Safe and Sound

TD Bank, National Association

Wilmington, DE
4
Star Rating
TD Bank, National Association is a Wilmington, DE-based, FDIC-insured bank founded in 1852. As of June 30, 2017, the bank had equity of $36.15 billion on assets of $268.18 billion.

U.S. bank customers have $227.05 billion on deposit at 1,278 offices in multiple states run by 25,096 full-time employees. With that footprint, the bank holds loans and leases worth $135.74 billion, including $57.65 billion worth of real estate loans.

Overall, Bankrate believes that, as of June 30, 2017, TD Bank, National Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a look at how the bank faired on the three major criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and affords protection for depositors during periods of financial trouble for the bank. Therefore, when it comes to measuring an an institution's financial fortitude, capital is crucial. When it comes to safety and soundness, more capital is better.
On our test to measure capital adequacy, TD Bank, National Association received a score of 8 out of a possible 30 points, falling short of the national average of 13.38.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. TD Bank, National Association's Tier 1 capital ratio was 14.39 percent, exceeding the 6 percent level regulators consider adequate, but under the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather economic difficulties.

Overall, TD Bank, National Association held equity amounting to 13.30 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

This test is intended to estimate how the bank's reserves set aside to cover loan losses, as well as overall capitalization could be affected by troubled assets, such as past-due mortgages.

Having large numbers of these types of assets could eventually require a bank to use capital to cover losses, diminishing its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, diminishing earnings and elevating the chances of a future failure.

TD Bank, National Association scored 40 out of a possible 40 points on Bankrate's test of asset quality, above the national average of 37.62.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of June 30, 2017, 1.18 percent of TD Bank, National Association's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.04 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing the how large that reserve is to the total amount of problem loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on TD Bank, National Association's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. Earnings can be retained by the bank, giving a boost to its capital cushion, or be used to deal with problematic loans, likely making the bank more resilient in tough times. Losses, on the other hand, reduce a bank's ability to do those things.

TD Bank, National Association scored 12 out of a possible 30 on Bankrate's test of earnings, below the national average of 16.52.

One important measure of a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. TD Bank, National Association's most recent annualized quarterly return on equity was 5.27 percent, below the national average of 9.28 percent.

The bank earned net income of $924.4 million on total equity of $36.15 billion for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 0.68 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 percent.

WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.