Analyst Presentation Q2 1998 Performance

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Analyst Presentation Q2 1998 Performance

  1. 1. BANK BANK FINANCIAL FINANCIAL GROUP GROUP Analyst Presentation Q2 1998 Performance Dan Marinangeli May 28, 1998 Senior Vice President Quarter Highlights n Strong Revenue Growth - up 24% vs Q2/97 n Other Income higher than Net Interest Income n EPS at $1.00 up 28 % over Q2/97 n Dividend to increase 2 cents in Q3/98 (2nd increase this year) n Credit losses forecast remains at $250 million for 1998. n Tier 1 ratio of 7.1% and total capital ratio of 10.7% n Unrealized securities gains at $ 965 million
  2. 2. EPS Growth: Outperforming Scale of 100 150 140 TD 4 Bank Peer 130 120 110 100 90 Q2/96 Q3/96 Q4/96 Q1/97 Q2/97 Q3/97 Q4/97 Q1/98 Q2/98 Notes: Data has been adjusted to exclude extraordinary items. Q2/98 peer data based on 3 banks. EPS Growth: Cash Basis * Scale of 100 150 140 130 120 110 100 90 Q2/96 Q3/96 Q4/96 Q1/97 Q2/97 Q3/97 Q4/97 Q1/98 Q2/98 * Cash basis measurement is based on excluding goodwill expense. Data has been also been adjusted to exclude extraordinary items.
  3. 3. ROE Cash Basis * % 21 20 19 18 17 16 15 14 Q2/96 Q3/96 Q4/96 Q1/97 Q2/97 Q3/97 Q4/97 Q1/98 Q2/98 * Cash basis measurement is based on excluding goodwill expense. Data has been also been adjusted to exclude extraordinary items. Net Common Equity to Risk- Weighted Assets: Rank #1 % 7.5 TD 4 Bank Peer 7.0 6.5 6.0 5.5 5.0 Q2/96 Q3/96 Q4/96 Q1/97 Q2/97 Q3/97 Q4/97 Q1/98 Q2/98 Note: Q2/98 peer data based on 3 banks.
  4. 4. General Reserves & Securities Surplus $ Millions 1 2 ,41 % of RWA 1 78 ,1 1 .37 1 ,062 1,076 17 .1 1 .09 1 .05 630 0.62 97 97 97 98 98 97 97 97 98 98 2/ 3/ 4/ 1/ 2/ 3/ 2/ 4/ 1/ 2/ Q Q Q Q Q Q Q Q Q Q Q2 Peer Average of 3 banks: 1.02% Strong Asset Quality Ratio of PCL to Loans & BAs % 1.2 TD 4 Bank Peer 0.8 0.4 0.0 1993 1 994 1 995 1996 1 997 Q /98 1 Q2/98 Notes: Q2/98 peer data based on 3 banks. Excludes special general provisions
  5. 5. Margin Contribution Basis Points Q2/97 Q1/98 Q2/98 1. Earning Assets - Excl.securities 155 152 154 and reverse repos 2. Deposits and equity 136 158 163 3. Margin from intermediation 291 310 317 4. Effect of reverse repos , securities, gap earnings, other (51) (89) (110) 5. Total as reported 240 221 207 Expense Rationalization Q2/Q2 Q2/Q1 Reported Increase 20 % 8% Less: n Investment Banking 11 5 n Wealth Management (base) 10 3 n Pont & Rivkin,Croll, Smith goodwill write-offs (4) (3) n Other performance driven compensation - 1 Base Bank 3% 2%
  6. 6. Key Goals - How Did We Do? Goals Q2/98 ROE 16 -18% 17.3% PCL/Loans & BAs 30 bps 22 bps Efficiency - excl. goodwill 58% 61.0% Customer service index 82.5 79.9 Key Strategies – Update 1 2 3 Invest in wealth Reposition Build investment management retail banking banking business business network – TD Securities
  7. 7. Strategy #1 Invest in Wealth Management Wealth Management Revenue Net Income $ millions $ millions 337 43 224 28 Q2/97 Q2/98 Q2/97 Q2/98 Excluding Pont acquisition costs Wealth Management
  8. 8. Wealth Management Net Income as % of Total 14.0% 10.4% Q2/97 Q2/98 Excluding Pont acquisition costs Wealth Management Wealth Management Revenue by Component $ millions 350 300 TDIM 250 Mutual Funds 200 150 Evergreen/ Private Client 100 Discount 50 Brokerage 0 6 6 6 7 7 7 7 8 8 2/9 3/9 4/9 1/9 2/9 3/9 4/9 1/9 2/9 Q Q Q Q Q Q Q Q Q Wealth Management
  9. 9. Mutual Funds $ billions WAF: 1.02% 1.05% 1.09% 1.12% 1.16% 1.19% $15 20% 19% $12 18% $9 17% $6 16% Q2/96 Q4/96 Q2/97 Q4/97 Q2/98 Volume Bank Mkt. Share Wealth Management Wealth Management Assets Under Administration $ billion 1 40 1 20 TDIM 1 00 Mutual Funds 80 60 Evergreen/ Private Client 40 Discount Brokerage 20 0 Q 2/96 Q3/96 Q4/96 Q /97 Q2/97 Q3/97 Q4/97 Q /98 Q2/98 1 1 Wealth Management
  10. 10. Strategy #2 Reposition Retail Banking Network Retail Bank Network Net Income ROE $ millions % 114 24% 93 18% Q2/97 Q2/98 Q2/97 Q2/98 Retail Bank
  11. 11. Residential Mortgages $ billions $35 15% $30 14% Insured mortgages $25 Q2/98: 70% Q2/97: 42% $20 13% Q2/96 Q4/96 Q2/97 Q4/97 Q2/98 Volume Mkt. Share Note: Data includes securitized mortgages. Retail Bank Personal Loans & Cards $ billions $18 14% $15 $12 12% $9 $6 10% Q2/96 Q4/96 Q2/97 Q4/97 Q2/98 Volume Mkt. Share Note: Data includes securitized loans. Retail Bank
  12. 12. Personal Deposits $ billions $50 14% $45 13% $40 $35 12% Q2/96 Q4/96 Q2/97 Q4/97 Q2/98 Volume Mkt. Share Retail Bank Strategy #3 Build Investment Banking Business
  13. 13. Investment Banking Revenue $ millions $346 $183 Q2/97 Q2/98 Investment Banking Investment Banking Net Income ROE $ Millions % $85 30% 22% $42 Q2/97 Q2/98 Q2/97 Q2/98 Investment Banking
  14. 14. Investment Banking Other Income Growth vs Q2/97 162% 30% TD 3 Bank Peer Investment bank revenue includes underwriting, brokerage, capital market fees, and trading income Investment Banking
  15. 15. Waterhouse Investor Services, Inc. Presentation To Analysts Frank J. Petrilli May 28, 1998 Waterhouse Investor Services, Inc. Agenda n Strength of the Franchise Measures n Kennedy Cabot/Jack White Integration n Branch Expansion n Electronic Brokerage n Dow Jones Index Fund
  16. 16. Waterhouse Investor Services, Inc. Average New Account Openings Per Day 1800 1600 1400 1200 1000 800 600 400 200 0 4th Qtr '96 1st Qtr '97 2nd Qtr 3rd Qtr '97 4th Qtr'97 1st Qtr '98 2nd Qtr '97 '98 Excluding Kennedy Cabot Including Kennedy Cabot Waterhouse Investor Services, Inc. Total Accounts (in Thousands) 1200 1000 800 600 400 200 0 4th Qtr '96 1st Qtr '97 2nd Qtr '97 3rd Qtr '97 4th Qtr '97 1st Qtr '98 2nd Qtr '98 Excluding Kennedy Cabot Including Kennedy Cabot
  17. 17. Waterhouse Investor Services, Inc. Average Number of Trades Per Day 50000 40000 30000 20000 10000 0 4th Qtr '96 1st Qtr '97 2nd Qtr '97 3rd Qtr '97 4th Qtr '97 1st Qtr '98 2nd Qtr '98 PC Trades Touch Tone Trades Agent Trades Excluding KCC Kennedy Cabot Waterhouse Investor Services, Inc. Customer Equity (in USD Billions) $45.00 $40.00 $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 4th Qtr '96 1st Qtr '97 2nd Qtr '97 3rd Qtr '97 4th Qtr '97 1st Qtr '98 2nd Qtr '98 Excluding Kennedy Cabot Including Kennedy Cabot
  18. 18. Waterhouse Investor Services, Inc. Money Market Balances (in USD Billions) $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 4th Qtr '96 1st Qtr '97 2nd Qtr '97 3rd Qtr '97 4th Qtr '97 1st Qtr '98 2nd Qtr '98 Excluding Kennedy Cabot Including Kennedy Cabot Waterhouse Investor Services, Inc. Margin Loans (in USD Millions) $2,500 $2,000 $1,500 $1,000 $500 $0 4th Qtr '96 1st Qtr '97 2nd Qtr 3rd Qtr '97 4th Qtr '97 1st Qtr '98 2nd Qtr '97 '98 Excluding Kennedy Cabot Including Kennedy Cabot
  19. 19. Waterhouse Investor Services, Inc. Comparison to Schwab Factor by which Schwab is larger than Waterhouse # New Accounts Total # of Accounts 8 8 7 7 6 6 5 5 4 4 3 3 2 2 1 1 0 0 1 Q '97* st tr 1 Q '98* st tr 1 Qtr '97* st 1 Qtr '98* st * Calendar Quarter Basis Waterhouse Investor Services, Inc. Comparison to Schwab Factor by which Schwab is larger than Waterhouse Total Trades Total Revenue Trades 7 7 6 6 5 5 4 4 3 3 2 2 1 1 0 0 1 Q '97* st tr 1 Q '98* st tr 1Q '97* tr 1 Q '98* st tr * Calendar Quarter Basis
  20. 20. Waterhouse Investor Services, Inc. Comparison to Schwab Factor by which Schwab is larger than Waterhouse Customer Assets - All Customers Customer Assets - PC Customers 1 6 1 6 1 4 1 4 1 2 1 2 1 0 1 0 8 8 N/A 6 6 4 4 2 2 0 0 1 Qtr '97* st 1 t Q '98 s tr 1 Qtr '97* st 1 Qtr '98* st * Calendar Quarter Basis Waterhouse Investor Services, Inc. Comparison to Schwab Factor by which Schwab is larger than Waterhouse Total Revenues Pre-Tax Income 9 9 8 8 7 7 6 6 5 5 4 4 3 3 2 2 1 1 0 0 1 Q '97* st tr 1 Q '98* st tr 1 Q '97* st tr 1 Q '98* st tr * Calendar Quarter Basis
  21. 21. Waterhouse Investor Services, Inc. Kennedy Cabot Integration n KCC Clearing conversion complete n KCC Integration plan in progress - Money Market Funds (June ‘ 98) - Asset Management Account (June ‘98) - Touch-tone Trading (July ‘98) - PC Trading (Oct ‘98) n Jack White deal to close May 29th Waterhouse Investor Services, Inc. Branch Expansion n Currently at 131 branches n On track for 200 branches by year 2000 n Business Development Offices pilot continues n Asian/Hispanic branches opened
  22. 22. Waterhouse Investor Services, Inc. Electronic Brokerage n 3rd largest electronic broker n 250,000 customers enabled for PC trading n Enhanced version of webbroker launched n Tripled capacity from late October n Morningstar mutual fund reports on-line n Expanded linkages (Quicken, Prodigy, Microsoft Money) Waterhouse Investor Services, Inc. Dow Jones Index Funds n Effective March 16th with SEC n Marketing launch underway
  23. 23. Selected Asian Exposures Gross Outstanding Loans and other Credit Exposures Millions of Canadian Dollars April 30, 1998 State Owned Private Country Commercial Commercial Total TOTAL Banks Banks Corporate Dec 31/97 Apr 30/98 Dec 31/97 Apr 30/98 Dec 31/97 Apr 30/98 Dec 31/97 Apr 30/98 Indonesia 200 195 137 107 183 171 520 473 Malaysia 0 0 3 2 0 0 3 2 Philippines 19 0 16 7 22 34 57 41 South Korea 124 149 118 20 0 0 242 169 Thailand 23 1 63 27 7 7 93 35 Total 366 344 337 164 212 212 915 720 BANK FINANCIAL GROUP

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