TD bank looks to strong growth in the future
02/27/2014 12:00 AM
02/26/2014 9:35 PM
TD Bank Group emerged from the turbulence of the financial crisis with its luster untarnished and an unwavering focus on expansion and growth.
At the helm in this country is Mike Pedersen, who last year was named group head of U.S. Banking, TD Bank Group, and president and chief executive officer at TD Bank. Pedersen previously was group head of wealth management, insurance and corporate shared services.
In an exclusive interview with The Greenville News, Pedersen described his growth strategy for the company that bills itself as America’s Most Convenient Bank, and the role played by Greenville, where TD Bank has corporate offices and a customer service hub.
Pedersen’s strategy is part of the company’s broader vision of reinforcing TD’s brand, culture and values, and providing an attractive return for shareholders.
“We’re a young bank with lots of growth opportunities,” Pedersen said. “We have, for example, lots of upside when it comes to things like credit cards or savings products or lending, mortgages, investment products -- all of which we’re investing in as a bank.”
Much of the credit for the company’s strength and ambition has gone to Ed Clark, TD Bank Group’s president and chief executive officer. Clark has said he will retire Nov. 1 after 12 years as CEO, but will remain a director until TD’s 2015 annual meeting.
Company officials said TD veteran Bharat Masrani will become group president and CEO when Clark retires.
Prior to joining TD in 2007, Pedersen worked in London, where he was responsible for Barclays’ global private bank and two other international businesses. Before joining Barclays, Pedersen spent 12 years at CIBC, where he held senior executive roles in retail and business banking.
TD, with 9.62 percent of bank deposits, has the fourth-largest market share in the Greenville-Anderson-Mauldin area, according to data from the Federal Deposit Insurance Corp. TD trails Wells Fargo, BB&T and Bank of America, according to the data.
Pedersen said he wants to increase TD’s share and grow the bank’s business. The bank, a unit of Toronto-Dominion Bank of Canada, is investing in mobile and online capabilities and recently launched “remote deposit capture,” in which a customer takes a smartphone photo of a check and emails it for deposit, Pedersen said.
“That is tremendously successful so far,” he said. “It’s only been six months. It’s already more than 5 percent of our entire deposits, so growing very, very quickly.”
TD plans on hiring more mortgage-loan officers and more financial advisers in its stores, or branches, to help people with savings and investment needs, Pedersen said. The bank plans to open 34 or 35 branches, or stores, this year throughout its Maine-to-Florida footprint, he said.
It wasn’t known how many of the new stores would be in South Carolina.
“In total, it’s a growth strategy,” Pedersen said. “We’re investing more. We’re hiring more. We’re creating more product capability so that we can broaden relationships with customers.”
Overall, TD has about 3,200 households for each store compared with an industry average of 1,400, Pedersen said.
“I don’t think that you’ll see us with a smaller footprint than we have now even as it’s obvious that online and mobile will become more important to customers, make it easier to do transactions that they were doing in stores and branches,” he said.
Pedersen told The News that TD’s expansion in the Southeast won’t necessarily include more acquisitions. In the past eight years, the bank has increased its size in the U.S. through a combination of organic growth and acquisitions.
“Frankly, our preference is for organic growth,” he said. “It allows you to control your culture and to ensure that it’s consistent with the culture that we want.”
But when good opportunities emerge “we’re certainly open to looking at them,” Pedersen said.
Pedersen said the company plans to meet its goal of 1,400 jobs at its corporate campus in Greenville, a commitment made following TD’s acquisition in 2010 of South Financial, parent of Carolina First Bank.
The campus along Interstate 85 includes a customer-service hub that is one of TD Bank’s three U.S.-based contact centers. Since the first call was routed to the hub in August 2012, employees in Greenville have fielded about 6 million customer inquiries from Maine to Florida, TD officials said.
About 500 customer-service employees work on three floors in one campus building that has approximately 45,000 square feet.
TD’s Metro Carolinas region president Robert Hoak said the bank wants to expand its small-business lending as well as its commercial and corporate activity.
“We just have to execute and focus on the organic growth, getting the growth out of our market,” said Hoak, who is based in Greenville.
Locally, TD will move forward by acquiring new customers and retaining its existing base and increasing deposit market share each year, he said.
Pedersen told analysts in a conference call last year that in the distribution system of the future, and with all of TD’s investments in mobile and online applications, stores will have a slightly different purpose and look.
The stores TD has been opening are about 35 percent smaller in square footage compared with those opened in the past, Pedersen said.
TD will release its latest quarterly earnings Thursday. For its fourth quarter ended Oct. 31, TD reported diluted earnings per share of $1.68 compared with $1.66 in the year-earlier period.
For the year, TD reported diluted earnings per share of $6.91. That compared with $6.76 a year earlier.
U.S. Personal and Commercial Banking reported $355 million in net income for the quarter. On an adjusted basis, the segment earned $384 million, an increase of 7 percent compared with the fourth quarter last year.
The increase in earnings was primarily due to strong loan and deposit volume growth, the acquisition of Target’s U.S. credit card portfolio, and an improvement in credit quality, partially offset by lower margins and investments in new stores and technology, TD officials said.
Pedersen told analysts that since TD has been disproportionately deposit-heavy and deposit margins were looking better, the bank’s view is that margins overall “will be stable to improving going forward.”
Asked by Cheryl Pate of Morgan Stanley’s research division about changing industry dynamics as mortgage rates move up, Pedersen said, “We have a particular advantage because having grown like we have, we’re very deposit-focused and less than 3 percent of our customers actually have mortgages with us.”
He also said, “That’s the real upside we have, just being very under-penetrated in this business in our U.S. banking.”
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