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TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 1

CONSOLIDATED FINANCIAL STATEMENTS

Page

Management’s Responsibility for Financial Information

Report of Independent Registered Public

Accounting Firm – Public Company Accounting

Oversight Board Standards (United States)

Report of Independent Registered Public

Accounting Firm – Internal Control over

Financial Reporting

Consolidated Financial Statements

Consolidated Balance Sheet

Consolidated Statement of Income

Consolidated Statement of Comprehensive

Income

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to Consolidated Financial Statements

Note 1

Nature of Operations

Note 2

Summary of Material Accounting Policies

Note 3

Significant Accounting Judgments, Estimates,

and Assumptions

Note 4

Current and Future Changes in Accounting

Policies

Note 5

Fair Value Measurements

Note 6

Offsetting Financial Assets and Financial Liabilities

Note 7

Securities

Note 8

Loans, Impaired Loans, and Allowance for

Credit Losses

Note 9

Transfers of Financial Assets

Note 10

Structured Entities

Note 11

Derivatives

Note 12

Investments in Associates and Joint Ventures

Note 13

Goodwill and Other Intangibles

Note 14

Land, Buildings, Equipment, Other Depreciable

Assets, and Right-of-Use Assets

Note 15

Other Assets

Note 16

Deposits

Note 17

Other Liabilities

Note 18

Subordinated Notes and Debentures

Note 19

Equity

Note 20

Insurance

Note 21

Share-Based Compensation

Note 22

Employee Benefits

Note 23

Income Taxes

Note 24

Earnings Per Share

Note 25

Provisions, Contingent Liabilities, Commitments,

Guarantees, Pledged Assets, and

Collateral

Note 26

Related Party Transactions

Note 27

Segmented Information

Note 28

Interest Income and Expense

Note 29

Credit Risk

Note 30

Regulatory Capital

Note 31

Information on Subsidiaries

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 2

FINANCIAL RESULTS

Consolidated Financial Statements

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL

INFORMATION

The management of The Toronto-Dominion Bank and its subsidiaries (the “Bank”)

is responsible for the integrity, consistency, objectivity,

and reliability of the

Consolidated Financial Statements of the Bank

and related financial information as

presented. International Financial Reporting Standards

as issued by the

International Accounting Standards Board,

as well as the requirements of the

Bank Act (Canada)

, and related regulations have been applied and

management has

exercised its judgment and made best estimates

where appropriate.

The Bank’s accounting system and related internal

controls are designed, and supporting procedures

maintained, to provide reasonable assurance

that

financial records are complete and accurate,

and that assets are safeguarded against

loss from unauthorized use or disposition.

These supporting procedures

include the careful selection and training

of qualified staff, the establishment of organizational

structures providing a well-defined division

of responsibilities and

accountability for performance, and the

communication of policies and guidelines

of business conduct throughout the Bank.

Management has assessed the effectiveness of the

Bank’s internal control over financial reporting

as at October 31, 2025,

using the framework found in

Internal Control – Integrated Framework issued

by the Committee of Sponsoring Organizations

of the Treadway Commission 2013 Framework. Based upon

this

assessment, management has concluded

that as at October 31, 2025,

the Bank’s internal control over financial reporting

is effective.

The Bank’s Board of Directors, acting through the

Audit Committee, which is composed entirely

of independent directors, oversees management’s

responsibilities for financial reporting. The

Audit Committee reviews the Consolidated

Financial Statements and recommends them

to the Board for approval.

Other responsibilities of the Audit Committee

include monitoring the Bank’s system of internal

control over the financial reporting process

and making

recommendations to the Board and shareholders

regarding the appointment of the external

auditor.

The Bank’s Chief Auditor, who has full and free access to the Audit

Committee, conducts an extensive program

of audits. This program supports the

system of

internal control and is carried out by a professional

staff of auditors.

The Office of the Superintendent of Financial

Institutions Canada, makes such examination

and enquiry into the affairs of the Bank as deemed

necessary to

ensure that the provisions of the

Bank Act (Canada)

, having reference to the safety of the depositors,

are being duly observed and that the Bank

is in sound

financial condition.

Ernst & Young LLP,

the independent auditors appointed by

the shareholders of the Bank, have audited

the effectiveness of the Bank’s internal control over

financial reporting as of October 31, 2025, in addition

to auditing the Bank’s Consolidated Financial

Statements as of the same date. Their

reports, which

expressed unqualified opinions, can be found

on the following pages. Ernst & Young LLP have full and free access

to, and meet periodically with, the Audit

Committee to discuss their audit and

matters arising therefrom, such as, comments

they may have on the fairness of financial

reporting and the adequacy of

internal controls.

Raymond Chun

Kelvin Tran

Group President and

Group Head and

Chief Executive Officer

Chief Financial Officer

Toronto, Canada

December 3, 2025

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TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 7

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of The Toronto-Dominion Bank

Opinion on the Consolidated Financial

Statements

We have audited the accompanying Consolidated

Balance Sheets

of The Toronto-Dominion Bank (TD) as of October 31, 2025

and 2024, the related Consolidated

Statements

of Income, Comprehensive Income,

Changes in Equity, and Cash Flows for the years then ended,

and the related notes (collectively referred

to as the

“consolidated financial statements”). In our opinion,

the consolidated financial statements present

fairly, in all material respects, the consolidated financial position

of TD at October 31, 2025 and 2024, its

consolidated financial performance and its

consolidated cash flows for the years then

ended, in conformity with

International Financial Reporting Standards

(IFRS) as issued by the International Accounting

Standards Board.

We also have audited, in accordance with the

standards of the Public Company Accounting

Oversight Board (United States) (PCAOB),

TD’s internal control over

financial reporting as of October 31, 2025, based

on criteria established in Internal Control –

Integrated Framework issued by the Committee

of Sponsoring

Organizations of the Treadway Commission (2013 framework)

and our report dated December 3, 2025, expressed

an unqualified opinion thereon.

Basis for Opinion

These consolidated financial statements are

the responsibility of TD’s management. Our responsibility

is to express an opinion on TD’s consolidated

financial

statements based on our audits. We are a public

accounting firm registered with the PCAOB

and are required to be independent with respect

to TD in accordance

with the U.S. federal securities laws and

the applicable rules and regulations of

the Securities and Exchange Commission

and the PCAOB.

We conducted our audits in accordance with

the standards of the PCAOB. Those standards

require that we plan and perform the audit

to obtain reasonable

assurance about whether the financial

statements are free of material misstatement,

whether due to error or fraud. Our audits

included performing procedures to

assess the risks of material misstatement

of the financial statements, whether due

to error or fraud, and performing procedures

that respond to those risks. Such

procedures included examining, on a test basis,

evidence regarding the amounts and disclosures

in the consolidated financial statements.

Our audits also included

evaluating the accounting principles used and

significant estimates made by management,

as well as evaluating the overall presentation

of the consolidated

financial statements. We believe that our audits

provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below

are matters arising from the current

period audit of the consolidated financial

statements that were communicated

or required to be communicated to the audit

committee and that: (1) relate to accounts

or disclosures that are material to the consolidated

financial statements,

and (2) involved our especially challenging,

subjective, or complex judgments.

The communication of critical audit

matters does not alter in any way our opinion

the consolidated financial statements, taken

as a whole, and we are not, by communicating

the critical audit matters below, providing separate opinions on

the

critical audit matters or on the accounts or

disclosures to which they relate.

Allowance for credit losses

Description of the Matter

TD describes its significant accounting judgments,

estimates, and assumptions in relation

to the allowance for credit losses in Note 3

of the consolidated financial statements. As

disclosed in Note 8 to the consolidated financial

statements, TD recognized $9,745 million

in allowances for credit losses on its

consolidated balance sheet using an expected

credit loss model (ECL). The ECL is an

unbiased

and probability-weighted estimate of credit losses

expected to occur in the future, which is

based on the probability of default (PD),

loss given default (LGD) and exposure at

default (EAD) or the expected cash

shortfall relating to the underlying financial asset.

The

ECL is determined by evaluating a range

of possible outcomes incorporating the time

value of money and reasonable and supportable

information about past events, current conditions,

and future economic forecasts. ECL allowances

are measured at amounts equal to

either (i) 12-month ECL; or (ii) lifetime ECL

for those financial instruments that have experienced

a significant increase in credit risk

(SICR) since initial recognition or when

there is objective evidence of impairment.

Auditing the allowance for credit losses was

complex and required the application of

significant judgment and involvement of

specialists because of the sophistication of

the models, the forward-looking nature

of the key assumptions, and the inherent

interrelationship of the critical variables used

in measuring the ECL. Key areas of judgment

include evaluating: (i) the models and

methodologies used for measuring both the

12-month and lifetime expected credit losses;

(ii) the assumptions used in the ECL

scenarios including forward-looking information

(FLI) and assigning probability weighting;

(iii) the determination of SICR; and (iv)

the

assessment of the qualitative component applied

to the modelled ECL based on management’s

expert credit judgment.

How We Addressed the

Matter in Our Audit

We obtained an understanding, evaluated the design,

and tested the operating effectiveness of

management’s controls over the

allowance for credit losses. The controls

we tested included, amongst others, the development

and validation of models and selection

of appropriate inputs including economic forecasting,

determination of non-retail borrower

risk ratings, the integrity of the data used

including the associated controls over relevant

information technology (IT) systems,

and the governance and oversight over the

modelled results and the use of expert credit judgment.

To test the allowance for credit losses, our audit procedures included, amongst

others, involving our credit risk specialists

to assess

whether the methodology and assumptions,

including management’s SICR triggers, used in

significant models that estimate the ECL

across various portfolios are consistent

with the requirements of IFRS. This included

reperforming the model validation procedures

for

a sample of models to evaluate whether management’s

conclusions were appropriate. With the assistance

of our economic specialists,

we evaluated the models, methodology and

process used by management to develop

the FLI variable forecasts for each scenario

and

the scenario probability weights. For a sample

of FLI variables, we compared management’s

FLI to independently derived forecasts

and publicly available information. On a sample

basis, we recalculated the ECL to test

the mathematical accuracy of management’s

models. We tested the completeness and accuracy

of data used in measuring the ECL by agreeing

to source documents and systems

and evaluated a sample of management’s non-retail

borrower risk ratings against TD’s risk rating

policy. With the assistance of our

credit risk specialists, we also evaluated

management’s methodology and governance

over the application of expert credit judgment

evaluating that the amounts recorded

were reflective of underlying credit quality and

macroeconomic trends. We also assessed the

adequacy of disclosures related to the allowance

for credit losses.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 8

Fair value measurement of derivatives

Description of the Matter

TD describes its significant accounting judgments,

estimates, and assumptions in relation

to the fair value measurement of derivatives

in Note 3 of the consolidated financial

statements. As disclosed in Note 5 of the

consolidated financial statements, TD

has derivative

assets of $82,972 million and derivative liabilities

of $79,356 million recorded at fair value.

Certain of these derivatives are complex

and illiquid and require valuation techniques

that may include complex models and

non-observable inputs, requiring management’s

estimation and judgment.

Auditing the valuation of certain derivatives required

the application of significant auditor judgment

and involvement of valuation

specialists in assessing the complex

models and non-observable inputs used. Certain

valuation inputs used to determine fair

value

that may be non-observable include volatilities,

correlations, and credit spreads. The

valuation of certain derivatives is sensitive

these inputs as they are forward-looking and

could be affected by future economic and market

conditions.

How We Addressed the

Matter in Our Audit

We obtained an understanding, evaluated the design,

and tested the operating effectiveness of

management’s controls, including the

associated controls over relevant IT systems,

over the valuation of TD’s derivative portfolio.

The controls we tested included, amongst

others, the controls over the suitability and

mechanical accuracy of models used in the

valuation of derivatives, and controls over

management’s independent assessment of

fair values, including the integrity of data used

in the valuation such as the significant

inputs noted above.

To test the valuation of these derivatives, our audit procedures included,

amongst others, an evaluation of the

methodologies and

significant inputs used by TD. With the assistance

of our valuation specialists, we performed

an independent valuation for a sample of

derivatives to assess the modelling assumptions

and significant inputs used to estimate

the fair value, which involved obtaining

significant inputs from independent external

sources,

where available.

We also assessed the adequacy of the

disclosures related to

the fair value measurement of derivatives.

Measurement of provision for uncertain

tax positions

Description of the Matter

TD describes its significant accounting judgments,

estimates, and assumptions in relation

to income taxes in Note 3 and Note 23 of

the

consolidated financial statements. As a

financial institution operating in multiple jurisdictions,

TD is subject to complex and constantly

evolving tax legislation. Uncertainty in a tax position

may arise as tax laws are subject to interpretation.

TD uses significant judgment in

i) determining whether it is probable that TD

will have to make a payment to tax authorities

upon their examination of certain uncertain

tax positions and ii) measuring the amount of

the provision.

Auditing TD’s provision for uncertain tax positions

involved

the application of judgment and is based on

interpretation of tax legislation

and jurisprudence.

How We Addressed the

Matter in Our Audit

We obtained an understanding, evaluated the design,

and tested the operating effectiveness of

management’s controls over TD’s

provision for uncertain tax positions.

The controls we tested included, amongst others,

the controls over the assessment of the

technical merits of tax positions and management’s

process to measure the provision for

uncertain tax positions.

With the assistance of our tax professionals,

we assessed the technical merits and the

amount recorded for uncertain tax positions.

Our audit procedures included, amongst others,

using our knowledge of, and experience

with, the application of tax laws by the

relevant income tax authorities to evaluate

TD’s interpretations and assessment of tax laws

with respect to uncertain tax positions.

assessed the implications of correspondence

received by TD from the relevant tax authorities

and evaluated income tax opinions or

other third-party advice obtained. We also assessed

the adequacy of the disclosures related

to uncertain tax positions.

Valuation of Goodwill in the U.S. Personal and

Commercial Banking group of Cash Generating

Units

Description of

the Matter

TD describes its significant accounting judgments,

estimates, and assumptions in relation

to the recoverable amount of its cash

generating units (“CGU”) or group of

CGUs to which goodwill has been allocated

in Note 3 of the consolidated financial

statements. As

disclosed in Note 13 of the consolidated financial

statements, TD has $14,776 million of goodwill

in the U.S. Retail segment, which

predominantly relates to the U.S. Personal

and Commercial Banking group of cash generating

units (“US P&C CGUs”). Goodwill is

assessed for impairment annually, or more frequently if impairment

indicators are present.

Auditing the recoverable amount for the

U.S. P&C CGUs was complex and required

the application of significant auditor judgment

and

involvement of valuation specialists in assessing

certain significant assumptions in the impairment

test. Significant assumptions in the

estimate of the recoverable amount included

the discount rate and certain forward-looking

assumptions, such as the terminal

growth

rate, and forecasted earnings,

which are affected by expectations about future

market or economic conditions.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 9

How We Addressed the

Matter in Our Audit

We obtained an understanding, evaluated the design,

and tested the operating effectiveness of

management’s controls over the

recoverable amount of TD’s U.S. P&C CGUs.

The controls we tested included, amongst

others, the controls over management’s

review of TD’s forecast

as well as controls over management’s review

of the model and methodology over significant

assumptions

such as the discount rate and the terminal

growth rate.

We also tested controls over management’s review

of the integrity of the data

used and the mathematical accuracy of

their valuation model.

To test the estimated recoverable amount of the U.S. P&C CGUs, our audit procedures

included, amongst others, with the assistance

of our valuation specialists, assessing

the methodology and testing the significant

assumptions and underlying data used by

TD in its

assessment. We considered the selection and

application of the discount rate by evaluating

the inputs and mathematical accuracy of

the calculation, while also developing an independent

estimate and comparing it to the discount

rate selected by management. We

considered the selection and application of

the terminal growth rate by evaluating the

selected rate against relevant market

and

economic forecast data. We evaluated the reasonability

of the forecasted earnings by comparing

to historical results and considering

our current understanding of the business as

well as current economic trends. We assessed

the historical accuracy of management’s

prior year estimates by performing a comparison

of management’s prior year projections to actual

results. We performed sensitivity

analysis on the significant assumptions to

consider the impact of changes in the recoverable

amount that would result from changes in

the assumptions. We also assessed the adequacy

of the disclosures related to the valuation of

goodwill.

/s/ Ernst & Young LLP

Chartered Professional Accountants

Licensed Public Accountants

We have served as TD’s sole auditor since 2006. Prior

to 2006, we or our predecessor firm have

served as joint auditor with various other firms

since 1955.

Toronto, Canada

December 3, 2025

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 10

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of The Toronto-Dominion Bank

Opinion on Internal Control over Financial

Reporting

We have audited The Toronto-Dominion Bank’s (TD) internal control over financial reporting

as of October 31, 2025, based on criteria

established in Internal

Control – Integrated Framework issued by

the Committee of Sponsoring Organizations

of the Treadway Commission (2013 framework) (the

COSO criteria). In our

opinion, TD maintained, in all material respects,

effective internal control over financial

reporting as of October 31, 2025, based on

the COSO criteria.

We also have audited, in accordance with the

standards of the Public Company Accounting

Oversight Board (United States) (PCAOB),

the Consolidated Balance

Sheets

of TD as of October 31, 2025

and 2024, the related Consolidated Statements

of Income, Comprehensive Income,

Changes in Equity and Cash Flows for

the years then ended, and the related notes,

and our report dated December 3, 2025, expressed

an unqualified opinion thereon.

Basis for Opinion

TD’s management is responsible for maintaining

effective internal control over financial reporting,

and for its assessment of the effectiveness of

internal control

over financial reporting included in the accompanying

Management’s Report on Internal Control over

Financial Reporting contained in the accompanying

Management’s Discussion and Analysis. Our responsibility

is to express an opinion on TD’s internal control

over financial reporting based on our

audit. We are a

public accounting firm registered with the PCAOB

and are required to be independent with respect

to TD in accordance with the U.S. federal securities

laws and

the applicable rules and regulations of the

Securities and Exchange Commission and

the PCAOB.

We conducted our audit in accordance with the

standards of the PCAOB. Those standards

require that we plan and perform the audit

to obtain reasonable

assurance about whether effective internal control

over financial reporting was maintained in

all material respects.

Our audit included obtaining an understanding

of internal control over financial reporting,

assessing the risk that a material weakness

exists, testing and evaluating

the design and operating effectiveness of internal

control based on the assessed risk, and performing

such other procedures as we considered necessary

in the

circumstances. We believe that our audit provides

a reasonable basis for our opinion.

Definition and Limitations of Internal Control

over Financial Reporting

A company’s internal control over financial

reporting is a process designed to provide reasonable

assurance regarding the reliability of financial

reporting and the

preparation of financial statements for external

purposes in accordance with International

Financial Reporting Standards as issued by the

International Accounting

Standards Board. A company’s internal control over

financial reporting includes those policies

and procedures that (1) pertain to the

maintenance of records that,

in reasonable detail, accurately and fairly reflect

the transactions and dispositions of

the assets of the company; (2) provide reasonable

assurance that

transactions are recorded as necessary to

permit preparation of financial statements

in accordance with International Financial

Reporting Standards as issued by

the International Accounting Standards Board,

and that receipts and expenditures of the

company are being made only in accordance

with authorizations of

management and directors of the company;

and (3) provide reasonable assurance regarding

prevention or timely detection of unauthorized

acquisition, use, or

disposition of the company’s assets that could have

a material effect on the financial statements.

Because of its inherent limitations, internal

control over financial reporting may not prevent

or detect misstatements. Also, projections

of any evaluation of

effectiveness to future periods are subject to

the risk that controls may become inadequate

because of changes in conditions, or that

the degree of compliance

with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Chartered Professional Accountants

Licensed Public Accountants

Toronto, Canada

December 3, 2025

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 11

Consolidated Financial Statements

CONSOLIDATED BALANCE SHEET

(As at and in millions of Canadian dollars)

October 31, 2025

October 31, 2024

ASSETS

Cash and due from banks

7,512

6,437

Interest-bearing deposits with banks

109,417

169,930

116,929

176,367

Trading loans, securities, and other

(Note 5)

220,136

175,770

Non-trading financial assets at fair value through

profit or loss

(Note 5)

7,395

5,869

Derivatives

(Notes 5, 11)

82,972

78,061

Financial assets designated at fair value through

profit or loss

(Notes 5, 7)

6,986

6,417

Financial assets at fair value through other

comprehensive income

(Note 5)

126,369

93,897

443,858

360,014

Debt securities at amortized cost, net

of allowance for credit losses (Notes 5,

240,439

271,615

Securities purchased under reverse repurchase

agreements (Note 6)

247,078

208,217

Loans (Notes 5, 8)

Residential mortgages

315,063

331,649

Consumer instalment and other personal

259,033

228,382

Credit card

41,662

40,639

Business and government

345,943

356,973

961,701

957,643

Allowance for loan losses

(Note 8)

(8,689)

(8,094)

Loans, net of allowance for loan losses

953,012

949,549

Other

Investment in Schwab

(Note 12)

–

9,024

Goodwill

(Note 13)

18,980

18,851

Other intangibles

(Note 13)

3,409

3,044

Land, buildings, equipment, other depreciable

assets, and right-of-use assets

(Note 14)

10,132

9,837

Deferred tax assets

(Note 23)

5,388

4,937

Amounts receivable from brokers, dealers,

and clients

27,345

22,115

Other assets

(Note 15)

27,988

28,181

93,242

95,989

Total assets

2,094,558

2,061,751

LIABILITIES

Trading deposits

(Notes 5, 16)

37,882

30,412

Derivatives

(Notes 5, 11)

79,356

68,368

Securitization liabilities at fair value

(Notes 5, 9)

25,283

20,319

Financial liabilities designated at fair value

through profit or loss

(Notes 5, 16)

197,635

207,914

340,156

327,013

Deposits (Notes 5, 16)

Personal

650,396

641,667

Banks

27,233

57,698

Business and government

589,475

569,315

1,267,104

1,268,680

Other

Obligations related to securities sold

short

(Note 5)

43,795

39,515

Obligations related to securities sold

under repurchase agreements

(Note 6)

221,150

201,900

Securitization liabilities at amortized

cost

(Notes 5, 9)

14,841

12,365

Amounts payable to brokers, dealers, and

clients

27,434

26,598

Insurance contract liabilities

(Note 20)

7,278

7,169

Other liabilities

(Note 17)

34,240

51,878

348,738

339,425

Subordinated notes and debentures (Notes

5, 18)

10,733

11,473

Total liabilities

1,966,731

1,946,591

EQUITY

Shareholders’ Equity

Common shares

(Note 19)

24,727

25,373

Preferred shares and other equity instruments

(Note 19)

11,625

10,888

Treasury – common shares

(Note 19)

–

(17)

Treasury – preferred shares and other equity instruments

(Note 19)

(4)

(18)

Contributed surplus

285

204

Retained earnings

78,320

70,826

Accumulated other comprehensive income (loss)

12,874

7,904

Total equity

127,827

115,160

Total liabilities and equity

2,094,558

2,061,751

The accompanying Notes are an integral part of these Consolidated Financial Statements.

Raymond Chun

Nancy G. Tower

Group President and Chief Executive Officer

Chair, Audit Committee

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 12

CONSOLIDATED STATEMENT OF INCOME

(millions of Canadian dollars, except

as noted)

For the years ended October 31

2025

2024

Interest income

(Note 28)

Loans

51,730

53,676

Reverse repurchase agreements

9,859

11,621

Securities

Interest

18,209

20,295

Dividends

2,648

2,371

Deposits with banks

5,175

5,426

87,621

93,389

Interest expense (Note 28)

Deposits

40,039

46,860

Securitization liabilities

886

1,002

Subordinated notes and debentures

519

436

Repurchase agreements and short sales

11,602

13,322

Other

1,513

1,297

54,559

62,917

Net interest income

33,062

30,472

Non-interest income

Investment and securities services

8,522

7,400

Credit fees

1,650

1,898

Trading income (loss)

4,602

3,628

Service charges

2,788

2,626

Card services

2,905

2,947

Insurance revenue

(Note 20)

7,737

6,952

Other income (loss)

(Notes 7, 8, 12)

6,511

1,300

34,715

26,751

Total revenue

67,777

57,223

Provision for (recovery of) credit losses

(Note 8)

4,506

4,253

Insurance service expenses (Note 20)

6,089

6,647

Non-interest expenses

Salaries and employee benefits

18,227

16,733

Occupancy, including depreciation

1,961

1,958

Technology and equipment, including depreciation

2,872

2,656

Amortization of other intangibles

780

702

Communication and marketing

1,643

1,516

Restructuring charges

(Note 25)

686

566

Brokerage-related and sub-advisory fees

528

498

Professional, advisory and outside services

4,288

3,064

Other

2,554

7,800

33,539

35,493

Income before income taxes and share

of net income from investment in Schwab

23,643

10,830

Provision for (recovery of) income taxes

(Note 23)

3,410

2,691

Share of net income from investment

in Schwab (Note 12)

305

703

Net income

20,538

8,842

Preferred dividends and distributions

on other equity instruments

565

526

Net income available to common shareholders

19,973

8,316

Earnings per share

(Canadian dollars)

(Note 24)

Basic

11.57

4.73

Diluted

11.56

4.72

Dividends per common share

(Canadian dollars)

4.20

4.08

Includes $

79,001

million for the year ended October 31, 2025 (October 31, 2024 – $

84,324

million), which has been calculated based on the effective interest rate method

(EIRM).

The accompanying Notes are an integral part of these Consolidated Financial Statements.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 13

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(millions of Canadian dollars)

For the years ended October 31

2025

2024

Net income

20,538

8,842

Other comprehensive income (loss)

Items that will be subsequently reclassified

to net income

Net change in unrealized gain/(loss) on

financial assets at fair value through

other comprehensive income

Change in unrealized gain/(loss)

579

285

Reclassification to earnings of net loss/(gain)

(23)

Changes in allowance for credit losses recognized

in earnings

(1)

Income taxes relating to:

Change in unrealized gain/(loss)

(159)

(68)

Reclassification to earnings of net loss/(gain)

(1)

491

205

Net change in unrealized foreign currency

translation gain/(loss) on

investments in foreign operations, net

of hedging activities

Change in unrealized gain/(loss)

1,094

540

Reclassification to earnings of net loss/(gain)

(534)

(19)

Net gain/(loss) on hedges

(1,088)

(457)

Reclassification to earnings of net loss/(gain)

on hedges

799

Income taxes relating to:

Net gain/(loss) on hedges

298

122

Reclassification to earnings of net loss/(gain)

on hedges

(220)

(11)

349

216

Net change in gain/(loss) on derivatives

designated as cash flow hedges

Change in gain/(loss)

7,840

3,354

Reclassification to earnings of loss/(gain)

(4,858)

173

Income taxes relating to:

Change in gain/(loss)

(2,164)

(929)

Reclassification to earnings of loss/(gain)

1,337

(50)

2,155

2,548

Share of other comprehensive income (loss)

from investment in Schwab

1,870

2,007

Items that will not be subsequently reclassified

to net income

Remeasurement gain/(loss) on employee

benefit plans

Gain/(loss)

(151)

Income taxes

(5)

(111)

Change in net unrealized gain/(loss)

on equity securities designated at

fair value through other comprehensive income

Change in net unrealized gain/(loss)

150

222

Income taxes

(39)

(60)

111

162

Gain/(loss) from changes in fair value due

to own credit risk on

financial liabilities designated at fair value

through profit or loss

Gain/(loss)

(8)

Income taxes

(6)

Total other comprehensive income (loss)

4,987

5,043

Total comprehensive income (loss)

25,525

13,885

Attributable to:

Common shareholders

24,960

13,359

Preferred shareholders and other equity instrument

holders

565

526

The accompanying Notes are an integral part of these Consolidated Financial Statements.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 14

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(millions of Canadian dollars)

For the years ended October 31

2025

2024

Common shares (Note 19)

Balance at beginning of year

25,373

25,434

Proceeds from shares issued on exercise of stock options

165

112

Shares issued as a result of dividend reinvestment plan

130

529

Purchase of shares for cancellation and other

(941)

(702)

Balance at end of year

24,727

25,373

Preferred shares and other equity instruments (Note 19)

Balance at beginning of year

10,888

10,853

Issuance of shares and other equity instruments

1,787

1,335

Redemption of shares and other equity instruments

(1,050)

(1,300)

Balance at end of year

11,625

10,888

Treasury – common shares (Note 19)

Balance at beginning of year

(17)

(64)

Purchase of shares

(13,094)

(11,209)

Sale of shares

13,111

11,256

Balance at end of year

–

(17)

Treasury – preferred shares and other equity instruments (Note 19)

Balance at beginning of year

(18)

(65)

Purchase of shares and other equity instruments

(1,535)

(625)

Sale of shares and other equity instruments

1,549

672

Balance at end of year

(4)

(18)

Contributed surplus

Balance at beginning of year

204

155

Net premium (discount) on sale of treasury instruments

Issuance of stock options, net of options exercised

Other

Balance at end of year

285

204

Retained earnings

Balance at beginning of year

70,826

73,008

Impact of reclassification of securities supporting insurance operations

related to the adoption of IFRS 17

–

(10)

Net income attributable to equity instrument holders

20,538

8,842

Common dividends

(7,228)

(7,163)

Preferred dividends and distributions on other equity instruments

(565)

(526)

Share and other equity instrument issue expenses

(7)

Net premium on repurchase of common shares and redemption of preferred shares and other equity instruments

(Note 19)

(5,265)

(3,295)

Remeasurement gain/(loss) on employee benefit plans

(111)

Realized gain/(loss) on equity securities designated at fair value through other comprehensive income

Balance at end of year

78,320

70,826

Accumulated other comprehensive income (loss)

Net unrealized gain/(loss) on financial assets at fair value through other comprehensive income:

Balance at beginning of year

(208)

(413)

Impact of reclassification of securities supporting insurance operations

related to the adoption of IFRS 17

–

Other comprehensive income (loss)

490

196

Allowance for credit losses

(1)

Balance at end of year

283

(208)

Net unrealized gain/(loss) on equity securities designated at fair value through other comprehensive income:

Balance at beginning of year

(127)

Other comprehensive income (loss)

115

250

Reclassification of loss/(gain) to retained earnings

(4)

(88)

Balance at end of year

146

Gain/(loss) from changes in fair value due to own credit risk on financial liabilities designated at fair value

through profit or loss:

Balance at beginning of year

(22)

(38)

Other comprehensive income (loss)

(6)

Balance at end of year

(28)

(22)

Net unrealized foreign currency translation gain/(loss) on investments in foreign operations, net of hedging activities:

Balance at beginning of year

12,893

12,677

Other comprehensive income (loss)

349

216

Balance at end of year

13,242

12,893

Net gain/(loss) on derivatives designated as cash flow hedges:

Balance at beginning of year

(2,924)

(5,472)

Other comprehensive income (loss)

2,155

2,548

Balance at end of year

(769)

(2,924)

Share of accumulated other comprehensive income (loss) from Investment in Schwab

–

(1,870)

Total accumulated other comprehensive income

12,874

7,904

Total equity

127,827

115,160

The accompanying Notes are an integral part of these Consolidated Financial Statements.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 15

CONSOLIDATED STATEMENT OF CASH FLOWS

(millions of Canadian dollars)

For the years ended October 31

2025

2024

Cash flows from (used in) operating activities

Net income

20,538

8,842

Adjustments to determine net cash flows from (used in) operating activities

Provision for (recovery of) credit losses

(Note 8)

4,506

4,253

Depreciation

(Note 14)

1,386

1,325

Amortization of other intangibles

(Note 13)

780

702

Net securities loss/(gain)

(Note 7)

1,951

358

Share of net income from investment in Schwab

(Note 12)

(305)

(703)

Gain on sale of Schwab shares

(Note 12)

(9,159)

(1,022)

Deferred taxes

(Note 23)

(764)

(1,061)

Changes in operating assets and liabilities

Interest receivable and payable

(Notes 15, 17)

(1,072)

1,133

Securities sold under repurchase agreements

19,250

35,046

Securities purchased under reverse repurchase agreements

(38,861)

(3,884)

Obligations related to securities sold short

4,280

(5,146)

Trading loans, securities, and other

(44,366)

(23,680)

Loans net of securitization and sales

(8,024)

(57,908)

Deposits

5,894

69,922

Derivatives

6,077

6,049

Non-trading financial assets at fair value through profit or loss

(1,526)

1,471

Financial assets and liabilities designated at fair value through profit or loss

(10,848)

15,185

Securitization liabilities

7,440

5,552

Current income taxes

441

658

Amounts receivable and payable from brokers, dealers, and clients

(4,394)

4,027

Other, including unrealized foreign currency translation loss/(gain)

(22,870)

(6,182)

Net cash from (used in) operating activities

(69,646)

54,937

Cash flows from (used in) financing activities

Issuance of subordinated notes and debentures

(Note 18)

2,283

3,324

Redemption or repurchase of subordinated notes and debentures

(Note 18)

(3,175)

(1,544)

Common shares issued, net of issuance costs

(Note 19)

150

100

Repurchase of common shares, including tax on net value of share repurchases

(Note 19)

(6,206)

(3,997)

Preferred shares and other equity instruments issued, net of issuance costs

(Note 19)

1,780

1,328

Redemption of preferred shares and other equity instruments

(Note 19)

(1,050)

(1,300)

Sale of treasury shares and other equity instruments

(Note 19)

14,692

11,948

Purchase of treasury shares and other equity instruments

(Note 19)

(14,629)

(11,834)

Dividends paid on shares and distributions paid on other equity instruments

(7,663)

(7,160)

Repayment of lease liabilities

(1,683)

(678)

Net cash from (used in) financing activities

(15,501)

(9,813)

Cash flows from (used in) investing activities

Interest-bearing deposits with banks

61,591

(71,153)

Activities in financial assets at fair value through other comprehensive income

Purchases

(77,185)

(42,542)

Proceeds from maturities

33,481

18,825

Proceeds from sales

14,425

4,130

Activities in debt securities at amortized cost

Purchases

(53,435)

(11,306)

Proceeds from maturities

49,646

49,606

Proceeds from sales

39,026

5,772

Net purchases of land, buildings, equipment, other depreciable assets, and other intangibles

(Note 14)

(2,145)

(2,177)

Net cash acquired from divestitures

(Note 12)

20,784

3,423

Net cash from (used in) investing activities

86,188

(45,422)

Effect of exchange rate changes on cash and due from banks

Net increase (decrease) in cash and due from banks

1,075

(284)

Cash and due from banks at beginning of year

6,437

6,721

Cash and due from banks at end of year

7,512

6,437

Supplementary disclosure of cash flows from operating activities

Amount of income taxes paid (refunded) during the year

4,332

3,812

Amount of interest paid during the year

55,466

61,779

Amount of interest received during the year

84,808

91,013

Amount of dividends received during the year

2,687

2,694

The accompanying Notes are an integral part of these Consolidated Financial Statements.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 16

Notes to Consolidated Financial Statements

NOTE 1: NATURE OF OPERATIONS

CORPORATE INFORMATION

The Toronto-Dominion Bank is a bank chartered under the

Bank Act (Canada)

. The shareholders of a bank are not, as

shareholders, liable for any liability, act, or

default of the bank except as otherwise provided

under the

Bank Act (Canada)

. The Toronto-Dominion Bank and its subsidiaries are collectively known

as TD

Bank Group (“TD” or the “Bank”). The Bank

was formed through the amalgamation

on February 1, 1955,

of The Bank of Toronto (chartered in 1855) and The

Dominion Bank (chartered in 1869). The Bank

is incorporated and domiciled in Canada

with its registered and principal business

offices located at 66 Wellington

Street West, Toronto, Ontario. TD serves customers in four business segments

operating in a number of locations in key

financial centres around the globe:

Canadian Personal and Commercial Banking,

U.S. Retail, Wealth Management and Insurance,

and Wholesale Banking.

BASIS OF PREPARATION

The accompanying Consolidated Financial

Statements and accounting principles

followed by the Bank have been prepared in

accordance with International

Financial Reporting Standards (IFRS),

as issued by the International Accounting

Standards Board (IASB), including the

accounting requirements of the Office of

the Superintendent of Financial Institutions

Canada (OSFI).

The Consolidated Financial Statements are

presented in Canadian dollars, unless

otherwise indicated.

These Consolidated Financial Statements

were prepared using the accounting policies

as described in Note 2. Certain comparative

amounts have been revised

to conform with the presentation adopted in

the current period.

The preparation of the Consolidated Financial

Statements requires that management

make judgments, estimates, and assumptions

regarding the reported

amount of assets, liabilities, revenue and expenses,

and disclosure of contingent assets and

liabilities, as further described

in Note 3. Accordingly, actual results

may differ from estimated amounts as future

confirming events occur.

The accompanying Consolidated Financial

Statements of the Bank were approved and

authorized for issue by the Bank’s Board of

Directors, in accordance

with a recommendation of the Audit Committee,

on December 3, 2025.

The risk management policies and procedures

of the Bank are provided in the Management’s

Discussion and Analysis (MD&A).

The shaded sections of the

“Managing Risk” section of the 2025 MD&A,

relating to market, liquidity, and insurance risks, are an integral

part of these Consolidated Financial Statements,

permitted by IFRS.

NOTE 2: SUMMARY OF MATERIAL ACCOUNTING POLICIES

BASIS OF CONSOLIDATION

The Consolidated Financial Statements include

the assets, liabilities, results of operations,

and cash flows of the Bank and its subsidiaries

including certain

structured entities which it controls.

The Bank’s Consolidated Financial Statements have

been prepared using uniform accounting policies

for like transactions and events in similar

circumstances.

All intercompany transactions, balances,

and unrealized gains and losses on transactions

are eliminated on consolidation.

Subsidiaries

Subsidiaries are corporations or other legal

entities controlled by the Bank, generally

through directly holding more than half of

the voting power of the entity.

Control of subsidiaries is determined based

on the power exercisable through ownership

of voting rights and is generally aligned with

the risks and/or returns

(collectively referred to as “variable returns”)

absorbed from subsidiaries through those

voting rights. As a result, the Bank controls

and consolidates subsidiaries

when it holds the majority of the voting rights

of the subsidiary, unless there is evidence that another investor

has control over the subsidiary. The existence and

effect of potential voting rights that are currently

exercisable or convertible are considered

in assessing whether the Bank controls

an entity. Subsidiaries are

consolidated from the date the Bank obtains

control and continue to be consolidated until

the date when control ceases to exist.

The Bank may consolidate certain subsidiaries

where it owns 50% or less of the voting rights.

Most of those subsidiaries are structured entities

as described in the

following section.

Structured Entities

Structured entities are entities created

to accomplish a narrow and well-defined objective.

Structured entities may take the form

of a corporation, trust, partnership,

or unincorporated entity. They are often created with legal arrangements

that impose limits on the decision-making powers

of their governing board, trustee, or

management. Structured entities are consolidated

when the substance of the relationship

between the Bank and the structured entity

indicates that the Bank

controls the entity. When assessing whether the Bank has to consolidate

a structured entity, the Bank evaluates three primary criteria in order

to conclude

whether, in substance:

●

The Bank has the power to direct the activities

of the structured entity that have the

most significant impact on the entity’s variable returns;

●

The Bank is exposed to significant variable

returns arising from the entity; and

●

The Bank has the ability to use its power

to affect the variable returns to which it is exposed.

Consolidation conclusions are reassessed at

the end of each financial reporting period.

The Bank’s policy is to consider the impact on consolidation

of all

significant changes in circumstances,

focusing on the following:

●

Substantive changes in ownership, such as

the purchase or disposal of more than

an insignificant interest in an entity;

●

Changes in contractual or governance arrangements

of an entity;

●

Additional activities undertaken, such as providing

a liquidity facility beyond the original terms

or entering into a transaction not originally

contemplated;

●

Changes in the financing structure of an entity;

and

●

Changes in the rights to exercise power over

an entity.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 17

INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

Entities over which the Bank has significant

influence are associates and entities over

which the Bank has joint control are joint

ventures. Significant influence is

the power to participate in the financial and

operating policy decisions of an investee,

but is not control or joint control over these

entities. Significant influence is

presumed to exist where the Bank holds between

% and

% of the voting rights of an entity. Significant influence may

also exist where the Bank holds less

than

% of the voting rights and has influence over

financial and operating policy-making processes,

through board representation and significant

commercial

arrangements. Associates and joint ventures

are accounted for using the equity method

of accounting. Investments in associates and

joint ventures are carried on

the Consolidated Balance Sheet initially at

cost and increased or decreased to recognize

the Bank’s share of the profit or loss of the associate

or joint venture,

capital transactions, including the receipt of any

dividends, and write-downs to reflect

any impairment in the value of such entities.

These increases or decreases,

together with any gains and losses realized

on disposition, are reported on the

Consolidated Statement of Income. The

carrying amount of the investments also

includes the Bank’s share of the investee’s other comprehensive

income or loss, which is reported in

the relevant section of the Consolidated

Statement of

Comprehensive Income.

At each balance sheet date, the Bank assesses

whether there is any objective evidence

that the investment in an associate or joint

venture is impaired. The

Bank calculates the amount of impairment

as the difference between the higher of fair

value or value-in-use and its carrying value.

CASH AND DUE FROM BANKS

Cash and due from banks consist of cash and

amounts due from banks which are issued

by investment grade financial institutions.

These amounts are due on

demand or have an original maturity of three

months or less.

REVENUE RECOGNITION

Revenue is recognized at an amount that reflects

the consideration the Bank expects to be

entitled to in exchange for transferring

services to a customer,

excluding amounts collected on behalf of

third parties. The Bank recognizes revenue

when it transfers control of a good or a service

to a customer at a point in

time or over time. The determination

of when performance obligations are satisfied

requires the use of judgment. Refer

to Note 3 for further details.

The Bank identifies contracts with customers

subject to IFRS 15,

Revenue from Contracts with Customers

, which create enforceable rights and obligations.

The

Bank determines the performance obligations

based on distinct services promised to

the customers in the contracts. The Bank’s

contracts generally have a term of

one year or less, consist of a single performance

obligation, and the performance obligations

generally reflect services.

For each contract, the Bank determines the

transaction price, which includes estimating

variable consideration and assessing whether

the price is constrained.

Variable consideration is included in the transaction

price to the extent that it is highly probable

that a significant reversal of the amount will not

occur when the

uncertainty associated with the amount of

variable consideration is subsequently resolved.

As such, the estimate of the variable consideration

is constrained until

the end of the invoicing period. The

uncertainty is generally resolved at the end

of the reporting period and as such, no significant

judgment is required when

recognizing variable consideration in revenues.

The Bank’s receipt of payment from customers

generally occurs subsequent to the

satisfaction of performance obligations or a

short time thereafter. As such,

the Bank has not recognized any material

contract assets (unbilled receivables) or

contract liabilities (deferred revenues)

and there is no significant financing

component associated with the consideration

due to the Bank.

When another party is involved in the transfer

of services to a customer, an assessment is made to evaluate

whether the Bank is the principal such that

revenues are reported on a gross basis or

the agent such that revenues are reported

on a net basis. The Bank is the principal

when it controls the services in the

contract promised to the customer before

they are transferred. Control is demonstrated

by the Bank being primarily responsible

for fulfilling the transfer of the

services to the customer, having discretion in establishing pricing

of the services, or both.

Investment and securities services

Investment and securities services income

includes

asset management fees, administration

and commission fees, and investment banking

fees. The Bank

recognizes asset management and administration

fees based on time elapsed, which depicts

the rendering of investment management

and related services over

time. The fees are primarily calculated based

on average daily or point in time assets

under management (AUM) or assets under administration

(AUA) depending

on the investment mandate.

Commission fees include sales, trailer and

brokerage commissions. Sales and brokerage

commissions are generally recognized at a point

in time when the

transaction is executed. Trailer commissions are recognized

over time and are generally calculated based

on the average daily net asset value of

the fund during

the period.

Investment banking fees include advisory

fees and underwriting fees and are generally

recognized at a point in time upon successful

completion of the

engagement.

Credit fees

Credit fees include liquidity fees, restructuring

fees, letter of credit fees, and loan syndication

fees. Liquidity, restructuring,

and letter of credit fees are recognized

income over the period in which the service

is provided. Loan syndication fees are

generally recognized at a point in time

upon completion of the financing

placement.

Service charges

Service charges income is earned on personal

and commercial deposit accounts and

consists of account fees and transaction-based

service charges. Account

fees relate to account maintenance activities

and are recognized in income over the

period in which the service is provided. Transaction-based

service charges are

recognized as earned at a point in time

when the transaction is complete.

Card services

Card services income includes interchange

income as well as card fees such as annual

and transactional fees. Interchange income

is recognized at a point in time

when the transaction is authorized and funded.

Card fees are recognized as earned at the

transaction date with the exception of annual

fees, which are recognized

over a twelve-month period.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 18

FINANCIAL INSTRUMENTS

Classification and Measurement of Financial

Assets

The Bank classifies its financial assets into

the following categories:

●

Amortized cost;

●

Fair value through other comprehensive income

(FVOCI);

●

Held-for-trading;

●

Non-trading fair value through profit or loss

(FVTPL); and

●

Designated as measured at FVTPL.

The Bank recognizes financial assets on a

settlement date basis, except for derivatives

and securities, which are recognized on a

trade date basis.

Debt Instruments

The classification and measurement for debt

instruments is based on the Bank’s business

models for managing its financial assets

and whether the contractual

cash flows represent solely payments of principal

and interest (SPPI). Refer to Note 3 for judgment

with respect to the determination of the Bank’s

business

models and whether contractual cash flows represent

SPPI.

The Bank has determined its business

models as follows:

●

Held-to-collect: the objective is to collect

contractual cash flows;

●

Held-to-collect-and-sell: the objective is both

to collect contractual cash flows and

sell the financial assets; and

●

Held-for-sale and other business models: the

objective is neither of the above.

The Bank performs the SPPI test for

financial assets held within the held-to-collect

and held-to-collect-and-sell business models.

If these financial assets have

contractual cash flows which are inconsistent

with a basic lending arrangement that do

not pass the SPPI test,

they are classified as non-trading financial

assets

measured at FVTPL. In a basic lending arrangement,

interest includes consideration for time

value of money, credit risk, other basic lending risks, and a

reasonable profit margin.

Debt Securities and Loans Measured at Amortized

Cost

Debt securities and loans held within a held-to-collect

business model where their contractual

cash flows pass the SPPI test are measured

at amortized cost. The

carrying amount of these financial assets is

adjusted by an allowance for credit losses

recognized and measured as described in

the Impairment – Expected Credit

Loss Model

section of this Note, as well as any write-offs and unearned

income which includes prepaid interest,

loan origination fees and costs, commitment

fees,

loan syndication fees, and unamortized discounts

or premiums. Interest income is recognized

using EIRM. The effective interest rate (EIR) is

the rate that

discounts expected future cash flows for

the expected life of the financial instrument

to its carrying value. The calculation takes

into account the contractual interest

rate, along with any fees or incremental

costs that are directly attributable to the instrument

and all other premiums or discounts. Loan

origination fees and costs

are considered to be adjustments to the loan

yield and are recognized in interest income

over the term of the loan. Commitment fees are

recognized in credit fees

over the commitment period when it is

unlikely that the commitment will be

called upon; otherwise, they are recognized

in interest income over the term of the

resulting loan. Loan syndication fees are recognized

in credit fees upon completion of the

financing placement unless the yield on any loan

retained by the Bank is

less than that of other comparable lenders involved

in the financing syndicate. In such cases,

an appropriate portion of the fee is recognized

as a yield adjustment

in interest income over the term of the loan.

Debt Securities and Loans Measured at Fair

Value through Other Comprehensive Income

Debt securities and loans held within a held-to-collect-and-sell

business model where their contractual cash

flows pass the SPPI test are measured at

FVOCI. Fair

value changes are recognized in other

comprehensive income, except for impairment

gains or losses, interest income and

foreign exchange gains and losses on

the instrument’s amortized cost, which are recognized

in the Consolidated Statement of Income.

Interest income is recognized using EIRM.

The expected credit

loss (ECL) allowance is recognized and

measured as described in the Impairment

– Expected Credit Loss Model section of

this Note. When the financial asset is

derecognized, the cumulative gain or loss previously

recognized in other comprehensive income is

reclassified from equity to income and

recognized in other

income (loss).

Financial Assets Held-for-Trading

The held-for-sale business model includes

financial assets held within a trading portfolio,

which have been originated, acquired,

or incurred principally for the

purpose of selling in the near term, or if they

form part of a portfolio of identified financial

instruments that are managed together

and for which there is evidence of

short-term profit-taking. Financial assets

held within this business model consist of

trading securities, trading loans, as well

as certain securities purchased under

reverse repurchase agreements.

Trading portfolio assets are accounted for at fair value

with changes in fair value recognized in

trading income (loss). Transaction costs are expensed as

incurred. Dividends are recognized on

the ex-dividend date and interest is recognized

on an accrual basis. Both dividends and interest

are included in interest

income.

Non-Trading Financial Assets Measured at Fair Value through Profit or Loss

Non-trading financial assets measured at

FVTPL include financial assets held

within the held-for-sale and other business

models, for example debt securities and

loans managed on a fair value basis. Financial

assets held within the held-to-collect or held-to-collect-and-sell

business models that do not pass the SPPI

test are

also classified as non-trading financial assets

measured at FVTPL. Changes in fair value

as well as any gains or losses realized on

disposal are recognized in

other income (loss). Interest income from

debt instruments is included in interest

income on an accrual basis.

Financial Assets Designated at Fair Value through Profit

or Loss

Debt instruments in a held-to-collect

or held-to-collect-and-sell business model can be

designated at initial recognition as measured

at FVTPL, provided the

designation can eliminate or significantly reduce

an accounting mismatch that would

otherwise arise from measuring these

financial assets on a different basis.

The FVTPL designation is available only

for those financial instruments for which a

reliable estimate of fair value can be obtained.

Once financial assets are

designated at FVTPL,

the designation is irrevocable. Changes in

fair value as well as any gains or losses realized

on disposal are recognized in other income

(loss). Interest income from these financial

assets is included in interest income on an accrual

basis.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 19

Equity Instruments

Equity investments are required to be measured

at FVTPL, except where the Bank has

elected at initial recognition to irrevocably designate

an equity investment,

held for purposes other than trading, at FVOCI.

If such an election is made, the fair value

changes, including any associated foreign exchange

gains or losses, are

recognized in other comprehensive income

and are not subsequently reclassified

to net income, including upon disposal.

Realized gains and losses are

transferred directly to retained earnings

upon disposal. Consequently, there is no review required for impairment.

Dividends will normally be recognized in interest

income unless the dividends represent a recovery

of part of the cost of the investment. Gains and

losses on trading and non-trading equity investments

measured

at FVTPL are included in trading income (loss)

and other income (loss), respectively.

Classification and Measurement for

Financial Liabilities

The Bank classifies its financial liabilities into

the following categories:

●

Held-for-trading;

●

Designated at FVTPL; and

●

Other liabilities.

Financial Liabilities Held-for-Trading

Financial liabilities are held within a trading

portfolio if they have been incurred principally

for the purpose of repurchasing in the near

term, or form part of a

portfolio of identified financial instruments

that are managed together and for which

there is evidence of a recent actual pattern

of short-term profit-taking. Financial

liabilities held-for-trading are primarily trading

deposits, securitization liabilities at

fair value, obligations related to securities

sold short and certain obligations

related to securities sold under repurchase agreements.

Trading portfolio liabilities are accounted for at fair

value, with changes in fair value as well as any

gains or losses realized on disposal recognized

in trading

income (loss). Transaction costs are expensed as incurred.

Interest is recognized on an accrual basis

in interest expense.

Financial Liabilities Designated at Fair Value through

Profit or Loss

Certain financial liabilities may be designated

at FVTPL at initial recognition. To be designated at FVTPL, financial liabilities

must meet one of the following criteria:

(1) the designation eliminates or significantly

reduces a measurement or recognition

inconsistency; (2) the financial liabilities

or a group of financial assets and

financial liabilities are managed, and their performance

is evaluated, on a fair value basis in accordance

with a documented risk management or

investment

strategy; or (3) the instrument contains one

or more embedded derivatives unless

a) the embedded derivative does not significantly

modify the cash flows that

otherwise would be required by the contract,

or b) it is clear with little or no analysis

that separation of the embedded derivative

from the financial instrument is

prohibited. In addition, the FVTPL designation

is available only for those financial instruments

for which a reliable estimate of fair value can be

obtained. Once

financial liabilities are designated at FVTPL,

the designation is irrevocable.

Financial liabilities designated at FVTPL are

carried at fair value on the Consolidated Balance

Sheet, with changes in fair value as well as

any gains or losses

realized on disposal recognized in other income

(loss), except for the amount of change in

fair value attributable to changes in the Bank’s own

credit risk, which is

presented in other comprehensive income.

Amounts recognized in other comprehensive

income are not subsequently reclassified

to net income upon

derecognition of the financial liability;

instead,

they are transferred directly to retained

earnings.

Changes in fair value attributable to changes in

the Bank’s own credit risk are measured as

the difference between: (i) the period-over-period

change in the

present value of the expected cash flows

using an all-in discount curve reflecting both

the interest rate benchmark curve and

the Bank’s own credit curve; and (ii)

the period-over-period change in the present

value of the same expected cash flows using

a discount curve based solely on the interest

rate benchmark curve.

For loan commitments and financial guarantee

contracts that are designated at FVTPL,

the full change in fair value of the liability is recognized

in other income

(loss).

Interest is recognized on an accrual basis

in interest expense.

Other Financial Liabilities

Deposits

Deposits, other than deposits included in a

trading portfolio and deposits designated at

FVTPL, are accounted for at amortized cost.

Accrued interest on deposits

is included in Other liabilities on the Consolidated

Balance Sheet. Interest, including capitalized

transaction costs, is recognized on an accrual

basis using EIRM as

Interest expense on the Consolidated Statement

of Income.

Subordinated Notes and Debentures

Subordinated notes and debentures are

accounted for at amortized cost. Accrued

interest on subordinated notes and debentures

is included in Other liabilities on

the Consolidated Balance Sheet. Interest, including

capitalized transaction costs, is recognized

on an accrual basis using EIRM as Interest

expense on the

Consolidated Statement of Income.

Reclassification of Financial Assets and

Financial Liabilities

Financial assets and financial liabilities are

not reclassified subsequent to their initial

recognition, except for financial assets

for which the Bank changes its

business model for managing financial assets.

Such reclassifications of financial assets

are expected to be rare in practice.

Impairment – Expected Credit Loss Model

The ECL model applies to financial assets, including

loans and debt securities measured

at amortized cost, loans and debt securities

measured at FVOCI, loan

commitments, and financial guarantees

that are not measured at FVTPL.

The ECL model consists of three stages:

Stage 1 – Twelve-month ECLs for performing

financial assets, Stage 2 – Lifetime ECLs

for financial assets that have

experienced a significant increase in credit

risk since initial recognition, and Stage 3 – Lifetime

ECLs for financial assets that are credit-impaired.

ECLs are the

difference between all the contractual cash flows

that are due to the Bank in accordance

with the contract and all the cash flows the

Bank expects to receive,

discounted at the original EIR. If a significant

increase in credit risk has occurred

since initial recognition, impairment is

measured as lifetime ECLs. Otherwise,

impairment is measured as twelve-month ECLs

which represent the portion of lifetime ECLs

that are expected to occur based on default

events that are possible

within twelve months after the reporting date.

If credit quality improves in a subsequent

period such that the increase in credit risk

since initial recognition is no

longer considered significant, the loss allowance

reverts to being measured based on twelve-month

ECLs.

Significant Increase in Credit Risk

For retail exposures, significant increase in

credit risk is assessed based on changes in

the twelve-month probability of default (PD)

since initial recognition, using

a combination of individual and collective information

that incorporates borrower and account

specific attributes and relevant

forward-looking macroeconomic

variables.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 20

For non-retail exposures, significant increase

in credit risk is assessed based on

changes in the internal risk rating (borrower risk

ratings (BRR)) since initial

recognition. Refer to the shaded areas of

the “Managing Risk” section of the 2025

MD&A for further details on the Bank’s 21-point BRR

scale to risk levels.

For both retail and non-retail exposures,

delinquency backstop when contractual payments

are more than 30 days past due is also used

in assessing significant

increase in credit risk.

The Bank defines default as delinquency of 90

days or more for most retail products

and BRR of

for non-retail exposures. Exposures are considered

credit-

impaired and migrate to Stage 3 when the definition

of default is met or when there is objective

evidence that there has been a deterioration

of credit quality to the

extent the Bank no longer has reasonable

assurance as to the timely collection of

the full amount of principal and interest.

When assessing whether there has been a

significant increase in credit risk since

the initial recognition of a financial asset, the Bank

considers all reasonable

and supportable information that is available

without undue cost or effort about past events,

current conditions, and forecast of future economic

conditions. Refer to

Note 3 for additional details.

Measurement of Expected Credit Losses

ECLs are measured as the probability-weighted

present value of expected cash shortfalls over

the remaining expected life of the financial instrument

and consider

reasonable and supportable information about

past events, current conditions, and forecasts

of future events and economic conditions

that impact the Bank’s

credit risk assessment. Expected life is

the maximum contractual period the Bank is

exposed to credit risk, including extension

options for which the borrower has

the unilateral right to exercise. For certain

financial instruments that include both a loan

and an undrawn commitment,

and the Bank’s contractual ability to demand

repayment and cancel the undrawn commitment

does not limit the Bank’s exposure to credit losses

to the contractual notice period, ECLs are

measured over the

period the Bank is exposed to credit risk.

For example, ECLs for credit cards are

measured over the borrowers’ expected

behavioural life, incorporating

survivorship assumptions and borrower-specific

attributes.

The Bank leverages

its Advanced Internal Ratings-Based

models used for regulatory capital purposes

and incorporates adjustments where appropriate

calculate ECLs.

Forward-Looking Information and Expert

Credit Judgment

Forward-looking information is considered

when determining significant increase in

credit risk and measuring ECLs. Forward-looking

macroeconomic factors are

incorporated in the risk parameters as relevant.

Qualitative factors that are not already considered

in the quantitative models are incorporated

by applying expert credit judgment in determining

the final ECLs.

Refer to Note 3 for additional details.

Modified Loans

In cases where a borrower experiences financial

difficulties, the Bank may grant certain

modifications to the terms and conditions of

a loan. Modifications may

include payment deferrals, extension of amortization

periods, rate reductions, principal forgiveness,

debt consolidation, forbearance and other

modifications

intended to minimize the economic loss and

to avoid foreclosure or repossession

of collateral. The Bank has policies in place

to determine the appropriate

remediation strategy based on the individual

borrower.

If the Bank determines that a modification

results in expiry of cash flows, the original

asset is derecognized and a new asset

is recognized based on the new

contractual terms. Significant increase in

credit risk is assessed relative to the risk of

default on the date of modification.

If the Bank determines that a modification

does not result in derecognition, significant

increase in credit risk is assessed based

on the risk of default at initial

recognition of the original asset. Expected cash

flows arising from the modified contractual

terms are considered when calculating ECLs

for the modified asset. For

loans that were modified while having lifetime

ECLs, the loans can revert to having

twelve-month ECLs after a period of performance

and improvement in the

borrower’s financial condition.

Allowance for Loan Losses

The allowance for loan losses represents

management’s calculation of probability-weighted

ECLs in the lending portfolios, including

any off-balance sheet

exposures, at the balance sheet date. The

allowance for loan losses for lending portfolios

reported on the Consolidated Balance Sheet,

which includes credit-

related allowances for residential mortgages,

consumer instalment and other personal,

credit card, business and government loans, is deducted

from Loans on the

Consolidated Balance Sheet. The allowance

for loan losses for loans measured at

FVOCI is included in the Consolidated Statement

of Changes in Equity. The

allowance for loan losses for off-balance sheet instruments,

which relates to certain guarantees, letters of

credit, and undrawn lines of credit, is recognized

in Other

liabilities on the Consolidated Balance Sheet.

Allowances for lending portfolios reported

on the balance sheet and off-balance sheet exposures

are calculated

using the same methodology. The allowance is increased by the

provision for credit losses and decreased

by write-offs net of recoveries and disposals. Each

quarter, allowances are reassessed and adjusted based on

any changes in management’s estimate of

ECLs. Loan losses on impaired loans in

Stage 3 continue to

be recognized by means of an allowance

for loan losses until a loan is written off.

A loan is written off against the related allowance

for loan losses when there is no realistic

prospect of recovery. Non-retail loans are generally written off

when

all reasonable collection efforts have been exhausted,

such as when a loan is sold, when all security

has been realized, or when all security has

been resolved

with the receiver or bankruptcy court.

Non-real estate retail loans are generally

written off when contractual payments are

180 days past due, or when a loan is

sold. Real estate secured retail loans are generally

written off when the security is realized. The time period

over which the Bank performs collection

activities on

the contractual amount outstanding of financial

assets that are written off varies from one

jurisdiction to another and generally spans

between less than one year to

five years.

Allowance for Credit Losses on Debt Securities

The allowance for credit losses on debt securities

represents management’s calculation of probability-weighted

ECLs. Debt securities measured at amortized

cost

are presented net of the allowance for credit

losses on the Consolidated Balance Sheet.

The allowance for credit losses on debt securities

measured at FVOCI are

included in the Consolidated Statement of

Changes in Equity. The allowance for credit losses is increased

by the provision for credit losses and

decreased by

write-offs net of recoveries and disposals.

Acquired Performing Loans

Acquired performing loans are initially measured

at fair value, which considers incurred

and expected future credit losses estimated

at the acquisition date and

also reflects adjustments based on the acquired

loan’s interest rate in comparison to current

market rates. On acquisition, twelve-month

ECLs are recognized on

the acquired performing loans, resulting in

the carrying amount being lower than fair

value. Acquired performing loans are subsequently

accounted for at amortized

cost based on their contractual cash flows and

any acquisition related discount or premium,

including credit-related discounts, is

considered to be an adjustment to

the loan yield and is recognized in interest income

using EIRM over the term of the loan, or

the expected life of the loan for acquired

performing loans with

revolving terms.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 21

SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS

The Bank classifies financial instruments

that it issues as either financial liabilities,

equity instruments, or compound instruments.

Issued instruments that are mandatorily redeemable

or convertible into a variable number of

the Bank’s common shares at the holder’s option

are classified as

liabilities on the Consolidated Balance Sheet.

Dividend or interest payments on these instruments

are recognized in Interest expense on the

Consolidated

Statement of Income.

Issued instruments are classified as

equity when there is no contractual obligation

to transfer cash or other financial assets

to redeem or convert these

instruments. Such instruments, if not

mandatorily redeemable or convertible into a

variable number of the Bank’s common shares at the

holder’s option, are

classified as equity on the Consolidated Balance

Sheet. Incremental costs directly attributable

to the issue of equity instruments are included

in equity as a

deduction from the proceeds, net of tax.

Dividends and distributions on these instruments

are recognized as a reduction in equity.

Compound instruments are comprised of

both liability and equity components in accordance

with the substance of the contractual

arrangement. The liability

component is initially measured at fair value

with any residual amount assigned to the equity

component. Issuance costs are allocated

proportionately to the

liability and equity components.

Common shares, preferred shares, and other

equity instruments issued and held by the Bank

are classified as treasury instruments

in equity, and the cost of

these instruments is recorded as a reduction in

equity. Upon the sale of treasury instruments, the difference between

the sale proceeds and the cost of the

instruments is recorded in or against contributed

surplus.

GUARANTEES

The Bank issues guarantee contracts that require

payments to be made to guaranteed parties

based on: (1) changes in the underlying

economic characteristics

relating to an asset or liability of the guaranteed

party; (2) failure of another party to perform

under an obligating agreement; or (3) failure of

another third party to

pay its indebtedness when due. Guarantees

are initially measured and recorded

at their fair value. The fair value of a

guarantee liability at initial recognition

normally equal to the present value of the guarantee

fees received over the life of the contract.

The Bank’s release from risk is recognized over

the term of the

guarantee using a systematic and rational amortization

method.

If a guarantee meets the definition of a derivative,

it is carried at fair value on the Consolidated

Balance Sheet and reported as a derivative asset

or derivative

liability at fair value. Guarantees that are

considered derivatives are over-the-counter

(OTC) credit derivative contracts designed

to transfer the credit risk in an

underlying financial instrument from one

counterparty to another.

DERIVATIVES

Derivatives are instruments that derive

their value from changes in underlying interest

rates, foreign exchange rates, credit spreads,

commodity prices, equities, or

other financial or non-financial measures.

Such instruments include interest rate, foreign

exchange, equity, commodity, and credit derivative contracts. The Bank

uses these instruments for trading and non-trading

purposes. Derivatives are carried at

their fair value on the Consolidated Balance

Sheet.

Derivatives Held for Trading Purposes

The Bank enters into trading derivative contracts

to meet the needs of its customers,

to provide liquidity and market-making

related activities, and in certain cases,

to manage risks related to its trading portfolios.

The realized and unrealized gains or losses

on trading derivatives are recognized

in trading income (loss).

Derivatives Held for Non-trading Purposes

Non-trading derivatives are primarily

used to manage interest rate, foreign exchange,

and other market risks of the Bank’s traditional banking

activities. When

derivatives are held for non-trading purposes

and when the transactions meet the hedge accounting

requirements of IAS 39,

Financial Instruments: Recognition

and Measurement

(IAS 39),

they are presented as non-trading derivatives

and receive hedge accounting treatment, as

appropriate. Certain derivative instruments

that are held for economic hedging purposes,

and do not meet the hedge accounting requirements

of IAS 39, are also presented as non-trading

derivatives with

the change in fair value of these derivatives recognized

in Non-interest income.

Hedging Relationships

Hedge Accounting

The Bank has an accounting policy choice

to apply the hedge accounting requirements

of IFRS 9,

Financial Instruments

(IFRS 9), or IAS 39. The Bank has

made

the decision to continue applying the IAS

39 hedge accounting requirements and complies

with the revised annual hedge accounting disclosures

as required by

the related amendments to IFRS 7,

Financial Instruments: Disclosures

(IFRS 7).

At the inception of a hedging relationship, there

is formal documentation of the relationship

between the hedging instrument and

the hedged item, its risk

management objective, and strategy for undertaking

the hedge. The Bank also requires a documented

assessment, both at hedge inception and

on an ongoing

basis, of whether or not the derivatives that

are used in hedging relationships are

highly effective in offsetting the changes attributable to

the hedged risks in the

fair values or cash flows of the hedged items.

In order to be considered highly effective, the

hedging instrument and the hedged item

must be highly and inversely

correlated such that the changes in the fair

value of the hedging instrument will substantially

offset the effects of the hedged exposure throughout

the term of the

hedging relationship. If a hedging relationship

becomes ineffective, it no longer qualifies

for hedge accounting and any subsequent change

in the fair value of the

hedging instrument is recognized in Non-interest

income on the Consolidated Statement

of Income.

Changes in fair value relating to the derivative

component excluded from the assessment

of hedge effectiveness are recognized in Net interest

income or Non-

interest income, as applicable, on the

Consolidated Statement of Income.

When derivatives are designated in hedge accounting

relationships, the Bank classifies them either

as: (1) hedges of the changes in

fair value of recognized

assets, liabilities or firm commitments (fair

value hedges); (2) hedges of the variability

in highly probable future cash flows

attributable to recognized assets,

liabilities or forecast transactions (cash

flow hedges); or (3) hedges of net investments

in foreign operations (net investment hedges).

Fair Value Hedges

The Bank’s fair value hedges principally consist of

interest rate swaps that are used to protect

against changes in the fair value of fixed-rate

financial instruments

due to movements in market interest rates.

The change in the fair value of the derivative

that is designated and qualifies as a fair value

hedge, as well as the change in the

fair value of the hedged item

attributable to the hedged risk, is recognized

in Net interest income to the extent that the hedging

relationship is effective. Any change in fair

value relating to the

ineffective portion of the hedging relationship

is recognized immediately in Non-interest income.

The cumulative adjustment to the carrying

amount of the hedged item (the basis adjustment)

is amortized to Net interest income on the

Consolidated Statement

of Income based on a recalculated EIR over

the remaining expected life of the hedged item,

with amortization beginning no later than

when the hedged item

ceases to be adjusted for changes in its fair

value attributable to the hedged risk. Where

the hedged item has been derecognized,

the basis adjustment is

immediately released to Net interest

income or Non-interest income, as applicable,

on the Consolidated Statement of Income.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 22

Cash Flow Hedges

The Bank is exposed to variability in

future cash flows attributable to interest rate,

foreign exchange rate, and equity price risks.

The amounts and timing of future

cash flows are projected for each hedged

exposure on the basis of their contractual

terms and other relevant factors, including estimates

of prepayments and

defaults.

The effective portion of the change in the fair value

of the derivative that is designated and qualifies

as a cash flow hedge is initially recognized in

other

comprehensive income. The change in fair

value of the derivative relating to the ineffective

portion is recognized immediately

in Non-interest income. Amounts

accumulated other comprehensive income

(AOCI) are reclassified to Net interest

income or Non-interest income, as applicable,

on the Consolidated Statement of

Income in the same period during which

the hedged item affects income.

When a hedging instrument expires or is sold,

or when a hedge no longer meets the

criteria for hedge accounting, any cumulative gain

or loss existing in AOCI

at that time remains in AOCI until the forecast

transaction impacts the Consolidated Statement

of Income. When a forecast transaction is no

longer expected to

occur, the cumulative gain or loss that was reported in AOCI

is immediately reclassified to Net interest

income or Non-interest income, as applicable,

on the

Consolidated Statement of Income.

Net Investment Hedges

Hedges of net investments in foreign operations

are accounted for similar to cash flow hedges.

The change in fair value on the hedging instrument

relating to the

effective portion is recognized in other comprehensive

income. The change in fair value of the

hedging instrument relating to the ineffective portion

is recognized

immediately in Non-interest income. Gains

and losses in AOCI are reclassified as

Non-interest income in the Consolidated

Statement of Income upon the disposal

or partial disposal of the investment in

the foreign operation. The Bank designates derivatives

and non-derivatives (such as foreign currency

deposit liabilities) as

hedging instruments in net investment hedges

of spot or forward exchange risk.

Embedded Derivatives

Derivatives may be embedded in financial liabilities

or other host contracts. Embedded derivatives

are treated as separate derivatives when

their economic

characteristics and risks are not closely

related to those of the host instrument,

a separate instrument with the same terms

as the embedded derivative would

meet

the definition of a derivative, and the combined

contract is not measured at fair value

with changes in fair value recognized in income,

such as held-for-trading or

designated at FVTPL.

These embedded derivatives, which are bifurcated

from the host contract, are recognized as

Derivatives on the Consolidated Balance Sheet

and measured at fair value with subsequent

changes in fair value recognized in

Non-interest income on the Consolidated Statement

of Income.

TRANSLATION AND PRESENTATION OF FOREIGN CURRENCIES

The Bank’s Consolidated Financial Statements

are

presented in Canadian dollars. Items included

in the financial statements of each of

the Bank’s entities are

measured using their functional currency, which is the currency

of the primary economic environment in

which they operate.

Monetary assets and liabilities denominated

in a currency that differs from an entity’s functional

currency are translated into the functional

currency of the entity

at exchange rates prevailing at the balance

sheet date. Non-monetary assets and liabilities

carried at cost are translated at historical

exchange rates. Non-

monetary assets and liabilities carried at

fair value are translated at the exchange

rate in effect at the balance sheet date. Revenue

and expenses are translated

into an entity’s functional currency at average

exchange rates for the period, except

for depreciation and amortization. Depreciation

and amortization are translated

at historical exchange rates. Translation gains and losses

are included in Non-interest income except

for equity investments designated at

FVOCI where

unrealized translation gains and losses are

recorded in other comprehensive income.

Foreign operations are those with a functional

currency other than Canadian dollars. For

the purpose of translation into the Bank’s presentation

currency, all

assets and liabilities are first measured in

the functional currency of the foreign operation

and subsequently, translated at exchange rates prevailing at

the balance

sheet date. Income and expenses are

translated at average exchange rates for

the period. Unrealized translation gains

and losses relating to these foreign

operations, net of gains or losses arising

from net investment hedges and applicable

income taxes, are included in other

comprehensive income. Translation gains

and losses in AOCI are recognized on

the Consolidated Statement of Income upon

the disposal or partial disposal of the foreign

operation. The investment

balance of foreign entities accounted for

by the equity method, including the Bank’s investment

in The Charles Schwab Corporation (“Schwab”)

prior to the sale, is

translated into Canadian dollars using exchange

rates prevailing at the balance sheet date

with exchange gains or losses recognized in

other comprehensive

income.

OFFSETTING OF FINANCIAL INSTRUMENTS

Financial assets and liabilities are offset, with

the net amount presented on the Consolidated

Balance Sheet, only if the Bank currently has

a legally enforceable

right to set off the recognized amounts, and intends

either to settle on a net basis or to realize

the asset and settle the liability simultaneously. In all other

situations,

assets and liabilities are presented on

a gross basis.

DETERMINATION OF FAIR VALUE

The fair value of a financial instrument on

initial recognition is normally the transaction

price, as evidenced by the fair value of the

consideration given or received.

The best evidence of fair value is quoted prices

in active markets. When there is no

active market for the instrument, the

fair value may be based on other

observable current market transactions

involving the same or similar instruments,

without modification or repackaging, or based

on a valuation technique which

maximizes the use of observable market

inputs.

When financial assets and liabilities have offsetting

market risks or credit risks, the Bank applies

a measurement exception, as described

in Note 5 under

Portfolio Exception

. The value determined from application

of the portfolio exception must be allocated

to the individual financial instruments

within the group to

arrive at the fair value of an individual financial

instrument. Balance sheet offsetting presentation

requirements, as described above under

the Offsetting of

Financial Instruments section of this Note, are

then applied, if applicable.

Valuation adjustments reflect the Bank’s assessment of factors that market participants

would use in pricing the asset or liability. The Bank recognizes

various

types of valuation adjustments including, but

not limited to, adjustments for bid-offer spreads,

adjustments for the unobservability of inputs

used in pricing models,

and adjustments for assumptions about risk,

such as the creditworthiness of either counterparty

and market implied unsecured funding

costs and benefits for OTC

derivatives.

If there is a difference between the initial transaction

price and the value based on a valuation

technique, the difference is referred to as inception

profit or loss.

Inception profit or loss is recognized

upon initial recognition of the instrument only

if the fair value is based on observable inputs.

When an instrument is measured

using a valuation technique that utilizes significant

non-observable inputs, it is initially valued at

the transaction price, which is considered

the best estimate of fair

value. Subsequent to initial recognition, any

difference between the transaction price and

the value determined by the valuation technique

at initial recognition is

recognized as non-observable inputs become

observable.

If the fair value of a financial asset measured

at fair value becomes negative, it is recognized

as a financial liability until either its fair

value becomes positive, at

which time it is recognized as a financial asset,

or until it is extinguished.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 23

DERECOGNITION OF FINANCIAL INSTRUMENTS

Financial Assets

The Bank derecognizes a financial asset

when the contractual rights to that asset have

expired. Derecognition may also be appropriate

where the contractual right

to receive future cash flows from the

asset have been transferred, or where

the Bank retains the rights to future cash

flows from the asset, but assumes an

obligation to pay those cash flows to a third party

subject to certain criteria.

When the Bank transfers a financial asset,

it is necessary to assess the extent

to which the Bank has retained the risks and rewards

of ownership of the

transferred asset. If substantially all the risks

and rewards of ownership of the financial

asset have been retained, the Bank continues

to recognize the financial

asset and also recognizes a financial liability

for the consideration received. Certain transaction

costs incurred are also capitalized and amortized

using EIRM. If

substantially all the risks and rewards of ownership

of the financial asset have been transferred,

the Bank will derecognize the financial asset

and recognize

separately as assets or liabilities any rights

and obligations created or retained in the

transfer. The Bank determines whether substantially all the risks

and rewards

have been transferred by quantitatively comparing

the variability in cash flows before and

after the transfer. If the variability in cash flows does not

change

significantly as a result of the transfer, the Bank has retained

substantially all of the risks and rewards of ownership.

If the Bank neither transfers nor retains

substantially all the risks and rewards of

ownership of the financial asset, the Bank

derecognizes the financial asset

where it has relinquished control of the financial

asset. The Bank is considered to have

relinquished control of the financial asset

where the transferee has the

practical ability to sell the transferred financial

asset. Where the Bank has retained control

of the financial asset, it continues to recognize

the financial asset to the

extent of its continuing involvement in

the financial asset. Under these circumstances,

the Bank usually retains the rights to future

cash flows relating to the asset

through a residual interest and is exposed

to some degree of risk associated with the

financial asset.

The derecognition criteria are also applied

to the transfer of part of an asset, rather

than the asset as a whole, or to a group of

similar financial assets in their

entirety, when applicable. If transferring a part of an asset, it

must be a specifically identified cash flow, a fully proportionate

share of the asset, or a fully

proportionate share of a specifically identified

cash flow.

Securitization

Securitization is the process by which

financial assets are transformed into

securities. The Bank securitizes financial

assets by transferring those financial assets

to a third party and as part of the securitization,

certain financial assets may be retained and

may consist of an interest-only strip and, in

some cases, a cash

reserve account (collectively referred to as

“retained interests”). If the transfer qualifies

for derecognition, a gain or loss on sale

of the financial assets is recognized

immediately in other income (loss) after considering

the effect of hedge accounting on the assets

sold, if applicable. The amount of the gain

or loss is calculated as

the difference between the carrying amount of the

asset transferred and the sum of any cash

proceeds received, the fair value of any financial

asset received or

financial liability assumed, and any cumulative

gain or loss allocated to the transferred

asset that had been recognized in AOCI.

To determine the value of the

retained interest initially recorded, the previous

carrying value of the transferred asset is allocated

between the amount derecognized from the balance

sheet and

the retained interest recorded, in proportion

to their relative fair values on the date of transfer. Subsequent

to initial recognition, as market prices are generally

not

available for retained interests, fair value

is determined by estimating the present

value of future expected cash flows using management’s

best estimates of key

assumptions that market participants would

use in determining such fair value. Refer

to Note 3 for assumptions used by management

in determining the fair value

of retained interests. Retained interest is classified

as trading securities with subsequent

changes in fair value recorded in trading income

(loss).

Where the Bank retains the servicing rights,

the benefits of servicing are assessed

against market expectations. When the benefits

of servicing are more than

adequate, a servicing asset is recognized.

Similarly, when the benefits of servicing are less than adequate,

a servicing liability is recognized. Servicing

assets and

servicing liabilities are initially recognized

at fair value and subsequently carried

at amortized cost.

Financial Liabilities

The Bank derecognizes a financial liability when

the obligation under the liability is discharged,

cancelled,

or expires. If an existing financial

liability is replaced by

another financial liability from the same lender

on substantially different terms or where

the terms of the existing liability are substantially

modified, the original

liability is derecognized and a new liability is

recognized with the difference in the respective

carrying amounts recognized on the Consolidated

Statement of

Income.

Securities Purchased Under Reverse

Repurchase Agreements, Securities Sold

Under Repurchase Agreements, and Securities

Borrowing and Lending

Securities purchased under reverse repurchase

agreements involve the purchase of

securities by the Bank under agreements

to resell the securities at a future

date. These agreements are treated as collateralized

lending transactions whereby the Bank

takes possession of the purchased securities, but

does not acquire

the risks and rewards of ownership. The Bank

monitors the market value of the purchased

securities relative to the amounts due under the

reverse repurchase

agreements, and when necessary, requires transfer of additional

collateral. In the event of counterparty default,

the agreements provide the Bank with the right

liquidate the collateral held and offset the proceeds

against the amount owing from the counterparty.

Obligations related to securities sold

under repurchase agreements involve the sale

of securities by the Bank to counterparties

under agreements to repurchase

the securities at a future date. These agreements

do not result in the risks and rewards of

ownership being relinquished and are treated

as collateralized borrowing

transactions. The Bank monitors the market

value of the securities sold relative to

the amounts due under the repurchase agreements,

and when necessary,

transfers additional collateral or may require

counterparties to return the collateral pledged.

Certain transactions that do not meet

derecognition criteria are also

included in obligations related to securities

sold under repurchase agreements. Refer to

Note 9 for further details.

Securities purchased under reverse repurchase

agreements and obligations related to

securities sold under repurchase agreements

are initially recorded on the

Consolidated Balance Sheet at the respective

prices at which the securities were originally

acquired or sold, plus accrued interest.

Subsequently, the agreements

are measured at amortized cost on the Consolidated

Balance Sheet, plus accrued interest, except

when they are held-for-trading or are designated

at FVTPL.

Interest earned on reverse repurchase agreements

and interest incurred on repurchase agreements

is determined using EIRM for agreements

measured at

amortized cost and recognized on an accrual

basis for agreements measured at fair value,

and is included in Interest income and Interest

expense, respectively,

on the Consolidated Statement of Income.

Changes in fair value on reverse repurchase

agreements and repurchase agreements

that are held-for-trading or are

designated at FVTPL are included in Trading income

(loss) or in Other income (loss) on the Consolidated

Statement of Income.

In securities lending transactions,

the Bank lends securities to a counterparty

and receives collateral in the form of

cash or securities. If cash collateral is

received, the Bank records the cash along

with an obligation to return the cash as Obligations

related to securities sold under repurchase

agreements on the

Consolidated Balance Sheet. Where securities

are received as collateral, the Bank does

not record the collateral on the Consolidated

Balance Sheet.

In securities borrowing transactions,

the Bank borrows securities from a counterparty

and pledges either cash or securities as

collateral. If cash is pledged as

collateral, the Bank records the transaction

as Securities purchased under reverse repurchase

agreements on the Consolidated Balance

Sheet. If securities are

pledged as collateral,

the securities remain on the Bank’s Consolidated

Balance Sheet.

Where securities are received or pledged as

collateral, securities lending income and

securities borrowing fees are recorded

in Non-interest income and Non-

interest expenses, respectively, on the Consolidated Statement of

Income over the term of the transaction.

Where cash is pledged or received as

collateral,

interest received or incurred is included in

Interest income and Interest expense, respectively, on the Consolidated

Statement of Income.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 24

Physical commodities purchased or sold

with an agreement to sell or repurchase the physical

commodities at a later date at a fixed price,

are also included in

securities purchased under reverse repurchase

agreements and obligations related to securities

sold under repurchase agreements, respectively, if the

derecognition criteria are not met. These

instruments are measured at fair value.

GOODWILL

Goodwill represents the excess purchase

price paid over the net fair value of identifiable

assets and liabilities acquired in a business

combination. Goodwill is

carried at its initial cost less accumulated impairment

losses.

Goodwill is allocated to a cash-generating

unit (CGU) or a group of CGUs that is

expected to benefit from the synergies of

the business combination, regardless

of whether any assets acquired and liabilities

assumed are assigned to the CGU or group

of CGUs. A CGU is the smallest identifiable group

of assets that

generates cash flows largely independent of

the cash inflows from other assets or groups

of assets. Each CGU or group of CGUs,

to which goodwill is allocated,

represents the lowest level within the Bank

at which the goodwill is monitored

for internal management purposes and is

not larger than an operating segment. If

the composition of a CGU or group of CGUs

to which goodwill has been allocated

changes as a result of the sale of a business,

restructuring or other changes, the

goodwill is reallocated to the units affected using a

relative value approach, unless the Bank

can demonstrate that some other method better

reflects the goodwill

associated with the units affected.

Goodwill is assessed for impairment at least

annually and when an event or change

in circumstances indicates that the carrying amount

may be impaired.

When impairment indicators are present,

the recoverable amount of the CGU or group

of CGUs, which is the higher of its

estimated fair value less costs of

disposal and its value-in-use, is determined.

If the carrying amount of the CGU or group

of CGUs is higher than its recoverable amount,

an impairment loss exists.

The impairment loss is recognized on the Consolidated

Statement of Income and cannot be reversed

in future periods.

INTANGIBLE ASSETS

Intangible assets represent identifiable non-monetary

assets and are acquired either separately

or through a business combination, or

internally generated

software. The Bank’s intangible assets consist primarily

of credit card related intangibles,

software intangibles,

and other intangibles. Intangible assets are

initially

recognized at cost, or at fair value if acquired

through a business combination, and are

amortized over their estimated useful lives

(

years) proportionate to

their expected economic benefits, except for

software which is amortized over its estimated

useful life (

years) on a straight-line basis. In respect of internally

generated software, development costs are

capitalized only if the costs can be measured

reliably, the asset is technically feasible, future economic benefits

are

probable, and the Bank intends to and has

sufficient resources to complete development

of the asset. Research costs are expensed

as incurred.

The Bank assesses its intangible assets

for impairment indicators on a quarterly basis.

When impairment indicators are present, the recoverable

amount of the

asset, which is the higher of its estimated

fair value less costs of disposal and its value-in-use,

is determined. If the carrying amount

of the asset is higher than its

recoverable amount, the asset is written down

to its recoverable amount. Where it is not possible

to estimate the recoverable amount of an individual

asset, the

Bank estimates the recoverable amount

of the CGU to which the asset belongs.

If the CGU is not impaired, the useful

life of the intangible asset is assessed with

any changes applied on a prospective basis.

An impairment loss is recognized on

the Consolidated Statement of Income in

the period in which the impairment is

identified. Impairment losses recognized

previously are assessed and reversed if

the circumstances leading to the impairment

are no longer present. Reversal of

any impairment loss will not exceed the

carrying amount of the intangible asset

that would have been determined had no

impairment loss been recognized for the

asset in prior periods.

LAND, BUILDINGS, EQUIPMENT, AND OTHER DEPRECIABLE ASSETS

Land is recognized at cost. Buildings, computer

equipment, furniture and fixtures, other equipment,

and leasehold improvements are recognized

at cost less

accumulated depreciation and provisions

for impairment, if any. Gains or losses on disposal are included in

Non-interest income on the Consolidated

Statement of

Income.

The Bank records the obligation associated

with the retirement of a long-lived asset

at fair value in the period in which it is incurred

and can be reasonably

estimated, and records a corresponding increase

to the carrying amount of the asset. The asset

is depreciated on a straight-line

basis over its remaining useful life

while the liability is accreted to reflect the passage

of time until the eventual settlement of the

obligation.

Depreciation is recognized on a straight-line

basis over the useful lives of the assets

estimated by asset category, as follows:

Asset

Useful Life

Buildings

years

Computer equipment

years

Furniture and fixtures

years

Other equipment

years

Leasehold improvements

Lesser of the remaining lease term and

the remaining useful life of the asset

The Bank assesses its depreciable assets

for changes in useful life or impairment

on a quarterly basis. Where an impairment

indicator exists and the depreciable

asset does not generate separate cash flows

on a stand-alone basis, impairment is assessed

based on the recoverable amount of the

CGU to which the

depreciable asset belongs. If the CGU is not

impaired, the useful life of the depreciable

asset is assessed with any changes applied

on a prospective basis. Any

impairment loss is recognized on the Consolidated

Statement of Income in the period in which

the impairment is identified. Impairment

losses previously

recognized are assessed and reversed if the

circumstances leading to their impairment

are no longer present. Reversal of any impairment

loss will not exceed the

carrying amount of the depreciable asset

that would have been determined had no impairment

loss been recognized for the asset in prior periods.

NON-CURRENT ASSETS HELD-FOR-SALE

Individual non-current assets or disposal groups

are classified as held-for-sale if they are

available for immediate sale in their present

condition subject only to

terms that are usual and customary for

sales of such assets or disposal groups, and

their sale must be highly probable to occur

within one year. For a sale to be

highly probable, management must be committed

to a sales plan and initiate an active program

to market the sale of the non-current assets

or disposal groups.

Non-current assets or disposal groups classified

as held-for-sale are measured at the lower

of their carrying amount and fair value

less costs to sell on the

Consolidated Balance Sheet. Write-downs on premises

related non-current assets and write-downs

on equipment on initial classification

as held-for-sale are

included in Non-interest expenses on the Consolidated

Statement of Income. Subsequently, a non-current asset or disposal

group that is held-for-sale is no longer

depreciated or amortized, and any subsequent

write-downs in fair value less costs to sell or

such increases not in excess of cumulative

write-downs, are

recognized in Other income on the Consolidated

Statement of Income.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 25

SHARE-BASED COMPENSATION

The Bank grants share options to certain

key employees as compensation for services

provided to the Bank. The Bank uses

a binomial tree-based valuation

option pricing model to estimate fair value

for all share option compensation awards.

The cost of the share options is based on the fair value estimated at the grant

date and is recognized as compensation expense and contributed surplus over the service period required for employees to become fully entitled to the awards.

This period is generally equal to the vesting period in addition to a period prior to the grant date. For the Bank’s share options, this period is generally equal to five

years. When options are exercised, the amount initially recognized in the contributed surplus balance is reduced, with a corresponding increase in common

shares.

The Bank has various other share-based

compensation plans where certain employees

of the Bank are awarded share units equivalent

to the Bank’s common

shares as compensation for services provided

to the Bank. The obligation related to share

units is included in other liabilities on the

Consolidated Balance Sheet.

Compensation expense is recognized based on

the fair value of the share units at the grant

date adjusted for changes in fair value

between the grant date and the

vesting date, net of hedging activities,

over the service period required for

employees to become fully entitled

to the awards. This period is generally

equal to the

vesting period,

in addition to a period prior to the grant

date. For the Bank’s share units, this period is

generally equal to four years.

EMPLOYEE BENEFITS

Defined Benefit Plans

Actuarial valuations are prepared at least

every three years to determine the present

value of the projected benefit obligation

related to the Bank’s defined benefit

plans. In periods between actuarial valuations,

an extrapolation is performed based

on the most recent valuation completed. All

remeasurement gains and losses

are recognized immediately in other comprehensive

income, with cumulative gains and losses

reclassified to retained earnings. Pension

and post-retirement

defined benefit plan expenses are determined

based upon separate actuarial valuations

using the projected benefit method pro-rated

on service and

management’s best estimates of discount rate,

compensation increases, health care

cost trend rate, and mortality rates, which are

reviewed annually with the

Bank’s actuaries. The discount rate used to value liabilities

is determined by reference to market

yields on high-quality corporate bonds with terms

matching the

plans’ specific cash flows

The expense recognized includes the cost of

benefits for employee service provided in

the current year, net interest expense or income

on the net defined benefit liability or asset, past

service costs related to plan amendments,

curtailments or settlements, and administrative

costs. Plan amendment

costs are recognized in the period of a plan amendment,

irrespective of its vested status. Curtailments

and settlements are recognized by the

Bank when the

curtailment or settlement occurs. A curtailment

occurs when there is a significant reduction

in the number of employees covered by

the plan. A settlement occurs

when the Bank enters into a transaction that

eliminates all further legal or constructive

obligation for part or all of the benefits

provided under a defined benefit plan.

The fair value of plan assets and the present

value of the projected benefit obligation are

measured as at October 31. The net defined

benefit asset or liability

represents the difference between the cumulative remeasurement

gains and losses, expenses,

and recognized contributions and is reported

in other assets or

other liabilities.

Net defined benefit assets recognized by

the Bank are subject to a ceiling which limits

the asset recognized on the Consolidated

Balance Sheet to the amount

that is recoverable through refunds of contributions

or future contribution holidays. In addition,

where a regulatory funding deficit exists related

to a defined benefit

plan, the Bank is required to record a liability

equal to the present value of all future

cash payments required to eliminate that

deficit.

Defined Contribution Plans

For defined contribution plans, annual pension

expense is equal to the Bank’s contributions

to those plans.

INSURANCE

Insurance contracts are aggregated into groups

which are measured at the risk-adjusted present

value of cash flows in fulfilling the contracts.

Insurance revenue is

recognized on the Consolidated Statement of

Income as insurance services are provided

over the coverage period of the contracts

within the groups. Insurance

service expenses are reported on the

Consolidated Statement of Income as insurance

claims and related expenses are recognized and

when contract groups are

expected to be onerous.

Contract groups are onerous if their fulfilment

cash flows are expected to result in a net outflow. The liabilities

from insurance groups are

comprised of the liability for remaining

coverage (LRC) and the liability for incurred

claims (LIC) and are reported as Insurance

contract liabilities on the

Consolidated Balance Sheet. The LRC is

the obligation to investigate and pay claims

that have not yet occurred and includes a loss

component related to onerous

contract groups. The LIC is the estimate

of claims incurred, including claims that

have occurred but have not been reported,

and related insurance costs.

The Bank measures its insurance contract

groups using one of two measurement models,

the premium allocation approach (PAA) or the general measurement

model (GMM). The majority of insurance

contract groups are measured using the PAA, which includes

the Bank’s property and casualty insurance contracts

and

short-term life and health insurance contracts.

The PAA is a simplified model applied to insurance contracts

that are either one year or less or where the PAA

approximates the GMM. Contracts using

the GMM are longer-term life and health

contracts.

The LRC for insurance contract groups using

the PAA is measured as the premiums received less insurance

acquisition cash flows paid. The LRC is adjusted

for the recognition of insurance revenue

and amortization of acquisition cash flows reported

in insurance service expenses on a straight-line

basis over the

contractual terms of the underlying insurance

contracts, usually twelve months. The

LRC for longer term contracts using the GMM

model is measured using

estimates and assumptions that reflect

the timing and uncertainty of insurance

cash flows. Under both the PAA and GMM, when a group of contracts

is expected

to be onerous, a loss component (expected

loss related to fulfilling the group’s insurance

contracts) is established which increases

the LRC and insurance service

expenses. The loss component of the LRC

is subsequently recognized as a reduction

to insurance service expenses over

the contractual term of the underlying

insurance contracts to offset claims incurred

and related expenses.

The Bank measures the LIC at the present

value of current estimates of claims and related

costs for insurable events occurring at or before

the Consolidated

Balance Sheet date. The LIC includes a risk

adjustment, which represents the compensation

the Bank requires for bearing the uncertainty

related to non-financial

risks in its fulfilment of insurance contracts.

Expenses related to claims incurred, including

claims arising from catastrophes, and related

costs are reported in

insurance service expenses while changes

related to discounting the liability are recorded

as insurance finance income or expenses in

other income (loss).

Estimates used in the measurement

of insurance contract liabilities are determined

in accordance with accepted actuarial practices.

Current estimates of claims

and related expenses are determined on a

case-by-case basis and consider such

variables as past loss experience, current

claims trends and changes in the

prevailing social, economic, and legal environment.

These estimates are continually reviewed,

and as experience develops and new information

becomes known,

the estimates are adjusted as necessary. In addition to reported

claims information, the Bank’s insurance

contract liabilities include a provision to

account for the

future development of insurance claims, including

insurance claims incurred but not reported

by policyholders (IBNR). IBNR liabilities are

evaluated based on

historical development trends and actuarial

methodologies for groups of claims

with similar attributes.

Reinsurance contracts held are recognized

and measured using the same principles

as insurance contracts. Reinsurance contract assets

are presented in

Other assets on the Consolidated Balance

Sheet and the net results from reinsurance

contracts held are presented in Other income

(loss) on the Consolidated

Statement of Income. Refer to Note 20 for further

detail on the balances and results of insurance

and reinsurance contracts.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 26

PROVISIONS & CONTINGENT LIABILITIES

Provisions are recognized when the Bank has

a present obligation (legal or constructive)

as a result of a past event, the amount of

which can be reliably estimated,

and it is probable that an outflow of resources

will be required to settle the obligation.

Provisions are measured based on management’s

best estimate of the consideration required

to settle the obligation at the end of the reporting

period, taking

into account the risks and uncertainties surrounding

the obligation. If the effect of the time value of

money is material, provisions are measured

at the present value

of the expenditure expected to be required

to settle the obligation, using a discount rate

that reflects

the current market assessment of the time

value of money and

the risks specific to the obligation.

Contingent liabilities exist when there is a possible

obligation which is yet to be confirmed

or a present obligation which has been confirmed

but the outflow of

future resources is not probable or is not

reliably measurable. Contingent liabilities

are not recorded in the Bank’s Consolidated

Financial Statements and are

disclosed if material unless there is a remote

chance that it will result in a future outflow

of resources to settle.

INCOME TAXES

Income tax is comprised of current and deferred

tax. Income tax is recognized in the Provision

for (recovery of) income taxes on the

Consolidated Statement of

Income, except to the extent that it relates to items

recognized in other comprehensive income or

directly in equity, in which case the related taxes are also

recognized in other comprehensive income

or directly in equity, respectively.

Deferred tax is recognized on temporary differences

between the carrying amounts of assets

and liabilities on the Consolidated Balance Sheet

and the amounts

attributed to such assets and liabilities for

tax purposes. Deferred tax assets and liabilities

are determined based on the tax rates

that are expected to apply when

the assets or liabilities are reported for

tax purposes. Deferred tax assets are recognized

only when it is probable that sufficient taxable

profit will be available in

future periods against which deductible

temporary differences may be utilized. Deferred

tax liabilities are not recognized on temporary

differences arising on

investments in subsidiaries, branches,

and associates, and interests in joint

ventures if the Bank controls the timing of

the reversal of the temporary difference and

it is probable that the temporary difference will not

reverse in the foreseeable future.

The Bank records a provision for uncertain

tax positions if it is probable that the Bank

will have to make a payment to tax authorities

upon their examination of a

tax position. This provision is measured

at the Bank’s best estimate of the amount expected

to be paid. Provisions are reversed in provision

for (recovery of)

income taxes in the period in which management

determines they are no longer required or

as determined by statute.

LEASES

An arrangement contains a lease if there is an

identified asset and the Bank has a right

to control that asset for a period of time in exchange

for consideration. A

right-of-use (ROU) asset and lease liability

is recognized for all leases except for

short-term leases and low value leases, as

described below. At the lease

commencement date, the lease liability is initially

recognized at the present value of the

future lease payments over the remaining lease

term and is discounted

using the Bank’s incremental borrowing rate.

The right-of-use asset is recognized

at cost, comprising an amount equal

to the lease liability, subject to certain

adjustments. Subsequently, the right-of-use asset is measured at

cost less accumulated depreciation and impairment

and adjusted for any remeasurement

lease liabilities, while the lease liability is accreted

using the Bank’s incremental borrowing rate.

The lease liability is remeasured when there is a

modification, a

change in the lease term, a change in the lease

payments (e.g., changes to future payments

resulting from a change in an index or rate used

to determine such

lease payments) or changes in the Bank’s assumptions

or strategies relating to the exercise

of purchase, extension, or termination options.

The Bank’s leases consist primarily of real estate,

equipment and other asset leases. Right-of-use

assets are recorded in Land, buildings,

equipment, other

depreciable assets and right-of-use assets

on the Consolidated Balance Sheet and

lease liabilities are included in Other liabilities

on the Consolidated Balance

Sheet. Interest expense on lease liabilities is

included in Net interest income and depreciation

expense on the right-of-use assets

is recognized in Non-interest

expenses on the Consolidated Statement

of Income.

Short-term leases, which have a lease term of

twelve months

or less, and leases of low-value assets

are exempt, and their payments are recognized

in Non-

interest expenses on a straight-line basis

within the Bank’s Consolidated Statement of

Income.

NOTE 3: SIGNIFICANT ACCOUNTING

JUDGMENTS, ESTIMATES, AND ASSUMPTIONS

The estimates used in the Bank’s accounting policies

are essential to understanding its results

of operations and financial condition. Some

of the Bank’s policies

require subjective, complex judgments and

estimates as they relate to matters

that are inherently uncertain. Changes in these judgments

or estimates and

changes to accounting standards and policies

could have a materially adverse impact

on the Bank’s Consolidated Financial Statements.

The Bank has established

procedures to ensure that accounting policies

are applied consistently and that the processes

for changing methodologies, determining

estimates,

and adopting

new accounting standards are well-controlled

and occur in an appropriate and systematic

manner.

CLASSIFICATION AND MEASUREMENT OF FINANCIAL ASSETS

Business Model Assessment

The Bank determines its business models

based on the objective under which its

portfolios of financial assets are managed.

Refer to Note 2 for details on the

Bank’s business models. In determining its

business models, the Bank considers

the following:

●

Management’s intent and strategic objectives

and the operation of the stated policies in practice;

●

The primary risks that affect the performance

of the portfolio of assets and how these risks

are managed;

●

How the performance of the portfolio is evaluated

and reported to management; and

●

The frequency and significance of financial

asset sales in prior periods, the reasons

for such sales and the expected future sales activities.

Sales in themselves do not determine the business

model and are not considered in isolation.

Instead, sales provide evidence about

how cash flows are realized.

A held-to-collect business model will be reassessed

by the Bank to determine whether

any sales are consistent with an objective

of collecting contractual cash

flows if the sales are more than insignificant

in value or more than infrequent.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 27

Solely Payments of Principal and Interest

Test

In assessing whether contractual cash flows

represent SPPI, the Bank considers the

contractual terms of the instrument. This

includes assessing whether the

financial asset contains contractual terms

that could change the timing or amount

of contractual cash flows such that

they would not be consistent with a basic

lending arrangement. In making the assessment,

the Bank considers the primary terms

as follows and assesses if the contractual

cash flows of the instrument

continue to meet the SPPI test:

●

Performance-linked features;

●

Terms that limit the Bank’s claim to cash flows

from specified assets (non-recourse terms);

●

Prepayment and extension terms;

●

Leverage features;

●

Features that modify elements of the time

value of money; and

●

Sustainability-linked features.

IMPAIRMENT OF FINANCIAL ASSETS

Significant Increase in Credit Risk

For retail exposures, criteria for assessing

significant increase in credit risk are

defined at the appropriate product or

portfolio level and vary based on the

exposure’s credit risk at origination. The criteria

include relative changes in PD, absolute

PD backstop, and delinquency backstop

when contractual payments are

more than 30 days past due. Significant increase

in credit risk since initial recognition

has occurred when one of the criteria is

met.

For non-retail exposures, BRR is determined

on an individual borrower basis using industry

and sector specific credit risk models that are

based on historical

data. Current and forward-looking information

that is specific to the borrower, industry, and sector is considered based on

expert credit judgment. Criteria for

assessing significant increase in credit risk

are defined at the appropriate segmentation

level and vary based on the BRR of the exposure

at origination. Criteria

include relative changes in BRR, absolute

BRR backstop, and delinquency backstop

when contractual payments are more than 30

days past due. Significant

increase in credit risk since initial recognition

has occurred when one of the criteria is

met.

Measurement of Expected Credit Loss

ECLs are recognized on the initial recognition

of financial assets. Allowance for credit losses

represents management’s unbiased estimate

of the risk of default and

ECLs on the financial assets, including any off-balance

sheet exposures, at the balance sheet date.

For retail exposures, ECLs are calculated as

the product of PD, loss given default (LGD),

and exposure at default (EAD) at each time

step over the remaining

expected life of the financial asset and discounted

to the reporting date based on the EIR. PD

estimates represent the forward-looking

PD, updated quarterly

based on the Bank’s historical experience, current

conditions, and relevant forward-looking expectations

over the expected life of the exposure

to determine the

lifetime PD curve. LGD estimates are determined

based on historical charge-off events and recovery

payments, current information about attributes

specific to the

borrower, and direct costs. Expected cash flows from

collateral, guarantees, and other credit enhancements

are incorporated in LGD if integral to the contractual

terms. Relevant macroeconomic variables

are incorporated in determining expected

LGD. EAD represents the expected balance

at default across the remaining

expected life of the exposure. EAD incorporates

forward-looking expectations about repayments

of drawn balances and future draws

where applicable.

For non-retail exposures, ECLs are calculated

based on the present value of cash shortfalls

determined as the difference between contractual

cash flows and

expected cash flows over the remaining expected

life of the financial instrument. Lifetime

PD is determined by mapping the exposure’s

BRR to forward-looking PD

over the expected life. LGD estimates are

determined by mapping the exposure’s facility

risk rating (FRR) to expected LGD which

takes into account facility-

specific characteristics such as collateral,

seniority ranking of debt, and loan structure.

Relevant macroeconomic variables are incorporated

in determining

expected PD and LGD. Expected cash flows

are determined by applying the PD and LGD

estimates to the contractual cash flows

to calculate cash shortfalls over

the expected life of the exposure.

Forward-Looking Information

In calculating ECLs, the Bank employs internally

developed models that utilize parameters

for PD, LGD, and EAD. Forward-looking

macroeconomic factors

including at the regional level are incorporated

in the risk parameters as relevant.

Additional risk factors that are industry or

segment specific are also incorporated,

where relevant. Forward-looking macroeconomic

forecasts are generated by TD Economics

as part of the ECL process: A base economic

forecast is accompanied

with upside and downside estimates of realistically

possible economic conditions by considering

the sources of uncertainty around the base

forecast. All

macroeconomic forecasts are updated quarterly

for each variable on a regional basis where

applicable and incorporated as relevant

into the quarterly modelling of

base, upside and downside risk parameters

used in the calculation of ECL scenarios and

probability-weighted ECLs. TD Economics

will apply judgment to

recommend probability weights to each forecast

on a quarterly basis. The proposed

macroeconomic forecasts and probability

weightings are subject to a robust

management review and challenge process

by a cross-functional committee that

includes representation from TD Economics,

Risk, Finance, and Business. ECLs

calculated under each of the three forecasts are

applied against the respective probability

weightings to determine the probability-weighted

ECLs. Refer to Note 8

for further details on the macroeconomic

variables and ECL sensitivity.

Expert Credit Judgment

Management’s expert credit judgment is used

to determine the best estimate for the qualitative

component contributing to ECLs, based on an assessment

business and economic conditions, historical

loss experience, loan portfolio composition,

and other relevant indicators and forward-looking

information that are not

fully incorporated into the model calculation.

There remains elevated economic uncertainty, and management continues

to exercise expert credit judgment in

assessing if an exposure has experienced

significant increase in credit risk since initial

recognition and in determining the amount

of ECLs at each reporting date. To the extent that certain effects are not

fully incorporated into the model calculations,

temporary quantitative and qualitative adjustments

have been applied, including for risks related

to elevated

uncertainty associated with policy and trade,

and such adjustments will be updated as appropriate

in future periods.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 28

LEASES

The Bank applies judgment in determining

the appropriate lease term on a lease-by-lease

basis. All facts and circumstances that

create an economic incentive to

exercise a renewal option or not to exercise

a termination option including investments

in major leaseholds, branch performance

and past business practice are

considered. The periods covered by renewal

or termination options are only included

in the lease term if it is reasonably certain

that the Bank will exercise the

options; management considers “reasonably

certain”

to be a high threshold. Changes in the economic

environment or changes in the industry

may impact the

Bank’s assessment of lease term, and any

changes in the Bank’s estimate of lease terms

may have a material impact on the Bank’s

Consolidated Balance Sheet

and Consolidated Statement of Income.

In determining the carrying amount of right-of-use

(ROU) assets and lease liabilities,

the Bank is required to estimate the incremental

borrowing rate specific to

each leased asset or portfolio of leased assets

if the interest rate implicit in the lease

is not readily determinable. The Bank determines

the incremental borrowing

rate of each leased asset or portfolio of leased

assets by incorporating the Bank’s creditworthiness,

the security, term, and value of the ROU asset, and the

economic environment in which the leased

asset operates. The incremental borrowing

rates are subject to change mainly due

to changes in the macroeconomic

environment.

FAIR VALUE MEASUREMENTS

The fair value of financial instruments traded

in active markets at the balance

sheet date is based on their quoted market

prices. For all other financial instruments

not traded in an active market, fair value may

be based on other observable current

market transactions involving the same

or similar instruments, without

modification or repackaging, or is based on

a valuation technique which maximizes

the use of observable market inputs. Observable

market inputs may include

interest rate yield curves, foreign exchange

rates, and option volatilities. Valuation techniques include comparisons

with similar instruments where observable

market prices exist, discounted cash flow

analysis, option pricing models, and

other valuation techniques commonly

used by market participants.

For certain complex or illiquid financial instruments,

fair value is determined using valuation

techniques in which current market transactions

or observable

market inputs are not available. Judgment is used

when determining which valuation techniques

to apply, liquidity considerations, and model inputs such as

volatilities, correlations, spreads, discount rates,

pre-payment rates, and prices of underlying

instruments. Any imprecision in these estimates

can affect the

resulting fair value.

Judgment is also used in recording valuation

adjustments to model fair values to account

for system limitations or measurement uncertainty, such as when

valuing complex and less actively traded

financial instruments. If the market for a

complex financial instrument develops,

the pricing for this instrument may

become more transparent, resulting in refinement

of valuation models.

An analysis of the fair value of financial instruments

and further details as to how they are

measured are provided in Note 5.

DERECOGNITION OF FINANCIAL ASSETS

Certain financial assets transferred may

qualify for derecognition from the Bank’s

Consolidated Balance Sheet. To qualify for derecognition, certain key

determinations must be made, including

whether the Bank’s rights to receive cash flows

from the financial asset have been retained

or transferred and the extent

to which the risks and rewards of ownership

of the financial assets have been retained

or transferred. If the Bank neither transfers nor

retains substantially all of

the risks and rewards of ownership of the

financial asset, a decision must be made

as to whether the Bank has retained control

of the financial asset.

Upon derecognition, the Bank will record a gain

or loss on sale of those assets which is

calculated as the difference between the carrying amount

of the asset

transferred and the sum of any cash proceeds

received, including any financial assets received

or financial liabilities assumed, and any

cumulative gains or losses

allocated to the transferred asset that had been

recognized in AOCI. In determining the

fair value of any financial assets received, the

Bank estimates future cash

flows by relying on estimates of the amount

of interest that will be collected on the

securitized assets, the yield to be paid to investors,

the portion of the securitized

assets that will be prepaid before their

scheduled maturity, ECLs, the cost of servicing the assets, and the

rate at which to discount these expected

future cash

flows. Actual cash flows may differ significantly

from those estimated by the Bank.

Retained interests are financial interests in

transferred assets retained by the Bank.

They are classified as trading securities and

are initially recognized at

relative fair value on the Bank’s Consolidated Balance

Sheet. Subsequently, the fair value of retained interests is

determined by estimating the present value

future expected cash flows. Differences between

the actual cash flows and the Bank’s estimated

future cash flows are recognized in trading income

(loss). These

assumptions are subject to periodic reviews

and may change due to significant changes

in the economic environment.

GOODWILL

The recoverable amount of the Bank’s CGUs

or groups of CGUs is determined from

internally developed valuation models

that consider various factors and

assumptions such as forecasted earnings, growth

rates, discount rates, and terminal

growth rates. Management is required

to use judgment in estimating the

recoverable amount of the CGUs or groups

of CGUs, and the use of different assumptions and

estimates in the calculations could influence

the determination of

the existence of impairment and the valuation

of goodwill. Management believes that the assumptions

and estimates used are reasonable and

supportable. Where

possible, assumptions generated internally

are compared to relevant market information.

The carrying amounts of the Bank’s CGUs or groups

of CGUs are

determined by management using risk-based

capital models to adjust net assets and liabilities

by CGU. These models consider various

factors including market

risk, credit risk, and operational risk,

including investment capital (comprised of

goodwill and other intangibles). Any capital

not directly attributable to the CGUs is

held within the Corporate segment. The Bank’s

capital oversight committees provide oversight

to the Bank’s capital allocation methodologies.

EMPLOYEE BENEFITS

The projected benefit obligation and expense

related to the Bank’s pension and post-retirement

defined benefit plans are determined using

multiple assumptions

that may significantly influence the value of

these amounts. Actuarial assumptions including

discount rates, compensation increases,

health care cost trend rates,

and mortality rates are management’s best estimates

and are reviewed annually with the Bank’s actuaries.

The Bank develops each assumption using

relevant

historical experience of the Bank in conjunction

with market-related data and considers

if the market-related data indicates

there is any prolonged or significant

impact on the assumptions. The discount

rate used to value the projected benefit

obligation is determined by reference

to market yields on high-quality corporate

bonds with terms matching the plans’ specific

cash flows. The other assumptions are also long-term

estimates. All assumptions are subject to

a degree of

uncertainty. Differences between actual experiences and the assumptions,

as well as changes in the assumptions

resulting from changes in future expectations,

result in remeasurement gains and losses

which are recognized in other comprehensive

income (OCI)

during the year and also impact expenses

in future periods.

INCOME TAXES

The Bank is subject to taxation in numerous

jurisdictions. There are many transactions

and calculations in the ordinary course of business

for which the ultimate

tax determination is uncertain. The Bank

maintains provisions for uncertain tax positions

that it believes appropriately reflect the risk of

tax positions under

discussion, audit, dispute, or appeal with

tax authorities, or which are otherwise

considered to involve uncertainty. These provisions are made using

the Bank’s

best estimate of the amount expected to be

paid based on an assessment of all relevant

factors, which are reviewed at the end of each

reporting period. However,

it is possible that at some future date, changes

in these liabilities could result from audits by

the relevant taxing authorities.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 29

Deferred tax assets are recognized only

when it is probable that sufficient taxable profit

will be available in future periods against which

deductible temporary

differences may be utilized. The amount of

the deferred tax asset recognized and considered

realizable could, however, be reduced if projected income is

not

achieved due to various factors, such as

unfavourable business conditions. If projected

income is not expected to be achieved, the

Bank would decrease its

deferred tax assets to the amount that it believes

can be realized. The magnitude of the decrease

is significantly influenced by the Bank’s forecast

of future profit

generation, which determines the extent to

which it will be able to utilize the deferred

tax assets.

PROVISIONS

Provisions arise when there is some uncertainty

in the timing or amount of a loss in the

future. Provisions are based on the Bank’s best estimate

of all

expenditures required to settle its present obligations,

considering all relevant risks and uncertainties,

as well as, when material, the effect of the time

value of

money.

Many of the Bank’s provisions relate to various

legal and regulatory actions that the Bank

is involved in during the ordinary course

of business. Legal and

regulatory provisions require the involvement

of both the Bank’s management and legal counsel

when assessing the probability of a loss and estimating

any

monetary impact. Throughout the life of a provision,

the Bank’s management or legal counsel

may learn of additional information that may impact

its assessments

about the probability of loss or about the estimates

of amounts involved. Changes in these assessments

may lead to changes in the amount recorded

for

provisions. In addition, the actual costs of resolving

these claims may be substantially higher

or lower than the amounts recognized.

The Bank reviews its legal and

regulatory provisions on a case-by-case basis

after considering, among other factors, the

progress of each case, the Bank’s experience,

the experience of others

in similar cases, and the opinions and views of

legal counsel.

Certain of the Bank’s provisions relate to restructuring

initiatives initiated by the Bank. Restructuring

provisions require management’s best estimate,

including

forecasts of economic conditions. Throughout

the life of a provision, the Bank may become

aware of additional information that may impact

the assessment of

amounts to be incurred. Changes in these assessments

may lead to changes in the amount recorded

for restructuring provisions.

INSURANCE

The assumptions used in establishing the Bank’s

insurance contract liabilities are based on best

estimates of possible outcomes.

For property and casualty insurance

contracts, the ultimate cost of LIC is

estimated using a range of standard actuarial

claims projection techniques by the

appointed actuary in accordance with

Canadian accepted actuarial practices. Additional

qualitative judgment is used to assess

the extent to which past trends may

or may not apply in the future, in order to arrive

at the estimated ultimate claims cost

amounts that present the most likely outcome

taking into account all the

uncertainties involved.

For life and health insurance contracts, insurance

contract liabilities consider all future policy

cash flows, including premiums, claims, and

expenses required to

administer the policies. Critical assumptions

used in the measurement of life and health

insurance contract liabilities are determined

by the appointed actuary.

Further information on insurance risk assumptions

is provided in Note 20.

CONSOLIDATION OF STRUCTURED ENTITIES

Management judgment is required when

assessing whether the Bank should consolidate

an entity. For instance, it may not be feasible to determine if the Bank

controls an entity solely through an assessment

of voting rights for certain structured entities.

In these cases, judgment is required

to establish whether the Bank

has decision-making power over the key

relevant activities of the entity and

whether the Bank has the ability to use that power

to absorb significant variable returns

from the entity. If it is determined that the Bank has both decision-making

power and significant variable returns

from the entity, judgment is also used to determine

whether any such power is exercised by

the Bank as principal, on its own behalf,

or as agent, on behalf of another counterparty.

Assessing whether the Bank has decision-making

power includes understanding the purpose

and design of the entity in order to determine

its key economic

activities. In this context, an entity’s key economic

activities are those which predominantly

impact the economic performance of the

entity. When the Bank has the

current ability to direct the entity’s key economic

activities, it is considered to have decision-making

power over the entity.

The Bank also evaluates its exposure

to the variable returns of a structured entity in

order to determine if it absorbs a significant

proportion of the variable

returns the entity is designed to create. As part

of this evaluation, the Bank considers the purpose

and design of the entity in order to determine

whether it absorbs

variable returns from the structured entity

through its contractual holdings, which

may take the form of securities issued by

the entity, derivatives with the entity, or

other arrangements such as guarantees, liquidity

facilities, or lending commitments.

If the Bank has decision-making power over

the entity and absorbs significant variable returns

from the entity, it then determines if it is acting as principal or

agent when exercising its decision-making power. Key factors

considered include the scope of its decision-making

power; the rights of other parties involved

with

the entity, including any rights to remove the Bank as decision-maker

or rights to participate in key decisions;

whether the rights of other parties are exercisable

practice; and the variable returns absorbed

by the Bank and by other parties involved

with the entity. When assessing consolidation, a presumption exists

that the

Bank exercises decision-making power as principal

if it is also exposed to significant variable

returns, unless an analysis of the

factors above indicates otherwise.

The decisions above are made with reference

to the specific facts and circumstances relevant

for the structured entity and related transaction(s)

under

consideration.

REVENUE FROM CONTRACTS WITH

CUSTOMERS

The Bank applies judgment to determine

the timing of satisfaction of performance

obligations which affects the timing of revenue recognition,

by evaluating the

pattern in which the Bank transfers control

of services promised to the customer. A performance obligation

is satisfied over time when the customer

simultaneously

receives and consumes the benefits as the

Bank performs the service. For performance

obligations satisfied over time, revenue is generally

recognized using the

time-elapsed method which is based on time

elapsed in proportion to the period over

which the service is provided, for example,

personal deposit account bundle

fees. The time-elapsed method is a faithful

depiction of the transfer of control

for these services as control is transferred

evenly to the customer when the Bank

provides a stand-ready service or effort is expended

evenly by the Bank to provide a service

over the contract period. In contracts

where the Bank has a right to

consideration from a customer in an amount

that corresponds directly with the value to

the customer of the Bank’s performance completed

to date, the Bank

recognizes revenue in the amount to which

it has a right to invoice.

The Bank satisfies a performance obligation

at a point in time if the customer obtains

control of the promised services at that date.

Determining when control is

transferred requires the use of judgment.

For transaction-based services, the Bank determines

that control is transferred to the customer

at a point in time when

the customer obtains substantially all of

the benefits from the service rendered

and the Bank has a present right to payment,

which generally coincides with the

moment the transaction is executed.

The Bank exercises judgment in determining

whether costs incurred in connection with acquiring

new revenue contracts would meet the requirement

to be

capitalized as incremental costs to obtain or

fulfil a contract with customers.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 30

NOTE 4: CURRENT AND FUTURE

CHANGES IN ACCOUNTING POLICIES

CURRENT CHANGES IN ACCOUNTING

POLICIES

There were no new accounting policies adopted

by the Bank for the fiscal year ended October

31, 2025.

FUTURE CHANGES IN ACCOUNTING

POLICIES

The following standard and amendments

have been issued but are not yet effective

on the date of issuance of the Bank’s Consolidated

Financial Statements.

Presentation and Disclosure in Financial

Statements

In April 2024, the IASB issued IFRS 18,

Presentation and Disclosure in Financial

Statements

(IFRS 18), which replaces the guidance

in IAS 1,

Presentation of

Financial Statements

and sets out requirements for presentation

and disclosure of information, focusing

on providing relevant information to users

of the financial

statements. IFRS 18 introduces changes

to the structure of the statement of profit

or loss, aggregation and disaggregation of

financial information, and

management-defined performance

measures to be disclosed in the notes to

the financial statements. It will be effective for the Bank’s annual

period beginning

November 1, 2027. Early application is permitted.

The standard will be applied retrospectively

with restatement of comparatives.

The Bank is currently assessing

the impact of adopting this standard.

Amendments to the Classification and Measurement

of Financial Instruments

In May 2024, the IASB issued

Amendments to the Classification

and Measurement of Financial Instruments,

which amended IFRS 9 and IFRS 7

The

amendments address matters identified during

the post-implementation review of the

classification and measurement requirements

of IFRS 9. The amendments

clarify how to assess the contractual

cash flow characteristics of financial assets

that include environmental, social, and governance

linked features and other

similar contingent features. The amendments

also clarify the treatment of non-recourse

assets and contractually linked instruments.

Furthermore, the amendments

clarify that a financial liability is derecognized

on the settlement date and provide an accounting

policy choice to derecognize a financial liability

settled using an

electronic payment system before the

settlement date if certain conditions are

met. Finally, the amendments introduce additional disclosure requirements

for

financial instruments with contingent

features and equity instruments classified at

FVOCI.

The amendments will be effective for the Bank’s annual

period beginning November 1, 2026. Early

adoption is permitted, with an option to early

adopt the

amendments related to the classification

of financial assets and associated disclosures

only. The Bank is required to apply the amendments retrospectively, but is

not required to restate prior periods. The Bank

is currently assessing the impact of adopting

these amendments.

NOTE 5: FAIR VALUE MEASUREMENTS

Certain assets and liabilities, primarily

financial instruments, are carried on

the balance sheet at their fair value on a recurring

basis. These financial instruments

include trading loans and securities, non-trading

financial assets at FVTPL, financial assets

and liabilities designated at FVTPL, financial

assets at FVOCI,

derivatives, certain securities purchased under

reverse repurchase agreements, trading

deposits, securitization liabilities at fair value,

obligations related to

securities sold short, and certain obligations

related to securities sold under repurchase

agreements. All other financial assets

and financial liabilities are carried at

amortized cost.

(a)

VALUATION GOVERNANCE

Valuation processes are guided by policies and procedures

that are approved by senior management

and subject matter experts. Senior Executive

oversight over

the valuation process is provided through various

valuation committees. Further, the Bank has a number of

additional controls in place, including an independent

price verification process to ensure the accuracy

of fair value measurements reported in

the financial statements. The sources used

for independent pricing comply

with the standards set out in the approved

valuation-related policies, which include

consideration of the reliability, relevancy, and timeliness of data.

(b)

METHODS AND ASSUMPTIONS

The Bank calculates fair value for measurement

and disclosure purposes based on the following

methods of valuation and assumptions:

Government and Government-Related Securities

The fair value of Canadian government debt

securities is determined by quoted prices in

active markets, reference to recent transaction

prices, or third-party

vendor prices. In cases where external and

independent prices are not readily available,

alternate techniques based on the risk

metrics and unique characteristics

of the security are utilized.

The fair value of Canadian residential mortgage-backed

securities (MBS) is based on third-party vendor

prices, reference to recent transaction prices,

valuation techniques that utilize observable

inputs such as benchmark government bond

prices, government bond yield curves, quoted

yield spreads and

prepayment rate assumptions related

to the underlying collateral.

The fair value of U.S. government and agency

debt securities is determined by reference

to recent transaction prices, broker quotes,

or third-party vendor

prices. For U.S. agency MBS pricing, brokers

or third-party vendors may use a pool-specific

valuation model to value these securities, using

observable market

inputs.

The fair value of other Organisation for Economic

Co-operation and Development (OECD)

government-guaranteed debt is based

on broker quotes and third-

party vendor prices, or where external and independent

prices are not readily available, alternate

techniques based on the risk metrics and unique

characteristics

of the security are utilized.

Other Debt Securities

The fair value of corporate and other debt

securities is based on broker quotes, third-party

vendor prices, or alternate techniques

utilizing the risk metrics and

unique characteristics of the security. Asset-backed securities are

primarily fair valued using third-party

vendor prices, including those generated by issue-specific

valuation models using observable market

inputs.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 31

Equity Securities

The fair value of equity securities is based

on quoted prices in active markets, where available.

Where quoted prices in active markets are not readily

available,

such as for private equity securities, or

where there is a wide bid-ask spread, fair

value is determined based on quoted

market prices for similar securities or

through valuation techniques, including discounted

cash flow analysis, multiples of earnings

before taxes, depreciation and amortization,

and other relevant

valuation techniques.

If there are trading restrictions on the equity

security held, a valuation adjustment is

recognized against available prices to reflect

the nature of the restriction.

However, restrictions that are not part of the security held

and represent a separate contractual arrangement

that has been entered into by the Bank and a third

party do not impact the fair value of the original

instrument.

The cost of Federal Reserve stock and

Federal Home Loan Bank (FHLB) stock

approximates fair value.

Retained Interests

Retained interests are classified as trading

securities and are initially recognized at their relative

fair market value. Subsequently, the fair value of retained interests

recognized by the Bank is determined by

estimating the present value of future expected

cash flows.

Differences between the actual cash flows and

the Bank’s

estimate of future cash flows are recognized

in income. These assumptions are subject

to periodic review and may change due

to significant changes in the

economic environment.

Loans

The estimated fair value of loans carried at amortized

cost reflects changes in market price that

have occurred since the loans were originated

or purchased.

Estimated fair value is determined by discounting

the expected future cash flows related

to these loans at current market interest rates

for loans with similar credit

risks. Changes in interest rates have

minimal impact on the fair value of floating-rate

loans since they reprice to the market

frequently, and therefore their carrying

value approximates their fair value. The

fair value of loans is not adjusted for the value

of any credit protection the Bank has purchased

to mitigate credit risk.

The fair value of loans carried at FVTPL,

which includes trading loans and non-trading

loans at FVTPL, is determined using observable

market prices, where

available. Where the Bank is a market maker

for loans traded in the secondary market,

fair value is determined using executed prices,

or prices for comparable

trades. For those loans where the Bank is

not a market maker, the Bank obtains broker quotes from other

reputable dealers, or uses valuation techniques

determine fair value.

The fair value of loans carried at FVOCI is assumed

to approximate amortized cost as they are

generally floating rate performing loans

that are short term in

nature.

Commodities

The fair value of commodities is based on quoted

prices in active markets, where available.

The Bank also transacts commodity derivative

contracts which can be

traded on an exchange or in OTC markets.

Derivative Financial Instruments

The fair value of exchange-traded derivative financial

instruments is based on quoted market prices.

The fair value of OTC derivative financial

instruments is

estimated using well established valuation

techniques, such as discounted cash flow

techniques, the Black-Scholes model,

and Monte Carlo simulation. The

valuation models incorporate inputs that are

observable in the market or can be derived

from observable market data.

Prices derived by using models are recognized

net of valuation adjustments. The inputs

used in the valuation models depend on

the type of derivative and the

nature of the underlying instrument and are

specific to the instrument being valued.

Inputs can include, but are not limited to, interest

rate yield curves, foreign

exchange rates, dividend yield projections,

commodity spot and forward prices, recovery

rates, volatilities, spot prices, and correlation.

A credit valuation adjustment (CVA) is recognized against the

model value of OTC derivatives to account

for the uncertainty that the counterparty in a derivative

transaction may not be able to fulfil its obligations

under the transaction to the Bank. In determining

CVA, the Bank takes into account master netting agreements

and collateral, and considers the creditworthiness

of the counterparty, using market observed or proxy credit

spreads, in assessing potential future amounts

owed

to the Bank.

The fair value of a derivative is partly a function

of collateralization. The Bank uses relevant

overnight borrowing curves to discount

the cash flows for

collateralized derivatives as most collateral

is posted in cash and can be funded at the

overnight rate.

A funding valuation adjustment (FVA) is recognized against the

model value of OTC derivatives to recognize

the market implied unsecured funding costs

and

benefits considered in the pricing and fair value

determination. Some of the key drivers

of FVA include the market implied funding spread and the expected

average exposure by counterparty.

The Bank will continue to monitor industry

practice on valuation adjustments and

may refine the methodology as market practices

evolve.

Deposits

The estimated fair value of term deposits is

determined by discounting the expected future

cash flows using interest rates currently offered

for deposits with similar

terms.

For deposits with no defined maturities,

the Bank considers fair value to equal carrying

value, which is equivalent to the amount payable

on the balance sheet

date.

For trading deposits and deposits designated

at FVTPL, which is included in financial liabilities

designated at FVTPL, fair value is determined

using discounted

cash flow valuation techniques which

maximize the use of observable market inputs

such as benchmark yield curves and foreign

exchange rates. The Bank

considers the impact of its own creditworthiness

in the valuation of these deposits by reference

to observable market inputs.

Securitization Liabilities

The fair value of securitization liabilities is based

on quoted market prices or quoted market

prices for similar financial instruments,

where available. Where quoted

prices are not available, fair value is determined

using valuation techniques, which maximize

the use of observable inputs, such as

Canada Mortgage Bond (CMB)

curves and MBS curves.

Obligations Related to Securities Sold

Short

The fair value of these obligations is based

on the fair value of the underlying securities,

which can include equity or debt securities.

As these obligations are fully

collateralized, the method used to determine

fair value would be the same as that of

the relevant underlying equity or debt securities.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 32

Securities Purchased Under Reverse

Repurchase Agreements and Obligations

Related to Securities Sold Under Repurchase

Agreements

Commodities and certain bonds and equities

purchased or sold with an agreement

to sell or repurchase them at a later

date at a fixed price are carried at fair

value. The fair value of these agreements

is based on valuation techniques such as discounted

cash flow models which maximize the use of observable

market

inputs such as interest rate swap curves

and commodity forward prices.

Subordinated Notes and Debentures

The fair value of subordinated notes and debentures

are based on quoted market prices.

Portfolio Exception

IFRS 13,

Fair Value Measurement

provides a measurement exception

that allows an entity to determine the fair

value of a group of financial assets and liabilities

with offsetting risks based on the sale or transfer

of its net exposure to a particular risk or

risks. The Bank manages certain financial

assets and financial liabilities,

such as derivative assets and derivative liabilities,

on the basis of net exposure to a particular risk,

or risks; and uses mid-market prices as a basis

for establishing

fair values for the offsetting risk positions and

applies the most representative price

within the bid-ask spread to the net open position,

as appropriate. Refer to

Note 2 for further details on the use of the portfolio

exception to establish fair value.

(c)

FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES NOT CARRIED AT FAIR VALUE

The carrying value and fair value of financial

assets and liabilities not carried at fair

value are disclosed in the table below. For these instruments,

fair values are

calculated for disclosure purposes only, using the valuation techniques

used by the Bank. In addition, the Bank

has determined that the carrying value of

certain

financial assets and liabilities approximates

their fair value, which include: cash and

due from banks, interest-bearing deposits

with banks, amounts receivable

from brokers, dealers, and clients, other

assets, amounts payable to brokers, dealers,

and clients, and other liabilities. Substantially

all securities purchased under

reverse repurchase agreements and obligations

related to securities sold under repurchase

agreements are measured at amortized cost

where the carrying value

approximates their fair value.

Financial Assets and Liabilities not carried

at Fair Value

(millions of Canadian dollars)

As at

October 31, 2025

October 31, 2024

Carrying

Fair

Carrying

Fair

value

FINANCIAL ASSETS

Debt securities at amortized cost, net of allowance

for credit losses

Government and government-related

securities

183,593

182,478

206,815

202,667

Other debt securities

56,846

56,679

64,800

63,509

Total debt securities at amortized cost, net of allowance for credit losses

240,439

239,157

271,615

266,176

Total loans, net of allowance for loan losses

953,012

956,424

949,549

949,227

Total financial assets not carried at fair value

1,193,451

1,195,581

1,221,164

1,215,403

FINANCIAL LIABILITIES

Deposits

1,267,104

1,267,466

1,268,680

1,266,562

Securitization liabilities at amortized

cost

14,841

14,805

12,365

12,123

Subordinated notes and debentures

10,733

10,929

11,473

11,628

Total financial liabilities not carried at fair value

1,292,678

1,293,200

1,292,518

1,290,313

This table excludes financial assets and liabilities where the carrying value approximates their fair value.

(d)

FAIR VALUE HIERARCHY

IFRS requires disclosure of a three-level hierarchy

for fair value measurements based upon

the observability of inputs to the valuation of

an asset or liability as of

the measurement date. The three levels are

defined as follows:

Level 1

: Fair value is based on quoted market prices

for identical assets or liabilities that are

traded in an active exchange market

or highly liquid and actively

traded in OTC markets.

Level 2

: Fair value is based on observable inputs other

than Level 1 prices, such as quoted

market prices for similar (but not identical) assets

or liabilities in active

markets, quoted market prices for identical

assets or liabilities in markets that are

not active, and other inputs that are observable

or can be corroborated by

observable market data for substantially the

full term of the assets or liabilities. Level

2 assets and liabilities include debt securities

with quoted prices that are

traded less frequently than exchange-traded

instruments and derivative contracts

whose value is determined using valuation

techniques with inputs that are

observable in the market or can be derived

principally from or corroborated by observable

market data.

Level 3

: Fair value is based on non-observable inputs

that are supported by little or no market

activity and that are significant to the

fair value of the assets or

liabilities. Financial instruments classified

within Level 3 of the fair value hierarchy are

initially recognized at their transaction price,

which is considered the best

estimate of fair value. After initial measurement,

the fair value of Level 3 assets and liabilities

is determined using valuation models, discounted

cash flow

methodologies, or similar techniques.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 33

Fair Value Hierarchy for Assets and Liabilities not carried

at Fair Value

The following table presents the levels within

the fair value hierarchy for each of the

financial assets and liabilities not carried at fair

value as at October 31, 2025

and October 31, 2024, but for which fair

value is disclosed.

Fair Value Hierarchy for Assets and

Liabilities not carried at Fair Value

(millions of Canadian dollars)

As at

October 31, 2025

October 31, 2024

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

ASSETS

Debt securities at amortized cost, net of allowance for

credit losses

Government and government-related securities

–

182,478

–

182,478

–

202,667

–

202,667

Other debt securities

–

56,679

–

56,679

–

63,509

–

63,509

Total debt securities

at amortized cost, net of allowance

for credit losses

–

239,157

–

239,157

–

266,176

–

266,176

Total loans, net

of allowance for loan losses

–

280,842

675,582

956,424

–

285,070

664,157

949,227

Total assets with

fair value disclosures

–

519,999

675,582

1,195,581

–

551,246

664,157

1,215,403

LIABILITIES

Deposits

–

1,267,466

–

1,267,466

–

1,266,562

–

1,266,562

Securitization liabilities at amortized cost

–

14,805

–

14,805

–

12,123

–

12,123

Subordinated notes and debentures

–

10,929

–

10,929

–

11,628

–

11,628

Total liabilities with

fair value disclosures

–

1,293,200

–

1,293,200

–

1,290,313

–

1,290,313

This table excludes financial assets and liabilities where the carrying value approximates their fair value.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 34

The following table presents

the levels

within the fair value hierarchy for each

of the assets and liabilities measured

at fair value on a recurring basis as at

October 31, 2025

and October 31, 2024.

Fair Value Hierarchy for Assets and

Liabilities Measured at Fair Value

on a Recurring Basis

(millions of Canadian dollars)

As at

October 31, 2025

October 31, 2024

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

FINANCIAL ASSETS AND COMMODITIES

Trading loans, securities, and other

Government and government-related securities

Canadian government debt

Federal

4,892

3,875

–

8,767

691

9,551

–

10,242

Provinces

–

4,537

–

4,537

–

6,398

–

6,398

U.S. federal, state, municipal governments,

and agencies debt

2,973

20,811

–

23,784

–

18,861

–

18,861

Other OECD government-guaranteed debt

283

5,818

–

6,101

–

9,722

–

9,722

Mortgage-backed securities

–

768

–

768

–

1,352

–

1,352

Other debt securities

Canadian issuers

–

6,695

6,762

–

6,611

6,623

Other issuers

–

16,508

–

16,508

–

15,845

15,859

Equity securities

87,713

171

87,909

68,682

68,728

Trading loans

–

30,032

–

30,032

–

23,518

–

23,518

Commodities

33,446

1,521

–

34,967

13,504

962

–

14,466

Retained interests

–

129,307

90,737

220,136

82,877

92,855

175,770

Non-trading financial assets at fair value through

profit or loss

Securities

465

5,019

1,567

7,051

391

1,188

1,233

2,812

Loans

–

344

–

344

–

3,057

–

3,057

465

5,363

1,567

7,395

391

4,245

1,233

5,869

Derivatives

Interest rate contracts

10,990

11,004

15,440

–

15,442

Foreign exchange contracts

53,576

53,609

51,001

51,061

Credit contracts

–

Equity contracts

162

12,534

–

12,696

6,167

–

6,231

Commodity and other contracts

752

4,867

–

5,619

548

4,756

5,321

950

82,011

82,972

661

77,370

78,061

Financial assets designated at

fair value through profit or loss

Securities

–

6,986

–

6,986

–

6,417

–

6,417

–

6,986

–

6,986

–

6,417

–

6,417

Financial assets at fair value through other

comprehensive income

Government and government-related securities

Canadian government debt

Federal

100

15,791

–

15,891

–

18,139

–

18,139

Provinces

–

21,080

–

21,080

–

21,270

–

21,270

U.S. federal, state, municipal governments,

and agencies debt

851

53,641

–

54,492

–

35,197

–

35,197

Other OECD government-guaranteed debt

–

7,875

–

7,875

–

1,679

–

1,679

Mortgage-backed securities

–

1,896

–

1,896

–

2,137

–

2,137

Other debt securities

Asset-backed securities

–

8,709

–

8,709

–

1,384

–

1,384

Corporate and other debt

–

13,091

–

13,091

–

9,439

9,446

Equity securities

1,136

–

1,911

3,047

1,058

3,355

4,415

Loans

–

288

–

288

–

230

–

230

2,087

122,371

1,911

126,369

1,058

89,477

3,362

93,897

Securities purchased under reverse

repurchase agreements

–

7,574

–

7,574

–

10,488

–

10,488

FINANCIAL LIABILITIES

Trading deposits

–

37,609

273

37,882

–

29,907

505

30,412

Derivatives

Interest rate contracts

9,572

9,654

13,283

158

13,444

Foreign exchange contracts

42,496

42,525

40,936

40,978

Credit contracts

–

440

–

440

–

403

–

403

Equity contracts

–

19,528

155

19,683

–

7,974

7,998

Commodity and other contracts

806

6,193

7,054

673

4,845

5,545

836

78,229

291

79,356

706

67,441

221

68,368

Securitization liabilities at fair value

–

25,283

–

25,283

–

20,319

–

20,319

Financial liabilities designated

at fair value through profit or loss

–

197,633

197,635

–

207,890

207,914

Obligations related to securities sold short

15,342

28,453

–

43,795

1,783

37,732

–

39,515

Obligations related to securities sold

under repurchase agreements

–

11,557

–

11,557

–

9,736

–

9,736

Balances reflect the reduction of securities owned (long positions) by the amount of identical securities sold but

not yet purchased (short positions).

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 35

(e)

TRANSFERS BETWEEN FAIR VALUE HIERARCHY LEVELS FOR ASSETS

AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS

The Bank’s policy is to record transfers of assets

and liabilities between the different levels of

the fair value hierarchy using the fair values as

at the end of each

reporting period. Assets and liabilities are

transferred between Level 1 and Level 2

depending on whether there is sufficient frequency

and volume in an active

market.

During the year ended October 31, 2025,

the Bank transferred $

810

million of trading loans, securities, and other, and $

561

million of obligations related to

securities sold short from Level 2 to Level 1.

During the year ended October 31, 2025, there

were no significant transfers from Level 1

to Level 2. There were no

significant transfers between Level 1 and Level

2 during the year ended October

31, 2024.

Movements of Level 3 instruments

Significant transfers into and out of Level 3 occur

mainly due to the following reasons:

●

Transfers from Level 3 to Level 2 occur when techniques

used for valuing the instrument incorporate

significant observable market inputs or broker-dealer

quotes which were previously not observable.

●

Transfers from Level 2 to Level 3 occur when an instrument’s

fair value, which was previously determined

using valuation techniques with significant

observable

market inputs, is now determined using

valuation techniques with significant unobservable

inputs.

Due to the unobservable nature of the inputs

used to value Level 3 financial instruments,

there may be uncertainty about the valuation

of these instruments. The

fair value of Level 3 instruments may be drawn

from a range of reasonably possible alternatives.

In determining the appropriate levels for these

unobservable

inputs, parameters are chosen so that they

are consistent with prevailing market evidence

and management judgment.

There were no significant transfers between

Level 2 and Level 3 during the years ended

October 31, 2025 and October 31, 2024.

There were no other significant changes to

the unobservable inputs and sensitivities

for assets and liabilities classified as Level

3 during the years ended

October 31, 2025

and October 31, 2024.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 36

(f)

RECONCILIATION OF CHANGES IN FAIR VALUE FOR LEVEL 3 ASSETS AND LIABILITIES

The following tables set out changes in fair

value of all assets and liabilities measured

at fair value using significant Level 3 unobservable

inputs for the years

ended October 31, 2025

and October 31, 2024.

Reconciliation of Changes in Fair Value for Level 3 Assets and Liabilities

(millions of Canadian dollars)

Change in

unrealized

Fair

Total realized and

Fair

gains

value as at

unrealized gains (losses)

Movements

Transfers

value as at

(losses) on

November 1

Included

Purchases/

Sales/

Into

Out of

October 31

instruments

2024

in income

in OCI

3,4

Issuances

Settlements

Level 3

2025

still held

FINANCIAL ASSETS

Trading loans, securities,

and other

Government and government-related

securities

–

Other debt securities

(1)

–

(26)

(2)

Equity securities

–

(9)

–

(35)

(2)

Non-trading financial assets at

fair value through profit or loss

Securities

1,233

–

385

(74)

–

(10)

1,567

(5)

1,233

–

385

(74)

–

(10)

1,567

(5)

Financial assets at fair value

through other comprehensive

income

Other debt securities

–

(7)

–

Equity securities

3,355

(1,472)

–

(3)

1,911

3,362

(1,479)

–

(3)

1,911

FINANCIAL LIABILITIES

Trading deposits

(505)

–

(191)

350

–

(273)

Derivatives

Interest rate contracts

(158)

–

(68)

Foreign exchange contracts

(18)

–

(2)

(3)

Equity contracts

(24)

(108)

–

(24)

(2)

(155)

(108)

Commodity and other contracts

(10)

(45)

–

(55)

(48)

(191)

(91)

–

(10)

(280)

(76)

Financial liabilities designated

at fair value through profit or loss

(24)

–

(24)

–

(2)

Change in

unrealized

Fair

Total realized and

Fair

gains

value as at

unrealized gains (losses)

Movements

Transfers

value as at

(losses) on

November 1

Included

Purchases/

Sales/

Into

Out of

October 31

instruments

2023

in income

in OCI

3,4

Issuances

Settlements

Level 3

2024

still held

FINANCIAL ASSETS

Trading loans, securities,

and other

Government and government-related

securities

–

(67)

–

Other debt securities

–

(88)

(76)

–

Equity securities

(1)

–

(8)

–

142

–

102

(163)

(76)

–

Non-trading financial assets at

fair value through profit or loss

Securities

980

–

232

(76)

–

(1)

1,233

980

–

232

(76)

–

(1)

1,233

Financial assets at fair value

through other comprehensive

income

Other debt securities

–

(3)

(20)

–

Equity securities

2,377

–

(7)

1,171

(205)

–

3,355

2,404

–

(10)

1,174

(225)

–

3,362

FINANCIAL LIABILITIES

Trading deposits

(985)

(13)

–

(122)

540

–

(505)

(6)

Derivatives

Interest rate contracts

(126)

(70)

–

(158)

(34)

Foreign exchange contracts

(6)

–

(14)

Equity contracts

(21)

(5)

–

(2)

(24)

(6)

Commodity and other contracts

(1)

(5)

–

(4)

–

(10)

(9)

(154)

(66)

–

(11)

(191)

(45)

Financial liabilities designated

at fair value through profit or loss

(22)

127

–

(260)

131

–

(24)

127

Includes foreign exchange.

Gains/losses on financial assets and liabilities are recognized within Non-interest income on the Consolidated Statement

of Income.

Other comprehensive income.

Includes realized gains/losses transferred to retained earnings on disposal of equities designated at FVOCI. Refer

to Note 7 for further details.

Changes in unrealized gains/losses on financial assets at FVOCI are recognized in AOCI.

Issuances and repurchases of trading deposits are reported on a gross basis.

Consists of derivative assets of $

million (October 31, 2024/November 1, 2024 – $

million; November 1, 2023 – $

million) and derivative liabilities of $

291

million

(October 31, 2024/November 1, 2024 – $

221

million; November 1, 2023 – $

176

million), which have been netted in this table for presentation purposes only.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 37

(g)

VALUATION OF ASSETS AND LIABILITIES CLASSIFIED AS LEVEL 3

Significant unobservable inputs in Level

3 positions

The following section discusses the significant

unobservable inputs for Level 3 positions

and assesses the potential effect that a change

in each unobservable

input may have on the fair value measurement.

Price Equivalent

Certain financial instruments, mainly

debt and equity securities, are valued using price

equivalents when market prices are

not available,

with fair value measured

by comparison with observable pricing data

from instruments with similar characteristics.

For debt securities, the price equivalent is

expressed in ‘basis points’, and

represents a percentage of the par amount.

For equity securities, the price equivalent

is based on a percentage of a proxy price.

There may be wide ranges

depending on the liquidity of the securities.

New issuances of debt and equity securities

are priced at 100% of the issue price.

Correlation

The movements of inputs are not necessarily

independent from other inputs. Such relationships,

where material to the fair value of a given instrument,

are

captured via correlation inputs into the pricing

models. The Bank includes correlation

between the asset class,

as well as across asset classes. For

example, price

correlation is the relationship between prices

of equity securities in equity basket

derivatives, and quanto correlation is the relationship

between instruments which

settle in one currency and the underlying

securities which are denominated in another

currency.

Implied Volatility

Implied volatility is the value of the volatility

of the underlying instrument which, when

input in an option pricing model, such as Black-Scholes,

will return a

theoretical value equal to the current

market price of the option. Implied volatility

is a forward-looking and subjective measure,

and differs from historical volatility

because the latter is calculated from known

past returns of a security.

Funding Ratio

The funding ratio is a significant unobservable

input required to value loan commitments issued

by the Bank. The funding ratio represents

an estimate of the

percentage of commitments that are ultimately

funded by the Bank. The funding ratio is

based on a number of factors such as observed

historical funding

percentages within the various lending channels

and the future economic outlook, considering

factors including, but not limited to, competitive

pricing and

fixed/variable mortgage rate gap. An increase/decrease

in the funding ratio will increase/decrease

loan commitment liability values in relationship

to prevailing

interest rates.

Earnings Multiple, Discount Rate, and Liquidity

Discount

Earnings multiple, discount rate, and liquidity

discount are significant inputs used when

valuing certain equity securities. Earnings multiples

are selected based on

comparable entities and a higher multiple

will result in a higher fair value. Discount

rates are applied to cash flow forecasts to reflect

time value of money and the

risks associated with the cash flows.

A higher discount rate will result in a lower

fair value. Liquidity discounts may be applied

as a result of the difference in

liquidity between the comparable entity and

the equity securities being valued.

Inflation Rate Swap Curve

Inflation rate swap contracts valuation reflects

spread between interest rate curves and

the inflation rates. The inflation rates are not

observable and are

determined using proxy inputs such as inflation

indices (e.g., Consumer Price Index).

Net Asset Value

The fair value of certain private funds is based

on the net asset value determined by the

fund managers based on valuation methodologies,

as there are no

observable prices for these instruments.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 38

Valuation techniques and inputs used in the fair value measurement

of Level 3 assets and liabilities

The following table presents

the Bank’s assets and liabilities recognized

at fair value and classified as Level 3, together

with the valuation techniques used to

measure fair value, the significant inputs

used in the valuation technique that are considered

unobservable,

and a range of values for those unobservable

inputs.

The range of values represents

the highest and lowest inputs

used in calculating the fair value.

Valuation Techniques and Inputs

Used in the Fair Value Measurement of Level 3 Assets and Liabilities

As at

October 31, 2025

October 31, 2024

Significant

Valuation

unobservable

Lower

Upper

Lower

Upper

technique

inputs (Level 3)

range

Unit

Other debt securities

Market comparable

Bond price equivalent

–

108

–

102

points

Equity securities

Market comparable

New issue price

100

Non-trading financial assets

at fair value through profit or loss

Market comparable

New issue price

100

Discounted cash flow

Discount rates

EBITDA multiple

Earnings multiple

n/a

–

20.0

times

Price-based

Net Asset Value

n/a

Derivatives

Interest rate contracts

Discounted cash flow

Inflation rate swap curve

n/a

Option model

Funding ratio

n/a

Swaption Model

Currency-specific volatility

277

319

Foreign exchange contracts

Option model

Currency-specific volatility

Equity contracts

Option model

Price correlation

Dividend yield

–

Equity volatility

111

Commodity and other contracts

Option model

Quanto correlation

(67)

(47)

(67)

(47)

Market comparable

Price equivalent

n/a

points

Trading deposits

Swaption model

Currency-specific volatility

277

319

Financial liabilities designated

at fair value through profit or loss

Option model

Funding ratio

Equity securities exclude the fair value of Federal Reserve stock and FHLB stock of $

1.7

billion (October 31, 2024 – $

3.2

billion) which are redeemable by the issuer at cost which

approximates fair value. These securities cannot be traded in the market, hence, these securities have not been

subjected to the sensitivity analysis.

Not applicable.

Net asset value information for private funds has not been disclosed due to the wide range in prices for these instruments.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 39

The following table summarizes the potential

effect of using reasonably possible alternative

assumptions for financial assets and

financial liabilities held, that are

classified in Level 3 of the fair value hierarchy

as at October 31, 2025 and October 31, 2024.

For trading securities, non-trading securities

at FVTPL and equity

securities at FVOCI, the sensitivity was

calculated based on an upward and downward

shock of the fair value reported. For interest rate

derivatives, the Bank

performed a sensitivity analysis on the mortgage

spreads and unobservable inflation curve.

For equity derivatives, the sensitivity was

calculated based on an

upward and downward shock of fair value.

For financial liabilities designated at FVTPL,

the sensitivity was calculated based on an

upward and downward shock of

the funding ratio.

Sensitivity Analysis of Level 3 Financial

Assets and Liabilities

(millions of Canadian dollars)

As at

October 31, 2025

October 31, 2024

Impact to net assets

Decrease in

Increase in

Decrease in

Increase in

fair value

FINANCIAL ASSETS

Trading loans, securities, and other

Securities

Non-trading financial assets at fair

value through profit or loss

Securities

189

155

Financial assets at fair value through other

comprehensive income

Equity securities

FINANCIAL LIABILITIES

Trading deposits

–

Derivatives

Interest rate contracts

Equity contracts

–

Financial liabilities designated at fair value

through profit or loss

–

Total

262

219

For the years ended October 31, 2025

and 2024, the aggregate difference yet

to be recognized in net income due to the difference

between the transaction price

and the amount determined using valuation

techniques with significant non-observable inputs

at initial recognition were immaterial.

(h)

FINANCIAL INSTRUMENTS DESIGNATED AT FAIR VALUE

Securities Designated at Fair Value through Profit

or Loss

Certain securities supporting insurance

contract liabilities within the Bank’s insurance

underwriting subsidiaries have been designated

at FVTPL to eliminate or

significantly reduce an accounting mismatch.

Insurance contract liabilities are measured

using a discount factor and changes in the discount

factor are recognized

on the Consolidated Statement of Income.

The unrealized gains or losses on securities

designated at FVTPL are recognized

on the Consolidated Statement of

Income in the same period as gains or losses

resulting from changes to the discount rate

used to value the insurance contract liabilities.

In addition, certain debt securities have been designated

at FVTPL as they are economically hedged

with derivatives and the designation eliminates

significantly reduces an accounting mismatch.

Financial Liabilities Designated at Fair Value through

Profit or Loss

Certain deposits have been designated at FVTPL

to reduce an accounting mismatch from

related economic hedges, and are included

in Financial liabilities

designated at FVTPL on the Consolidated

Balance Sheet. In addition, certain obligations

related to securities sold under repurchase

agreements have been

designated at FVTPL as the instruments

are part of a portfolio that is managed on a

fair value basis and have been included in Obligations

related to securities

sold under repurchase agreements on the Consolidated

Balance Sheet. The fair value of obligations

related to securities sold under repurchase

agreements

designated at FVTPL was $

8,738

million as at October 31, 2025 (October

31, 2024 – $

9,736

million).

For financial liabilities designated at FVTPL,

the estimated amount that the Bank

would be contractually required to pay at

maturity, which is based on notional

amounts, was $

1,708

million less than its fair value as at October

31, 2025 (October 31, 2024 – $

2,744

million).

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 40

NOTE 6: OFFSETTING FINANCIAL ASSETS

AND FINANCIAL LIABILITIES

The Bank enters into netting agreements

with counterparties (such as clearing houses)

to manage the credit risks associated primarily

with repurchase and

reverse repurchase transactions, securities

borrowing and lending transactions, and

OTC and exchange-traded derivatives.

These netting agreements and similar

arrangements generally allow the counterparties

to set-off liabilities against available assets received.

The right to set-off is a legal right to settle or otherwise

eliminate all or a portion of an amount due by

applying against that amount an amount receivable

from the other party. These agreements effectively reduce the

Bank’s credit exposure by what it would have

been if those same counterparties were liable

for the gross exposure on the same underlying

contracts.

Netting arrangements are typically constituted

by a master netting agreement which

specifies the general terms of the agreement

between the counterparties,

including information on the basis of the netting

calculation, types of collateral, and the definition

of default and other termination events for

transactions executed

under the agreement. The master netting

agreements contain the terms and conditions

by which all (or as many as possible) relevant

transactions between the

counterparties are governed. Multiple individual

transactions are subsumed under this general

master netting agreement, forming a single legal

contract under

which the counterparties conduct their relevant

mutual business. In addition to the mitigation

of credit risk, placing individual transactions

under a single master

netting agreement that provides for netting of

transactions in scope also helps to mitigate

settlement risks associated with transacting

in multiple jurisdictions or

across multiple contracts. These arrangements

include clearing agreements, global

master repurchase agreements, and global

master securities lending

agreements.

In the normal course of business, the Bank

enters into contracts to buy and sell goods

and services from various suppliers. Some

of these contracts may have

netting provisions that allow for the offset of various

trade payables and receivables in the event

of default of one of the parties. While these

are not disclosed in

the following table, the gross amount of all payables

and receivables to and from the Bank’s vendors

is disclosed in Note 15 in accounts receivable

and other

items, and in Note 17 in accounts payable,

accrued expenses, and other items.

The Bank also enters into regular way purchases

and sales of stocks and bonds. Some of

these transactions may have netting provisions

that allow for the

offset of broker payables and broker receivables

related to these purchases and sales.

While these are not disclosed in the following

table, the amount of

receivables are presented in amounts receivable

from brokers, dealers, and clients, and payables

are disclosed in amounts payable to brokers,

dealers, and

clients.

The following table provides a summary

of the financial assets and liabilities which

are subject to enforceable master netting

agreements and similar

arrangements, including amounts not otherwise

set-off on the Consolidated Balance Sheet, as

well as financial collateral received to mitigate

credit exposures for

these financial assets and liabilities. The gross

financial assets and liabilities are reconciled

to net amounts and are presented within the

associated line on the

Consolidated Balance Sheet, after transactions

with the same counterparties have been offset.

Related amounts and collateral received that

are not offset on the

Consolidated Balance Sheet but are otherwise

subject to the same enforceable netting agreements

and similar arrangements, are then presented

to arrive at a net

amount.

Offsetting Financial Assets and Financial Liabilities

(millions of Canadian dollars)

As at

October 31, 2025

Amounts subject to an enforceable

master netting agreement or similar

arrangement that are not offset in

the Consolidated Balance Sheet

1,2

Gross amounts

of recognized

Net amount

financial

of financial

Amounts

instruments

subject to an

before

offset in the

presented in the

enforceable

balance sheet

Consolidated

master netting

netting

Balance Sheet

agreement

Collateral

Net Amount

Financial Assets

Derivatives

84,781

1,809

82,972

45,857

15,132

21,983

Securities purchased under

reverse repurchase agreements

266,189

19,111

247,078

21,509

216,312

9,257

Total

350,970

20,920

330,050

67,366

231,444

31,240

Financial Liabilities

Derivatives

81,165

1,809

79,356

45,857

28,537

4,962

Obligations related to securities sold

under repurchase agreements

240,261

19,111

221,150

21,509

198,524

1,117

Total

321,426

20,920

300,506

67,366

227,061

6,079

October 31, 2024

Financial Assets

Derivatives

79,949

1,888

78,061

42,849

14,214

20,998

Securities purchased under

reverse repurchase agreements

225,475

17,258

208,217

20,904

184,116

3,197

Total

305,424

19,146

286,278

63,753

198,330

24,195

Financial Liabilities

Derivatives

70,256

1,888

68,368

42,849

19,903

5,616

Obligations related to securities sold

under repurchase agreements

219,158

17,258

201,900

20,904

179,318

1,678

Total

289,414

19,146

270,268

63,753

199,221

7,294

Excess collateral as a result of overcollateralization has not been reflected in the table.

Includes amounts where the contractual set-off rights are subject to uncertainty under the laws of the

relevant jurisdiction.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 41

NOTE 7: SECURITIES

Securities are held by the Bank for both trading

and non-trading activities. Trading securities are included

in Trading loans, securities, and other on the

Consolidated Balance Sheet. Non-trading

securities are included in Non-trading financial

assets at FVTPL, Financial assets designated

at FVTPL, Financial assets

at FVOCI, or Debt securities at amortized

cost, net of allowance for credit losses on

the Consolidated Balance Sheet.

(a)

REMAINING TERMS TO MATURITIES OF SECURITIES

The remaining terms to contractual maturities

of the securities held by the Bank are

shown on the following table.

Securities Maturity Schedule

(millions of Canadian dollars)

As at

October 31

2025

2024

Remaining terms to maturities

Over 1

Over 3

Over 5

With no

Within

year to

years to

Over 10

specific

1 year

3 years

5 years

10 years

years

maturity

Total

Trading securities

Government and government-related securities

Canadian government debt

Federal

2,508

917

1,012

2,723

1,607

–

8,767

10,242

Provinces

1,184

251

457

972

1,673

–

4,537

6,398

U.S. federal, state, municipal governments, and

agencies debt

5,689

3,383

1,943

2,466

10,303

–

23,784

18,861

Other OECD government-guaranteed debt

4,575

652

456

318

100

–

6,101

9,722

Mortgage-backed securities

Residential

250

248

–

552

1,040

Commercial

101

–

216

312

14,217

5,546

4,020

6,491

13,683

–

43,957

46,575

Other debt securities

Canadian issuers

598

2,653

1,406

1,474

631

–

6,762

6,623

Other issuers

4,794

6,601

3,243

1,456

293

121

16,508

15,859

5,392

9,254

4,649

2,930

924

121

23,270

22,482

Equity securities

Common shares

–

87,790

68,670

Preferred shares

–

119

–

87,909

68,728

Retained interests

–

Total trading securities

19,609

14,801

8,669

9,421

14,607

88,030

155,137

137,786

Non-trading financial assets at fair value through

profit or loss

Government and government-related securities

U.S. federal, state, municipal governments, and

agencies debt

–

333

–

333

271

–

333

–

333

271

Other debt securities

Canadian issuers

122

110

–

689

979

912

Asset-backed securities

–

2,261

778

507

704

–

4,250

414

Other issuers

–

117

2,383

888

538

704

806

5,346

1,376

Equity securities

Common shares

–

1,314

1,105

Preferred shares

–

1,372

1,165

Total non-trading financial

assets at fair value

through profit or loss

2,383

888

538

1,037

2,178

7,051

2,812

Financial assets designated at fair value through profit

or loss

Government and government-related securities

Canadian government debt

Federal

182

–

191

294

Provinces

525

376

1,055

737

2,751

2,443

U.S. federal, state, municipal governments, and

agencies debt

–

Other OECD government-guaranteed debt

400

–

513

310

1,125

471

1,078

739

3,473

3,056

Other debt securities

Canadian issuers

742

1,484

352

–

2,677

2,395

Other issuers

571

155

–

836

966

814

2,055

507

129

–

3,513

3,361

Total financial assets designated

at fair value

through profit or loss

1,939

2,526

1,585

868

6,986

6,417

Represents contractual maturities. Actual maturities may differ due to prepayment privileges in the applicable

contract.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 42

Securities Maturity Schedule

(Continued)

(millions of Canadian dollars)

As at

October 31

2025

2024

Remaining terms to maturities

Over 1

Over 3

Over 5

With no

Within

year to

years to

Over 10

specific

1 year

3 years

5 years

10 years

years

maturity

Total

Securities at fair value through other comprehensive

income

Government and government-related securities

Canadian government debt

Federal

1,878

1,619

5,108

7,175

111

–

15,891

18,139

Provinces

1,050

3,253

5,973

10,372

432

–

21,080

21,270

U.S. federal, state, municipal governments, and

agencies debt

12,005

1,501

16,504

21,648

2,834

–

54,492

35,197

Other OECD government-guaranteed debt

273

1,612

5,932

–

7,875

1,679

Mortgage-backed securities

436

1,460

–

1,896

2,137

15,642

9,445

33,517

39,253

3,377

–

101,234

78,422

Other debt securities

Asset-backed securities

914

274

2,932

1,615

2,974

–

8,709

1,384

Corporate and other debt

2,681

3,280

2,212

1,643

3,275

–

13,091

9,446

3,595

3,554

5,144

3,258

6,249

–

21,800

10,830

Equity securities

Common shares

–

2,536

3,914

Preferred shares

–

511

501

–

3,047

4,415

Total securities at fair value

through other

comprehensive income

19,237

12,999

38,661

42,511

9,626

3,047

126,081

93,667

Debt securities at amortized cost, net of allowance for

credit losses

Government and government-related securities

Canadian government debt

Federal

12,267

12,206

2,784

9,368

1,293

–

37,918

22,991

Provinces

934

3,370

7,811

6,395

326

–

18,836

18,614

U.S. federal, state, municipal governments, and

agencies debt

1,922

23,631

11,061

24,181

33,732

–

94,527

124,099

Other OECD government-guaranteed debt

8,006

13,428

6,882

2,891

–

31,207

39,394

23,129

52,635

28,538

42,835

35,351

–

182,488

205,098

Other debt securities

Asset-backed securities

1,140

4,509

5,981

15,407

–

27,047

29,708

Non-agency collateralized mortgage obligation

portfolio

–

13,274

–

13,274

15,362

Canadian issuers

105

1,051

867

532

–

2,564

4,722

Other issuers

2,188

6,775

4,392

1,711

–

15,066

16,725

2,303

8,966

9,768

8,224

28,690

–

57,951

66,517

Total debt securities at amortized

cost, net of

allowance for credit losses

25,432

61,601

38,306

51,059

64,041

–

240,439

271,615

Total securities

66,244

94,310

88,109

104,397

89,363

93,271

535,694

512,297

Represents contractual maturities. Actual maturities may differ due to prepayment privileges in the applicable

contract.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 43

(b)

UNREALIZED SECURITIES GAINS (LOSSES)

The following table summarizes the unrealized

gains and losses as at October 31, 2025

and October 31, 2024.

Unrealized Securities Gains (Losses) for

Securities at Fair Value Through Other Comprehensive

Income

(millions of Canadian dollars)

As at

October 31, 2025

October 31, 2024

Cost/

Gross

Cost/

Gross

amortized

unrealized

Fair

amortized

unrealized

Fair

cost

gains

(losses)

value

cost

gains

(losses)

value

Government and government-related

securities

Canadian government debt

Federal

15,956

(88)

15,891

18,281

(159)

18,139

Provinces

20,971

120

(11)

21,080

21,263

(70)

21,270

U.S. federal, state, municipal governments, and

agencies debt

54,279

267

(54)

54,492

35,371

(196)

35,197

Other OECD government-guaranteed debt

7,864

(4)

7,875

1,687

(9)

1,679

Mortgage-backed securities

1,869

(2)

1,896

2,125

(5)

2,137

100,939

454

(159)

101,234

78,727

134

(439)

78,422

Other debt securities

Asset-backed securities

8,713

(15)

8,709

1,397

(14)

1,384

Corporate and other debt

13,011

106

(26)

13,091

9,419

(50)

9,446

21,724

117

(41)

21,800

10,816

(64)

10,830

Total debt securities

122,663

571

(200)

123,034

89,543

212

(503)

89,252

Equity securities

Common shares

2,332

226

(22)

2,536

3,810

176

(72)

3,914

Preferred shares

523

(79)

511

632

(160)

501

2,855

293

(101)

3,047

4,442

205

(232)

4,415

Total securities at fair value through other

comprehensive income

125,518

864

(301)

126,081

93,985

417

(735)

93,667

Includes the foreign exchange translation of amortized cost balances at the period-end spot rate.

(c)

EQUITY SECURITIES DESIGNATED AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

The Bank designated certain equity securities

at FVOCI.

The following table summarizes the fair

value of equity securities designated at

FVOCI as at

October 31, 2025 and October 31, 2024, and

dividend income recognized on these securities

for the years ended October 31, 2025 and

October 31, 2024.

Equity Securities Designated at Fair Value Through

Other Comprehensive Income

(millions of Canadian dollars)

As at

For the years ended

October 31, 2025

October 31, 2024

October 31, 2025

October 31, 2024

Fair value

Dividend income recognized

Common shares

2,536

3,914

201

153

Preferred shares

511

501

141

155

Total

3,047

4,415

342

308

The Bank disposed of certain equity securities

in line with the Bank’s investment strategy

and disposed of FHLB stocks in accordance

with FHLB member

stockholding requirements, as follows:

Equity Securities Net Realized Gains

(Losses)

(millions of Canadian dollars)

For the years ended

October 31

2025

2024

Equity Securities

Fair value

273

643

Cumulative realized gain/(loss)

121

FHLB Stock

Fair value

1,483

187

Cumulative realized gain/(loss)

–

Includes disposal of the Bank’s holdings in First Horizon Corporation (“First Horizon”) common shares

in the third quarter of fiscal 2024.

(d)

DEBT SECURITIES NET REALIZED GAINS

(LOSSES)

The Bank disposed of certain debt securities

measured at amortized cost and FVOCI

during the year.

The following table summarizes the net realized

gains and

losses on securities disposed of during

the years ended October 31, 2025 and October

31, 2024, which are included in Other income

(loss) on the Consolidated

Statement of Income.

Debt Securities Net Realized Gains (Losses)

(millions of Canadian dollars)

For the years ended

October 31

2025

2024

Debt securities at amortized cost

(1,880)

(381)

Debt securities at fair value through other

comprehensive income

(71)

Total

(1,951)

(358)

Includes $

1,929

million (US$

1,366

million) (October 31, 2024 – $

311

million (US$

226

million)) of pre-tax losses on debt securities related to balance sheet restructuring activities

undertaken in the U.S. Retail segment. Refer to Note 25 for additional information regarding the asset limitation

on TD’s two U.S. bank subsidiaries.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 44

(e)

CREDIT QUALITY OF DEBT SECURITIES

The Bank evaluates non-retail credit risk

on an individual borrower basis, using both

a BRR and FRR, as detailed in the

shaded area of the “Managing Risk”

section of the 2025

MD&A. This system is used to assess all

non-retail exposures, including debt securities.

The following table provides the gross carrying

amounts of debt securities measured

at amortized cost and debt securities at FVOCI

by internal risk rating for credit

risk management purposes, presenting

separately those debt securities that are

subject to Stage 1, Stage 2, and Stage 3

allowances. Refer to the “Allowance for

Credit Losses” table in Note 8 for details regarding

the allowance and provision for credit losses

on debt securities.

Debt Securities by Risk Rating

(millions of Canadian dollars)

As at

October 31, 2025

October 31, 2024

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Debt securities

Investment grade

362,521

–

n/a

362,521

360,272

–

n/a

360,272

Non-investment grade

738

167

n/a

905

439

n/a

530

Watch and classified

n/a

Default

n/a

–

n/a

–

Total debt securities

363,259

216

–

363,475

360,711

159

–

360,870

Allowance for credit losses on debt

securities at amortized cost

–

Total debt securities, net of allowance

363,257

216

–

363,473

360,708

159

–

360,867

Includes debt securities backed by government-guaranteed loans of $

million (October 31, 2024 – $

113

million), which are reported in Non-investment grade or a lower risk rating

based on the issuer’s credit risk.

As at October 31, 2025, total debt securities,

net of allowance, in the table above, include

debt securities measured at amortized

cost, net of allowance, of

240,439

million (October 31, 2024 – $

271,615

million), and debt securities measured at

FVOCI of $

123,034

million (October 31, 2024 – $

89,252

million).

The difference between probability-weighted ECLs

and base ECLs on debt securities at FVOCI

and at amortized cost as at both October 31, 2025

and

October 31, 2024, was insignificant. Refer to

Note 3 for further details.

NOTE 8: LOANS, IMPAIRED LOANS, AND ALLOWANCE FOR CREDIT LOSSES

(a)

LOANS

The following table provides details regarding

the Bank’s loans as at October 31, 2025

and October 31, 2024.

Loans

(millions of Canadian dollars)

As at October 31

2025

2024

Residential mortgages

315,063

331,649

Consumer instalment and other personal

259,033

228,382

Credit card

41,662

40,639

Business and government

345,943

356,973

961,701

957,643

Loans at FVOCI

288

230

Total loans

961,989

957,873

Total allowance for loan losses

8,689

8,094

Total loans, net of allowance

953,300

949,779

Included in Financial assets at fair value through other comprehensive income on the Consolidated Balance Sheet.

Business and government loans and loans

at FVOCI are grouped together as reflected

below for presentation in the “Loans by

Risk Rating” table.

Loans – Business and Government

(millions of Canadian dollars)

As at October 31

2025

2024

Loans at amortized cost

345,943

356,973

Loans at FVOCI

(Note 5)

288

230

Loans

346,231

357,203

Allowance for loan losses

3,847

3,583

Loans, net of allowance

342,384

353,620

(b)

CREDIT QUALITY OF LOANS

In the retail portfolio, including individuals and

small businesses, the Bank manages exposures

on a pooled basis, using predictive credit

scoring techniques. For

non-retail exposures, each borrower is assigned

a BRR that reflects the PD of the borrower

using proprietary industry and sector specific

risk models and expert

judgment. Refer to the shaded areas of the “Managing

Risk”

section of the 2025 MD&A for further details,

including the mapping of PD ranges

to risk levels for

retail exposures as well as the Bank’s 21-point

BRR scale to risk levels and external

ratings for non-retail exposures.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 45

The following tables provide the gross carrying

amounts of loans and credit risk exposures

on loan commitments and financial guarantee

contracts by internal risk

rating for credit risk management purposes,

presenting separately those that are

subject to Stage 1, Stage 2, and Stage 3

allowances.

Loans by Risk Rating

(millions of Canadian dollars)

As at

October 31, 2025

October 31, 2024

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Residential mortgages

1,2,3

Low Risk

221,168

765

n/a

221,933

238,101

655

n/a

238,756

Normal Risk

70,217

8,391

n/a

78,608

65,318

13,620

n/a

78,938

Medium Risk

351

9,490

n/a

9,841

370

9,614

n/a

9,984

High Risk

3,700

391

4,094

3,201

347

3,553

Default

n/a

587

n/a

418

Total loans

291,739

22,346

978

315,063

303,794

27,090

765

331,649

Allowance for loan losses

102

175

357

116

189

365

Loans, net of allowance

291,637

22,171

898

314,706

303,678

26,901

705

331,284

Consumer instalment and other personal

Low Risk

110,513

2,588

n/a

113,101

101,171

2,624

n/a

103,795

Normal Risk

75,881

19,812

n/a

95,693

66,105

12,054

n/a

78,159

Medium Risk

29,757

6,792

n/a

36,549

27,188

6,352

n/a

33,540

High Risk

5,407

7,209

448

13,064

4,017

7,881

412

12,310

Default

n/a

626

n/a

578

Total loans

221,558

36,401

1,074

259,033

198,481

28,911

990

228,382

Allowance for loan losses

699

1,220

274

2,193

667

1,120

262

2,049

Loans, net of allowance

220,859

35,181

800

256,840

197,814

27,791

728

226,333

Credit card

Low Risk

8,011

n/a

8,015

6,902

n/a

6,918

Normal Risk

12,222

119

n/a

12,341

11,714

188

n/a

11,902

Medium Risk

12,780

902

n/a

13,682

12,908

1,122

n/a

14,030

High Risk

2,727

4,329

419

7,475

2,832

4,382

437

7,651

Default

n/a

149

n/a

138

Total loans

35,740

5,354

568

41,662

34,356

5,708

575

40,639

Allowance for loan losses

743

1,089

460

2,292

704

1,015

378

2,097

Loans, net of allowance

34,997

4,265

108

39,370

33,652

4,693

197

38,542

Business and government

1,2,3,5

Investment grade or Low/Normal Risk

139,518

152

n/a

139,670

158,425

102

n/a

158,527

Non-investment grade or Medium Risk

173,836

13,289

n/a

187,125

166,892

11,851

n/a

178,743

Watch and classified or High Risk

538

16,098

16,713

704

16,610

17,403

Default

n/a

2,723

n/a

2,530

Total loans

313,892

29,539

2,800

346,231

326,021

28,563

2,619

357,203

Allowance for loan losses

1,195

1,878

774

3,847

983

1,758

842

3,583

Loans, net of allowance

312,697

27,661

2,026

342,384

325,038

26,805

1,777

353,620

Total loans

862,929

93,640

5,420

961,989

862,652

90,272

4,949

957,873

Total allowance for loan losses

2,739

4,362

1,588

8,689

2,470

4,082

1,542

8,094

Total loans, net of allowance

860,190

89,278

3,832

953,300

860,182

86,190

3,407

949,779

Includes impaired loans with a balance of $

273

million (October 31, 2024 – $

259

million) which did not have a related allowance for loan losses as the realizable value of the collateral

exceeded the loan amount.

Excludes trading loans and non-trading loans at FVTPL with a fair value of $

billion (October 31, 2024 – $

billion) and $

0.3

billion (October 31, 2024 – $

billion), respectively.

Includes insured mortgages of $

billion (October 31, 2024 – $

billion).

Includes Canadian government-insured real estate personal loans of $

billion (October 31, 2024 – $

billion).

Includes loans guaranteed by government agencies of $

billion (October 31, 2024 – $

billion), which are primarily reported in non-investment grade or a lower risk rating based on the

borrowers’ credit risk.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 46

Loans by Risk Rating

(Continued)

– Off-Balance Sheet Credit Instruments

(millions of Canadian dollars)

As at

October 31, 2025

October 31, 2024

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Retail Exposures

Low Risk

318,759

1,464

n/a

320,223

268,234

1,365

n/a

269,599

Normal Risk

62,564

1,147

n/a

63,711

93,576

1,332

n/a

94,908

Medium Risk

16,381

1,295

n/a

17,676

18,562

1,247

n/a

19,809

High Risk

1,282

1,092

–

2,374

1,126

1,181

–

2,307

Default

n/a

–

n/a

–

Non-Retail Exposures

Investment grade

319,274

–

n/a

319,274

287,830

–

n/a

287,830

Non-investment grade

103,936

5,710

n/a

109,646

99,866

6,968

n/a

106,834

Watch and classified

150

4,905

–

5,055

328

5,418

–

5,746

Default

n/a

343

n/a

252

Total off-balance sheet credit

instruments

822,346

15,613

343

838,302

769,522

17,511

252

787,285

Allowance for off-balance sheet credit

instruments

470

566

1,052

439

593

1,043

Total off-balance sheet credit

instruments, net of allowance

821,876

15,047

327

837,250

769,083

16,918

241

786,242

Excludes mortgage commitments.

Includes

401

billion (October 31, 2024 – $

384

billion) of personal lines of credit and credit card lines, which are unconditionally cancellable at the Bank’s

discretion at any time.

Includes $

billion (October 31, 2024 – $

billion) of the undrawn component of uncommitted credit and liquidity facilities.

(c)

IMPAIRED LOANS

The following table presents information related

to the Bank’s impaired loans as at October 31, 2025

and October 31, 2024.

Impaired Loans

(millions of Canadian dollars)

As at

October 31, 2025

October 31, 2024

Average

Unpaid

allowance

gross

Unpaid

allowance

gross

principal

Carrying

for credit

impaired

principal

Carrying

for credit

impaired

balance

value

losses

loans

balance

value

losses

loans

Residential mortgages

1,033

978

886

827

765

685

Consumer instalment and

other personal

1,114

1,074

274

1,054

1,045

990

262

894

Credit card

569

568

460

568

575

378

544

Business and government

3,096

2,800

774

2,791

2,812

2,619

842

1,875

Total

5,812

5,420

1,588

5,299

5,259

4,949

1,542

3,998

Represents contractual amount of principal owed.

(d)

ALLOWANCE FOR CREDIT LOSSES

The following table provides details on

the Bank’s allowance for credit losses as at and

for the years ended October 31, 2025

and October 31, 2024, including

allowance for off-balance sheet instruments in the

applicable categories.

Allowance for Credit Losses

(millions of Canadian dollars)

Foreign

exchange,

Balance at

Provision

Write-offs,

disposals,

Balance

Balance at

Provision

Write-offs,

disposals,

Balance

beginning

for credit

net of

and other

at end of

beginning

for credit

net of

and other

at end of

of year

losses

recoveries

adjustments

year

of year

losses

recoveries

adjustments

year

For the years ended

October 31, 2025

October 31, 2024

Residential mortgages

365

(5)

(4)

357

403

(34)

(7)

365

Consumer instalment and other

personal

2,133

1,385

(1,250)

2,273

1,895

1,407

(1,173)

2,133

Credit card

2,699

1,763

(1,685)

2,790

2,577

1,676

(1,561)

2,699

Business and government

3,940

1,362

(954)

(27)

4,321

3,310

1,204

(536)

(38)

3,940

Total allowance for loan losses,

including off-balance sheet

instruments

9,137

4,505

(3,893)

(8)

9,741

8,185

4,253

(3,277)

(24)

9,137

Debt securities at amortized cost

–

(1)

–

Debt securities at FVOCI

–

(1)

–

Total allowance for credit

losses on debt securities

–

(1)

–

Total allowance for credit losses

9,141

4,506

(3,893)

(9)

9,745

8,189

4,253

(3,277)

(24)

9,141

Comprising:

Allowance for credit losses on

loans at amortized cost

8,094

8,689

7,136

8,094

Allowance for credit losses on

loans at FVOCI

–

Allowance for loan losses

8,094

8,689

7,136

8,094

Allowance for off-balance sheet

instruments

1,043

1,052

1,049

1,043

Allowance for credit losses on

debt securities

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 47

(e)

ALLOWANCE FOR LOAN LOSSES BY STAGE

The following table provides details on

the Bank’s allowance for loan losses by stage

as at and for the years ended October 31,

2025

and October 31, 2024.

Allowance for Loan Losses by Stage

(millions of Canadian dollars)

For the years ended

October 31, 2025

October 31, 2024

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Residential Mortgages

Balance at beginning of period

116

189

365

154

192

403

Provision for credit losses

Transfer to Stage 1

108

(103)

(5)

–

137

(133)

(4)

–

Transfer to Stage 2

(26)

(30)

–

(30)

(22)

–

Transfer to Stage 3

–

(42)

–

(32)

–

Net remeasurement due to transfers into stage

(24)

–

(9)

(30)

–

(8)

New originations or purchases

n/a

Net repayments

(4)

–

(8)

(4)

–

(4)

Derecognition of financial assets (excluding

disposals and write-offs)

(14)

(20)

(28)

(62)

(7)

(27)

(35)

(69)

Changes to risk, parameters, and models

(80)

(135)

114

Disposals

–

Write-offs

–

(11)

–

(8)

Recoveries

–

Foreign exchange and other adjustments

–

(1)

Balance at end of period

102

175

357

116

189

365

Consumer Instalment and Other Personal

Balance, including off-balance sheet instruments,

at beginning of period

696

1,175

262

2,133

688

1,010

197

1,895

Provision for credit losses

Transfer to Stage 1

696

(691)

(5)

–

607

(603)

(4)

–

Transfer to Stage 2

(239)

329

(90)

–

(246)

329

(83)

–

Transfer to Stage 3

(10)

(298)

308

–

(11)

(254)

265

–

Net remeasurement due to transfers into stage

(297)

282

(6)

(267)

300

New originations or purchases

345

n/a

345

359

n/a

359

Net repayments

(87)

(107)

(17)

(211)

(76)

(95)

(16)

(187)

Derecognition of financial assets (excluding

disposals and write-offs)

(87)

(115)

(49)

(251)

(74)

(104)

(50)

(228)

Changes to risk, parameters, and models

(295)

698

1,105

1,508

(286)

590

1,117

1,421

Disposals

–

Write-offs

–

(1,597)

–

(1,496)

Recoveries

–

347

–

323

Foreign exchange and other adjustments

–

Balance, including off-balance sheet instruments,

at end of period

724

1,275

274

2,273

696

1,175

262

2,133

Less: Allowance for off-balance sheet instruments

–

Balance at end of period

699

1,220

274

2,193

667

1,120

262

2,049

Credit Card

Balance, including off-balance sheet instruments,

at beginning of period

947

1,374

378

2,699

988

1,277

312

2,577

Provision for credit losses

Transfer to Stage 1

1,299

(1,257)

(42)

–

1,087

(1,051)

(36)

–

Transfer to Stage 2

(352)

441

(89)

–

(323)

404

(81)

–

Transfer to Stage 3

(25)

(1,047)

1,072

–

(21)

(881)

902

–

Net remeasurement due to transfers into stage

(503)

461

(16)

(476)

477

New originations or purchases

160

n/a

160

153

n/a

153

Net repayments

(5)

101

Derecognition of financial assets (excluding

disposals and write-offs)

(60)

(97)

(310)

(467)

(55)

(71)

(367)

(493)

Changes to risk, parameters, and models

(521)

1,495

1,035

2,009

(432)

1,204

1,117

1,889

Disposals

–

Write-offs

–

(2,078)

–

(1,880)

Recoveries

–

393

–

319

Foreign exchange and other adjustments

Balance, including off-balance sheet instruments,

at end of period

944

1,386

460

2,790

947

1,374

378

2,699

Less: Allowance for off-balance sheet instruments

201

297

–

498

243

359

–

602

Balance at end of period

743

1,089

460

2,292

704

1,015

378

2,097

Transfers represent stage transfer movements prior to ECL remeasurement.

Represents the mechanical remeasurement between twelve-month (i.e., Stage 1) and lifetime ECLs (i.e., Stage 2

or 3) due to stage transfers necessitated by credit risk migration, as

described in the “Significant Increase in Credit Risk” section of Note 2 and Note 3, holding all other factors impacting

the change in ECLs constant.

Represents the increase in the allowance resulting from loans that were newly originated, purchased, or renewed.

Represents the changes in the allowance related to cash flow changes associated with new draws or repayments

on loans outstanding.

Represents the decrease in the allowance resulting from loans that were fully repaid and excludes the decrease

associated with loans that were disposed or fully written off.

Represents the changes in the allowance related to current period changes in risk (e.g.,

PD) caused by changes to macroeconomic factors, level of risk, parameters, and/or models,

subsequent to stage migration. Refer to the “Measurement of Expected Credit Losses”, “Forward-Looking

Information” and “Expert Credit Judgment” sections of Note 2 and Note 3 for

further details.

The allowance for loan losses for off-balance sheet instruments is recorded in Other liabilities

on the Consolidated Balance Sheet.

Credit cards are considered impaired and migrate to Stage 3 when they are 90 days past due and written off

at 180 days past due. Refer to Note 2 for further details.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 48

Allowance for Loan Losses by Stage

(Continued)

(millions of Canadian dollars)

For the years ended

October 31, 2025

October 31, 2024

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Business and Government

Balance, including off-balance sheet instruments,

at beginning of period

1,150

1,937

853

3,940

1,319

1,521

470

3,310

Provision for credit losses

Transfer to Stage 1

356

(352)

(4)

–

266

(265)

(1)

–

Transfer to Stage 2

(727)

766

(39)

–

(568)

584

(16)

–

Transfer to Stage 3

(10)

(482)

492

–

(19)

(350)

369

–

Net remeasurement due to transfers into stage

(103)

193

(86)

158

New originations or purchases

1,458

n/a

1,458

1,165

n/a

1,165

Net repayments

(44)

(209)

(240)

(60)

(77)

(117)

Derecognition of financial assets (excluding

disposals and write-offs)

(804)

(940)

(368)

(2,112)

(683)

(611)

(297)

(1,591)

Changes to risk, parameters, and models

998

1,083

2,163

(271)

917

1,016

1,662

Disposals

–

(22)

–

(39)

Write-offs

–

(1,039)

–

(600)

Recoveries

–

Foreign exchange and other adjustments

(45)

(5)

(49)

Balance, including off-balance sheet instruments,

at end of period

1,439

2,092

790

4,321

1,150

1,937

853

3,940

Less: Allowance for off-balance sheet instruments

244

214

474

167

179

357

Balance at end of period

1,195

1,878

774

3,847

983

1,758

842

3,583

Total Allowance, including

off-balance sheet

instruments, at end of period

3,209

4,928

1,604

9,741

2,909

4,675

1,553

9,137

Less: Total Allowance for

off-balance sheet

instruments

470

566

1,052

439

593

1,043

Total Allowance for Loan Losses

at end of period

2,739

4,362

1,588

8,689

2,470

4,082

1,542

8,094

For explanations regarding this line item, refer to the “Allowance for Loan Losses by Stage” table on the previous

page in this Note.

The allowance for loan losses for off-balance sheet instruments is recorded in Other liabilities on the

Consolidated Balance Sheet.

The allowance for credit losses on all remaining

financial assets is not significant.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 49

(f)

FORWARD-LOOKING INFORMATION

Relevant macroeconomic factors are incorporated

in risk parameters as appropriate. Additional

risk factors that are industry or segment

specific are also

incorporated, where relevant. The key macroeconomic

variables used in determining ECLs include

regional unemployment rates for all retail exposures

and

regional housing price indices for residential

mortgages and home equity lines of credit.

For business and government loans, the key

macroeconomic variables

include gross domestic product (GDP), unemployment

rates, interest rates, and credit spreads.

Refer to Note 3 for a discussion

of how forward-looking information

is generated and considered in determining

whether there has been a significant increase

in credit risk and in measuring ECLs.

Macroeconomic Variables

Select macroeconomic variables are projected

over the forecast period.

The following table sets out average values

of the macroeconomic variables over the

four

calendar quarters starting with the current

quarter, and the remaining 4-year forecast period for the base

forecast and upside and downside scenarios

used in

determining the Bank’s ECLs as at October

31, 2025. As the forecast period increases, information

about the future becomes less readily

available and projections

are anchored on assumptions around structural

relationships between economic parameters

that are inherently much less certain.

The baseline forecast reflects

some tempering in growth and higher unemployment

as a result of tariffs. While trade tensions have

eased in recent months, uncertainty about

the economic

outlook remains elevated. Any further escalation

in trade tensions would pose a downside

risk to the economic outlook.

However, the Bank’s Canadian and U.S.

downside scenarios reflect a recession and

help capture these risks accordingly through

its allowance process.

Macroeconomic Variables

As at

October 31, 2025

Base Forecast

Upside Scenario

Downside Scenario

Average

Remaining

Average

Remaining

Average

Remaining

Q4 2025-

4-year

Q4 2025-

4-year

Q4 2025-

4-year

Q3 2026

period

Q3 2026

period

Q3 2026

period

Unemployment rate

Canada

7.1

6.0

6.4

5.7

7.8

7.2

United States

4.3

4.0

4.1

3.8

5.5

5.4

Real GDP

Canada

0.9

1.7

1.0

1.9

(1.0)

2.0

United States

1.7

2.1

1.8

2.2

(0.4)

2.4

Home prices

Canada (average existing price)

4.1

4.0

4.3

4.5

(5.5)

3.7

United States (CoreLogic HPI)

(0.1)

3.5

0.6

4.1

(7.5)

4.0

Central bank policy interest rate

Canada

2.25

2.50

1.13

1.42

United States

3.50

3.25

3.75

3.50

2.06

2.30

U.S. 10-year treasury yield

4.02

4.00

4.34

4.24

3.60

U.S. 10-year BBB spread (%-pts)

1.38

1.60

1.24

1.53

2.27

1.90

Exchange rate (U.S. dollar/Canadian dollar)

0.74

0.75

0.74

0.76

0.68

0.71

Macroeconomic Variables

As at

October 31, 2024

Base Forecast

Upside Scenario

Downside Scenario

Average

Remaining

Average

Remaining

Average

Remaining

Q4 2024-

4-year

Q4 2024-

4-year

Q4 2024-

4-year

Q3 2025

period

Q3 2025

period

Q3 2025

period

Unemployment rate

Canada

6.7

6.0

5.7

5.6

7.7

7.3

United States

4.3

4.0

3.8

3.7

5.4

Real GDP

Canada

1.7

2.0

2.1

2.2

(0.4)

2.3

United States

1.9

2.1

2.7

2.4

(0.2)

2.4

Home prices

Canada (average existing price)

6.0

3.0

8.2

3.4

(7.1)

3.7

United States (CoreLogic HPI)

1.3

3.0

4.2

3.8

(8.5)

4.1

Central bank policy interest rate

Canada

3.19

2.27

4.19

2.61

1.69

1.81

United States

3.69

3.00

5.00

3.39

2.81

2.06

U.S. 10-year treasury yield

3.52

3.45

4.49

3.81

3.40

3.34

U.S. 10-year BBB spread (%-pts)

1.75

1.80

1.59

1.76

2.51

2.10

Exchange rate (U.S. dollar/Canadian dollar)

0.74

0.75

0.76

0.71

The numbers represent average values for the quoted periods, and average of year-on-year growth for real GDP

and home prices.

The average home price is the average transacted sale price of homes sold via the Multiple Listing Service; data

is collected by the Canadian Real Estate Association.

The CoreLogic home price index (HPI) is a repeat-sales index which tracks increases and decreases in the same

home’s sales price over time.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 50

(g)

SENSITIVITY OF ALLOWANCE FOR CREDIT LOSSES

ECLs are sensitive to the inputs used in internally

developed models, the macroeconomic variables

in the forward-looking forecasts and respective

probability

weightings in determining the probability-weighted

ECLs, and other factors considered when

applying expert credit judgment. Changes

in these inputs,

assumptions, models, and judgments would

affect the assessment of significant increase in

credit risk and the measurement of ECLs.

The following table presents the base ECL

scenario compared to the probability-weighted

ECLs,

with the latter derived from three ECL

scenarios for performing

loans and off-balance sheet instruments. The difference

reflects the impact of deriving multiple

scenarios around the base ECLs

and resultant change in ECLs due

to non-linearity and sensitivity to using

macroeconomic forecasts.

Change from Base to Probability-Weighted

ECLs

(millions of Canadian dollars, except

as noted)

As at

October 31, 2025

October 31, 2024

Probability-weighted ECLs

8,137

7,584

Base ECLs

7,737

7,185

Difference – in amount

400

399

Difference – in percentage

5.2

5.6

ECLs for performing loans and off-balance sheet

instruments consist of an aggregate amount

of Stage 1 and Stage 2 probability-weighted

ECLs which are twelve-

month ECLs and lifetime ECLs,

respectively. Transfers from Stage 1 to Stage 2 ECLs result from a

significant increase in credit risk since initial

recognition of the

loan.

The following table shows the estimated

impact of staging on ECLs by presenting

all performing loans and off-balance sheet instruments

calculated using

twelve-month ECLs compared to the current

aggregate probability-weighted ECLs, holding

all risk profiles constant.

Incremental Lifetime ECLs Impact

(millions of Canadian dollars)

As at

October 31, 2025

October 31, 2024

Probability-weighted ECLs

8,137

7,584

All performing loans and off-balance sheet instruments

using 12-month ECLs

6,435

5,631

Incremental lifetime ECLs impact

1,702

1,953

(h)

FORECLOSED ASSETS

Foreclosed assets are repossessed non-financial

assets where the Bank gains title, ownership,

or possession of individual properties,

such as real estate

properties, which are managed for sale in an

orderly manner with the proceeds used

to reduce or repay any outstanding debt.

The Bank does not generally occupy

foreclosed properties for its business use.

The Bank predominantly relies on third-party

appraisals to determine the carrying value of

foreclosed assets. Foreclosed

assets held for sale were $

101

million as at October 31, 2025 (October 31, 2024

– $

126

million) and were recorded in Other assets

on the Consolidated Balance

Sheet.

(i)

LOANS PAST DUE BUT NOT IMPAIRED

A loan is classified as past due when a borrower

has failed to make a payment by the

contractual due date.

The following table summarizes loans that are

past

due but not impaired. Loans less than 31 days

contractually past due are excluded as

they do not generally reflect a borrower’s ability

to meet their payment

obligations.

Loans Past Due but not Impaired

(millions of Canadian dollars)

As at

October 31, 2025

October 31, 2024

31-60

61-89

31-60

61-89

days

Total

days

Total

Residential mortgages

407

129

536

443

111

554

Consumer instalment and other personal

930

301

1,231

983

335

1,318

Credit card

373

253

626

375

269

644

Business and government

247

332

244

327

Total

1,957

768

2,725

2,045

798

2,843

Includes loans that are measured at FVOCI.

(j)

MODIFIED FINANCIAL ASSETS

The amortized cost of financial assets

with lifetime allowance that were modified

during the year ended October 31, 2025,

was $

210

million (October 31, 2024 –

214

million) before modification, with insignificant

modification gain or loss. The gross carrying

amount of modified financial assets

for which the loss allowance

changed from lifetime to twelve-month ECLs

during the years ended October 31, 2025

and October 31, 2024 were insignificant.

(k)

COLLATERAL

As at October 31, 2025, the collateral held against

total gross impaired loans represents

% (October 31, 2024 –

%) of total gross impaired loans. The fair

value of non-financial collateral is determined

at the origination date of the loan. A revaluation

of non-financial collateral is performed if

there has been a significant

change in the terms and conditions of the loan

and/or the loan is considered impaired.

Management considers the nature of the collateral,

seniority ranking of the

debt, and loan structure in assessing the

value of collateral. These estimated cash

flows are reviewed at least annually, or more frequently when new information

indicates a change in the timing or amount expected

to be received.

(l)

SALE OF U.S. RESIDENTIAL MORTGAGE

LOANS

On March 26, 2025, the Bank sold US$

8.6

billion of certain U.S. residential mortgage

loans (correspondent loans) which resulted

in the recognition of a pre-tax

loss including transaction costs of US$

507

million in Other income (loss) on the

Consolidated Statement of Income. The

sale related to balance sheet restructuring

activities undertaken in the U.S. Retail segment.

Refer to Note 25 for additional information

regarding the asset limitation on TD’s two

U.S. bank subsidiaries.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 51

NOTE 9: TRANSFERS OF FINANCIAL

ASSETS

LOAN SECURITIZATIONS

The Bank securitizes loans through structured

entity or non-structured entity third parties.

Most loan securitizations do not qualify for

derecognition since in most

circumstances, the Bank continues to be exposed

to substantially all of the prepayment, interest

rate, and/or credit risk associated with

the securitized financial

assets and has not transferred substantially

all of the risk and rewards of ownership

of the securitized assets. Where loans do not

qualify for derecognition, they

are not derecognized from the Bank’s Consolidated

Balance Sheet, retained interests are not

recognized, and a securitization liability is recognized

for the cash

proceeds received. Certain transaction costs

incurred are also capitalized and amortized

using EIRM.

The Bank securitizes insured residential

mortgages under the National Housing Act

Mortgage-Backed Securities (NHA

MBS) program sponsored by the

Canada Mortgage and Housing Corporation

(CMHC). The MBS that are created through

the NHA MBS program are sold to the

Canada Housing Trust (CHT) as

part of the CMB program,

sold to third-party investors,

or are held by the Bank. The CHT issues

CMB to third-party investors and uses resulting

proceeds to

purchase NHA MBS from the Bank and other

mortgage issuers in the Canadian market. Assets

purchased by the CHT are commingled

in a single trust from which

CMB are issued. The Bank continues to be exposed

to substantially all of the risks of the underlying

mortgages, through the retention of a seller

swap which

transfers principal and interest payment

risk on the NHA MBS back to the Bank

in return for coupon paid on the CMB

issuance and as such, the sales do not

qualify for derecognition.

The Bank securitizes U.S. originated residential

mortgages with U.S. government agencies

which qualify for derecognition from the Bank’s Consolidated

Balance Sheet. As part of the securitization,

the Bank retains the right to service the

transferred mortgage loans. The MBS

that are created through the

securitization are typically sold to third-party

investors.

The Bank also securitizes business and government

loans to entities which may be structured

entities. These securitizations may give

rise to derecognition of

the financial assets depending on the individual

arrangement of each transaction.

In addition, the Bank transfers credit card receivables

to structured entities that the Bank consolidates.

Refer to Note 10 for further details.

The following table summarizes the securitized

asset types that did not qualify for derecognition,

along with their associated

securitization liabilities as at

October 31, 2025

and October 31, 2024.

Financial Assets Not Qualifying for Derecognition

Treatment as Part of the Bank’s Securitization Programs

(millions of Canadian dollars)

As at

October 31, 2025

October 31, 2024

Fair

Carrying

Fair

Carrying

value

amount

value

amount

Nature of transaction

Securitization of residential mortgage loans

38,674

38,704

30,543

30,787

Other financial assets transferred related

to securitization

1,968

1,966

2,623

2,619

Total

40,642

40,670

33,166

33,406

Associated liabilities

40,088

40,124

32,442

32,684

Includes asset-backed securities, asset-backed commercial paper (ABCP),

cash, repurchase agreements, and Government of Canada securities used to fulfil funding requirements

of the

Bank’s securitization structures after the initial securitization of mortgage loans.

Includes securitization liabilities carried at amortized cost of $

billion as at October 31, 2025 (October 31, 2024 – $

billion), and securitization liabilities carried at fair value of

billion as at October 31, 2025 (October 31, 2024 – $

billion).

Other Financial Assets Not Qualifying for

Derecognition

The Bank enters into certain transactions

where it transfers previously recognized commodities

and financial assets, such as debt and equity

securities, but retains

substantially all of the risks and rewards of

those assets. These transferred assets are

not derecognized and the transfers are accounted

for as financing

transactions. The most common transactions

of this nature are repurchase agreements

and securities lending agreements, in which

the Bank retains substantially

all of the associated credit, price, interest rate,

and foreign exchange risks and rewards

associated with the assets.

The following table summarizes the carrying

amount of financial assets and the associated

transactions that did not qualify for derecognition,

as well as their

associated financial liabilities as at October

31, 2025 and October 31, 2024.

Other Financial Assets Not Qualifying for

Derecognition

(millions of Canadian dollars)

As at

October 31

2025

2024

Carrying amount of assets

Nature of transaction

Repurchase agreements

1,2

36,074

40,725

Securities lending agreements

56,316

52,781

Total

92,390

93,506

Carrying amount of associated liabilities

35,364

40,450

Includes $

2.1

billion, as at October 31, 2025 (October 31, 2024 – $

2.8

billion) of assets related to repurchase agreements or swaps that are collateralized by physical precious

metals.

Associated liabilities are all related to repurchase agreements.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 52

TRANSFERS OF FINANCIAL ASSETS QUALIFYING

FOR DERECOGNITION

Transferred financial assets that are derecognized

in their entirety where the Bank has a

continuing involvement

Continuing involvement may arise if the Bank

retains any contractual rights or obligations

subsequent to the transfer of financial assets.

Certain business and

government loans securitized by the Bank are

derecognized from the Bank’s Consolidated Balance

Sheet. In instances where the Bank fully derecognizes

business and government loans, the Bank

may be exposed to the risks of transferred loans

through a retained interest. As at October

31, 2025, the fair value of

retained interests was $

million (October 31, 2024 – $

million). A gain or loss on sale of the loans

is recognized immediately in other income

(loss) after

considering the effect of hedge accounting on

the assets sold, if applicable. The amount

of the gain or loss recognized depends on

the previous carrying values of

the loans involved in the transfer, allocated between the assets

sold and the retained interests based on their

relative fair values at the date of transfer.

Certain portfolios of U.S. residential mortgages

originated by the Bank are sold and derecognized

from the Bank’s Consolidated

Balance Sheet. In certain

instances, the Bank has a continuing involvement

to service those loans. As at October 31, 2025,

the carrying value of these servicing

rights was $

million

(October 31, 2024 – $

million) and the fair value was $

139

million (October 31, 2024 – $

133

million). A gain or loss on sale of the loans

is recognized

immediately in other income (loss). The gain

(loss) on sale of the loans for the year ended

October 31, 2025 was ($

) million (October 31, 2024 – ($

) million).

NOTE 10: STRUCTURED ENTITIES

The Bank uses structured entities for a variety

of purposes including:

(1) to facilitate the transfer of specified risks

to clients; (2) as financing vehicles for itself or

for

clients; or (3)

to segregate assets on behalf of investors.

The Bank is typically restricted from accessing

the assets of the structured entity under the relevant

arrangements.

The Bank is involved with structured entities

that it sponsors,

as well as entities sponsored by third parties.

Factors assessed when determining if the Bank

the sponsor of a structured entity include

whether the Bank is the predominant user

of the entity; whether the entity’s branding or

marketing identity is linked with

the Bank; and whether the Bank provides

an implicit or explicit guarantee of

the entity’s performance to investors or other

third parties. The Bank is not considered

to be the sponsor of a structured entity if

it only provides arm’s-length services to the entity, for example, by acting

as administrator, distributor, custodian, asset

manager, or loan servicer. Sponsorship of a structured entity may indicate

that the Bank had power over the entity at

inception; however, this is not sufficient to

determine if the Bank consolidates the entity. Regardless of

whether or not the Bank sponsors an entity, consolidation is determined

on a case-by-case basis.

(a)

SPONSORED STRUCTURED ENTITIES

The following section outlines the Bank’s involvement

with key sponsored structured entities.

Securitizations

The Bank securitizes its own assets

and facilitates the securitization of client

assets through structured entities, such

as conduits, which issue ABCP or other

securitization entities which issue longer-dated

term securities. Securitizations are an important

source of liquidity for the Bank, allowing

it to diversify its funding

sources and to optimize its balance sheet

management approach.

The Bank sponsors both single-seller and

multi-seller securitization conduits. Depending

on the specifics of the entity, the variable returns absorbed through

ABCP may be significantly mitigated

by variable returns retained by the sellers.

The Bank provides liquidity facilities to certain

conduits for the benefit of ABCP

investors which are structured as loan

facilities between the Bank, as the sole liquidity

lender, and the Bank-sponsored entity.

If an entity experiences difficulty

issuing ABCP due to illiquidity in the commercial

market, the entity may draw on the loan facility, and use the proceeds

to pay maturing ABCP. The ABCP issued

by each multi-seller conduit is in the conduit’s own

name with recourse to the financial assets

owned by the multi-seller conduit, and is non-recourse

to the Bank

except through our participation in liquidity facilities.

The Bank’s exposure to the variable returns

of these conduits from its provision of liquidity

facilities and any

related commitments is mitigated by

the sellers’ continued exposure to variable returns

through the provision of first loss protection,

as described below. The Bank

provides administration and securities

distribution services to its sponsored

securitization conduits, which may result

in it holding an investment in the ABCP issued

by these entities. In some cases, the Bank

may also provide credit enhancements or

may transact derivatives with securitization

conduits. The Bank earns fees

from the conduits which are recognized

when earned.

The Bank sells assets to single-seller

conduits which it controls and consolidates.

Control results from the Bank’s power over the entity’s

key economic

decisions, predominantly, the mix of assets sold into the conduit

and exposure to the variable returns of

the transferred assets, usually through a

derivative or the

provision of credit mitigation in the form

of cash reserves, over-collateralization,

or guarantees over the performance of

the entity’s portfolio of assets.

Multi-seller conduits provide sellers with

alternate sources of financing through the

securitization of their assets. These

conduits are similar to single-seller

conduits except that financial assets are

purchased from more than one seller and

commingled into a single portfolio of assets. Each

transaction is structured with

transaction-specific first loss protection provided

by the third-party seller. This enhancement can take

various forms, including but not limited

overcollateralization, excess spread, subordinated

classes of financial assets, guarantees or

letters of credit. The Bank is typically deemed

to have power over the

entity’s key economic decisions, namely,

the selection of sellers and related assets

sold as well as other decisions related

to the management of risk in the vehicle.

Where the Bank has power over multi-seller

conduits, but is not exposed to significant

variable returns it does not consolidate

such entities.

Investment Funds and Other Asset Management

Entities

As part of its asset management business,

the Bank creates investment funds and

trusts (including mutual funds), enabling it

to provide its clients with a broad

range of diversified exposure to different risk profiles,

in accordance with the client’s risk appetite.

Such entities may be actively managed or

may be passively

directed, for example, through the tracking

of a specified index, depending on

the entity’s investment strategy. Financing for these entities is obtained through

the

issuance of securities to investors, typically

in the form of fund units. Based on each

entity’s specific strategy and risk profile, the

proceeds from this issuance are

used by the entity to purchase a portfolio of

assets. An entity’s portfolio may contain investments

in securities, derivatives, or other assets, including

cash. At the

inception of a new investment fund or trust,

the Bank will typically invest an amount of

seed capital in the entity, allowing it to establish a performance

history in the

market. Over time, the Bank sells its seed

capital holdings to third-party investors, as the entity’s

AUM increases. As a result, the Bank’s holding

of seed capital

investment in its own sponsored investment

funds and trusts is typically not significant

to the Consolidated Financial Statements. Aside

from any seed capital

investments, the Bank’s interest in these entities

is generally limited to fees earned for

the provision of asset management services.

The Bank does not typically

provide guarantees over the performance of

these funds.

The Bank is typically considered to have

power over the key economic decisions

of sponsored asset management entities;

however, it does not consolidate an

entity unless it is also exposed to significant

variable returns of the entity. This determination is made on

a case-by-case basis, in accordance

with the Bank’s

consolidation policy.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 53

Financing Vehicles

The Bank may use structured entities to provide

a cost-effective means of financing its operations,

including raising capital or obtaining

funding. These structured

entities include TD Covered Bond (Legislative)

Guarantor Limited Partnership (the “Covered

Bond Entity”).

The Bank issues, or has issued, debt under its

covered bond program where the principal

and interest payments of the notes are guaranteed

by the Covered

Bond Entity. The Bank sold a portfolio of assets to the Covered Bond

Entity and provided a loan to the Covered

Bond Entity to facilitate the purchase. The Bank

restricted from accessing the Covered Bond

Entity’s assets under the relevant agreement.

Investors in the Bank’s covered bonds may have recourse

to the Bank

should the assets of the Covered Bond Entity

be insufficient to satisfy the covered bond liabilities.

The Bank consolidates the Covered Bond

Entity as it has power

over the key economic activities and

retains all the variable returns in this entity.

(b)

THIRD-PARTY SPONSORED STRUCTURED ENTITIES

In addition to structured entities sponsored

by the Bank, the Bank is also involved

with structured entities sponsored by third parties.

Key involvement with

third-party sponsored structured entities

is described in the following section.

Third-party Sponsored Securitization

Programs

The Bank participates in the securitization

programs

of government-sponsored structured

entities, including the CMHC, a Crown

corporation of the Government of

Canada, and similar U.S. government-sponsored

entities. CMHC guarantees both NHA

MBS and CMB which are issued through

the CHT.

The Bank is exposed to the variable returns

in the CHT, through its retention of seller swaps resulting from its

participation in the CHT program. The Bank does

not have power over the CHT as its key

economic activities are controlled by the Government

of Canada. The Bank’s exposure to the

CHT is included in the

balance of residential mortgage loans as noted

in Note 9, and is not disclosed in the

table accompanying this Note.

The Bank participates in the securitization

programs sponsored by U.S. government

agencies. The Bank is not exposed to significant

variable returns from

these agencies and does not have power over

the key economic activities of these agencies,

which are controlled by the U.S. government.

Investment Holdings and Derivatives

The Bank may hold interests in third-party

structured entities, predominantly in

the form of direct investments in securities

or partnership interests issued by those

structured entities,

or through derivatives transacted with

counterparties which are structured entities.

Investments in, and derivatives with, structured

entities are

recognized on the Bank’s Consolidated Balance Sheet.

The Bank does not typically consolidate third-party

structured entities where its involvement

is limited to

investment holdings and/or derivatives as the Bank

would not generally have power over the

key economic decisions of these entities.

Financing Transactions

In the normal course of business, the Bank

may enter into financing transactions with third-party

structured entities including commercial loans,

reverse repurchase

agreements, prime brokerage margin lending,

and similar collateralized lending transactions.

While such transactions expose the Bank

to the structured entities’

counterparty credit risk, this exposure is

mitigated by the collateral related to these

transactions. The Bank typically has neither

power nor significant variable

returns due to financing transactions with

structured entities and would not generally

consolidate such entities. Financing transactions

with third-party sponsored

structured entities are included on the Bank’s

Consolidated Financial Statements and have not

been included in the table accompanying

this Note.

Arm’s-length Servicing Relationships

In addition to the involvement outlined above,

the Bank may also provide services

to structured entities on an arm’s-length basis,

for example as sub-advisor to an

investment fund or asset servicer. Similarly, the Bank’s asset management services

provided to institutional investors

may include transactions with structured

entities. As a consequence of providing

these services, the Bank may be exposed

to variable returns from these structured

entities, for example, through the

receipt of fees or short-term exposure

to the structured entity’s securities. Any such exposure

is typically mitigated by collateral or

some other contractual

arrangement with the structured entity or

its sponsor. The Bank generally has neither power nor

significant variable returns from the provision

of arm’s-length

services to a structured entity and, consequently

does not consolidate such entities.

Fees and other exposures through servicing

relationships are included on the

Bank’s Consolidated Financial Statements and have

not been included in the table accompanying

this Note.

(c)

INVOLVEMENT WITH CONSOLIDATED STRUCTURED ENTITIES

Securitizations

The Bank securitizes credit card receivables

through securitization entities, predominantly

single-seller conduits. These conduits are

consolidated by the Bank

based on the factors described above. Aside

from the exposure resulting from its involvement

as seller and sponsor of consolidated securitization

conduits

described above, including the liquidity facilities

provided, the Bank has no contractual or

non-contractual arrangements to provide

financial support to

consolidated securitization conduits. The Bank’s

interests in securitization conduits

generally rank senior to interests held by other

parties, in accordance with the

Bank’s investment and risk policies. As a result,

the Bank has no significant obligations to absorb

losses before other holders of securitization issuances.

Consolidation of Structured Entities

Effective July 31, 2025, the Bank concluded that it

no longer controls its U.S. multi-seller ABCP

conduits due to a change in the Bank’s exposure

to variable

returns and has therefore deconsolidated

these conduits prospectively. The deconsolidation has resulted

in a decrease of $

17,702

million of Business and

government loans, $

2,695

million of Non-trading financial assets at fair

value through profit or loss (FVTPL), $

million of Other assets and $

19,332

million of

Other liabilities on the Consolidated Balance

Sheet. The Bank concurrently recognized

1,142

million in Trading loans, securities, and other on the

Consolidated

Balance Sheet, representing the ABCPs purchased

by the Bank ($

1,111

million as at October 31, 2024, which

was previously eliminated upon consolidation).

Impacts on the Consolidated Statement of

Income as a result of deconsolidation are

minimal. In addition, the Bank continues to provide

liquidity facilities to these

conduits. The total committed undrawn amount

under these facilities as at October 31,

2025 was $

16.0

billion (October 31, 2024 – $

13.1

billion).

Other Consolidated Structured Entities

Depending on the specific facts and circumstances

of the Bank’s involvement with structured

entities, the Bank may consolidate asset

management entities,

financing vehicles,

or third-party sponsored structured entities,

based on the factors described above.

Aside from its exposure resulting from its

involvement as

sponsor or investor in the structured

entities as previously discussed,

the Bank does not typically have other

contractual or non-contractual arrangements

provide financial support to these consolidated

structured entities.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 54

(d)

INVOLVEMENT WITH UNCONSOLIDATED STRUCTURED ENTITIES

The following table presents information related

to the Bank’s unconsolidated structured entities.

Unconsolidated structured entities include both

TD and third-party

sponsored entities. Securitizations include holdings

in TD-sponsored multi-seller conduits,

as well as third-party sponsored mortgage

and asset-backed

securitizations, including government-sponsored

agency securities such as CMBs, and

U.S. government agency issuances. Investment

Funds and Trusts include

holdings in third-party funds and trusts, as

well as holdings in TD-sponsored asset management

funds and trusts and commitments to certain

U.S. municipal

funds. Amounts in Other are mainly related

to investments in community-based

U.S. tax-advantage entities described in

Note 12. These holdings do not result in

the consolidation of these entities as TD does

not have control over these entities.

Carrying Amount and Maximum Exposure to Unconsolidated

Structured Entities

(millions of Canadian dollars)

As at

October 31, 2025

October 31, 2024

Investment

funds and

Securitizations

trusts

Other

Total

Securitizations

trusts

Other

Total

FINANCIAL ASSETS

Trading loans, securities,

and other

10,875

1,114

11,995

7,559

992

–

8,551

Non-trading financial assets at

fair value through profit or loss

4,583

854

178

5,615

684

836

1,618

Derivatives

–

1,668

–

1,668

–

680

–

680

Financial assets designated at

fair value through profit or loss

176

107

–

283

–

298

–

298

Financial assets at fair value through

other comprehensive income

36,650

737

–

37,387

22,615

967

23,584

Debt securities at amortized cost,

net of allowance for credit losses

93,453

1,210

–

94,663

117,890

1,210

–

119,100

Loans

729

–

733

4,114

–

4,117

Other

6,024

6,058

5,762

5,852

Total assets

146,493

5,701

6,208

158,402

152,864

5,074

5,862

163,800

FINANCIAL LIABILITIES

Deposits

–

1,226

–

1,451

Derivatives

–

3,988

–

3,988

–

645

–

645

Obligations related to securities

sold short

2,703

317

–

3,020

2,324

331

–

2,655

Total liabilities

2,703

4,305

1,226

8,234

2,324

976

1,451

4,751

Off-balance sheet exposure

57,910

4,253

3,358

65,521

22,897

4,392

2,990

30,279

Maximum exposure to loss from

involvement with unconsolidated

structured entities

201,700

5,649

8,340

215,689

173,437

8,490

7,401

189,328

Size of sponsored unconsolidated

structured entities

38,029

69,554

107,584

15,850

45,272

61,134

Derivatives primarily subject to vanilla interest rate or foreign exchange risk are not included in these amounts

as those derivatives are designed to align the structured entity’s cash flows

with risks absorbed by investors and are not predominantly designed to expose the Bank to variable returns created

by the entity.

For the purposes of this disclosure, off-balance sheet exposure represents the notional value of liquidity

facilities, guarantees, or other off-balance sheet commitments without considering

the effect of collateral or other credit enhancements.

The size of sponsored unconsolidated structured entities is provided based on the most appropriate measure of

size for the type of entity: (1) The par value of notes issued by

securitization conduits and similar liability issuers; (2) the total AUM of investment funds and trusts; and (3) the total

fair value of partnership or equity shares in issue for partnerships and

similar equity issuers.

Sponsored Unconsolidated Structured Entities

in which the Bank has no Significant Investment

at the End of the Period

Sponsored unconsolidated structured entities

in which the Bank has no significant investment

at the end of the period are predominantly investment

funds and

trusts created for the asset management

business. The Bank would not typically

hold investments, with the exception of

seed capital, in these structured entities.

However, the Bank continues to earn fees from asset management

services provided to these entities, some

of which could be based on the performance of

the

fund. Fees payable are generally senior in

the entity’s priority of payment and would also

be backed by collateral, limiting the Bank’s exposure

to loss from these

entities. The Bank earned non-interest income

of $

2.4

billion (October 31, 2024 – $

2.3

billion) from its involvement with these asset

management entities for the

year ended October 31, 2025, of which $

2.1

billion (October 31, 2024 – $

1.9

billion) was received directly from these

entities. The total AUM in these entities

as at

October 31, 2025 was $

334

billion (October 31, 2024 – $

302.9

billion). Any assets transferred by the

Bank during the period are commingled

with assets obtained

from third parties in the market. Except as previously

disclosed, the Bank has no contractual or

non-contractual arrangements to provide

financial support to

unconsolidated structured entities.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 55

NOTE 11: DERIVATIVES

(a)

DERIVATIVE PRODUCT TYPES AND RISK EXPOSURES

The majority of the Bank’s derivative contracts

are OTC transactions that are bilaterally

negotiated between the Bank and the

counterparty to the contract. The

remainder are exchange-traded contracts transacted

through organized and regulated exchanges

and consist primarily of options and futures.

The Bank’s derivative transactions relate to trading

and non-trading activities. The purpose of

derivatives held for non-trading activities

is primarily for managing

interest rate, foreign exchange, and equity risk

related to the Bank’s funding, lending,

investment, and other structural market risk

management activities. The

Bank’s risk management strategy for these

risks is discussed in shaded sections of

the “Managing Risk” section of the MD&A.

Where hedge accounting is applied, only

specific or a combination of risk components

are hedged, including benchmark interest

rate, foreign exchange rate,

and equity price components. All these risk

components are observable in the relevant

market environment and the change in the fair

value or the variability in

cash flows attributable to these risk components

can be reliably measured for hedged items.

The Bank also enters into derivative transactions

to economically

hedge certain exposures that do not otherwise

qualify for hedge accounting, or

where hedge accounting is not considered

feasible.

Where the derivatives are in hedge relationships,

the main sources of ineffectiveness can be attributed

to differences between hedging instruments and hedged

items:

●

Differences in fixed rates, when contractual coupons

of the fixed rate hedged items are designated;

●

CVA on the hedging derivatives; and

●

Mismatch in critical terms such as tenor and

timing of cash flows between hedging instruments

and hedged items.

To mitigate a portion of the ineffectiveness, the Bank designates the benchmark risk

component of contractual cash flows of

hedged items and executes hedging

derivatives with high-quality counterparties.

The majority of the Bank’s hedging derivatives

are collateralized.

Interest Rate Derivatives

Interest rate swaps are OTC contracts in

which two counterparties agree to exchange

cash flows over a period of time based

on rates applied to a specified

notional amount. This includes interest rate

swaps that are transacted and settled through

a clearing house which acts as a central

counterparty. A typical interest

rate swap would require one counterparty

to pay a fixed market interest rate in exchange

for a variable market interest rate determined

from time to time, with both

calculated on a specified notional amount.

No exchange of principal amount takes place.

Forward rate agreements are OTC contracts

that effectively fix a future interest rate for a

period of time. A typical forward rate agreement

provides that at a pre-

determined future date, a cash settlement

will be made between the counterparties based

upon the difference between a contracted rate and

a market rate to be

determined in the future, calculated on a

specified notional amount. No exchange of principal

amount takes place.

Interest rate options are contracts in

which the purchaser of an option pays the

writer of the option a premium to acquire

the right, but not the obligation, to buy

or sell a specified financial instrument

at a contracted price on a specified future date,

series of future dates, or within a specified

time period. The underlying

financial instrument will have a market price

which varies in response to changes in interest

rates. In managing the Bank’s interest rate

exposure, the Bank acts as

both a writer and purchaser of these options.

Options are transacted both OTC and through

exchanges.

Interest rate futures are standardized

contracts transacted on an exchange, with interest

bearing instruments as the underlying reference

assets. These

contracts differ from forward rate agreements in

that they are in standard amounts with standard

settlement dates and are transacted on an exchange.

The Bank uses interest rate swaps to hedge

its exposure to benchmark interest rate

risk by modifying the repricing or maturity characteristics

of existing and/or

forecast assets and liabilities, including funding

and investment activities. These swaps are

designated in either fair value hedges against

fixed rate

assets/liabilities or cash flow hedges against

floating rate assets/liabilities. For fair

value hedges, the Bank assesses and measures

the hedge effectiveness based

on the change in the fair value of the derivative

hedging instrument relative to the change

in the fair value of the hedged item. For

cash flow hedges, the Bank uses

a hypothetical derivative having terms that identically

match the critical terms of the hedged item

as the proxy for measuring

the change in cash flows of the

hedged item.

Foreign Exchange Derivatives

Foreign exchange forwards are OTC contracts

in which one counterparty contracts

with another to exchange a specified amount

of one currency for a specified

amount of a second currency, at a future date or range of dates.

Swap contracts comprise foreign exchange

swaps and cross-currency interest rate swaps.

Foreign exchange swaps are transactions

in which a foreign

currency is simultaneously purchased in

the spot market and sold in the forward

market, or vice-versa. Cross-currency interest

rate swaps are transactions in

which counterparties exchange principal and

interest cash flows in different currencies over

a period of time. These contracts

are used to manage either currency

or currency and interest rate risk exposures.

Foreign exchange contract options are OTC

or exchange-traded contracts in which

the purchaser of an option pays the writer

of the option a premium to

purchase the right, but not the obligation, to buy

or sell a specified amount of one currency

at a predetermined exchange rate on or

before a specified future date.

Foreign exchange futures contracts are

similar to foreign exchange forward contracts

but differ in that they are in standard currency amounts

with standard

settlement dates and are transacted on an exchange.

The Bank uses non-derivative instruments

such as foreign currency deposit liabilities

and derivative instruments such as

cross-currency swaps and foreign

exchange forwards to hedge its foreign currency

exposure. These hedging instruments

are designated in either net investment hedges

or cash flow hedges. For

net investment hedges, the Bank assesses and

measures the hedge effectiveness based on

the change in the fair value of the hedging

instrument relative to the

translation gains and losses on the net investment

in the foreign operation. For cash flow

hedges, the Bank assesses and measures

the hedge effectiveness

based on the change in the fair value of

the hedging instrument relative to the change

in the cash flows of the foreign currency denominated

asset/liability

attributable to foreign exchange risk, using the

hypothetical derivative method.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 56

Credit Derivatives

The Bank uses credit derivatives such as

credit default swaps (CDS) and total return

swaps to manage risks in the Bank’s corporate loan

portfolio and other cash

instruments, as well as managing counterparty

credit risk on derivatives. Credit risk is the

risk of loss if a borrower or counterparty in

a transaction fails to meet its

agreed payment obligations. The Bank uses

credit derivatives to mitigate industry

concentration and borrower-specific exposure as

part of the Bank’s portfolio risk

management techniques. The credit, legal, and

other risks associated with these transactions

are controlled through well established

procedures. The Bank’s

policy is to enter into these transactions

with investment grade financial institutions.

Credit risk to these counterparties is managed

through the same approval,

limit, and monitoring processes that is

used for all counterparties to which the

Bank has credit exposure.

Credit derivatives are OTC contracts designed

to transfer the credit risk in an underlying

financial instrument (usually termed as a

reference asset) from one

counterparty to another. The most common credit derivatives

are CDS, which include contracts transacted

through clearing houses, and total return swaps.

CDS contracts, the CDS purchaser acquires

credit protection on a reference asset or group

of assets from a writer of CDS in exchange

for a premium. The

purchaser may pay the agreed premium

at inception or over a period of time.

The credit protection compensates the

purchaser for deterioration in value of the

reference asset or group of assets upon the occurrence

of certain credit events such as bankruptcy, or changes in specified

credit rating or credit index. Settlement

may be cash based or physical, requiring

the delivery of the reference asset to the

CDS writer. In total return swap contracts, one counterparty

agrees to pay or

receive from the other cash amounts based

on changes in the value of a reference

asset or group of assets, including any

returns such as interest earned on

these assets in exchange for amounts that are

based on prevailing market funding rates.

These cash settlements are made regardless of

whether there is a credit

event.

Other Derivatives

The Bank also transacts in equity and commodity

derivatives in both exchange and OTC

markets.

Equity swaps are OTC contracts in which one

counterparty agrees to pay, or receive from the other, cash amounts based on

changes in the value of a stock

index, a basket of stocks or a single stock.

These contracts sometimes include a payment

in respect of dividends.

Equity options give the purchaser of the option,

for a premium, the right, but not the obligation,

to buy from or sell to the writer of an option,

an underlying stock

index, basket of stocks or a single stock

at a contracted price. Options are transacted

both OTC and through exchanges.

Equity index futures are standardized

contracts transacted on an exchange. They

are based on an agreement to pay or receive

a cash amount based on the

difference between the contracted price level of

an underlying stock index and its corresponding

market price level at a specified future date.

There is no actual

delivery of stocks that comprise the underlying

index. These contracts are in standard amounts

with standard settlement dates.

Equity forwards are OTC contracts in

which one counterparty contracts with another

to buy or sell a single stock or stock index, or

to settle the contract in cash

based on changes in the value of a reference

asset, at a future date.

Commodity and other contracts include

commodity forwards, futures, swaps, and

options, such as precious metals and energy-related

products in both OTC

and exchange markets.

The Bank applies hedge accounting on

certain equity forwards and/or total return

swaps to hedge exposure to equity price risk.

These derivatives are

designated as cash flow hedges.

The Bank assesses and measures the hedge

effectiveness based on the change in the

fair value of the hedging instrument

relative to the change in the cash flows of the

hedged item attributable to movement in

equity price, using the hypothetical derivative

method.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 57

Fair Value of Derivatives

(millions of Canadian dollars)

October 31, 2025

October 31, 2024

Fair value as at

balance sheet date

Positive

Negative

Positive

Negative

Derivatives held or issued for trading

purposes

Interest rate contracts

Forward rate agreements

119

232

Swaps

7,968

6,432

11,971

9,470

Options written

–

1,121

–

1,118

Options purchased

1,237

–

1,210

–

Total interest rate contracts

9,324

7,646

13,413

10,636

Foreign exchange contracts

Forward contracts

3,585

1,935

3,617

2,521

Swaps

14,776

14,845

15,456

14,304

Cross-currency interest rate swaps

24,854

23,378

24,366

22,496

Options written

–

575

–

619

Options purchased

503

–

507

–

Total foreign exchange contracts

43,718

40,733

43,946

39,940

Credit derivative contracts

Credit default swaps – protection purchased

311

–

294

Credit default swaps – protection sold

Total credit derivative contracts

312

296

Other contracts

Equity contracts

9,485

16,808

5,286

6,636

Commodity and other contracts

5,619

7,054

5,321

5,545

Total other contracts

15,104

23,862

10,607

12,181

Fair value – trading

68,190

72,553

67,971

63,053

Derivatives held or issued for non-trading

purposes

Interest rate contracts

Forward rate agreements

–

Swaps

1,680

2,006

2,005

2,807

Options written

–

Options purchased

–

Total interest rate contracts

1,680

2,008

2,029

2,808

Foreign exchange contracts

Forward contracts

1,129

386

494

Swaps

Cross-currency interest rate swaps

9,827

662

6,649

524

Total foreign exchange contracts

9,891

1,792

7,115

1,038

Credit derivative contracts

Credit default swaps – protection purchased

–

128

107

Total credit derivative contracts

–

128

107

Other contracts

Equity contracts

3,211

2,875

945

1,362

Total other contracts

3,211

2,875

945

1,362

Fair value – non-trading

14,782

6,803

10,090

5,315

Total fair value

82,972

79,356

78,061

68,368

The fair values of interest rate futures and foreign exchange futures are immaterial and therefore excluded from

this table.

The following table distinguishes derivatives held

or issued for non-trading purposes between

those that have been designated in qualifying

hedge accounting

relationships and those which have not been

designated in qualifying hedge accounting

relationships as at October 31, 2025 and

October 31, 2024.

Fair Value of Non-Trading

Derivatives

(millions of Canadian dollars)

As at

October 31, 2025

Derivative Assets

Derivative Liabilities

Derivatives

Derivatives in qualifying

not in

Derivatives in qualifying

not in

hedging relationships

qualifying

hedging relationships

qualifying

Fair

Cash

Net

hedging

Fair

Cash

Net

hedging

value

flow

investment

relationships

Total

value

flow

investment

relationships

Total

Derivatives held or issued for

non-trading purposes

Interest rate contracts

1,275

199

–

206

1,680

300

771

–

937

2,008

Foreign exchange contracts

–

9,651

229

9,891

–

1,485

286

1,792

Credit derivative contracts

–

128

Other contracts

–

1,808

–

1,403

3,211

–

2,854

2,875

Fair value – non-trading

1,275

11,658

1,838

14,782

300

2,277

286

3,940

6,803

October 31, 2024

Derivatives held or issued for

non-trading purposes

Interest rate contracts

932

123

–

974

2,029

309

1,290

–

1,209

2,808

Foreign exchange contracts

–

6,945

–

170

7,115

–

846

–

192

1,038

Credit derivative contracts

–

107

Other contracts

–

337

–

608

945

–

132

–

1,230

1,362

Fair value – non-trading

932

7,405

–

1,753

10,090

309

2,268

–

2,738

5,315

Certain derivative assets qualify to be offset with certain derivative liabilities on the Consolidated Balance

Sheet. Refer to Note 6 for further details.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 58

Fair Value Hedges

The following table presents the effects of fair

value hedges on the Consolidated Balance

Sheet and the Consolidated Statement of Income.

Fair Value Hedges

(millions of Canadian dollars)

For the years ended or as at

October 31, 2025

Accumulated

Change in

Change in fair

amount of fair

value of hedged

value of hedging

Carrying

value hedge

items for

instruments for

amounts

adjustments

adjustments on

ineffectiveness

Hedge

for hedged

on hedged

de-designated

measurement

ineffectiveness

items

1,2

hedged items

Assets

Interest rate risk

Debt securities at amortized cost

2,031

(2,033)

(2)

112,729

(7,849)

(3,195)

Financial assets at fair value through

other comprehensive income

1,616

(1,618)

(2)

93,230

472

Loans

517

(514)

31,906

(14)

(5)

Total assets

4,164

(4,165)

(1)

237,865

(7,391)

(3,182)

Liabilities

Interest rate risk

Deposits

(1,090)

1,088

(2)

165,311

(875)

Securitization liabilities at amortized cost

(141)

141

–

8,599

169

–

Subordinated notes and debentures

(53)

–

2,825

(54)

Total liabilities

(1,284)

1,282

(2)

176,735

(624)

(27)

Total

2,880

(2,883)

(3)

October 31, 2024

Assets

Interest rate risk

Debt securities at amortized cost

6,856

(6,899)

(43)

113,323

(10,995)

(3,015)

Financial assets at fair value through

other comprehensive income

3,127

(3,146)

(19)

53,253

(1,086)

(71)

Loans

1,789

(1,798)

(9)

52,765

(328)

Total assets

11,772

(11,843)

(71)

219,341

(12,409)

(3,082)

Liabilities

Interest rate risk

Deposits

(2,291)

2,265

(26)

125,519

(3,543)

(136)

Securitization liabilities at amortized cost

(163)

163

–

6,865

–

Subordinated notes and debentures

(50)

–

3,158

(91)

Total liabilities

(2,504)

2,478

(26)

135,542

(3,448)

(227)

Total

9,268

(9,365)

(97)

The Bank has portfolios of fixed rate financial assets and liabilities whereby the principal amount changes frequently

due to originations, issuances, maturities and prepayments. The

interest rate risk hedges on these portfolios are rebalanced dynamically.

Reported balances represent adjustments to the carrying values of hedged items as included in the “Carrying amounts

for hedged items” column in this table.

Cash Flow Hedges and Net Investment

Hedges

The following table presents the effects of cash

flow hedges and net investment hedges on the

Bank’s Consolidated Statement of Income and

the Consolidated

Statement of Comprehensive Income.

Cash Flow and Net Investment Hedges

(millions of Canadian dollars)

For the years ended

October 31, 2025

Change in fair

Hedging

Amount reclassified

Change in value

value of hedging

gains (losses)

from accumulated

Net change

of hedged items

instruments for

recognized in other

other comprehensive

in other

for ineffectiveness

ineffectiveness

Hedge

comprehensive

income (loss)

comprehensive

measurement

ineffectiveness

income

to earnings

income (loss)

Cash flow hedges

Interest rate risk

(1,859)

1,860

1,619

(1,048)

2,667

Foreign exchange risk

4,5,6

(5,199)

5,201

4,679

4,559

120

Equity price risk

(1,531)

1,542

1,347

195

Total cash flow hedges

(8,589)

8,603

7,840

4,858

2,982

Net investment hedges

1,088

(1,088)

–

(1,088)

(799)

(289)

October 31, 2024

Cash flow hedges

Interest rate risk

(3,602)

3,606

2,128

(2,311)

4,439

Foreign exchange risk

4,5,6

(1,863)

1,867

1,287

2,204

(917)

Equity price risk

(59)

(3)

(59)

(66)

Total cash flow hedges

(5,409)

5,414

3,356

(173)

3,529

Net investment hedges

457

(457)

–

(457)

(41)

(416)

Effects on OCI are presented on a pre-tax basis.

During the years ended October 31, 2025 and October 31, 2024, there were no instances where forecast hedged

transactions failed to occur.

Hedged items include forecast interest cash flows on loans

deposits, and securitization liabilities.

For non-derivative instruments designated as hedging foreign exchange risk, fair value change is measured as

the gains and losses due to spot foreign exchange movements.

Cross-currency swaps may be used to hedge 1) foreign exchange risk, or 2) a combination of interest rate risk

and foreign exchange risk in a single hedge relationship. Cross-currency

swaps in both types of hedge relationships are disclosed in the foreign exchange risk category.

Hedged items include principal and interest cash flows on foreign denominated securities, loans, deposits, other

liabilities, and subordinated notes and debentures.

The amount reclassified from accumulated other comprehensive income (loss) to earnings relates to the

sale of the Bank’s equity investment in Schwab.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 59

Reconciliation of Accumulated Other Comprehensive

Income (Loss)

(millions of Canadian dollars)

For the years ended

October 31, 2025

Accumulated other

comprehensive

Net changes in other

comprehensive

income (loss)

comprehensive

income (loss)

income (loss) on

at beginning of year

income (loss)

at end of year

designated hedges

de-designated hedges

Cash flow hedges

Interest rate risk

(2,002)

2,667

665

1,727

(1,062)

Foreign exchange risk

(2,008)

120

(1,888)

–

Equity price risk

(14)

195

181

–

Total cash flow hedges

(4,024)

2,982

(1,042)

(1,062)

Net investment hedges

Foreign translation risk

(6,768)

(289)

(7,057)

–

October 31, 2024

Cash flow hedges

Interest rate risk

(6,441)

4,439

(2,002)

455

(2,457)

Foreign exchange risk

(1,091)

(917)

(2,008)

–

Equity price risk

(21)

(14)

–

Total cash flow hedges

(7,553)

3,529

(4,024)

(1,567)

(2,457)

Net investment hedges

Foreign translation risk

(6,352)

(416)

(6,768)

–

Presented on a pre-tax basis.

(b)

NOTIONAL AMOUNTS

The notional amounts are not recorded as assets

or liabilities as they represent the face amount

of the contract to which a rate or price is applied

to determine the

amount of cash flows to be exchanged.

Notional amounts do not represent the potential

gain or loss associated with the market risk

nor are they indicative of the

credit risk associated with derivative

financial instruments.

The following table discloses the notional

amount of OTC and exchange-traded derivatives.

Over-the-Counter and Exchange-Traded Derivatives

(millions of Canadian dollars)

As at

October 31

2025

2024

Trading

Over-the-Counter

Non

Clearing

clearing

Exchange-

Non-

house

traded

Total

trading

Total

Notional

Interest rate contracts

Futures

–

1,207,135

–

1,207,135

761,112

Forward rate agreements

942,703

31,384

–

974,087

579

974,666

574,289

Swaps

19,608,951

623,143

–

20,232,094

1,910,412

22,142,506

19,839,245

Options written

–

150,130

53,654

203,784

105

203,889

99,490

Options purchased

–

171,046

56,203

227,249

227,252

119,511

Total interest rate contracts

20,551,654

975,703

1,316,992

22,844,349

1,911,099

24,755,448

21,393,647

Foreign exchange contracts

Forward contracts

456,331

–

456,379

26,687

483,066

380,615

Swaps

–

1,824,527

–

1,824,527

2,160

1,826,687

1,692,601

Cross-currency interest rate swaps

–

1,716,271

–

1,716,271

181,907

1,898,178

1,669,577

Options written

–

62,931

326

63,257

–

63,257

56,777

Options purchased

–

58,215

58,255

–

58,255

49,359

Total foreign exchange contracts

4,118,275

366

4,118,689

210,754

4,329,443

3,848,929

Credit derivative contracts

Credit default swaps – protection purchased

13,907

1,934

–

15,841

2,890

18,731

15,504

Credit default swaps – protection sold

1,889

329

–

2,218

–

2,218

1,893

Total credit derivative contracts

15,796

2,263

–

18,059

2,890

20,949

17,397

Other contracts

Equity contracts

–

218,155

191,085

409,240

32,295

441,535

278,028

Commodity and other contracts

174

99,416

188,539

288,129

–

288,129

245,595

Total other contracts

174

317,571

379,624

697,369

32,295

729,664

523,623

Total

20,567,672

5,413,812

1,696,982

27,678,466

2,157,038

29,835,504

25,783,596

Collateral held under a Credit Support Annex to help reduce counterparty credit risk is in the form of high-quality

and liquid assets such as cash and high-quality government securities.

Acceptable collateral is governed by the Collateralized Trading Policy.

Derivatives executed through a central clearing house reduce settlement risk due to the ability to net settle offsetting

positions for capital purposes and therefore receive preferential

capital treatment compared to those settled with non-central clearing house counterparties.

Includes $

1,762

billion of OTC derivatives that are transacted with clearing houses (October 31, 2024 – $

1,532

billion) and $

395

billion of OTC derivatives that are transacted with non-

clearing houses (October 31, 2024 – $

394

billion). There were

exchange-traded derivatives both as at October 31, 2025 and October 31, 2024.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 60

The following table distinguishes the notional

amount of derivatives held or issued for

non-trading purposes between those that have

been designated in qualifying

hedge accounting relationships and those

which have not been designated in qualifying

hedge accounting relationships.

Notional of Non-Trading Derivatives

(millions of Canadian dollars)

As at

October 31, 2025

Derivatives in qualifying hedging relationships

Derivatives not in

Derivatives held or issued for

Fair

Cash

Net

qualifying hedging

hedging (non-trading) purposes

value

flow

Investment

relationships

Total

Interest rate contracts

436,988

380,109

–

1,094,002

1,911,099

Foreign exchange contracts

–

172,269

23,220

15,265

210,754

Credit derivative contracts

–

2,890

Other contracts

–

2,551

–

29,744

32,295

Total notional non-trading

436,988

554,929

23,220

1,141,901

2,157,038

October 31, 2024

Interest rate contracts

395,687

340,741

–

974,641

1,711,069

Foreign exchange contracts

–

159,693

–

15,771

175,464

Credit derivative contracts

–

2,708

Other contracts

–

2,409

–

33,640

36,049

Total notional non-trading

395,687

502,843

–

1,026,760

1,925,290

Certain cross-currency swaps are executed using multiple derivatives, including interest rate swaps. These derivatives

are used to hedge foreign exchange rate risk in cash flow hedges

and net investment hedges.

The following table discloses the notional

principal amount of OTC derivatives and exchange-traded

derivatives based on their contractual terms

to maturity.

Derivatives by Remaining Term-to-Maturity

(millions of Canadian dollars)

As at

October

2025

2024

Within

Over 1 year

Over

Notional Principal

1 year

to 5 years

5 years

Total

Interest rate contracts

Futures

891,230

315,905

–

1,207,135

761,112

Forward rate agreements

946,656

28,010

–

974,666

574,289

Swaps

7,262,622

9,998,401

4,881,483

22,142,506

19,839,245

Options written

159,225

41,237

3,427

203,889

99,490

Options purchased

165,281

59,498

2,473

227,252

119,511

Total interest rate contracts

9,425,014

10,443,051

4,887,383

24,755,448

21,393,647

Foreign exchange contracts

Forward contracts

461,515

19,334

2,217

483,066

380,615

Swaps

1,781,558

42,098

3,031

1,826,687

1,692,601

Cross-currency interest rate swaps

551,107

945,450

401,621

1,898,178

1,669,577

Options written

58,108

5,149

–

63,257

56,777

Options purchased

53,584

4,666

58,255

49,359

Total foreign exchange contracts

2,905,872

1,016,697

406,874

4,329,443

3,848,929

Credit derivative contracts

Credit default swaps – protection purchased

4,943

8,716

5,072

18,731

15,504

Credit default swaps – protection sold

554

1,119

545

2,218

1,893

Total credit derivative contracts

5,497

9,835

5,617

20,949

17,397

Other contracts

Equity contracts

338,989

90,121

12,425

441,535

278,028

Commodity and other contracts

256,783

30,286

1,060

288,129

245,595

Total other contracts

595,772

120,407

13,485

729,664

523,623

Total

12,932,155

11,589,990

5,313,359

29,835,504

25,783,596

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 61

The following table discloses the notional amount

and average price of derivative instruments

designated in qualifying hedge accounting

relationships.

Hedging Instruments by Remaining Term-to-Maturity

(millions of Canadian dollars, except

as noted)

As at

October 31

2025

2024

Within

Over 1 year

Over 5

Notional

1 year

to 5 years

years

Total

Interest rate risk

Interest rate swaps

Notional – pay fixed

15,114

126,746

106,458

248,318

230,740

Average fixed interest rate %

2.77

3.02

2.58

Notional – received fixed

121,601

190,068

44,210

355,879

317,149

Average fixed interest rate %

3.04

3.01

3.15

Total notional – interest rate risk

136,715

316,814

150,668

604,197

547,889

Foreign exchange risk

Forward contracts

Notional – USD/CAD

2,127

3,902

6,067

7,816

Average FX forward rate

1.31

1.30

Notional – EUR/CAD

2,808

14,007

2,756

19,571

15,141

Average FX forward rate

1.59

1.55

1.60

Notional – other

257

–

257

901

Cross-currency swaps

2,3

Notional – USD/CAD

39,860

29,184

11,449

80,493

46,944

Average FX rate

1.36

1.35

1.32

Notional – EUR/CAD

15,336

34,779

14,373

64,488

61,877

Average FX rate

1.45

1.47

1.49

Notional – GBP/CAD

–

8,189

–

8,189

9,760

Average FX rate

1.68

Notional – other currency pairs

5,997

9,101

1,326

16,424

17,254

Total notional – foreign exchange risk

66,385

99,162

29,942

195,489

159,693

Equity Price Risk

Notional – equity contracts

2,551

2,409

Total notional

205,651

415,976

180,610

802,237

709,991

Foreign currency denominated deposit liabilities are also used to hedge foreign exchange risk. Includes $

60.3

billion (October 31, 2024 – $

77.4

billion) of the carrying value of these non-

derivative hedging instruments

designated under net investment hedges.

Cross-currency swaps may be used to hedge 1) foreign exchange risk, or 2) a combination of interest rate risk and

foreign exchange risk in a single hedge relationship. Cross-currency

swaps in both types of hedge relationships are disclosed in the foreign exchange risk category.

Certain cross-currency swaps are executed using multiple derivatives, including interest rate swaps. The notional

amount of these interest rate swaps, excluded from the above, is

212.9

billion as at October 31, 2025 (October 31, 2024 – $

188.5

billion).

Includes derivatives executed to manage non-trading foreign currency exposures, when more than one currency

is involved prior to hedging to the Canadian dollar, or when

the currency

pair is not a significant exposure for the Bank.

(c)

DERIVATIVE-RELATED RISKS

Market Risk

Derivatives, in the absence of any compensating

upfront cash payments, generally have no

market value at inception. They obtain value,

positive or negative, as

relevant interest rates, foreign exchange

rates, equity, commodity or credit prices or indices change, such

that the previously contracted terms of the derivative

transactions have become more or less favourable

than what can be negotiated under current

market conditions for contracts with the same

terms and the same

remaining period to expiry. The potential for derivatives to increase

or decrease in value as a result of the foregoing

factors is generally referred to as market risk.

Credit Risk

Credit risk on derivatives, also known as

counterparty credit risk, is the risk of a

financial loss occurring as a result of

the failure of a counterparty to meet its

obligation to the Bank.

Derivative-related credit risks are subject

to the same credit approval, limit and

monitoring standards that are used for managing

other transactions that create

credit exposure. This includes evaluating

the creditworthiness of counterparties, and

managing the size, diversification and maturity

structure of the portfolios. The

Bank actively engages in risk mitigation

strategies through the use of multi-product

derivative master netting agreements,

collateral and other risk mitigation

techniques. Master netting agreements reduce

risk to the Bank by allowing the Bank

to close out and net transactions with counterparties

subject to such

agreements upon the occurrence of certain

events.

The current replacement cost and credit equivalent

amount shown in the following table are based

on the

standardized approach for counterparty credit

risk. According to this approach, the

current replacement cost accounts for

the fair value of the positions, posted and

received collateral, and master netting agreement

clauses. The credit equivalent amount is

the sum of the current replacement cost

and the potential future

exposure, which is calculated by applying

factors determined by OSFI to the notional

principal amount of the derivatives. The risk-weighted

amount is determined

by applying the adequate risk weights to

the credit equivalent amount.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 62

Credit Exposure of Derivatives

(millions of Canadian dollars)

As at

October 31, 2025

October 31, 2024

Current

Credit

Risk-

Current

Credit

Risk-

replacement

equivalent

weighted

replacement

equivalent

weighted

cost

amount

cost

amount

Interest rate contracts

Forward rate agreements

162

102

Swaps

2,838

8,962

1,323

4,215

11,037

964

Options written

147

140

Options purchased

151

123

Total interest rate contracts

2,902

9,422

1,439

4,274

11,402

1,042

Foreign exchange contracts

Forward contracts

1,064

5,180

978

1,746

5,643

1,022

Swaps

2,802

16,099

2,373

3,234

16,136

2,246

Cross-currency interest rate swaps

3,358

15,195

1,574

4,124

17,176

1,515

Options written

334

291

Options purchased

279

239

Total foreign exchange contracts

7,301

37,087

5,067

9,190

39,485

4,906

Other contracts

Credit derivatives

–

192

–

207

Equity contracts

729

12,531

2,994

669

8,964

2,348

Commodity and other contracts

746

4,777

1,044

1,115

5,752

848

Total other contracts

1,475

17,500

4,064

1,784

14,923

3,226

Total derivatives

11,678

64,009

10,570

15,248

65,810

9,174

Qualifying Central Counterparty Contracts

11,772

24,449

797

10,529

19,117

652

Total

23,450

88,458

11,367

25,777

84,927

9,826

Current Replacement Cost of Derivatives

(millions of Canadian dollars, except

as noted)

As at

Canada

United States

Other international

Total

October 31

By sector

2025

2024

2025

2024

2025

2024

2025

2024

Financial

3,367

4,647

605

272

4,028

4,957

Government

2,695

3,594

1,018

2,618

3,790

6,310

Other

1,818

1,670

673

639

1,369

1,671

3,860

3,980

Total current replacement cost

7,880

9,911

806

775

2,992

4,561

11,678

15,247

October 31

2025

2024

By location of risk

2025

2024

% mix

Canada

3,237

3,737

27.7

24.5

United States

3,930

4,937

33.7

32.4

Other international

United Kingdom

717

775

6.1

5.1

Europe – other

1,919

2,828

16.4

18.5

Other

1,875

2,970

16.1

19.5

Total Other international

4,511

6,573

38.6

43.1

Total current replacement cost

11,678

15,247

100.0

Based on geographic location of unit responsible for recording revenue.

Certain of the Bank’s derivative contracts are

governed by master derivative agreements

having provisions that may permit the Bank’s

counterparties to require,

upon the occurrence of a certain contingent event:

(1) the posting of collateral or other acceptable

remedy such as assignment of the affected

contracts to an

acceptable counterparty;

or (2)

settlement of outstanding derivative contracts.

Most often, these contingent events are in the

form of a downgrade of the senior

debt rating of the Bank, either as counterparty

or as guarantor of one of the Bank’s subsidiaries.

At October 31, 2025, the aggregate net liability

position of those

contracts would require: (1) the posting of

collateral or other acceptable remedy

totalling $

331

million (October 31, 2024 – $

511

million) in the event of a one-notch

or two-notch downgrade in the Bank’s senior debt rating;

and (2) funding totalling $

358

million (October 31, 2024 – $

134

million) following the termination and

settlement of outstanding derivative contracts

in the event of a one-notch or two-notch

downgrade in the Bank’s senior debt rating.

Certain of the Bank’s derivative contracts are

governed by master derivative agreements

having credit support provisions

that permit the Bank’s counterparties

to call for collateral depending on the net mark-to-market

exposure position of all derivative contracts

governed by that master derivative agreement.

Some of

these agreements may permit the Bank’s counterparties

to require, upon the downgrade of the senior

debt ratings of the Bank, to post additional

collateral. As of

October 31, 2025, the fair value of all derivative

instruments with credit risk related

contingent features in a net liability position

was $

billion (October 31, 2024 –

billion). The Bank has posted $

billion (October 31, 2024 – $

billion) of collateral for this exposure in the normal

course of business. As of

October 31, 2025, the impact of a one-notch downgrade

in the Bank’s senior debt ratings would require the

Bank to post an additional $

1,015

million

(October 31, 2024 – $

million) of collateral to that posted in the

normal course of business. The increase

is attributable to the clarification of downgrade

requirements under a single Credit Support

Annex with no economic impact. A two-notch

downgrade in the Bank’s senior debt ratings

would require the Bank to

post an additional $

1,536

million (October 31, 2024 – $

1,228

million) of collateral to that posted in the

normal course of business.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 63

(d)

IMPACT FROM TERMINATED FIRST HORIZON ACQUISITION-RELATED CAPITAL HEDGING STRATEGY

Prior to the termination of the merger agreement

with First Horizon on May 4, 2023,

the Bank had implemented a strategy to mitigate

the impact of interest rate

volatility to capital on closing of the acquisition.

In order to mitigate this impact, the Bank

de-designated certain interest rate

swaps hedging fixed income

investments in fair value hedge accounting

relationships. As a result of the de-designation,

mark-to-market gains (losses) on these

swaps were recognized in

earnings, without any corresponding offset from

the previously hedged investments. The

de-designation also triggered the amortization

of the investments’ basis

adjustment to net interest income over

the remaining expected life of the investments.

Following the announcement to terminate

the merger agreement, the Bank discontinued

this strategy and reinstated hedge accounting

on the portfolio of fixed

income investments using new swaps

entered into at higher market rates. The

impact from the higher swap rates and

the basis adjustment amortization discussed

above is reported in net interest income. Income

recognized from this strategy

will reverse over time causing a decrease

to net interest income. This impact is

expected to continue until fiscal 2029. For

the year ended October 31, 2025, the decrease

to net interest income was $

205

million (October 31, 2024 –

242

million), recorded in the Corporate segment.

NOTE 12: INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

INVESTMENT IN THE CHARLES SCHWAB CORPORATION

On February 12, 2025, the Bank sold its entire

remaining equity investment in Schwab

through a registered offering and share repurchase

by Schwab.

Immediately prior to the sale, TD held

184.7

million shares of Schwab’s common stock, representing

10.1

% economic ownership. The sale of the shares resulted

in proceeds of $

21.0

billion and the Bank recognized in Other

income (loss) a net gain on sale of $

9.2

billion. This gain is net of the release of

related cumulative

foreign currency translation from AOCI, the

release of AOCI on designated net investment

hedging items, and direct transaction costs.

For segment reporting, the

Bank recognized an after-tax gain of $

8.6

billion in its Corporate segment and $

184

million of underwriting fees in its Wholesale

segment as a result of TD

Securities acting as a lead bookrunner on

the transaction.

The Bank discontinued recording its share

of earnings available to common shareholders

from its investment in Schwab following the

sale. The Bank’s share of

net income from its prior investment in Schwab

of $

305

million during the year ended October 31, 2025,

reflects net income after adjustments

for amortization of

certain intangibles net of tax.

The stockholder agreement to which the Bank

and Schwab were party (the “Stockholder

Agreement”) was terminated by

the Bank’s sale of its equity investment

in Schwab. The Bank continues to have a

business relationship with Schwab through

the insured deposit account agreement

(“Schwab IDA Agreement”).

Prior to the sale, the Bank had significant

influence over Schwab and the ability to

participate in the financial and operational

policy-making decisions of Schwab

through a combination of the Bank’s ownership,

board representation and the insured deposit

account agreement between the Bank and

Schwab. As such, the

Bank accounted for its investment in

Schwab using the equity method. The Bank’s

share of Schwab’s earnings available to common

shareholders was reported

with a one-month lag. The Bank took into

account changes in the one-month lag period

that would significantly affect the results.

On August 21, 2024, the Bank sold

40.5

million shares of common stock of Schwab for

proceeds of $

3.4

billion (US$

2.5

billion). The share sale reduced the

Bank’s ownership interest in Schwab from

12.3

% to

10.1

%. The Bank recognized $

1.0

billion (US$

0.7

billion) as other income in fiscal 2024.

As at October 31, 2024, the Bank’s reported investment

in Schwab was approximately

10.1

%, consisting of

7.5

% of the outstanding voting common shares

and

the remainder in non-voting common shares

of Schwab with an aggregate fair value of

billion (US$

billion) based on the closing price of

US$

70.83

on the

New York Stock Exchange.

Under the Stockholder Agreement, the Bank

had the right to designate two members of

Schwab’s Board of Directors and had representation

on two Board

Committees, subject to the Bank meeting

certain conditions. The Bank’s designated directors

were the Bank’s former Group President and Chief

Executive Officer

and the Bank’s former Chair of the Board. Under

the Stockholder Agreement, the Bank

was not permitted to own more than

9.9

% voting common shares of

Schwab, and the Bank was subject to

customary standstill restrictions and

subject to certain exceptions, transfer restrictions.

The carrying value of the Bank’s prior investment

in Schwab of $

9.0

billion as at October 31, 2024 represented

the Bank’s share of Schwab’s stockholders’

equity, adjusted for goodwill, other intangibles, and cumulative

translation adjustment. The Bank’s share of net

income from its investment in Schwab of

703

million during the year ended October 31, 2024,

reflects net income after adjustments

for amortization of certain intangibles net of tax.

The following tables

represent the gross amount of Schwab’s total

assets, liabilities, net revenues, net income

available to common stockholders, other

comprehensive income (loss),

and comprehensive income (loss) for the

comparative year.

Summarized Financial Information

(millions of Canadian dollars)

As at

September 30

2024

Total assets

630,363

Total liabilities

566,502

(millions of Canadian dollars)

For the year ended

September 30

2024

Total net revenues

25,493

Total net income available to common stockholders

6,376

Total other comprehensive income (loss)

8,356

Total comprehensive income (loss)

14,732

Insured Deposit Account Agreement

On May 4, 2023, the Bank and Schwab entered

into an amended Schwab IDA Agreement,

with an initial expiration of July 1, 2034.

Pursuant to the Schwab IDA

Agreement, the Bank makes sweep deposit

accounts available to clients of Schwab.

Schwab designates a portion of the deposits

with the Bank as fixed-rate

obligation amounts (FROA). Remaining deposits

are designated as floating-rate obligations.

The FROA floor is set at US$

billion.

Refer to Note 26 for further details on

the Schwab IDA Agreement.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 64

INVESTMENTS

IN OTHER ASSOCIATES AND JOINT VENTURES

Except for Schwab as disclosed above,

the Bank did not have investments in associates

or joint ventures which were individually

material as of October 31, 2025,

or October 31, 2024. The carrying amount

of the Bank’s investments in other associates

and joint ventures as at October 31, 2025

was $

5.2

billion

(October 31, 2024 – $

4.9

billion), recorded in Other assets on the

Consolidated Balance Sheet.

Other associates and joint ventures consisted

predominantly of investments in private

funds or partnerships that make equity investments,

provide debt

financing or support community-based tax-advantaged

investments. The investments in these

entities generate a return primarily through

the realization of U.S.

federal and state income tax credits,

including Low Income Housing Tax Credits, New Markets Tax Credits,

and Historic Tax Credits.

NOTE 13: GOODWILL AND OTHER INTANGIBLES

GOODWILL

The recoverable amount of the Bank’s CGUs or groups

of CGUs is determined from internally

developed valuation models that consider

various factors and

assumptions such as forecasted earnings, growth

rates, discount rates, and terminal

growth rates. Management is required

to use judgment in estimating the

recoverable amount of the CGUs or groups

of CGUs,

and the use of different assumptions and estimates

in the calculations could influence the

determination of

the existence of impairment and the valuation

of goodwill. Management believes that the assumptions

and estimates used are reasonable and

supportable. Where

possible, assumptions generated internally

are compared to relevant market information.

The carrying amounts of the Bank’s CGUs or groups

of CGUs are

determined by management using risk-based

capital models to adjust net assets and liabilities

by CGU. These models consider various

factors including market

risk, credit risk,

and operational risk, including investment

capital (comprised of goodwill and other intangibles).

As at the date of the last impairment test,

the

amount of capital not directly attributable

to the CGUs and held within the Corporate

segment was approximately $

22.9

billion (2024 – $

11.5

billion) and primarily

related to treasury assets and excess capital

managed within the Corporate segment.

The Bank’s capital oversight committees provide

oversight to the Bank’s

capital allocation methodologies.

Key Assumptions

The recoverable amount of each CGU or group

of CGUs has been determined based on its estimated

value-in-use. In assessing value-in-use, estimated

future

cash flows based on the Bank’s internal forecast

are discounted using an appropriate pre-tax

discount rate.

The following were the key assumptions

applied in the goodwill impairment testing:

Discount Rate

The pre-tax discount rates used reflect

current market assessments

of the risks specific to each group of

CGUs and are dependent on the risk profile

and capital

requirements of each group of CGUs.

Forecasted Earnings

The earnings included in the goodwill impairment

testing for each group of CGUs were based

on the Bank’s internal forecast, which projects

expected cash flows

over the next five years,

with the exception of the U.S. Personal and

Commercial Banking group of CGUs

where cash flow projections covering a

seven year

period were used, which more closely aligns

with the long-term strategic growth plan for

the business.

Terminal Growth Rates

Beyond the Bank’s internal forecast, cash flows

were assumed to grow at a steady terminal

growth rate. Terminal growth rates were based on the expected long-

term growth of gross domestic product and

inflation and ranged from

3.7

% to

4.2

% (2024 –

2.0

% to

4.1

%).

In considering the sensitivity of the key assumptions

discussed above, management determined

that a reasonably

possible change in any of the above

would not

result in the recoverable amount of any of

the groups of CGUs to be less than their carrying

amount.

Goodwill by Segment

(millions of Canadian dollars)

Canadian

Personal and

Wealth

Commercial

U.S.

Management

Wholesale

Banking

Retail

and Insurance

Banking

Total

Carrying amount of goodwill as at November 1, 2023

902

14,620

2,122

958

18,602

Additions (disposals)

–

128

Foreign currency translation adjustments and other

–

121

Carrying amount of goodwill as at October 31, 2024

902

14,663

2,125

1,161

18,851

Additions (disposals)

–

Foreign currency translation adjustments and other

113

129

Carrying amount of goodwill as at October 31, 2025

903

14,776

2,132

1,169

18,980

Pre-tax discount rates

2024

9.7

–

9.9

10.7

–

11.8

10.9

–

11.0

14.4

2025

9.9

–

10.7

11.0

–

11.8

11.0

–

11.9

13.3

Goodwill predominantly relates to U.S. Personal and Commercial Banking.

Includes adjustments to the purchase price allocation in connection with the Cowen acquisition.

Accumulated impairment as at October 31, 2025 and October 31, 2024 was

nil

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 65

OTHER INTANGIBLES

The following table presents details of other

intangibles as at October 31, 2025 and

October 31, 2024.

Other Intangibles

(millions of Canadian dollars)

Credit card

Internally

Core deposit

generated

Other

intangibles

software

intangibles

Total

Cost

As at November 1, 2023

2,712

850

3,103

236

1,556

8,457

Additions

–

961

993

Disposals

–

(5)

(6)

(17)

Fully amortized intangibles

–

(627)

(60)

–

(687)

Foreign currency translation adjustments

and other

(25)

As at October 31, 2024

2,720

851

3,407

195

1,595

8,768

Additions

–

1,095

–

1,165

Disposals

–

(3)

(7)

(5)

Fully amortized intangibles

(2,741)

(734)

(300)

(46)

(509)

(4,330)

Foreign currency translation adjustments

and other

(4)

(9)

As at October 31, 2025

–

118

4,195

213

1,082

5,608

Amortization and impairment

As at November 1, 2023

2,712

785

1,127

163

899

5,686

Disposals

–

(3)

–

(3)

Impairment losses (reversals)

–

Amortization charge for the year

–

498

161

702

Fully amortized intangibles

–

(627)

(60)

–

(687)

Foreign currency translation adjustments

and other

–

(2)

As at October 31, 2024

2,720

796

996

135

1,077

5,724

Disposals

–

(7)

(3)

–

(10)

Impairment losses (reversals)

–

Amortization charge for the year

–

586

125

780

Fully amortized intangibles

(2,741)

(734)

(300)

(46)

(509)

(4,330)

Foreign currency translation adjustments

and other

(1)

As at October 31, 2025

–

1,288

145

692

2,199

Net Book Value:

As at October 31, 2024

–

2,411

518

3,044

As at October 31, 2025

–

2,907

390

3,409

Includes amounts related to restructuring. Refer to Note 25 for further details.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 66

NOTE 14: LAND, BUILDINGS, EQUIPMENT, OTHER DEPRECIABLE ASSETS,

AND RIGHT-OF-USE ASSETS

The following table presents details of the

Bank’s land, buildings, equipment, and other depreciable

assets as at October 31, 2025

and October 31, 2024.

Land, Buildings, Equipment, and Other

Depreciable Assets

(millions of Canadian dollars)

Furniture,

fixtures,

and other

Computer

depreciable

Leasehold

Land

Buildings

equipment

assets

improvements

Total

Cost

As at November 1, 2023

919

2,555

917

1,511

3,679

9,581

Additions

–

216

153

362

485

1,216

Disposals

–

(9)

(65)

(137)

(127)

(338)

Fully depreciated assets

–

(22)

(143)

(171)

(289)

(625)

Foreign currency translation adjustments

and other

(11)

As at October 31, 2024

925

2,787

851

1,567

3,790

9,920

Additions

–

173

167

328

321

989

Disposals

–

(5)

(42)

(92)

(7)

(146)

Fully depreciated assets

–

(46)

(226)

(167)

(347)

(786)

Foreign currency translation adjustments

and other

(72)

(153)

(13)

(211)

As at October 31, 2025

853

2,756

737

1,642

3,778

9,766

Accumulated depreciation and

impairment losses

As at November 1, 2023

–

992

418

787

1,792

3,989

Depreciation charge for the year

–

179

165

298

735

Disposals

–

(9)

(62)

(134)

(108)

(313)

Impairment losses

–

Fully depreciated assets

–

(22)

(143)

(171)

(289)

(625)

Foreign currency translation adjustments

and other

–

(4)

As at October 31, 2024

–

1,079

399

667

1,736

3,881

Depreciation charge for the year

–

100

176

198

300

774

Disposals

–

(2)

(42)

(90)

(4)

(138)

Impairment losses

–

Fully depreciated assets

–

(46)

(226)

(167)

(347)

(786)

Foreign currency translation adjustments

and other

–

(74)

–

(9)

As at October 31, 2025

–

1,058

328

642

1,723

3,751

Net Book Value Excluding Right-of-Use Assets:

As at October 31, 2024

925

1,708

452

900

2,054

6,039

As at October 31, 2025

853

1,698

409

1,000

2,055

6,015

Cash received from disposals was $

million for the year ended October 31, 2025 (October 31, 2024 – $

million).

Includes amounts related to restructuring and adjustments to reclassify held-for-sale items to other assets.

Refer to Note 25 for further details.

The following table presents details of the

Bank’s ROU assets as recorded in accordance

with IFRS 16,

Leases

. Refer to Note 17 and Note 25 for the related

lease

liabilities details.

Right-of-Use Assets Net Book Value

(millions of Canadian dollars)

Computer

Land

Buildings

equipment

Total

As at November 1, 2023

709

3,101

3,842

Additions

373

424

Depreciation

(97)

(462)

(13)

(572)

Reassessments, modifications, and variable

lease payment adjustments

130

(20)

131

Terminations and impairment

–

Foreign currency translation adjustments

and other

(3)

(25)

–

(28)

As at October 31, 2024

633

3,118

3,798

Additions

490

500

Depreciation

(92)

(478)

(13)

(583)

Reassessments, modifications, and variable

lease payment adjustments

295

–

349

Terminations and impairment

–

Foreign currency translation adjustments

and other

–

As at October 31, 2025

600

3,476

4,117

Total Land, Buildings, Equipment, Other Depreciable

Assets, and Right-of-Use Assets Net

Book Value

(millions of Canadian dollars)

Furniture,

fixtures,

and other

Computer

depreciable

Leasehold

Land

Buildings

equipment

assets

improvements

Total

As at October 31, 2024

1,558

4,826

499

900

2,054

9,837

As at October 31, 2025

1,453

5,174

450

1,000

2,055

10,132

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 67

NOTE 15: OTHER ASSETS

Other Assets

(millions of Canadian dollars)

As at

October 31

2025

2024

Accounts receivable and other items

9,366

8,076

Accrued interest

5,674

5,509

Cheques and other items in transit

–

1,656

Current income tax receivable

3,849

4,061

Defined benefit asset

(Note 22)

1,111

1,042

Investments in other associates and joint

ventures

(Note 12)

5,237

4,855

Prepaid expenses

1,815

1,794

Reinsurance contract assets

936

1,188

Total

27,988

28,181

NOTE 16: DEPOSITS

Demand deposits are those for which

the Bank does not have the right to require notice

prior to withdrawal, which primarily include business

and government

chequing accounts. Notice deposits are those

for which the Bank can legally require notice

prior to withdrawal, which include both

savings and chequing accounts.

Term deposits are payable on a given date of maturity and are purchased by

customers to earn interest over a fixed period,

with terms ranging from one day to ten

years and generally include fixed term deposits,

guaranteed investment certificates,

senior debt, and similar instruments.

The aggregate amount of term deposits

in denominations of $100,000 or more as

at October 31, 2025 was $

544

billion (October 31, 2024 – $

546

billion).

Deposits

(millions of Canadian dollars)

As at

October 31

By Type

By Country

2025

2024

Demand

Notice

Term

Canada

United States

International

Total

Personal

24,606

488,831

136,959

354,799

295,597

–

650,396

641,667

Banks

11,379

417

15,437

21,937

1,235

4,061

27,233

57,698

Business and government

161,003

204,780

223,692

426,753

161,610

1,112

589,475

569,315

196,988

694,028

376,088

803,489

458,442

5,173

1,267,104

1,268,680

Trading

–

37,882

27,633

4,290

5,959

37,882

30,412

Designated at fair value

through profit or loss

–

197,336

63,949

78,960

54,427

197,336

207,668

Total

196,988

694,028

611,306

895,071

541,692

65,559

1,502,322

1,506,760

Non-interest-bearing deposits included

above

Canada

60,796

58,873

United States

73,364

73,509

International

–

Interest-bearing deposits included above

Canada

834,275

781,526

United States

468,328

504,896

International

65,558

87,956

Total

2,6

1,502,322

1,506,760

Includes $

104.3

billion (October 31, 2024 – $

97.6

billion) of senior debt which is subject to the bank recapitalization “bail-in” regime. This regime provides certain

statutory powers to the

Canada Deposit Insurance Corporation, including the ability to convert specified eligible shares and liabilities into

common shares in the event that the Bank becomes non-viable.

Includes $

70.6

billion relating to covered bondholders (October 31, 2024 – $

75.4

billion).

Financial liabilities designated at FVTPL on the Consolidated Balance Sheet also includes $

299

million (October 31, 2024 – $

246

million) of loan commitments, financial guarantees and

other liabilities designated at FVTPL.

The geographical splits of the deposits are based on the point of origin of the deposits.

Includes $

7.2

billion (October 31, 2024 – $

13.1

billion) of U.S. federal funds deposited and $

1.1

billion (October 31, 2024 – $

36.2

billion) of deposits and advances with the FHLB.

Includes deposits of $

807.7

billion (October 31, 2024 – $

810.2

billion) denominated in U.S. dollars and $

111.1

billion (October 31, 2024 – $

140.7

billion) denominated in other foreign

currencies.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 68

Term Deposits by Remaining Term-to-Maturity

(millions of Canadian dollars)

As at

October 31

2025

2024

Over

Within

1 year to

2 years to

3 years to

4 years to

Over

1 year

2 years

3 years

4 years

5 years

Total

Personal

106,877

17,296

6,753

3,752

2,279

136,959

143,758

Banks

15,433

–

15,437

44,735

Business and government

83,830

51,067

28,311

14,668

13,812

32,004

223,692

225,517

Trading

20,538

6,314

4,140

1,538

2,253

3,099

37,882

30,412

Designated at fair value through

profit or loss

196,684

652

–

197,336

207,668

Total

423,362

75,331

39,205

19,958

18,345

35,105

611,306

652,090

Term Deposits due within a Year

(millions of Canadian dollars)

As at

October 31

2025

2024

Over 3

Over 6

Within

months to

3 months

6 months

12 months

Total

Personal

45,952

24,351

36,574

106,877

113,041

Banks

15,328

15,433

44,732

Business and government

39,046

19,236

25,548

83,830

87,025

Trading

7,493

5,288

7,757

20,538

15,622

Designated at fair value through

profit or loss

95,227

57,600

43,857

196,684

206,191

Total

203,046

106,531

113,785

423,362

466,611

NOTE 17: OTHER LIABILITIES

Other Liabilities

(millions of Canadian dollars)

As at

October 31

2025

2024

Accounts payable, accrued expenses, and

other items

8,954

7,706

Accrued interest

4,652

5,559

Accrued salaries and employee benefits

7,313

5,386

Cheques and other items in transit

255

–

Current income tax payable

296

Deferred tax liabilities

(Note 23)

303

300

Defined benefit liability

(Note 22)

1,372

1,380

Lease liabilities

5,352

5,013

Liabilities related to structured entities

(Note 10)

4,008

22,792

Provisions

(Note 25)

1,735

3,675

Total

34,240

51,878

Refer to Note 25 for lease liability maturity and lease payment details.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 69

NOTE 18: SUBORDINATED NOTES AND DEBENTURES

Subordinated notes and debentures are

direct unsecured obligations of the Bank

or its subsidiaries and are subordinated in

right of payment to the claims of

depositors and certain other creditors. Redemptions,

cancellations, exchanges, and modifications

of subordinated debentures qualifying

as regulatory capital are

subject to the consent and approval of OSFI.

Subordinated Notes and Debentures

(millions of Canadian dollars, except

as noted)

As at

Earliest par

Interest

Reset

redemption

October 31

Maturity date

rate (%)

spread (%)

date

2025

2024

May 26, 2025

9.150

n/a

–

200

April 22, 2030

3.105

n/a

April 22, 2025

–

2,989

March 4, 2031

4.859

3.490

March 4, 2026

1,252

1,257

September 15, 2031

3.625

2.205

September 15, 2026

1,997

2,045

January 26, 2032

3.060

1.330

January 26, 2027

1,715

1,637

April 9, 2034

5.177

1.530

April 9, 2029

1,820

1,803

September 10, 2034

5.146

1.500

September 10, 2029

1,396

1,359

October 30, 2034

1.601

1.032

October 30, 2029

181

183

January 23, 2036

4.030

1.500

January 23, 2031

1,209

–

February 1, 2035

4.231

1.540

February 1, 2030

1,009

–

September 25, 2035

2.058

0.970

September 25, 2030

127

–

July 23, 2040

5.930

1.870

July 23, 2035

–

Total

10,733

11,473

The outstanding subordinated notes and debentures include non-viability contingent capital (NVCC) provisions

and qualify as regulatory capital under OSFI’s Capital Adequacy

Requirements (CAR) guideline. Refer to Note 19 for further details.

Interest rate is for the period to but excluding the earliest par redemption date and, thereafter,

if not otherwise redeemed, it will be reset at the applicable reset rate.

On May 26, 2025, this note matured and all of the accrued interest and outstanding principal was repaid

in full.

On April 22, 2025, the Bank redeemed all of its outstanding $

billion

3.105

% medium-term notes due April 22, 2030, at a redemption price of

100

per cent of the principal amount, plus

accrued and unpaid interest to, but excluding, the redemption date.

To be reset at a rate to be determined

with consent of the noteholders as the CORRA-based rate and spread considered to be reasonably equivalent

to the of

3-month bankers’

acceptance rate

(as such term is defined in the applicable offering document) plus the reset spread noted.

To be reset at a rate of

5-year Mid-Swap Rate

plus the reset spread noted.

To be reset at Daily Compounded

Canadian Overnight Repo Rate Average plus the reset spread noted.

To be reset at the prevailing

5-year U.S. Treasury Rate

plus the reset spread noted.

To be reset at the Japanese

government bond yield plus the reset spread noted.

be reset at the

5-year Tokyo Overnight Average Rate

mid-swap rate plus the reset spread noted.

be reset at the

3-month Bank Bill Swap Rate

plus the reset spread noted.

NOTE 19: EQUITY

COMMON SHARES

The Bank is authorized by its shareholders

to issue an unlimited number of common

shares, without par value, for unlimited

consideration. The common shares

are not redeemable or convertible. Dividends

are typically declared by the Board of

Directors of the Bank on a quarterly basis and

the amount may vary from

quarter to quarter.

PREFERRED SHARES AND OTHER EQUITY

INSTRUMENTS

Preferred Shares

The Bank is authorized by its shareholders

to issue, in one or more series, an unlimited

number of Class A First Preferred Shares,

without nominal or par value.

Non-cumulative preferential dividends are payable

either quarterly or semi-annually in accordance

with applicable terms, as and when declared

by the Board of

Directors of the Bank. All preferred shares

issued by the Bank currently include

NVCC provisions, necessary for the

preferred shares to qualify as regulatory

capital under OSFI’s CAR guideline. NVCC provisions

require the conversion of the impacted instruments

into a variable number of common shares

upon the

occurrence of a Trigger Event. A Trigger Event is currently defined

in the CAR Guideline as an event where

OSFI determines that the Bank is, or is about

become, non-viable and that after conversion

or write-off, as applicable, of all non-common

capital instruments and consideration of

any other relevant factors or

circumstances, the viability of the Bank is expected

to be restored, or where the Bank has accepted

or agreed to accept a capital injection or equivalent

support

from a federal or provincial government of

Canada without which the Bank would have

been determined by OSFI to be non-viable.

Limited Recourse Capital Notes

The Bank has issued Limited Recourse

Capital Notes (the “LRCNs”) with recourse

limited to assets held in a trust consolidated by

the Bank (the “Limited Recourse

Trust”). The Limited Recourse Trust’s assets consist of Class A First

Preferred Shares of the Bank, each series

of which is issued concurrently with

the LRCNs

(the “LRCN Preferred Shares”). The LRCN

Preferred Shares are eliminated on the Bank’s

Consolidated Financial Statements.

In the event of (i) non-payment of interest

following any interest payment date,

(ii) non-payment of the redemption price

in case of a redemption of the LRCNs,

(iii) non-payment of principal plus accrued

and unpaid interest at the maturity of the LRCNs,

(iv) an event of default on the LRCNs,

or (v) a Trigger Event, the

recourse of each LRCN holder will be limited

to that holder’s pro rata share of the

Limited Recourse Trust’s assets.

The LRCNs, by virtue of the recourse

to the LRCN Preferred Shares, include standard

NVCC provisions necessary for them to qualify as

Additional Tier 1

Capital under OSFI’s CAR guideline. NVCC provisions

require the conversion of the instrument

into a variable number of common shares

upon the occurrence of

a Trigger Event. In such an event, each LRCN Preferred

Share will automatically and immediately be

converted into a variable number of common

shares which

will be delivered to LRCN holders in

satisfaction of the principal amount of, and accrued

and unpaid interest on, the LRCNs. The number

of common shares issued

will be determined based on the conversion

formula set out in the terms of the respective

series of LRCN Preferred Shares.

The LRCNs are compound instruments with

both equity and liability features. Non-payment

of interest and principal in cash does not

constitute an event of

default and will trigger the delivery of the LRCN

Preferred Shares. The liability component

has a nominal value and, therefore,

the proceeds received upon

issuance have been presented as equity, and any interest payments

are accounted for as distributions on other

equity instruments.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 70

Perpetual Subordinated Capital Notes

The Bank has issued Perpetual Subordinated

Capital Notes (“Perpetual Notes”). The

Perpetual Notes have no scheduled maturity

or redemption date. Interest

payments are at the discretion of the Bank.

The Perpetual Notes include standard NVCC

provisions necessary for them to qualify as

Additional Tier 1 Capital

under OSFI’s CAR guideline.

The Perpetual Notes are compound instruments

with both equity and liability features. The

liability component has a nominal value and,

therefore, the proceeds

received upon issuance have been presented

as equity, and any interest payments are accounted for as distributions

on other equity instruments.

The following table summarizes the changes

to the shares and other equity instruments

issued and outstanding and treasury instruments

held as at and for the

years ended October 31, 2025 and October

31, 2024.

Shares and Other Equity Instruments

Issued and Outstanding and Treasury Instruments

Held

(thousands of shares or other equity instruments

and millions of Canadian dollars)

October 31, 2025

October 31, 2024

Number

of shares

Amount

of shares

Amount

Common Shares

Balance as at beginning of year

1,750,272

25,373

1,791,422

25,434

Proceeds from shares issued on exercise

of stock options

2,260

165

1,657

112

Shares issued as a result of dividend reinvestment

plan

1,575

130

6,592

529

Purchase of shares for cancellation and other

(64,611)

(941)

(49,399)

(702)

Balance as at end of year – common shares

1,689,496

24,727

1,750,272

25,373

Preferred Shares and Other Equity Instruments

Preferred Shares – Class A

Series 1

20,000

500

20,000

500

Series 5

–

20,000

500

Series 7

–

14,000

350

Series 9

–

8,000

200

Series 16

14,000

350

14,000

350

Series 18

14,000

350

14,000

350

Series 27

850

Series 28

800

49,650

2,850

91,650

3,900

Other Equity Instruments

Limited Recourse Capital Notes – Series 1

1,750

Limited Recourse Capital Notes – Series 2

1,500

Limited Recourse Capital Notes – Series 3

1,750

2,403

1,750

2,403

Limited Recourse Capital Notes – Series 4

750

1,023

750

1,023

Limited Recourse Capital Notes – Series 5

750

–

Limited Recourse Capital Notes – Series 6

750

1,037

–

Perpetual Subordinated Capital Notes – Series

2023-9

312

7,251

8,775

5,751

6,988

Balance as at end of year – preferred shares

and other equity instruments

56,901

11,625

97,401

10,888

Treasury – common shares

Balance as at beginning of year

213

(17)

748

(64)

Purchase of shares

145,166

(13,094)

139,135

(11,209)

Sale of shares

(145,379)

13,111

(139,670)

11,256

Balance as at end of year – treasury

– common shares

–

213

(17)

Treasury – preferred shares and other equity instruments

Balance as at beginning of year

163

(18)

142

(65)

Purchase of shares and other equity instruments

4,614

(1,535)

6,556

(625)

Sale of shares and other equity instruments

(4,748)

1,549

(6,535)

672

Balance as at end of year – treasury

– preferred shares and other equity

instruments

(4)

163

(18)

On January 31, 2025, the Bank redeemed all of its

million outstanding Non-Cumulative 5-Year

Rate Reset Class A First Preferred Shares NVCC, Series 5 (“Series 5 Preferred

Shares”), at a redemption price of $

25.00

per Series 5 Preferred Share, for a total redemption cost of approximately $

500

million.

On July 31, 2025, the Bank redeemed all of its

million outstanding Non-Cumulative 5-Year

Rate Reset Class A First Preferred Shares NVCC, Series 7 (“Series 7 Preferred Shares”), at

a redemption price of $

25.00

per Series 7 Preferred Share, for a total redemption cost of approximately $

350

million.

On October 31, 2025, the Bank redeemed all of its

million outstanding Non-Cumulative 5-Year

Rate Reset Class A First Preferred Shares NVCC, Series 9 (“Series 9 Preferred Shares”),

at a redemption price of $

25.00

per Series 9 Preferred Share, for a total redemption cost of approximately $

200

million.

For Other Equity Instruments, the number of shares represents the number of notes issued.

For LRCNs – Series 3, 4, and 6, the amount represents the Canadian dollar equivalent of the U.S. dollar notional

amount. Refer to “Preferred Shares and Other Equity Instruments –

Significant Terms and Conditions” table

for further details.

For Perpetual Subordinated Capital Notes (AT1),

the amount represents the Canadian dollar equivalent of the Singapore dollar notional amount. Refer to

“Preferred Shares and Other

Equity Instruments – Significant Terms and

Conditions” table for further details.

When the Bank purchases its own equity instruments as part of its trading business, they are classified as treasury

instruments and the cost of these instruments is recorded as a

reduction in equity.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 71

Preferred Shares and Other Equity Instruments – Significant

Terms and Conditions

Annual

Dividend

Reset

Next redemption/

Convertible

Issue date

yield (%)

frequency

spread (%)

conversion date

1,2

into

1,2

NVCC Rate Reset Preferred Shares

Series 1

June 4, 2014

4.970

Quarterly

2.240

October 31, 2029

Series 2

Series 16

July 14, 2017

6.301

Quarterly

3.010

October 31, 2027

Series 17

Series 18

March 14, 2018

5.747

Quarterly

2.700

April 30, 2028

Series 19

Series 27

April 4, 2022

5.750

Semi-annual

3.317

October 31, 2027

–

Series 28

July 25, 2022

7.232

Semi-annual

4.200

October 31, 2027

–

Annual

Coupon

Reset

Next redemption

Recourse to

Issue date

yield (%)

frequency

spread (%)

date

Preferred Shares

Other Equity Instruments

Perpetual Subordinated Capital Notes

July 10, 2024

5.700

Semi-annual

2.652

July 31, 2029

n/a

NVCC Limited Recourse Capital Notes

Series 1

July 29, 2021

3.600

Semi-annual

2.747

October 31, 2026

Series 26

Series 2

September 14, 2022

7.283

Semi-annual

4.100

October 31, 2027

Series 29

Series 3

October 17, 2022

8.125

Quarterly

4.075

October 31, 2027

Series 30

Series 4

July 3, 2024

7.250

Quarterly

2.977

July 31, 2029

Series 31

Series 5

December 18, 2024

5.909

Quarterly

3.100

January 1, 2030

Series 32

Series 6

September 23, 2025

6.350

Quarterly

2.721

October 31, 2030

Series 33

Non-cumulative preferred dividends for each series are payable as and when declared by the Board of Directors.

Unless redeemed, the dividend rate of the Rate Reset Preferred Shares

will reset on the next earliest optional redemption/conversion date and every

years thereafter to equal the then

-year Government of Canada bond yield plus the noted reset spread. If

converted into a series of floating rate preferred shares, the dividend rate for the quarterly period will be equal to

the then

-day Government of Canada Treasury bill yield plus the noted

reset spread unless otherwise stated.

Subject to regulatory consent and unless otherwise stated, preferred shares are redeemable on the next earliest

optional redemption date as noted and every

years thereafter. Preferred

Shares, except Series 27 and Series 28, are convertible into the corresponding series of floating rate preferred shares

on the conversion date noted and every

years thereafter if not

redeemed. If converted, the holders have the option to convert back to the original series of preferred shares every

years.

LRCN Preferred Share Series 26, Series 29, and Series 32 were issued at a price of $

1,000

per share and LRCN Preferred Share Series 30, Series 31, and Series 33 were issued at a

price of US$

1,000

per share. The LRCN Preferred Shares are eliminated on the Bank’s Consolidated

Balance Sheet.

Perpetual Subordinated Capital Notes are denominated in Singapore dollars. Unless redeemed, the interest rate

on Perpetual Subordinated Capital Notes will reset on the next interest

reset date and every

years thereafter to a rate equal to the then prevailing

-year SORA-OIS Rate plus the noted reset spread.

LRCNs may be redeemed at the option of the Bank, with the prior written approval of OSFI, in whole

or in part on prior notice by the Bank as of the earliest redemption date and each

optional redemption date thereafter. Unless redeemed or otherwise stated, the interest

rate on the LRCNs will reset on the next earliest optional redemption date and every

years

thereafter at a rate equal to the then

-year Government of Canada bond yield plus the noted reset spread.

LRCN Series 3, 4, and 6 are denominated in U.S. dollars. Unless redeemed, the interest rate on LRCN

Series 3, 4, and 6 will reset on the next interest reset date and every

years

thereafter to equal the then

-year U.S. Treasury yield plus the noted reset spread.

NVCC Provision

If an NVCC trigger event were to occur, for all series of

Class A First Preferred Shares excluding

the preferred shares issued with respect

to LRCNs, the maximum

number of common shares that could be issued,

assuming there are no declared and unpaid

dividends on the respective series

of preferred shares at the time of

conversion, would be

0.6

billion in aggregate.

The LRCNs, by virtue of the recourse

to the preferred shares held in the Limited

Recourse Trust, include NVCC provisions. For LRCNs, if

an NVCC trigger were

to occur, the maximum number of common shares that

could be issued, assuming there are

no declared and unpaid dividends on the preferred

shares series

issued in connection with such LRCNs,

would be

1.7

billion in aggregate.

For NVCC subordinated notes and debentures

(including Perpetual Notes), if an

NVCC trigger event were to occur, the maximum number of common

that could be issued, assuming there is no accrued

and unpaid interest on the respective

subordinated notes and debentures, would be

3.3

billion in aggregate.

DIVIDEND RESTRICTIONS

The Bank is prohibited by the

Bank Act (Canada)

from declaring dividends on its preferred

or common shares if there are reasonable

grounds for believing that the

Bank is, or the payment would cause the

Bank to be, in contravention of the capital adequacy

and liquidity regulations of the

Bank Act (Canada)

or directions of

OSFI. The Bank does not anticipate that this

condition will restrict it from paying dividends

in the normal course of business. In addition,

the ability to pay dividends

on common shares without the approval of

the holders of the outstanding preferred

shares is restricted unless all dividends on

the preferred shares have been

declared and paid or set apart for payment.

Currently, these limitations do not restrict the payment of dividends

on common shares or preferred shares.

DIVIDENDS

On December 3, 2025, the Board approved

a dividend in an amount of one dollar and

eight cents ($

1.08

) per fully paid common share in the capital

stock of the

Bank for the quarter ending January 31, 2026,

payable on and after January 31, 2026,

to shareholders of record at the close of

business on January 9, 2026.

At October 31, 2025, the quarterly dividend

was $

1.05

per common share. Common share

cash dividends declared and paid during the

year totalled $

4.20

per

share (October 31, 2024 – $

4.08

), representing a payout ratio of

%, at the high end of the Bank’s target payout range

% of adjusted earnings. For cash

dividends payable on the Bank’s preferred shares,

refer to Note 19. As at October 31, 2025,

1,689

million common shares were outstanding

(October 31, 2024 –

1,750

million).

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 72

DIVIDEND REINVESTMENT PLAN

The Bank offers a Dividend Reinvestment Plan (DRIP)

for its common shareholders. Participation

in the plan is optional and under the

terms of the plan, cash

dividends on common shares are used

to purchase additional common shares. At

the option of the Bank, the common shares

may be issued from treasury at an

average market price based on the last

five trading days before the date of the dividend

payment, with a discount of between

% to

% at the Bank’s discretion or

purchased from the open market at market

prices.

During the year ended October 31, 2025,

the Bank satisfied the DRIP requirements

through common shares issued from treasury

with

discount for the first

three months and open market common

share purchases in the last nine months.

During the year ended October 31, 2024,

the Bank satisfied the DRIP

requirements through common shares issued

from treasury with

discount.

NORMAL COURSE ISSUER BID

On August 28, 2023, the Bank announced

that the Toronto Stock Exchange (TSX) and OSFI approved a normal course issuer

bid (2023 NCIB) to repurchase for

cancellation up to

million of its common shares. The 2023 NCIB

commenced on August 31, 2023 and continued

until August 31, 2024. During the year ended

October 31, 2024, the Bank repurchased

49.4

million common shares under the 2023 NCIB,

at an average price of $

80.15

per share for a total amount of

4.0

billion.

On February 24, 2025, the Bank announced

that the TSX and OSFI had approved a normal

course issuer bid (2025 NCIB) to purchase

for cancellation up to

100

million of its common shares for up to $

billion. The 2025 NCIB commenced on

March 3, 2025 and will end on February

28, 2026, or such earlier date as the

Bank may determine. From the commencement

of the 2025 NCIB to October 31, 2025,

the Bank repurchased

64.6

million shares under the program, at an

average price of $

94.29

per share for a total amount of $

6.1

billion.

NOTE 20: INSURANCE

(a)

INSURANCE SERVICE RESULT

Insurance revenue and expenses are presented

on the Consolidated Statement of Income

under Insurance revenue and Insurance

service expenses,

respectively. Net income or expense from reinsurance is presented

in other income (loss).

The following table shows components of the insurance

service result

included in the Consolidated Statement of

Income for the Bank which includes

the results of property and casualty insurance,

life and health insurance, as well as

reinsurance issued and held in Canada and

internationally.

Insurance Service Result

(millions of Canadian dollars)

For the year ended

October 31, 2025

October 31, 2024

Insurance revenue

7,737

6,952

Insurance service expenses

6,089

6,647

Insurance service result before reinsurance

contracts held

1,648

305

Net income (expense) from reinsurance

contracts held

(172)

524

Insurance service result

1,476

829

Net income (expense) from reinsurance

contracts held is comprised of recoveries

from reinsurers offset by ceded premiums. For

the year ended October 31, 2025,

the Bank recognized recoveries from reinsurers

of $

439

million (October 31, 2024 – $

1,054

million) and ceded premiums of $

611

million (October 31, 2024 –

530

million). For the year ended October 31, 2025,

the Bank recognized insurance finance expenses

of $

299

million (October 31, 2024 – $

443

million) from

insurance and reinsurance contracts in other

income (loss). The Bank’s investment return on

securities supporting insurance contracts is

comprised of interest

income reported in net interest income and

fair value changes reported in other income (loss).

Investment return on securities supporting

insurance contracts was

247

million for the year ended October 31, 2025 (October

31, 2024 – $

372

million).

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 73

(b)

INSURANCE CONTRACT LIABILITIES

Insurance contract liabilities are comprised

of amounts related to the LRC, LIC and

other insurance liabilities.

The following table presents movements in

the property and casualty insurance liabilities.

Property and casualty insurance contract

liabilities by LRC and LIC

(millions of Canadian dollars)

For the year ended October 31, 2025

Liabilities for remaining coverage

Liabilities for incurred claims

Total

Excluding

Estimates of the

loss

Loss

present value of

Risk

component

future cash flows

adjustment

Insurance contract liabilities at beginning

of year

714

101

5,989

221

7,025

Insurance revenue

(6,230)

Insurance service expenses:

Incurred claims and other insurance service

expenses

–

(148)

4,420

4,342

Amortization of insurance acquisition cash

flows

864

–

864

Losses (reversal of losses) on onerous

contracts

–

163

–

163

Changes to liabilities for incurred claims

–

(34)

(116)

(150)

Insurance service result

(5,366)

4,386

(46)

(1,011)

Insurance finance expenses

–

332

345

Total changes in the Consolidated Statement of Income

(5,364)

4,718

(35)

(666)

Cash flows:

Premiums received

6,268

–

6,268

Claims and other insurance service expenses

paid

–

(4,576)

–

(4,576)

Acquisition cash flows paid

(912)

–

(912)

Total cash flows

5,356

–

(4,576)

–

780

Insurance contract liabilities at end of year

706

116

6,131

186

7,139

Property and casualty insurance contract

liabilities by LRC and LIC

(millions of Canadian dollars)

For the year ended October 31, 2024

Liabilities for remaining coverage

Liabilities for incurred claims

Total

Excluding

Estimates of the

loss

Loss

present value of

Risk

component

future cash flows

adjustment

Insurance contract liabilities at beginning

of year

630

129

4,740

220

5,719

Insurance revenue

(5,506)

–

(5,506)

Insurance service expenses:

Incurred claims and other insurance service

expenses

–

(145)

5,099

5,050

Amortization of insurance acquisition cash

flows

803

–

803

Losses (reversal of losses) on onerous

contracts

–

117

–

117

Changes to liabilities for incurred claims

–

(65)

(114)

(179)

Insurance service result

(4,703)

(28)

5,034

(18)

285

Insurance finance expenses

–

479

505

Total changes in the Consolidated Statement of Income

(4,696)

(28)

5,513

790

Cash flows:

Premiums received

5,576

–

5,576

Claims and other insurance service expenses

paid

–

(4,264)

–

(4,264)

Acquisition cash flows paid

(796)

–

(796)

Total cash flows

4,780

–

(4,264)

–

516

Insurance contract liabilities at end of year

714

101

5,989

221

7,025

Other insurance contract liabilities were $

139

million as at October 31, 2025 (October 31,

2024 – $

144

million) and include life and health insurance contract

liabilities of $

113

million (October 31, 2024 – $

121

million).

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 74

(c)

PROPERTY AND CASUALTY CLAIMS DEVELOPMENT

The following table shows the estimates of

the insurance liabilities for incurred

claims net of reinsurance assets for incurred

claims (net LIC) with subsequent

developments during the periods and cumulative

payments to date. The original estimates

are evaluated monthly for redundancy or

deficiency. The evaluation is

based on actual payments in full or partial

settlement of claims and current estimates

of the net LIC related to claims still open

or claims still unreported.

Incurred Claims by Accident Year

(millions of Canadian dollars)

Accident Year

2016

and prior

2017

2018

2019

2020

2021

2022

2023

2024

2025

Total

Net ultimate claims cost at

end of accident year

6,645

2,425

2,631

2,727

2,646

2,529

3,242

3,830

4,478

4,397

Revised estimates

One year later

6,327

2,307

2,615

2,684

2,499

2,367

3,182

4,039

4,515

Two years later

5,990

2,258

2,573

2,654

2,412

2,278

3,167

3,994

Three years later

5,647

2,201

2,522

2,575

2,278

2,225

3,165

Four years later

5,440

2,151

2,465

2,489

2,230

2,211

Five years later

5,377

2,108

2,408

2,474

2,224

Six years later

5,315

2,086

2,396

2,471

Seven years later

5,281

2,078

2,399

Eight years later

5,267

2,078

Nine years later

5,266

Current estimates of

cumulative net claims

5,266

2,078

2,399

2,471

2,224

2,211

3,165

3,994

4,515

4,397

Cumulative net claims paid to date

(5,115)

(2,033)

(2,309)

(2,335)

(2,059)

(1,961)

(2,662)

(3,057)

(3,010)

(2,178)

Net undiscounted provision

for unpaid claims

151

136

165

250

503

937

1,505

2,219

6,001

Effect of discounting

(517)

Effect of risk adjustment for

non-financial risk

167

Net liabilities for incurred claims

5,651

Insurance liabilities for incurred claims

6,317

Reinsurance assets for incurred claims

(666)

(d)

RISK ADJUSTMENT FOR NON-FINANCIAL

RISK AND DISCOUNTING

The risk adjustment reflects an amount that

an insurer would reasonably pay to remove

the uncertainty that future cash flows

will exceed the expected value

amount. The Bank has estimated the risk adjustment

for its property and casualty operations’ LIC

using statistical techniques in accordance

with Canadian

accepted actuarial principles to develop potential

future observations and a confidence level

range of 75

to 85

percentile.

Insurance contract liabilities are calculated

by discounting expected future cash flows.

The interest rates used to discount the Bank’s insurance

balances over a

duration of

years range from

2.8

% to

4.1

% as at October 31, 2025 (October

31, 2024 –

3.8

% to

4.5

%).

(e)

SENSITIVITY TO INSURANCE RISK

A variety of assumptions are made related

to the future level of claims, policyholder behaviour, expenses

and sales levels when products are designed

and priced,

as well as when actuarial liabilities are determined.

Such assumptions require a significant amount

of professional judgment. The LIC is

sensitive to certain

assumptions. It has not been possible

to quantify the sensitivity of certain assumptions

such as legislative changes or uncertainty in

the estimation process. Actual

experience may differ from the assumptions

made by the Bank.

For property and casualty insurance, the

main assumption underlying the LIC is that past

claims development experience can be

used to project future claims

development and hence ultimate claims costs.

As such, these methods extrapolate the development

of paid and incurred losses, average costs

per claim, and

claim numbers based on the observed development

of earlier years and expected loss ratios.

Net LIC estimates are based on various quantitative

and qualitative

factors including the discount rate, the risk

adjustment,

reinsurance, trends in claims severity and

frequency,

and other external drivers.

Qualitative and other unforeseen factors could

negatively impact the Bank’s ability to accurately

assess the risk of the insurance policies that

the Bank

underwrites. In addition, there may be

significant lags between the occurrence of

an insured event and the time it is actually

reported to the Bank and additional

lags between the time of reporting and final

settlements of claims.

The following table outlines the sensitivity of

the Bank’s property and casualty LIC to reasonably

possible movements in the discount

rate, risk adjustment, and

the frequency and severity of claims, with

all other assumptions held constant.

Movements in the assumptions may be non-linear.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 75

Sensitivity of Critical Assumptions – Property

and Casualty Insurance

(millions of Canadian dollars)

As at

October 31, 2025

October 31, 2024

Impact on net

income (loss)

before

Impact on

before

Impact on

income taxes

equity

income taxes

equity

Impact of a 1% change

Discount rate

Increase in assumption

135

100

121

Decrease in assumption

(143)

(107)

(129)

(95)

Impact of a 5% change

Frequency of claims

Increase in assumption

(202)

(150)

(182)

(135)

Decrease in assumption

202

150

182

135

Severity of claims

Increase in assumption

(289)

(215)

(288)

(213)

Decrease in assumption

289

215

288

213

Risk adjustment

Increase in assumption

(39)

(29)

(52)

(38)

Decrease in assumption

For life and health insurance, the processes

used to determine critical assumptions

are as follows:

●

Mortality, morbidity, and lapse assumptions are based on industry and historical company

data; and

●

Expense assumptions are based on the annual

expense study.

Sensitivity analysis was performed on

these critical assumptions for the life and health

insurance business and impacts were

deemed not significant to the Bank’s

Consolidated Financial Statements.

(f)

CONCENTRATION OF INSURANCE RISK

Concentration risk is the risk resulting from

large exposures to similar risks that are positively

correlated.

Risk associated with automobile, residential

and other products may vary in relation to the

geographical area of the risk insured. Exposure

to concentrations of

insurance risk, by type of risk, is mitigated by

ceding these risks through reinsurance

contracts, as well as careful selection and implementation

of underwriting

strategies, which is in turn largely achieved

through diversification by line of business and

geographical areas. For automobile insurance,

legislation is in place at a

provincial level and this creates differences in risk

selection and underwriting strategies among

the different provinces.

As at October 31, 2025, for the property

and casualty insurance business,

64.3

% of insurance revenue was mainly derived

from automobile policies

(October 31, 2024 –

65.5

%) followed by residential with

35.3

% (October 31, 2024 –

34.3

%). The distribution by provinces show that business

is mostly

concentrated in Ontario with

51.4

% of insurance revenue (October 31, 2024

–

50.5

%). The Western provinces represented

31.0

% (October 31, 2024 –

31.9

%),

followed by the Atlantic provinces with

10.5

% (October 31, 2024 –

10.6

%), and Québec at

6.7

% (October 31, 2024 –

6.8

%).

Concentration risk is not a major concern

for the life and health insurance business

as it does not have a material level of regional

specific characteristics like

those exhibited in the property and casualty

insurance business. Reinsurance is used

to limit the liability on a single claim and

from a single weather-related event.

Concentration risk is further limited by diversification

across uncorrelated risks. This limits the

impact of a regional pandemic and other

concentration risks.

improve understanding of exposure to this risk,

a pandemic scenario is tested annually.

NOTE 21: SHARE-BASED COMPENSATION

STOCK OPTION PLAN

The Bank maintains a stock option program

for certain key employees. Options on

common shares are granted to eligible employees

of the Bank under the plan

for terms of

ten years

and vest over a

four-year

period. These options provide holders

with the right to purchase common shares of

the Bank at a fixed price equal

to the closing market price of the shares

on the TSX on the day prior to the date the

options were issued. The outstanding options

expire on various dates to

December 12, 2034.

The following table summarizes the Bank’s stock

option activity and related information,

adjusted to reflect the impact of the 2014

stock

dividend on a retrospective basis, for the

years ended October 31, 2025

and October 31, 2024.

Stock Option Activity

(millions of shares and Canadian dollars)

2025

2024

Weighted-

Number

average

Number

average

of shares

exercise price

of shares

exercise price

Number outstanding, beginning of year

14.7

79.17

14.1

76.58

Granted

2.0

75.76

2.6

81.78

Exercised

(2.3)

65.99

(1.7)

60.07

Forfeited/expired

(0.2)

85.29

(0.3)

85.36

Number outstanding, end of year

14.2

80.65

14.7

79.17

Exercisable, end of year

5.2

70.94

5.4

68.51

Available for grant

3.4

5.1

The weighted-average share price for the

options exercised in 2025 was $

93.40

(2024 – $

80.57

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 76

The following table summarizes information

relating to stock options outstanding and

exercisable as at October 31, 2025.

Range of Exercise Prices

(millions of shares and Canadian dollars)

Options outstanding

Options exercisable

Weighted-

average

Weighted-

Number

remaining

average

Number

average

of shares

contractual

exercise

of shares

exercise

outstanding

life (years)

price

exercisable

price

53.15

69.39

1.7

2.3

68.07

1.7

68.07

71.88

72.64

2.2

4.0

72.13

2.2

72.13

72.84

81.78

5.6

7.5

77.67

1.3

72.84

90.55

2.4

7.0

90.55

–

95.33

2.3

6.0

95.33

–

For the year ended October 31, 2025, the Bank

recognized compensation expense for

stock option awards of $

22.9

million (October 31, 2024 – $

34.2

million). For

the year ended October 31, 2025,

2.0

million (October 31, 2024 –

2.6

million) options were granted by the Bank at a

weighted-average fair value of $

12.80

per

option (2024 – $

14.36

per option) estimated using a binomial tree-based

valuation option pricing model.

The following table summarizes the assumptions

used for estimating the fair value of options

for the years ended October 31, 2025 and

October 31, 2024.

Assumptions Used for Estimating the

Fair Value of Options

(in Canadian dollars, except as noted)

2025

2024

Risk-free interest rate

3.08

3.41

Option contractual life

years

Expected volatility

19.47

18.92

Expected dividend yield

3.94

3.78

Exercise price/share price

75.76

81.78

The risk-free interest rate is based on Government

of Canada benchmark bond yields as

at the grant date. Expected volatility is

calculated based on the historical

average daily volatility and expected dividend

yield is based on dividend payouts in the last

fiscal year. These assumptions are measured over a period

corresponding to the option contractual life.

OTHER SHARE-BASED COMPENSATION PLANS

The Bank operates restricted share unit and performance

share unit plans which are offered to certain employees

of the Bank. Under these plans, participants

are

awarded share units equivalent to the Bank’s

common shares that generally vest over

three years

. During the vesting period, dividend equivalents

accrue to the

participants in the form of additional share

units. At the maturity date, the participant receives

cash representing the value of the share

units. The final number of

performance share units will typically vary

from

% to

120

% of the number of units outstanding

at maturity (consisting of initial units awarded

plus additional units

in lieu of dividends) based on the Bank’s total

shareholder return relative to the average of

a peer group of large Canadian financial

institutions.

For the year ended

October 31, 2025, the Bank awarded

12.9

million of such share units at a weighted-average

price of $

76.19

(2024 –

9.9

million units at a weighted-average price of

81.54

). The number of such share units outstanding

under these plans as at October 31, 2025

was

32.2

million (October 31, 2024 –

27.9

million).

The Bank also offers deferred share unit plans

to eligible employees and non-employee directors.

Under these plans, a portion of the participant’s

annual

incentive award may be deferred,

or in the case of non-employee directors,

a portion of their annual compensation

may be delivered as share units equivalent

the Bank’s common shares. The deferred share units

are not redeemable by the participant until

termination of employment or directorship. Once

these conditions

are met, the deferred share units

must be redeemed for cash no later than

the end of the next calendar year. Dividend equivalents accrue

to the participants in the

form of additional units. For the year ended

October 31, 2025, the Bank awarded

0.2

million deferred share units at a weighted-average

price of $

79.30

(2024 –

0.2

million units at a weighted-average price

of $

81.57

). As at October 31, 2025,

5.9

million deferred share units were outstanding

(October 31, 2024 –

6.6

million).

Compensation expense for these plans is recorded

in the year the incentive award is earned

by the plan participant. Changes in the value of

these plans are

recorded, net of the effects of related hedges, on

the Consolidated Statement of Income.

For the year ended October 31, 2025, the Bank

recognized

compensation expense, net of the effects of hedges,

for these plans of $

1,043

million (2024 – $

970

million). The compensation expense recognized

before the

effects of hedges was $

2,390

million (2024 – $

903

million). The carrying amount of the liability relating

to these plans, based on the closing share

price, was

4.4

billion at October 31, 2025 (October

31, 2024 – $

2.7

billion), and is reported in Other liabilities

on the Consolidated Balance Sheet.

EMPLOYEE OWNERSHIP PLAN

The Bank also operates a share purchase plan

available to Canadian employees. Employees

can contribute up to

% of their annual eligible earnings (net

source deductions) to the Employee Ownership

Plan. For participating employees below

the level of Vice President, the Bank matches

100

% of the first $

250

employee contributions each year and the remainder

of employee contributions at

% to an overall maximum of

3.5

% of the employee’s eligible earnings or

2,250

, whichever comes first. The Bank’s contributions

vest once an employee has completed

two years of continuous service with the Bank.

For the year ended

October 31, 2025, the Bank’s contributions totalled $

million (2024 – $

million) and were expensed as salaries and

employee benefits. As at

October 31, 2025, an aggregate of

million (October 31, 2024 –

million) common shares were held under

the Employee Ownership Plan. The shares

in the

Employee Ownership Plan are purchased in

the open market and are considered outstanding

for computing the Bank’s basic and diluted earnings

per share.

Dividends earned on the Bank’s

common shares held by the Employee Ownership

Plan are used to purchase additional common

shares for the Employee

Ownership Plan in the open market.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 77

NOTE 22: EMPLOYEE BENEFITS

PENSION AND OTHER POST-RETIREMENT

BENEFIT PLANS

The Bank sponsors a number of pension and

post-retirement benefit plans for current eligible

and former employees. Pension arrangements

include defined

benefit pension plans, defined contribution

pension plans and supplementary arrangements

that provide pension benefits in excess of

statutory limits. The Bank

also provides certain post-retirement benefits.

The Bank’s principal defined benefit pension plans,

consisting of The Pension Fund Society of

The Toronto-Dominion Bank (the “Society”) and the defined

benefit portion of the TD Pension Plan (Canada)

(the “TDPP DB”), are for eligible Canadian

Bank employees who elected to join the Society

or the TDPP DB. The

Society was closed to new members on January

30, 2009, and the TDPP DB commenced

on March 1, 2009. Effective December 31, 2018,

the TDPP DB was

closed to new employees hired after that

date. All new permanent employees hired

in Canada on or after January 1, 2019 are eligible

to join the defined

contribution portion of the TDPP (the “TDPP

DC”) after one year of service. Benefits

under the principal defined benefit pension plans

are determined based upon

the period of plan participation and the average

salary of the member in the best consecutive

five years in the last ten years of combined plan

membership.

Benefits under the TDPP DC are funded

from the balance of the accumulated

contributions of the member and the Bank plus

the member’s investment earnings.

Annual expense for the TDPP DC is

equal to the Bank’s contributions to the plan.

Funding for the Bank’s principal defined benefit

pension plans is provided by contributions

from the Bank and members of the plans

through a separate trust. In

accordance with legislation, the Bank contributes

amounts, as determined on an actuarial basis,

to the plans and has the ultimate responsibility

for ensuring that

the liabilities of the plans are adequately funded

over time. Any deficits determined

in the funding valuations must generally be

funded over a period not exceeding

fifteen years. The Bank’s funding policy is to

make at least the minimum annual contributions

required by legislation. Any contributions

in excess of the minimum

requirements are discretionary. The principal defined benefit pension

plans are registered with OSFI and

the Canada Revenue Agency and are subject

to the acts

and regulations that govern federally regulated

pension plans. The 2025

and 2024 contributions were made in accordance

with the actuarial valuation reports for

funding purposes as at October 31, 2024 and

October 31, 2023, respectively. Valuations for funding purposes are being prepared as

of October 31, 2025.

Post-retirement defined benefit plans are unfunded

and, where offered, generally include health

care and dental benefits or, to assist with the cost, a benefits

subsidy to be used to reduce the cost of

coverage. Employees must meet certain

age and service requirements to be eligible

for post-retirement benefits and are

generally required to pay a portion of the

cost of the benefits. Effective June 1, 2017, the

Bank’s principal post-retirement defined benefit

plan, covering eligible

Canadian employees, was closed to new employees

hired on or after that date.

(a)

INVESTMENT STRATEGY AND ASSET ALLOCATION

The principal defined benefit pension plans are expected to each achieve a rate of return that meets or exceeds the change in value of the plan’s respective

liabilities over rolling five-year periods. The investments are managed with the primary objective of providing reasonable rates of return, consistent with available

market opportunities, economic conditions, consideration of plan liabilities, prudent portfolio management, and the target risk profiles for the plans.

The asset allocations by asset category for

the principal defined benefit pension plans

are as follows:

Plan Asset Allocation

(millions of Canadian dollars except as noted)

Society

TDPP DB

Target

% of

Fair value

Target

% of

Fair value

As at October 31, 2025

range

total

Quoted

Unquoted

range

total

Quoted

Unquoted

Debt

–

4,172

–

2,245

Equity

124

297

238

Alternative investments

–

1,312

–

894

Other

n/a

–

218

n/a

–

307

Total

100

124

5,999

100

3,684

As at October 31, 2024

Debt

–

4,245

–

2,106

Equity

104

194

106

Alternative investments

–

1,458

–

877

Other

n/a

–

n/a

–

188

Total

100

104

5,983

100

3,277

The principal defined benefit pension plans invest in investment vehicles which may hold shares or debt issued

by the Bank.

The principal defined benefit pension plans’ alternative investments are primarily private equity,

infrastructure, and real estate funds.

Consists mainly of amounts due to and due from brokers for securities traded but not yet settled, bond repurchase

agreements, interest and dividends receivable, and Pension

Enhancement Account assets, which are invested at the members’ discretion in certain mutual and

pooled funds.

Public debt instruments of the Bank’s principal defined

benefit pension plans must meet or exceed

a credit rating of BBB – at the time of

purchase.

The equity portfolios of the principal defined

benefit pension plans are broadly diversified

primarily across small to large capitalization

quality companies with no

individual holding exceeding

% of the equity portfolio or

% of the outstanding shares of any one

company. Foreign equities are included to further diversify the

portfolio. A maximum of

% of the equity portfolio can be invested

in emerging market equities.

Derivatives can be utilized by the principal

defined benefit pension plans provided

they are not used to create financial leverage,

unless the financial leverage is

for risk management purposes. The principal

defined benefit pension plans are permitted

to invest in alternative investments, such as private

equity, infrastructure

equity, and real estate.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 78

(b)

RISK MANAGEMENT PRACTICES

The Bank’s principal defined benefit pension plans

are overseen by a single retirement governance

structure established by the Human Resources

Committee of

the Bank’s Board of Directors. The governance

structure utilizes retirement governance

committees who have responsibility

to oversee plan operations and

investments, acting in a fiduciary capacity. Strategic, material

plan changes require the approval of the

Bank’s Board of Directors.

The principal defined benefit pension plans’ investments

include financial instruments which

are exposed to various risks. These risks include

market risk

(including foreign currency, interest rate, inflation, equity price, and

credit spread risks), credit risk, and liquidity

risk. Key material risks faced by defined benefit

plans are a decline in interest rates or credit

spreads, which could increase the present

value of the projected benefit obligation by

more than the change in the

value of plan assets, and from longevity risk

(that is, lower mortality rates).

Asset-liability matching strategies are employed

to focus on obtaining an appropriate balance

between earning an adequate return

and having changes in

liability values hedged by changes in asset

values.

The principal defined benefit pension plans

manage these financial risks in accordance

with the

Pension Benefits Standards Act, 1985

, applicable regulations,

as well as the plans’ written investment policies.

Specific risk management practices

monitored for the principal defined benefit pension

plans include performance,

credit exposure, and asset mix.

(c)

OTHER SIGNIFICANT PENSION AND POST-RETIREMENT

BENEFIT PLANS

Canada Trust (CT) Pension Plan

As a result of the acquisition of CT Financial

Services Inc., the Bank sponsors a defined benefit

pension plan, which is closed to new

members, but for which

active members continue to accrue benefits.

Funding for the plan is provided by contributions

from the Bank and members of the plan.

TD Insurance Pension Plan

As a result of the acquisition of Meloche

Monnex Inc., the Bank sponsors a defined benefit

pension plan, which is closed to new

members, but for which active

members continue to accrue benefits. Funding

for the plan is provided by contributions

from the Bank.

TD Bank, N.A. Retirement Plans

TD Bank, N.A. and its subsidiaries maintain

a defined contribution 401(k) plan covering

all employees. Annual expense is equal

to the Bank’s contributions to the

plan. TD Bank, N.A. also has frozen defined

benefit pension plans covering certain legacy

TD Banknorth and TD Auto Finance (legacy

Chrysler Financial)

employees.

Government Pension Plans

The Bank also makes contributions to government

pension plans, including the Canada Pension

Plan, Quebec Pension Plan and Social Security

under the

U.S.

Federal Insurance Contributions

Act.

(d)

DEFINED CONTRIBUTION PLAN EXPENSE

The following table summarizes expenses for

the Bank’s defined contribution plans.

Defined Contribution Plan Expenses

(millions of Canadian dollars)

For the years ended October 31

2025

2024

Defined contribution pension plans

362

310

Government pension plans

597

533

Total

959

843

Includes the TDPP DC and the TD Bank, N.A. defined contribution 401(k) plan.

Includes Canada Pension Plan, Quebec Pension Plan, and Social Security under the U.S.

Federal Insurance Contributions

Act

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 79

(e)

DEFINED BENEFIT PLAN FINANCIAL INFORMATION

The following table presents the financial position

of the Bank’s principal pension and post-retirement

defined benefit plans and the Bank’s other material

defined

benefit pension plans for the years ended October

31, 2025 and October 31, 2024. Other

employee defined benefit plans operated

by the Bank and certain of its

subsidiaries are not considered material

for disclosure purposes.

Employee Defined Benefit Plans’ Obligations, Assets,

Funded Status, and Expense

(millions of Canadian dollars, except as noted)

Principal

post-retirement

Principal pension plans

benefit plan

Other pension plans

2025

2024

2025

2024

2025

2024

Change in projected benefit obligation

Projected benefit obligation at beginning of year

8,470

6,833

397

352

2,500

2,264

Service cost – benefits earned

276

217

Interest cost on projected benefit obligation

374

381

116

128

Remeasurement (gain) loss – financial

(15)

1,155

220

Remeasurement (gain) loss – demographic

–

(14)

(1)

Remeasurement (gain) loss – experience

107

(1)

–

(29)

Members’ contributions

109

112

–

Benefits paid

(400)

(355)

(19)

(20)

(161)

(149)

Change in foreign currency exchange rate

–

Past service cost

–

Projected benefit obligation as at October 31

8,921

8,470

405

397

2,459

2,500

Wholly or partially funded projected benefit obligation

8,921

8,470

–

1,858

1,898

Unfunded projected benefit obligation

–

405

397

601

602

Total projected benefit obligation

as at October 31

8,921

8,470

405

397

2,459

2,500

Change in plan assets

Plan assets at fair value at beginning of year

9,418

8,220

–

2,000

1,816

Interest income on plan assets

425

464

–

102

Remeasurement gain (loss) – return on plan assets less

interest income

988

–

177

Members’ contributions

109

112

–

Employer’s contributions

289

–

Benefits paid

(400)

(355)

(19)

(20)

(161)

(149)

Change in foreign currency exchange rate

–

Defined benefit administrative expenses

(10)

(11)

–

(4)

(5)

Plan assets at fair value as at October 31

9,872

9,418

–

2,046

2,000

Excess (deficit) of plan assets at fair value over projected

benefit obligation

951

948

(405)

(397)

(413)

(500)

Effect of asset limitation and minimum funding requirement

–

(26)

(21)

Net defined benefit asset (liability)

951

948

(405)

(397)

(439)

(521)

Recorded in

Other assets in the Bank’s Consolidated Balance Sheet

951

948

–

160

Other liabilities in the Bank’s Consolidated Balance Sheet

–

(405)

(397)

(599)

(615)

Net defined benefit asset (liability)

951

948

(405)

(397)

(439)

(521)

Annual expense

Net employee benefits expense includes the following:

Service cost – benefits earned

276

217

Net interest cost (income) on net defined benefit liability

(asset)

(51)

(83)

Interest cost on asset limitation and minimum funding requirement

–

Past service cost

–

Defined benefit administrative expenses

–

Total

236

189

Actuarial assumptions used to determine the annual expense

Weighted-average discount rate for projected benefit

obligation

4.83

5.66

4.80

5.71

5.06

5.95

Weighted-average rate of compensation increase

2.78

3.00

3.05

1.37

1.35

Assumed life expectancy at age 65, in years

Male aged 65

23.2

21.9

Female aged 65

24.3

23.5

23.4

Male aged 45

24.1

22.7

22.6

Female aged 45

25.2

24.3

Actuarial assumptions used to determine the projected

benefit obligation as at October 31

Weighted-average discount rate for projected benefit

obligation

4.80

4.83

4.70

4.80

4.97

5.06

Weighted-average rate of compensation increase

2.79

2.78

3.00

1.39

1.37

Assumed life expectancy at age 65, in years

Male aged 65

23.3

23.2

23.3

23.2

22.0

21.9

Female aged 65

24.4

24.3

24.4

24.3

23.6

23.5

Male aged 45

24.2

24.1

24.2

24.1

22.7

Female aged 45

25.3

25.2

25.3

25.2

24.4

24.3

The rate of increase for health care costs for the next year used to measure the expected cost of benefits covered

for the principal post-retirement defined benefit plan is

2.46

The rate

is assumed to decrease gradually to

0.89

% by the year 2040 and remain at that level thereafter (2024 –

2.59

% grading to

0.89

% by the year 2040 and remain at that level thereafter).

Includes Canada Trust defined benefit pension plan, TD Banknorth defined benefit pension

plan, TD Auto Finance defined benefit pension plan, TD Insurance defined benefit pension

plan, and supplemental executive defined benefit pension plans.

Relates to the Pension Fund Society that was modified in fiscal 2024.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 80

The Bank recognized the following amounts

on the Consolidated Balance Sheet.

Amounts Recognized in the Consolidated

Balance Sheet

(millions of Canadian dollars)

As at

October 31

2025

2024

Other assets

Principal defined benefit pension plans

951

948

Other defined benefit pension plans

160

Total

1,111

1,042

Other liabilities

Principal post-retirement defined benefit

plan

405

397

Other defined benefit pension plans

599

615

Other employee benefit plans

368

Total

1,372

1,380

Net amount recognized

(261)

(338)

Consists of other pension and other post-retirement benefit plans operated by the Bank and its subsidiaries that

are not considered material for disclosure purposes.

The following table summarizes the remeasurements

recognized in OCI for the Bank’s principal pension

and post-retirement defined benefit plans and

certain of

the Bank’s other material defined benefit pension plans.

Amounts Recognized in Other Comprehensive

Income for Remeasurement of Defined

Benefit Plans

1,2

(millions of Canadian dollars)

Principal

post-retirement

Other

Principal pension plans

benefit plan

pension plans

For the years ended October 31

2025

2024

2025

2024

2025

2024

Remeasurement gains (losses) – financial

(1,155)

(5)

(40)

(16)

(220)

Remeasurement gains (losses) – demographic

–

Remeasurement gains (losses) – experience

(107)

(92)

–

(20)

Remeasurement gains (losses) – return

plan assets less interest income

986

–

177

Changes in asset limitation and minimum funding

requirement

–

206

–

(4)

Total

(50)

(55)

(4)

(40)

(27)

Amounts are presented on a pre-tax basis.

Excludes net remeasurement gains (losses) recognized in OCI in respect of other employee defined

benefit plans operated by the Bank and certain of its subsidiaries not considered

material for disclosure purposes totalling $

million (2024 – ($

) million).

(f)

CASH FLOWS

During the year ended October 31, 2026,

the Bank expects to contribute $

190

million to its principal defined benefit pension

plans, $

million to its principal post-

retirement defined benefit plan, and $

million to its other defined benefit pension

plans. Future contribution amounts

may change upon the Bank’s review of its

contribution levels during the year.

The following table summarizes the expected

future benefit payments for the next 10 years.

Expected Future Benefit Payments

(millions of Canadian dollars)

Principal

post-retirement

pension plans

benefit plan

Other pension

plans

Benefit payments expected to be paid

in:

2026

435

165

2027

458

167

2028

484

168

2029

506

169

2030

527

170

2031-2035

2,918

134

830

Total

5,328

252

1,669

(g)

MATURITY PROFILE

The breakdown of the projected benefit obligations

between active, deferred, and retired

members is as follows:

Disaggregation of Projected Benefit Obligation

(millions of Canadian dollars)

Principal

post-retirement

pension plans

benefit plan

Other pension plans

As at October 31

2025

2024

2025

2024

2025

2024

Active members

5,956

5,722

170

163

472

488

Deferred members

633

543

–

456

373

Retired members

2,332

2,205

235

234

1,531

1,639

Total

8,921

8,470

405

397

2,459

2,500

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 81

The weighted-average duration of the projected

benefit obligations is as follows:

Duration of Projected Benefit Obligation

(number of years)

Principal

pension

post-retirement

plans

benefit plan

Other pension plans

As at October 31

2025

2024

2025

2024

2025

2024

Weighted-average duration

(h)

SENSITIVITY ANALYSIS

The following table provides the sensitivity

of the projected benefit obligation for the

Bank’s principal defined benefit pension plans,

the principal post-retirement

defined benefit plan, and the Bank’s significant

other defined benefit pension plans to actuarial

assumptions considered significant by the Bank.

These include

discount rate, rates of compensation increase,

life expectancy, and health care cost initial trend rates, as applicable.

The sensitivity analysis provided in the table

should be used with caution, as it is hypothetical

and the impact of changes in each significant

assumption may not be linear. For each sensitivity test,

the impact

of a reasonably possible change in a single

factor is shown with other assumptions left

unchanged. Actual experience may result in

simultaneous changes in a

number of key assumptions, which could

magnify or diminish certain sensitivities.

Sensitivity of Significant Defined Benefit

Plan Actuarial Assumptions

(millions of Canadian dollars, except

as noted)

As at

October 31, 2025

Obligation Increase (Decrease)

Principal

post-

Other

pension

retirement

pension

plans

benefit plan

plans

Impact of an absolute change in

significant actuarial assumptions

Discount rate

1% decrease in assumption

1,280

286

1% increase in assumption

(1,017)

(43)

(237)

Rates of compensation increase

1% decrease in assumption

(240)

–

(23)

1% increase in assumption

213

–

Life expectancy

1 year decrease in assumption

(157)

(11)

(76)

1 year increase in assumption

152

Health care cost initial trend rate

1% decrease in assumption

n/a

(7)

n/a

1% increase in assumption

n/a

An absolute change in this assumption is immaterial.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 82

NOTE 23: INCOME TAXES

The provision for (recovery of) income

taxes is comprised of the following:

Provision for (Recovery of) Income Taxes

(millions of Canadian dollars)

For the years ended October 31

2025

2024

Provision for (recovery of) income taxes

– Consolidated Statement of Income

Current income taxes

Provision for (recovery of) income taxes

for the current period

4,281

3,956

Adjustments in respect of prior years and

other

(107)

(204)

Total current income taxes

4,174

3,752

Deferred income taxes

Provision for (recovery of) deferred income

taxes related to the origination

and reversal of temporary differences

(778)

(1,254)

Effect of changes in tax rates

(45)

(13)

Adjustments in respect of prior years and

other

206

Total deferred income taxes

(764)

(1,061)

Total provision for (recovery of) income taxes – Consolidated Statement

of Income

3,410

2,691

Provision for (recovery of) income taxes

– Statement of Other Comprehensive Income

Current income taxes

628

767

Deferred income taxes

323

183

Total provision for (recovery of) income taxes – Statement of Other

Comprehensive Income

951

950

Income taxes – other items including

business combinations and other adjustments

Current income taxes

(134)

(38)

Deferred income taxes

(7)

(12)

(141)

(50)

Total provision for (recovery of) income taxes

4,220

3,591

Current income taxes

Federal

2,078

1,712

Provincial

1,454

1,221

Foreign

1,136

1,548

4,668

4,481

Deferred income taxes

Federal

(162)

Provincial

(132)

Foreign

(154)

(1,036)

(448)

(890)

Total provision for (recovery of) income taxes

4,220

3,591

The Bank’s statutory and effective tax rate is outlined

in the following table.

Reconciliation to Statutory Income Tax Rate

(millions of Canadian dollars, except

as noted)

2025

2024

Income taxes at Canadian statutory income

tax rate

6,572

27.8

3,009

27.8

Increase (decrease) resulting from:

Dividends received

(13)

(0.1)

(28)

(0.3)

Rate differentials on international operations

(3,037)

(12.8)

(270)

(2.5)

Other – net

(112)

(0.5)

(20)

(0.2)

Provision for income taxes and effective

income tax rate

3,410

14.4

2,691

24.8

The 2025 amount includes the Pillar Two Global Minimum Tax

impact to provision for income taxes as discussed in the International Tax

Reform – Pillar Two Global Minimum Tax

section

below.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 83

International Tax Reform – Pillar Two Global Minimum Tax

On December 20, 2021, the OECD published

Pillar Two model rules as part of its efforts toward international

tax reform. The Pillar Two model rules provide for the

implementation of a 15% global minimum

tax for large multinational enterprises,

which is to be applied on a jurisdiction-by-jurisdiction

basis. Pillar Two legislation

was enacted in Canada on June 20, 2024

under Bill C-69, which includes the

Global Minimum Tax Act

addressing the Pillar Two model rules. Similar legislation

has passed in other jurisdictions in which

the Bank operates and will result in additional

taxes being paid in these countries. The rules

were effective and

implemented by the Bank on November 1, 2024.

The IASB previously issued amendments

to IAS 12

Income Taxes

for a temporary mandatory exception

from the

recognition and disclosure of deferred

taxes related to the implementation of Pillar

Two model rules, which the Bank has applied. For the year ended

October 31, 2025, the Bank’s effective tax rate increased

by approximately

0.3

% due to Pillar Two taxes.

Other Tax Matters

The Canada Revenue Agency (CRA), Revenu

Québec Agency (RQA) and Alberta Tax and Revenue Administration (ATRA) are denying certain

dividend and

interest deductions claimed by the Bank.

During the year ended October 31, 2025,

the CRA and the ATRA reassessed the Bank for a total of $

million of

additional income tax and interest in respect

of the 2019 and 2020 taxation years. As at

October 31, 2025, the CRA has reassessed

the Bank for $

1,676

million for

the years 2011 to 2020, the RQA has reassessed the Bank for $

million for the years 2011 to 2018, and the ATRA has reassessed the Bank for $

million for

the years 2011 to 2020. In total, the Bank has been reassessed for

1,799

million of income tax and interest. The Bank

expects to continue to be reassessed

for

open years. The Bank is of the view that its

tax filing positions were appropriate and

filed a Notice of Appeal with the Tax Court of Canada on March 21, 2023.

Deferred tax assets and liabilities comprise of

the following:

Deferred Tax Assets and Liabilities

(millions of Canadian dollars)

As at

October 31

2025

2024

Deferred tax assets

Allowance for credit losses

1,760

1,592

Trading loans

Employee benefits

1,089

1,036

Losses available for carry forward

Tax credits

Land, buildings, equipment, other depreciable

assets, and right-of-use assets

437

366

Securities

478

589

Deferred income

359

353

Intangibles

202

Other

923

727

Total deferred tax assets

5,399

4,920

Deferred tax liabilities

Pensions

Goodwill

223

202

Total deferred tax liabilities

314

283

Net deferred tax assets

5,085

4,637

Reflected on the Consolidated Balance Sheet

as follows:

Deferred tax assets

5,388

4,937

Deferred tax liabilities

303

300

Net deferred tax assets

5,085

4,637

Included in Other liabilities on the Consolidated Balance Sheet.

The amount of temporary differences, unused tax

losses, and unused tax credits for which

no deferred tax asset is recognized on the

Consolidated Balance Sheet

was $

735

million as at October 31, 2025 (October 31,

2024 – $

658

million), of which $

million (October 31, 2024 – $

million) is scheduled to expire within

five

years.

Certain taxable temporary differences associated

with the Bank’s investments in subsidiaries, branches

and associates, and interests in joint ventures

did not

result in the recognition of deferred tax liabilities

as at October 31, 2025. The total amount

of these temporary differences was $

billion as at October 31, 2025

(October 31, 2024 – $

billion).

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 84

The movement in the net deferred tax asset

for the years ended October 31, 2025 and

October 31, 2024, was as follows:

Deferred Income Tax Expense (Recovery)

(millions of Canadian dollars)

For the years ended October 31

2025

2024

Consolidated

Other

Business

Consolidated

Other

Business

statement of

comprehensive

combinations

statement of

comprehensive

combinations

income

and other

Total

income

and other

Total

Deferred income tax expense

(recovery)

Allowance for credit losses

(168)

–

(168)

(126)

–

(126)

Trading loans

–

(1)

–

(1)

Employee benefits

(55)

–

(53)

(154)

(15)

–

(169)

Losses available for carry

forward

–

Tax credits

–

(43)

–

(43)

Land, buildings, equipment, other depreciable

assets, and right-of-use assets

(71)

–

(71)

105

–

105

Securities

(219)

330

–

111

(494)

219

–

(275)

Deferred (income) expenses

(6)

–

(6)

(591)

–

(591)

Intangibles

(110)

–

(110)

(102)

–

(102)

Other deferred tax assets

(189)

–

(7)

(196)

291

–

(12)

279

Pensions

(9)

–

(56)

(21)

–

(77)

Goodwill

–

Total deferred income tax

expense (recovery)

(764)

323

(7)

(448)

(1,061)

183

(12)

(890)

NOTE 24: EARNINGS PER SHARE

Basic earnings per share is calculated by

dividing net income attributable to common

shareholders by the weighted-average number

of common shares

outstanding for the period.

Diluted earnings per share is calculated using

the same method as basic earnings per

share except that certain adjustments are made

to net income

attributable to common shareholders and

the weighted-average number of shares outstanding

for the effects of all dilutive potential common

shares that are

assumed to be issued by the Bank.

The following table presents the Bank’s basic and

diluted earnings per share for the years ended

October 31, 2025 and October 31, 2024.

Basic and Diluted Earnings Per Share

(millions of Canadian dollars, except

as noted)

For the years ended October 31

2025

2024

Basic earnings per share

Net income attributable to common shareholders

19,973

8,316

Weighted-average number of common shares outstanding

(millions)

1,726.3

1,758.8

Basic earnings per share

(Canadian dollars)

11.57

4.73

Diluted earnings per share

Net income attributable to common shareholders

19,973

8,316

Net income available to common shareholders

including impact of dilutive securities

19,973

8,316

Weighted-average number of common shares outstanding

(millions)

1,726.3

1,758.8

Effect of dilutive securities

Stock options potentially exercisable (millions)

1.7

1.2

Weighted-average number of common shares outstanding

– diluted (millions)

1,728.0

1,760.0

Diluted earnings per share

(Canadian dollars)

11.56

4.72

For the year ended October 31, 2025, the computation of diluted earnings per share excluded average options

outstanding of

2.3

million with a weighted-average exercise price of $

95.33

as the option price was greater than the average market price of the Bank’s common

shares. For the year ended October 31, 2024, the computation of diluted earnings per share

excluded average options outstanding of

6.9

million with an exercise price of $

89.49

, as the option price was greater than the average market price of the Bank’s common

shares.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 85

NOTE 25: PROVISIONS, CONTINGENT LIABILITIES,

COMMITMENTS, GUARANTEES, PLEDGED

ASSETS, AND COLLATERAL

(a)

PROVISIONS

The following table summarizes

the Bank’s provisions recorded in other liabilities.

Provisions

(millions of Canadian dollars)

Legal, Regulatory,

Restructuring

and Other

Total

Balance as at November 1, 2024

236

2,396

2,632

Additions

701

143

844

Amounts used

(492)

(2,272)

(2,764)

Release of unused amounts

(15)

(55)

(70)

Foreign currency translation adjustments

and other

(12)

Balance as at October 31, 2025, before

allowance for

credit losses for off-balance sheet instruments

418

265

683

Add: Allowance for credit losses for off-balance

sheet instruments

1,052

Balance as at October 31, 2025

1,735

Refer to Note 8 for further details.

(b)

RESTRUCTURING CHARGES

The Bank continued to undertake certain

measures in the fourth quarter of 2025 to reduce

its cost base and achieve greater efficiency. In connection with

this

program, the Bank incurred $

686

million pre-tax of restructuring charges during

the year ended October 31, 2025 (October

31, 2024 – $

566

million). The

restructuring charges primarily relate to: (i)

employee severance and other personnel-related

costs recorded as provisions; (ii) asset impairment

and other

rationalization, including certain business

wind-downs and (iii) real estate optimization

mainly recorded as a reduction to buildings

and land.

(c)

LEGAL AND REGULATORY MATTERS

In the ordinary course of business, the Bank

and its subsidiaries are involved in various

legal and regulatory actions, including but

not limited to civil claims and

lawsuits, regulatory examinations, investigations,

audits, and requests for information by

governmental, regulatory and self-regulatory

agencies and law

enforcement authorities in various jurisdictions,

in respect of our businesses and compliance

programs. The Bank establishes provisions

when it becomes

probable that the Bank will incur a loss and

the amount can be reliably estimated.

The Bank also estimates the aggregate range

of reasonably possible losses

(RPL) in its legal and regulatory actions (that

is, those which are neither probable nor

remote), in excess of provisions. However, the Bank does

not disclose the

specific possible loss associated with each underlying

matter given the substantial uncertainty associated

with each possible loss as described below and

the

negative consequences to the Bank’s resolution

of the matters that comprise the

RPL should individual possible losses be disclosed.

As at October 31, 2025, the

Bank’s RPL is from

zero

to approximately $

440.7

million (October 31, 2024 – from

zero

to approximately $

625

million). The Bank’s provisions and RPL represent

the Bank’s best estimates based upon currently available

information for actions for which estimates

can be made, but there are a number of factors

that could

cause the Bank’s actual losses to be significantly

different from its provisions or RPL. For example,

the Bank’s estimates involve significant judgment

due to the

varying stages of the proceedings, the existence

of multiple defendants in many proceedings

whose share of liability has yet to be determined,

the numerous yet-

unresolved issues in many of the proceedings,

some of which are beyond the Bank’s control and/or

involve novel legal theories and interpretations,

the attendant

uncertainty of the various potential outcomes

of such proceedings, and the fact that the underlying

matters will change from time to time. In addition,

some actions

seek very large or indeterminate damages.

Based on the Bank’s current knowledge, and

subject to the factors listed above as

well as other uncertainties inherent

in litigation and regulatory matters, other

than as described below, since October 31, 2025, no other

legal or regulatory matter has arisen or progressed

to the point

that it would reasonably be expected to result

in a material financial impact to the

Bank.

As previously disclosed, on October 10, 2024,

the Bank announced that, following active

cooperation and engagement with authorities and

regulators, it

reached a resolution (the “Global Resolution”)

of previously disclosed investigations related

to its U.S. Bank Secrecy Act (BSA) and Anti-Money

Laundering (AML)

compliance programs (collectively, the “U.S. BSA/AML program”).

The Bank and certain of its U.S. subsidiaries

consented to orders with the Office of the

Comptroller of the Currency (OCC), the Federal

Reserve Board, and the Financial Crimes

Enforcement Network and entered into plea agreements

with the

Department of Justice (DOJ), Criminal

Division, Money Laundering and Asset

Recovery Section and the United States

Attorney’s Office for the District of New

Jersey. Details of the Global Resolution include: (i) a total payment

of US$

3.088

billion ($

4.233

billion), all of which was provisioned during

the 2024 fiscal year;

(ii) TD Bank, N.A. (TDBNA) pleading guilty

to one count of conspiring to fail to maintain

an adequate AML program, failing

to file accurate currency transaction

reports (CTRs) and launder money and

TD Bank US Holding Company (TDBUSH)

pleading guilty to two counts of causing

TDBNA to fail to maintain an adequate

AML program and to fail to file accurate

CTRs; (iii) requirements to remediate the

Bank’s U.S. BSA/AML program; (iv) a requirement

to prioritize the funding and

staffing of the remediation, which includes Board

certifications for dividend distributions

from certain of the Bank’s U.S. subsidiaries to the

Bank; (v) formal

oversight of the U.S. BSA/AML remediation

through an independent compliance monitorship;

(vi) a prohibition against the average combined

total assets of TD’s

two U.S. banking subsidiaries (TDBNA and

TD Bank USA, N.A.) (collectively, the “U.S. Bank”) exceeding

US$

434

billion (representing the combined total assets

of the U.S. Bank as at September 30, 2024)

(the “Asset Limitation”), and if the

U.S. Bank does not achieve compliance with

all actionable articles in the OCC

consent orders (and for each successive

year that the U.S. Bank remains non-compliant),

the OCC may require the U.S. Bank to

further reduce total consolidated

assets by up to

%; (vii) the U.S. Bank being subject to OCC

supervisory approval processes for any

additions of new bank products, services,

markets, and

stores prior to the OCC’s acceptance of the

U.S. Bank’s improved AML policies and procedures,

to ensure the AML risk of new initiatives is appropriately

considered and mitigated; (viii) requirements

for the Bank and TD Group U.S. Holdings,

LLC (TDGUS) to retain a third party

to assess the effectiveness of the

corporate governance and U.S. management

structure and composition to adequately

oversee U.S. operations; (ix) requirements

to comply with the terms of the

plea agreements with the DOJ during a five-year

term of probation (which could be extended

as a result of the Bank failing to complete

the compliance

undertakings, failing to cooperate or to report

alleged misconduct as required, or

committing additional crimes); (x) an ongoing

obligation to cooperate with DOJ

investigations; and (xi) an ongoing obligation

to report evidence or allegations of violations

by the Bank, its affiliates, or their employees

that may be a violation of

U.S. federal law. The Bank is focused on meeting the

terms of the consent orders and plea agreements,

including meeting its requirements to remediate

the

Bank’s U.S. BSA/AML compliance programs.

During the first fiscal quarter of 2025, the

Bank fully paid the remainder of the monetary penalty

owed pursuant to the

consent orders and plea agreements that

were entered into as part of the Global Resolution.

The payment was covered by provisions previously

taken by the Bank

for this matter.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 86

As previously disclosed, the Bank and

some former and current directors, officers and employees

have been named as defendants in proposed

class action

lawsuits in the United States and Canada

purporting to be brought on behalf of

the Bank’s shareholders alleging, among other things,

that a decline in the price of

the Bank’s shares was the result of misleading disclosures

with respect to the Bank’s AML compliance programs

and/or the potential outcomes of the government

agencies’ or regulators’ investigations.

The two proposed class actions filed in

the United States have been consolidated

under the caption Tiessen v. The

Toronto-Dominion Bank, et al., in the United States District Court for the

Southern District of New York, and a consolidated amended complaint

has been filed

which names TD Bank, N.A., TDBUSH,

and certain former and current officers as

defendants. On May 30, 2025, the defendants

filed motions to dismiss in the

Tiessen case. Out of the three proposed class actions

in Ontario, Parkin v. The Toronto-Dominion Bank, et al., has been identified as the lead action

with the other

two Ontario actions being stayed. There remains

one further proposed class action in

Quebec which has been stayed. A putative shareholder

derivative action,

captioned Rubin v. Masrani, et al., has also been filed purportedly

on behalf of TD in the United States

in the Supreme Court of the State of

New York, New York

County, against certain former and current TD directors, officers and employees,

and certain of TD’s U.S. affiliates and subsidiaries.

The complaint asserts alleged

breaches of duties and other claims against

the individual defendants in connection with

the Bank’s U.S. BSA/AML compliance programs.

On October 31, 2025,

TD filed a motion to dismiss the Rubin action.

Certain purported TD shareholders have

also filed an application in the Ontario

Superior Court of Justice (The

Trustees of International Brotherhood of Electrical Workers, et

al., v. The Toronto-Dominion Bank, et al.) seeking leave to bring a shareholder derivative action

the Delaware Court of Chancery on behalf

of TD and TDBUSH against certain current

and former directors and officers. All of the proceedings

are still in early

stages and none of the proposed class action

lawsuits have been certified to proceed

as a class action. Losses or damages

cannot be estimated at this time.

As previously disclosed, the Bank has been

named as defendant in a purported class

action lawsuit in the United States purporting

to be brought on behalf of

First Horizon shareholders alleging that a decline

in the price of First Horizon shares

was the result of alleged misleading disclosures

the Bank made with respect

to its U.S. BSA/AML compliance programs

and its effect on the Bank’s contemplated

merger with First Horizon. The lawsuit also names

some of the Bank’s former

and current officers and a former employee as defendants.

On November 26, 2025, the court dismissed

plaintiffs’ complaint, but gave plaintiffs a final opportunity

to amend their complaint again to attempt

to address its deficiencies. These proceedings

are still in early stages and have not been

certified to proceed as a class

action. Losses or damages cannot be estimated

at this time.

As previously disclosed, the Bank is a defendant

in Canada and/or the United States in a

number of matters brought by customers, including

class actions,

alleging claims in connection with various

fees, practices and credit decisions. The

cases are in various stages of maturity and

include, among others: a Quebec

action against members of the financial

services industry (including the Bank) regarding

the existence and amount of the insufficient or

non-sufficient funds fee, a

Quebec action against certain brokers (including

TD Direct Investing) regarding disclosure

of foreign conversion fees, and a Quebec action

against members of

the automobile insurance industry (including

Primmum Insurance Company) regarding

underwriting practices in Quebec.

As previously disclosed, on September 30,

2024, TD Securities (USA) LLC (TDS-US)

entered into a Deferred Prosecution

Agreement (DPA) with the U.S. DOJ

related to the actions of a former TDS trader. Pursuant to

the terms of the DPA, TDS-US agreed to pay total monetary sanctions

of approximately US$

15.5

million,

which consists of a criminal penalty, forfeiture and victim compensation.

TDS-US and, in certain instances, TD Group

US Holdings LLC, further agreed to abide by

certain cooperation, reporting and compliance

obligations in connection with the DPA. These include, but are not

limited to: (i) an ongoing obligation to cooperate

with DOJ investigations; (ii) an ongoing obligation

to report evidence or allegations of violations

by TDS-US of certain federal statutes;

(iii) the implementation and

maintenance of a corporate compliance program

that meets certain enumerated standards;

and (iv) an ongoing obligation to regularly

report to the DOJ on its

efforts to bolster its compliance program. TDS-US

also resolved investigations by the U.S.

Securities and Exchange Commission

(SEC) and the Financial Industry

Regulatory Authority (FINRA) relating

to the actions of the former TDS-US trader. As part of the resolutions,

TDS-US agreed to pay approximately US$

million in

total monetary sanctions to the SEC

and US$

million to FINRA.

As previously disclosed, the Bank was named

as a defendant in Rotstain v. Trustmark National Bank, et al., a putative

class action lawsuit in the United States

District Court for the Northern District of

Texas related to a US$

7.2

billion Ponzi scheme perpetrated by

R. Allen Stanford, the owner of Stanford

International

Bank, Limited, an offshore bank based in Antigua.

In fiscal year 2023, the Bank reached a settlement

agreement pursuant to which the Bank agreed

to pay

US$

1.205

billion to the U.S. Receiver to resolve

all claims against the Bank arising from or

related to R. Allen Stanford, including

the claims asserted in the

Rotstain et al. v. Trustmark National Bank et al. and Smith et al. v. Independent Bank actions. Under

the terms of the agreement, all involved parties

have agreed

to a bar order dismissing and releasing all

current or future claims arising from or

related to R. Allen Stanford. On May 31, 2024,

the claims against the Bank were

dismissed with prejudice in Rotstain

v. Trustmark National Bank, et al. This brings to a close the Stanford litigation

in the United States. A case regarding

the same

facts was also brought in Ontario by the Joint

Liquidators of Stanford International Bank

Ltd. appointed by the Eastern Caribbean

Supreme Court, under the title

McDonald v. The Toronto-Dominion Bank; on July 20, 2023, the Canadian proceeding ended

following the Supreme Court of Canada’s dismissal

of an application

for leave to appeal by the Joint Liquidators.

As previously disclosed, in the third quarter

of 2024, the Bank and certain of its subsidiaries

resolved the investigations by the SEC

and the Commodity Futures

Trading Commission concerning compliance with records

preservation requirements relating

to business communications exchanged on

unapproved electronic

channels. The Bank and its subsidiaries in the

aggregate paid penalties totaling US$

124.5

million, for which the Bank was fully provisioned,

and agreed to various

other customary terms similar to those

imposed on other financial institutions

that have resolved similar investigations.

As previously disclosed, in the second quarter

of 2024, the Bank and certain of its subsidiaries

reached a settlement in principle relating to a

civil matter, pursuant

to which the Bank recorded a provision of $

274

million.

Refer to Note 23 for disclosures related

to tax matters.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 87

(d)

COMMITMENTS

Credit-related Arrangements

In the normal course of business, the Bank

enters into various commitments and

contingent liability contracts. The primary purpose

of these contracts is to make

funds available for the financing needs of

customers. The Bank’s policy for requiring

collateral security with respect to these contracts

and the types of collateral

security held is generally the same as for loans

made by the Bank.

Financial and performance standby letters

of credit represent irrevocable assurances

that the Bank will make payments in the event

that a customer cannot

meet its obligations to third parties and they

carry the same credit risk, recourse,

and collateral security requirements as loans

extended to customers.

Performance standby letters of credit are

considered non-financial guarantees as payment

does not depend on the occurrence of

a credit event and is generally

related to a non-financial trigger event.

Documentary and commercial letters of

credit are instruments issued on behalf

of a customer authorizing a third party to

draw drafts on the Bank up to a certain

amount subject to specific terms and conditions.

The Bank is at risk for any drafts drawn

that are not ultimately settled by the customer, and the amounts

are

collateralized by the assets to which

they relate.

Commitments to extend credit represent unutilized

portions of authorizations to extend credit

in the form of loans. A discussion on the

types of liquidity facilities

the Bank provides to its securitization

conduits is included in Note 10.

The values of credit instruments reported as

follows represent the maximum amount

of additional credit that the Bank could

be obligated to extend should

contracts be fully utilized.

Credit Instruments

(millions of Canadian dollars)

As at

October 31

2025

2024

Financial and performance standby letters

of credit

48,348

44,463

Documentary and commercial letters

of credit

321

337

Commitments to extend credit

Original term-to-maturity of one year or less

96,042

76,060

Original term-to-maturity of more than one

year

244,078

245,846

Total

388,789

366,706

Commitments to extend credit exclude personal lines of credit and credit card lines, which are unconditionally cancellable

at the Bank’s discretion at any time.

In addition, as at October 31, 2025, the Bank

is committed to fund $

617

million (October 31, 2024 – $

594

million) of private equity investments.

Long-term Commitments or Leases

The Bank has obligations under long-term non-cancellable

leases for premises and equipment.

The maturity profile for undiscounted lease liabilities

is $

million

for 2026, $

128

million for 2027, $

186

million for 2028, $

359

million for 2029, $

482

million for 2030, $

5,490

million for 2031 and thereafter. Total lease payments,

including $

million (October 31, 2024 – $

million) paid for short-term and low-value asset

leases, for the year ended October 31,

2025, were $

833

million

(October 31, 2024 – $

829

million).

(e)

ASSETS SOLD WITH RECOURSE

In connection with its securitization activities,

the Bank typically makes customary representations

and warranties about the underlying assets

which may result in

an obligation to repurchase the assets. These

representations and warranties attest that

the Bank, as the seller, has executed the sale of assets

in good faith, and

in compliance with relevant laws and contractual

requirements. In the event that they do not

meet these criteria, the loans may be required

to be repurchased by

the Bank.

(f)

GUARANTEES

In addition to financial and performance

standby letters of credit, the following types

of transactions represent the principal guarantees

that the Bank has entered

into.

Credit Enhancements

The Bank guarantees payments to counterparties

in the event that third-party credit enhancements

supporting asset pools are insufficient.

Indemnification Agreements

In the normal course of operations, the Bank

provides indemnification agreements

to various counterparties in transactions such as

service agreements, leasing

transactions, and agreements relating

to acquisitions and dispositions. Under these agreements,

the Bank is required to compensate counterparties

for costs

incurred as a result of various contingencies

such as changes in laws and regulations

and litigation claims. The nature of certain indemnification

agreements

prevent the Bank from making a reasonable

estimate of the maximum potential amount

that the Bank would be required to pay such

counterparties.

The Bank also indemnifies directors, officers,

and other persons, to the extent permitted by

law, against certain claims that may be made against

them as a

result of their services to the Bank or, at the Bank’s request, to

another entity.

(g)

PLEDGED ASSETS AND COLLATERAL

In the ordinary course of business, securities

and other assets are pledged against liabilities

or contingent liabilities, including repurchase

agreements,

securitization liabilities, covered bonds,

obligations related to securities sold

short, and securities borrowing transactions.

Assets are also deposited for the

purposes of participation in clearing and payment

systems and depositories or to have access

to the facilities of central banks in foreign jurisdictions,

or as security

for contract settlements with derivative exchanges

or other derivative counterparties.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 88

Details of assets pledged against liabilities

and collateral assets held or repledged are

shown in the following table:

Sources and Uses of Pledged Assets

and Collateral

(millions of Canadian dollars)

As at

October 31

2025

2024

Sources of pledged assets and collateral

Bank assets

Interest-bearing deposits with banks

5,700

6,161

Loans

213,125

205,337

Securities

236,430

240,425

Other assets

262

238

455,517

452,161

Third-party assets

Collateral received and available for sale or

repledging

439,278

364,178

Less: Collateral not repledged

(84,094)

(73,996)

355,184

290,182

810,701

742,343

Uses of pledged assets and collateral

Derivatives

18,709

15,964

Obligations related to securities sold

under repurchase agreements

204,710

186,777

Securities borrowing and lending

170,642

137,292

Obligations related to securities sold

short

37,320

34,336

Securitization

44,674

36,806

Covered bond

69,695

76,698

Clearing systems, payment systems, and depositories

11,048

10,540

Foreign governments and central banks

Other

95,851

124,408

652,669

622,847

Assets pledged but not encumbered

158,032

119,496

Total

810,701

742,343

Includes collateral received from reverse repurchase agreements, securities lending,

margin loans, and other client activity.

Includes $

billion of on-balance sheet assets that the Bank has pledged and that the counterparty can subsequently repledge

as at October 31, 2025 (October 31, 2024 – $

63.7

billion).

Represents assets pledged as pre-positioned collateral or to generate unused borrowing capacity with the U.S. Federal Reserve

Bank and the FHLB system.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 89

NOTE 26: RELATED PARTY TRANSACTIONS

Parties are considered to be related if one party

has the ability to directly or indirectly

control the other party or exercise significant influence

over the other party in

making financial or operational decisions.

The Bank’s related parties include key management

personnel, their close family members and their related

entities,

subsidiaries, associates, joint ventures, and

post-employment benefit plans for the Bank’s employees.

TRANSACTIONS WITH KEY MANAGEMENT

PERSONNEL, THEIR CLOSE FAMILY MEMBERS,

AND THEIR RELATED ENTITIES

Key management personnel are those persons

having authority and responsibility

for planning, directing,

and controlling the activities of the Bank, directly

indirectly. The Bank considers certain of its officers and directors to be

key management personnel. The Bank

makes loans to its key management personnel,

their

close family members,

and their related entities on market

terms and conditions with the exception of

banking products and services for key

management

personnel, which are subject to approved policy

guidelines that govern all employees.

As at October 31, 2025, $

131

million (October 31, 2024 – $

million) of related party loans were outstanding

from key management personnel, their

close family

members,

and their related entities. This amount

also includes balances from certain retired

key management personnel.

COMPENSATION

The remuneration of key management personnel

was as follows:

Compensation

(millions of Canadian dollars)

For the years ended October 31

2025

2024

Short-term employee benefits

Post-employment benefits

Share-based payments

Total

109

In addition, the Bank offers deferred share and

other plans to non-employee directors, executives,

and certain other key employees. Refer

to Note 21 for further

details.

In the ordinary course of business, the Bank

also provides various banking services to associated

and other related corporations on terms

similar to those

offered to non-related parties.

TRANSACTIONS WITH SUBSIDIARIES,

SCHWAB, AND SYMCOR INC.

Transactions between the Bank and its subsidiaries

meet the definition of related party transactions.

If these transactions are eliminated on

consolidation, they are

not disclosed as related party transactions.

Transactions between the Bank, Schwab, and Symcor

Inc. (Symcor) also qualify as related party

transactions. As the Bank’s entire remaining equity

investment

in Schwab was sold on February 12, 2025, Schwab

is no longer a related party as of October

31, 2025, but was a related party up to the date

of sale. There were

no significant transactions between the Bank,

Schwab, and Symcor during the year

ended October 31, 2025, other than as described

in the following sections and

in Note 12.

i) TRANSACTIONS WITH SCHWAB

A description of significant transactions

between the Bank and its affiliates with Schwab

is set forth below.

Insured Deposit Account Agreement

As at October 31, 2025, deposits under

the Schwab IDA Agreement were $

106

billion (US$

billion) (October 31, 2024 – $

117

billion (US$

billion)). The Bank

paid fees of $405 million related to sweep deposit

accounts from November 1, 2024 to February

11, 2025, the period in which Schwab was a related party to

the

Bank. The Bank paid fees, net of the termination

fees received from Schwab, of $

908

million during the year ended October 31, 2024.

As at October 31, 2025, amounts receivable

from Schwab were $

million (October 31, 2024 – $

million). As at October 31, 2025, amounts payable

Schwab were $

million (October 31, 2024 – $

million).

ii) TRANSACTIONS WITH SYMCOR

The Bank has

one-third ownership

in Symcor, a Canadian provider of business process

outsourcing services offering a diverse portfolio

of integrated solutions in

item processing, statement processing and

production, and cash management

services. The Bank accounts for Symcor’s

results using the equity method of

accounting. During the year ended October 31,

2025, the Bank paid $

million (October 31, 2024 – $

million) for these services. As at October

31, 2025, the

amount payable to Symcor was $

million (October 31, 2024 – $

million).

The Bank and two other shareholder banks

have also provided a $

100

million unsecured loan facility to Symcor

which was undrawn as at October 31, 2025 and

October 31, 2024.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 90

NOTE 27: SEGMENTED INFORMATION

For management reporting purposes, the Bank

reports its results under four key

business segments: Canadian Personal

and Commercial Banking,

U.S. Retail,

Wealth Management and Insurance,

and Wholesale Banking. The Bank’s other activities

are grouped into the Corporate segment.

Canadian Personal and Commercial

Banking provides financial products and services

to personal, small business and commercial

customers, and includes

TD Auto Finance Canada. U.S. Retail is

comprised of personal and business banking

in the U.S., TD Auto Finance U.S., and

the U.S. wealth business. On

February 12, 2025, the Bank sold its entire remaining

equity investment in Schwab. Prior to the

sale, the Bank’s investment in Schwab was reported

in the

U.S. Retail segment, refer to Note 12

for further details. Wealth Management and Insurance

includes the Canadian wealth business

which provides investment

products and services to institutional and retail

investors, and the insurance business

which provides property and casualty insurance,

as well as life and health

insurance products to customers across

Canada. Wholesale Banking provides a

wide range of capital markets, investment

banking, and corporate banking

products and services, including underwriting

and distribution of new debt and equity issues,

providing advice on strategic acquisitions

and divestitures, and

meeting the daily trading, funding, and investment

needs of the Bank’s clients. The Corporate

segment includes the effects of certain asset securitization

programs, treasury management, elimination

of taxable equivalent adjustments and other

management reclassifications, corporate level

tax items, and residual

unallocated revenue and expenses. Effective

fiscal 2025, certain U.S. governance and

control investments, including costs for U.S. BSA/AML

remediation,

previously reported in the Corporate segment

are now reported in the U.S. Retail

segment. Comparative amounts have

been reclassified to conform with the

presentation adopted in the current period.

The results of each business segment reflect

revenue, expenses, and assets generated

by the businesses in that segment.

Due to the complexity of the Bank,

its management reporting model uses various

estimates, assumptions, allocations, and

risk-based methodologies for funds

transfer pricing, inter-segment

revenue, income tax rates, capital, indirect

expenses and cost transfers to

measure business segment results. The basis

of allocation and methodologies are

reviewed periodically to align with management’s

evaluation of the Bank’s business segments.

Transfer pricing of funds is generally applied at market rates.

Intersegment revenue is negotiated between

each business segment and approximates

the fair value of the services provided.

Income tax provision or recovery is

generally applied to each segment based on

a statutory tax rate and may be adjusted

for items and activities unique to each segment.

Amortization of intangibles

acquired as a result of business combinations

is included in the Corporate segment. Accordingly, net income

for business segments is presented before

amortization of these intangibles.

Non-interest income is earned by the Bank

primarily through investment and

securities services, credit fees, trading

income, service charges, card services, and

insurance revenues. Revenues from

investment and securities services are earned

predominantly in the Wealth Management

and Insurance segment. Revenues

from credit fees are primarily earned

in the Wholesale Banking and Canadian Personal

and Commercial Banking segments.

Trading income is earned within

Wholesale Banking. Both service charges

and card services revenue are mainly earned

in the U.S. Retail and Canadian Personal

and Commercial Banking

segments. Insurance revenue is earned in

the Wealth Management and Insurance segment.

Net interest income within Wholesale Banking

is calculated on a taxable equivalent basis

(TEB), which means that the value of non-taxable

or tax-exempt

income, primarily dividends, is adjusted

to its equivalent before-tax value. Using TEB allows

the Bank to measure income from all

securities and loans consistently

and makes for a more meaningful comparison

of net interest income with similar institutions.

The TEB adjustment reflected in Wholesale

Banking is reversed in the

Corporate segment.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 91

The following table summarizes the segment

results for the years ended October 31, 2025

and October 31, 2024.

Results by Business Segment

(millions of Canadian dollars)

For the years ended

October 31, 2025

Canadian

Personal and

Wealth

Commercial

U.S.

Management

Wholesale

Banking

Retail

and Insurance

Banking

Corporate

Total

Net interest income (loss)

16,701

12,368

1,493

(18)

2,518

33,062

Non-interest income (loss)

3,985

(63)

13,069

8,410

9,314

34,715

Total revenue

20,686

12,305

14,562

8,392

11,832

67,777

Provision for (recovery of)

credit losses

2,143

1,514

–

290

559

4,506

Insurance service expenses

–

6,089

–

6,089

Non-interest expenses

8,382

9,599

4,698

6,048

4,812

33,539

Income (loss) before income taxes

and share of net income from

investment in Schwab

10,161

1,192

3,775

2,054

6,461

23,643

Provision for (recovery of)

income taxes

2,844

(472)

986

444

(392)

3,410

Share of net income from

investment in Schwab

3,4

–

277

–

305

Net income (loss)

7,317

1,941

2,789

1,610

6,881

20,538

October 31, 2024

Net interest income (loss)

15,697

11,600

1,226

582

1,367

30,472

Non-interest income (loss)

4,093

2,113

12,309

6,704

1,532

26,751

Total revenue

19,790

13,713

13,535

7,286

2,899

57,223

Provision for (recovery of)

credit losses

1,755

1,532

–

317

649

4,253

Insurance service expenses

–

6,647

–

6,647

Non-interest expenses

8,010

13,141

4,285

5,576

4,481

35,493

Income (loss) before income taxes

and share of net income

from investment in Schwab

10,025

(960)

2,603

1,393

(2,231)

10,830

Provision for (recovery of)

income taxes

2,806

648

275

(1,107)

2,691

Share of net income from

investment in Schwab

3,4

–

709

–

(6)

703

Net income (loss)

7,219

(320)

1,955

1,118

(1,130)

8,842

The retailer program partners’

share of revenues and credit losses is presented in the Corporate segment, with an offsetting

amount (representing the partners’ net share) recorded in

Non-interest expenses, resulting in no impact to Corporate reported Net income (loss).

The Net income (loss) included in the U.S. Retail segment includes only the portion of revenue and

credit losses attributable to the Bank under the agreements.

Net interest income within Wholesale Banking is calculated on a TEB. The TEB adjustment reflected in Wholesale

Banking is reversed in the Corporate segment.

The after-tax amounts for amortization of acquired intangibles, the Bank’s share of acquisition and integration

charges associated with Schwab’s acquisition of TD Ameritrade, the Bank’s

share of Schwab’s restructuring charges, and the Bank’s share of Schwab’s Federal

Deposit Insurance Corporation special assessment charge were recorded in the Corporate segment.

The Bank’s share of Schwab’s earnings was reported with a one-month lag. Refer to

Note 12 for further details.

Total Assets by Business Segment

(millions of Canadian dollars)

Canadian

Personal and

Wealth

Commercial

Management

Wholesale

Banking

U.S. Retail

and Insurance

Banking

Corporate

Total

As at October 31, 2025

Total assets

616,115

530,729

25,231

754,391

168,092

2,094,558

As at October 31, 2024

Total assets

584,468

606,572

23,217

686,795

160,699

2,061,751

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 92

RESULTS BY GEOGRAPHY

For reporting of geographic results, segments

are grouped into Canada, United States,

and Other international. Transactions are primarily

recorded in the location

responsible for recording the revenue or assets.

This location frequently corresponds

with the location of the legal entity through which

the business is conducted

and the location of the customer.

Results by Geography

(millions of Canadian dollars)

For the years ended

As at

October 31

2025

Total revenue

Total assets

Canada

33,916

1,167,980

United States

29,706

753,258

Other international

4,155

173,320

Total

67,777

2,094,558

2024

Canada

31,453

1,146,243

United States

22,097

749,353

Other international

3,673

166,155

Total

57,223

2,061,751

NOTE 28: INTEREST INCOME AND EXPENSE

The following tables present interest income

and interest expense by basis of accounting

measurement.

Interest Income

(millions of Canadian dollars)

For the years ended October 31

2025

2024

Measured at amortized cost

74,659

80,581

Measured at FVOCI – Debt instruments

4,342

3,743

79,001

84,324

Measured or designated at FVTPL

8,282

8,742

Measured at FVOCI – Equity instruments

338

323

Total

87,621

93,389

Interest income is calculated using EIRM.

Interest Expense

(millions of Canadian dollars)

For the years ended October 31

2025

2024

Measured at amortized cost

1,2

43,268

50,382

Measured or designated at FVTPL

11,291

12,535

Total

54,559

62,917

Interest expense is calculated using EIRM.

Includes interest expense on lease liabilities for the year ended October 31, 2025 of $

163

million (October 31, 2024 – $

151

million).

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 93

NOTE 29: CREDIT RISK

Concentration of credit risk exists where

a number of borrowers or counterparties are

engaged in similar activities, are located

in the same geographic area or

have comparable economic characteristics.

Their ability to meet contractual obligations

may be similarly affected by changing economic, political

or other

conditions. The Bank’s portfolio could be sensitive

to changing conditions in particular geographic

regions.

Concentration of Credit Risk

(millions of Canadian dollars,

As at

except as noted)

Derivative financial

Loans

1,2

Credit Instruments

3,4

instruments

5,6

October 31

2025

2024

2025

2024

2025

2024

Canada

United States

United Kingdom

–

Europe – other

–

Other international

–

Total

100

953,300

949,779

388,789

366,706

72,333

69,970

Of the total loans the only industry segment which equalled or exceeded

% of the total concentration as at October 31, 2025 was real estate

% (October 31, 2024 –

%).

Includes loans that are measured at FVOCI.

As at October 31, 2025, the Bank had commitments and contingent liability contracts in the amount of $

389

billion (October 31, 2024 – $

367

billion). Included are commitments to extend

credit totalling $

340

billion (October 31, 2024 – $

322

billion), of which the credit risk is dispersed as detailed in the table above.

Of the commitments to extend credit, industry segments which equalled or exceeded

% of the total concentration were as follows as at October 31, 2025: financial institutions

(October 31, 2024 –

%); power and utilities

% (October 31, 2024 –

%); government, public sector entities and education

% (October 31, 2024 –

%); automotive

(October 31, 2024 –

%); professional and other services

% (October 31, 2024 –

%); sundry manufacturing and wholesale

% (October 31, 2024 –

%); telecommunications, cable and

media

% (October 31, 2024 –

%).

As at October 31, 2025, the current replacement cost of derivative financial instruments, excluding the impact of

master netting agreements and collateral, amounted to $

billion

(October 31, 2024 – $

billion). Based on the location of the ultimate counterparty,

the credit risk was allocated as detailed in the table above. The table excludes the fair

value of

exchange traded derivatives.

The largest concentration by counterparty type was with financial institutions (including non-banking financial institutions),

which accounted for

% of the total as at October 31, 2025

(October 31, 2024 –

%). The second largest concentration was with governments, which accounted for

% of the total as at October 31, 2025 (October 31, 2024 –

%). No other

industry segment exceeded

% of the total.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 94

The following table presents the maximum

exposure to credit risk of financial instruments,

before taking account of any collateral

held or other credit

enhancements.

Gross Maximum Credit Risk Exposure

(millions of Canadian dollars)

As at

October 31

2025

2024

Cash and due from banks

7,512

6,437

Interest-bearing deposits with banks

109,417

169,930

Securities

Financial assets designated at fair value through

profit or loss

Government and government-insured

securities

3,473

3,056

Other debt securities

3,513

3,361

Trading

Government and government-insured

securities

43,957

46,575

Other debt securities

23,270

22,482

Retained interest

Non-trading securities at fair value through

profit or loss

Government and government-insured

securities

333

271

Other debt securities

5,346

1,376

Securities at fair value through other

comprehensive income

Government and government-insured

securities

101,234

78,422

Other debt securities

21,800

10,830

Debt securities at amortized cost

Government and government-insured

securities

182,488

205,098

Other debt securities

57,951

66,517

Securities purchased under reverse purchase

agreements

247,078

208,217

Derivatives

82,972

78,061

Loans

Residential mortgages

314,706

331,284

Consumer instalment and other personal

256,840

226,333

Credit card

39,370

38,542

Business and government

342,096

353,390

Trading loans

30,032

23,518

Non-trading loans at fair value through profit

or loss

344

3,057

Loans at fair value through other comprehensive

income

288

230

Amounts receivable from brokers, dealers,

and clients

27,345

22,115

Other assets

12,318

12,761

Total assets

1,913,684

1,911,864

Credit instruments

388,789

366,706

Unconditionally cancellable commitments

to extend credit

468,663

450,574

Total credit exposure

2,771,136

2,729,144

Excludes equity securities.

The carrying amount of the derivative assets represents the maximum credit risk exposure related to derivative contracts.

The balance represents the maximum amount of additional funds that the Bank could be obligated to extend should the contracts

be fully utilized. The actual maximum exposure may

differ from the amount reported above. Refer to Note 25 for further details.

NOTE 30: REGULATORY CAPITAL

The Bank manages its capital in accordance

with guidelines established by OSFI. The regulatory

capital guidelines measure capital in relation

to credit, market,

and operational risks. The Bank has various

capital policies, procedures,

and controls which it utilizes to achieve its

goals and objectives. The Bank is designated

as a domestic systemically important bank

(D-SIB) and a global systemically important

bank (G-SIB).

The Bank’s capital management objectives are:

●

To maintain an adequate level of capital based on the Bank’s risk profile

as determined by:

–

the Bank’s Risk Appetite Statement;

–

capital requirements defined by relevant

regulatory authorities; and

–

the Bank’s internal assessment of capital requirements,

including stress test analysis, consistent

with the Bank’s risk profile and risk tolerance levels.

●

Manage capital levels, in order to:

–

insulate the Bank from unexpected loss events;

–

maintain stakeholder confidence in the Bank;

–

establish that the Bank has adequate capital

under a severe but plausible stress event;

and

–

facilitate business growth and/or strategic

deployment consistent with the Bank’s

strategy and risk appetite.

●

To have the most economic weighted-average cost of capital achievable, while

preserving the appropriate mix of

capital instruments to meet targeted

capitalization levels and provide a satisfactory

return on shareholders’

equity.

●

To support strong external debt ratings, in order to manage the Bank’s overall cost

of funds and to maintain access to required

funding (in the event of

unexpected loss or business growth).

●

To maintain a robust capital planning process and framework to support capital

funding decisions such as issuances, redemptions

and distributions which in

turn support the Bank’s capital adequacy.

These objectives are applied in a manner

consistent with the Bank’s overall objective of

providing a satisfactory return on

shareholders’ equity.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 95

Basel III Capital Framework

Capital requirements of the Basel Committee

on Banking Supervision are commonly referred

to as Basel III. Under Basel III, Total Capital consists of three

components, namely Common Equity Tier 1 (CET1),

Additional Tier 1, and Tier 2 Capital. Risk sensitive regulatory

capital ratios are calculated by dividing

CET1,

Tier 1, and Total Capital by risk-weighted assets (RWA), inclusive of any minimum requirements outlined

under the regulatory floor. Basel III also implemented a

non-risk sensitive leverage ratio to act as a

supplementary measure to the risk-sensitive

capital requirements. The leverage ratio

is calculated by dividing Tier 1

Capital by leverage exposure which is primarily

comprised of on-balance sheet assets

with adjustments made to derivative and securities

financing transaction

exposures, and credit equivalent amounts

of off-balance sheet exposures. TD manages its

regulatory capital in accordance with

OSFI’s implementation of the

Basel III Capital Framework.

Capital Position and Capital Ratios

The Basel framework allows qualifying banks

to determine capital levels consistent with

the way they measure, manage, and

mitigate risks. It specifies

methodologies for the measurement of credit,

trading market, and operational risks. The

Bank uses the Internal Ratings-Based

approaches to credit risk for all

material portfolios.

For accounting purposes, IFRS is followed

for consolidation of subsidiaries and joint ventures.

For regulatory capital purposes, all

subsidiaries of the Bank are

consolidated except for insurance subsidiaries

which are deconsolidated and follow prescribed

treatment per OSFI’s CAR guidelines. Insurance

subsidiaries are

subject to their own capital adequacy reporting,

such as OSFI’s Minimum Capital Test for General Insurance and Life Insurance Capital

Adequacy Test for Life and

Health.

Some of the Bank’s subsidiaries are individually

regulated by either OSFI or other regulators.

Many of these entities have minimum

capital requirements which

may limit the Bank’s ability to extract capital

or funds for other uses.

Canadian banks designated as D-SIBs are required

to comply with OSFI’s minimum targets for risk-based

capital and leverage ratios. The minimum

targets

include a D-SIB surcharge and Domestic Stability

Buffer (DSB) for CET1, Tier 1, Total Capital and risk-based Total Loss Absorbing Capacity (TLAC) ratios. The

DSB level was increased to

3.5

% as of November 1, 2023, and as

a result the published regulatory minimum

targets are set at

11.5

13.0

15.0

% and

25.0

respectively. The OSFI target includes the greater of the D-SIB or

G-SIB surcharge, both of which are

currently

% for the Bank. The OSFI target for leverage

requires D-SIBs to hold a leverage ratio buffer of

0.50

% in addition to the existing minimum

requirement. This sets the published regulatory

minimum targets for

leverage and TLAC leverage ratios at

3.5

% and

7.25

%, respectively.

The Bank complied with all minimum risk-based

capital and leverage ratio requirements

set by OSFI during the year ended October

31, 2025.

The following table summarizes the Bank’s regulatory

capital position as at October 31, 2025 and

October 31, 2024.

Regulatory Capital Position

(millions of Canadian dollars, except

as noted)

As at

October 31

2025

2024

Capital

Common Equity Tier 1 Capital

93,579

82,714

Tier 1 Capital

104,502

93,248

Total Capital

116,866

105,745

Risk-weighted assets used in the calculation

of capital ratios

636,424

630,900

Capital and leverage ratios

Common Equity Tier 1 Capital ratio

14.7

13.1

Tier 1 Capital ratio

16.4

14.8

Total Capital ratio

18.4

16.8

Leverage ratio

4.6

4.2

TLAC Ratio

31.8

28.7

TLAC Leverage Ratio

8.9

8.1

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 96

NOTE 31: INFORMATION ON SUBSIDIARIES

The following is a list of the directly or indirectly

held significant subsidiaries.

SIGNIFICANT SUBSIDIARIES

(millions of Canadian dollars)

October 31, 2025

Address of Head

Carrying value of shares

North America

or Principal Office

owned by the Bank

Meloche Monnex Inc.

Montreal, Québec

3,202

Security National Insurance Company

Montreal, Québec

Primmum Insurance Company

Toronto, Ontario

TD Direct Insurance Inc.

Toronto, Ontario

TD General Insurance Company

Toronto, Ontario

TD Home and Auto Insurance Company

Toronto, Ontario

TD Wealth Holdings Canada Limited

Toronto, Ontario

12,683

TD Asset Management Inc.

Toronto, Ontario

GMI Servicing Inc.

Winnipeg, Manitoba

TD Waterhouse Private Investment Counsel Inc.

Toronto, Ontario

TD Waterhouse Canada Inc.

Toronto, Ontario

TD Auto Finance (Canada) Inc.

Toronto, Ontario

4,542

TD Group US Holdings LLC

Wilmington, Delaware

75,699

Toronto Dominion Holdings (U.S.A.), Inc.

New York, New York

Cowen Inc.

New York, New York

Cowen Structured Holdings LLC

New York, New York

Cowen Structured Holdings Inc.

New York, New York

TD Arranged Services LLC

New York, New York

RCG LV Pearl, LLC

New York, New York

Cowen Financial Products LLC

New York, New York

Cowen Holdings, Inc.

New York, New York

Cowen CV Acquisition LLC

New York, New York

Cowen Execution Holdco LLC

New York, New York

Westminster Research Associates LLC

New York, New York

RCG Insurance Company

New York, New York

TD Prime Services LLC

New York, New York

TD Financial Products LLC

Chicago, Illinois

TD Securities (USA) LLC

New York, New York

Toronto Dominion (Texas) LLC

New York, New York

Toronto Dominion (New York) LLC

New York, New York

Toronto Dominion Investments LLC

New York, New York

TD Bank US Holding Company

Cherry Hill, New Jersey

Epoch Investment Partners, Inc.

New York, New York

TD Bank USA, National Association

Cherry Hill, New Jersey

TD Bank, National Association

Cherry Hill, New Jersey

TD Equipment Finance, Inc.

Mt. Laurel, New Jersey

TD Private Client Wealth LLC

New York, New York

TD Public Finance LLC

New York, New York

TD Wealth Management Services Inc.

Mt. Laurel, New Jersey

TD Investment Services Inc.

Toronto, Ontario

TD Life Insurance Company

Toronto, Ontario

180

TD Mortgage Corporation

Toronto, Ontario

14,052

TD Pacific Mortgage Corporation

Vancouver, British Columbia

The Canada Trust Company

Toronto, Ontario

TD Securities Inc.

Toronto, Ontario

3,589

TD Vermillion Holdings Limited

Toronto, Ontario

24,279

TD Reinsurance (Barbados) Inc.

St. James, Barbados

International

Ramius Enterprise Luxembourg Holdco S.à.r.l.

Luxembourg, Luxembourg

Cowen Reinsurance S.A.

Luxembourg, Luxembourg

TD Ireland Unlimited Company

Dublin, Ireland

2,973

TD Global Finance Unlimited Company

Dublin, Ireland

TD Securities (Japan) Co. Ltd.

Tokyo, Japan

Toronto Dominion Australia Limited

Sydney, Australia

107

TD Bank Europe Limited

London, England

1,420

Toronto Dominion International Pte. Ltd.

Singapore, Singapore

10,701

TD Execution Services Limited

London, England

Toronto Dominion (South East Asia) Limited

Singapore, Singapore

1,813

Unless otherwise noted, The Toronto-Dominion Bank, either directly or through its subsidiaries, owns

100

% of the entity and/or

100

% of any issued and outstanding voting

securities and

non-voting securities of the entities listed.

Each subsidiary is incorporated or organized in the country in which its head or principal office is located.

Carrying amounts are prepared for purposes of meeting the disclosure requirements of Section 308 (3)(a)(ii) of the

Bank Act (Canada)

. Intercompany transactions may be included herein

which are eliminated for consolidated financial reporting purposes.

TD BANK GROUP • 2025 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES

Page 97

SUBSIDIARIES WITH RESTRICTIONS

TO TRANSFER FUNDS

Certain of the Bank’s subsidiaries have regulatory requirements

to fulfil, in accordance with applicable law, in order to transfer

funds, including paying dividends to,

repaying loans to, or redeeming subordinated

debentures issued to, the Bank.

These customary requirements include,

but are not limited to:

●

Local regulatory capital and/or surplus adequacy

requirements;

●

Basel requirements under Pillar 1 and Pillar

●

Local regulatory approval requirements; and

●

Local corporate and/or securities laws.

Pursuant to the terms of the orders that

TD Bank USA, N.A. (TDBUSA) and TDBNA

(collectively the “U.S. Bank”) entered into

with the OCC, the Boards of

Directors of the U.S. Bank are required

to certify to the OCC that the U.S. Bank has

allocated appropriate resources and

staffing to the remediation required by the

orders before declaring or paying dividends, engaging

in share repurchases, or making any

other capital distribution. In addition, pursuant

to the terms of the

cease and desist order that the Bank, TDGUS

and TDBUSH entered into with the

Federal Reserve, the Boards of Directors

of the Bank, TDGUS and TDBUSH are

required to certify to the Federal Reserve

that appropriate resources and staffing have been

allocated to remediation, as required by the

order, before declaring or

paying any dividends, engaging in share

repurchases, or making any other capital

distributions. If the Bank, the U.S. Bank,

TDGUS or TDBUSH are unable to so

certify, then there would be restrictions on (i) the payment of dividends

or making of any other capital distributions,

or (ii) the repurchase of shares by these

entities

As at October 31, 2025, the net assets of

subsidiaries subject to regulatory or CAR

was approximately $

107

billion (October 31, 2024 – $

109

billion), before

intercompany eliminations.

In addition to regulatory requirements outlined

above, the Bank may be subject to significant

restrictions on its ability to use the assets

or settle the liabilities of

members of its group. Key contractual restrictions

may arise from the provision of collateral

to third parties in the normal course of business,

for example through

secured financing transactions; assets

securitized which are not subsequently available

for transfer by the Bank; and assets transferred

into other consolidated

and unconsolidated structured entities. The impact

of these restrictions has been disclosed

in Notes 9 and 25.