Territorial Bancorp Inc. Announces Second Quarter 2023 Results
- Solid asset quality with the ratio of non-performing assets to total assets of
0.11% as of June 30, 2023. - Strong liquidity position with
$87.66 million in cash balances and access to liquidity totaling more than$1 billion as of June 30, 2023. - The Company’s tier one leverage and risk-based capital ratios were
11.69% and28.93% , respectively, and the Company is considered to be “well-capitalized” at June 30, 2023. - Board of Directors approved a quarterly cash dividend of
$0.23 per share, representing Territorial Bancorp Inc.’s 55th consecutive quarterly dividend.
HONOLULU, July 28, 2023 (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
The Company also announced that its Board of Directors approved a quarterly cash dividend of
“Our financial results continue to be impacted by the record pace and level of increases in short-term interest rates over the last 15 months,” said Allan Kitagawa, Chairman and Chief Executive Officer. “The efforts by the Federal Reserve to rein in inflation by increasing short-term interest rates over the past six quarters to historically high levels, has put increased pressure on our net interest margins as lower cost transactional deposit and savings accounts have migrated to higher cost time deposits. We expect our net interest margin to continue to decline for the remainder of 2023. Despite these challenges, we have enhanced our liquidity levels, continued to seek ways to retain and grow deposits through promotional campaigns, and focused on maintaining our lending base. Throughout all of this, we have been able to maintain our strong capital levels, which are well above regulatory required levels, our asset quality remains solid, and we continue to have ample liquidity.”
Interest Income
The Federal Reserve Bank has increased short-term interest rates by 475 basis points since March 2022, which has increased the Company’s cost of funds. This coupled with the inverted yield curve where longer term rates are not sufficiently higher than funding costs, have made the Company’s conservative business model challenging to fulfill its mission to continue to help its customers achieve homeownership. This has led to continued pressure on the Company’s net interest margin in the second quarter. To mitigate the impact of a lower net interest margin, the Company continues to focus on reducing expenses while being mindful of preserving the strength of its underwriting standards and policies. Net interest income decreased by
Interest Expense and Provision for Credit Losses
As the result of the increases in short-term interest rates, total interest expense increased by
The Company recorded
Noninterest Income
Noninterest income was
Noninterest Expense
Noninterest expense decreased to
Income Taxes
Income tax expense for the three months ended June 30, 2023, was
Balance Sheet
Total assets were
Deposits decreased by
Capital Management
The Company is in its twelfth share repurchase program and repurchased 162,143 shares during the three months ending June 30, 2023. Through June 30, 2023, the Company has repurchased 4,396,055 shares through all of its share repurchase programs. The shares repurchased represent
Asset Quality
Credit quality continues to be extremely important and we adhere to our strict underwriting standards. The Company had
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.tsbhawaii.bank.
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:
- 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.
| 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, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Interest income: | ||||||||||||||||
| Loans | $ | 11,697 | $ | 11,176 | $ | 23,151 | $ | 22,533 | ||||||||
| Investment securities | 4,525 | 3,928 | 9,065 | 7,351 | ||||||||||||
| Other investments | 1,070 | 267 | 1,797 | 443 | ||||||||||||
| Total interest income | 17,292 | 15,371 | 34,013 | 30,327 | ||||||||||||
| Interest expense: | ||||||||||||||||
| Deposits | 4,323 | 738 | 7,853 | 1,335 | ||||||||||||
| Advances from the Federal Home Loan Bank | 1,832 | 516 | 2,886 | 1,027 | ||||||||||||
| Securities sold under agreements to repurchase | 45 | 47 | 91 | 91 | ||||||||||||
| Total interest expense | 6,200 | 1,301 | 10,830 | 2,453 | ||||||||||||
| Net interest income | 11,092 | 14,070 | 23,183 | 27,874 | ||||||||||||
| Provision (reversal of provision) for credit/loan losses | 212 | (326 | ) | 112 | (494 | ) | ||||||||||
| Net interest income after provision (reversal of provision) for credit/loan losses | 10,880 | 14,396 | 23,071 | 28,368 | ||||||||||||
| Noninterest income: | ||||||||||||||||
| Service and other fees | 414 | 412 | 724 | 753 | ||||||||||||
| Income on bank-owned life insurance | 207 | 194 | 410 | 391 | ||||||||||||
| Net gain (loss) on sale of loans | 9 | (21 | ) | 10 | (3 | ) | ||||||||||
| Other | 60 | 186 | 135 | 1,283 | ||||||||||||
| Total noninterest income | 690 | 771 | 1,279 | 2,424 | ||||||||||||
| Noninterest expense: | ||||||||||||||||
| Salaries and employee benefits | 5,143 | 5,392 | 10,547 | 11,005 | ||||||||||||
| Occupancy | 1,759 | 1,648 | 3,382 | 3,242 | ||||||||||||
| Equipment | 1,303 | 1,236 | 2,615 | 2,432 | ||||||||||||
| Federal deposit insurance premiums | 246 | 143 | 491 | 284 | ||||||||||||
| Other general and administrative expenses | 1,059 | 1,125 | 2,088 | 2,179 | ||||||||||||
| Total noninterest expense | 9,510 | 9,544 | 19,123 | 19,142 | ||||||||||||
| Income before income taxes | 2,060 | 5,623 | 5,227 | 11,650 | ||||||||||||
| Income taxes | 563 | 1,513 | 1,414 | 2,830 | ||||||||||||
| Net income | $ | 1,497 | $ | 4,110 | 3,813 | $ | 8,820 | |||||||||
| Basic earnings per share | $ | 0.17 | $ | 0.46 | $ | 0.44 | $ | 0.98 | ||||||||
| Diluted earnings per share | $ | 0.17 | $ | 0.46 | $ | 0.43 | $ | 0.98 | ||||||||
| Cash dividends paid per common share | $ | 0.23 | $ | 0.23 | $ | 0.46 | $ | 0.46 | ||||||||
| Basic weighted-average shares outstanding | 8,620,643 | 8,876,691 | 8,697,213 | 8,928,127 | ||||||||||||
| Diluted weighted-average shares outstanding | 8,658,927 | 8,927,173 | 8,740,699 | 8,977,834 | ||||||||||||
| Territorial Bancorp Inc. and Subsidiaries | ||||||||
| Consolidated Balance Sheets (Unaudited) | ||||||||
| (Dollars in thousands, except per share data) | ||||||||
| June 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 87,660 | $ | 40,553 | ||||
| Investment securities available for sale, at fair value | 20,455 | 20,821 | ||||||
| Investment securities held to maturity, at amortized cost (fair value of | 705,584 | 717,773 | ||||||
| Loans receivable | 1,310,446 | 1,296,796 | ||||||
| Allowance for credit/loan losses | (5,262 | ) | (2,032 | ) | ||||
| Loans receivable, net of allowance for credit/loan losses | 1,305,184 | 1,294,764 | ||||||
| Federal Home Loan Bank stock, at cost | 13,244 | 8,197 | ||||||
| Federal Reserve Bank stock, at cost | 3,176 | 3,170 | ||||||
| Accrued interest receivable | 5,967 | 6,115 | ||||||
| Premises and equipment, net | 7,260 | 7,599 | ||||||
| Right-of-use asset, net | 13,577 | 14,498 | ||||||
| Bank-owned life insurance | 48,193 | 47,783 | ||||||
| Deferred income tax assets, net | 2,430 | 1,643 | ||||||
| Prepaid expenses and other assets | 6,469 | 6,676 | ||||||
| Total assets | $ | 2,219,199 | $ | 2,169,592 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Liabilities: | ||||||||
| Deposits | $ | 1,645,711 | $ | 1,716,152 | ||||
| Advances from the Federal Home Loan Bank | 266,000 | 141,000 | ||||||
| Securities sold under agreements to repurchase | 10,000 | 10,000 | ||||||
| Accounts payable and accrued expenses | 24,161 | 24,180 | ||||||
| Lease liability | 15,321 | 15,295 | ||||||
| Income taxes payable | 1,500 | 838 | ||||||
| Advance payments by borrowers for taxes and insurance | 5,872 | 5,577 | ||||||
| Total liabilities | 1,968,565 | 1,913,042 | ||||||
| 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 | ||||||||
| 8,848,511 and 9,071,076 shares as of June 30, 2023 and December 31, 2022, | ||||||||
| respectively | 88 | 91 | ||||||
| Additional paid-in capital | 48,110 | 51,825 | ||||||
| Unearned ESOP shares | (2,691 | ) | (2,936 | ) | ||||
| Retained earnings | 212,848 | 215,314 | ||||||
| Accumulated other comprehensive loss | (7,721 | ) | (7,744 | ) | ||||
| Total stockholders’ equity | 250,634 | 256,550 | ||||||
| Total liabilities and stockholders’ equity | $ | 2,219,199 | $ | 2,169,592 | ||||
| Territorial Bancorp Inc. and Subsidiaries | |||||||||
| Selected Financial Data (Unaudited) | |||||||||
| Three Months Ended | |||||||||
| June 30, | |||||||||
| 2023 | 2022 | ||||||||
| Performance Ratios (annualized): | |||||||||
| Return on average assets | |||||||||
| Return on average equity | |||||||||
| Net interest margin on average interest earning assets | |||||||||
| Efficiency ratio (1) | |||||||||
| At | At | ||||||||
| June 30, | December 31, | ||||||||
| 2023 | 2022 | ||||||||
| Selected Balance Sheet Data: | |||||||||
| Book value per share (2) | |||||||||
| Stockholders' equity to total assets | |||||||||
| Asset Quality | |||||||||
| (Dollars in thousands): | |||||||||
| Delinquent loans 90 days past due and not accruing | |||||||||
| Non-performing assets (3) | |||||||||
| Allowance for credit losses | |||||||||
| Non-performing assets to total assets | |||||||||
| Allowance for credit losses to total loans | |||||||||
| Allowance for credit losses to non-performing assets | |||||||||
| 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
