Toronto-Dominion Bank reported a 27% drop in net income for the first quarter ended Jan. 31, to $712 million from $970 million a year ago. However, its revenue increased by 15% during that time to almost $4.2 billion from $3.6 billion in Q1 2008.

The results demonstrated solid earnings contributions from TD Bank’s personal and commercial banking operations in Canada and the U.S. and wholesale banking, while wealth management was affected by the continuing challenges in financial markets.

“Our solid first-quarter results demonstrate that our strategy has positioned us well to weather the stresses of a weakening economy,” said Ed Clark, president and CEO of TD Bank. “In fact, the strength of our banking model is what’s behind our ability to continually make investments in the future growth of our businesses.”

The bank’s Canadian personal and commercial banking division, TD Canada Trust, posted earnings of $584 million in Q1, down 2% from the same period last year. Record volume growth in the quarter was offset by compressed margins and higher loan losses, reflecting the deteriorating economic outlook. During the quarter, TD Bank’s home and auto, life and health insurance businesses were consolidated under the single brand, TD Insurance.

“TD Canada Trust remains committed to lending, with both personal and commercial lending growing at double-digit rates compared to the same period last year. As other lenders have withdrawn from the Canadian market, and non-bank sources of credit become harder to find, TD Canada Trust is doing its part to fill the lending gap. This gap will further shrink as demand for credit naturally slows with the economy,” said Clark.

“While this operating environment will likely get worse before it gets better, the underlying strength of TD Canada Trust is allowing us to continue investing in future growth, including our plans to add new branches and to increase the number of customer-facing roles,” he added

TD Bank’s wealth management division, including the bank’s equity share in TD Ameritrade, earned $152 million in the quarter, down 30% from the Q1 2008. As previously reported, TD Ameritrade contributed $77 million in earnings to the segment, with record average trades per day for its quarter ended Dec. 31, 2008. In Canada, increases in transactional revenue in online brokerage operations were offset by lower fee income and declines in assets levels in mutual funds and the advice-based businesses.

“Our wealth management businesses continue to prudently manage through strong market headwinds,” said Clark. “As we continue on this course, we remain committed to strategically growing our diversified wealth offering. We plan to add 80 new client-facing advisors in Canada this year and recently announced an arrangement to increase our direct ownership stake in TD Ameritrade by 5%. TD Ameritrade’s significant long-term potential continues to be a key part of our U.S. growth strategy.”

TD Bank’s U.S. personal and commercial banking division generated $240 million in reported net income and $307 million in adjusted net income for the quarter, compared to $127 million in adjusted and reported net income for the same period last year. Much of this increase was attributable to the inclusion of Commerce earnings, which have been added to this segment since the third quarter of 2008. The quarter saw solid growth in loans and deposits moderated by increased loan losses, as credit conditions worsened, and continuing downward pressure on margins.

“Our U.S. personal and commercial bank delivered another solid quarter for us and the integration of Commerce remains on track,” said Clark. “We remain very cautious in our outlook for the U.S. economy and are positioning the business accordingly. Nevertheless, with 14 new branches added this quarter, TD Bank remains focused on executing its organic growth strategy and taking advantage of its position of strength to gain market share.”

Meanwhile, the wholesale banking division showed continued strength as reported net income for the quarter of $265 million, a 63% increase compared to the same period last year. Wholesale banking’s performance was driven by strong interest rate and foreign exchange trading, as well as solid contributions from equity trading and investment banking. The recovery of committed financing was partially offset by securities losses in the quarter.

TD Bank also announced that a dividend in an amount of 61¢ per fully paid common share in the bank’s capital stock has been declared for the quarter ending April 30, payable on and after April 30 , to shareholders of record at the close of business on April 3.