Source: The Canadian Press

TD Bank (TSX:TD) has set the earnings growth target for its U.S. personal and commercial banking operations at US$1.6 billion over next three years, but the head of the division said profits could race even higher.

Bharat Masrani told an investor conference in New York that the bank came up with the target by combining an annualized version of its earnings so far this year, as well as accounting for recent U.S. acquisitions and organic growth predictions.

“We also did not assume any material improvements in margins,” he said.

But Masrani said the calculations were made assuming “modest growth” in the economy, given uncertainty about how quickly the U.S. will recover and questions about future changes in international banking regulations that remain unanswered.

“Should the recovery be more robust — or if rising rates over the next few years were to materially improve the margin — this would create an additional tailwind,” he said.

TD has been bulking up its U.S. presence in recent months, picking up a series of banks in the southeast.

Last month, it paid US$191.6 million for South Financial Group Inc. (Nasdaq:TSFG), a casualty of the credit crunch.

The bank made a similar acquisition in April when it picked up the assets and liabilities of three insolvent Florida banks, pairing with the U.S. Federal Deposit Insurance Corp. to share the loan losses.

When the deals close later this year, TD Bank will have about 1,300 branches in the United States, overshadowing the near 1,100 that it has in Canada.

“We don’t need to do anything as we have a fantastic platform from which to drive organic growth in the markets we’re in,” Masrani told investors, though he noted an attractive deal could always change executives’ minds.

In TD’s investor presentation, the company outlined a “significant growth opportunity in the Carolinas” highlighted by encouraging population growth trends and what it considers strong demographics.

Shares in the bank slipped 34 cents to $73.14 in afternoon trading on the Toronto Stock Exchange.