Territorial Bancorp Inc. Announces Second Quarter 2021 Results

Rhea-AI Summary

Territorial Bancorp Inc. (TBNK) reported a net income of $4.06 million for Q2 2021, down from $4.29 million in Q2 2020. Fully diluted earnings per share was $0.44, slightly below last year's $0.47. However, earnings per share for the first half of 2021 rose to $0.99, up 5.32%. The company declared a quarterly cash dividend of $0.23, marking the 46th consecutive dividend. Total interest income fell to $14.76 million, primarily due to decreased loan balances and yields. Notably, total assets grew to $2.13 billion, while delinquent loans decreased to $99,000.

Positive

• Earnings per share for six months increased by 5.32% to $0.99.
• Declared quarterly cash dividend of $0.23, showing commitment to shareholders.
• Total assets grew to $2.13 billion.
• Delinquent mortgage loans decreased to $99,000.

Negative

• Net income for Q2 2021 decreased to $4.06 million from $4.29 million in Q2 2020.
• Total interest income declined by $3.24 million to $14.76 million due to lower loan yields.
• Interest income on loans decreased by $3.09 million.

• Net income for the three months ended June 30, 2021 was $4.06 million compared to $4.29 million for the three months ended June 30, 2020.
• Fully-diluted earnings per share for the three months ended June 30, 2021 was $0.44 per share compared to $0.47 per share for the three months ended June 30, 2020. 
• Fully-diluted earnings per share for the six months ended June 30, 2021 was $0.99 per share compared to $0.94 per share for the six months ended June 30, 2020.   Earnings per share for the first six months of 2021 has risen by $0.05 per share, or 5.32%.  
• Board of Directors approved a quarterly cash dividend of $0.23 per share, representing Territorial Bancorp Inc.’s 46th consecutive quarterly dividend.  

HONOLULU, July 29, 2021 (GLOBE NEWSWIRE) -- 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%
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

Contact: Walter Ida
(808) 946-1400

FAQ

What is Territorial Bancorp's (TBNK) net income for Q2 2021?

Territorial Bancorp reported a net income of $4.06 million for Q2 2021.

How much did earnings per share increase for Territorial Bancorp in the first half of 2021?

Earnings per share for the first half of 2021 rose to $0.99, an increase of 5.32%.

What dividend did Territorial Bancorp declare for Q2 2021?

The company declared a quarterly cash dividend of $0.23 per share.

What is the current status of Territorial Bancorp's delinquent loans?

Delinquent mortgage loans at Territorial Bancorp decreased to $99,000 as of June 30, 2021.

How did interest income change for Territorial Bancorp compared to last year?

Total interest income for Q2 2021 decreased by $3.24 million to $14.76 million compared to Q2 2020.