involved our especially challenging,

subjective, or complex judgments.

The communication of critical audit

matters does not alter in any way our opinion

the consolidated financial statements, taken

as a whole, and we are not, by communicating

the critical audit matters below, providing separate opinions

on the

critical audit matters or on the accounts or

disclosures to which they relate.

Allowance for credit losses

Description of

the Matter

TD describes its significant accounting judgments,

estimates, and assumptions in relation

to the allowance for credit losses in Note 3

of the consolidated financial statements. As

disclosed in Note 8 to the consolidated financial

statements, TD recognized $9,141 million

in allowances for credit losses on its

consolidated balance sheet using an expected

credit loss model (ECL). The ECL is an

unbiased

and probability-weighted estimate of credit losses

expected to occur in the future, which is

based on the probability of default (PD),

loss given default (LGD) and exposure at

default (EAD) or the expected cash

shortfall relating to the underlying financial asset.

The

ECL is determined by evaluating a range

of possible outcomes incorporating the time

value of money and reasonable and supportable

information about past events, current conditions,

and future economic forecasts. ECL allowances

are measured at amounts equal to

either (i) 12-month ECL; or (ii) lifetime ECL

for those financial instruments that have experienced

a significant increase in credit risk

(SICR) since initial recognition or when

there is objective evidence of impairment.

Auditing the allowance for credit losses was

complex and required the application of

significant judgment and involvement of

specialists because of the sophistication of

the models, the forward-looking nature

of the key assumptions, and the inherent

interrelationship of the critical variables used

in measuring the ECL. Key areas of judgment

include evaluating: (i) the models

and

methodologies used for measuring both the

12-month and lifetime expected credit losses;

(ii) the assumptions used in the ECL

scenarios including forward-looking information

(FLI) and assigning probability weighting;

(iii) the determination of SICR; and (iv)

the

assessment of the qualitative component applied

to the modelled ECL based on management’s

expert credit judgment.

How We Addressed the

Matter in Our Audit

We obtained an understanding, evaluated the design,

and tested the operating effectiveness of

management’s controls over the

allowance for credit losses. The controls

we tested included, amongst others, the development

and validation of models and selection

of appropriate inputs including economic forecasting,

determination of non-retail borrower

risk ratings, the integrity of the data used

including the associated controls over relevant

information technology (IT) systems,

and the governance and oversight over the

modelled results and the use of expert credit judgment.

To test the allowance for credit losses, our audit procedures included, amongst

others, involving our credit risk specialists

to assess

whether the methodology and assumptions,

including management’s SICR triggers, used in

significant models that estimate the ECL

across various portfolios are consistent

with the requirements of IFRS. This included

reperforming the model validation procedures

for

a sample of models to evaluate whether management’s

conclusions were appropriate. With the assistance

of our economic specialists,

we evaluated the models, methodology and

process used by management to develop

the FLI variable forecasts for each scenario

and

the scenario probability weights. For a

sample of FLI variables, we compared management’s

FLI to independently derived forecasts

and publicly available information. On a sample

basis, we recalculated the ECL to test

the mathematical accuracy of management’s

models. We tested the completeness and accuracy

of data used in measuring the ECL

by agreeing to source documents and systems

and evaluated a sample of management’s non-retail

borrower risk ratings against TD’s risk rating

policy. With the assistance of our

credit risk specialists, we also evaluated

management’s methodology and governance

over the application of expert credit judgment

evaluating that the amounts recorded

were reflective of underlying credit quality and

macroeconomic trends. We also assessed the

adequacy of disclosures related to the allowance

for credit losses.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 8

Fair value measurement of derivatives

Description of

the Matter

TD describes its significant accounting judgments,

estimates, and assumptions in relation

to the fair value measurement of derivatives

in Note 3 of the consolidated financial

statements. As disclosed in Note 5 of the

consolidated financial statements, TD

has derivative

assets of $78,061 million and derivative liabilities

of $68,368 million recorded at fair value.

Certain of these derivatives are complex

and illiquid and require valuation techniques

that may include complex models and

non-observable inputs, requiring management’s

estimation and judgment.

Auditing the valuation of certain derivatives required

the application of significant auditor judgment

and involvement of valuation

specialists in assessing the complex models

and non-observable inputs used. Certain

valuation inputs used to determine fair

value

that may be non-observable include volatilities,

correlations, and credit spreads. The

valuation of certain derivatives is sensitive

these inputs as they are forward-looking and

could be affected by future economic and market

conditions.

How We Addressed the

Matter in Our Audit

We obtained an understanding, evaluated the design,

and tested the operating effectiveness of

management’s controls, including the

associated controls over relevant IT systems,

over the valuation of TD’s derivative portfolio.

The controls we tested included, amongst

others, the controls over the suitability and

mechanical accuracy of models used in the

valuation of derivatives, and controls over

management’s independent assessment of

fair values, including the integrity of data used

in the valuation such as the significant

inputs noted above.

To test the valuation of these derivatives, our audit procedures included,

amongst others, an evaluation of the

methodologies and

significant inputs used by TD. With the assistance

of our valuation specialists, we performed

an independent valuation for a sample of

derivatives to assess the modelling assumptions

and significant inputs used to estimate

the fair value, which involved obtaining

significant inputs from independent external

sources, where available. We also assessed

the adequacy of the disclosures related to

the fair value measurement of derivatives.

Measurement of provision for uncertain

tax positions

Description of

the Matter

TD describes its significant accounting judgments,

estimates, and assumptions in relation

to income taxes in Note 3 and Note 24 of

the

consolidated financial statements. As a

financial institution operating in multiple jurisdictions,

TD is subject to complex and constantly

evolving tax legislation. Uncertainty in a tax position

may arise as tax laws are subject to interpretation.

TD uses significant judgment in

i) determining whether it is probable that TD

will have to make a payment to tax authorities

upon their examination of certain uncertain

tax positions and ii) measuring the amount of

the provision.

Auditing TD’s provision for uncertain tax positions

involved the application of judgment and

is based on interpretation of tax legislation

and jurisprudence.

How We Addressed the

Matter in Our Audit

We obtained an understanding, evaluated the design,

and tested the operating effectiveness of

management’s controls over TD’s

provision for uncertain tax positions.

The controls we tested included, amongst others,

the controls over the assessment of the

technical merits of tax positions and management’s

process to measure the provision for

uncertain tax positions.

With the assistance of our tax professionals,

we assessed the technical merits and the

amount recorded for uncertain tax positions.

Our audit procedures included, amongst others,

using our knowledge of, and experience

with, the application of tax laws by the

relevant income tax authorities to evaluate

TD’s interpretations and assessment of tax laws

with respect to uncertain tax positions.

assessed the implications of correspondence

received by TD from the relevant tax authorities

and evaluated income tax opinions or

other third-party advice obtained. We also assessed

the adequacy of the disclosures related

to uncertain tax positions.

Valuation of Goodwill in the U.S. Personal and

Commercial Banking group of Cash Generating

Units

Description of

the Matter

TD describes its significant accounting judgments,

estimates, and assumptions in relation

to the recoverable amount of its cash

generating units (‘CGU”) or group of

CGUs to which goodwill has been allocated

in Note 3 of the consolidated financial

statements. As

disclosed in Note 14 of the consolidated financial

statements, TD has $14,663 million of goodwill

in the U.S. Retail segment, which

predominantly relates to the U.S. Personal

and Commercial Banking group of cash generating

units (“US P&C CGUs”). Goodwill is

assessed for impairment annually, or more frequently if impairment

indicators are present.

Auditing the recoverable amount for the

U.S. P&C CGUs was complex and required

the application of significant auditor judgment

and

involvement of valuation specialists in assessing

certain significant assumptions in the impairment

test. Significant assumptions in the

estimate of the recoverable amount included

the discount rate and certain forward-looking

assumptions, such as the terminal

growth

rate, and forecasted earnings, which are affected by

expectations about future market or economic

conditions.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 9

How We Addressed the

Matter in Our Audit

We obtained an understanding, evaluated the design,

and tested the operating effectiveness of

management’s controls over the

recoverable amount of TD’s U.S. P&C CGUs.

The controls we tested included, amongst

others, the controls over management’s

review of TD’s forecast as well as controls over

management’s review of the model and methodology

over significant assumptions

such as the discount rate and the terminal

growth rate. We also tested controls over

management’s review of the integrity of the data

used and the mathematical accuracy of

their valuation model.

To test the estimated recoverable amount of the U.S. P&C CGUs, our audit

procedures included, amongst others,

with the assistance

of our valuation specialists, assessing the

methodology and testing the significant assumptions

and underlying data used by TD in its

assessment. We considered the selection and

application of the discount rate by evaluating

the inputs and mathematical accuracy of

the calculation, while also developing an independent

estimate and comparing it to the discount

rate selected by management. We

considered the selection and application of

the terminal growth rate by evaluating the

selected rate against relevant market and

economic forecast data. We evaluated the reasonability

of the forecasted earnings by comparing

to historical results and considering

our current understanding of the business as

well as current economic trends. We assessed

the historical accuracy of management’s

prior year estimates by performing a comparison

of management’s prior year projections to actual

results. We performed sensitivity

analysis on the significant assumptions to

consider the impact of changes in the recoverable

amount that would result from changes in

the assumptions. We also assessed the adequacy

of the disclosures related to the valuation

of goodwill.

Chartered Professional Accountants

Licensed Public Accountants

We have served as TD’s sole auditor since 2006. Prior

to 2006, we or our predecessor firm have

served as joint auditor with various other firms

since 1955.

Toronto, Canada

December 4, 2024

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 10

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of The Toronto-Dominion Bank

Opinion on Internal Control over Financial

Reporting

We have audited The Toronto-Dominion Bank’s (TD) internal control over financial reporting

as of October 31, 2024, based on

criteria established in Internal

Control – Integrated Framework issued by

the Committee of Sponsoring Organizations

of the Treadway Commission (2013 framework) (the

COSO criteria). In our

opinion, TD maintained, in all material respects,

effective internal control over financial

reporting as of October 31, 2024, based on

the COSO criteria.

We also have audited, in accordance with the

standards of the Public Company Accounting

Oversight Board (United States) (PCAOB),

the Consolidated Balance

Sheets of TD as of October 31, 2024 and 2023,

the related Consolidated Statements of

Income, Comprehensive Income, Changes

in Equity and Cash Flows for

the years then ended, and the related notes,

and our report dated December 4, 2024,

expressed an unqualified opinion thereon.

Basis for Opinion

TD’s management is responsible for maintaining

effective internal control over financial reporting,

and for its assessment of the effectiveness of

internal control

over financial reporting included in the accompanying

Management’s Report on Internal Control over

Financial Reporting contained in the accompanying

Management’s Discussion and Analysis. Our responsibility

is to express an opinion on TD’s internal control

over financial reporting based on our

audit. We are a

public accounting firm registered with the PCAOB

and are required to be independent with respect

to TD in accordance with the U.S. federal

securities laws and

the applicable rules and regulations of the

Securities and Exchange Commission and

the PCAOB.

We conducted our audit in accordance with the

standards of the PCAOB. Those standards

require that we plan and perform the audit

to obtain reasonable

assurance about whether effective internal control

over financial reporting was maintained in

all material respects.

Our audit included obtaining an understanding

of internal control over financial reporting,

assessing the risk that a material weakness

exists, testing and evaluating

the design and operating effectiveness of internal

control based on the assessed risk, and performing

such other procedures as we considered necessary

in the

circumstances. We believe that our audit provides

a reasonable basis for our opinion.

Definition and Limitations of Internal Control

over Financial Reporting

A company’s internal control over financial

reporting is a process designed to provide reasonable

assurance regarding the reliability of

financial reporting and the

preparation of financial statements for external

purposes in accordance with International

Financial Reporting Standards as issued by the

International Accounting

Standards Board. A company’s internal control over

financial reporting includes those policies

and procedures that (1) pertain to the

maintenance of records that,

in reasonable detail, accurately and fairly reflect

the transactions and dispositions of the assets

of the company; (2) provide reasonable

assurance that

transactions are recorded as necessary to

permit preparation of financial statements

in accordance with International Financial

Reporting Standards as issued by

the International Accounting Standards Board,

and that receipts and expenditures of the

company are being made only in accordance

with authorizations of

management and directors of the company;

and (3) provide reasonable assurance regarding

prevention or timely detection of unauthorized

acquisition, use, or

disposition of the company’s assets that could have

a material effect on the financial statements.

Because of its inherent limitations, internal

control over financial reporting may not prevent

or detect misstatements. Also, projections

of any evaluation of

effectiveness to future periods are subject to

the risk that controls may become inadequate

because of changes in conditions, or that

the degree of compliance

with the policies or procedures may deteriorate.

Chartered Professional Accountants

Licensed Public Accountants

Toronto, Canada

December 4, 2024

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 11

Consolidated Financial Statements

CONSOLIDATED BALANCE SHEET

(As at and in millions of Canadian dollars)

October 31, 2024

October 31, 2023

ASSETS

Cash and due from banks

6,437

6,721

Interest-bearing deposits with banks

169,930

98,348

176,367

105,069

Trading loans, securities, and other

(Note 5)

175,770

152,090

Non-trading financial assets at fair value through

profit or loss

(Note 5)

5,869

7,340

Derivatives

(Notes 5, 11)

78,061

87,382

Financial assets designated at fair value through

profit or loss

(Notes 5, 7)

6,417

5,818

Financial assets at fair value through other

comprehensive income

(Note 5)

93,897

69,865

360,014

322,495

Debt securities at amortized cost, net

of allowance for credit losses (Notes 5,

271,615

308,016

Securities purchased under reverse repurchase

agreements (Note 6)

208,217

204,333

Loans (Notes 5, 8)

Residential mortgages

331,649

320,341

Consumer instalment and other personal

228,382

217,554

Credit card

40,639

38,660

Business and government

356,973

326,528

957,643

903,083

Allowance for loan losses

(Note 8)

(8,094)

(7,136)

Loans, net of allowance for loan losses

949,549

895,947

Other

Customers’ liability under acceptances

(Note 8)

–

17,569

Investment in Schwab

(Note 12)

9,024

8,907

Goodwill

(Note 14)

18,851

18,602

Other intangibles

(Note 14)

3,044

2,771

Land, buildings, equipment, other depreciable

assets, and right-of-use assets

(Note 15)

9,837

9,434

Deferred tax assets

(Note 24)

4,937

3,951

Amounts receivable from brokers, dealers,

and clients

22,115

30,416

Other assets

(Note 16)

28,181

27,629

95,989

119,279

Total assets

2,061,751

1,955,139

LIABILITIES

Trading deposits

(Notes 5, 17)

30,412

30,980

Derivatives

(Notes 5, 11)

68,368

71,640

Securitization liabilities at fair value

(Notes 5, 9)

20,319

14,422

Financial liabilities designated at fair value

through profit or loss

(Notes 5, 17)

207,914

192,130

327,013

309,172

Deposits (Notes 5, 17)

Personal

641,667

626,596

Banks

57,698

31,225

Business and government

569,315

540,369

1,268,680

1,198,190

Other

Acceptances

(Note 8)

–

17,569

Obligations related to securities sold

short

(Note 5)

39,515

44,661

Obligations related to securities sold

under repurchase agreements

(Note 6)

201,900

166,854

Securitization liabilities at amortized

cost

(Notes 5, 9)

12,365

12,710

Amounts payable to brokers, dealers, and

clients

26,598

30,872

Insurance contract liabilities

(Note 21)

7,169

5,846

Other liabilities

(Note 18)

51,878

47,574

339,425

326,086

Subordinated notes and debentures (Notes

5, 19)

11,473

9,620

Total liabilities

1,946,591

1,843,068

EQUITY

Shareholders’ Equity

Common shares

(Note 20)

25,373

25,434

Preferred shares and other equity instruments

(Note 20)

10,888

10,853

Treasury – common shares

(Note 20)

(17)

(64)

Treasury – preferred shares and other equity instruments

(Note 20)

(18)

(65)

Contributed surplus

204

155

Retained earnings

70,826

73,008

Accumulated other comprehensive income (loss)

7,904

2,750

Total equity

115,160

112,071

Total liabilities and equity

2,061,751

1,955,139

Balances as at October 31, 2023 have been restated for the adoption of IFRS 17,

Insurance Contracts

(IFRS 17). Refer to Note 4 for details.

The accompanying Notes are an integral part of these Consolidated Financial Statements.

Bharat B. Masrani

Nancy G. Tower

Group President and Chief Executive Officer

Chair, Audit Committee

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 12

CONSOLIDATED STATEMENT OF INCOME

(millions of Canadian dollars, except

as noted)

For the years ended October 31

2024

2023

Interest income

(Note 29)

Loans

53,676

44,518

Reverse repurchase agreements

11,621

9,520

Securities

Interest

20,295

19,029

Dividends

2,371

2,289

Deposits with banks

5,426

5,318

93,389

80,674

Interest expense (Note 29)

Deposits

46,860

38,351

Securitization liabilities

1,002

915

Subordinated notes and debentures

436

Repurchase agreements and short sales

13,322

10,083

Other

1,297

945

62,917

50,730

Net interest income

30,472

29,944

Non-interest income

Investment and securities services

7,400

6,420

Credit fees

1,898

1,796

Trading income (loss)

3,628

2,417

Service charges

2,626

2,514

Card services

2,947

2,932

Insurance revenue

(Note 21)

6,952

6,311

Other income (loss)

(Notes 12, 13)

1,300

(1,644)

26,751

20,746

Total revenue

57,223

50,690

Provision for (recovery of) credit losses

(Note 8)

4,253

2,933

Insurance service expenses

(Note 21)

6,647

5,014

Non-interest expenses

Salaries and employee benefits

16,733

15,753

Occupancy, including depreciation

1,958

1,799

Technology and equipment, including depreciation

2,656

2,308

Amortization of other intangibles

702

672

Communication and marketing

1,516

1,452

Restructuring charges

(Note 26)

566

363

Brokerage-related and sub-advisory fees

498

456

Professional, advisory and outside services

3,064

2,493

Other

(Notes 13, 26)

7,800

4,559

35,493

29,855

Income before income taxes and share

of net income from investment in Schwab

10,830

12,888

Provision for (recovery of) income taxes

(Note 24)

2,691

3,118

Share of net income from investment

in Schwab (Note 12)

703

864

Net income

8,842

10,634

Preferred dividends and distributions on

other equity instruments

526

563

Net income available to common shareholders

8,316

10,071

Earnings per share

(Canadian dollars)

(Note 25)

Basic

4.73

5.53

Diluted

4.72

5.52

Dividends per common share

(Canadian dollars)

4.08

3.84

Includes $

84,324

million for the year ended October 31, 2024 (October 31, 2023 – $

72,403

million), which has been calculated based on the effective interest rate method

(EIRM).

Amounts for the year ended October 31, 2023 have been restated for the adoption of IFRS 17. Refer to Note 4 for

details.

The accompanying Notes are an integral part of these Consolidated Financial Statements.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 13

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(millions of Canadian dollars)

For the years ended October 31

2024

2023

Net income

8,842

10,634

Other comprehensive income (loss)

Items that will be subsequently reclassified

to net income

Net change in unrealized gain/(loss) on

financial assets at fair value through

other comprehensive income

Change in unrealized gain/(loss)

285

Reclassification to earnings of net loss/(gain)

(23)

(9)

Changes in allowance for credit losses recognized

in earnings

(1)

–

Income taxes relating to:

Change in unrealized gain/(loss)

(68)

(32)

Reclassification to earnings of net loss/(gain)

205

Net change in unrealized foreign currency

translation gain/(loss) on

investments in foreign operations, net

of hedging activities

Unrealized gain/(loss)

540

2,233

Reclassification to earnings of net loss/(gain)

(19)

Net gain/(loss) on hedges

(457)

(1,821)

Reclassification to earnings of net loss/(gain)

on hedges

(15)

Income taxes relating to:

Net gain/(loss) on hedges

122

217

Reclassification to earnings of net loss/(gain)

on hedges

(11)

216

629

Net change in gain/(loss) on derivatives

designated as cash flow hedges

Change in gain/(loss)

3,354

(78)

Reclassification to earnings of loss/(gain)

173

238

Income taxes relating to:

Change in gain/(loss)

(929)

137

Reclassification to earnings of loss/(gain)

(50)

(52)

2,548

245

Share of other comprehensive income (loss)

from investment in Schwab

2,007

Items that will not be subsequently reclassified

to net income

Remeasurement gain/(loss) on employee

benefit plans

Gain/(loss)

(151)

(95)

Income taxes

(111)

(86)

Change in net unrealized gain/(loss)

on equity securities designated at

fair value through other comprehensive income

Change in net unrealized gain/(loss)

222

(204)

Income taxes

(60)

162

(150)

Gain/(loss) from changes in fair value due

to own credit risk on

financial liabilities designated at fair value

through profit or loss

Gain/(loss)

(158)

Income taxes

(6)

(116)

Total other comprehensive income (loss)

5,043

676

Total comprehensive income (loss)

13,885

11,310

Attributable to:

Common shareholders

13,359

10,747

Preferred shareholders and other equity instrument

holders

526

563

Amounts for the year ended October 31, 2023 have been restated for the adoption of IFRS 17. Refer to Note 4 for

details.

The accompanying Notes are an integral part of these Consolidated Financial Statements.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 14

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(millions of Canadian dollars)

For the years ended October 31

2024

2023

Common shares (Note 20)

Balance at beginning of year

25,434

24,363

Proceeds from shares issued on exercise of stock options

112

Shares issued as a result of dividend reinvestment plan

529

1,720

Purchase of shares for cancellation and other

(702)

(732)

Balance at end of year

25,373

25,434

Preferred shares and other equity instruments (Note 20)

Balance at beginning of year

10,853

11,253

Issuance of shares and other equity instruments

1,335

–

Redemption of shares and other equity instruments

(1,300)

(400)

Balance at end of year

10,888

10,853

Treasury – common shares (Note 20)

Balance at beginning of year

(64)

(91)

Purchase of shares

(11,209)

(7,959)

Sale of shares

11,256

7,986

Balance at end of year

(17)

(64)

Treasury – preferred shares and other equity instruments (Note 20)

Balance at beginning of year

(65)

(7)

Purchase of shares and other equity instruments

(625)

(590)

Sale of shares and other equity instruments

672

532

Balance at end of year

(18)

(65)

Contributed surplus

Balance at beginning of year

155

179

Net premium (discount) on sale of treasury instruments

(21)

Issuance of stock options, net of options exercised

Other

(30)

Balance at end of year

204

155

Retained earnings

Balance at beginning of year

73,008

73,698

Impact on adoption of IFRS 17

–

112

Impact of reclassification of securities supporting insurance operations

related to the adoption of IFRS 17

(10)

–

Net income attributable to equity instrument holders

8,842

10,634

Common dividends

(7,163)

(6,982)

Preferred dividends and distributions on other equity instruments

(526)

(563)

Share and other equity instrument issue expenses

(7)

–

Net premium on repurchase of common shares and redemption of preferred shares and other equity instruments

(Note 20)

(3,295)

(3,553)

Remeasurement gain/(loss) on employee benefit plans

(111)

(86)

Realized gain/(loss) on equity securities designated at fair value through other comprehensive income

(252)

Balance at end of year

70,826

73,008

Accumulated other comprehensive income (loss)

Net unrealized gain/(loss) on financial assets at fair value through other comprehensive income:

Balance at beginning of year

(413)

(476)

Impact of reclassification of securities supporting insurance operations

related to the adoption of IFRS 17

–

Other comprehensive income (loss)

196

Allowance for credit losses

(1)

–

Balance at end of year

(208)

(413)

Net unrealized gain/(loss) on equity securities designated at fair value through other comprehensive income:

Balance at beginning of year

(127)

Other comprehensive income (loss)

250

(402)

Reclassification of loss/(gain) to retained earnings

(88)

252

Balance at end of year

(127)

Gain/(loss) from changes in fair value due to own credit risk on financial liabilities designated at fair value

through profit or loss:

Balance at beginning of year

(38)

Other comprehensive income (loss)

(116)

Balance at end of year

(22)

(38)

Net unrealized foreign currency translation gain/(loss) on investments in foreign operations, net of hedging activities:

Balance at beginning of year

12,677

12,048

Other comprehensive income (loss)

216

629

Balance at end of year

12,893

12,677

Net gain/(loss) on derivatives designated as cash flow hedges:

Balance at beginning of year

(5,472)

(5,717)

Other comprehensive income (loss)

2,548

245

Balance at end of year

(2,924)

(5,472)

Share of accumulated other comprehensive income (loss) from Investment in Schwab

(1,870)

(3,877)

Total accumulated other comprehensive income

7,904

2,750

Total equity

115,160

112,071

Amounts for the year ended October 31, 2023 have been restated for the adoption of IFRS 17. Refer to Note 4 for

details.

Refer to Note 4 for details on the adoption of IFRS 17.

The accompanying Notes are an integral part of these Consolidated Financial Statements.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 15

CONSOLIDATED STATEMENT OF CASH FLOWS

(millions of Canadian dollars)

For the years ended October 31

2024

2023

Cash flows from (used in) operating activities

Net income

8,842

10,634

Adjustments to determine net cash flows from (used in) operating activities

Provision for (recovery of) credit losses

(Note 8)

4,253

2,933

Depreciation

(Note 15)

1,325

1,239

Amortization of other intangibles

(Note 14)

702

672

Net securities loss/(gain)

(Note 7)

358

Share of net income from investment in Schwab

(Note 12)

(703)

(864)

Gain on sale of Schwab shares

(Note 12)

(1,022)

–

Deferred taxes

(Note 24)

(1,061)

(1,306)

Changes in operating assets and liabilities

Interest receivable and payable

(Notes 16, 18)

1,133

812

Securities sold under repurchase agreements

35,046

36,832

Securities purchased under reverse repurchase agreements

(3,884)

(41,873)

Securities sold short

(5,146)

(2,722)

Trading loans, securities, and other

(23,680)

(5,332)

Loans net of securitization and sales

(57,908)

(67,766)

Deposits

69,922

(25,487)

Derivatives

6,049

(2,341)

Non-trading financial assets at fair value through profit or loss

1,471

3,897

Financial assets and liabilities designated at fair value through profit or loss

15,185

28,565

Securitization liabilities

5,552

(552)

Current taxes

658

1,228

Brokers, dealers, and clients amounts receivable and payable

4,027

(5,128)

Other, including unrealized foreign currency translation loss/(gain)

(6,182)

1,209

Net cash from (used in) operating activities

54,937

(65,302)

Cash flows from (used in) financing activities

Issuance of subordinated notes and debentures

(Note 19)

3,324

–

Redemption or repurchase of subordinated notes and debentures

(Note 19)

(1,544)

(1,716)

Common shares issued, net of issuance costs

(Note 20)

100

Repurchase of common shares, including tax on net value of share repurchases

(Note 20)

(3,997)

(4,285)

Preferred shares and other equity instruments issued, net of issuance costs

(Note 20)

1,328

–

Redemption of preferred shares and other equity instruments

(Note 20)

(1,300)

(400)

Sale of treasury shares and other equity instruments

(Note 20)

11,948

8,497

Purchase of treasury shares and other equity instruments

(Note 20)

(11,834)

(8,549)

Dividends paid on shares and distributions paid on other equity instruments

(7,160)

(5,825)

Repayment of lease liabilities

(678)

(643)

Net cash from (used in) financing activities

(9,813)

(12,847)

Cash flows from (used in) investing activities

Interest-bearing deposits with banks

(71,153)

41,446

Activities in financial assets at fair value through other comprehensive income

Purchases

(42,542)

(24,336)

Proceeds from maturities

18,825

17,893

Proceeds from sales

4,130

5,838

Activities in debt securities at amortized cost

Purchases

(11,306)

(26,987)

Proceeds from maturities

49,606

52,819

Proceeds from sales

5,772

12,021

Net purchases of land, buildings, equipment, other depreciable assets, and other intangibles

(Note 15)

(2,177)

(1,844)

Net cash acquired from (paid for) divestitures and acquisitions

(Notes 12, 13)

3,423

(624)

Net cash from (used in) investing activities

(45,422)

76,226

Effect of exchange rate changes on cash and due from banks

Net increase (decrease) in cash and due from banks

(284)

(1,835)

Cash and due from banks at beginning of year

6,721

8,556

Cash and due from banks at end of year

6,437

6,721

Supplementary disclosure of cash flows from operating activities

Amount of income taxes paid (refunded) during the year

3,812

3,036

Amount of interest paid during the year

61,779

48,179

Amount of interest received during the year

91,013

76,646

Amount of dividends received during the year

2,694

2,247

Amounts for the year ended October 31, 2023 have been restated for the adoption of IFRS 17. Refer to Note 4 for

details.

The accompanying Notes are an integral part of these Consolidated Financial Statements.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 16

Notes to Consolidated Financial Statements

NOTE 1: NATURE OF OPERATIONS

CORPORATE INFORMATION

The Toronto-Dominion Bank is a bank chartered under the

Bank Act (Canada)

. The shareholders of a bank are not, as

shareholders, liable for any liability, act, or

default of the bank except as otherwise provided

under the

Bank Act (Canada)

. The Toronto-Dominion Bank and its subsidiaries are collectively known as

Bank Group (“TD” or the “Bank”). The Bank

was formed through the amalgamation

on February 1, 1955,

of The Bank of Toronto (chartered in 1855) and The

Dominion Bank (chartered in 1869). The Bank

is incorporated and domiciled in Canada

with its registered and principal business

offices located at 66 Wellington

Street West, Toronto, Ontario. TD serves customers in four business segments

operating in a number of locations in key

financial centres around the globe:

Canadian Personal and Commercial Banking,

U.S. Retail, Wealth Management and Insurance,

and Wholesale Banking.

BASIS OF PREPARATION

The accompanying Consolidated Financial

Statements and accounting principles

followed by the Bank have been prepared in

accordance with International

Financial Reporting Standards (IFRS), as issued

by the International Accounting Standards

Board (IASB), including the accounting

requirements of the Office of

the Superintendent of Financial Institutions

Canada (OSFI). The Consolidated Financial Statements

are presented in Canadian dollars, unless

otherwise indicated.

These Consolidated Financial Statements

were prepared using the accounting policies

as described in Note 2. Certain comparative

amounts have been revised

to conform with the presentation adopted in

the current period.

The preparation of the Consolidated Financial

Statements requires that management

make judgments, estimates, and assumptions

regarding the reported

amount of assets, liabilities, revenue and expenses,

and disclosure of contingent assets and

liabilities, as further described

in Note 3. Accordingly, actual results

may differ from estimated amounts as future

confirming events occur.

The accompanying Consolidated Financial Statements

of the Bank were approved and authorized

for issue by the Bank’s Board of Directors, in

accordance

with a recommendation of the Audit Committee,

on December 4, 2024.

The risk management policies and procedures

of the Bank are provided in the Management’s

Discussion and Analysis (MD&A).

The shaded sections of the

“Managing Risk” section of the 2024 MD&A,

relating to market, liquidity, and insurance risks, are an integral

part of these Consolidated Financial Statements,

permitted by IFRS.

NOTE 2: SUMMARY OF MATERIAL ACCOUNTING POLICIES

BASIS OF CONSOLIDATION

The Consolidated Financial Statements include

the assets, liabilities, results of operations,

and cash flows of the Bank and its subsidiaries

including certain

structured entities which it controls.

The Bank’s Consolidated Financial Statements have

been prepared using uniform accounting policies

for like transactions and events in similar

circumstances.

All intercompany transactions, balances,

and unrealized gains and losses on transactions

are eliminated on consolidation.

Subsidiaries

Subsidiaries are corporations or other legal

entities controlled by the Bank, generally

through directly holding more than half of

the voting power of the entity.

Control of subsidiaries is determined based

on the power exercisable through ownership

of voting rights and is generally aligned with

the risks and/or returns

(collectively referred to as “variable returns”)

absorbed from subsidiaries through those voting

rights. As a result, the Bank controls and

consolidates subsidiaries

when it holds the majority of the voting rights

of the subsidiary, unless there is evidence that another investor

has control over the subsidiary. The existence and

effect of potential voting rights that are currently

exercisable or convertible are considered

in assessing whether the Bank controls

an entity. Subsidiaries are

consolidated from the date the Bank obtains

control and continue to be consolidated until

the date when control ceases to exist.

The Bank may consolidate certain subsidiaries

where it owns 50% or less of the voting rights.

Most of those subsidiaries are structured entities

as described in the

following section.

Structured Entities

Structured entities are entities created

to accomplish a narrow and well-defined objective.

Structured entities may take the form

of a corporation, trust, partnership,

or unincorporated entity. They are often created with legal arrangements

that impose limits on the decision-making powers

of their governing board, trustee, or

management. Structured entities are consolidated

when the substance of the relationship

between the Bank and the structured entity

indicates that the Bank

controls the entity. When assessing whether the Bank has to consolidate

a structured entity, the Bank evaluates three primary criteria in order

to conclude

whether, in substance:

●

The Bank has the power to direct the activities

of the structured entity that have the most

significant impact on the entity’s variable returns;

●

The Bank is exposed to significant variable

returns arising from the entity; and

●

The Bank has the ability to use its power

to affect the variable returns to which it is exposed.

Consolidation conclusions are reassessed at

the end of each financial reporting period.

The Bank’s policy is to consider the impact on consolidation

of all

significant changes in circumstances,

focusing on the following:

●

Substantive changes in ownership, such as

the purchase or disposal of more than

an insignificant interest in an entity;

●

Changes in contractual or governance arrangements

of an entity;

●

Additional activities undertaken, such as providing

a liquidity facility beyond the original terms

or entering into a transaction not originally

contemplated;

●

Changes in the financing structure of an entity;

and

●

Changes in the rights to exercise power over

an entity.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 17

INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

Entities over which the Bank has significant

influence are associates and entities over

which the Bank has joint control are joint

ventures. Significant influence is

the power to participate in the financial and

operating policy decisions of an investee,

but is not control or joint control over these

entities. Significant influence is

presumed to exist where the Bank holds between

% and

% of the voting rights of an entity. Significant influence may

also exist where the Bank holds less

than

% of the voting rights and has influence over

financial and operating policy-making processes,

through board representation and significant

commercial

arrangements. Associates and joint ventures

are accounted for using the equity method

of accounting. Investments in associates and

joint ventures are carried on

the Consolidated Balance Sheet initially at

cost and increased or decreased to recognize

the Bank’s share of the profit or loss of the associate

or joint venture,

capital transactions, including the receipt of any

dividends, and write-downs to reflect

any impairment in the value of such entities.

These increases or decreases,

together with any gains and losses realized

on disposition, are reported on the

Consolidated Statement of Income. The

carrying amount of the investments also

includes the Bank’s share of the investee’s other comprehensive

income or loss, which is reported in the relevant

section of the Consolidated Statement of

Comprehensive Income.

At each balance sheet date, the Bank assesses

whether there is any objective evidence that

the investment in an associate or joint venture

is impaired. The

Bank calculates the amount of impairment

as the difference between the higher of fair

value or value-in-use and its carrying value.

CASH AND DUE FROM BANKS

Cash and due from banks consist of cash and amounts

due from banks which are issued by

investment grade financial institutions.

These amounts are due on

demand or have an original maturity of three

months or less.

REVENUE RECOGNITION

Revenue is recognized at an amount that reflects

the consideration the Bank expects to be

entitled to in exchange for transferring

services to a customer,

excluding amounts collected on behalf of

third parties. The Bank recognizes revenue

when it transfers control of a good or a service

to a customer at a point in

time or over time. The determination

of when performance obligations are satisfied

requires the use of judgment. Refer

to Note 3 for further details.

The Bank identifies contracts with customers

subject to IFRS 15,

Revenue from Contracts with Customers

, which create enforceable rights and obligations.

The

Bank determines the performance obligations

based on distinct services promised to

the customers in the contracts. The Bank’s contracts

generally have a term of

one year or less, consist of a single performance

obligation, and the performance obligations

generally reflect services.

For each contract, the Bank determines the

transaction price, which includes estimating

variable consideration and assessing whether

the price is constrained.

Variable consideration is included in the transaction

price to the extent that it is highly probable

that a significant reversal of the amount will not

occur when the

uncertainty associated with the amount of

variable consideration is subsequently resolved.

As such, the estimate of the variable consideration

is constrained until

the end of the invoicing period. The

uncertainty is generally resolved at the end

of the reporting period and as such, no significant

judgment is required when

recognizing variable consideration in revenues.

The Bank’s receipt of payment from customers

generally occurs subsequent to the

satisfaction of performance obligations or a

short time thereafter. As such,

the Bank has not recognized any material contract

assets (unbilled receivables) or contract

liabilities (deferred revenues) and there

is no significant financing

component associated with the consideration

due to the Bank.

When another party is involved in the transfer

of services to a customer, an assessment is made to evaluate

whether the Bank is the principal such that

revenues are reported on a gross basis or

the agent such that revenues are reported

on a net basis. The Bank is the principal

when it controls the services in the

contract promised to the customer before

they are transferred. Control is demonstrated

by the Bank being primarily responsible

for fulfilling the transfer of the

services to the customer, having discretion in establishing pricing

of the services, or both.

Investment and securities services

Investment and securities services income

includes

asset management fees, administration

and commission fees, and investment banking

fees. The Bank

recognizes asset management and administration

fees based on time elapsed, which depicts

the rendering of investment management

and related services over

time. The fees are primarily calculated based

on average daily or point in time assets

under management (AUM) or assets under administration

(AUA) depending

on the investment mandate.

Commission fees include sales, trailer and

brokerage commissions. Sales and brokerage

commissions are generally recognized at a

point in time when the

transaction is executed. Trailer commissions are recognized

over time and are generally calculated based

on the average daily net asset value of

the fund during

the period.

Investment banking fees include advisory

fees and underwriting fees and are generally

recognized at a point in time upon successful

completion of the

engagement.

Credit fees

Credit fees include liquidity fees, restructuring

fees, letter of credit fees, and loan syndication

fees. Liquidity, restructuring,

and letter of credit fees are recognized

income over the period in which the service

is provided. Loan syndication fees are

generally recognized at a point in time

upon completion of the financing

placement.

Service charges

Service charges income is earned on personal

and commercial deposit accounts and

consists of account fees and transaction-based

service charges. Account

fees relate to account maintenance activities

and are recognized in income over the

period in which the service is provided.

Transaction-based service charges are

recognized as earned at a point in time

when the transaction is complete.

Card services

Card services income includes interchange

income as well as card fees such as annual

and transactional fees. Interchange income

is recognized at a point in time

when the transaction is authorized and funded.

Card fees are recognized as earned at the

transaction date with the exception of annual

fees, which are recognized

over a twelve-month period.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 18

FINANCIAL INSTRUMENTS

Interest Rate Benchmark Reform Phase

The Bank adopted Interest Rate Benchmark

Reform, Amendments to IFRS 9,

Financial Instruments

(IFRS 9), IAS 39,

Financial Instruments: Recognition and

Measurement

(IAS 39) and IFRS 7,

Financial Instruments: Disclosures

(IFRS 7) (Interest Rate Benchmark

Reform Phase 1), including the applicable

amendments

to IFRS 7 relating to hedge accounting, in

the fourth quarter of 2019. Under these

amendments, it is assumed that the hedged

interest rate benchmark is not

altered and thus hedge accounting continues

through to the date of replacement of

the existing interest rate benchmark with its

alternative reference rate (ARR).

The Bank is not required to discontinue hedge

accounting if the actual results of the hedge

do not meet the effectiveness requirements as a result

of interbank

offered rate (IBOR) reform. Refer to Note 11 for disclosures related

to the Bank’s hedge accounting relationships

impacted by IBOR reform.

Refer to Note 3 for details of Interest Rate

Benchmark Reform – Phase 2, Amendments

to IFRS 9, IAS 39, IFRS 7, IFRS 4,

Insurance Contracts

(IFRS 4) and

IFRS 16,

Leases

(IFRS 16) (Interest Rate Benchmark

Reform Phase 2), issued on August 27, 2020

and early adopted by the Bank on November

1, 2020.

Classification and Measurement of Financial

Assets

The Bank classifies its financial assets into

the following categories:

●

Amortized cost;

●

Fair value through other comprehensive income

(FVOCI);

●

Held-for-trading;

●

Non-trading fair value through profit or loss

(FVTPL); and

●

Designated as measured at FVTPL.

The Bank recognizes financial assets on a

settlement date basis, except for derivatives

and securities, which are recognized on a

trade date basis.

Debt Instruments

The classification and measurement for debt

instruments is based on the Bank’s business

models for managing its financial assets

and whether the contractual

cash flows represent solely payments of principal

and interest (SPPI). Refer to Note 3 for judgment

with respect to the determination of the Bank’s

business

models and whether contractual cash flows represent

SPPI.

The Bank has determined its business

models as follows:

●

Held-to-collect: the objective is to collect

contractual cash flows;

●

Held-to-collect-and-sell: the objective is both

to collect contractual cash flows and

sell the financial assets; and

●

Held-for-sale and other business models: the

objective is neither of the above.

The Bank performs the SPPI test for

financial assets held within the held-to-collect

and held-to-collect-and-sell business models.

If these financial assets have

contractual cash flows which are inconsistent

with a basic lending arrangement that do

not pass the SPPI test,

they are classified as non-trading financial

assets

measured at FVTPL. In a basic lending arrangement,

interest includes only consideration for

time value of money, credit risk, other basic lending risks, and a

reasonable profit margin.

Debt Securities and Loans Measured at Amortized

Cost

Debt securities and loans held within a held-to-collect

business model where their contractual

cash flows pass the SPPI test are measured

at amortized cost. The

carrying amount of these financial assets is

adjusted by an allowance for credit losses

recognized and measured as described

in the Impairment – Expected Credit

Loss Model

section of this Note, as well as any write-offs and unearned

income which includes prepaid interest,

loan origination fees and costs, commitment

fees,

loan syndication fees, and unamortized discounts

or premiums. Interest income is recognized

using EIRM. The effective interest rate (EIR) is

the rate that

discounts expected future cash flows for

the expected life of the financial instrument

to its carrying value. The calculation takes

into account the contractual interest

rate, along with any fees or incremental

costs that are directly attributable to the instrument

and all other premiums or discounts. Loan

origination fees and costs

are considered to be adjustments to the loan

yield and are recognized in interest income

over the term of the loan. Commitment fees

are recognized in credit fees

over the commitment period when it is

unlikely that the commitment will be

called upon; otherwise, they are recognized

in interest income over the term of the

resulting loan. Loan syndication fees are recognized

in credit fees upon completion of the financing

placement unless the yield on any loan retained

by the Bank is

less than that of other comparable lenders involved

in the financing syndicate. In such cases,

an appropriate portion of the fee is recognized

as a yield adjustment

in interest income over the term of the loan.

Debt Securities and Loans Measured at Fair

Value through Other Comprehensive Income

Debt securities and loans held within a held-to-collect-and-sell

business model where their contractual cash

flows pass the SPPI test are measured at

FVOCI. Fair

value changes are recognized in other

comprehensive income,

except for impairment gains or losses,

interest income and foreign exchange gains

and losses on

the instrument’s amortized cost, which are recognized

in the Consolidated Statement of Income.

Interest income is recognized using EIRM.

The expected credit

loss (ECL) allowance is recognized and

measured as described in the Impairment

– Expected Credit Loss Model section of

this Note. When the financial asset is

derecognized, the cumulative gain or loss previously

recognized in other comprehensive income is

reclassified from equity to income and

recognized in other

income (loss).

Financial Assets Held-for-Trading

The held-for-sale business model includes

financial assets held within a trading portfolio,

which have been originated, acquired,

or incurred principally for the

purpose of selling in the near term, or if they

form part of a portfolio of identified financial

instruments that are managed together

and for which there is evidence of

short-term profit-taking. Financial assets

held within this business model consist of

trading securities, trading loans, as well

as certain securities purchased under

reverse repurchase agreements.

Trading portfolio assets are accounted for at fair value

with changes in fair value recognized in

trading income (loss). Transaction costs are expensed

incurred. Dividends are recognized on

the ex-dividend date and interest is recognized

on an accrual basis. Both dividends and interest

are included in interest

income.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 19

Non-Trading Financial Assets Measured at Fair Value through Profit or Loss

Non-trading financial assets measured at

FVTPL include financial assets held

within the held-for-sale and other business

models, for example debt securities and

loans managed on a fair value basis. Financial

assets held within the held-to-collect or held-to-collect-and-sell

business models that do not pass the SPPI

test are

also classified as non-trading financial assets

measured at FVTPL. Changes in fair value

as well as any gains or losses realized on

disposal are recognized in

other income (loss). Interest income from

debt instruments is included in interest

income on an accrual basis.

Financial Assets Designated at Fair Value through Profit

or Loss

Debt instruments in a held-to-collect

or held-to-collect-and-sell business model can be

designated at initial recognition as measured

at FVTPL, provided the

designation can eliminate or significantly reduce

an accounting mismatch that would

otherwise arise from measuring these

financial assets on a different basis.

The FVTPL designation is available only

for those financial instruments for which a

reliable estimate of fair value can be obtained.

Once financial assets are

designated at FVTPL,

the designation is irrevocable. Changes in

fair value as well as any gains or losses realized

on disposal are recognized in other income

(loss). Interest income from these financial

assets is included in interest income on an accrual

basis.

Customers’ Liability under Acceptances

Acceptances represent a form of negotiable

short-term debt issued by customers,

which the Bank guarantees for a fee. Revenue

is recognized on an accrual

basis. The potential obligation of the Bank is

reported as a liability under Acceptances

on the Consolidated Balance Sheet.

The Bank’s recourse against the

customer in the event of a call on any of

these commitments is reported as an asset

of the same amount.

Equity Instruments

Equity investments are required to be measured

at FVTPL, except where the Bank has

elected at initial recognition to irrevocably designate

an equity investment,

held for purposes other than trading, at FVOCI.

If such an election is made, the fair value

changes, including any associated foreign exchange

gains or losses, are

recognized in other comprehensive income

and are not subsequently reclassified

to net income, including upon disposal.

Realized gains and losses are

transferred directly to retained earnings

upon disposal. Consequently, there is no review required for impairment.

Dividends will normally be recognized in interest

income unless the dividends represent a recovery

of part of the cost of the investment. Gains and

losses on trading and non-trading equity investments

measured

at FVTPL are included in trading income (loss)

and other income (loss), respectively.

Classification and Measurement for

Financial Liabilities

The Bank classifies its financial liabilities into

the following categories:

●

Held-for-trading;

●

Designated at FVTPL; and

●

Other liabilities.

Financial Liabilities Held-for-Trading

Financial liabilities are held within a trading

portfolio if they have been incurred principally

for the purpose of repurchasing in the near

term, or form part of a

portfolio of identified financial instruments

that are managed together and for which

there is evidence of a recent actual pattern

of short-term profit-taking. Financial

liabilities held-for-trading are primarily trading

deposits, securitization liabilities at

fair value, obligations related to securities

sold short and certain obligations

related to securities sold under repurchase agreements.

Trading portfolio liabilities are accounted for at fair

value, with changes in fair value as well as any

gains or losses realized on disposal recognized

in trading

income (loss). Transaction costs are expensed as incurred.

Interest is recognized on an accrual basis

in interest expense.

Financial Liabilities Designated at Fair Value through

Profit or Loss

Certain financial liabilities may be designated

at FVTPL at initial recognition. To be designated at FVTPL, financial liabilities

must meet one of the following criteria:

(1) the designation eliminates or significantly

reduces a measurement or recognition

inconsistency; (2) the financial liabilities

or a group of financial assets and

financial liabilities are managed, and their performance

is evaluated, on a fair value basis in accordance

with a documented risk management or

investment

strategy; or (3) the instrument contains one

or more embedded derivatives unless

a) the embedded derivative does not significantly

modify the cash flows that

otherwise would be required by the contract,

or b) it is clear with little or no analysis

that separation of the embedded derivative

from the financial instrument is

prohibited. In addition, the FVTPL designation

is available only for those financial instruments

for which a reliable estimate

of fair value can be obtained. Once

financial liabilities are designated at FVTPL,

the designation is irrevocable.

Financial liabilities designated at FVTPL are

carried at fair value on the Consolidated Balance

Sheet, with changes in fair value as

well as any gains or losses

realized on disposal recognized in other income

(loss), except for the amount of change in

fair value attributable to changes in the Bank’s own

credit risk, which is

presented in other comprehensive income.

Amounts recognized in other comprehensive

income are not subsequently reclassified

to net income upon

derecognition of the financial liability;

instead,

they are transferred directly to retained

earnings.

Changes in fair value attributable to changes in

the Bank’s own credit risk are measured as

the difference between: (i) the period-over-period

change in the

present value of the expected cash flows

using an all-in discount curve reflecting both

the interest rate benchmark curve and

the Bank’s own credit curve; and (ii)

the period-over-period change in the present

value of the same expected cash flows using

a discount curve based solely on the interest

rate benchmark curve.

For loan commitments and financial guarantee

contracts that are designated at FVTPL,

the full change in fair value of the liability is recognized

in other income

(loss).

Interest is recognized on an accrual basis

in interest expense.

Other Financial Liabilities

Deposits

Deposits, other than deposits included in a

trading portfolio and deposits designated at

FVTPL, are accounted for at amortized cost.

Accrued interest on deposits

is included in Other liabilities on the Consolidated

Balance Sheet. Interest, including capitalized

transaction costs, is recognized on an accrual

basis using EIRM as

Interest expense on the Consolidated Statement

of Income.

Subordinated Notes and Debentures

Subordinated notes and debentures are

accounted for at amortized cost. Accrued

interest on subordinated notes and debentures

is included in Other liabilities on

the Consolidated Balance Sheet. Interest, including

capitalized transaction costs, is recognized

on an accrual basis using EIRM as Interest

expense on the

Consolidated Statement of Income.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 20

Reclassification of Financial Assets and

Financial Liabilities

Financial assets and financial liabilities are

not reclassified subsequent to their initial

recognition, except for financial assets

for which the Bank changes its

business model for managing financial assets.

Such reclassifications of financial assets are

expected to be rare in practice.

Impairment – Expected Credit Loss Model

The ECL model applies to financial assets, including

loans and debt securities measured

at amortized cost, loans and debt securities

measured at FVOCI, loan

commitments, and financial guarantees

that are not measured at FVTPL.

The ECL model consists of three stages:

Stage 1 – Twelve-month ECLs for performing

financial assets, Stage 2 – Lifetime ECLs

for financial assets that have

experienced a significant increase in credit

risk since initial recognition, and Stage 3 – Lifetime

ECLs for financial assets that are credit-impaired.

ECLs are the

difference between all the contractual cash flows

that are due to the Bank in accordance with

the contract and all the cash flows the

Bank expects to receive,

discounted at the original EIR. If a significant

increase in credit risk has occurred

since initial recognition, impairment is

measured as lifetime ECLs. Otherwise,

impairment is measured as twelve-month ECLs

which represent the portion of lifetime ECLs

that are expected to occur based on default

events that are possible

within twelve months after the reporting date.

If credit quality improves in a subsequent

period such that the increase in credit risk

since initial recognition is no

longer considered significant, the loss allowance

reverts to being measured based on twelve-month

ECLs.

Significant Increase in Credit Risk

For retail exposures, significant increase in

credit risk is assessed based on changes in

the twelve-month probability of default (PD)

since initial recognition, using

a combination of individual and collective information

that incorporates borrower and account

specific attributes and relevant forward-looking

macroeconomic

variables.

For non-retail exposures, significant increase

in credit risk is assessed based on

changes in the internal risk rating (borrower risk

ratings (BRR)) since initial

recognition. Refer to the shaded areas of

the “Managing Risk” section of the 2024

MD&A for further details on the Bank’s 21-point BRR

scale to risk levels.

For both retail and non-retail exposures,

delinquency backstop when contractual payments

are more than 30 days past due is also used

in assessing significant

increase in credit risk.

The Bank defines default as delinquency of 90

days or more for most retail products

and BRR of 9 for non-retail exposures.

Exposures are considered credit-

impaired and migrate to Stage 3 when the definition

of default is met or when there is objective

evidence that there has been a deterioration

of credit quality to the

extent the Bank no longer has reasonable

assurance as to the timely collection of the

full amount of principal and interest.

When assessing whether there has been a

significant increase in credit risk since

the initial recognition of a financial asset,

the Bank considers all reasonable

and supportable information that is available

without undue cost or effort about past events,

current conditions, and forecast of future economic

conditions. Refer to

Note 3 for additional details.

Measurement of Expected Credit Losses

ECLs are measured as the probability-weighted

present value of expected cash shortfalls over

the remaining expected life of the financial instrument

and consider

reasonable and supportable information about

past events, current conditions, and forecasts

of future events and economic conditions

that impact the Bank’s

credit risk assessment. Expected life is

the maximum contractual period the Bank is

exposed to credit risk, including extension

options for which the borrower has

unilateral right to exercise. For certain

financial instruments that include both a loan

and an undrawn commitment,

and the Bank’s contractual ability to demand

repayment and cancel the undrawn commitment

does not limit the Bank’s exposure to credit losses

to the contractual notice period, ECLs are

measured over the

period the Bank is exposed to credit risk.

For example, ECLs for credit cards are

measured over the borrowers’ expected

behavioural life, incorporating

survivorship assumptions and borrower-specific

attributes.

The Bank leverages

its Advanced Internal Ratings-Based

models used for regulatory capital purposes

and incorporates adjustments where appropriate

calculate ECLs.

Forward-Looking Information and Expert

Credit Judgment

Forward-looking information is considered

when determining significant increase in

credit risk and measuring ECLs. Forward-looking

macroeconomic factors are

incorporated in the risk parameters as relevant.

Qualitative factors that are not already considered

in the quantitative models are incorporated

by applying expert credit judgment in determining

the final ECLs.

Refer to Note 3 for additional details.

Modified Loans

In cases where a borrower experiences financial

difficulties, the Bank may grant certain modifications

to the terms and conditions of a loan.

Modifications may

include payment deferrals, extension of amortization

periods, rate reductions, principal forgiveness,

debt consolidation, forbearance and other

modifications

intended to minimize the economic loss and

to avoid foreclosure or repossession

of collateral. The Bank has policies in place

to determine the appropriate

remediation strategy based on the individual

borrower.

If the Bank determines that a modification

results in expiry of cash flows, the original

asset is derecognized and a new asset

is recognized based on the new

contractual terms. Significant increase in

credit risk is assessed relative to the risk of

default on the date of modification.

If the Bank determines that a modification

does not result in derecognition, significant

increase in credit risk is assessed based

on the risk of default at initial

recognition of the original asset. Expected cash

flows arising from the modified contractual

terms are considered when calculating ECLs

for the modified asset. For

loans that were modified while having lifetime

ECLs, the loans can revert to having

twelve-month ECLs after a period of performance

and improvement in the

borrower’s financial condition.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 21

Allowance for Loan Losses, Excluding

Acquired Credit-Impaired Loans

The allowance for loan losses represents

management’s calculation of probability-weighted

ECLs in the lending portfolios, including

any off-balance sheet

exposures, at the balance sheet date. The

allowance for loan losses for lending portfolios

reported on the Consolidated Balance

Sheet, which includes credit-

related allowances for residential mortgages,

consumer instalment and other personal,

credit card, business and government loans, and

customers’ liability under

acceptances, is deducted from Loans on

the Consolidated Balance Sheet. The allowance

for loan losses for loans measured at

FVOCI is included in the

Consolidated Statement of Changes in Equity. The allowance for loan losses

for off-balance sheet instruments, which relates

to certain guarantees, letters of

credit, and undrawn lines of credit, is recognized

in Other liabilities on the Consolidated Balance

Sheet. Allowances for lending portfolios

reported on the balance

sheet and off-balance sheet exposures are

calculated using the same methodology. The allowance is increased

by the provision for credit losses and

decreased

by write-offs net of recoveries and disposals.

Each

quarter, allowances are reassessed and adjusted based

on any changes in management’s estimate

of ECLs.

Loan losses on impaired loans in Stage 3

continue to be recognized by means of an allowance

for loan losses until a loan is written off.

A loan is written off against the related allowance

for loan losses when there is no realistic

prospect of recovery. Non-retail loans are generally written off

when

all reasonable collection efforts have been exhausted,

such as when a loan is sold, when all security

has been realized, or when all security has

been resolved

with the receiver or bankruptcy court.

Non-real estate retail loans are generally

written off when contractual payments are

180 days past due, or when a loan is

sold. Real estate secured retail loans are generally

written off when the security is realized. The time period

over which the Bank performs collection

activities on

the contractual amount outstanding of financial

assets that are written off varies from one

jurisdiction to another and generally spans

between less than one year to

five years.

Allowance for Credit Losses on Debt Securities

The allowance for credit losses on debt securities

represents management’s calculation of probability-weighted

ECLs. Debt securities measured at amortized

cost

are presented net of the allowance for credit

losses on the Consolidated Balance Sheet.

The allowance for credit losses on debt securities

measured at FVOCI are

included in the Consolidated Statement of

Changes in Equity. The allowance for credit losses is increased

by the provision for credit losses and

decreased by

write-offs net of recoveries and disposals.

Acquired Performing Loans

Acquired performing loans are initially measured

at fair value, which considers incurred

and expected future credit losses estimated

at the acquisition date and

also reflects adjustments based on the acquired

loan’s interest rate in comparison to current

market rates. On acquisition, twelve-month

ECLs are recognized on

the acquired performing loans, resulting in

the carrying amount being lower than fair

value. Acquired performing loans are subsequently

accounted for at amortized

cost based on their contractual cash flows and

any acquisition related discount or premium,

including credit-related discounts, is

considered to be an adjustment to

the loan yield and is recognized in interest income

using EIRM over the term of the loan, or the expected

life of the loan for acquired performing

loans with

revolving terms.

Acquired Credit-Impaired Loans

When loans are acquired with evidence of incurred

credit loss where it is probable at the purchase

date that the Bank will be unable to collect

all contractually

required principal and interest payments,

they are generally considered to be acquired

credit-impaired (ACI) loans, with no ECLs recognized

on acquisition. ACI

loans are identified as impaired at acquisition

based on specific risk characteristics of

the loans, including past due status, performance

history, and recent

borrower credit scores. ACI loans are accounted

for based on the present value of expected

cash flows as opposed to their contractual

cash flows. The Bank

determines the fair value of these loans at

the acquisition date by discounting expected

cash flows at a discount rate that reflects

factors a market participant

would use when determining fair value, including

management assumptions relating to default rates,

loss severities, the amount and timing of prepayments,

and

other factors that are reflective of current

market conditions. With respect to certain

individually significant ACI loans, accounting

is applied individually at the loan

level. The remaining ACI loans are aggregated

provided they are acquired in the same

fiscal quarter and have common risk

characteristics. Aggregated loans are

accounted for as a single asset with aggregated

cash flows and a single composite interest

rate. Subsequent to acquisition, the Bank

regularly reassesses and

updates its cash flow estimates for changes

to assumptions relating to default rates, loss

severities, the amount and timing of prepayments,

and other factors that

are reflective of current market conditions.

Probable decreases in expected cash flows

trigger the recognition of additional impairment,

which is measured based

on the present value of the revised expected

cash flows discounted at the loan’s EIR as

compared to the carrying value of the loan.

The ECL in excess of the initial

credit-related discount is recorded through

the provision for credit losses. Interest

income on ACI loans is calculated by applying

the credit-adjusted EIR to the

amortized cost of ACI loans.

SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS

The Bank classifies financial instruments

that it issues as either financial liabilities,

equity instruments, or compound instruments.

Issued instruments that are mandatorily redeemable

or convertible into a variable number of

the Bank’s common shares at the holder’s option

are classified as

liabilities on the Consolidated Balance Sheet.

Dividend or interest payments on these instruments

are recognized in Interest expense on

the Consolidated

Statement of Income.

Issued instruments are classified as

equity when there is no contractual obligation

to transfer cash or other financial assets

to redeem or convert these

instruments. Such instruments, if not

mandatorily redeemable or convertible into a

variable number of the Bank’s common shares at the

holder’s option, are

classified as equity on the Consolidated Balance

Sheet.

Incremental costs directly attributable

to the issue of equity instruments are included

in equity as a

deduction from the proceeds, net of tax.

Dividends and distributions on these instruments

are recognized as a reduction in equity.

Compound instruments are comprised of

both liability and equity components in accordance

with the substance of the contractual arrangement.

The liability

component is initially measured at fair value

with any residual amount assigned to the equity

component. Issuance costs are allocated

proportionately to the

liability and equity components.

Common shares, preferred shares, and other

equity instruments issued and held by the Bank

are classified as treasury instruments

in equity, and the cost of

these instruments is recorded as a reduction in

equity. Upon the sale of treasury instruments, the difference between

the sale proceeds and the cost of the

instruments is recorded in or against contributed

surplus.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 22

GUARANTEES

The Bank issues guarantee contracts that require

payments to be made to guaranteed parties

based on: (1) changes in the underlying

economic characteristics

relating to an asset or liability of the guaranteed

party; (2) failure of another party to perform

under an obligating agreement; or (3) failure

of another third party to

pay its indebtedness when due. Guarantees

are initially measured and recorded

at their fair value. The fair value of a

guarantee liability at initial recognition

normally equal to the present value of the guarantee

fees received over the life of the contract.

The Bank’s release from risk is recognized

over the term of the

guarantee using a systematic and rational amortization

method.

If a guarantee meets the definition of a derivative,

it is carried at fair value on the Consolidated

Balance Sheet and reported as a derivative asset

or derivative

liability at fair value. Guarantees that are

considered derivatives are over-the-counter

(OTC) credit derivative contracts designed

to transfer the credit risk in an

underlying financial instrument from one

counterparty to another.

DERIVATIVES

Derivatives are instruments that derive

their value from changes in underlying interest

rates, foreign exchange rates, credit spreads,

commodity prices, equities, or

other financial or non-financial measures.

Such instruments include interest rate, foreign

exchange, equity, commodity, and credit derivative contracts. The Bank

uses these instruments for trading and non-trading

purposes. Derivatives are carried at

their fair value on the Consolidated Balance

Sheet.

Derivatives Held for Trading Purposes

The Bank enters into trading derivative contracts

to meet the needs of its customers,

to provide liquidity and market-making

related activities, and in certain cases,

to manage risks related to its trading portfolios.

The realized and unrealized gains or losses

on trading derivatives are recognized

in trading income (loss).

Derivatives Held for Non-trading Purposes

Non-trading derivatives are primarily used

to manage interest rate, foreign exchange, and

other market risks of the Bank’s traditional

banking activities. When

derivatives are held for non-trading purposes

and when the transactions meet the hedge accounting

requirements of IAS 39, they are presented

as non-trading

derivatives and receive hedge accounting

treatment, as appropriate. Certain derivative

instruments that are held for economic hedging

purposes, and do not meet

the hedge accounting requirements of IAS

39, are also presented as non-trading derivatives

with the change in fair value of these derivatives

recognized in non-

interest income.

Hedging Relationships

Hedge Accounting

The Bank has an accounting policy choice

to apply the hedge accounting requirements

of IFRS 9 or IAS 39. The Bank has

made the decision to continue applying

the IAS 39 hedge accounting requirements

and complies with the revised annual

hedge accounting disclosures as required

by the related amendments to IFRS 7.

At the inception of a hedging relationship, the

Bank documents the relationship between

the hedging instrument and the hedged item,

its risk management

objective, and its strategy for undertaking

the hedge. The Bank also requires a documented

assessment, both at hedge inception

and on an ongoing basis, of

whether or not the derivatives that are used in

hedging relationships are highly effective in offsetting

the changes attributable to the hedged risks

in the fair values

or cash flows of the hedged items. In order

to be considered highly effective, the hedging instrument

and the hedged item must be highly and inversely

correlated

such that the changes in the fair value of

the hedging instrument will substantially offset

the effects of the hedged exposure throughout

the term of the hedging

relationship. If a hedging relationship becomes

ineffective, it no longer qualifies for hedge accounting

and any subsequent change in the fair value

of the hedging

instrument

is recognized in Non-interest income

on the Consolidated Statement of Income.

Changes in fair value relating to the derivative

component excluded from the assessment

of hedge effectiveness are recognized in

Net interest income or Non-

interest income, as applicable, on the

Consolidated Statement of Income.

When derivatives are designated in hedge accounting

relationships,

the Bank classifies them either as: (1) hedges

of the changes in fair value of recognized

assets, liabilities or firm commitments (fair

value hedges); (2) hedges of the variability in

highly probable future cash flows attributable

to recognized assets,

liabilities or forecast transactions (cash flow

hedges); or (3) hedges of net investments

in foreign operations (net investment hedges).

Interest Rate Benchmark Reform

A hedging relationship is affected by IBOR reform

if the reform gives rise to uncertainties about

(a) the interest rate benchmark (contractually

or non-contractually

specified) designated as a hedged risk; and/or

(b) the timing or the amount of interest

rate benchmark-based cash flows of the hedged

item or of the hedging

instrument.

For such hedging relationships, the following

temporary exceptions apply during the period

of uncertainty:

●

When assessing whether a forecast transaction

is highly probable or expected to occur, it is assumed that

the interest rate benchmark on which the hedged

cash flows (contractually or non-contractually

specified) are based is not altered as a result

of IBOR reform;

●

When assessing whether a hedge is expected

to be highly effective, it is assumed that the interest

rate benchmark on which the hedged cash

flows and/or the

hedged risk (contractually or non-contractually

specified) are based, or the interest rate benchmark

on which the cash flows of the hedging

instrument are

based, is not altered as a result of IBOR reform;

●

A hedge is not required to be discontinued

if the actual results of the hedge are outside

of a range of 80–125 per cent as a result

of IBOR reform; and

●

For a hedge of a non-contractually specified benchmark

portion of interest rate risk, the requirement

that the risk component is separately

identifiable need only

be met at the inception of the hedging relationship.

Fair Value Hedges

The Bank’s fair value hedges principally consist of

interest rate swaps that are used to protect

against changes in the fair value of fixed-rate

financial instruments

due to movements in market interest rates.

The change in the fair value of the derivative

that is designated and qualifies as a fair value

hedge, as well as the change in the

fair value of the hedged item

attributable to the hedged risk, is recognized

in net interest income to the extent that the

hedging relationship is effective. Any change in

fair value relating to the

ineffective portion of the hedging relationship

is recognized immediately in non-interest

income.

The cumulative adjustment to the carrying

amount of the hedged item (the basis adjustment)

is amortized to Net interest income on

the Consolidated Statement

of Income based on a recalculated EIR over

the remaining expected life of the hedged item,

with amortization beginning no later than

when the hedged item

ceases to be adjusted for changes in its fair value

attributable to the hedged risk. Where the

hedged item has been derecognized, the

basis adjustment is

immediately released to Net interest

income or Non-interest income, as applicable,

on the Consolidated Statement of Income.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 23

Cash Flow Hedges

The Bank is exposed to variability in

future cash flows attributable to interest rate,

foreign exchange rate, and equity price risks.

The amounts and timing of future

cash flows are projected for each hedged

exposure on the basis of their contractual

terms and other relevant factors, including estimates

of prepayments and

defaults.

The effective portion of the change in the fair value

of the derivative that is designated and qualifies

as a cash flow hedge is initially recognized in

other

comprehensive income. The change in fair

value of the derivative relating to the ineffective

portion is recognized immediately in

non-interest income. Amounts in

accumulated other comprehensive income

(AOCI) are reclassified to Net interest

income or Non-interest income, as applicable,

on the Consolidated Statement of

Income in the same period during which

the hedged item affects income.

When a hedging instrument expires or is sold,

or when a hedge no longer meets the

criteria for hedge accounting, any cumulative

gain or loss existing in AOCI

at that time remains in AOCI until the forecast

transaction impacts the Consolidated Statement

of Income. When a forecast transaction is no

longer expected to

occur, the cumulative gain or loss that was reported in AOCI

is immediately reclassified to Net interest

income or Non-interest income, as

applicable, on the

Consolidated Statement of Income.

Net Investment Hedges

Hedges of net investments in foreign operations

are accounted for similar to cash flow hedges.

The change in fair value on the hedging instrument

relating to the

effective portion is recognized in other comprehensive

income. The change in fair value of the

hedging instrument relating to the ineffective

portion is recognized

immediately in non-interest income. Gains

and losses in AOCI are reclassified as

non-interest income in the Consolidated

Statement of Income upon the disposal

or partial disposal of the investment in

the foreign operation. The Bank designates derivatives

and non-derivatives (such as foreign currency

deposit liabilities) as

hedging instruments in net investment hedges.

Embedded Derivatives

Derivatives may be embedded in financial liabilities

or other host contracts. Embedded derivatives

are treated as separate derivatives when

their economic

characteristics and risks are not closely

related to those of the host instrument,

a separate instrument with the same terms

as the embedded derivative would meet

the definition of a derivative, and the combined

contract is not measured at fair value

with changes in fair value recognized in income,

such as held-for-trading or

designated at FVTPL.

These embedded derivatives, which are bifurcated

from the host contract, are recognized as

Derivatives on the Consolidated Balance Sheet

and measured at fair value with subsequent

changes in fair value recognized in

Non-interest income on the Consolidated Statement

of Income.

TRANSLATION AND PRESENTATION OF FOREIGN CURRENCIES

The Bank’s Consolidated Financial Statements

are

presented in Canadian dollars.

Items included in the financial statements

of each of the Bank’s entities are

measured using their functional currency, which is the currency

of the primary economic environment in

which they operate.

Monetary assets and liabilities denominated

in a currency that differs from an entity’s functional

currency are translated into the functional

currency of the entity

at exchange rates prevailing at the balance

sheet date. Non-monetary assets and liabilities

are translated at historical exchange

rates. Income and expenses are

translated into an entity’s functional currency at

average exchange rates for the period.

Translation gains and losses are included in non-interest income

except for

equity investments designated at FVOCI where

unrealized translation gains and losses

are recorded in other comprehensive income.

Foreign operations are those with a functional

currency other than Canadian dollars. For

the purpose of translation into the Bank’s presentation

currency, all

assets and liabilities are first measured in

the functional currency of the foreign operation

and subsequently, translated at exchange rates prevailing at

the balance

sheet date. Income and expenses are

translated at average exchange rates for the

period. Unrealized translation gains

and losses relating to these foreign

operations, net of gains or losses arising

from net investment hedges and applicable

income taxes, are included in other

comprehensive income. Translation gains

and losses in AOCI are recognized on

the Consolidated Statement of Income upon

the disposal or partial disposal of the foreign

operation. The investment

balance of foreign entities accounted for

by the equity method, including the Bank’s investment

in The Charles Schwab Corporation, is

translated into Canadian

dollars using exchange rates prevailing at

the balance sheet date with exchange gains

or losses recognized in other comprehensive

income.

OFFSETTING OF FINANCIAL INSTRUMENTS

Financial assets and liabilities are offset, with

the net amount presented on the Consolidated

Balance Sheet, only if the Bank currently has

a legally enforceable

right to set off the recognized amounts, and intends

either to settle on a net basis or to realize

the asset and settle the liability simultaneously. In all other

situations,

assets and liabilities are presented on

a gross basis.

DETERMINATION OF FAIR VALUE

The fair value of a financial instrument on

initial recognition is normally the transaction

price, as evidenced by the fair value of the

consideration given or received.

The best evidence of fair value is quoted prices

in active markets. When there is no

active market for the instrument, the fair

value may be based on other

observable current market transactions

involving the same or similar instruments,

without modification or repackaging, or based

on a valuation technique which

maximizes the use of observable market

inputs.

When financial assets and liabilities have offsetting

market risks or credit risks, the Bank applies

a measurement exception, as described

in Note 5 under

Portfolio Exception

. The value determined from application

of the portfolio exception must be allocated

to the individual financial instruments

within the group to

arrive at the fair value of an individual financial

instrument. Balance

sheet offsetting presentation requirements, as described

above under the Offsetting of

Financial Instruments section of this Note, are

then applied, if applicable.

Valuation adjustments reflect the Bank’s assessment of factors that market participants

would use in pricing the asset or liability. The Bank recognizes

various

types of valuation adjustments including, but

not limited to, adjustments for bid-offer spreads, adjustments

for the unobservability of inputs used in

pricing models,

and adjustments for assumptions about risk,

such as the creditworthiness of either counterparty

and market implied unsecured funding

costs and benefits for OTC

derivatives.

If there is a difference between the initial transaction

price and the value based on a valuation

technique, the difference is referred to as inception

profit or loss.

Inception profit or loss is recognized

upon initial recognition of the instrument only

if the fair value is based on observable

inputs. When an instrument is measured

using a valuation technique that utilizes significant

non-observable inputs, it is initially valued at

the transaction price, which is considered

the best estimate of fair

value. Subsequent to initial recognition, any

difference between the transaction price and

the value determined by the valuation technique

at initial recognition is

recognized as non-observable inputs become

observable.

If the fair value of a financial asset measured

at fair value becomes negative, it is recognized

as a financial liability until either its fair

value becomes positive, at

which time it is recognized as a financial asset,

or until it is extinguished.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 24

DERECOGNITION OF FINANCIAL INSTRUMENTS

Financial Assets

The Bank derecognizes a financial asset

when the contractual rights to that asset have

expired. Derecognition may also be appropriate

where the contractual right

to receive future cash flows from the

asset have been transferred, or where

the Bank retains the rights to future cash

flows from the asset, but assumes an

obligation to pay those cash flows to a third party

subject to certain criteria.

When the Bank transfers a financial asset,

it is necessary to assess the extent

to which the Bank has retained the risks and rewards

of ownership of the

transferred asset. If substantially all the risks

and rewards of ownership of the financial

asset have been retained, the Bank continues

to recognize the financial

asset and also recognizes a financial liability

for the consideration received. Certain transaction

costs incurred are also capitalized and amortized

using EIRM. If

substantially all the risks and rewards of ownership

of the financial asset have been transferred,

the Bank will derecognize the financial asset

and recognize

separately as assets or liabilities any rights

and obligations created or retained in the

transfer. The Bank determines whether substantially all

the risks and rewards

have been transferred by quantitatively comparing

the variability in cash flows before and

after the transfer. If the variability in cash flows does not

change

significantly as a result of the transfer, the Bank has retained

substantially all of the risks and rewards of ownership.

If the Bank neither transfers nor retains

substantially all the risks and rewards of

ownership of the financial asset, the Bank

derecognizes the financial asset

where it has relinquished control of the financial

asset. The Bank is considered to have

relinquished control of the financial asset

where the transferee has the

practical ability to sell the transferred financial

asset. Where the Bank has retained control

of the financial asset, it continues to recognize

the financial asset to the

extent of its continuing involvement in

the financial asset. Under these circumstances,

the Bank usually retains the rights to future

cash flows relating to the asset

through a residual interest and is exposed

to some degree of risk associated with the

financial asset.

The derecognition criteria are also applied

to the transfer of part of an asset, rather

than the asset as a whole, or to a group of

similar financial assets in their

entirety, when applicable. If transferring a part of an asset, it

must be a specifically identified cash flow, a fully proportionate

share of the asset, or a fully

proportionate share of a specifically identified

cash flow.

Securitization

Securitization is the process by which

financial assets are transformed into

securities. The Bank securitizes financial

assets by transferring those financial assets

to a third party and as part of the securitization,

certain financial assets may be retained and

may consist of an interest-only strip and, in

some cases, a cash

reserve account (collectively referred to as

“retained interests”). If the transfer qualifies

for derecognition, a gain or loss on sale

of the financial assets is recognized

immediately in other income (loss) after considering

the effect of hedge accounting on the assets

sold, if applicable. The amount of the gain

or loss is calculated as

the difference between the carrying amount of the

asset transferred and the sum of any cash

proceeds received, the fair value of any financial

asset received or

financial liability assumed, and any cumulative

gain or loss allocated to the transferred

asset that had been recognized in AOCI.

To determine the value of the

retained interest initially recorded, the previous

carrying value of the transferred asset is allocated

between the amount derecognized from

the balance sheet and

the retained interest recorded, in proportion

to their relative fair values on the date of transfer. Subsequent

to initial recognition, as market prices are generally

not

available for retained interests, fair value

is determined by estimating the present

value of future expected cash flows using management’s

best estimates of key

assumptions that market participants would

use in determining such fair value. Refer

to Note 3 for assumptions used by management

in determining the fair value

of retained interests. Retained interest is classified

as trading securities with subsequent

changes in fair value recorded in trading income

(loss).

Where the Bank retains the servicing rights,

the benefits of servicing are assessed

against market expectations. When the benefits

of servicing are more than

adequate, a servicing asset is recognized.

Similarly, when the benefits of servicing are less than adequate,

a servicing liability is recognized. Servicing

assets and

servicing liabilities are initially recognized

at fair value and subsequently carried

at amortized cost.

Financial Liabilities

The Bank derecognizes a financial liability when

the obligation under the liability is discharged,

cancelled,

or expires. If an existing financial

liability is replaced by

another financial liability from the same lender

on substantially different terms or where

the terms of the existing liability are substantially

modified, the original

liability is derecognized and a new liability is

recognized with the difference in the respective

carrying amounts recognized on the Consolidated

Statement of

Income.

Securities Purchased Under Reverse Repurchase

Agreements, Securities Sold Under Repurchase

Agreements, and Securities Borrowing

and Lending

Securities purchased under reverse repurchase

agreements involve the purchase of securities

by the Bank under agreements to resell

the securities at a future

date. These agreements are treated as collateralized

lending transactions whereby the Bank

takes possession of the purchased securities, but

does not acquire

the risks and rewards of ownership. The Bank

monitors the market value of the purchased

securities relative to the amounts due under the

reverse repurchase

agreements, and when necessary, requires transfer of additional

collateral. In the event of counterparty default,

the agreements provide the Bank with the right

liquidate the collateral held and offset the proceeds

against the amount owing from the counterparty.

Obligations related to securities sold

under repurchase agreements involve the sale

of securities by the Bank to counterparties

under agreements to repurchase

the securities at a future date. These agreements

do not result in the risks and rewards of

ownership being relinquished and are treated

as collateralized borrowing

transactions. The Bank monitors the market

value of the securities sold relative to

the amounts due under the repurchase agreements,

and when necessary,

transfers additional collateral or may require

counterparties

to return the collateral pledged. Certain

transactions that do not meet derecognition

criteria are also

included in obligations related to securities

sold under repurchase agreements. Refer to

Note 9 for further details.

Securities purchased under reverse repurchase

agreements and obligations related to

securities sold under repurchase agreements

are initially recorded on the

Consolidated Balance Sheet at the respective

prices at which the securities were originally

acquired or sold, plus accrued interest.

Subsequently, the agreements

are measured at amortized cost on the

Consolidated Balance Sheet, plus accrued

interest, except when they are held-for-trading

or are designated at FVTPL.

Interest earned on reverse repurchase agreements

and interest incurred on repurchase agreements

is determined using EIRM for agreements

measured at

amortized cost and recognized on an accrual

basis for agreements measured at fair value,

and is included in Interest income and Interest

expense, respectively,

on the Consolidated Statement of Income.

Changes in fair value on reverse repurchase

agreements and repurchase agreements

that are held-for-trading or are

designated at FVTPL are included in Trading income

(loss) or in Other income (loss) on the Consolidated

Statement of Income.

In securities lending transactions,

the Bank lends securities to a counterparty

and receives collateral in the form of

cash or securities. If cash collateral is

received, the Bank records the cash along

with an obligation to return the cash as Obligations

related to securities sold under repurchase

agreements on the

Consolidated Balance Sheet.

Where securities are received as collateral,

the Bank does not record the collateral on

the Consolidated Balance Sheet.

In securities borrowing transactions,

the Bank borrows securities from a counterparty

and pledges either cash or securities as

collateral. If cash is pledged as

collateral, the Bank records the transaction

as Securities purchased under reverse repurchase

agreements on the Consolidated Balance

Sheet. If securities are

pledged as collateral,

the securities remain on the Bank’s Consolidated

Balance Sheet.

Where securities are pledged or received as

collateral, security borrowing fees and security

lending income are recorded in Non-interest

income on the

Consolidated Statement of Income over the

term of the transaction. Where cash is pledged

or received as collateral, interest received

or incurred is included in

Interest income and Interest expense, respectively, on the Consolidated

Statement of Income.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 25

Physical commodities purchased or sold

with an agreement to sell or repurchase the physical

commodities at a later date at a fixed price,

are also included in

securities purchased under reverse repurchase

agreements and obligations related to securities

sold under repurchase agreements, respectively, if the

derecognition criteria are not met. These

instruments are measured at fair value.

GOODWILL

Goodwill represents the excess purchase

price paid over the net fair value of identifiable

assets and liabilities acquired in a business

combination. Goodwill is

carried at its initial cost less accumulated impairment

losses.

Goodwill is allocated to a cash-generating

unit (CGU) or a group of CGUs that is

expected to benefit from the synergies of

the business combination, regardless

of whether any assets acquired and liabilities

assumed are assigned to the CGU or group

of CGUs. A CGU is the smallest identifiable

group of assets that

generates cash flows largely independent of

the cash inflows from other assets or groups

of assets. Each CGU or group of CGUs,

to which goodwill is allocated,

represents the lowest level within the Bank

at which the goodwill is monitored

for internal management purposes and is

not larger than an operating segment. If

the composition of a CGU or group of CGUs

to which goodwill has been allocated

changes as a result of the sale of a business,

restructuring or other changes, the

goodwill is reallocated to the units affected using a

relative value approach, unless the Bank

can demonstrate that some other method better

reflects the goodwill

associated with the units affected.

Goodwill is assessed for impairment at least

annually and when an event or change

in circumstances indicates that the carrying

amount may be impaired.

When impairment indicators are present,

the recoverable amount of the CGU or group

of CGUs, which is the higher of its

estimated fair value less costs of

disposal and its value-in-use, is determined.

If the carrying amount of the CGU or group

of CGUs is higher than its recoverable amount,

an impairment loss exists.

The impairment loss is recognized on the Consolidated

Statement of Income and cannot be reversed

in future periods.

INTANGIBLE ASSETS

Intangible assets represent identifiable non-monetary

assets and are acquired either separately

or through a business combination, or

internally generated

software. The Bank’s intangible assets consist primarily

of core deposit intangibles, credit

card related intangibles,

software intangibles,

and other intangibles.

Intangible assets are initially recognized at

cost, or at fair value if acquired through

a business combination, and are amortized

over their estimated useful lives (

years) proportionate to their expected economic

benefits, except for software which is

amortized over its estimated useful life (

years) on a straight-line

basis. In respect of internally generated

software, development costs are capitalized

only if the costs can be measured reliably, the asset is technically

feasible,

future economic benefits are probable, and the

Bank intends to and has sufficient resources

to complete development of the asset. Research

costs are expensed

as incurred.

The Bank assesses its intangible assets

for impairment indicators on a quarterly basis.

When impairment indicators are present, the recoverable

amount of the

asset, which is the higher of its estimated

fair value less costs of disposal and its value-in-use,

is determined. If the carrying amount

of the asset is higher than its

recoverable amount, the asset is written down

to its recoverable amount. Where it is not possible

to estimate the recoverable amount of an individual

asset, the

Bank estimates the recoverable amount

of the CGU to which the asset belongs.

If the CGU is not impaired, the useful

life of the intangible asset is assessed with

any changes applied on a prospective basis.

An impairment loss is recognized on

the Consolidated Statement of Income in

the period in which the impairment is

identified. Impairment losses recognized

previously are assessed and reversed if the

circumstances leading to the impairment

are no longer present. Reversal of

any impairment loss will not exceed the

carrying amount of the intangible asset

that would have been determined had no

impairment loss been recognized for the

asset in prior periods.

LAND, BUILDINGS, EQUIPMENT, AND OTHER DEPRECIABLE ASSETS

Land is recognized at cost. Buildings, computer

equipment, furniture and fixtures, other equipment,

and leasehold improvements are recognized

at cost less

accumulated depreciation and provisions

for impairment, if any. Gains or losses on disposal are included in

Non-interest income on the Consolidated

Statement of

Income.

The Bank records the obligation associated

with the retirement of a long-lived asset

at fair value in the period in which it is incurred

and can be reasonably

estimated, and records a corresponding increase

to the carrying amount of the asset. The asset

is depreciated on a straight-line

basis over its remaining useful life

while the liability is accreted to reflect the passage

of time until the eventual settlement of the

obligation.

Depreciation is recognized on a straight-line

basis over the useful lives of the assets

estimated by asset category, as follows:

Asset

Useful Life

Buildings

years

Computer equipment

years

Furniture and fixtures

years

Other equipment

years

Leasehold improvements

Lesser of the remaining lease term and

the remaining useful life of the asset

The Bank assesses its depreciable assets

for changes in useful life or impairment

on a quarterly basis. Where an impairment

indicator exists and the depreciable

asset does not generate separate cash flows

on a stand-alone basis, impairment is assessed

based on the recoverable amount of the

CGU to which the

depreciable asset belongs. If the CGU is not

impaired, the useful life of the depreciable

asset is assessed with any changes applied

on a prospective basis. Any

impairment loss is recognized on the Consolidated

Statement of Income in the period in which

the impairment is identified. Impairment

losses previously

recognized are assessed and reversed if the

circumstances leading to their impairment

are no longer present. Reversal of any impairment

loss will not exceed the

carrying amount of the depreciable asset

that would have been determined had no impairment

loss been recognized for the asset in prior periods.

NON-CURRENT ASSETS HELD-FOR-SALE

Individual non-current assets or disposal groups

are classified as held-for-sale if they are

available for immediate sale in their present

condition subject only to

terms that are usual and customary for

sales of such assets or disposal groups, and

their sale must be highly probable to occur

within one year. For a sale to be

highly probable, management must be committed

to a sales plan and initiate an active program

to market the sale of the non-current assets

or disposal groups.

Non-current assets or disposal groups classified

as held-for-sale are measured at the lower

of their carrying amount and fair value

less costs to sell on the

Consolidated Balance Sheet. Write-downs on premises

related non-current assets and write-downs

on equipment on initial classification

as held-for-sale are

included in Non-interest expenses on the Consolidated

Statement of Income. Subsequently, a non-current asset or disposal

group that is held-for-sale is no longer

depreciated or amortized, and any subsequent

write-downs in fair value less costs to sell or

such increases not in excess of cumulative

write-downs, are

recognized in Other income on the Consolidated

Statement of Income.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 26

SHARE-BASED COMPENSATION

The Bank grants share options to certain

key employees as compensation for services

provided to the Bank. The Bank uses

a binomial tree-based valuation

option pricing model to estimate fair value

for all share option compensation awards.

The cost of the share options is based on the fair value estimated at the grant

date and is recognized as compensation expense and contributed surplus over the service period required for employees to become fully entitled to the awards.

This period is generally equal to the vesting period in addition to a period prior to the grant date. For the Bank’s share options, this period is generally equal to five

years. When options are exercised, the amount initially recognized in the contributed surplus balance is reduced, with a corresponding increase in common

shares.

The Bank has various other share-based

compensation plans where certain employees

of the Bank are awarded share units equivalent

to the Bank’s common

shares as compensation for services provided

to the Bank. The obligation related to share

units is included in other liabilities on

the Consolidated Balance Sheet.

Compensation expense is recognized based on

the fair value of the share units at the grant

date adjusted for changes in fair value

between the grant date and the

vesting date, net of hedging activities,

over the service period required for

employees to become fully entitled

to the awards. This period is generally

equal to the

vesting period,

in addition to a period prior to the grant

date. For the Bank’s share units, this period is

generally equal to four years.

EMPLOYEE BENEFITS

Defined Benefit Plans

Actuarial valuations are prepared at least

every three years to determine the present

value of the projected benefit obligation

related to the Bank’s defined benefit

plans. In periods between actuarial valuations,

an extrapolation is performed based

on the most recent valuation completed. All

remeasurement gains and losses

are recognized immediately in other comprehensive

income, with cumulative gains and losses

reclassified to retained earnings. Pension

and post-retirement

defined benefit plan expenses are determined

based upon separate actuarial valuations

using the projected benefit method pro-rated

on service and

management’s best estimates of discount rate,

compensation increases, health care

cost trend rate, and mortality rates, which are

reviewed annually with the

Bank’s actuaries. The discount rate used to value liabilities

is determined by reference to market

yields on high-quality corporate bonds with terms

matching the

plans’ specific cash flows

The expense recognized includes the cost of

benefits for employee service provided in

the current year, net interest expense or income

on the net defined benefit liability or asset, past

service costs related to plan amendments,

curtailments or settlements, and administrative

costs. Plan amendment

costs are recognized in the period of a plan amendment,

irrespective of its vested status. Curtailments

and settlements are recognized by the

Bank when the

curtailment or settlement occurs. A curtailment

occurs when there is a significant reduction

in the number of employees covered by

the plan. A settlement occurs

when the Bank enters into a transaction that

eliminates all further legal or constructive

obligation for part or all of the benefits

provided under a defined benefit plan.

The fair value of plan assets and the present

value of the projected benefit obligation are

measured as at October 31. The net defined

benefit asset or liability

represents the difference between the cumulative remeasurement

gains and losses, expenses,

and recognized contributions and is reported

in other assets or

other liabilities.

Net defined benefit assets recognized by

the Bank are subject to a ceiling which limits

the asset recognized on the Consolidated

Balance Sheet to the amount

that is recoverable through refunds of contributions

or future contribution holidays. In addition,

where a regulatory funding deficit exists related

to a defined benefit

plan, the Bank is required to record a liability

equal to the present value of all future

cash payments required to eliminate that

deficit.

Defined Contribution Plans

For defined contribution plans, annual pension

expense is equal to the Bank’s contributions

to those plans.

INSURANCE

Insurance contracts are aggregated into groups

which are measured at the risk-adjusted present

value of cash flows in fulfilling the contracts.

Insurance revenue is

recognized on the Consolidated Statement of

Income as insurance services are provided

over the coverage period of the contracts

within the groups. Insurance

service expenses are reported on the

Consolidated Statement of Income as insurance

claims and related expenses are recognized and

when contract groups are

expected to be onerous.

Contract groups are onerous if their fulfilment

cash flows are expected to result in a net outflow. The liabilities

from insurance groups are

comprised of the liability for remaining

coverage (LRC) and the liability for incurred

claims (LIC) and are reported as Insurance

contract liabilities on the

Consolidated Balance Sheet. The LRC is

the obligation to investigate and pay claims

that have not yet occurred and includes a loss

component related to onerous

contract groups. The LIC is the estimate

of claims incurred, including claims that

have occurred but have not been reported,

and related insurance costs.

The Bank measures its insurance contract

groups using one of two measurement models,

the premium allocation approach (PAA) or the general measurement

model (GMM). The majority of insurance

contract groups are measured using the PAA, which includes

the Bank’s property and casualty insurance contracts

and

short-term life and health insurance contracts.

The PAA is a simplified model applied to insurance contracts

that are either one year or less or where the PAA

approximates the GMM. Contracts using

the GMM are longer-term life and health

contracts. The LRC for insurance contract

groups using the PAA is measured as

the premiums received less insurance acquisition

cash flows paid. The LRC is adjusted for the

recognition of insurance revenue and amortization

of acquisition

cash flows reported in insurance service expenses

on a straight-line basis over the contractual

terms of the underlying insurance contracts,

usually twelve months.

The LRC for longer term contracts using

the GMM model is measured using estimates

and assumptions that reflect the timing and

uncertainty of insurance cash

flows. Under both the PAA and GMM, when a group of contracts

is expected to be onerous, a loss

component (expected loss related to

fulfilling the group’s

insurance contracts) is established which

increases the LRC and insurance

service expenses. The loss component of the LRC

is subsequently recognized as a

reduction to insurance service expenses

over the contractual term of the underlying

insurance contracts to offset claims incurred

and related expenses.

The Bank measures the LIC at the present

value of current estimates of claims and related

costs for insurable events occurring at or before

the Consolidated

Balance Sheet date. The LIC includes a risk

adjustment, which represents the compensation

the Bank requires for bearing the uncertainty

related to non-financial

risks in its fulfilment of insurance contracts.

Expenses related to claims incurred, including

claims arising from catastrophes, and related

costs are reported in

insurance service expenses while changes

related to discounting the liability are recorded

as insurance finance income or expenses in

other income (loss).

Estimates used in the measurement of insurance

contract liabilities are determined in accordance

with accepted actuarial practices. Current estimates

of claims

and related expenses are determined on a

case-by-case basis and consider such

variables as past loss experience, current

claims trends and changes in the

prevailing social, economic, and legal environment.

These estimates are continually reviewed,

and as experience develops and new information

becomes known,

the estimates are adjusted as necessary. In addition to reported

claims information, the Bank’s insurance

contract liabilities include a provision to

account for the

future development of insurance claims, including

insurance claims incurred but not reported

by policyholders (IBNR). IBNR liabilities

are evaluated based on

historical development trends and actuarial

methodologies for groups of claims

with similar attributes.

Reinsurance contracts held are recognized

and measured using the same principles

as insurance contracts. Reinsurance contract assets

are presented in

Other assets on the Consolidated Balance

Sheet and the net results from reinsurance

contracts held are presented in Other income

(loss) on the Consolidated

Statement of Income. Refer to Note 21 for further

detail on the balances and results of insurance

and reinsurance contracts.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 27

PROVISIONS & CONTINGENT LIABILITIES

Provisions are recognized when the Bank has

a present obligation (legal or constructive)

as a result of a past event, the amount of

which can be reliably estimated,

and it is probable that an outflow of resources

will be required to settle the obligation.

Provisions are measured based on management’s

best estimate of the consideration required

to settle the obligation at the end of the reporting

period, taking

into account the risks and uncertainties surrounding

the obligation. If the effect of the time value of

money is material, provisions are measured

at the present value

of the expenditure expected to be required

to settle the obligation, using a discount rate

that reflects

the current market assessment of the time

value of money and

the risks specific to the obligation.

Contingent liabilities exist when there is a possible

obligation which is yet to be confirmed

or a present obligation which has been confirmed

but the outflow of

future resources is not probable or is not

reliably measurable. Contingent liabilities

are not recorded in the Bank’s Consolidated

Financial Statements and are

disclosed if material unless there is a remote

chance that it will result in a future outflow

of resources to settle.

INCOME TAXES

Income tax is comprised of current and deferred

tax. Income tax is recognized in the Provision

for (recovery of) income taxes on the

Consolidated Statement of

Income, except to the extent that it relates to items

recognized in other comprehensive income or

directly in equity, in which case the related taxes are also

recognized in other comprehensive income

or directly in equity, respectively.

Deferred tax is recognized on temporary differences

between the carrying amounts of assets

and liabilities on the Consolidated Balance Sheet

and the amounts

attributed to such assets and liabilities for

tax purposes. Deferred tax assets and liabilities

are determined based on the tax rates

that are expected to apply when

the assets or liabilities are reported for

tax purposes. Deferred tax assets are recognized

only when it is probable that sufficient taxable

profit will be available in

future periods against which deductible

temporary differences may be utilized. Deferred

tax liabilities are not recognized on temporary

differences arising on

investments in subsidiaries, branches,

and associates, and interests in joint

ventures if the Bank controls the timing of

the reversal of the temporary difference and

it is probable that the temporary difference will not

reverse in the foreseeable future.

The Bank records a provision for uncertain

tax positions if it is probable that the Bank

will have to make a payment to tax authorities

upon their examination of a

tax position. This provision is measured

at the Bank’s best estimate of the amount expected

to be paid. Provisions are reversed in provision

for (recovery of)

income taxes in the period in which management

determines they are no longer required or

as determined by statute.

LEASES

An arrangement contains a lease if there is an

identified asset and the Bank has a right

to control that asset for a period of time in

exchange for consideration. A

right-of-use (ROU) asset and lease liability

is recognized for all leases except for

short-term leases and low value leases, as

described below. At the lease

commencement date, the lease liability is initially

recognized at the present value of the

future lease payments over the remaining lease

term and is discounted

using the Bank’s incremental borrowing rate.

The right-of-use asset is recognized

at cost, comprising an amount equal

to the lease liability, subject to certain

adjustments. Subsequently, the right-of-use asset is measured at

cost less accumulated depreciation and impairment

and adjusted for any remeasurement

lease liabilities, while the lease liability is accreted

using the Bank’s incremental borrowing rate.

The lease liability is remeasured when there is a

modification, a

change in the lease term, a change in the lease

payments (e.g., changes to future payments

resulting from a change in an index or rate

used to determine such

lease payments) or changes in the Bank’s assumptions

or strategies relating to the exercise

of purchase, extension, or termination options.

The Bank’s leases consist primarily of real estate,

equipment and other asset leases. Right-of-use

assets are recorded in Land, buildings,

equipment, other

depreciable assets and right-of-use assets

on the Consolidated Balance Sheet and

lease liabilities are included in Other liabilities

on the Consolidated Balance

Sheet. Interest expense on lease liabilities is

included in Net interest income and depreciation

expense on the right-of-use assets

is recognized in Non-interest

expenses on the Consolidated Statement

of Income.

Short-term leases, which have a lease term of

twelve months

or less, and leases of low-value assets

are exempt, and their payments are recognized

in Non-

interest expenses on a straight-line basis

within the Bank’s Consolidated Statement of

Income.

NOTE 3: SIGNIFICANT ACCOUNTING

JUDGMENTS, ESTIMATES, AND ASSUMPTIONS

The estimates used in the Bank’s accounting policies

are essential to understanding its results

of operations and financial condition. Some

of the Bank’s policies

require subjective, complex judgments and

estimates as they relate to matters

that are inherently uncertain. Changes in these

judgments or estimates and

changes to accounting standards and policies

could have a materially adverse impact

on the Bank’s Consolidated Financial Statements.

The Bank has established

procedures to ensure that accounting policies

are applied consistently and that the processes

for changing methodologies, determining

estimates,

and adopting

new accounting standards are well-controlled

and occur in an appropriate and systematic

manner.

CLASSIFICATION AND MEASUREMENT OF FINANCIAL ASSETS

Business Model Assessment

The Bank determines its business models

based on the objective under which its

portfolios of financial assets are managed.

Refer to Note 2 for details on the

Bank’s business models. In determining its

business models, the Bank considers

the following:

●

Management’s intent and strategic objectives

and the operation of the stated policies in practice;

●

The primary risks that affect the performance

of the portfolio

of assets and how these risks are

managed;

●

How the performance of the portfolio is evaluated

and reported to management; and

●

The frequency and significance of financial

asset sales in prior periods, the reasons

for such sales and the expected future sales activities.

Sales in themselves do not determine the business

model and are not considered in isolation.

Instead, sales provide evidence about

how cash flows are realized.

A held-to-collect business model will be reassessed

by the Bank to determine whether

any sales are consistent with an objective

of collecting contractual cash

flows if the sales are more than insignificant

in value or more than infrequent.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 28

Solely Payments of Principal and Interest

Test

In assessing whether contractual cash flows

represent SPPI, the Bank considers the

contractual terms of the instrument. This

includes assessing whether the

financial asset contains contractual terms

that could change the timing or amount

of contractual cash flows such that

they would not be consistent with a basic

lending arrangement. In making the assessment,

the Bank considers the primary terms

as follows and assesses if the contractual

cash flows of the instrument

continue to meet the SPPI test:

●

Performance-linked features;

●

Terms that limit the Bank’s claim to cash flows

from specified assets (non-recourse terms);

●

Prepayment and extension terms;

●

Leverage features;

●

Features that modify elements of the time

value of money; and

●

Sustainability-linked features.

IMPAIRMENT OF FINANCIAL ASSETS

Significant Increase in Credit Risk

For retail exposures, criteria for assessing

significant increase in credit risk are

defined at the appropriate product or

portfolio level and vary based on the

exposure’s credit risk at origination. The criteria

include relative changes in PD, absolute

PD backstop, and delinquency backstop

when contractual payments are

more than 30 days past due. Significant increase

in credit risk since initial recognition

has occurred when one of the criteria is

met.

For non-retail exposures, BRR is determined

on an individual borrower basis using industry

and sector specific credit risk models that are

based on historical

data. Current and forward-looking information

that is specific to the borrower, industry, and sector is considered based on expert

credit judgment. Criteria for

assessing significant increase in credit risk

are defined at the appropriate segmentation

level and vary based on the BRR of the exposure

at origination. Criteria

include relative changes in BRR, absolute

BRR backstop, and delinquency backstop

when contractual payments are more than 30

days past due. Significant

increase in credit risk since initial recognition

has occurred when one of the criteria is

met.

Measurement of Expected Credit Loss

ECLs are recognized on the initial recognition

of financial assets. Allowance for credit losses

represents management’s unbiased estimate

of the risk of default and

ECLs on the financial assets, including any off-balance

sheet exposures, at the balance sheet date.

For retail exposures, ECLs are calculated as

the product of PD, loss given default (LGD),

and exposure at default (EAD) at each

time step over the remaining

expected life of the financial asset and discounted

to the reporting date based on the EIR. PD

estimates represent the forward-looking

PD, updated quarterly

based on the Bank’s historical experience, current

conditions, and relevant forward-looking expectations

over the expected life of the exposure

to determine the

lifetime PD curve. LGD estimates are determined

based on historical charge-off events and recovery

payments, current information about attributes

specific to the

borrower, and direct costs. Expected cash flows from

collateral, guarantees, and other credit enhancements

are incorporated in LGD if integral to the contractual

terms. Relevant macroeconomic variables

are incorporated in determining expected

LGD. EAD represents the expected balance

at default across the remaining

expected life of the exposure. EAD incorporates

forward-looking expectations about repayments

of drawn balances and future draws

where applicable.

For non-retail exposures, ECLs are calculated

based on the present value of cash shortfalls

determined as the difference between contractual

cash flows and

expected cash flows over the remaining expected

life of the financial instrument. Lifetime

PD is determined by mapping the exposure’s

BRR to forward-looking PD

over the expected life. LGD estimates are

determined by mapping the exposure’s facility

risk rating (FRR) to expected LGD which

takes into account facility-

specific characteristics such as collateral,

seniority ranking of debt, and loan structure.

Relevant macroeconomic variables are incorporated

in determining

expected PD and LGD. Expected cash flows

are determined by applying the PD and LGD

estimates to the contractual cash flows

to calculate cash shortfalls over

the expected life of the exposure.

Forward-Looking Information

In calculating ECLs, the Bank employs internally

developed models that utilize parameters

for PD, LGD, and EAD. Forward-looking

macroeconomic factors

including at the regional level are incorporated

in the risk parameters as relevant.

Additional risk factors that are industry or

segment specific are also incorporated,

where relevant. Forward-looking macroeconomic

forecasts are generated by TD Economics

as part of the ECL process: A base economic

forecast is accompanied

with upside and downside estimates of realistically

possible economic conditions by considering

the sources of uncertainty around the base

forecast. All

macroeconomic forecasts are updated quarterly

for each variable on a regional basis where

applicable and incorporated as relevant

into the quarterly modelling of

base, upside and downside risk parameters

used in the calculation of ECL scenarios and

probability-weighted ECLs. TD Economics

will apply judgment to

recommend probability weights to each forecast

on a quarterly basis. The proposed

macroeconomic forecasts and probability

weightings are subject to robust

management review and challenge process

by a cross-functional committee that

includes representation from TD Economics,

Risk, Finance, and Business. ECLs

calculated under each of the three forecasts are

applied against the respective probability

weightings to determine the probability-weighted

ECLs. Refer to Note 8

for further details on the macroeconomic

variables and ECL sensitivity.

Expert Credit Judgment

Management’s expert credit judgment is used

to determine the best estimate for the qualitative

component contributing to ECLs, based on an assessment

business and economic conditions, historical

loss experience, loan portfolio composition,

and other relevant indicators and forward-looking

information that are not

fully incorporated into the model calculation.

There remains elevated economic uncertainty,

and management continues to exercise expert

credit judgment in assessing if an exposure

has experienced

significant increase in credit risk since initial

recognition and in determining the amount

of ECLs at each reporting date. To the extent that certain effects are not

fully incorporated into the model calculations,

temporary quantitative and qualitative adjustments

have been applied.

LEASES

The Bank applies judgment in determining

the appropriate lease term on a lease-by-lease

basis. All facts and circumstances that

create an economic incentive to

exercise a renewal option or not to exercise

a termination option including investments

in major leaseholds, branch performance

and past business practice are

considered. The periods covered by renewal

or termination options are only included

in the lease term if it is reasonably certain

that the Bank will exercise the

options; management considers “reasonably

certain”

to be a high threshold. Changes in the economic

environment or changes in the industry

may impact the

Bank’s assessment of lease term, and any changes

in the Bank’s estimate of lease terms

may have a material impact on the Bank’s

Consolidated Balance Sheet

and Consolidated Statement of Income.

In determining the carrying amount of right-of-use

(ROU) assets and lease liabilities,

the Bank is required to estimate the incremental

borrowing rate specific to

each leased asset or portfolio of leased assets

if the interest rate implicit in the lease

is not readily determinable. The Bank

determines the incremental borrowing

rate of each leased asset or portfolio of leased

assets by incorporating the Bank’s creditworthiness,

the security, term, and value of the ROU asset, and the

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 29

economic environment in which the leased

asset operates. The incremental borrowing

rates are subject to change mainly due

to changes in the macroeconomic

environment.

FAIR VALUE MEASUREMENTS

The fair value of financial instruments traded

in active markets at the balance

sheet date is based on their quoted market

prices. For all other financial instruments

not traded in an active market, fair value may

be based on other observable current

market transactions involving the same or

similar instruments, without

modification or repackaging, or is based on

a valuation technique which maximizes

the use of observable market inputs. Observable

market inputs may include

interest rate yield curves, foreign exchange

rates, and option volatilities. Valuation techniques include comparisons

with similar instruments where observable

market prices exist, discounted cash flow

analysis, option pricing models, and

other valuation techniques commonly

used by market participants.

For certain complex or illiquid financial instruments,

fair value is determined using valuation

techniques in which current market transactions

or observable

market inputs are not available. Judgment is used

when determining which valuation techniques

to apply, liquidity considerations, and model inputs such as

volatilities, correlations, spreads, discount rates,

pre-payment rates, and prices of underlying

instruments. Any imprecision in these estimates

can affect the

resulting fair value.

Judgment is also used in recording valuation

adjustments to model fair values to account

for system limitations or measurement uncertainty, such as

when

valuing complex and less actively traded

financial instruments. If the market for a

complex financial instrument develops,

the pricing for this instrument may

become more transparent, resulting in refinement

of valuation models.

An analysis of the fair value of financial instruments

and further details as to how they are

measured are provided in Note 5.

DERECOGNITION OF FINANCIAL ASSETS

Certain financial assets transferred may

qualify for derecognition from the Bank’s

Consolidated Balance Sheet. To qualify for derecognition, certain key

determinations must be made, including

whether the Bank’s rights to receive cash flows

from the financial asset have been retained

or transferred and the extent

to which the risks and rewards of ownership

of the financial assets have been retained

or transferred. If the Bank neither transfers nor

retains substantially all of

the risks and rewards of ownership of the

financial asset, a decision must be made

as to whether the Bank has retained control

of the financial asset.

Upon derecognition, the Bank will record a gain

or loss on sale of those assets which is calculated

as the difference between the carrying amount

of the asset

transferred and the sum of any cash proceeds

received, including any financial assets received

or financial liabilities assumed, and

any cumulative gains or losses

allocated to the transferred asset that had been

recognized in AOCI. In determining the

fair value of any financial assets received, the

Bank estimates future cash

flows by relying on estimates of the amount

of interest that will be collected on the

securitized assets, the yield to be paid to investors,

the portion of the securitized

assets that will be prepaid before their

scheduled maturity, ECLs, the cost of servicing the assets, and the

rate at which to discount these expected

future cash

flows. Actual cash flows may differ significantly

from those estimated by the Bank.

Retained interests are financial interests in

transferred assets retained by the Bank.

They are classified as trading securities and

are initially recognized at

relative fair value on the Bank’s Consolidated Balance

Sheet. Subsequently, the fair value of retained interests is

determined by estimating the present value

future expected cash flows. Differences between

the actual cash flows and the Bank’s estimated

future cash flows are recognized in trading

income (loss). These

assumptions are subject to periodic reviews

and may change due to significant changes

in the economic environment.

GOODWILL

The recoverable amount of the Bank’s CGUs

or groups of CGUs is determined from

internally developed valuation models

that consider various factors and

assumptions such as forecasted earnings, growth

rates, discount rates, and terminal growth

rates. Management is required to use judgment

in estimating the

recoverable amount of the CGUs or groups

of CGUs, and the use of different assumptions and

estimates in the calculations could influence

the determination of

the existence of impairment and the valuation

of goodwill. Management believes that the assumptions

and estimates used are reasonable

and supportable. Where

possible, assumptions generated internally

are compared to relevant market information.

The carrying amounts of the Bank’s CGUs or groups

of CGUs are

determined by management using risk-based

capital models to adjust net assets and liabilities

by CGU. These models consider various

factors including market

risk, credit risk, and operational risk,

including investment capital (comprised of

goodwill and other intangibles). Any capital

not directly attributable to the CGUs is

held within the Corporate segment. The Bank’s

capital oversight committees provide oversight

to the Bank’s capital allocation methodologies.

EMPLOYEE BENEFITS

The projected benefit obligation and expense

related to the Bank’s pension and post-retirement

defined benefit plans are determined using

multiple assumptions

that may significantly influence the value of

these amounts. Actuarial assumptions including

discount rates, compensation increases,

health care cost trend rates,

and mortality rates are management’s best estimates

and are reviewed annually with the Bank’s actuaries.

The Bank develops each assumption using

relevant

historical experience of the Bank in conjunction

with market-related data and considers

if the market-related data indicates

there is any prolonged or significant

impact on the assumptions. The discount

rate used to value the projected benefit

obligation is determined by reference

to market yields on high-quality corporate

bonds with terms matching the plans’ specific

cash flows. The other assumptions are also long-term

estimates. All assumptions are subject to

a degree of

uncertainty. Differences between actual experiences and the assumptions,

as well as changes in the assumptions

resulting from changes in future expectations,

result in remeasurement gains and losses

which are recognized in other comprehensive

income (OCI)

during the year and also impact expenses

in future periods.

INCOME TAXES

The Bank is subject to taxation in numerous

jurisdictions. There are many transactions

and calculations in the ordinary course

of business for which the ultimate

tax determination is uncertain. The Bank

maintains provisions for uncertain tax positions

that it believes appropriately reflect the risk of

tax positions under

discussion, audit, dispute, or appeal with

tax authorities, or which are otherwise

considered to involve uncertainty. These provisions are made using

the Bank’s

best estimate of the amount expected to be paid

based on an assessment of all relevant

factors, which are reviewed at the end of

each reporting period. However,

it is possible that at some future date, changes

in these liabilities could result from audits by

the relevant taxing authorities.

Deferred tax assets are recognized only

when it is probable that sufficient taxable profit

will be available in future periods against

which deductible temporary

differences may be utilized. The amount of

the deferred tax asset recognized and considered

realizable could, however, be reduced if projected income is

not

achieved due to various factors, such as

unfavourable business conditions. If projected

income is not expected to be achieved, the

Bank would decrease its

deferred tax assets to the amount that it believes

can be realized. The magnitude of the decrease

is significantly influenced by the Bank’s forecast

of future profit

generation, which determines the extent to

which it will be able to utilize the deferred

tax assets.

PROVISIONS

Provisions arise when there is some uncertainty

in the timing or amount of a loss in the

future. Provisions are based on the Bank’s best estimate

of all

expenditures required to settle its present obligations,

considering all relevant risks and uncertainties,

as well as, when material, the effect of

the time value of

money.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 30

Many of the Bank’s provisions relate to various

legal and regulatory actions that the Bank

is involved in during the ordinary course

of business. Legal and

regulatory provisions require the involvement

of both the Bank’s management and legal counsel

when assessing the probability of a loss and estimating

any

monetary impact. Throughout the life of a provision,

the Bank’s management or legal counsel

may learn of additional information that may impact

its assessments

about the probability of loss or about the estimates

of amounts involved. Changes in these assessments

may lead to changes in the amount recorded

for

provisions. In addition, the actual costs of resolving

these claims may be substantially higher

or lower than the amounts recognized.

The Bank reviews its legal and

regulatory provisions on a case-by-case basis

after considering, among other factors, the

progress of each case, the Bank’s experience,

the experience of others

in similar cases, and the opinions and views of

legal counsel.

Certain of the Bank’s provisions relate to restructuring

initiatives initiated by the Bank. Restructuring

provisions require management’s best estimate,

including

forecasts of economic conditions. Throughout

the life of a provision, the Bank may become

aware of additional information that may impact

the assessment of

amounts to be incurred. Changes in these assessments

may lead to changes in the amount recorded

for restructuring provisions.

INSURANCE

The assumptions used in establishing the Bank’s

insurance contract liabilities are based on best

estimates of possible outcomes.

For property and casualty insurance

contracts, the ultimate cost of LIC is estimated

using a range of standard actuarial claims

projection techniques by the

appointed actuary in accordance with

Canadian accepted actuarial practices. Additional

qualitative judgment is used to assess

the extent to which past trends may

or may not apply in the future, in order to arrive

at the estimated ultimate claims cost

amounts that present the most likely outcome

taking into account all the

uncertainties involved.

For life and health insurance contracts, insurance

contract liabilities consider all future policy

cash flows, including premiums, claims, and

expenses required to

administer the policies. Critical assumptions

used in the measurement of life and health

insurance contract liabilities are determined

by the appointed actuary.

Further information on insurance risk assumptions

is provided in Note 21.

CONSOLIDATION OF STRUCTURED ENTITIES

Management judgment is required when

assessing whether the Bank should consolidate

an entity. For instance, it may not be feasible to determine if the Bank

controls an entity solely through an assessment

of voting rights for certain structured entities.

In these cases, judgment is required

to establish whether the Bank

has decision-making power over the key

relevant activities of the entity and

whether the Bank has the ability to use that power

to absorb significant variable returns

from the entity. If it is determined that the Bank has both decision-making

power and significant variable returns

from the entity, judgment is also used to determine

whether any such power is exercised by

the Bank as principal, on its own behalf,

or as agent, on behalf of another counterparty.

Assessing whether the Bank has decision-making

power includes understanding the purpose

and design of the entity in order to determine

its key economic

activities. In this context, an entity’s key economic

activities are those which predominantly

impact the economic performance of the

entity. When the Bank has the

current ability to direct the entity’s key economic

activities, it is considered to have decision-making

power over the entity.

The Bank also evaluates its exposure

to the variable returns of a structured entity in

order to determine if it absorbs a significant

proportion of the variable

returns the entity is designed to create. As part

of this evaluation, the Bank considers the purpose

and design of the entity in order to determine

whether it absorbs

variable returns from the structured entity

through its contractual holdings, which

may take the form of securities issued by

the entity, derivatives with the entity, or

other arrangements such as guarantees, liquidity

facilities, or lending commitments.

If the Bank has decision-making power over

the entity and absorbs significant variable returns

from the entity, it then determines if it is acting as principal or

agent when exercising its decision-making power. Key factors

considered include the scope of its decision-making

power; the rights of other parties involved

with

the entity, including any rights to remove the Bank as decision-maker

or rights to participate in key decisions;

whether the rights of other parties are exercisable

practice; and the variable returns absorbed

by the Bank and by other parties involved

with the entity. When assessing consolidation, a presumption exists

that the

Bank exercises decision-making power as principal

if it is also exposed to significant variable

returns, unless an analysis of the

factors above indicates otherwise.

The decisions above are made with reference

to the specific facts and circumstances relevant

for the structured entity and related transaction(s)

under

consideration.

REVENUE FROM CONTRACTS WITH

CUSTOMERS

The Bank applies judgment to determine

the timing of satisfaction of performance

obligations which affects the timing of revenue recognition,

by evaluating the

pattern in which the Bank transfers control

of services promised to the customer. A performance obligation

is satisfied over time when the customer

simultaneously

receives and consumes the benefits as the

Bank performs the service. For performance

obligations satisfied over time, revenue is generally

recognized using the

time-elapsed method which is based on time

elapsed in proportion to the period over

which the service is provided, for example,

personal deposit account bundle

fees. The time-elapsed method is a faithful

depiction of the transfer of control

for these services as control is transferred

evenly to the customer when the Bank

provides a stand-ready service or effort is expended

evenly by the Bank to provide a service

over the contract period. In contracts

where the Bank has a right to

consideration from a customer in an amount

that corresponds directly with the value to the

customer of the Bank’s performance completed

to date, the Bank

recognizes revenue in the amount to which

it has a right to invoice.

The Bank satisfies a performance obligation

at a point in time if the customer obtains

control of the promised services at that

date. Determining when control is

transferred requires the use of judgment.

For transaction-based services, the Bank determines

that control is transferred to the customer

at a point in time when

the customer obtains substantially all of

the benefits from the service rendered

and the Bank has a present right to payment,

which generally coincides with the

moment the transaction is executed.

The Bank exercises judgment in determining

whether costs incurred in connection with acquiring

new revenue contracts would meet the requirement

to be

capitalized as incremental costs to obtain or

fulfil a contract with customers.

INTEREST RATE BENCHMARK REFORM PHASE 2

Effective November 1, 2020, the Bank was an early adopter

of the Interest Rate Benchmark Reform Phase

2 and no transitional adjustment was required.

Interest Rate Benchmark Reform Phase 2 addresses

issues affecting financial reporting when

changes are made to contractual cash

flows of financial

instruments or hedging relationships

as a result of IBOR reform. The amendments

permit modification to financial assets,

financial liabilities and lease

liabilities required as a direct consequence of IBOR

reform and made on an economically equivalent

basis to be accounted for by updating

the EIR

prospectively. If the modification does not meet the practical expedient

requirements, existing IFRS requirements

are applied. Relief is also provided

for an

entity’s hedge accounting relationships in circumstances

where changes to hedged items and hedging

instruments arise as a result of IBOR reform.

The

amendments

enable entities to reflect these changes without

discontinuing, or resulting in a new formal

designation of, the existing hedging relationship.

Permitted

changes include redefining the hedged risk

to reference an ARR (contractually or non-contractually

specified), amending the description of

the hedged item and

hedging instrument to reflect the ARR, and

amending the description of how the entity

will assess hedge effectiveness. Hedging relationships

within the scope of

Interest Rate Benchmark Reform Phase 2

are the same as those within the scope of

Interest Rate Benchmark Reform Phase 1.

Interest Rate Benchmark Reform

Phase 2 also amended IFRS 7, introducing expanded

qualitative and quantitative disclosures about

the risks arising from IBOR reform, how

an entity is managing

those risks, its progress in completing

the transition to ARRs, and how it is managing

the transition.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 31

Interest rate benchmarks (such as the London

Interbank Offered Rate (LIBOR) and the Canadian

Dollar Offered Rate (CDOR)) have been reformed

and

replaced by ARRs. From June 30, 2023, all remaining

USD LIBOR settings (overnight, one-month,

three-month, six-month and twelve-month)

have either ceased

or were published only on a synthetic basis

for the use in legacy contracts that had no other

fallback solution. The remaining settings

of CDOR (one-month, two-

month, and three-month) ceased following

a final publication on June 28, 2024. The Bank’s

exposure to non-derivative financial assets,

non-derivative financial

liabilities, derivative notional amounts and off-balance

sheet commitments referencing CDOR is no

longer significant to its financial statements

as at

October 31, 2024 (October 31, 2023 – $

billion, $

2,645

billion and $

billion, respectively).

NOTE 4: CURRENT AND FUTURE

CHANGES IN ACCOUNTING POLICIES

CURRENT CHANGES IN ACCOUNTING

POLICIES

The following new standard was adopted by

the Bank on November 1, 2023.

Insurance Contracts

The IASB issued IFRS 17 which replaced

the guidance in IFRS 4 and became effective

for annual reporting periods beginning on or

after January 1, 2023, which

was November 1, 2023 for the Bank. IFRS 17 establishes

principles for recognition, measurement,

presentation and disclosure of insurance

contracts.

The Bank initially applied IFRS 17 on

November 1, 2023 and restated the comparative

period. The Bank transitioned by primarily

applying the full retrospective

approach which resulted in the measurement

of insurance contracts as if IFRS 17

had always applied to them.

The following table sets out adjustments

to the

Bank’s insurance-related balances reported under

IFRS 4 as at October 31, 2022 used to derive

the insurance contract liabilities and reinsurance

contract assets

recognized by the Bank as at November

1, 2022 under IFRS 17.

(millions of Canadian dollars)

Amount

Insurance-related liabilities

7,468

Other liabilities

131

Other assets

(2,361)

Net insurance-related balances as at October

31, 2022

5,238

Changes in actuarial assumptions, including

risk adjustment and discount factor

(192)

Recognition of losses on onerous contracts

113

Other adjustments

(93)

Net insurance-related balances as at

November 1, 2022

5,066

Insurance contract liabilities

5,761

Reinsurance contract assets

(695)

Net insurance-related balances as at

November 1, 2022

5,066

On November 1, 2022, IFRS 17 transition

adjustments resulted in a decrease

to the Bank’s deferred tax assets of $

million and an after-tax increase to retained

earnings of $

112

million.

Upon the initial application of IFRS 17 on

November 1, 2023, the Bank applied transitional

guidance and reclassified certain securities

supporting insurance

operations to minimize accounting mismatches

arising from the application of the new discount

factor under IFRS 17. The transitional guidance

for such securities

is applicable for entities that previously used

IFRS 9 and was applied without a restatement

of comparatives. The reclassification resulted

in a decrease to retained

earnings and an increase in AOCI of $

million.

FUTURE CHANGES IN ACCOUNTING

POLICIES

The following standard and amendments

have been issued but are not yet effective

on the date of issuance of the Bank’s Consolidated

Financial Statements.

Presentation and Disclosure in Financial

Statements

In April 2024, the IASB issued IFRS 18,

Presentation and Disclosure in Financial

Statements

(IFRS 18), which replaces the guidance

in IAS 1,

Presentation of

Financial Statements

and sets out requirements for presentation

and disclosure of information, focusing

on providing relevant information to users

of the financial

statements. IFRS 18 introduces changes

to the structure of the statement of profit

or loss, aggregation and disaggregation of

financial information, and

management-defined performance

measures to be disclosed in the notes to

the financial statements. It will be effective for the Bank’s annual

period beginning

November 1, 2027. Early application is permitted.

The standard will be applied retrospectively

with restatement of comparatives.

The Bank is currently assessing

the impact of adopting this standard.

Amendments to the Classification and Measurement

of Financial Instruments

In May 2024, the IASB issued

Amendments to the Classification

and Measurement of Financial Instruments,

which amended IFRS 9 and IFRS 7

The

amendments address matters identified during

the post-implementation review of the

classification and measurement requirements

of IFRS 9. The amendments

clarify how to assess the contractual

cash flow characteristics of financial assets

that include environmental, social, and governance

linked features and other

similar contingent features. The amendments

also clarify the treatment of non-recourse

assets and contractually linked instruments.

Furthermore, the amendments

clarify that a financial liability is derecognized

on the settlement date and provide an accounting

policy choice to derecognize a financial liability

settled using an

electronic payment system before the

settlement date if certain conditions are

met. Finally, the amendments introduce additional disclosure requirements

for

financial instruments with contingent

features and equity instruments classified at

FVOCI.

The amendments will be effective for the Bank’s annual

period beginning November 1, 2026. Early

adoption is permitted, with an option to early

adopt the

amendments related to the classification

of financial assets and associated disclosures

only.

The Bank is required to apply the amendments

retrospectively, but is

not required to restate prior periods. The Bank

is currently assessing the impact of adopting

these amendments.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 32

NOTE 5: FAIR VALUE MEASUREMENTS

Certain assets and liabilities, primarily

financial instruments, are carried on

the balance sheet at their fair value on a recurring

basis. These financial instruments

include trading loans and securities, non-trading

financial assets at FVTPL, financial assets

and liabilities designated at FVTPL, financial

assets at FVOCI,

derivatives, certain securities purchased under

reverse repurchase agreements, trading

deposits, securitization liabilities at fair value,

obligations related to

securities sold short, and certain obligations

related to securities sold under repurchase

agreements. All other financial assets

and financial liabilities are carried at

amortized cost.

(a)

VALUATION GOVERNANCE

Valuation processes are guided by policies and procedures

that are approved by senior management

and subject matter experts. Senior Executive

oversight over

the valuation process is provided through various

valuation committees. Further, the Bank has a number of

additional controls in place, including

an independent

price verification process to ensure the accuracy

of fair value measurements reported in

the financial statements. The sources used

for independent pricing comply

with the standards set out in the approved

valuation-related policies, which include

consideration of the reliability, relevancy, and timeliness of data.

(b)

METHODS AND ASSUMPTIONS

The Bank calculates fair value for measurement

and disclosure purposes based on the following

methods of valuation and assumptions:

Government and Government-Related Securities

The fair value of Canadian government debt

securities is determined by quoted prices in

active markets, reference to recent transaction

prices, or third-party

vendor prices. In cases where external and

independent prices are not readily available,

alternate

techniques based on the risk metrics and unique

characteristics

of the security are utilized.

The fair value of Canadian residential mortgage-backed

securities (MBS) is based on third-party vendor

prices, reference to recent transaction prices,

valuation techniques that utilize observable

inputs such as benchmark government bond

prices, government bond yield curves, quoted

yield spreads and

prepayment rate assumptions related

to the underlying collateral.

The fair value of U.S. government and agency

debt securities is determined by reference

to recent transaction prices, broker quotes,

or third-party vendor

prices. For U.S. agency MBS pricing, brokers

or third-party vendors may use a pool-specific

valuation model to value these securities, using

observable market

inputs.

The fair value of other Organisation for Economic

Co-operation and Development (OECD)

government-guaranteed debt is based

on broker quotes and third-

party vendor prices, or where external and independent

prices are not readily available, alternate

techniques based on the risk metrics and unique

characteristics

of the security are utilized.

Other Debt Securities

The fair value of corporate and other debt

securities is based on broker quotes, third-party

vendor prices, or alternate techniques

utilizing the risk metrics and

unique characteristics of the security. Asset-backed securities are

primarily fair valued using third-party

vendor prices, including those generated by issue-specific

valuation models using observable market

inputs.

Equity Securities

The fair value of equity securities is based

on quoted prices in active markets, where available.

Where quoted prices in active markets are

not readily available,

such as for private equity securities, or

where there is a wide bid-ask spread, fair

value is determined based on quoted

market prices for similar securities or

through valuation techniques, including discounted

cash flow analysis, multiples of earnings

before taxes, depreciation and amortization,

and other relevant

valuation techniques.

If there are trading restrictions on the equity

security held, a valuation adjustment is

recognized against available prices to reflect

the nature of the restriction.

However, restrictions that are not part of the security held

and represent a separate contractual arrangement

that has been entered into by the Bank and a

third

party do not impact the fair value of the original

instrument.

The cost of Federal Reserve stock and

Federal Home Loan Bank (FHLB) stock

approximates fair value.

Retained Interests

Retained interests are classified as trading

securities and are initially recognized at their relative

fair market value. Subsequently, the fair value of retained interests

recognized by the Bank is determined by

estimating the present value of future expected

cash flows.

Differences between the actual cash flows and

the Bank’s

estimate of future cash flows are recognized

in income. These assumptions are subject

to periodic review and may change due

to significant changes in the

economic environment.

Loans

The estimated fair value of loans carried at amortized

cost reflects changes in market price that have

occurred since the loans were originated

or purchased. For

fixed-rate performing loans, estimated

fair value is determined by discounting the expected

future cash flows related to these loans at

current market interest rates

for loans with similar credit risks. For floating-rate

performing loans, changes in interest

rates have minimal impact on fair value

since loans reprice to market

frequently. On that basis, fair value is assumed to approximate

carrying value. The fair value of loans is not

adjusted for the value of any credit protection

the Bank

has purchased to mitigate credit risk.

The fair value of loans carried at FVTPL,

which includes trading loans and non-trading

loans at FVTPL, is determined using observable

market prices, where

available. Where the Bank is a market maker

for loans traded in the secondary market,

fair value is determined using executed prices,

or prices for comparable

trades. For those loans where the Bank is

not a market maker, the Bank obtains broker quotes from other

reputable dealers, or uses valuation techniques

determine fair value.

The fair value of loans carried at FVOCI is assumed

to approximate amortized cost as they are generally

floating rate performing loans that are

short term in

nature.

Commodities

The fair value of commodities is based on quoted

prices in active markets, where available.

The Bank also transacts commodity derivative

contracts which can be

traded on an exchange or in OTC markets.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 33

Derivative Financial Instruments

The fair value of exchange-traded derivative financial

instruments is based on quoted market prices.

The fair value of OTC derivative financial

instruments is

estimated using well established valuation

techniques, such as discounted cash flow

techniques, the Black-Scholes model,

and Monte Carlo simulation. The

valuation models incorporate inputs that are

observable in the market or can be derived

from observable market data.

Prices derived by using models are recognized

net of valuation adjustments. The inputs

used in the valuation models depend on

the type of derivative and the

nature of the underlying instrument and are

specific to the instrument being valued.

Inputs can include, but are not limited to, interest

rate yield curves, foreign

exchange rates, dividend yield projections,

commodity spot and forward prices, recovery

rates, volatilities, spot prices, and correlation.

A credit valuation adjustment (CVA) is recognized against the

model value of OTC derivatives to account

for the uncertainty that the counterparty in a derivative

transaction may not be able to fulfil its obligations

under the transaction to the Bank. In determining

CVA, the Bank takes into account master netting agreements

and collateral, and considers the creditworthiness

of the counterparty, using market observed or proxy credit

spreads, in assessing potential future

amounts owed

to the Bank.

The fair value of a derivative is partly a function

of collateralization. The Bank uses relevant

overnight

borrowing curves to discount the

cash flows for

collateralized derivatives as most collateral

is posted in cash and can be funded at the

overnight rate.

A funding valuation adjustment (FVA) is recognized against the model

value of OTC derivatives to recognize the

market implied unsecured funding costs and

benefits considered in the pricing and fair value

determination. Some of the key drivers

of FVA include the market implied funding spread and the expected

average exposure by counterparty.

The Bank will continue to monitor industry

practice on valuation adjustments and

may refine the methodology as market practices

evolve.

Deposits

The estimated fair value of term deposits is

determined by discounting the contractual

cash flows using interest rates currently offered for

deposits with similar

terms.

For deposits with no defined maturities,

the Bank considers fair value to equal carrying

value, which is equivalent to the amount payable

on the balance sheet

date.

For trading deposits and deposits designated

at FVTPL, which is included in financial liabilities

designated at FVTPL, fair value is determined

using discounted

cash flow valuation techniques which

maximize the use of observable market inputs

such as benchmark yield curves and foreign

exchange rates. The Bank

considers the impact of its own creditworthiness

in the valuation of these deposits by reference

to observable market inputs.

Securitization Liabilities

The fair value of securitization liabilities is based

on quoted market prices or quoted market

prices for similar financial instruments,

where available. Where quoted

prices are not available, fair value is determined

using valuation techniques, which maximize

the use of observable inputs, such

as Canada Mortgage Bond (CMB)

curves and MBS curves.

Obligations Related to Securities Sold

Short

The fair value of these obligations is based

on the fair value of the underlying securities,

which can include equity or debt securities.

As these obligations are fully

collateralized, the method used to determine

fair value would be the same as that of

the relevant underlying equity or debt securities.

Securities Purchased Under Reverse

Repurchase Agreements and Obligations

Related to Securities Sold Under Repurchase

Agreements

Commodities and certain bonds and equities

purchased or sold with an agreement

to sell or repurchase them at a later

date at a fixed price are carried at fair

value. The fair value of these agreements

is based on valuation techniques such as discounted

cash flow models which maximize the use

of observable market

inputs such as interest rate swap curves

and commodity forward prices.

Subordinated Notes and Debentures

The fair value of subordinated notes and debentures

are based on quoted market prices.

Portfolio Exception

IFRS 13,

Fair Value Measurement

provides a measurement exception

that allows an entity to determine the fair value of

a group of financial assets and liabilities

with offsetting risks based on the sale or transfer

of its net exposure to a particular risk or

risks. The Bank manages certain financial

assets and financial liabilities,

such as derivative assets and derivative liabilities,

on the basis of net exposure to a particular risk,

or risks; and uses mid-market prices as a basis

for establishing

fair values for the offsetting risk positions and

applies the most representative price

within the bid-ask spread to the net open position,

as appropriate. Refer to

Note 2 for further details on the use of the portfolio

exception to establish fair value.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 34

(c)

FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES NOT CARRIED AT FAIR VALUE

The carrying value and fair value of financial

assets and liabilities not carried at fair

value are disclosed in the table below. For these instruments,

fair values are

calculated for disclosure purposes only, using the valuation techniques

used by the Bank. In addition, the Bank

has determined that the carrying value of

certain

financial assets and liabilities approximates

their fair value, which include: cash and

due from banks, interest-bearing deposits

with banks, customers’ liability

under acceptances, amounts receivable from

brokers, dealers, and clients, other assets,

acceptances, amounts payable to brokers,

dealers, and clients, and other

liabilities. Substantially all securities purchased

under reverse repurchase agreements

and obligations related to securities sold under

repurchase agreements are

measured at amortized cost where the carrying

value approximates their fair value.

Financial Assets and Liabilities not carried

at Fair Value

(millions of Canadian dollars)

As at

October 31, 2024

October 31, 2023

Carrying

Fair

Carrying

Fair

value

FINANCIAL ASSETS

Debt securities at amortized cost, net of allowance

for credit losses

Government and government-related

securities

206,815

202,667

232,093

222,699

Other debt securities

64,800

63,509

75,923

72,511

Total debt securities at amortized cost, net of allowance for credit losses

271,615

266,176

308,016

295,210

Total loans, net of allowance for loan losses

949,549

949,227

895,947

877,763

Total financial assets not carried at fair value

1,221,164

1,215,403

1,203,963

1,172,973

FINANCIAL LIABILITIES

Deposits

1,268,680

1,266,562

1,198,190

1,188,585

Securitization liabilities at amortized

cost

12,365

12,123

12,710

12,035

Subordinated notes and debentures

11,473

11,628

9,620

9,389

Total financial liabilities not carried at fair value

1,292,518

1,290,313

1,220,520

1,210,009

This table excludes financial assets and liabilities where the carrying value approximates their fair value.

(d)

FAIR VALUE HIERARCHY

IFRS requires disclosure of a three-level hierarchy

for fair value measurements based upon

the observability of inputs to the valuation of

an asset or liability as of

the measurement date. The three levels are

defined as follows:

Level 1

: Fair value is based on quoted market prices

for identical assets or liabilities that are

traded in an active exchange market

or highly liquid and actively

traded in OTC markets.

Level 2

: Fair value is based on observable inputs other

than Level 1 prices, such as quoted

market prices for similar (but not identical)

assets or liabilities in active

markets, quoted market prices for identical

assets or liabilities in markets that are

not active, and other inputs that are observable

or can be corroborated by

observable market data for substantially the

full term of the assets or liabilities. Level

2 assets and liabilities include debt securities

with quoted prices that are

traded less frequently than exchange-traded

instruments and derivative contracts

whose value is determined using valuation

techniques with inputs that are

observable in the market or can be derived

principally from or corroborated by observable

market data.

Level 3

: Fair value is based on non-observable inputs

that are supported by little or no market

activity and that are significant to the

fair value of the assets or

liabilities. Financial instruments classified

within Level 3 of the fair value hierarchy are

initially recognized at their transaction price,

which is considered the best

estimate of fair value. After initial measurement,

the fair value of Level 3 assets and liabilities

is determined using valuation models, discounted

cash flow

methodologies, or similar techniques.

Fair Value Hierarchy for Assets and Liabilities not carried

at Fair Value

The following table presents the levels within

the fair value hierarchy for each of the

financial assets and liabilities not carried at fair

value as at October 31, 2024

and October 31, 2023, but for which fair

value is disclosed.

Fair Value Hierarchy for Assets and

Liabilities not carried at Fair Value

(millions of Canadian dollars)

As at

October 31, 2024

October 31, 2023

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

ASSETS

Debt securities at amortized cost, net of allowance for

credit losses

Government and government-related securities

–

202,667

–

202,667

–

222,699

–

222,699

Other debt securities

–

63,509

–

63,509

–

72,510

72,511

Total debt securities

at amortized cost, net of allowance

for credit losses

–

266,176

–

266,176

–

295,209

295,210

Total loans, net

of allowance for loan losses

–

285,070

664,157

949,227

–

284,280

593,483

877,763

Total assets with

fair value disclosures

–

551,246

664,157

1,215,403

–

579,489

593,484

1,172,973

LIABILITIES

Deposits

–

1,266,562

–

1,266,562

–

1,188,585

–

1,188,585

Securitization liabilities at amortized cost

–

12,123

–

12,123

–

12,035

–

12,035

Subordinated notes and debentures

–

11,628

–

11,628

–

9,389

–

9,389

Total liabilities with

fair value disclosures

–

1,290,313

–

1,290,313

–

1,210,009

–

1,210,009

This table excludes financial assets and liabilities where the carrying value approximates their fair value.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 35

The following table presents

the levels

within the fair value hierarchy for each

of the assets and liabilities measured

at fair value on a recurring basis as at

October 31, 2024

and October 31, 2023.

Fair Value Hierarchy for Assets and

Liabilities Measured at Fair Value

on a Recurring Basis

(millions of Canadian dollars)

As at

October 31, 2024

October 31, 2023

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

FINANCIAL ASSETS AND COMMODITIES

Trading loans, securities, and other

Government and government-related securities

Canadian government debt

Federal

691

9,551

–

10,242

9,073

–

9,145

Provinces

–

6,398

–

6,398

–

7,445

–

7,445

U.S. federal, state, municipal governments,

and agencies debt

–

18,861

–

18,861

24,325

24,394

Other OECD government-guaranteed debt

–

9,722

–

9,722

–

8,811

–

8,811

Mortgage-backed securities

–

1,352

–

1,352

–

1,698

–

1,698

Other debt securities

Canadian issuers

–

6,611

6,623

–

6,067

6,072

Other issuers

–

15,845

15,859

–

14,553

14,613

Equity securities

68,682

68,728

54,186

54,237

Trading loans

–

23,518

–

23,518

–

17,261

–

17,261

Commodities

13,504

962

–

14,466

7,620

791

–

8,411

Retained interests

–

82,877

92,855

175,770

61,880

90,068

142

152,090

Non-trading financial assets at fair value through

profit or loss

Securities

391

1,188

1,233

2,812

269

2,596

980

3,845

Loans

–

3,057

–

3,057

–

3,495

–

3,495

391

4,245

1,233

5,869

269

6,091

980

7,340

Derivatives

Interest rate contracts

15,440

–

15,442

22,893

–

22,910

Foreign exchange contracts

51,001

51,061

57,380

57,413

Credit contracts

–

Equity contracts

6,167

–

6,231

4,839

–

4,897

Commodity contracts

548

4,756

5,321

306

1,787

2,108

661

77,370

78,061

407

86,953

87,382

Financial assets designated at

fair value through profit or loss

Securities

–

6,417

–

6,417

–

5,818

–

5,818

–

6,417

–

6,417

–

5,818

–

5,818

Financial assets at fair value through other

comprehensive income

Government and government-related securities

Canadian government debt

Federal

–

18,139

–

18,139

–

18,210

–

18,210

Provinces

–

21,270

–

21,270

–

19,940

–

19,940

U.S. federal, state, municipal governments,

and agencies debt

–

35,197

–

35,197

–

11,002

–

11,002

Other OECD government-guaranteed debt

–

1,679

–

1,679

–

1,498

–

1,498

Mortgage-backed securities

–

2,137

–

2,137

–

2,277

–

2,277

Other debt securities

Asset-backed securities

–

1,384

–

1,384

–

4,114

–

4,114

Corporate and other debt

–

9,439

9,446

–

8,863

8,890

Equity securities

1,058

3,355

4,415

1,133

2,377

3,513

Loans

–

230

–

230

–

421

–

421

1,058

89,477

3,362

93,897

1,133

66,328

2,404

69,865

Securities purchased under reverse

repurchase agreements

–

10,488

–

10,488

–

9,649

–

9,649

FINANCIAL LIABILITIES

Trading deposits

–

29,907

505

30,412

–

29,995

985

30,980

Derivatives

Interest rate contracts

13,283

158

13,444

21,064

126

21,206

Foreign exchange contracts

40,936

40,978

44,841

44,873

Credit contracts

–

403

–

403

–

172

–

172

Equity contracts

–

7,974

7,998

3,251

3,279

Commodity contracts

673

4,845

5,545

248

1,846

2,110

706

67,441

221

68,368

290

71,174

176

71,640

Securitization liabilities at fair value

–

20,319

–

20,319

–

14,422

–

14,422

Financial liabilities designated

at fair value through profit or loss

–

207,890

207,914

–

192,108

192,130

Obligations related to securities sold short

1,783

37,732

–

39,515

1,329

43,332

–

44,661

Obligations related to securities sold

under repurchase agreements

–

9,736

–

9,736

–

12,641

–

12,641

Balances reflect the reduction of securities owned (long positions) by the amount of identical securities sold but

not yet purchased (short positions).

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 36

(e)

TRANSFERS BETWEEN FAIR VALUE HIERARCHY LEVELS FOR ASSETS

AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS

The Bank’s policy is to record transfers of assets

and liabilities between the different levels of

the fair value hierarchy using the fair values as

at the end of each

reporting period. Assets are transferred between

Level 1 and Level 2 depending on whether

there is sufficient frequency and volume in an

active market. There

were no significant transfers between Level

1 and Level 2 during the years ended

October 31, 2024 and October 31, 2023.

Movements of Level 3 instruments

Significant transfers into and out of Level 3 occur

mainly due to the following reasons:

●

Transfers from Level 3 to Level 2 occur when techniques

used for valuing the instrument incorporate

significant observable market inputs

or broker-dealer

quotes which were previously not observable.

●

Transfers from Level 2 to Level 3 occur when an instrument’s

fair value, which was previously determined

using valuation techniques with significant

observable

market inputs, is now determined using

valuation techniques with significant unobservable

inputs.

Due to the unobservable nature of the inputs

used to value Level 3 financial instruments,

there may be uncertainty about the valuation

of these instruments. The

fair value of Level 3 instruments may be drawn

from a range of reasonably possible alternatives.

In determining the appropriate levels for these

unobservable

inputs, parameters are chosen so that they

are consistent with prevailing market evidence

and management judgment.

There were no significant transfers between

Level 2 and Level 3 during the years ended

October 31, 2024 and October 31, 2023.

There were no other significant changes to

the unobservable inputs and sensitivities

for assets and liabilities classified as

Level 3 during the years ended

October 31, 2024 and October 31, 2023.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 37

(f)

RECONCILIATION OF CHANGES IN FAIR VALUE FOR LEVEL 3 ASSETS AND LIABILITIES

The following tables set out changes in fair

value of all assets and liabilities measured

at fair value using significant Level 3 unobservable

inputs for the years

ended October 31, 2024

and October 31, 2023.

Reconciliation of Changes in Fair Value for Level 3 Assets and Liabilities

(millions of Canadian dollars)

Change in

unrealized

Fair

Total realized and

Fair

gains

value as at

unrealized gains (losses)

Movements

Transfers

value as at

(losses) on

November 1

Included

Purchases/

Sales/

Into

Out of

October 31

instruments

2023

in income

in OCI

3,4

Issuances

Settlements

Level 3

2024

still held

FINANCIAL ASSETS

Trading loans, securities,

and other

Government and government-related

securities

–

(67)

–

Other debt securities

–

(88)

(76)

–

Equity securities

(1)

–

(8)

–

142

–

102

(163)

(76)

–

Non-trading financial assets at

fair value through profit or loss

Securities

980

–

232

(76)

–

(1)

1,233

980

–

232

(76)

–

(1)

1,233

Financial assets at fair value

through other comprehensive

income

Other debt securities

–

(3)

(20)

–

Equity securities

2,377

–

(7)

1,171

(205)

–

3,355

2,404

–

(10)

1,174

(225)

–

3,362

FINANCIAL LIABILITIES

Trading deposits

(985)

(13)

–

(122)

540

–

(505)

(6)

Derivatives

Interest rate contracts

(126)

(70)

–

(158)

(34)

Foreign exchange contracts

(6)

–

(14)

Equity contracts

(21)

(5)

–

(2)

(24)

(6)

Commodity contracts

(1)

(5)

–

(4)

–

(10)

(9)

(154)

(66)

–

(11)

(191)

(45)

Financial liabilities designated

at fair value through profit or loss

(22)

127

–

(260)

131

–

(24)

127

Change in

unrealized

Fair

Total realized and

Fair

gains

value as at

unrealized gains (losses)

Movements

Transfers

value as at

(losses) on

November 1

Included

Purchases/

Sales/

Into

Out of

October 31

instruments

2022

in income

in OCI

3,4

Issuances

Settlements

Level 3

2023

still held

FINANCIAL ASSETS

Trading loans, securities,

and other

Government and government-related

securities

–

Other debt securities

–

111

(145)

(52)

Equity securities

–

(2)

–

(29)

–

185

(174)

129

(52)

142

Non-trading financial assets at

fair value through profit or loss

Securities

845

–

187

(56)

–

980

(17)

845

–

187

(56)

–

980

(17)

Financial assets at fair value

through other comprehensive

income

Other debt securities

–

(6)

(28)

–

(21)

–

Equity securities

2,477

–

(565)

2,473

(2,008)

–

2,377

(382)

2,537

–

(571)

2,495

(2,036)

–

(21)

2,404

(382)

FINANCIAL LIABILITIES

Trading deposits

(416)

(57)

–

(539)

(15)

(985)

(43)

Derivatives

Interest rate contracts

(156)

(47)

–

(126)

Foreign exchange contracts

(2)

–

(1)

(8)

(6)

Equity contracts

(59)

–

(17)

(1)

(5)

(21)

Commodity contracts

–

(52)

–

(1)

(184)

–

(9)

(4)

(154)

Financial liabilities designated

at fair value through profit or loss

(44)

(89)

–

(486)

597

–

(22)

(89)

Includes foreign exchange.

Gains/losses on financial assets and liabilities are recognized within Non-interest income on the Consolidated Statement

of Income.

Other comprehensive income.

Includes realized gains/losses transferred to retained earnings on disposal of equities designated at FVOCI. Refer

to Note 7 for further details.

Changes in unrealized gains/losses on financial assets at FVOCI are recognized in AOCI.

Issuances and repurchases of trading deposits are reported on a gross basis.

Consists of derivative assets of $

million (October 31, 2023/November 1, 2023 – $

million; November 1, 2022 – $

million) and derivative liabilities of $

221

million

(October 31, 2023/November 1, 2023 – $

176

million; November 1, 2022 – $

234

million), which have been netted in this table for presentation purposes only.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 38

(g)

VALUATION OF ASSETS AND LIABILITIES CLASSIFIED AS LEVEL 3

Significant unobservable inputs in Level

3 positions

The following section discusses the significant

unobservable inputs for Level 3 positions

and assesses the potential effect that a change

in each unobservable

input may have on the fair value measurement.

Price Equivalent

Certain financial instruments, mainly

debt and equity securities, are valued using price

equivalents when market prices are

not available,

with fair value measured

by comparison with observable pricing data

from instruments with similar characteristics.

For debt securities, the price equivalent is

expressed in ‘points’, and

represents a percentage of the par amount.

For equity securities, the price equivalent

is based on a percentage of a proxy price.

There may be wide ranges

depending on the liquidity of the securities.

New issuances of debt and equity securities

are priced at 100% of the issue price.

Correlation

The movements of inputs are not necessarily

independent from other inputs. Such relationships,

where material to the fair value of a given instrument,

are

captured via correlation inputs into the pricing

models. The Bank includes correlation between

the asset class,

as well as across asset classes. For

example, price

correlation is the relationship between prices

of equity securities in equity basket

derivatives, and quanto correlation is the relationship

between instruments which

settle in one currency and the underlying

securities which are denominated in another

currency.

Implied Volatility

Implied volatility is the value of the volatility

of the underlying instrument which, when

input in an option pricing

model, such as Black-Scholes,

will return a

theoretical value equal to the current

market price of the option. Implied volatility

is a forward-looking and subjective measure,

and differs from historical volatility

because the latter is calculated from known

past returns of a security.

Funding Ratio

The funding ratio is a significant unobservable

input required to value loan commitments

issued by the Bank. The funding ratio represents

an estimate of the

percentage of commitments that are ultimately

funded by the Bank. The funding ratio is

based on a number of factors such as observed

historical funding

percentages within the various lending channels

and the future economic outlook, considering

factors including, but not limited to, competitive

pricing and

fixed/variable mortgage rate gap. An increase/decrease

in the funding ratio will increase/decrease

loan commitment liability values in relationship

to prevailing

interest rates.

Earnings Multiple, Discount Rate, and Liquidity

Discount

Earnings multiple, discount rate, and liquidity

discount are significant inputs used when

valuing certain equity securities. Earnings multiples

are selected based on

comparable entities and a higher multiple

will result in a higher fair value. Discount

rates are applied to cash flow forecasts

to reflect time value of money and the

risks associated with the cash flows.

A higher discount rate will result in a lower

fair value. Liquidity discounts may be applied

as a result of the difference in

liquidity between the comparable entity and

the equity securities being valued.

Inflation Rate Swap Curve

Inflation rate swap contracts valuation reflects

spread between interest rate curves and

the inflation rates. The inflation rates are

not observable and are

determined using proxy inputs such as inflation

indices (e.g., Consumer Price Index).

Net Asset Value

The fair value of certain private funds is based

on the net asset value determined by the

fund managers based on valuation methodologies,

as there are no

observable prices for these instruments.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 39

Valuation techniques and inputs used in the fair value measurement

of Level 3 assets and liabilities

The following table presents

the Bank’s assets and liabilities recognized

at fair value and classified as Level 3, together

with the valuation techniques used to

measure fair value, the significant inputs

used in the valuation technique that are considered

unobservable,

and a range of values for those unobservable

inputs.

The range of values represents

the highest and lowest inputs

used in calculating the fair value.

Valuation Techniques and Inputs

Used in the Fair Value Measurement of Level 3 Assets and Liabilit

ies

As at

October 31, 2024

October 31, 2023

Significant

Valuation

unobservable

Lower

Upper

Lower

Upper

technique

inputs (Level 3)

range

Unit

Government and government-

related securities

Market comparable

Bond price equivalent

n/a

100

points

Other debt securities

Market comparable

Bond price equivalent

–

102

–

103

points

Equity securities

Market comparable

New issue price

100

Non-trading financial assets

at fair value through profit or loss

Market comparable

New issue price

100

Discounted cash flow

Discount rates

EBITDA multiple

Earnings multiple

–

20.0

–

20.0

times

Price-based

Net Asset Value

n/a

Derivatives

Interest rate contracts

Discounted cash flow

Inflation rate swap curve

Option model

Funding ratio

Swaption Model

Currency-specific volatility

319

n/a

Foreign exchange contracts

Option model

Currency-specific volatility

Equity contracts

Option model

Price correlation

Quanto correlation

n/a

–

Dividend yield

–

Equity volatility

Commodity contracts

Option model

Quanto correlation

(67)

(47)

(67)

(47)

Trading deposits

Option model

Quanto correlation

n/a

–

Dividend yield

n/a

–

Equity volatility

n/a

Swaption model

Currency-specific volatility

319

503

Financial liabilities designated

at fair value through profit or loss

Option model

Funding ratio

Not applicable.

Equity securities exclude the fair value of Federal Reserve stock and FHLB stock of $

3.2

billion (October 31, 2023 – $

2.2

billion) which are redeemable by the issuer at cost which

approximates fair value. These securities cannot be traded in the market, hence, these securities have not been

subjected to the sensitivity analysis.

Net asset value information for private funds has not been disclosed due to the wide range in prices for these instruments.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 40

The following table summarizes the potential

effect of using reasonably possible alternative

assumptions for financial assets and

financial liabilities held, that are

classified in Level 3 of the fair value hierarchy

as at October 31, 2024 and October 31, 2023.

For trading securities, non-trading securities

at FVTPL and equity

securities at FVOCI, the sensitivity was

calculated based on an upward and downward

shock of the fair value reported. For trading deposits,

the sensitivity was

calculated by varying unobservable inputs

which may include volatility, credit spreads, and correlation. For

interest rate derivatives, the Bank performed

sensitivity analysis on the mortgage spreads

and unobservable inflation curve. For equity

derivatives, the sensitivity was calculated

by using reasonably possible

alternative

assumptions by shocking correlation,

or the price and volatility of the underlying

equity instrument. For financial liabilities

designated at FVTPL, the

sensitivity was calculated based on an upward

and downward shock of the funding ratio.

Sensitivity Analysis of Level 3 Financial

Assets and Liabilities

(millions of Canadian dollars)

As at

October 31, 2024

October 31, 2023

Impact to net assets

Decrease in

Increase in

Decrease in

Increase in

fair value

FINANCIAL ASSETS

Trading loans, securities, and other

Securities

Non-trading financial assets at fair

value through profit or loss

Securities

155

133

Financial assets at fair value through other

comprehensive income

Equity securities

FINANCIAL LIABILITIES

Trading deposits

–

Derivatives

Interest rate contracts

Equity contracts

–

Financial liabilities designated at fair value

through profit or loss

Total

219

200

For the years ended October 31, 2024

and 2023, the aggregate difference yet

to be recognized in net income due to the difference

between the transaction price

and the amount determined using valuation

techniques with significant non-observable inputs

at initial recognition were immaterial.

(h)

FINANCIAL INSTRUMENTS DESIGNATED AT FAIR VALUE

Securities Designated at Fair Value through Profit

or Loss

Certain securities supporting insurance

contract liabilities within the Bank’s insurance

underwriting subsidiaries have been designated

at FVTPL to eliminate or

significantly reduce an accounting mismatch.

Insurance contract liabilities are measured

using a discount factor and changes in the discount

factor are recognized

on the Consolidated Statement of Income.

The unrealized gains or losses on securities

designated at FVTPL are recognized on

the Consolidated Statement of

Income in the same period as gains or losses

resulting from changes to the discount rate

used to value the insurance contract liabilities.

In addition, certain debt securities have been designated

at FVTPL as they are economically hedged

with derivatives and the designation eliminates

significantly reduces an accounting mismatch.

Financial Liabilities Designated at Fair Value through

Profit or Loss

Certain deposits have been designated at FVTPL

to reduce an accounting mismatch from

related economic hedges, and are included

in Financial liabilities

designated at FVTPL on the Consolidated

Balance Sheet. In addition, certain obligations

related to securities sold under repurchase

agreements have been

designated at FVTPL as the instruments

are part of a portfolio that is managed on a

fair value basis and have been included in Obligations

related to securities

sold under repurchase agreements on the Consolidated

Balance Sheet. The fair value of obligations

related to securities sold under repurchase

agreements

designated at FVTPL was $

9,736

million as at October 31, 2024 (October

31, 2023 – $

7,974

million).

For financial liabilities designated at FVTPL,

the estimated amount that the Bank

would be contractually required to pay at

maturity, which is based on notional

amounts, was $

2,744

million less than its fair value as at October

31, 2024 (October 31, 2023 – $

2,897

million).

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 41

NOTE 6: OFFSETTING FINANCIAL ASSETS

AND FINANCIAL LIABILITIES

The Bank enters into netting agreements

with counterparties (such as clearing houses)

to manage the credit risks associated primarily

with repurchase and

reverse repurchase transactions, securities

borrowing and lending transactions, and

OTC and exchange-traded derivatives.

These netting agreements and similar

arrangements generally allow the counterparties

to set-off liabilities against available assets received.

The right to set-off is a legal right to settle or otherwise

eliminate all or a portion of an amount due by

applying against that amount an amount receivable

from the other party. These agreements effectively reduce the

Bank’s credit exposure by what it would have

been if those same counterparties were liable

for the gross exposure on the same underlying

contracts.

Netting arrangements are typically constituted

by a master netting agreement which

specifies the general terms of the agreement

between the counterparties,

including information on the basis of the netting

calculation, types of collateral, and the definition

of default and other termination events

for transactions executed

under the agreement. The master netting

agreements contain the terms and conditions

by which all (or as many as possible) relevant

transactions between the

counterparties are governed. Multiple individual

transactions are subsumed under this general

master netting agreement, forming a single legal

contract under

which the counterparties conduct their relevant

mutual business. In addition to the mitigation

of credit risk, placing individual transactions

under a single master

netting agreement that provides for netting of

transactions in scope also helps to mitigate

settlement risks associated with transacting

in multiple jurisdictions or

across multiple contracts. These arrangements

include clearing agreements, global

master repurchase agreements, and global

master securities lending

agreements.

In the normal course of business, the Bank

enters into contracts to buy and sell goods

and services from various suppliers. Some

of these contracts may have

netting provisions that allow for the offset of various

trade payables and receivables in the event

of default of one of the parties. While these

are not disclosed in

the following table, the gross amount of all payables

and receivables to and from the Bank’s vendors

is disclosed in Note 16 in accounts receivable

and other

items, and in Note 18 in accounts payable,

accrued expenses, and other items.

The Bank also enters into regular way purchases

and sales of stocks and bonds. Some of

these transactions may have netting provisions

that allow for the

offset of broker payables and broker receivables

related to these purchases and sales.

While these are not disclosed in the following

table, the amount of

receivables are presented in amounts receivable

from brokers, dealers, and clients, and payables

are disclosed in amounts payable to brokers,

dealers, and

clients.

The following table provides a summary

of the financial assets and liabilities which

are subject to enforceable master netting

agreements and similar

arrangements, including amounts not otherwise

set-off on the Consolidated Balance Sheet, as

well as financial collateral received to mitigate

credit exposures for

these financial assets and liabilities. The gross

financial assets and liabilities are reconciled

to net amounts and are presented within the

associated line on the

Consolidated Balance Sheet, after transactions

with the same counterparties have been offset. Related

amounts and collateral received that are not

offset on the

Consolidated Balance Sheet, but are otherwise

subject to the same enforceable netting agreements

and similar arrangements, are then presented

to arrive at a

net amount.

Offsetting Financial Assets and Financial Liabilities

(millions of Canadian dollars)

As at

October 31, 2024

Amounts subject to an enforceable

master netting agreement or similar

arrangement that are not offset in

the Consolidated Balance Sheet

1,2

Gross amounts

of recognized

Net amount

financial

of financial

Amounts

instruments

subject to an

before

offset in the

presented in the

enforceable

balance sheet

Consolidated

master netting

netting

Balance Sheet

agreement

Collateral

Net Amount

Financial Assets

Derivatives

79,949

1,888

78,061

42,849

14,214

20,998

Securities purchased under

reverse repurchase agreements

225,475

17,258

208,217

20,904

184,116

3,197

Total

305,424

19,146

286,278

63,753

198,330

24,195

Financial Liabilities

Derivatives

70,256

1,888

68,368

42,849

19,903

5,616

Obligations related to securities sold

under repurchase agreements

219,158

17,258

201,900

20,904

179,318

1,678

Total

289,414

19,146

270,268

63,753

199,221

7,294

October 31, 2023

Financial Assets

Derivatives

93,867

6,485

87,382

47,300

13,526

26,556

Securities purchased under

reverse repurchase agreements

232,211

27,878

204,333

12,291

188,510

3,532

Total

326,078

34,363

291,715

59,591

202,036

30,088

Financial Liabilities

Derivatives

78,125

6,485

71,640

47,300

14,279

10,061

Obligations related to securities sold

under repurchase agreements

194,732

27,878

166,854

12,291

153,090

1,473

Total

272,857

34,363

238,494

59,591

167,369

11,534

Excess collateral as a result of overcollateralization has not been reflected in the table.

Includes amounts where the contractual set-off rights are subject to uncertainty under the laws of the

relevant jurisdiction.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 42

NOTE 7: SECURITIES

Securities are held by the Bank for both trading

and non-trading activities. Trading securities are included

in Trading loans, securities, and other on the

Consolidated Balance Sheet. Non-trading

securities are included in Non-trading financial

assets at FVTPL, Financial assets designated

at FVTPL, Financial assets

at FVOCI, or Debt securities at amortized

cost, net of allowance for credit losses on

the Consolidated Balance Sheet.

(a)

REMAINING TERMS TO MATURITIES OF SECURITIES

The remaining terms to contractual maturities

of the securities held by the Bank are

shown on the following table.

Securities Maturity Schedule

(millions of Canadian dollars)

As at

October 31

2024

2023

Remaining terms to maturities

Over 1

Over 3

Over 5

With no

Within

year to

years to

Over 10

specific

1 year

3 years

5 years

10 years

years

maturity

Total

Trading securities

Government and government-related securities

Canadian government debt

Federal

4,765

1,228

1,876

1,238

1,135

–

10,242

9,145

Provinces

872

1,023

669

1,558

2,276

–

6,398

7,445

U.S. federal, state, municipal governments, and

agencies debt

4,308

2,215

1,580

2,686

8,072

–

18,861

24,394

Other OECD government-guaranteed debt

7,790

861

354

497

220

–

9,722

8,811

Mortgage-backed securities

Residential

459

480

–

1,040

1,484

Commercial

110

–

312

214

18,304

5,856

4,650

6,062

11,703

–

46,575

51,493

Other debt securities

Canadian issuers

900

2,722

1,037

1,194

770

–

6,623

6,072

Other issuers

3,547

7,409

2,788

1,428

686

15,859

14,613

4,447

10,131

3,825

2,622

1,456

22,482

20,685

Equity securities

Common shares

–

68,670

54,204

Preferred shares

–

68,728

54,237

Retained interests

–

Total trading securities

22,751

15,987

8,476

8,684

13,159

68,729

137,786

126,418

Non-trading financial assets at fair value through

profit or loss

Government and government-related securities

U.S. federal, state, municipal governments, and

agencies debt

–

271

–

271

288

–

271

–

271

288

Other debt securities

Canadian issuers

161

–

618

912

750

Asset-backed securities

373

–

414

1,885

Other issuers

–

534

668

1,376

2,683

Equity securities

Common shares

–

1,105

816

Preferred shares

–

1,165

874

Total non-trading financial

assets at fair value

through profit or loss

534

286

1,833

2,812

3,845

Financial assets designated at fair value through profit

or loss

Government and government-related securities

Canadian government debt

Federal

251

–

294

484

Provinces

511

424

247

1,202

2,443

1,817

U.S. federal, state, municipal governments, and

agencies debt

–

Other OECD government-guaranteed debt

188

104

–

310

411

950

567

275

1,202

3,056

2,720

Other debt securities

Canadian issuers

988

882

395

2,395

2,577

Other issuers

817

–

966

521

1,059

1,699

468

3,361

3,098

Total financial assets designated

at fair value

through profit or loss

2,009

2,266

743

1,265

116

6,417

5,818

Represents contractual maturities. Actual maturities may differ due to prepayment privileges in the applicable

contract.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 43

Securities Maturity Schedule

(Continued)

(millions of Canadian dollars)

As at

October 31

2024

2023

Remaining terms to maturities

Over 1

Over 3

Over 5

With no

Within

year to

years to

Over 10

specific

1 year

3 years

5 years

10 years

years

maturity

Total

Securities at fair value through other comprehensive

income

Government and government-related securities

Canadian government debt

Federal

4,587

1,070

3,447

8,651

384

–

18,139

18,210

Provinces

2,807

2,376

6,346

9,609

132

–

21,270

19,940

U.S. federal, state, municipal governments, and

agencies debt

19,837

3,333

1,780

8,179

2,068

–

35,197

11,002

Other OECD government-guaranteed debt

863

521

173

122

–

1,679

1,498

Mortgage-backed securities

1,539

593

–

2,137

2,277

28,099

8,839

12,339

26,561

2,584

–

78,422

52,927

Other debt securities

Asset-backed securities

–

1,252

–

1,384

4,114

Corporate and other debt

1,391

2,600

1,679

2,097

1,679

–

9,446

8,890

1,391

2,600

1,717

2,191

2,931

–

10,830

13,004

Equity securities

Common shares

–

3,914

3,170

Preferred shares

–

501

343

–

4,415

3,513

Total securities at fair value

through other

comprehensive income

29,490

11,439

14,056

28,752

5,515

4,415

93,667

69,444

Debt securities at amortized cost, net of allowance for

credit losses

Government and government-related securities

Canadian government debt

Federal

1,858

12,431

5,222

2,095

1,385

–

22,991

25,344

Provinces

1,587

2,496

5,192

9,339

–

18,614

17,474

U.S. federal, state, municipal governments, and

agencies debt

3,565

19,028

28,157

28,363

44,986

–

124,099

146,217

Other OECD government-guaranteed debt

11,134

18,391

7,133

2,736

–

39,394

41,269

18,144

52,346

45,704

42,533

46,371

–

205,098

230,304

Other debt securities

Asset-backed securities

6,653

3,821

6,734

12,451

–

29,708

39,888

Non-agency collateralized mortgage obligation

portfolio

–

209

15,153

–

15,362

16,791

Canadian issuers

309

2,899

392

1,122

–

4,722

4,552

Other issuers

2,547

6,099

6,044

2,035

–

16,725

16,481

2,905

15,651

10,257

10,100

27,604

–

66,517

77,712

Total debt securities at amortized

cost, net of

allowance for credit losses

21,049

67,997

55,961

52,633

73,975

–

271,615

308,016

Total securities

75,321

97,784

79,770

91,376

93,051

74,995

512,297

513,541

Represents contractual maturities. Actual maturities may differ due to prepayment privileges in the applicable

contract.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 44

(b)

UNREALIZED SECURITIES GAINS (LOSSES)

The following table summarizes the unrealized

gains and losses as at October 31, 2024

and October 31, 2023.

Unrealized Securities Gains (Losses) for

Securities at Fair Value Through Other Comprehensive

Income

(millions of Canadian dollars)

As at

October 31, 2024

October 31, 2023

Cost/

Gross

Cost/

Gross

amortized

unrealized

Fair

amortized

unrealized

Fair

cost

gains

(losses)

value

cost

gains

(losses)

value

Government and government-related

securities

Canadian government debt

Federal

18,281

(159)

18,139

18,335

(170)

18,210

Provinces

21,263

(70)

21,270

19,953

105

(118)

19,940

U.S. federal, state, municipal governments, and

agencies debt

35,371

(196)

35,197

11,260

(275)

11,002

Other OECD government-guaranteed debt

1,687

(9)

1,679

1,521

(24)

1,498

Mortgage-backed securities

2,125

(5)

2,137

2,313

–

(36)

2,277

78,727

134

(439)

78,422

53,382

168

(623)

52,927

Other debt securities

Asset-backed securities

1,397

(14)

1,384

4,146

–

(32)

4,114

Corporate and other debt

9,419

(50)

9,446

8,946

(99)

8,890

10,816

(64)

10,830

13,092

(131)

13,004

Total debt securities

89,543

212

(503)

89,252

66,474

211

(754)

65,931

Equity securities

Common shares

3,810

176

(72)

3,914

3,191

(116)

3,170

Preferred shares

632

(160)

501

566

(224)

343

4,442

205

(232)

4,415

3,757

(340)

3,513

Total securities at fair value through other

comprehensive income

93,985

417

(735)

93,667

70,231

307

(1,094)

69,444

Includes the foreign exchange translation of amortized cost balances at the period-end spot rate.

(c)

EQUITY SECURITIES DESIGNATED AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

The Bank designated certain equity securities

at FVOCI.

The following table summarizes the fair

value of equity securities designated at

FVOCI as at

October 31, 2024 and October 31, 2023, and

dividend income recognized on these securities

for the years ended October 31, 2024 and

October 31, 2023.

Equity Securities Designated at Fair Value Through

Other Comprehensive Income

(millions of Canadian dollars)

As at

For the years ended

October 31, 2024

October 31, 2023

October 31, 2024

October 31, 2023

Fair value

Dividend income recognized

Common shares

3,914

3,170

153

476

Preferred shares

501

343

155

136

Total

4,415

3,513

308

612

The Bank disposed of certain equity securities

in line with the Bank’s investment strategy

and disposed of FHLB stocks in accordance

with FHLB member

stockholding requirements, as follows:

Equity Securities Net Realized Gains

(Losses)

(millions of Canadian dollars)

For the years ended

October 31

2024

2023

Equity Securities

Fair value

643

230

Cumulative realized gain/(loss)

121

(18)

FHLB Stock

Fair value

187

1,575

Cumulative realized gain/(loss)

–

Includes disposal of the Bank’s holdings in First Horizon Corporation (“First Horizon”) common shares

in the third quarter of fiscal 2024.

(d)

DEBT SECURITIES NET REALIZED GAINS

(LOSSES)

The Bank disposed of certain debt securities

measured at amortized cost and FVOCI

during the year.

The following table summarizes the net realized

gains and

losses on securities disposed of during

the years ended October 31, 2024 and October

31, 2023, which are included in Other income

(loss) on the Consolidated

Statement of Income.

Debt Securities Net Realized Gains (Losses)

(millions of Canadian dollars)

For the years ended

October 31

2024

2023

Debt securities at amortized cost

(381)

(57)

Debt securities at fair value through other

comprehensive income

Total

(358)

(48)

Includes $

311

million (US$

226

million) (October 31, 2023 –

nil

) of pre-tax losses on debt securities at amortized cost related to the balance sheet restructuring initiative

undertaken in the

U.S. Retail segment. Refer to Note 26 for additional information regarding the asset limitation on TD’s two

U.S. bank subsidiaries. As of December 4, 2024, the Bank has sold additional

debt securities during the first quarter of fiscal 2025, resulting in approximately an additional $

330

million (US$

236

million) of pre-tax losses on debt securities at amortized cost.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 45

(e)

CREDIT QUALITY OF DEBT SECURITIES

The Bank evaluates non-retail credit risk

on an individual borrower basis, using both

a BRR and FRR, as detailed in the

shaded area of the “Managing Risk”

section of the 2024

MD&A. This system is used to assess all

non-retail exposures, including debt securities.

The following table provides the gross carrying

amounts of debt securities measured

at amortized cost and debt securities at

FVOCI by internal risk rating for credit

risk management purposes, presenting

separately those debt securities that are

subject to Stage 1, Stage 2, and Stage 3

allowances. Refer to the “Allowance

for

Credit Losses” table in Note 8 for details regarding

the allowance and provision for credit losses

on debt securities.

Debt Securities by Risk Rating

(millions of Canadian dollars)

As at

October 31, 2024

October 31, 2023

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Debt securities

Investment grade

360,272

–

n/a

360,272

373,317

–

n/a

373,317

Non-investment grade

439

n/a

530

519

–

n/a

519

Watch and classified

n/a

113

n/a

113

Default

n/a

–

n/a

–

Total debt securities

360,711

159

–

360,870

373,836

113

–

373,949

Allowance for credit losses on debt

securities at amortized cost

–

Total debt securities, net of allowance

360,708

159

–

360,867

373,834

113

–

373,947

Includes debt securities backed by government-guaranteed loans of $

113

million (October 31, 2023 – $

104

million), which are reported in Non-investment grade or a lower risk rating

based on the issuer’s credit risk.

As at October 31, 2024, total debt securities,

net of allowance, in the table above, include

debt securities measured at amortized cost,

net of allowance, of

271,615

million (October 31, 2023 – $

308,016

million), and debt securities measured at

FVOCI of $

89,252

million (October 31, 2023 – $

65,931

million).

The difference between probability-weighted ECLs

and base ECLs on debt securities at FVOCI

and at amortized cost as at both October 31, 2024

and

October 31, 2023, was insignificant. Refer to

Note 3 for further details.

NOTE 8: LOANS, IMPAIRED LOANS, AND ALLOWANCE FOR CREDIT LOSSES

(a)

LOANS AND ACCEPTANCES

The following table provides details regarding

the Bank’s loans and acceptances as at October

31, 2024

and October 31, 2023.

Loans and Acceptances

(millions of Canadian dollars)

As at October 31

2024

2023

Residential mortgages

331,649

320,341

Consumer instalment and other personal

228,382

217,554

Credit card

40,639

38,660

Business and government

356,973

326,528

957,643

903,083

Customers’ liability under acceptances

–

17,569

Loans at FVOCI

(Note 5)

230

421

Total loans

and acceptances

957,873

921,073

Total allowance for loan losses

8,094

7,136

Total loans and acceptances, net of allowance

949,779

913,937

Business and government loans (including

loans at FVOCI) and customers’ liability

under acceptances are grouped together

as reflected below for presentation in

the “Loans and Acceptances by Risk Rating”

table.

Loans and Acceptances – Business and

Government

(millions of Canadian dollars)

As at October 31

2024

2023

Loans at amortized cost

356,973

326,528

Customers’ liability under acceptances

–

17,569

Loans at FVOCI

(Note 5)

230

421

Loans and acceptances

357,203

344,518

Allowance for loan losses

3,583

2,990

Loans and acceptances, net of allowance

353,620

341,528

(b)

CREDIT QUALITY OF LOANS

In the retail portfolio, including individuals and

small businesses, the Bank manages exposures

on a pooled basis, using predictive credit

scoring techniques. For

non-retail exposures, each borrower is assigned

a BRR that reflects the PD of the borrower

using proprietary industry and sector

specific risk models and expert

judgment. Refer to the shaded areas of the “Managing

Risk”

section of the 2024 MD&A for further details,

including the mapping of PD ranges

to risk levels for

retail exposures as well as the Bank’s 21-point

BRR scale to risk levels and external

ratings for non-retail exposures.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 46

The following tables provide the gross carrying

amounts of loans, acceptances, and credit

risk exposures on loan commitments and

financial guarantee contracts

by internal risk rating for credit risk management

purposes,

presenting separately those that are

subject to Stage 1, Stage 2, and Stage 3

allowances.

Loans and Acceptances by Risk Rating

(millions of Canadian dollars)

As at

October 31, 2024

October 31, 2023

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Residential mortgages

1,2,3

Low Risk

238,101

655

n/a

238,756

225,596

n/a

225,642

Normal Risk

65,318

13,620

n/a

78,938

70,423

11,324

n/a

81,747

Medium Risk

370

9,614

n/a

9,984

110

9,581

n/a

9,691

High Risk

3,201

347

3,553

2,573

325

2,908

Default

n/a

418

n/a

353

Total loans

303,794

27,090

765

331,649

296,139

23,524

678

320,341

Allowance for loan losses

116

189

365

154

192

403

Loans, net of allowance

303,678

26,901

705

331,284

295,985

23,332

621

319,938

Consumer instalment and other personal

Low Risk

101,171

2,624

n/a

103,795

100,102

2,278

n/a

102,380

Normal Risk

66,105

12,054

n/a

78,159

60,613

13,410

n/a

74,023

Medium Risk

27,188

6,352

n/a

33,540

24,705

5,816

n/a

30,521

High Risk

4,017

7,881

412

12,310

4,122

5,700

323

10,145

Default

n/a

578

n/a

485

Total loans

198,481

28,911

990

228,382

189,542

27,204

808

217,554

Allowance for loan losses

667

1,120

262

2,049

653

959

197

1,809

Loans, net of allowance

197,814

27,791

728

226,333

188,889

26,245

611

215,745

Credit card

Low Risk

6,902

n/a

6,918

6,499

n/a

6,511

Normal Risk

11,714

188

n/a

11,902

11,171

134

n/a

11,305

Medium Risk

12,908

1,122

n/a

14,030

12,311

1,163

n/a

13,474

High Risk

2,832

4,382

437

7,651

2,567

4,289

401

7,257

Default

n/a

138

n/a

113

Total loans

34,356

5,708

575

40,639

32,548

5,598

514

38,660

Allowance for loan losses

704

1,015

378

2,097

709

913

312

1,934

Loans, net of allowance

33,652

4,693

197

38,542

31,839

4,685

202

36,726

Business and government

1,2,3,5

Investment grade or Low/Normal Risk

158,425

102

n/a

158,527

159,477

101

n/a

159,578

Non-investment grade or Medium Risk

166,892

11,851

n/a

178,743

161,651

10,278

n/a

171,929

Watch and classified or High Risk

704

16,610

17,403

604

11,017

11,696

Default

n/a

2,530

n/a

1,315

Total loans and acceptances

326,021

28,563

2,619

357,203

321,732

21,396

1,390

344,518

Allowance for loan losses

983

1,758

842

3,583

1,157

1,371

462

2,990

Loans and acceptances, net of allowance

325,038

26,805

1,777

353,620

320,575

20,025

928

341,528

Total loans and acceptances

862,652

90,272

4,949

957,873

839,961

77,722

3,390

921,073

Total allowance for loan losses

2,470

4,082

1,542

8,094

2,673

3,435

1,028

7,136

Total loans and acceptances,

net of allowance

860,182

86,190

3,407

949,779

837,288

74,287

2,362

913,937

Includes impaired loans with a balance of $

259

million (October 31, 2023 – $

271

million) which did not have a related allowance for loan losses as the realizable value of the collateral

exceeded the loan amount.

Excludes trading loans and non-trading loans at FVTPL with a fair value of $

billion (October 31, 2023 – $

billion) and $

billion (October 31, 2023 – $

billion), respectively.

Includes insured mortgages of $

billion (October 31, 2023 – $

billion).

Includes Canadian government-insured real estate personal loans of $

billion (October 31, 2023 – $

billion).

Includes loans guaranteed by government agencies of $

billion (October 31, 2023 – $

billion), which are primarily reported in non-investment grade or a lower risk rating based on the

borrowers’ credit risk.

Stage 3 includes ACI loans of

nil

(October 31, 2023 – $

million) and a related allowance for loan losses of

nil

(October 31, 2023 – $

million), which have been included in the “Default”

risk rating category as they were impaired at acquisition.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 47

Loans and Acceptances by Risk Rating

(Continued)

– Off-Balance Sheet Credit Instruments

(millions of Canadian dollars)

As at

October 31, 2024

October 31, 2023

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Retail Exposures

Low Risk

268,234

1,365

n/a

269,599

254,231

1,093

n/a

255,324

Normal Risk

93,576

1,332

n/a

94,908

91,474

1,112

n/a

92,586

Medium Risk

18,562

1,247

n/a

19,809

19,774

1,079

n/a

20,853

High Risk

1,126

1,181

–

2,307

1,209

1,198

–

2,407

Default

n/a

–

n/a

–

Non-Retail Exposures

Investment grade

287,830

–

n/a

287,830

264,029

–

n/a

264,029

Non-investment grade

99,866

6,968

n/a

106,834

98,068

4,396

n/a

102,464

Watch and classified

328

5,418

–

5,746

218

4,158

–

4,376

Default

n/a

252

n/a

107

Total off-balance sheet credit

instruments

769,522

17,511

252

787,285

729,003

13,036

107

742,146

Allowance for off-balance sheet credit

instruments

439

593

1,043

476

565

1,049

Total off-balance sheet credit

instruments, net of allowance

769,083

16,918

241

786,242

728,527

12,471

741,097

Exclude mortgage commitments.

Includes

384

billion (October 31, 2023 – $

369

billion) of personal lines of credit and credit card lines, which are unconditionally cancellable at the Bank’s

discretion at any time.

Includes $

billion (October 31, 2023 – $

billion) of the undrawn component of uncommitted credit and liquidity facilities.

(c)

IMPAIRED LOANS

The following table presents information related

to the Bank’s impaired loans as at October 31, 2024

and October 31, 2023.

Impaired Loans

(millions of Canadian dollars)

As at

October 31, 2024

October 31, 2023

Average

Unpaid

allowance

gross

Unpaid

allowance

gross

principal

Carrying

for credit

impaired

principal

Carrying

for credit

impaired

balance

value

losses

loans

balance

value

losses

loans

Residential mortgages

827

765

685

665

618

Consumer instalment and

other personal

1,045

990

262

894

849

795

197

735

Credit card

575

378

544

514

312

425

Business and government

2,812

2,619

842

1,875

1,473

1,372

456

1,034

Total

5,259

4,949

1,542

3,998

3,501

3,299

1,022

2,812

Balances exclude ACI loans.

Represents contractual amount of principal owed.

(d)

ALLOWANCE FOR CREDIT LOSSES

The following table provides details on

the Bank’s allowance for credit losses as at and

for the years ended October 31, 2024

and October 31, 2023, including

allowance for off-balance sheet instruments in the

applicable categories.

Allowance for Credit Losses

(millions of Canadian dollars)

Foreign

exchange,

Balance at

Provision

Write-offs,

disposals,

Balance

Balance at

Provision

Write-offs,

disposals,

Balance

beginning

for credit

net of

and other

at end of

beginning

for credit

net of

and other

at end of

of year

losses

recoveries

adjustments

year

of year

losses

recoveries

adjustments

year

For the years ended

October 31, 2024

October 31, 2023

Residential mortgages

403

(34)

(7)

365

323

(7)

403

Consumer instalment and other

personal

1,895

1,407

(1,173)

2,133

1,704

988

(806)

1,895

Credit card

2,577

1,676

(1,561)

2,699

2,352

1,327

(1,137)

2,577

Business and government

3,310

1,204

(536)

(38)

3,940

2,984

533

(261)

3,310

Total allowance for loan losses,

including off-balance sheet

instruments

8,185

4,253

(3,277)

(24)

9,137

7,363

2,933

(2,211)

100

8,185

Debt securities at amortized cost

–

Debt securities at FVOCI

(1)

–

Total allowance for credit

losses on debt securities

–

Total allowance for credit losses

8,189

4,253

(3,277)

(24)

9,141

7,366

2,933

(2,211)

101

8,189

Comprising:

Allowance for credit losses on

loans at amortized cost

7,136

8,094

6,432

7,136

Allowance for credit losses on

loans at FVOCI

–

Allowance for loan losses

7,136

8,094

6,432

7,136

Allowance for off-balance sheet

instruments

1,049

1,043

931

1,049

Allowance for credit losses on

debt securities

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 48

(e)

ALLOWANCE FOR LOAN LOSSES BY STAGE

The following table provides details on

the Bank’s allowance for loan losses by stage

as at and for the years ended October 31,

2024

and October 31, 2023.

Allowance for Loan Losses by Stage

(millions of Canadian dollars)

For the years ended

October 31, 2024

October 31, 2023

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Residential Mortgages

Balance at beginning of period

154

192

403

127

140

323

Provision for credit losses

Transfer to Stage 1

137

(133)

(4)

–

123

(120)

(3)

–

Transfer to Stage 2

(30)

(22)

–

(30)

(17)

–

Transfer to Stage 3

–

(32)

–

(2)

(23)

–

Net remeasurement due to transfers into stage

(30)

–

(8)

(23)

–

(5)

New originations or purchases

n/a

Net repayments

(4)

–

(4)

(3)

–

(7)

Derecognition of financial assets (excluding

disposals and write-offs)

(7)

(27)

(35)

(69)

(9)

(23)

(14)

(46)

Changes to risk, parameters, and models

(135)

114

(78)

156

Disposals

–

Write-offs

–

(8)

–

(10)

Recoveries

–

Foreign exchange and other adjustments

(1)

–

Balance at end of period

116

189

365

154

192

403

Consumer Instalment and Other Personal

Balance, including off-balance sheet instruments,

at beginning of period

688

1,010

197

1,895

654

896

154

1,704

Provision for credit losses

Transfer to Stage 1

607

(603)

(4)

–

594

(589)

(5)

–

Transfer to Stage 2

(246)

329

(83)

–

(207)

276

(69)

–

Transfer to Stage 3

(11)

(254)

265

–

(9)

(197)

206

–

Net remeasurement due to transfers into stage

(267)

300

(208)

223

New originations or purchases

359

n/a

359

415

n/a

415

Net repayments

(76)

(95)

(16)

(187)

(63)

(81)

(12)

(156)

Derecognition of financial assets (excluding

disposals and write-offs)

(74)

(104)

(50)

(228)

(76)

(97)

(51)

(224)

Changes to risk, parameters, and models

(286)

590

1,117

1,421

(416)

575

770

929

Disposals

–

Write-offs

–

(1,496)

–

(1,104)

Recoveries

–

323

–

298

Foreign exchange and other adjustments

–

Balance, including off-balance sheet instruments,

at end of period

696

1,175

262

2,133

688

1,010

197

1,895

Less: Allowance for off-balance sheet instruments

–

Balance at end of period

667

1,120

262

2,049

653

959

197

1,809

Credit Card

Balance, including off-balance sheet instruments,

at beginning of period

988

1,277

312

2,577

954

1,191

207

2,352

Provision for credit losses

Transfer to Stage 1

1,087

(1,051)

(36)

–

1,134

(1,108)

(26)

–

Transfer to Stage 2

(323)

404

(81)

–

(317)

375

(58)

–

Transfer to Stage 3

(21)

(881)

902

–

(19)

(715)

734

–

Net remeasurement due to transfers into stage

(476)

477

(513)

476

(16)

New originations or purchases

153

n/a

153

194

n/a

194

Net repayments

101

138

Derecognition of financial assets (excluding

disposals and write-offs)

(55)

(71)

(367)

(493)

(43)

(75)

(264)

(382)

Changes to risk, parameters, and models

(432)

1,204

1,117

1,889

(489)

1,111

771

1,393

Disposals

–

Write-offs

–

(1,880)

–

(1,425)

Recoveries

–

319

–

288

Foreign exchange and other adjustments

Balance, including off-balance sheet instruments,

at end of period

947

1,374

378

2,699

988

1,277

312

2,577

Less: Allowance for off-balance sheet instruments

243

359

–

602

279

364

–

643

Balance at end of period

704

1,015

378

2,097

709

913

312

1,934

Includes allowance for loan losses related to ACI loans.

Transfers represent stage transfer movements prior to ECL remeasurement.

Represents the mechanical remeasurement between twelve-month (i.e., Stage 1) and lifetime ECLs (i.e., Stage 2

or 3) due to stage transfers necessitated by credit risk migration, as

described in the “Significant Increase in Credit Risk” section of Note 2 and Note 3, holding all other factors impacting

the change in ECLs constant.

Represents the increase in the allowance resulting from loans that were newly originated, purchased, or renewed.

Represents the changes in the allowance related to cash flow changes associated with new draws or repayments

on loans outstanding.

Represents the decrease in the allowance resulting from loans that were fully repaid and excludes the decrease

associated with loans that were disposed or fully written off.

Represents the changes in the allowance related to current period changes in risk (e.g., PD) caused by changes

to macroeconomic factors, level of risk, parameters, and/or models,

subsequent to stage migration. Refer to the “Measurement of Expected Credit Losses”, “Forward-Looking

Information” and “Expert Credit Judgment” sections of Note 2 and Note 3 for

further details.

The allowance for loan losses for off-balance sheet instruments is recorded in Other liabilities

on the Consolidated Balance Sheet.

Credit cards are considered impaired and migrate to Stage 3 when they are 90 days past due and written off

at 180 days past due. Refer to Note 2 for further details.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 49

Allowance for Loan Losses by Stage

(Continued)

(millions of Canadian dollars)

For the years ended

October 31, 2024

October 31, 2023

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Business and Government

Balance, including off-balance sheet instruments,

at beginning of period

1,319

1,521

470

3,310

1,220

1,417

347

2,984

Provision for credit losses

Transfer to Stage 1

266

(265)

(1)

–

346

(344)

(2)

–

Transfer to Stage 2

(568)

584

(16)

–

(570)

583

(13)

–

Transfer to Stage 3

(19)

(350)

369

–

(11)

(208)

219

–

Net remeasurement due to transfers into stage

(86)

158

(102)

115

New originations or purchases

1,165

n/a

1,165

1,258

n/a

1,258

Net repayments

(60)

(77)

(117)

(76)

(100)

(135)

Derecognition of financial assets (excluding

disposals and write-offs)

(683)

(611)

(297)

(1,591)

(715)

(587)

(398)

(1,700)

Changes to risk, parameters, and models

(271)

917

1,016

1,662

(178)

585

688

1,095

Disposals

–

(39)

–

Write-offs

–

(600)

–

(307)

Recoveries

–

Foreign exchange and other adjustments

(49)

(12)

Balance, including off-balance sheet instruments,

at end of period

1,150

1,937

853

3,940

1,319

1,521

470

3,310

Less: Allowance for off-balance sheet instruments

167

179

357

162

150

320

Balance at end of period

983

1,758

842

3,583

1,157

1,371

462

2,990

Total Allowance, including

off-balance sheet

instruments, at end of period

2,909

4,675

1,553

9,137

3,149

4,000

1,036

8,185

Less: Total Allowance for

off-balance sheet

instruments

439

593

1,043

476

565

1,049

Total Allowance for Loan Losses

at end of period

2,470

4,082

1,542

8,094

2,673

3,435

1,028

7,136

Includes allowance for loan losses related to ACI loans.

Includes allowance for loan losses related to customers’ liability under acceptances.

For explanations regarding this line item, refer to the “Allowance for Loan Losses by Stage” table on the previous

page in this Note.

The allowance for loan losses for off-balance sheet instruments is recorded in Other liabilities on the

Consolidated Balance Sheet.

The allowance for credit losses on all remaining

financial assets is not significant.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 50

(f)

FORWARD-LOOKING INFORMATION

Relevant macroeconomic factors are incorporated

in risk parameters as appropriate. Additional

risk factors that are industry or segment

specific are also

incorporated, where relevant. The key macroeconomic

variables used in determining ECLs include

regional unemployment rates for all retail

exposures and

regional housing price indices for residential

mortgages and home equity lines of credit.

For business and government loans, the key

macroeconomic variables

include gross domestic product (GDP), unemployment

rates, interest rates, and credit spreads.

Refer to Note 3 for a discussion

of how forward-looking information

is generated and considered in determining

whether there has been a significant increase

in credit risk and in measuring ECLs.

Macroeconomic Variables

Select macroeconomic variables are projected

over the forecast period.

The following table sets out average values

of the macroeconomic variables over the

four

calendar quarters starting with the current

quarter, and the remaining 4-year forecast period for the base

forecast and upside and downside scenarios

used in

determining the Bank’s ECLs as at October

31, 2024. As the forecast period increases, information

about the future becomes less readily available

and projections

are anchored on assumptions around structural

relationships between economic parameters

that are inherently much less certain.

Restrictive monetary policy

continues to contribute to elevated economic

uncertainty, particularly in Canada where household debt levels

remain elevated, and is likely to continue

to weigh on

near-term economic growth.

Macroeconomic Variables

As at

October 31, 2024

Base Forecast

Upside Scenario

Downside Scenario

Average

Remaining

Average

Remaining

Average

Remaining

Q4 2024-

4-year

Q4 2024-

4-year

Q4 2024-

4-year

Q3 2025

period

Q3 2025

period

Q3 2025

period

Unemployment rate

Canada

6.7

6.0

5.7

5.6

7.7

7.3

United States

4.3

4.0

3.8

3.7

5.4

Real GDP

Canada

1.7

2.0

2.1

2.2

(0.4)

2.3

United States

1.9

2.1

2.7

2.4

(0.2)

2.4

Home prices

Canada (average existing price)

6.0

3.0

8.2

3.4

(7.1)

3.7

United States (CoreLogic HPI)

1.3

3.0

4.2

3.8

(8.5)

4.1

Central bank policy interest rate

Canada

3.19

2.27

4.19

2.61

1.69

1.81

United States

3.69

3.00

5.00

3.39

2.81

2.06

U.S. 10-year treasury yield

3.52

3.45

4.49

3.81

3.40

3.34

U.S. 10-year BBB spread (%-pts)

1.75

1.80

1.59

1.76

2.51

2.10

Exchange rate (U.S. dollar/Canadian dollar)

0.74

0.75

0.76

0.71

Macroeconomic Variables

As at

October 31, 2023

Base Forecast

Upside Scenario

Downside Scenario

Average

Remaining

Average

Remaining

Average

Remaining

Q4 2023-

4-year

Q4 2023-

4-year

Q4 2023-

4-year

Q3 2024

period

Q3 2024

period

Q3 2024

period

Unemployment rate

Canada

6.2

5.6

5.8

7.0

7.1

United States

4.0

4.1

3.7

3.9

5.0

5.2

Real GDP

Canada

0.7

1.7

0.9

1.7

(0.8)

1.9

United States

1.5

1.7

2.2

1.8

(0.1)

2.0

Home prices

Canada (average existing price)

0.1

3.7

3.1

3.0

(9.7)

6.7

United States (CoreLogic HPI)

2.5

1.6

3.5

2.1

(8.1)

4.8

Central bank policy interest rate

Canada

4.63

2.39

5.00

2.45

3.75

1.88

United States

5.25

2.94

5.50

2.95

4.25

2.38

U.S. 10-year treasury yield

3.89

3.22

4.21

3.32

3.46

3.17

U.S. 10-year BBB spread (%-pts)

2.18

1.81

1.94

1.78

2.67

2.05

Exchange rate (U.S. dollar/Canadian dollar)

0.72

0.79

0.77

0.81

0.71

0.74

The numbers represent average values for the quoted periods, and average of year-on-year growth for real GDP

and home prices.

The average home price is the average transacted sale price of homes sold via the Multiple Listing Service; data

is collected by the Canadian Real Estate Association.

The CoreLogic home price index (HPI) is a repeat-sales index which tracks increases and decreases in the same

home’s sales price over time.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 51

(g)

SENSITIVITY OF ALLOWANCE FOR CREDIT LOSSES

ECLs are sensitive to the inputs used in internally

developed models, the macroeconomic variables

in the forward-looking forecasts and respective

probability

weightings in determining the probability-weighted

ECLs, and other factors considered when

applying expert credit judgment. Changes

in these inputs,

assumptions, models, and judgments would

affect the assessment of significant increase in

credit risk and the measurement of ECLs.

The following table presents the base ECL

scenario compared to the probability-weighted

ECLs,

with the latter derived from three ECL

scenarios for performing

loans and off-balance sheet instruments. The difference

reflects the impact of deriving multiple

scenarios around the base ECLs

and resultant change in ECLs due

to non-linearity and sensitivity to using

macroeconomic forecasts.

Change from Base to Probability-Weighted ECLs

(millions of Canadian dollars, except

as noted)

As at

October 31, 2024

October 31, 2023

Probability-weighted ECLs

7,584

7,149

Base ECLs

7,185

6,658

Difference – in amount

399

491

Difference – in percentage

5.6

7.4

ECLs for performing loans and off-balance sheet

instruments consist of an aggregate amount

of Stage 1 and Stage 2 probability-weighted

ECLs which are twelve-

month ECLs and lifetime ECLs,

respectively. Transfers from Stage 1 to Stage 2 ECLs result from a

significant increase in credit risk since initial

recognition of the

loan.

The following table shows the estimated

impact of staging on ECLs by presenting

all performing loans and off-balance sheet instruments

calculated using

twelve-month ECLs compared to the current

aggregate probability-weighted ECLs,

holding all risk profiles constant.

Incremental Lifetime ECLs Impact

(millions of Canadian dollars)

As at

October 31, 2024

October 31, 2023

Probability-weighted ECLs

7,584

7,149

All performing loans and off-balance sheet instruments

using 12-month ECLs

5,631

5,295

Incremental lifetime ECLs impact

1,953

1,854

(h)

FORECLOSED ASSETS

Foreclosed assets are repossessed non-financial

assets where the Bank gains title, ownership,

or possession of individual properties,

such as real estate

properties, which are managed for sale in an

orderly manner with the proceeds used

to reduce or repay any outstanding debt. The Bank

does not generally occupy

foreclosed properties for its business use.

The Bank predominantly relies on third-party

appraisals to determine the carrying value of

foreclosed assets. Foreclosed

assets held for sale were $

126

million as at October 31, 2024 (October 31, 2023

– $

million) and were recorded in Other assets

on the Consolidated Balance

Sheet.

(i)

LOANS PAST DUE BUT NOT IMPAIRED

A loan is classified as past due when a borrower

has failed to make a payment by the

contractual due date.

The following table summarizes loans that are

past

due but not impaired. Loans less than 31 days

contractually past due are excluded as

they do not generally reflect a borrower’s ability

to meet their payment

obligations.

Loans Past Due but not Impaired

(millions of Canadian dollars)

As at

October 31, 2024

October 31, 2023

31-60

61-89

31-60

61-89

days

Total

days

Total

Residential mortgages

443

111

554

286

367

Consumer instalment and other personal

983

335

1,318

870

287

1,157

Credit card

375

269

644

359

242

601

Business and government

244

327

264

103

367

Total

2,045

798

2,843

1,779

713

2,492

Includes loans that are measured at FVOCI.

(j)

MODIFIED FINANCIAL ASSETS

The amortized cost of financial assets

with lifetime allowance that were modified

during the year ended October 31, 2024,

was $

214

million (October 31, 2023 –

389

million) before modification, with insignificant

modification gain or loss. The gross carrying

amount of modified financial assets

for which the loss allowance

changed from lifetime to twelve-month ECLs

during the year ended October 31, 2024 was

insignificant (October 31, 2023 – $

144

million).

(k)

COLLATERAL

As at October 31, 2024, the collateral held against

total gross impaired loans represents

% (October 31, 2023 –

%) of total gross impaired loans. The fair

value of non-financial collateral is determined

at the origination date of the loan. A revaluation

of non-financial collateral is performed if

there has been a significant

change in the terms and conditions of the loan

and/or the loan is considered impaired.

Management considers the nature of the collateral,

seniority ranking of the

debt, and loan structure in assessing the

value of collateral. These estimated cash

flows are reviewed at least annually, or more frequently when new

information

indicates a change in the timing or amount expected

to be received.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 52

NOTE 9: TRANSFERS OF FINANCIAL

ASSETS

LOAN SECURITIZATIONS

The Bank securitizes loans through structured

entity or non-structured entity third parties.

Most loan securitizations do not qualify for

derecognition since in most

circumstances, the Bank continues to be exposed

to substantially all of the prepayment, interest

rate, and/or credit risk associated with

the securitized financial

assets and has not transferred substantially

all of the risk and rewards of ownership

of the securitized assets. Where loans do

not qualify for derecognition, they

are not derecognized from the Bank’s Consolidated

Balance Sheet, retained interests are not

recognized, and a securitization liability is recognized

for the cash

proceeds received. Certain transaction costs

incurred are also capitalized and amortized

using EIRM.

The Bank securitizes insured residential

mortgages under the National Housing Act

Mortgage-Backed Securities (NHA

MBS) program sponsored by the

Canada Mortgage and Housing Corporation

(CMHC). The MBS that are created through

the NHA MBS program are sold to the

Canada Housing Trust (CHT) as

part of the CMB program,

sold to third-party investors,

or are held by the Bank. The CHT issues

CMB to third-party investors and uses resulting

proceeds to

purchase NHA MBS from the Bank and other

mortgage issuers in the Canadian market. Assets

purchased by the CHT are commingled

in a single trust from which

CMB are issued. The Bank continues to be exposed

to substantially all of the risks of the underlying

mortgages, through the retention of a seller

swap which

transfers principal and interest payment

risk on the NHA MBS back to the Bank

in return for coupon paid on the CMB

issuance and as such, the sales do not

qualify for derecognition.

The Bank securitizes U.S. originated residential

mortgages with U.S. government agencies

which qualify for derecognition from the Bank’s Consolidated

Balance Sheet. As part of the securitization,

the Bank retains the right to service the

transferred mortgage loans. The MBS that

are created through the

securitization are typically sold to third-party

investors.

The Bank also securitizes business and government

loans to entities which may be structured

entities. These securitizations may give

rise to derecognition of

the financial assets depending on the individual

arrangement of each transaction.

In addition, the Bank transfers credit card receivables

to structured entities that the Bank consolidates.

Refer to Note 10 for further details.

The following table summarizes the securitized

asset types that did not qualify for derecognition,

along with their associated

securitization liabilities as at

October 31, 2024

and October 31, 2023.

Financial Assets Not Qualifying for Derecognition

Treatment as Part of the Bank’s Securitization Programs

(millions of Canadian dollars)

As at

October 31, 2024

October 31, 2023

Fair

Carrying

Fair

Carrying

value

amount

value

amount

Nature of transaction

Securitization of residential mortgage loans

30,543

30,787

23,835

24,433

Other financial assets transferred related

to securitization

2,623

2,619

3,554

3,571

Total

33,166

33,406

27,389

28,004

Associated liabilities

32,442

32,684

26,457

27,131

Includes asset-backed securities, asset-backed commercial paper (ABCP),

cash, repurchase agreements, and Government of Canada securities used to fulfil funding requirements

of the

Bank’s securitization structures after the initial securitization of mortgage loans.

Includes securitization liabilities carried at amortized cost of $

billion as at October 31, 2024 (October 31, 2023 – $

billion), and securitization liabilities carried at fair value of

billion as at October 31, 2024 (October 31, 2023 – $

billion).

Other Financial Assets Not Qualifying for

Derecognition

The Bank enters into certain transactions

where it transfers previously recognized commodities

and financial assets, such as debt and equity

securities, but retains

substantially all of the risks and rewards of

those assets. These transferred assets are

not derecognized and the transfers are accounted

for as financing

transactions. The most common transactions

of this nature are repurchase agreements

and securities lending agreements, in which

the Bank retains substantially

all of the associated credit, price, interest rate,

and foreign exchange risks and rewards

associated with the assets.

The following table summarizes the carrying

amount of financial assets and the associated

transactions that did not qualify for derecognition,

as well as their

associated financial liabilities as at October

31, 2024 and October 31, 2023.

Other Financial Assets Not Qualifying for

Derecognition

(millions of Canadian dollars)

As at

October 31

2024

2023

Carrying amount of assets

Nature of transaction

Repurchase agreements

1,2

40,725

27,782

Securities lending agreements

52,781

40,333

Total

93,506

68,115

Carrying amount of associated liabilities

40,450

28,037

Includes $

2.8

billion, as at October 31, 2024 (October 31, 2023 – $

3.6

billion) of assets related to repurchase agreements or swaps that are collateralized by physical precious

metals.

Associated liabilities are all related to repurchase agreements.

TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 53

TRANSFERS OF FINANCIAL ASSETS QUALIFYING

FOR DERECOGNITION

Transferred financial assets that are derecognized

in their entirety where the Bank has a

continuing involvement

Continuing involvement may arise if the Bank

retains any contractual rights or obligations

subsequent to the transfer of financial assets.

Certain business and

government loans securitized by the Bank are

derecognized from the Bank’s Consolidated Balance

Sheet. In instances where the Bank fully derecognizes

business and government loans, the Bank

may be exposed to the risks of transferred loans

through a retained interest. As at October

31, 2024, the fair value of

retained interests was $

million (October 31, 2023 – $

million). A gain or loss on sale of the loans

is recognized immediately in other income

(loss) after

considering the effect of hedge accounting on

the assets sold, if applicable. The amount

of the gain or loss recognized depends on

the previous carrying values of

the loans involved in the transfer, allocated between the assets

sold and the retained interests based on their

relative fair values at the date of transfer.

Certain portfolios of U.S. residential mortgages

originated by the Bank are sold and derecognized

from the Bank’s Consolidated Balance Sheet.

In certain

instances, the Bank has a continuing involvement

to service those loans. As at October 31, 2024,

the carrying value of these servicing

rights was $

million

(October 31, 2023 – $

million) and the fair value was $

133

million (October 31, 2023 – $

150

million). A gain or loss on sale of the loans

is recognized

immediately in other income (loss). The gain

(loss) on sale of the loans for the year ended

October 31, 2024 was ($

) million (October 31, 2023 – ($

) million).

NOTE 10: STRUCTURED ENTITIES

The Bank uses structured entities for a variety

of purposes including:

(1) to facilitate the transfer of specified risks

to clients; (2) as financing vehicles for itself or

for

clients; or (3)

to segregate assets on behalf of investors.

The Bank is typically restricted from accessing

the assets of the structured entity under the relevant

arrangements.

The Bank is involved with structured entities

that it sponsors,

as well as entities sponsored by third parties.

Factors assessed when determining if the Bank

the sponsor of a structured entity include

whether the Bank is the predominant user of

the entity; whether the entity’s branding or marketing

identity is linked with

the Bank; and whether the Bank provides

an implicit or explicit guarantee of

the entity’s performance to investors or other

third parties. The Bank is not considered

to be the sponsor of a structured entity if

it only provides arm’s-length services to the entity, for example, by acting

as administrator, distributor, custodian, asset

manager, or loan servicer. Sponsorship of a structured entity may indicate

that the Bank had power over the entity at

inception; however, this is not sufficient to

determine if the Bank consolidates the entity. Regardless of

whether or not the Bank sponsors an entity, consolidation is determined

on a case-by-case basis.

(a)

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	6th grade Good

The Toronto-Dominion Bank (TD) 40-F2024 FY Annual report (Canada)

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