Territorial Bancorp Inc. (NASDAQ: TBNK) (the “Company”),
headquartered in Honolulu, Hawaii, the holding company parent of
Territorial Savings Bank, announced a net loss of $482,000, or
$(0.06) per diluted share, for the three months ended March 31,
2024.
Hope Bancorp Merger Agreement
As previously announced in a joint news release issued April 29,
2024, Hope Bancorp, Inc. (Nasdaq:HOPE) and the Company signed a
definitive merger agreement. Under the terms of the merger
agreement, Company shareholders will receive a fixed exchange ratio
of 0.8048 share of Hope Bancorp common stock in exchange for each
share of Company common stock they own, in a 100% stock-for-stock
transaction valued at approximately $78.6 million, based on the
closing price of Hope Bancorp’s common stock on April 26, 2024. The
transaction is intended to qualify as a tax-free reorganization for
Territorial shareholders.
Upon completion of the transaction, Hope Bancorp intends to
maintain the Territorial franchise in Hawaii and preserve the
100-plus year legacy of the Territorial Savings Bank brand name,
culture and commitment to the local communities. The branches will
continue to do business under the Territorial Savings Bank brand,
as a trade name of Bank of Hope.
The transaction is subject to regulatory approvals, the approval
of Territorial shareholders, and the satisfaction of other
customary closing conditions.
Interest Income
Net interest income decreased by $3.33 million for the three
months ended March 31, 2024. Total interest income was $17.99
million for the three months ended March 31, 2024, compared to
$16.72 million for the three months ended March 31, 2023. The $1.27
million increase in total interest income was primarily due to an
$886,000 increase in interest earned on other investments and a
$611,000 increase in interest earned on loans. The increase in
interest income on other investments is primarily due to a $50.72
million increase in the average cash balance with the Federal
Reserve Bank (FRB) and a 97 basis point increase in the average
interest rate paid on cash balances. The $611,000 increase in
interest income on loans resulted from a $12.23 million increase in
the average loan balance together with a 16 basis point increase in
the average loan yield.
Interest Expense
As a result of recent increases in short-term interest rates,
total interest expense increased by $4.60 million for the three
months ended March 31, 2024. Interest expense on deposits increased
by $3.25 million primarily due to an increase in interest expense
on certificates of deposit (CD) and savings accounts. Interest
expense on CDs rose by $2.28 million due to a 126 basis point
increase in the average cost of CDs and an $87.24 million increase
in the average CD balance. Interest expense on savings accounts
rose by $969,000 due to a 56 basis point increase in the average
cost of savings accounts which was partially offset by a $143.40
million decrease in the average savings account balance. The
increase in the average cost of CDs and savings accounts occurred
as interest rates were raised in response to the increase in market
interest rates. The increase in the average balance of CDs occurred
as customers transferred balances from lower rate savings accounts
to higher rate CDs. Interest expense on Federal Home Loan Bank
(FHLB) advances increased by $756,000 for the three months ended
March 31, 2024, primarily due to a $49.67 million increase in the
average advance balance and an 80 basis point increase in the
average cost of advances. Interest expense on FRB borrowings rose
by $595,000 for the three months ended March 31, 2024, as the
Company obtained a $50.0 million advance from the FRB in the fourth
quarter of 2023. Additional FHLB and FRB advances were obtained in
2023 to enhance the Company’s liquidity and to fund deposit
withdrawals.
Noninterest Expense
Noninterest expense increased by $447,000 for the three months
ended March 31, 2024, primarily due to increases in the Federal
Deposit Insurance Corporation (FDIC) premium and legal expenses
which were offset by decreases in salaries and employee benefits.
FDIC premium expense rose by $251,000 for the quarter because of an
increase in the FDIC insurance premium rate retroactive to October
1, 2023. Other general and administrative expenses rose by $512,000
for the quarter and included $290,000 in merger-related legal
expenses. Salaries and employee benefits decreased by $442,000 for
the quarter primarily due to a decrease in compensation expense,
deferred salary expense for originating new loans, deferred
compensation accruals, supplemental executive retirement plan
benefits and accruals for the employee stock ownership plan (ESOP).
The decrease in compensation expense is primarily due to a decrease
in the number of employees working at the bank. The decrease in
deferred salary expense for originating new loans occurred as fewer
loans were originated during the three months ended March 31, 2024,
compared to the three months ended March 31, 2023. The decrease in
ESOP accruals is primarily due to a decline in the Company’s share
price which is used to calculate the accrual.
Income Taxes
Income tax benefit for the three months ended March 31, 2024 was
$243,000 with an effective tax rate of (33.52)% compared to income
tax expense of $851,000 with an effective tax rate of 26.87% for
the three months ended March 31, 2023. The decrease in income tax
expense was primarily due to a $3.89 million decrease in income
before income taxes during the quarter.
Balance Sheet
Total assets were $2.19 billion at March 31, 2024 and $2.24
billion at December 31, 2023. Investment securities, including
available for sale securities, decreased by $8.84 million to
$697.06 million at March 31, 2024 from $705.90 million at December
31, 2023. The decrease in investment securities occurred primarily
because of principal repayments on mortgage-backed securities. Cash
and cash equivalents decreased by $36.60 million to $90.06 million
at March 31, 2024 from $126.66 million at December 31, 2023. The
decrease in cash and cash equivalents was used to fund deposit
withdrawals during the quarter ended March 31, 2024.
Deposits decreased by $36.46 million from $1.64 billion at
December 31, 2023 to $1.60 billion at March 31, 2024. The decrease
in deposits occurred as customers sought higher interest rates on
their deposits than what the Company offers.
Asset Quality
Credit quality continues to be extremely important as the Bank
adheres to its strict underwriting standards. The Company had
$87,000 in delinquent mortgage loans 90 days or more past due at
March 31, 2024, compared to $227,000 at December 31, 2023.
Non-performing assets totaled $2.21 million at March 31, 2024,
compared to $2.26 million at December 31, 2023. The ratio of
non-performing assets to total assets was 0.10% at March 31, 2024
and December 31, 2023. The allowance for credit losses at March 31,
2024 was $5.14 million and represented 0.39% of total loans,
compared to $5.12 million and 0.39% of total loans as of December
31, 2023. The ratio of the allowance for credit losses to
non-performing loans rose to 233.20% at March 31, 2024, compared to
226.59% at December 31, 2023.
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 28 branch offices in the state of Hawaii. For additional
information, please visit the Company’s website at:
https://www.tsbhawaii.bank.
Additional Information and Where to Find it
In connection with the proposed merger, Hope
Bancorp, Inc. will file with the Securities and Exchange Commission
(“SEC”) a Registration Statement on Form S-4, which will include a
Proxy Statement of Territorial Bancorp Inc. that also constitutes a
prospectus of Hope Bancorp, Inc. Territorial Bancorp shareholders
are encouraged to read the Registration Statement and the Proxy
Statement/Prospectus regarding the merger when it becomes available
and any other relevant documents filed with the SEC, as well as any
amendments or supplements to those documents, because they will
contain important information about the proposed merger.
Territorial Bancorp shareholders will be able to obtain a free copy
of the Proxy Statement/Prospectus, as well as other filings
containing information about Hope Bancorp and Territorial Bancorp
at the SEC’s Internet site (www.sec.gov). Territorial Bancorp
shareholders will also be able to obtain these documents, free of
charge, from Territorial Bancorp at
https://www.tsbhawaii.bank/tsb/investor-relations/.
Participants in Solicitation
Territorial Bancorp and its directors, executive officers,
management and employees may be deemed to be participants in the
solicitation of proxies in respect of the merger. Information
concerning Territorial Bancorp’s participants is set forth in the
Proxy Statement, dated April 16, 2024, for Territorial Bancorp’s
2024 annual meeting of shareholders as filed with the SEC on
Schedule 14A. Additional information regarding the participants in
the solicitation of proxies in respect of the proposed transaction
and interests of participants of Territorial Bancorp in the
solicitation of proxies in respect of the merger will be included
in the Registration Statement and Proxy Statement/Prospectus to be
filed with the SEC. Free copies of these documents, when available,
may be obtained as described in the preceding paragraph.
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:
- factors related to the proposed transaction with Hope Bancorp,
including the receipt of regulatory and shareholder approvals, and
other customary closing conditions;
- 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;
- the effect of any pandemic disease, including COVID-19, natural
disaster, war, act of terrorism, accident or similar action or
event;
- 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.
Contact: Walter Ida(808)
946-1400
Territorial Bancorp Inc. and
SubsidiariesConsolidated Statements of Operations
(Unaudited)(Dollars in thousands, except per share data) |
|
|
|
|
|
|
Three Months EndedMarch 31, |
|
|
|
|
|
|
2024 |
|
|
|
2023 |
|
|
Interest income: |
|
|
|
|
|
|
|
|
|
|
Loans |
|
$ |
12,065 |
|
|
$ |
11,454 |
|
|
|
Investment
securities |
|
|
4,313 |
|
|
|
4,540 |
|
|
|
Other investments |
|
|
1,613 |
|
|
|
727 |
|
|
|
Total interest income |
|
|
17,991 |
|
|
|
16,721 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
6,779 |
|
|
|
3,530 |
|
|
|
Advances
from the Federal Home Loan Bank |
|
|
1,810 |
|
|
|
1,054 |
|
|
|
Advances
from the Federal Reserve Bank |
|
|
595 |
|
|
|
— |
|
|
|
Securities
sold under agreements to repurchase |
|
|
46 |
|
|
|
46 |
|
|
|
Total interest expense |
|
|
9,230 |
|
|
|
4,630 |
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
8,761 |
|
|
|
12,091 |
|
|
Provision (reversal of provision) for credit losses |
|
|
19 |
|
|
|
(100 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net interest income after provision (reversal of provision) for
credit losses |
|
|
8,742 |
|
|
|
12,191 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest income: |
|
|
|
|
|
|
|
|
Service and
other fees |
|
|
273 |
|
|
|
310 |
|
|
|
Income on
bank-owned life insurance |
|
|
246 |
|
|
|
203 |
|
|
|
Net gain on
sale of loans |
|
|
— |
|
|
|
1 |
|
|
|
Other |
|
|
74 |
|
|
|
75 |
|
|
|
Total noninterest income |
|
|
593 |
|
|
|
589 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
Salaries and employee
benefits |
|
|
4,962 |
|
|
|
5,404 |
|
|
|
Occupancy |
|
|
1,738 |
|
|
|
1,623 |
|
|
|
Equipment |
|
|
1,323 |
|
|
|
1,312 |
|
|
|
Federal deposit insurance
premiums |
|
|
496 |
|
|
|
245 |
|
|
|
Other general and
administrative expenses |
|
|
1,541 |
|
|
|
1,029 |
|
|
|
Total noninterest expense |
|
|
10,060 |
|
|
|
9,613 |
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income taxes |
|
|
(725 |
) |
|
|
3,167 |
|
|
Income tax (benefit) expense |
|
|
(243 |
) |
|
|
851 |
|
|
|
Net (loss) income |
|
$ |
(482 |
) |
|
$ |
2,316 |
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings per share |
|
$ |
(0.06 |
) |
|
$ |
0.26 |
|
|
Diluted (loss) earnings per share |
|
$ |
(0.06 |
) |
|
$ |
0.26 |
|
|
Cash dividends declared per common share |
|
$ |
- |
|
|
$ |
0.23 |
|
|
Basic weighted-average shares outstanding |
|
|
8,588,137 |
|
|
|
8,774,634 |
|
|
Diluted weighted-average shares outstanding |
|
|
8,630,719 |
|
|
|
8,806,744 |
|
|
Territorial Bancorp Inc. and
SubsidiariesConsolidated Balance Sheets
(Unaudited)(Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
March 31,2024 |
|
December 31,2023 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
90,059 |
|
|
$ |
126,659 |
|
|
Investment securities available for sale, at fair value |
|
|
19,483 |
|
|
|
20,171 |
|
|
Investment securities held to maturity, at amortized cost (fair
value of $547,290 and $568,128 at March 31,
2024 and December 31, 2023, respectively) |
|
|
677,578 |
|
|
|
685,728 |
|
|
Loans receivable |
|
|
1,309,712 |
|
|
|
1,308,552 |
|
|
|
Allowance for credit losses |
|
|
(5,142 |
) |
|
|
(5,121 |
) |
|
Loans receivable, net of allowance for credit losses |
|
|
1,304,570 |
|
|
|
1,303,431 |
|
|
Federal Home Loan Bank stock, at cost |
|
|
12,232 |
|
|
|
12,192 |
|
|
Federal Reserve Bank stock, at cost |
|
|
3,182 |
|
|
|
3,180 |
|
|
Accrued interest receivable |
|
|
6,281 |
|
|
|
6,105 |
|
|
Premises and equipment, net |
|
|
7,144 |
|
|
|
7,185 |
|
|
Right-of-use asset, net |
|
|
12,080 |
|
|
|
12,371 |
|
|
Bank-owned life insurance |
|
|
48,884 |
|
|
|
48,638 |
|
|
Income taxes receivable |
|
|
604 |
|
|
|
344 |
|
|
Deferred income tax assets, net |
|
|
2,820 |
|
|
|
2,457 |
|
|
Prepaid expenses and other assets |
|
|
8,112 |
|
|
|
8,211 |
|
|
|
Total assets |
|
$ |
2,193,029 |
|
|
$ |
2,236,672 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
Deposits |
|
$ |
1,600,148 |
|
|
$ |
1,636,604 |
|
|
|
Advances from the Federal Home
Loan Bank |
|
|
242,000 |
|
|
|
242,000 |
|
|
|
Advances from the Federal
Reserve Bank |
|
|
50,000 |
|
|
|
50,000 |
|
|
|
Securities sold under
agreements to repurchase |
|
|
10,000 |
|
|
|
10,000 |
|
|
|
Accounts payable and accrued
expenses |
|
|
20,113 |
|
|
|
23,334 |
|
|
|
Lease liability |
|
|
17,597 |
|
|
|
17,297 |
|
|
|
Advance payments by borrowers
for taxes and insurance |
|
|
3,155 |
|
|
|
6,351 |
|
|
|
Total liabilities |
|
|
1,943,013 |
|
|
|
1,985,586 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity: |
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.01 par
value; authorized 50,000,000 shares, no shares issued or
outstanding |
|
|
— |
|
|
|
— |
|
|
|
Common stock, $0.01 par value;
authorized 100,000,000 shares; issued and outstanding
8,826,613 shares at March 31, 2024 and December 31, 2023 |
|
|
88 |
|
|
|
88 |
|
|
|
Additional paid-in
capital |
|
|
48,098 |
|
|
|
48,022 |
|
|
|
Unearned ESOP shares |
|
|
(2,324 |
) |
|
|
(2,447 |
) |
|
|
Retained earnings |
|
|
210,771 |
|
|
|
211,644 |
|
|
|
Accumulated other
comprehensive loss |
|
|
(6,617 |
) |
|
|
(6,221 |
) |
|
|
Total stockholders’ equity |
|
|
250,016 |
|
|
|
251,086 |
|
|
|
Total liabilities and stockholders’ equity |
|
$ |
2,193,029 |
|
|
$ |
2,236,672 |
|
|
|
Territorial
Bancorp Inc. and Subsidiaries |
|
Selected Financial
Data (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
|
|
March 31, |
|
|
|
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
|
|
|
|
Performance Ratios (annualized): |
|
|
|
|
|
|
Return on
average assets |
|
|
-0.09 |
% |
|
|
0.43 |
% |
|
|
Return on
average equity |
|
|
-0.77 |
% |
|
|
3.67 |
% |
|
|
Net interest margin on average interest earning assets |
|
1.65 |
% |
|
|
2.30 |
% |
|
|
Efficiency
ratio (1) |
|
|
107.55 |
% |
|
|
75.81 |
% |
|
|
|
|
|
|
|
|
|
|
|
At |
|
At |
|
|
|
|
March |
|
December |
|
|
|
|
31, 2024 |
|
31, 2023 |
|
|
|
|
|
|
|
|
Selected Balance Sheet Data: |
|
|
|
|
|
|
Book value
per share (2) |
|
$ |
28.33 |
|
|
$ |
28.45 |
|
|
|
Stockholders' equity to total assets |
|
|
11.40 |
% |
|
|
11.23 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality |
|
|
|
|
|
(Dollars in thousands): |
|
|
|
|
|
|
Delinquent loans 90 days past due and not accruing |
$ |
87 |
|
|
$ |
227 |
|
|
|
Non-performing assets (3) |
|
$ |
2,205 |
|
|
$ |
2,260 |
|
|
|
Allowance
for credit losses |
|
$ |
5,142 |
|
|
$ |
5,121 |
|
|
|
Non-performing assets to total assets |
|
|
0.10 |
% |
|
|
0.10 |
% |
|
|
Allowance
for credit losses to total loans |
|
|
0.39 |
% |
|
|
0.39 |
% |
|
|
Allowance for credit losses to non-performing assets |
|
233.20 |
% |
|
|
226.59 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: |
|
|
|
|
|
|
|
|
|
|
|
|
(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 |
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|
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Territorial Bancorp (NASDAQ:TBNK)
Historical Stock Chart
From May 2024 to Jun 2024
Territorial Bancorp (NASDAQ:TBNK)
Historical Stock Chart
From Jun 2023 to Jun 2024