Toronto-Dominion Bank, the first Canadian banking company to report fiscal first-quarter earnings this season, said its net income fell 27%, to $567 million or 66 cents a share, from a year earlier.

It was the Toronto company's fourth straight quarterly decline.

Canada's second-biggest bank by assets said its loan-loss provision more than doubled, to $436.5 million, mostly for its consumer banking units in Canada and the United States.

Canadian consumer banking profit fell 2%, to $474 million, as provisions offset record volume growth in banking products. U.S. consumer banking profit grew 89%, to $195 million. Toronto-Dominion has spent more than $15 billion in the past four years to expand in the United States, including the purchases of Portland, Maine-based TD Banknorth and Cherry Hill, N.J.-based Commerce Bancorp Inc. Toronto-Dominion says it has more U.S. branches than Canadian.

The Commerce purchase "was maybe an ill-timed one," said John Stephenson, who helps oversee about $1.03 billion, including Toronto-Dominion shares, at First Asset Investment Management Inc. in Toronto. "I can't say it was wrong, but it looks a little silly now with hindsight."

Bad loans will probably cause an average profit decline of 12% at Canada's six biggest lenders in the most recent quarterly reports, according to Scotia Capital analyst Kevin Choquette. This would be the biggest drop since the third quarter of 2002, he said.

"This is clearly the story of 2009: deterioration in credit quality and the loan-loss provisions that accompany that," said Craig Fehr, an analyst at Edward Jones & Co. in St. Louis. "TD has the biggest U.S. bank exposure, which does cause some issues. That's where credit quality is deteriorating the quickest."

Before one-time items such as hedging and acquisition-related costs, Toronto-Dominion earned $1.08 a share. Robert Sedran, an analyst at National Bank Financial in Toronto, said he had expected $1.05 a share by that measure. The median estimate of 10 analysts surveyed by Bloomberg was for $1.03 a share. Asset management earnings fell 30%, to $123.5 million. Toronto-Dominion recently paid about $515 million to increase its stake in the online broker TD Ameritrade Holding Corp. to 45%, from 39.9%.

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