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How Much Did TD Bank Make From Pandemic Relief?
On the SBA's fee schedule, TD Bank was owed about $497.9 million for the 133,140 PPP loans it made. Its Canadian parent never reported a fee total, but its own slides put PPP revenue at US$525 million over eight quarters. On the same model, Customers Bank was owed more for half the lending.
I. $497.9 million, tenth among the fee collectors
TD Bank, N.A. is the American bank of The Toronto-Dominion Bank of Toronto. Neither reported what the SBA paid it in fees, so the answer has to be modeled, as it was for Womply's fees. The parent's filings and investor slides supply a check of a different kind.
| Question | Figure | Source | Kind |
|---|---|---|---|
| What did the SBA owe TD on its 2020 loans? | $298.3 million on 85,711 loans | SBA loan-level data, priced loan by loan | modeled |
| On its 2021 first-draw loans? | $28.4 million on 9,650 loans | SBA loan-level data | modeled |
| On its 2021 second-draw loans? | $171.2 million on 37,779 loans | SBA loan-level data | modeled |
| What rate did TD say the fees ran at? | "generally ranging from 1-5% of the loan's value at origination" | TD Bank Group 2021 Annual Report (Exhibit 99.2 to Form 40-F, filed Dec. 2, 2021) | company filing |
| What PPP revenue did TD report? | US$525 million, August 2020 through July 2022 | TD quarterly results presentations, Dec. 2, 2021 and Aug. 25, 2022 | company slides |
| What PPP fee total did TD report? | none found | annual reports for fiscal 2020 through 2022 and the quarterly reports to shareholders |
The three modeled amounts add to $497.9 million, the 15th-largest fee total among the 4,688 lenders in the SBA file (PPP lenders by estimated fees). The series ranking of fee collectors adds agents and contractors and ranks each on its fees after documented payments to them. Seven lenders with larger fee totals fall below TD once payments to agents and fintech partners are subtracted, or their own published net figures are used. That leaves TD tenth, behind Womply, ranked on its billings of $1.8 billion to $2.6 billion and covered in its own piece, JPMorgan Chase, Bank of America, Blueacorn, Cross River Bank, Wells Fargo, PNC, Truist and U.S. Bank.
Eleventh is Itria Ventures, a Biz2Credit affiliate, at $473.4 million, $24.5 million behind TD. The $497.9 million is fees owed, before the cost of the staff and systems that processed the loans. No TD filing we read discloses that cost.
II. Who paid TD, and for what
The SBA paid the lender of record a processing fee on every PPP loan and guaranteed the loan in full. For 2020 loans the fee was 5 percent of loans up to $350,000, 3 percent up to $2 million and 1 percent above that (85 FR 20811). For 2021 loans of $50,000 or less it became the lesser of 50 percent of the loan or $2,500 (86 FR 3692; 86 FR 3712). Borrowers paid nothing.
A Massachusetts accountant's lawsuit supplies a worked example. An ice cream shop she helped borrowed about $32,000 through TD in May 2020. On her complaint's arithmetic, TD was entitled to a $1,600 fee, and she, as the applicant's agent, to $320 of it, which she says she never received (Complaint, Guerriero v. Bank of America, N.A., D. Mass. No. 1:20-cv-11267, July 6, 2020).
TD's parent described the fees as "generally ranging from 1-5% of the loan's value at origination" (2021 Annual Report). That was true of 2020. In 2021 TD made 32,855 loans of $50,000 or less, and the $2,500 rule priced them at $79.5 million on $621.4 million lent: 12.8 cents per dollar.
TD did not book the money when the SBA paid it. "The fees are amortized over the life of the loan, with any unamortized amount upon forgiveness being recognized immediately as income," the same report said. Forgiveness came quickly. In the year to October 31, 2021, about 97,000 TD loans, US$8.7 billion, were forgiven, and about 36,000 remained outstanding.
III. Half the lending, more in fees
TD's PPP book looked like a commercial bank's. Its loans averaged $92,135 (lender page). Two thirds were for $50,000 or less, but the fees came from the larger ones:
| TD loans by size | Loans | Share of loans | Modeled fees | Share of fees |
|---|---|---|---|---|
| $50,000 or less | 90,963 | 68.3% | $134.4M | 27.0% |
| $50,000 to $350,000 | 35,977 | 27.0% | $218.1M | 43.8% |
| $350,000 to $2 million | 5,610 | 4.2% | $121.2M | 24.3% |
| $2 million and up | 590 | 0.4% | $24.2M | 4.9% |
That came to 4.1 cents in fees per dollar lent, the same rate as JPMorgan Chase's book and below the program's 4.8 cents (fee schedules by vintage).
Customers Bank, of Pennsylvania, took the other road. It lent through fintech partners, Kabbage among them, and most of its fees came from 2021 loans of $50,000 or less, the ones the $2,500 rule paid at up to half the loan. On the same model it was owed $60.3 million more than TD on about half the dollars:
| TD Bank | Customers Bank | |
|---|---|---|
| Loans | 133,140 | 249,661 |
| Dollars approved | $12.27 billion | $6.33 billion |
| Average loan | $92,135 | $25,355 |
| Loans of $50,000 or less | 68.3% | 91.9% |
| Share of fees from those loans | 27.0% | 75.4% |
| Share of fees from 2021 loans | 40.1% | 80.0% |
| Modeled fees | $497.9 million | $558.2 million |
| Fees per dollar lent | 4.1 cents | 8.8 cents |
| Fee figure the company published | none | "close to $350 million," net of direct origination costs |
Customers had accrued about $65.5 million in PPP fees payable to Kabbage, Inc., by then doing business as KServicing. In October 2022 it agreed to cut the bill to $58 million, subject to the bankruptcy court's approval (Form 8-K). Its own fee figure, from its 2022 proxy statement, is lower still, and the series ranks Customers on it, 17th. We found no record of TD paying any share of its fees to an agent or a referral platform.
IV. What Toronto told its shareholders
The Toronto-Dominion Bank files its annual reports with the SEC as exhibits to Form 40-F, the form Canadian issuers use. Its reports for fiscal 2020 through 2022, which end on October 31, give loan counts and no fee total. At April 30, 2020 it had funded about 28,000 PPP loans (US$6.0 billion); at October 31, 2020, about 86,000 (US$8.2 billion) (2020 Annual Report, filed Dec. 3, 2020). By October 31, 2021 the total was about 133,000, including about 47,000 new loans (US$3.6 billion) in fiscal 2021 (2021 Annual Report). The SBA file shows 47,429 TD loans approved in 2021, for $3.72 billion.
The dollar figures came in the investor slides. In December 2021 TD split the net interest income of its U.S. Retail Bank into "NII ex PPP" and "PPP." "On slide 30, we've added new disclosure on the impact of the PPP program," the group's chief financial officer, Kelvin Tran, told analysts. "This quarter, PPP revenue contributed about US$110MM to NII and 16 basis points to NIM" (Q4 2021 earnings call, Dec. 2, 2021). The slide carried the series back a year, and later slides carried it forward:
| TD fiscal quarter | Months | "PPP" in U.S. Retail Bank NII (US$ millions) |
|---|---|---|
| Q4 2020 | Aug. – Oct. 2020 | 53 |
| Q1 2021 | Nov. 2020 – Jan. 2021 | 70 |
| Q2 2021 | Feb. – Apr. 2021 | 86 |
| Q3 2021 | May – July 2021 | 99 |
| Q4 2021 | Aug. – Oct. 2021 | 108 |
| Q1 2022 | Nov. 2021 – Jan. 2022 | 65 |
| Q2 2022 | Feb. – Apr. 2022 | 28 |
| Q3 2022 | May – July 2022 | 16 |
| Eight quarters | 525 |
(Quarterly results presentations of Dec. 2, 2021 and Aug. 25, 2022, slide 30 in each.) The footnote says the split "adjusts for the impact of Paycheck Protection Program (PPP) loan forgiveness on NII and NIM." The eight quarters leave out TD's first PPP quarter, May through July 2020, when its PPP loans grew from US$6.0 billion to US$8.2 billion. They still add to more than the model's $497.9 million in fees for the whole book. The slides do not say whether the bars include the 1 percent interest the loans paid. At 1 percent, US$8 billion of loans pays about US$80 million a year; that is our arithmetic.
In March 2022 the chief executive of TD's American bank, Leo Salom, put the program in Canadian dollars. "We extended 130,000 PPP loans for nearly CAD 14 billion at a time that those clients needed it, and certainly we're very proud of that. But we did over-index," he said, meaning PPP made up more of TD's commercial lending than at "both our big bank as well as regional competitors" (Q1 2022 earnings call, March 3, 2022).
Four economists measured the same tilt for the first round. TD made 1.83 percent of first-round PPP dollars while holding 0.687 percent of the small-business loan market at the end of 2019 (Granja, Makridis, Yannelis and Zwick, Journal of Financial Economics, 2022, Table 1).
V. The queue: bigger loans approved first, and no borrower suit
TD took applications only from its own customers. Its PPP page on April 9, 2020 said: "At this time, TD Bank is only accepting applications from Existing TD Business Customers. Customers must have a deposit account at TD Bank to receive funding" (td.com, archived April 9, 2020). Bank of America's similar rule drew a lawsuit, and the court refused to block it (The Banks Served Their Own Customers First).
TD "built and launched a customized online PPP application," the bank's news site said (TD Stories, April 23, 2020). Its approvals began in number on April 7, four days after the program opened. From then until the money ran out on April 16, the average size of the TD loans the SBA approved fell nearly every day:
| Approved on | TD loans | TD average | All lenders' average |
|---|---|---|---|
| April 7 | 28 | $599,000 | $234,000 |
| April 8 | 283 | $616,000 | $235,000 |
| April 9 | 873 | $603,000 | $236,000 |
| April 10 | 1,691 | $489,000 | $218,000 |
| April 11 | 2,586 | $364,000 | $210,000 |
| April 12 | 3,038 | $292,000 | $216,000 |
| April 13 | 3,047 | $216,000 | $183,000 |
| April 14 | 5,582 | $143,000 | $161,000 |
| April 15 | 7,863 | $108,000 | $143,000 |
| April 16 | 912 | $87,000 | $121,000 |
By April 16 the SBA had approved 80.3 percent of the 2020 TD loans of $350,000 to $2 million that are in its file, and 17.6 percent of those of $50,000 or less. Program-wide the figures were 69.4 and 21.4 percent; at JPMorgan Chase, 47.4 and 3.8. TD's round-one loans carried $178.8 million in modeled fees, 60 percent of its 2020 total. The file records when the SBA approved each loan, not when the application reached the bank, so it cannot show whether TD worked its queue in order.
The April 2020 class actions alleging that banks moved bigger, better-paying loans to the front named JPMorgan Chase, Bank of America, Wells Fargo and U.S. Bank (Banking Dive, April 21, 2020). We found no such suit against TD in the federal dockets on CourtListener.
The agents sued instead. TD was one of 20 lenders named in a suit by Full Compliance, LLC, a Florida firm, filed in the Southern District of Florida on June 5, 2020 (schedule of actions, MDL No. 2954; TD's disclosure statement). The Massachusetts complaint alleged that "TD Bank's policy is not to ask whether Agents assisted with PPP loan applications and not to pay Agents the fees they are entitled to." A South Carolina firm alleged that TD's portal "had no place for disclosure of applicant agents" and that TD told it "TD had elected against the payment of agent fees" (Complaint, Peay and Associates, LLC v. First Community Bank, D.S.C. No. 6:20-cv-02651, filed June 15, 2020).
The South Carolina firm dismissed its case without prejudice on September 11, 2020 (stipulation of voluntary dismissal). The Massachusetts docket closed on October 1, 2020 and the Florida one on January 21, 2021. On August 5, 2020 the Judicial Panel on Multidistrict Litigation declined to combine the agent-fee suits, by then 62 actions in 26 districts (order denying transfer). A California court later wrote that it "appears every court that has decided this issue has held that the CARES Act does not require lenders to pay agent fees absent an agreement to do so" (order; The Agents Got Nothing).
VI. What TD said
"TD helped more than 26,000 small businesses secure PPP funding during round one for a total of $6.1 billion in relief. The average loan was $230,000 and 82% of the businesses that received funding through this program have 25 or fewer employees" (TD Stories, May 20, 2020). The SBA file has 25,903 TD loans approved in round one, for $5.76 billion, an average of $222,215; 81.8 percent of them reported 25 or fewer jobs.
"We will be ready to submit additional applications in our queue on behalf of our business customers" (Chris Giamo, head of TD's commercial bank, TD Stories, April 23, 2020). In the four days after the program reopened on April 27, the SBA approved 13,899 TD loans averaging $61,736.
"As the leading SBA lender in our Maine to Florida footprint, TD usually approves around 3,000 SBA applications each year. During round one, we processed 10 times this annual average in just 10 days" (TD Stories, May 20, 2020). TD's round-one approvals in the SBA file fall on April 5 and on the ten days from April 7 through April 16.
"We were the #6 PPP lender nationwide" (Q4 2020 earnings call, Dec. 3, 2020) and "Ranked 7th nationwide for PPP financing" (2021 Annual Report). The SBA's 2024 file ranks TD eighth by approved dollars and 16th by loan count (lender page).
"But we did over-index" (Salom, March 3, 2022). TD made 1.2 percent of all PPP loans and, on the model, was owed 1.3 percent of the fees.
Method, and what would change the numbers
Modeled fees. Each loan in the SBA's PPP loan-level file (release of September 30, 2024) is priced under the fee rule for its approval date and draw, and counted by approval year. The model assumes the SBA paid a fee on every loan in the file. Fees on loans later canceled or reduced may not have been paid in full, so the modeled figures are fees owed, not received. The series ranking of fee collectors subtracts payments to agents and fintech partners where records give them, or uses a company's own published net fee figure; for TD we found neither. It credits loans the SBA file lists under an acquirer's name to the bank that made them.
Round-one counts. Loans approved from April 3 through April 16, 2020, by the SBA's approval date, among loans still in the September 2024 file. Averages use each loan's current approved amount.
Company figures. Loan counts, the fee sentence and the accounting sentence are quoted from The Toronto-Dominion Bank's annual reports filed with Form 40-F. The quarterly "PPP" amounts are read from the U.S. Retail slides of TD's quarterly results presentations of Dec. 2, 2021 and Aug. 25, 2022. Round-one claims are TD's, from TD Stories.
What is not public. TD's PPP fee total; what its "PPP" net interest income includes; its PPP income for May through July 2020 and after July 2022; its cost of processing the loans; and the order in which its applications arrived.
Sources: SBA PPP loan-level data (Sept. 30, 2024), priced under 85 FR 20811, 86 FR 3692 and 86 FR 3712 (TD Bank lender page; Customers Bank lender page; PPP lenders by estimated fees; fee schedules by vintage; PPP per-lender totals); The Toronto-Dominion Bank, 2020 and 2021 Annual Reports, Management's Discussion and Analysis (Exhibit 99.2 to Form 40-F, filed Dec. 3, 2020 and Dec. 2, 2021); TD Bank Group quarterly results presentations of Dec. 2, 2021 and Aug. 25, 2022; TD Bank Group earnings call transcripts of Dec. 3, 2020, Dec. 2, 2021 and March 3, 2022; TD Stories, "TD Bank Supports Businesses Through SBA Paycheck Protection Program" (April 23, 2020) and "How TD Bank Helped 26,000 Small Businesses Secure PPP Loans in Round 1" (May 20, 2020); TD Bank, "COVID-19 Customer Assistance for SBA & CARES Act Loans" (td.com, archived April 9, 2020); Customers Bancorp Form 8-K, KServicing settlement and 2022 proxy statement; Granja, Makridis, Yannelis and Zwick, "Did the Paycheck Protection Program Hit the Target?", Journal of Financial Economics 145 (2022); Banking Dive (April 21, 2020); Guerriero v. Bank of America, N.A., D. Mass. No. 1:20-cv-11267, Dkt. 1 (July 6, 2020); Peay and Associates, LLC v. First Community Bank, D.S.C. No. 6:20-cv-02651, Dkt. 1-1 (complaint) and Dkt. 37 (Sept. 11, 2020); Full Compliance, LLC, et al. v. TD Bank, N.A., et al. (as captioned in TD's disclosure statement), S.D. Fla. No. 1:20-cv-22339 (schedule of actions, TD disclosure statement); In re Paycheck Protection Program (PPP) Agent Fees Litigation, MDL No. 2950 (order denying transfer); American Video Duplicating, Inc. v. Citibank, N.A., C.D. Cal. No. 2:20-cv-03815 (order). Related: How Much Did Womply Make From Pandemic Relief?