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Toronto-Dominion: Positioned As North America’s Bank

Summary

An overview of TD’s successful acquisition strategy in America and Canadian history.

Unlike any other bank, TD offers its shareholders exposure to the entire North American banking industry.

Credit Suisse has increased their target price for TD.

The Canadian banking industry is widely accepted to be one of the safest banking networks in the world. It is characterized into two general categories, which are the “large five” and the smaller second-tier banks. The large five include Royal Bank of Canada (NYSE:RY), Toronto-Dominion Bank (NYSE:TD), The Bank of Nova Scotia (NYSE:BNS), Bank of Montreal (NYSE:BMO) and Canadian Imperial Bank of Commerce (NYSE:CM). The second or smaller-tier banks include companies such as National Bank of Canada (OTCPK:NTIOF), Canadian Western Bank (OTCPK:CBWBF) and Laurentian Bank of Canada (OTCPK:LRCDF). Unlike the tier-two Canadian banks, the large five are much more than Canadian banks, and would be better described as international financial conglomerates with a strong rooted foundation in the Canadian banking industry.

The Canadian, banks supported by a historically strong Canadian dollar, increasing profits, cash-rich and with the desire to expand outside of Canada, have spent the last decade on a wild shopping spree. Let’s focus specifically on Toronto-Dominion Bank of Canada, which is commonly referred to as TD Bank or simply TD. TD has spent the last decade assisting the consolidation of the American banking industry, and has emerged as a household brand in America. This is significant to observe, as TD is neither positioned more as a Canadian bank or an American bank; it would be best classified as a North American Bank.

Today in Canada, TD is the second-largest bank by market capitalization and based on assets. It offers a range of financial services and products to greater than 10 million Canadian customers through more than 1,200 branches, and is armed with 2,600 Green Machine ABMs. The current-day TD Bank dates back to 2000, when TD acquired Canada Trust. In recent years, TD has been moving away from the Canada Trust brand to simply TD Bank. TD Bank is the brand name in the USA, which indicates a shift to consolidate brands throughout North America possibly towards one TD Bank, N.A.

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Long-term strategic dividend investing:

Toronto-Dominion Bank: Canada’s Best Export

Summary

Since TD Bank’s more sizable acquisition, Commerce Bank, in 2008, the bank has gained a solid foothold in the U.S., and is now crowned as “America’s Most Convenient Bank.”

TD Bank has grown through a number of acquisitions that have led it to become a top 10 bank in the USA with significant retail.

TD is quickly becoming best-known as a U.S. bank with a strong dividend and steadily rising stock price. TD presents healthy exposure to the U.S. banking industry.

Since Toronto-Dominion Bank’s (NYSE:TD) more sizable acquisition, Commerce Bank, in 2008, the bank has gained a solid foothold in the U.S. by maintaining and focusing on the highly customer-driven strategies, which have been the core focus in Canada. The philosophy, which was adapted from its Canadian retail operations, has allowed the bank to crown itself America’s Most Convenient Bank. While the Canadian banks have grown handsomely in the domestic markets, some have attempted to take on foreign markets, such as Bank of Nova Scotia (NYSE:BNS) and its efforts in developing nations. Bank of Montreal (NYSE:BMO), through acquisition, has increased its presence in America, but the efforts are still bearing non-significant rewards.

In 2004, TD Bank became the majority owner of the remaining Banknorth Group, and renamed it to “TD Banknorth, N.A.” Hudson United Bank, based in Mahwah, New Jersey, became a target for TD Bank and was absorbed in July 2005. This acquisition expanded TD Banknorth’s presence in New York and extended it into northern New Jersey and Philadelphia. As TD Bank moved into 2006, there was still appetite for acquisition, and the takeover of Financial Services Corp. was completed. This acquisition gave TD Bank additional exposure throughout New Jersey. In the fall of 2007, TD Bank and Commerce Bancorp of New Jersey announced that they had signed a definitive agreement for TD Bank to acquire Commerce Bank in a stock and cash transaction. The deal was valued at $8.5 billion. Advancing into 2010, TD Bank demonstrated that there was still room for ongoing acquisitions and bought The South Financial Group located in South Carolina. This would give TD Bank significant exposure along the Eastern side of America. In late 2010, TB Bank moved into the automotive finance market with the purchase of Chrysler Financial, which was later renamed to “TD Auto Finance.”

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