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Residents walk through flood waters in Calgary on June 24, 2013.Nathan Denette/The Canadian Press

Following severe weather in Alberta and the Greater Toronto Area, it was clear that Toronto-Dominion Bank's insurance division would take a hit.

And those who follow insurance had heard rumblings of problems stemming from Ontario insurance legislation.

But the one element of the bank's new three-tier charge that caught people off guard is the hit to its real estate lending portfolio. TD is recognizing a provision of up to $125-million, or $93-million after tax, to account for loan losses.

On a conference call with executives, analysts couldn't quite figure out what spurred the provision. Roughly 70 per cent of TD's residential mortgages are insured by Canada Mortgage and Housing Corp., so real estate loans were largely expected to be protected.

TD, however, said it still isn't quite sure just how much coverage it will get from CMHC or Alberta's disaster recovery program.

Earlier this month the provincial government said it would ban developments in areas at risk of 100-year floods. And just two days ago the government said it would help fund a home rebuild if the cost of doing so is cheaper than repair – but the rebuild would only be to a very basic level.

The bank still doesn't know exactly what that means for it in dollar figures, nor does it know how much CMHC will kick in on mortgages that aren't being repaid – especially if the affected homes are in the special flood designated areas.

To err on the side of caution, TD took the big hit, wrapping the real estate provision into the other two writedowns. All in, they amount to nearly $550-million. However, chief financial officer Colleen Johnston said the final figures could easily change, it's just that the fiscal quarter ends Thursday and TD needs to put something on its books.

For now, the bank is optimistic the real estate charge will drop. "I would expect the number to be below [the estimate], ultimately," said chief risk officer Mark Chauvin.

(Tim Kiladze is a Globe and Mail banking reporter.)

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