Safe and Sound

TD Bank, National Association

Wilmington, DE
4
Star Rating
TD Bank, National Association is a Wilmington, DE-based, FDIC-insured bank that opened its doors in 1852. The bank holds equity of $37.19 billion on $288.29 billion in assets, according to December 31, 2017, regulatory filings.

With 25,486 full-time employees in 1,257 offices in multiple states, the bank holds loans and leases worth $141.88 billion, including real estate loans of $59.29 billion. U.S. bank customers currently have $246.42 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 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 did on the three major criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a key measurement of an institution's financial fortitude. It acts as a buffer against losses and provides protection for accountholders when a bank is experiencing economic instability. When it comes to safety and soundness, more capital is preferred.

On our test to measure capital adequacy, TD Bank, National Association received a score of 8 out of a possible 30 points, less than the national average of 13.13.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. TD Bank, National Association's Tier 1 capital ratio was 14.79 percent, exceeding the 6 percent level regulators consider adequate, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial difficulties.

Overall, TD Bank, National Association held equity amounting to 12.90 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to estimate the impact of troubled assets, such as unpaid mortgages, on the bank's loan loss reserves and overall capitalization.

A bank with large numbers of these kinds of assets could eventually be forced to use capital to absorb losses, reducing its cushion of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in lower earnings and potentially more risk of a failure in the future.

TD Bank, National Association scored 40 out of a possible 40 points on Bankrate's test of asset quality, exceeding the national average of 37.49.

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of December 31, 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 1.01 percent.

Banks keep a reserve to handle troubled assets known as an "allowance for loan and lease losses." Comparing the reserve's size to the total amount of at-risk loans can be a widely used 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 affects its safety and soundness. Earnings may be retained by the bank, boosting its capital cushion, or be used to address problematic loans, likely making the bank better able to withstand economic trouble. Banks that are losing money, however, are less able to do those things.

TD Bank, National Association received below-average marks on Bankrate's test of earnings, achieving a score of 10 out of a possible 30.

One key way to measure a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. TD Bank, National Association's most recent annualized quarterly return on equity was 4.32 percent, below the national average of 8.10 percent.

The bank reported net income of $1.55 billion on total equity of $37.19 billion for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.56 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 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.