NEW YORK – Toronto-Dominion Bank Chief Executive Officer Edmund Clark faced investor doubts when he announced in 2004 he was buying a U.S. consumer lender, challenging larger rivals such as Bank of America in the world’s largest financial market.

“Every analyst said ‘You see, another dumb Canadian trying to go into the U.S.,’ ” Clark said this month in an interview at Bloomberg’s headquarters in New York. “They don’t know how to do it. They don’t have the guts. They’re too conservative.”

More than seven years later, Canada’s second-largest bank is one of the 10 biggest lenders in the U.S. by assets, and may soon have the third-most branches in New York City, a banking market almost as big as Canada’s.

By sticking to consumer lending and avoiding high-risk subprime loans and structured products, the Canadian lender posted profit of almost $3 billion in U.S. consumer banking over the past three years, while bigger banks such as Bank of America and Citigroup required government bailouts.

“When we went into the United States, we refused to do subprime lending,” Clark said. “We said, ‘I don’t care what the spreads are, we are not going to do that.’ ”

Shareholders have rewarded Clark’s ability to weather the financial crisis while expanding earnings on both sides of the border.

Toronto-Dominion now has more branches in the United States than in Canada. Toronto-Dominion is also one of the few banks with an Aaa credit rating from Moody’s Investors Service.

Toronto-Dominion shares have gained 42 percent in the five years ended Dec. 31, 2011. That’s the best performance among Canada’s five largest banks over that period, and compares with a drop of 87 percent for the Bank of America, in Charlotte, N.C.

“We have had a philosophical view all along that people were changing banks from being built around customers and clients, to being built around traders,” said Clark, 64.

The lender posted record annual profit in 2011 of $6.05 billion, or $6.43 a share, according to International Financial Reporting Standards. Since Clark became CEO in December 2002, Toronto-Dominion has increased earnings 18 percent on a compounded annual basis.

Bank of America CEO Brian Moynihan, 52, has spent the last two years atoning for ill-fated acquisitions made by his predecessor, Kenneth Lewis. The 2008 takeover of Countrywide Financial, the biggest home lender during the U.S. housing bubble, saddled the firm with so many liabilities from shoddy mortgages that last year it weighed putting the unit into bankruptcy.

Jerry Dubrowski, a Bank of America spokesman, declined to comment.

Toronto-Dominion and other Canadian lenders avoided subprime lending and structured products during the worst financial crisis since the Great Depression.

“I’m a big believer that you should run an institution and become capable of understanding any part of the institution that you run,” Clark said. “The moment you’re saying ‘No, no, no, but I have a third vice president that does,’ look out. I like to keep institutions a little narrow in their focus.”