TD Bank is content with its branch network along the East Coast and, for now, is not interested in deals that would take it into new markets, according to its chief financial officer.
But the $228 billion-asset unit of Toronto-Dominion Bank plans to continue opening branches in important markets and remains interested in acquisitions of business lines that would add loans but not necessarily deposits, CFO Steve Boyle said in an investor presentation Wednesday.
Speaking at a conference in Boston hosted by RBC Capital Markets, Boyle said that while low interest rates are a threat to branch profitability, branches remain valuable because they bring in not just deposits, but customers who potentially need a range of products and services.
"We used to be focused on [deposit] balances, but now our focus is on the number of customers and how we are going to sell them products," Boyle said.
TD has opened dozens of branches in recent years, and it plans to continue adding them in urban areas such as Washington, Boston and New York. Boyle said that TD has the No. 5 market share in New York and that its goal is to be No. 3 there by 2016.
The bank is also interested in adding more portfolio businesses, Boyle said. This year the bank acquired Target stores' $5.7 billion-asset credit card portfolio, and two years ago it entered the U.S. automobile lending business when it bought Chrysler Financial. Those acquisitions are big reasons why TD's loan portfolio was up 17.5%, to $102.8 billion, at June 30 from a year earlier.
Boyle did not rule out bank acquisitions, but noted that the bank is already flush with deposits and wants to be careful about adding more. At June 30, TD's loan-to-deposit ratio was 53.12%, well below the industry average of 70.35%, according to Federal Deposit Insurance Corp. data.
He added that the regulatory climate has also made it more difficult for large banks like TD to make acquisitions these days. The bank built itself into an East Coast powerhouse through a series of large acquisitions, but Boyle said that potential deals have come under "a lot more scrutiny" in the wake of the financial crisis.
"We're happy with our current footprint," Boyle said. "We don't feel any compelling need to do acquisitions."