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1 Foreign Bank Worth a Closer Look

On the net interest income side, the majority of the bank's earning assets are residential mortgages. Twenty-one percent of the bank's total assets are residential mortgages, 14% are loans to businesses or governments, and 7.6% are other consumer loans such as home equity lines, car loans, or personal loans.

On the non-interest income side, the bank relies pretty heavily on its TD Waterhouse brokerage subsidiary and its insurance unit. The following chart breaks out the key drivers of the bank's non-interest income. The total investment and securities services segment includes brokerage, investment management, and mutual fund management.

Foolish takeaway

For bank investors, this breakdown is a beautiful thing. The bank's business, first and foremost, is making loans to individuals and businesses. That business is supplemented and protected by strong investment services and insurance income streams.

That extra, lower-risk income gives the bank flexibility to price loans competitively to win the best deals. It also mitigates the risk of low interest rates, as in the current environment, and it cushions the top line from economic and market gyrations throughout the credit cycle.

There's a lot more to analyzing a bank stock than just looking at revenue, but this is as good a place to start as any. And for TD Bank, the analysis is off to a great start.

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The article 1 Foreign Bank Worth a Closer Look originally appeared on Fool.com.

Jay Jenkins has no position in any stocks mentioned. The Motley Fool recommends Apple, Bank of American, Goldman Sachs, and Wells Fargo and owns shares of Apple, Bank of America, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days . We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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