TD Bank Plans 100 New U.S. Branches Amid AML Costs

Toronto Dominion Bank intends to open 100 new branches in the United States by the end of 2028, a move that resumes its physical expansion strategy after a pause driven by compliance requirements. The plan focuses on increasing store density in key Northeast markets, including New York and New Jersey, while extending its footprint into Florida and the Carolinas. This growth is contingent upon continued regulatory approval and operates within the constraints of the bank's ongoing consent order.

Despite the expansion plans, TD Bank has increased its fiscal 2026 guidance for U.S. Bank Secrecy Act and anti-money-laundering remediation expenses to $550 million, up from a previous estimate of $500 million. The additional $50 million is primarily attributed to a look-back exercise and the acceleration of certain management actions originally scheduled for later in 2026 and 2027. The bank states that while some costs will remain part of its ongoing operating structure, more than half of total remediation spending is expected to decrease over time.

Branch Expansion Strategy Details

Leo Salom, Head of U.S. Banking, indicated that the new stores will build upon an existing network of approximately 1,100 locations. The strategy prioritizes markets where the bank already holds a top-three deposit position, such as New England and Philadelphia, to capitalize on demographic trends. The expansion is not a signal that the remediation plan is complete, but rather a utilization of permissions granted under the current regulatory order to pursue growth through 2028.

Remediation Costs and Validation

The bank has rebuilt its management team overseeing compliance by appointing 40 experienced officers and implementing new transaction-monitoring platforms. TD is currently in a validation phase where internal audit, an independent monitor, and regulators will test these new controls before any potential relief from the consent order. Management expects governance and control costs to moderate in the second half of fiscal 2027 as the initial intensive remediation efforts conclude.

Cost Savings and Financial Impact

To fund its growth, TD Bank is targeting C$750 million in structural cost savings within its U.S. business over the medium term. The company has already realized nearly C$200 million in savings this year through store optimization, staffing initiatives, and early artificial intelligence projects. U.S. banking expenses have remained stable at just over C$1.8 billion for the past four quarters, while the business returned to loan growth with a third-quarter net interest margin of 3.47%, according to data cited by GN stocks/banks.