TD Bank Expanding — and Changing — Its Branch Network

green_balloonOther banks may have saturated their markets, but Toronto-Dominion Bank still believes it has room to grow “in most markets.” While JPMorgan Chase & Co. acknowledged earlier this week that it was cutting back on branches, TD Bank is taking the opposite tack.

In an earnings call yesterday, Timothy D. Hockey, group head of Canadian banking, auto finance & wealth management, and Michael B. Pedersen, group head of U.S. personal & commercial banking, discussed their branch philosophy at some length.

Hockey began with the following:

So in terms of branch format in Canada, then clearly, just as we do in the U.S., we’re constantly experimenting with branch format size. There is no question that the average square footage of a branch will be declining over time, and they will also change in the nature of the transactions that happen. They’ll move much more to sales transactions versus service transactions. And we’ve seen obviously a remarkable increase in online, mobile and alternate forms of distribution growth. I would say that to date we still continue to see the vast majority of sales happening in the branches.

He then passed the baton to Pederson, who expressed great confidence in the branch as a sales tool:

In the U.S., we have now seen the total number of branches flatten out and begin to decline. But every bank circumstances are different, and we have our own views about the roles of stores, and Tim just spoke to that. And we’re also in a unique situation given that we have a fairly fresh store network, if you will, and we also have 3,200 households per store versus the industry average of 1,400. That puts us in a very, very different position than our competitors in terms of our store penetration. In most markets, it’s our belief that we should still grow our store network, and we’re continuing to do that. Consistent with what Tim said, the stores we’re opening are smaller and cheaper and more oriented towards sales and advice. And as we’re opening them, we’re investing very fast as well in all the digital channels, in online and mobile, in capability for both retail and small business clients. We’re very focused on all the industry developments around that, but our view is stores are going to continue to be a very important tool to acquire customers and to sell products. So we are going to, I think, have more stores in the future than we have today.

The “smaller and cheaper” store certainly fits industry trends, but growing its network does not. TD is making an expensive bet.

TD Bank [ticker: TD] has a market capitalization of about $83.4 billion.

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Philip Ryan is Senior Editor of Bank Innovation and Senior Director of INV Fintech. He began covering financial services in 2012 and has more than 15 years' experience in online journalism, which makes him quite old. He can be reached at

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