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The outside of a TD Bank branch is seen in New York January 17, 2012.SHANNON STAPLETON/Reuters

Toronto-Dominion Bank reported first-quarter earnings of $1.48-billion on Thursday, down from $1.56-billion a year earlier.

TD's banking, wealth and insurance units reported higher earnings than a year ago, while its capital markets division saw its profits fall 17 per cent.

The results were also affected by a number of one-time items, most significantly a litigation reserve that amounts to $171-million after tax, which the bank is setting aside after it was ordered to pay $67-million for its role as a third-party bank in a $1.2-billion Ponzi scheme operated by Scott Rothstein, a disbarred Florida lawyer.

On a diluted basis the earnings amount to $1.55 per share, down from $1.67 in the same quarter last year.

Despite the earnings drop TD is raising its dividend. The bank said that a dividend of 72 cents per common share will be paid for the quarter ending April 30. That's an increase of four cents or 5.9 per cent from the prior quarter.

Rival Royal Bank of Canada also said Thursday that its profit fell from a year ago (by 5 per cent to $1.86-billion), and, like TD, its performance was hurt by its capital markets business. RBC also increased its dividend, by three cents or 6 per cent to 57 cents.

TD's core Canadian personal and commercial banking division posted its highest profit to date, despite the headwinds posed by low interest rates. It earned $826-million, as Canadians continued to cope, by and large, with their debt payments.

"Looking ahead we feel we're positioned for steady earnings growth in the mid-to-high single digits," stated Tim Hockey, the head of TD's Canadian banking division.

TD's wealth and insurance unit brought in $294-million, up 14 per cent from a year ago, despite lower trading revenue. The increase was the result of asset growth in the wealth business and new business on the insurance side.

U.S. personal and commercial banking reported profits of $165-million (U.S.), up 6 per cent from the same time last year.

But the bank's wholesale banking or capital markets unit saw its profits drop 17 per cent to $194-million (Canadian), because its investments earned much more a year ago than they did this quarter.

"Core results were strong despite market-wide declines in equity trading volumes and low new issuance activity," Bob Dorrance, the head of the wholesale banking division, stated in a press release. "Our fixed income, currency and commodity businesses performed well as did our M&A advisory practice, which made for an overall strong quarter."