NEW YORK — TD Bank's president and chief executive officer believes the company made a wise choice when completing the acquisition of Chrysler Financial earlier this year.

Now doing business as TD Auto Finance, Bharat Masrani told an investors conference earlier this week that activity within this division is "going well."

After making a presentation about the bank's interests in the U.S., Canada and beyond, Masrani was asked specifically about the vehicle-lending segment during a question-and-answer session at the Barclays 2011 Global Financial Services Conference in New York.

"It's a very important component of our strategy in the U.S. as I'm sure everybody knows because of the structure of our balance sheet in the U.S. where we have a huge level of funding," Masrani began in response. "It made Chrysler Financial very attractive to our U.S. business.

"It's going well," he continued. "We only closed on the deal in April. We've been very happy with the dealer signups. That has exceeded our expectations. We are seeing good application flows from those dealers."

Masrani did touch on one part that's given TD Auto Finance some difficulty.

"One part which has been somewhat challenging is the competitive situation, which has resulted in softer margins," the bank boss shared. "But to some extent, by our entry it created a competitive response, which is to be expected. With our funding costs, our size, our profile, you're going to have a competitive response when you're starting out in this business.

"With the benefit of hindsight, we should not be surprised at that, but I see over time, not only with that business to meet our expectations but to exceed those expectations, we have to deliver for our franchised dealers," Masrani went on to say.

Back in June, TD Bank Group held a special celebration in Michigan to officially announce the launch of its North America auto lending brand, TD Auto Finance. At that time, the company said it was already 25 percent ahead of expectations in signing up U.S. dealers.

"In the last 70 days, we've been able to sign up about 25 percent more dealers than just the 5,000 (which was the initial plan)," Thomas Gilman, TD Auto Finance president and chief executive officer, told Bloomberg.

The company's goal is to become a top 10 auto lender in the U.S. within three to four years. At the time TD announced it was acquiring Chrysler Financial late last year; top management said the plan would be for the new auto brand to focus on prime.

The acquisition gave TD all of Chrysler Financial's processes and technology as well as its existing portfolio of retail assets on both sides of the border.

TD expects that the former Chrysler Financial business could generate a return on invested capital of about 20 percent in three to four years once it is operating at a steady run rate for target originations.

In a recap, after GMAC (now Ally Financial) was tapped to serve as Chrysler dealers' primary preferred lender once it gained bank status and bailout funds from the government, Chrysler Financial was left to fend for itself.

It found renewed capital and support thanks to this deal, which allowed the company to renew originations and support the dealer insurance and capitalization divisions.

At the Barclays event, another questioner insisted TD Bank is making a "fairly large bet on U.S. economy" with its interests in TD Auto Finance and more. Masrani acknowledged the fact but said he remains confident.

"Obviously the macroeconomic conditions are not where we would like them to be. The headwinds are real, and the recovery is going to take time. There are going to be a few bumps in the road through this process," Masrani responded.

"But the U.S. economy has always been resilient. The American psyche is to be optimistic. I have every confidence that at some point we'll be able to turn that," he concluded.