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Ed Clark , CEO of TD Bank delivers his address during the company's annual general meeting April 4, 2013 in Ottawa.Dave Chan/The Globe and Mail

It was his last public speech and Ed Clark showed remarkable restraint.

Toronto-Dominion Bank's outgoing chief executive held court on Bay Street Tuesday, hinting at first that he would weigh in on his latest pet project: fretting that Canada's economy isn't making the transformational shifts required to compete this century. "For those of you who've heard me before, you know I worry," he teased.

But Mr. Clark refrained from economic and public policy. Instead, he delved into detail about how he built TD. For the business elite who showed up in droves, including rival bank CEOs and pension fund heads, it was a rare chance to see Mr. Clark talk this way and claim credit.

Since he took over in 2002, TD's stock has soared 287 per cent and the bank's market value has increased five fold. Last quarter, the bank that stresses customer service and convenience, made a $2.1-billion profit. TD is now neck and neck with the formidable earnings machine that is the Royal Bank of Canada, the country's largest company.

These figures are sometimes overlooked because Mr. Clark, who will step down in October, is arguably best known for speaking his mind, whether he is questioning Canadian competitiveness or supporting gay rights – and occasionally getting criticized for believing he knows what's best for the population. At the beginning of the current mortgage-lending boom, and just as Canada's biggest banks were hauling in profits, Mr. Clark had the gall to ask Ottawa for stricter lending standards.

Mr. Clark's success at TD was far from guaranteed. The bank he inherited was in rough shape after posting its first full-year loss, decimated by loans to telecom companies during the tech bubble. To reshape the lender, Mr. Clark relied on what he knew best: retail banking. He ran Canada Trust when TD acquired it in 2000, and he applied the same customer-service mentality at TD.

Early in his tenure, Mr. Clark made the two crucial decisions that fundamentally altered TD's path.

Long before the financial crisis erupted, Mr. Clark and his then-chief risk officer, Bharat Masrani, who is now taking over as CEO, questioned the returns from complex mortgage securities. Although investors loved the profits these securities generated, the duo worried there wasn't adequate compensation for the risks and they exited the business before it collapsed.

Mr. Clark also bet heavily on the United States, first buying Banknorth and then tacking on Commerce Bank, racking up a bill worth roughly $18-billion. Unlike the call on mortgage products, the merits of these deals remain unproven. The U.S. economy has taken years to recover from the crisis, and that has severely suppressed profits south of the border.

"Going in de novo into a new country is a long slog," Mr. Clark said in an interview Tuesday. But he stressed that chief executives must deliver short-term profits and also build for the long-term. And in his speech, he swore he knew going in that the value of the U.S. acquisitions could take years to materialize.

TD's shareholders have not minded the slow progress. Yet Bank of Nova Scotia, for instance, must constantly answer questions about any troubles that surface in its international operations. And when TD incurred a humbling $418-million after-tax charge in its insurance arm a year ago, investors barely blinked.

"It never feels like we're getting this free pass," Mr. Clark said, acknowledging that he feels the pressure, but believes investors stick with the bank because they appreciate being talked to like adults.

At the end of Mr. Clark's last quarterly conference call in August, RBC Dominion Securities analyst Darko Mihelic gave this theory some credence. "You've answered all our tough questions; you haven't ducked any of them. And you've answered all of our stupid questions with class, for which I thank you very much," he said to Mr. Clark.

"He's the most candid of the bank CEOs that I've encountered over the years," said Murray Leith, director of investment research at Odlum Brown in Vancouver. "People trust him. He's honest. He's upfront. He's straightforward, whether it's good news or bad news."

Looking back on his career, Mr. Clark said he always tried to be outspoken. "Generally, I do actually try to say what I think." He also admitted he hasn't gotten everything right. "To be honest," he said, "I've been warning about Canada slowing down for the last couple of years. And the Eveready bunny just keeps on bouncing around."

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 13/06/24 4:00pm EDT.

SymbolName% changeLast
Bank of Nova Scotia
Bank of Nova Scotia
Royal Bank of Canada
Royal Bank of Canada
Toronto Dominion Bank
Toronto-Dominion Bank

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