Letter to Shareholders

BY DELIVERING MORE TO OUR CUSTOMERS IN 1995, WE DELIVERED MORE TO YOU, OUR SHAREHOLDERS.

Your Bank increased dividends, strengthened its capital base, and invested in new businesses and operations to generate future growth while achieving record earnings of $794 million. Net income per common share increased by 17% from 1994, thanks to record net interest income, record other income, and the lowest loan losses in over a decade. To reflect these improvements, we are increasing the quarterly dividend per common share in the first quarter of 1996 by $.03 - the third increase in the last two years.

This strong performance in a period of modest economic growth reflects exceptional efforts throughout the Bank - in our traditional businesses and in our new ones. This has improved return on equity - our key benchmark for the delivery of shareholder value.

But there is another goal which is also vital, and that is making banking easier and more satisfying for our customers. And we have a key performance measure for that - our Customer Service Index, a detailed annual survey of over 100,000 customers. In the past year, we saw this index increase by two percentage points to over 80%, which means customers rate TD as "very good" in terms of service.

We aim to excel, improving our performance in all our businesses by this measure every year, in keeping with our public promise, "Your Bank. Your Way.", and the theme of our new advertising campaign, "We're here to help make it easier." We cannot deliver to shareholders if we do not deliver to customers.

Delivering superior service is one of the ways we at TD have been differentiating ourselves from the competition - one of our core strengths. We also differentiate ourselves as the integrated bank, and the bank of industry specialization.

Our strategy to integrate the delivery of a wide range of services and products is our response to customers who told us they want one person to handle all their various dealings with TD - enabling us to tailor financial solutions from a full range of approaches. We have now integrated to the point that one relationship officer represents the bank to each of our corporate, institutional and business clients - and, increasingly, our personal customers.

As the bank of industry specialization, we have used our industry expertise to enter new markets and build new businesses. Our specialization adds great value to our relationships and enhances our ability to advise our customers.

Our strategy is to build on these core strengths - and we have clear benchmarks for measuring our success.

WE'RE HERE TO HELP MAKE IT EASIER FOR OUR CORPORATE AND INSTITUTIONAL CUSTOMERS

Integration and industry specialization have propelled our corporate and investment banking business in North America and around the world.

Our corporate lending has shown solid growth as we have established ourselves as a well-capitalized bank that can fully underwrite loans. An indication of our success is the fact that we are one of the top banks in loan syndications in the United States.

In recent years, we have broadened our ability to serve corporate and institutional clients with the development of investment banking capabilities. As the only Canadian bank to build rather than buy a securities dealer, we have been working to get all the essential elements in place, and in 1995, we accelerated our build of TD Securities Inc.

We acquired Lancaster Financial Holdings Inc. - a highly respected financial advisory firm with strong mergers and acquisitions capabilities. With this acquisition, the launching of a merchant banking business, and the recruiting of strong individuals and teams - including a highly rated Eurobond team in London, and both a high yield group and a bond lending and borrowing (repo) team in New York - we have demonstrated to our customers that we are a major player in the securities business.

Indeed, during 1995, we built on our lead as number one in Canada in private placements, and we became the leader in asset securitization and one of the top players in merchant banking. We had the best market share gains in fixed income and in institutional equity research, sales and trading. Perhaps even more significant in terms of future growth, we were ranked #1 overall in momentum - with both issuers and investors. We aim to maintain the momentum.

TD Securities now has a staff of close to 2,000 in 58 offices, and revenues of over $350 million. And while building in Canada, we moved ahead in the U.S. market, where we had already established a strong mergers and acquisitions business.

TD Securities (USA) Inc. gained Tier II investment banking powers in August, allowing us to underwrite and deal in debt and equity securities in the United States - which in turn allows us to provide a broader range of integrated service to our American and cross-border clients.

In a globalized marketplace, this means supporting clients in key markets. We broadened our international presence this year with the opening of a representative office in Mexico and a trade finance operation in Houston, while gaining approval to proceed in the year ahead with a branch in India and a representative office in Chile. We aim to exceed our customers' domestic and international expectations.

WE'RE HERE TO HELP MAKE IT EASIER FOR OUR BUSINESS CUSTOMERS

We have been working hard to meet the needs of Canada's small and medium-sized businesses - an increasingly important part of the Canadian economy and of our customer base. With our focus on relationships and providing the best products and services, we have made considerable progress: in 1995, we saw substantial increases in the number of customers we serve in this sector, and in our loans to small business.

A key initiative of 1995 was the development of TD Main$treet Banking, our program to expand delivery of business banking services through our entire branch network. This broadens the reach of services previously available only at our Commercial Banking Centres and responds to the needs of small business customers who prefer to deal with their local branch. At the same time, it provides us with an opportunity to integrate delivery of business banking, personal banking, and investment services for entrepreneurs. TD Main$treet Banking is now available at two-thirds of our branches and will be extended to every branch in Canada in 1996.

To reinforce the commitment of our Business Banking Relationship Standards code and build on initiatives such as TD's Independent Business Advisory Panel, we have appointed a senior officer of the Bank as TD's first Ombudsman. Reporting directly to the Chairman, the Ombudsman's mandate is to improve relationships between the Bank and our customers by resolving disputes fairly and professionally, while advising senior management as to sources and causes of disputes, so we can improve service.

WE'RE HERE TO HELP MAKE IT EASIER FOR OUR PERSONAL CUSTOMERS

Over the years, we have developed technology to provide customers with a range of low-priced delivery options for many of their transactions - from our Green Machines to phone and computer banking and brokerage, to satellite banking in the Yukon, to TD Direct Payment, our highly successful debit card operation.

Having improved access and convenience with these new delivery systems, we have repositioned our 943 retail branches across Canada as value-added service centres, where we meet a range of our customers' needs. We have removed many of the administrative functions from our branches, enabling staff to focus on sales and service quality; for example, 5,000 TD employees are qualified to sell mutual funds, and have just completed our Mutual Fund National Education Review. At the same time, our branches are providing longer hours of service than our bank competitors, and faster service, with our $5 Service Guarantee.

A major step forward in the delivery of value-added, integrated services in 1995 was the successful transformation of 180 key branches to TD BANK & TRUST - the first such transformation by a Canadian bank. This move improves our customers' access to estate planning and administration, investment counselling and portfolio management.

We also extended our trust services to the administration of offshore trusts and estates, with the establishment of TD Trust (Bermuda) Limited - broadening the portfolio of wealth management services available to our customers. As well, we established U.S. operations for Green Line Investor Services Inc., our discount broker which has long been the clear leader in Canada - providing Canadians in the United States and American customers with prompt and inexpensive access to Canadian securities markets and dual currency accounts.

In the past two years, Green Line has been complemented by our full service broker TD Evergreen Investment Services Inc. Across Canada, we now have over 110 Investment Advisors in 26 Evergreen branches, which have forged strong relationships with TD Bank branches - broadening the array of financial services and advice available to customers of both operations.

While integrating services and providing higher levels of advice for customers throughout our retail businesses, we developed a number of new products to meet customer needs - such as the highly flexible TD GOLD TRAVEL CARD, and six new mutual funds - including our Science and Technology Fund, which achieved a one-year performance record of 56.2% for the year - one of the best records of all mutual funds in Canada.

CELEBRATING EXCELLENCE

In our new advertising campaign, we say thank you to customers for entrusting us with their business and their money. That trust is due to the people who serve them - the people of TD Bank. They are working harder than ever to help make it easier.

In recognition of superior efforts throughout your Bank, we launched our first TD Award of Excellence program this year - honouring 122 individuals and teams at the national level. All were nominated and selected by their peers, and the selection committees received over 3,000 nominations - an indication of the depth of achievement at TD.

Beyond their efforts to meet our customers' needs, TD people are actively involved in their communities, volunteering their time and giving generously through our employee donation fund. To support these efforts, which reflect well on the Bank, we have strengthened and refocused our corporate donations program - with a special focus on the youth of Canada.

FUTURE PROGRESS

We anticipate lingering political uncertainty and slow economic growth as we enter 1996 - so we aim to outperform the economy once again by building businesses and services that meet our customers' needs. We believe we have the core strengths, strategies, management depth and entrepreneurial leadership in our various businesses to make further progress towards our goals for improving shareholder value.

In the year ahead, we will work to deliver more to our shareholders by making it easier for our customers.

Richard M. Thomson
Chairman and
Chief Executive Officer

A. Charles Baillie
President

Toronto, Canada
November 23, 1995

Consolidated Balance Sheet

Consolidated Statement of Income

Consolidated Statement of Changes in Shareholders' Equity

Consolidated Statement of Changes in Financial Position