TD Bank disclosed on Thursday that it has received inquiries related to a federal anti-money laundering investigation and reported lower quarterly profits after the Canadian lender terminated a deal in May to acquire First Horizon.
TD told shareholders in its third-quarter earnings report that the bank has been cooperating with a U.S. Department of Justice investigation related to its compliance with the Bank Secrecy Act and anti-money laundering regulations.
The $1.4 trillion-asset bank is "pursuing efforts to enhance" its anti-money laundering controls and "anticipates" regulatory penalties to be imposed, TD said in a quarterly report to its shareholders.
TD also reported a 12%
Scrutiny of the bank's handling of suspicious customer transactions is what prevented regulators from approving the TD-First Horizon deal, according to a report from The Wall Street Journal.
Bharat Masrani, CEO of Toronto-Dominion Bank, the Canadian parent company of TD, which is based in Cherry Hill, New Jersey, told analysts during the bank's third-quarter earnings call that TD is "pursuing efforts to enhance" its risk management controls.
TD is "ensuring that we've got a strong control platform to be able to operate," added Leo Salom, the bank's U.S.-based CEO, noting that investments to "strengthen the foundation of our U.S. franchise" contributed to overall noninterest expenses of $5.6 billion increasing by 24% compared to the same period last year.
In TD's U.S. retail banking business, noninterest expenses of $1.5 billion rose by 13%. "Governance and control is one of our important elements and pillars of our overall investment process," Salom said.
In addition to higher expenses, acquisition and integration-related
The $13.4 billion acquisition was first announced in February 2022 and was originally expected to close during the second half of last year. Closing was delayed several times amid stricter regulatory scrutiny of bank acquisitions, even after TD committed to a
The two banks are now targeting May 27, three months later than their previous goal. The transaction, which would create a top-six U.S. bank by asset size, was originally expected to be completed last fall.
After TD canceled the community agreement as part of the merger termination, the bank committed
Overall, TD reported total revenue of $9.4 billion, increasing by 17% compared to the same period last year, including 10% growth In the bank's U.S. retail banking business.
TD's average loan volume in the U.S. totaled $17 billion, a 10% increase during the same period. The bank's U.S. average deposit volume of $54 billion declined by 14%.
