Territorial Bancorp Inc. (NASDAQ: TBNK) (the ‘'Company”),
headquartered in Honolulu, Hawaii, the holding company parent of
Territorial Savings Bank, announced net income of $4.06 million, or
$0.44 per diluted share, for the three months ended June 30, 2021.
The Company also announced that its Board of Directors approved
a quarterly cash dividend of $0.23 per share. The dividend is
expected to be paid on August 26, 2021 to stockholders of record as
of August 12, 2021.
Allan Kitagawa, Chairman and Chief Executive Officer, said,
“Hawaii’s economy has improved as more visitors arrive in the
state. Our balance sheet and asset quality remain strong and we are
well-positioned to help our customers with their banking needs. We
also continue to return capital to our shareholders by paying
dividends and repurchasing shares.”
Interest Income
Net interest income decreased to $13.08 million for the three
months ended June 30, 2021 from $14.77 million for the three months
ended June 30, 2020. Total interest income was$14.76 million for
the three months ended June 30, 2021 compared to $18.00 million for
the three months ended June 30, 2020. The $3.24 million decrease in
total interest income was primarily due to a $3.09 million decrease
in interest earned on loans and a $216,000 decrease in interest
income on investment securities. The decline in interest income on
loans was due to a 26 basis point decrease in the average yield on
loans receivable and a $228.84 million decrease in the average loan
balance. The decrease in the average yield on loans occurred
because of the payoff of higher yielding loans and the addition of
new lower yielding loans to the loan portfolio. The decrease in the
average loan balance occurred as loan repayments and sales of loans
exceeded the origination of new loans. The decrease in interest
income on investment securities occurred because of a 61 basis
point decrease in the average securities yield, which was partially
offset by a $55.34 million increase in the average balance of
investment securities. The decrease in the average securities yield
occurred as higher yielding securities were paid-off and the
addition of new lower yielding securities to the investment
portfolio. The increase in the average balance of investment
securities occurred as security purchases exceeded repayments and
the sale of securities.
Interest Expense and Provision for Loan
Losses
Total interest expense decreased to $1.67 million for the three
months ended June 30, 2021 from $3.24 million for the three months
ended June 30, 2020. Interest expense on deposits decreased by
$1.27 million to $1.09 million for the three months ended June 30,
2021 from $2.36 million for the three months ended June 30, 2020.
The decrease in interest expense on deposits was primarily due to a
33 basis point decrease in the average cost of deposits. The
decrease in the average cost of deposits occurred as the interest
rates offered on deposits were lowered in response to the decline
in market interest rates. Interest expense on Federal Home Loan
Bank (FHLB) advances decreased by $292,000 to $537,000 for the
three months ended June 30, 2021 from $829,000 for the three months
ended June 30, 2020. The decrease in interest expense on FHLB
advances resulted from an 80 basis point decrease in the average
cost of advances. The decrease in the average cost of advances
occurred as the Company restructured $102.00 million of FHLB
advances at lower interest rates. The Company reversed loan loss
provisions of $372,000 for the three months ended June 30, 2021
compared to loan loss provisions of $1.40 million for the three
months ended June 30, 2020. The reversal of the loan loss
provisions during the three months ended June 30, 2021 occurred
primarily because of the decreases in the size of the mortgage loan
portfolio, in Hawaii’s unemployment rate and in amount of loans in
the payment deferral program, all of which contributed to the
reduction in the allowance for loan losses.
Noninterest Income
Noninterest income was $1.73 million for the three months ended
June 30, 2021 compared to $1.46 million for the three months ended
June 30, 2020. The increase in noninterest income was primarily due
to a $492,000 increase in the gain on sale of investment
securities. The increase in gain on sale of investment securities
was partially offset by a $233,000 decrease in the gain on sale of
loans which occurred during the same period.
Noninterest Expense
Noninterest expense was $9.61 million for the three months ended
June 30, 2021 compared to $8.97 million for the three months ended
June 30, 2020. Salaries and benefits expense increased by $296,000
to $5.56 million for the three months ended June 30, 2021 from
$5.26 million for the three months ended June 30, 2020. The
increase in salaries and benefit expenses occurred primarily
because of an increase in compensation and health insurance. The
increases in these expenses were partially offset by decreases in
the cost of equity incentive plans. Other general and
administrative expenses increased by $431,000 to $1.27 million for
the three months ended June 30, 2021 from $843,000 for the three
months ended June 30, 2020. The increase in general and
administrative expenses is primarily due to increases in
accounting, marketing, and legal expenses.
Income Taxes
Income tax expense for the three months ended June 30, 2021 was
$1.51 million compared to $1.57 million for the three months ended
June 30, 2020. The decrease in income tax expense was primarily due
to a $290,000 decrease in income before taxes during the three
months ended June 30, 2021 as compared to the three months ended
June 30, 2020.
Balance Sheet
Total assets were $2.13 billion at June 30, 2021 and $2.11
billion at December 31, 2020. Loans receivable decreased by $93.78
million to $1.31 billion at June 30, 2021 from $1.41 billion at
December 31, 2020. The decrease in loans receivable occurred as
loan repayments and sales exceeded new loan originations.
Investment securities increased by $357.87 million to $609.07
million at June 30, 2021 from $251.20 million at December 31, 2020.
The increase in investment securities occurred as the purchase of
new mortgage-backed securities exceeded principal repayments and
the sale of securities. Cash and cash equivalents decreased to
$117.58 million at June 30, 2021 from $363.54 million at December
31, 2020. The decrease in cash and cash equivalents occurred
because of the purchase of investment securities. Deposits
increased to $1.68 billion at June 30, 2021 from $1.66 billion at
December 31, 2020. Total stockholders’ equity increased to $251.25
million at June 30, 2021 from $248.71 million at December 31, 2020.
The increase in stockholders’ equity occurred as the Company’s net
income and the increase in capital from the allocation of ESOP
shares exceeded dividends paid to shareholders and share
repurchases.
Capital Management
During the three months ended June 30, 2021, the Company
repurchased 101,273 shares. Through June 30, 2021, the Company
repurchased 3,806,950 shares in all of its share repurchase
programs. The shares repurchased represent 31.12% of the total
shares issued in its initial public offering.
Asset Quality
The Company had $99,000 of delinquent mortgage loans 90 days or
more past due at June 30, 2021 compared to $240,000 of delinquent
mortgage loans 90 days or more past due at December 31, 2020.
Delinquent loans exclude loans which are receiving loan payment
deferrals because of COVID-19. Non-performing assets totaled $4.19
million at June 30, 2021 compared to $4.41 million at December 31,
2020. The ratio of non-performing assets to total assets was 0.20%
at June 30, 2021 and 0.21% at December 31, 2020. The allowance for
loan losses at June 30, 2021 was $2.97 million and represented
0.23% of total loans compared to $4.26 million and 0.30% of total
loans as of December 31. 2020.
As of June 30, 2021, the Company had $25.62 million of loans, or
1.95% of total loans receivable in its payment deferral
program. As of March 31, 2021, the Company had $29.30
million, or 2.18% of total loans receivable in its payment deferral
program. In this program, the Company allowed borrowers, who
experienced financial hardship because of COVID-19, to defer
payments on their loans. The decrease in the amount of loans in the
payment deferral program occurred as borrowers opted out of the
program and repaid any deferred loan
payments.
About Us
Territorial Bancorp Inc., headquartered in Honolulu, Hawaii, is
the stock holding company for Territorial Savings Bank. Territorial
Savings Bank is a state chartered savings bank which was originally
chartered in 1921 by the Territory of Hawaii.
Territorial Savings Bank conducts business from its headquarters in
Honolulu, Hawaii and has 29 branch offices in the state of Hawaii.
For additional information, please visit the Company’s website at:
https://www.territorialsavings.net.
Forward-looking statements - this earnings
release contains forward-looking statements, which can be
identified by the use of words such as “estimate,” “project,”
“believe,” “intend,” “anticipate,” “plan,” “seek,” “expect,”
“will,” “may” and words of similar meaning. These forward-looking
statements include, but are not limited to:
- statements of our goals, intentions and expectations;
- statements regarding our business plans, prospects, growth and
operating strategies;
- statements regarding the asset quality of our loan and
investment portfolios; and
- estimates of our risks and future costs and benefits.
These forward-looking statements are based on our current
beliefs and expectations and are inherently subject to significant
business, economic and competitive uncertainties and contingencies,
many of which are beyond our control. In addition, these
forward-looking statements are subject to assumptions with respect
to future business strategies and decisions that are subject to
change. We are under no duty to and do not take any obligation to
update any forward-looking statements after the date of this
earnings release.
The following factors, among others, could cause actual results
to differ materially from the anticipated results or other
expectations expressed in the forward-looking statements:
- the effect of any pandemic disease, including COVID-19, natural
disaster, war, act of terrorism, accident or similar action or
event;
- general economic conditions, either internationally, nationally
or in our market areas, that are worse than expected;
- competition among depository and other financial
institutions;
- inflation and changes in the interest rate environment that
reduce our margins or reduce the fair value of financial
instruments;
- adverse changes in the securities markets;
- changes in laws or government regulations or policies affecting
financial institutions, including changes in regulatory fees and
capital requirements;
- changes in monetary or fiscal policies of the U.S. Government,
including policies of the U.S. Treasury and the Federal Reserve
Board;
- our ability to enter new markets successfully and capitalize on
growth opportunities;
- our ability to successfully integrate acquired entities, if
any;
- changes in consumer demand, spending, borrowing and savings
habits;
- changes in accounting policies and practices, as may be adopted
by the bank regulatory agencies, the Financial Accounting Standards
Board, the Securities and Exchange Commission and the Public
Company Accounting Oversight Board;
- changes in our organization, compensation and benefit
plans;
- the timing and amount of revenues that we may recognize;
- the value and marketability of collateral underlying our loan
portfolios;
- our ability to retain key employees;
- cyberattacks, computer viruses and other technological risks
that may breach the security of our websites or other systems to
obtain unauthorized access to confidential information, destroy
data or disable our systems;
- technological change that may be more difficult or expensive
than expected;
- the ability of third-party providers to perform their
obligations to us;
- the ability of the U.S. Government to manage federal debt
limits;
- the quality and composition of our investment portfolio;
- changes in market and other conditions that would affect our
ability to repurchase our common stock; and
- changes in our financial condition or results of operations
that reduce capital available to pay dividends.
Because of these and a wide variety of other uncertainties, our
actual future results may be materially different from the results
indicated by these forward-looking statements.
Territorial Bancorp Inc. and Subsidiaries |
|
|
Consolidated Statements of Income (Unaudited) |
|
|
(Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2021 |
|
|
2020 |
|
2021 |
|
|
2020 |
Interest income: |
|
|
|
|
|
|
|
|
|
|
Loans |
|
$ |
12,134 |
|
|
$ |
15,225 |
$ |
25,183 |
|
$ |
30,682 |
Investment securities |
|
|
2,394 |
|
|
|
2,610 |
|
4,219 |
|
|
5,390 |
Other investments |
|
|
228 |
|
|
|
170 |
|
459 |
|
|
514 |
Total interest income |
|
|
14,756 |
|
|
|
18,005 |
|
29,861 |
|
|
36,586 |
|
|
|
|
|
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
1,090 |
|
|
|
2,364 |
|
2,407 |
|
|
5,488 |
Advances from the Federal Home Loan Bank |
|
|
537 |
|
|
|
829 |
|
1,073 |
|
|
1,724 |
Securities sold under agreements to repurchase |
|
|
45 |
|
|
|
46 |
|
91 |
|
|
91 |
Total interest expense |
|
|
1,672 |
|
|
|
3,239 |
|
3,571 |
|
|
7,303 |
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
13,084 |
|
|
|
14,766 |
|
26,290 |
|
|
29,283 |
(Reversal of provision)
provision for loan losses |
|
|
(372 |
) |
|
|
1,395 |
|
(1,285 |
) |
|
1,612 |
|
|
|
|
|
|
|
|
|
|
|
Net interest income after (reversal of provision) provision for
loan losses |
|
|
13,456 |
|
|
|
13,371 |
|
27,575 |
|
|
27,671 |
|
|
|
|
|
|
|
|
|
|
|
Non-interest income: |
|
|
|
|
|
|
|
|
|
|
Service fees on loan and deposit accounts |
|
|
530 |
|
|
|
535 |
|
1,525 |
|
|
988 |
Income on bank-owned life insurance |
|
|
190 |
|
|
|
201 |
|
378 |
|
|
403 |
Gain on sale of investment securities |
|
|
911 |
|
|
|
419 |
|
1,437 |
|
|
597 |
Gain on sale of loans |
|
|
26 |
|
|
|
259 |
|
446 |
|
|
666 |
Other |
|
|
70 |
|
|
|
47 |
|
180 |
|
|
108 |
Total noninterest income |
|
|
1,727 |
|
|
|
1,461 |
|
3,966 |
|
|
2,762 |
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
5,560 |
|
|
|
5,264 |
|
11,083 |
|
|
10,948 |
Occupancy |
|
|
1,572 |
|
|
|
1,626 |
|
3,219 |
|
|
3,271 |
Equipment |
|
|
1,064 |
|
|
|
1,164 |
|
2,194 |
|
|
2,284 |
Federal deposit insurance premiums |
|
|
142 |
|
|
|
74 |
|
283 |
|
|
74 |
Other general and administrative expenses |
|
|
1,274 |
|
|
|
843 |
|
2,387 |
|
|
1,932 |
Total noninterest expense |
|
|
9,612 |
|
|
|
8,971 |
|
19,166 |
|
|
18,509 |
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
5,571 |
|
|
|
5,861 |
|
12,375 |
|
|
11,924 |
Income taxes |
|
|
1,513 |
|
|
|
1,570 |
|
3,304 |
|
|
3,160 |
Net income |
|
$ |
4,058 |
|
|
$ |
4,291 |
$ |
9,071 |
|
$ |
8,764 |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.44 |
|
|
$ |
0.47 |
$ |
0.99 |
|
$ |
0.95 |
Diluted earnings per
share |
|
$ |
0.44 |
|
|
$ |
0.47 |
$ |
0.99 |
|
$ |
0.94 |
Cash dividends paid per common
share |
|
$ |
0.23 |
|
|
$ |
0.23 |
$ |
0.46 |
|
$ |
0.46 |
Basic weighted-average shares
outstanding |
|
|
9,117,467 |
|
|
|
9,092,287 |
|
9,124,086 |
|
|
9,164,877 |
Diluted weighted-average
shares outstanding |
|
|
9,162,348 |
|
|
|
9,139,135 |
|
9,166,003 |
|
|
9,228,421 |
Territorial Bancorp Inc. and Subsidiaries |
Consolidated Balance Sheets (Unaudited) |
(Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
|
2021 |
|
|
2020 |
|
|
ASSETS |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
117,578 |
|
|
$ |
363,543 |
|
|
Investment securities
available for sale |
|
|
— |
|
|
|
3,562 |
|
|
Investment securities held to
maturity, at amortized cost (fair value of $615,721 and $262,841 at
June 30, 2021 and December 31, 2020, respectively). |
|
|
609,074 |
|
|
|
247,642 |
|
|
Loans held for sale |
|
|
540 |
|
|
|
2,195 |
|
|
Loans receivable, net |
|
|
1,314,871 |
|
|
|
1,406,995 |
|
|
Federal Home Loan Bank stock,
at cost |
|
|
8,173 |
|
|
|
8,144 |
|
|
Federal Reserve Bank stock, at
cost |
|
|
3,152 |
|
|
|
3,145 |
|
|
Accrued interest
receivable |
|
|
6,345 |
|
|
|
6,515 |
|
|
Premises and equipment,
net |
|
|
4,454 |
|
|
|
4,855 |
|
|
Right-of-use asset, net |
|
|
13,623 |
|
|
|
12,333 |
|
|
Bank-owned life insurance |
|
|
46,022 |
|
|
|
45,644 |
|
|
Deferred income tax assets,
net |
|
|
3,145 |
|
|
|
3,382 |
|
|
Prepaid expenses and other
assets |
|
|
5,100 |
|
|
|
2,844 |
|
|
Total assets |
|
$ |
2,132,077 |
|
|
$ |
2,110,799 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
Deposits |
|
$ |
1,678,694 |
|
|
$ |
1,659,800 |
|
|
Advances from the Federal Home Loan Bank |
|
|
141,000 |
|
|
|
141,000 |
|
|
Securities sold under agreements to repurchase |
|
|
10,000 |
|
|
|
10,000 |
|
|
Accounts payable and accrued expenses |
|
|
28,219 |
|
|
|
29,221 |
|
|
Lease liability |
|
|
14,433 |
|
|
|
13,119 |
|
|
Income taxes payable |
|
|
2,354 |
|
|
|
2,161 |
|
|
Advance payments by borrowers for taxes and insurance |
|
|
6,132 |
|
|
|
6,790 |
|
|
Total liabilities |
|
|
1,880,832 |
|
|
|
1,862,091 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity: |
|
|
|
|
|
|
|
Preferred stock, $.01 par value; authorized 50,000,000 shares, no
shares issued or outstanding |
|
|
— |
|
|
|
— |
|
|
Common stock, $.01 par value; authorized 100,000,000 shares; issued
and outstanding 9,421,560 and 9,513,867 shares at June 30, 2021 and
December 31, 2020,respectively. |
|
|
94 |
|
|
|
95 |
|
|
Additional paid-in capital |
|
|
58,860 |
|
|
|
61,153 |
|
|
Unearned ESOP shares |
|
|
(3,670 |
) |
|
|
(3,915 |
) |
|
Retained earnings |
|
|
204,928 |
|
|
|
200,066 |
|
|
Accumulated other comprehensive loss |
|
|
(8,967 |
) |
|
|
(8,691 |
) |
|
Total stockholders’ equity |
|
|
251,245 |
|
|
|
248,708 |
|
|
Total liabilities and stockholders’ equity |
|
$ |
2,132,077 |
|
|
$ |
2,110,799 |
|
|
|
|
|
|
|
|
|
|
Territorial Bancorp Inc. and Subsidiaries |
Selected Financial Data (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
June 30, |
|
|
|
|
|
|
|
|
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Ratios
(annualized): |
|
|
|
|
|
|
|
|
|
Return on average
assets |
|
|
|
|
|
0.76% |
|
|
|
0.83% |
|
|
|
|
Return on average
equity |
|
|
|
|
6.43% |
|
|
|
7.05% |
|
|
|
|
Net interest
margin on average interest earning assets |
|
|
2.54% |
|
|
|
2.94% |
|
|
|
|
Efficiency ratio
(1) |
|
|
|
|
|
64.90% |
|
|
|
55.28% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June |
|
At December |
|
|
|
|
|
|
|
|
|
|
30, 2021 |
|
|
|
31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Balance
Sheet Data: |
|
|
|
|
|
|
|
|
|
Book value per
share (2) |
|
|
|
|
$26.67 |
|
|
$26.14 |
|
|
|
|
Stockholders'
equity to total assets |
|
|
|
|
11.78% |
|
|
|
11.78% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality |
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands): |
|
|
|
|
|
|
|
|
|
|
Delinquent loans
90 days past due and not accruing |
|
$99 |
|
|
$240 |
|
|
|
|
Non-performing
assets (3) |
|
|
|
$4,190 |
|
|
$4,405 |
|
|
|
|
Allowance for loan
losses |
|
|
|
$2,969 |
|
|
$4,262 |
|
|
|
|
Non-performing
assets to total assets |
|
|
|
0.20% |
|
|
|
0.21% |
|
|
|
|
Allowance for loan
losses to total loans |
|
|
|
0.23% |
|
|
|
0.30% |
|
|
|
|
Allowance for loan
losses to non-performing assets |
|
|
70.86% |
|
|
|
96.75% |
|
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Note: |
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(1) Efficiency
ratio is equal to noninterest expense divided by the sum of net
interest income and noninterest income |
(2) Book value
per share is equal to stockholders' equity divided by number of
shares issued and outstanding |
(3)
Non-performing assets consist of non-accrual loans and real estate
owned. Amounts are net of charge-offs |
Contact: Walter Ida(808)
946-1400
Territorial Bancorp (NASDAQ:TBNK)
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