Territorial Bancorp Inc. Announces Third Quarter 2020 Results
Territorial Bancorp Inc. (NASDAQ: TBNK) reported a net income of $4.32 million for the three months ended September 30, 2020, down from $5.37 million the previous year. The decline was due to an $884,000 drop in loan sales gains and an increased $581,000 loan loss provision. Fully diluted earnings per share decreased from $0.57 to $0.47. Despite challenges from COVID-19, asset quality remains strong with non-performing assets at 0.10% of total assets. A quarterly cash dividend of $0.23 was approved, representing the 43rd consecutive dividend. Total assets increased to $2.11 billion.
- Quarterly cash dividend of $0.23 approved, marking the 43rd consecutive dividend.
- Total assets increased to $2.11 billion from $2.09 billion at year-end 2019.
- Non-performing assets remained low at 0.10% of total assets.
- Decrease in noninterest expenses by $0.01 million year-over-year.
- Net income fell from $5.37 million to $4.32 million, a decrease of $1.05 million.
- Earnings per share declined from $0.57 to $0.47.
- Loan loss provisions surged by $581,000, indicating potential credit risks.
- Interest income dropped to $17.13 million from $18.95 million due to lower loan balances.
- Net income for the three months ended September 30, 2020 was
$4.32 million compared to$5.37 million for the three months ended September 30, 2019. The decrease in net income occurred primarily because of an$884,000 decrease in the gain on sale of loans due to a mortgage loan securitization in the prior year and an increase of$581,000 in loan loss provision recorded in the three months ended September 30, 2020. The increase in loan loss provision occurred primarily from an increase in the qualitative factors used to calculate the allowance for loan losses. The qualitative factors increased primarily because Hawaii’s unemployment rate has risen due to the government mandates to minimize the spread of COVID-19. - Fully-diluted earnings per share for the three months ended September 30, 2020 was
$0.47 per share compared to$0.57 per share for the three months ended September 30, 2019. - Asset quality continues to be strong. Non-performing assets at September 30, 2020 total
$2.19 million and represent only0.10% of total assets. - Board of Directors approved a quarterly cash dividend of
$0.23 per share, representing Territorial Bancorp Inc.’s 43rd consecutive quarterly dividend.
HONOLULU, Hawaii, Oct. 29, 2020 (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
Allan Kitagawa, Chairman and Chief Executive Officer, said, “The recession and the decrease in mortgage interest rates that occurred because of COVID-19 have created challenges in the banking industry. The Company continued to perform well in the third quarter of 2020 despite these challenges. We are pleased with our asset quality and strong capital position.”
Interest Income
Net interest income decreased to
Interest Expense and Provision for Loan Losses
Total interest expense decreased to
Noninterest Income
Noninterest income was
Noninterest Expense
Noninterest expense was
Income Taxes
Income tax expense for the three months ended September 30, 2020 was
Assets and Equity
Total assets were
Capital Management
Through September 30, 2020, the Company repurchased 3,705,677 shares in all of its share repurchase programs. The shares repurchased represent
Asset Quality
The Company had
COVID-19
The State of Hawaii has been affected by COVID-19. Like other states, Hawaii mandated that many non-essential businesses close temporarily and the public self-quarantine to limit the spread of COVID-19. When the pandemic started, Hawaii also imposed a 14-day quarantine for any out-of-state visitors and residents returning to the State. The 14-day quarantine reduced the number of visitors to the State from 30,000 per day during the same period last year to a few hundred per day. The tourism industry is the largest sector of Hawaii’s economy and the reduction in the number of visitors to the State and the stay-at-home mandate resulted in the layoff and furlough of workers and increased the State’s unemployment rate. The 14-day quarantine ended on October 15, 2020. Visitors to the State and returning residents are not subject to the 14-day quarantine provided they tested negative for COVID-19 within 72 hours prior to arriving in Hawaii.
To assist customers during COVID-19, the Company has:
- Provided payment deferrals to borrowers who have experienced financial difficulties because of COVID-19;
- Originated 23 Paycheck Protection Program loans totaling
$1.69 million ; and - Waived early withdrawal penalties on certificates of deposit.
To qualify for the Bank’s payment deferral program, a borrower’s financial difficulties must be related to COVID-19 and the loan must not be more than 30 days past due as of December 31, 2019. In the loan payment deferral program, borrowers are allowed to defer loan payments for six months. For residential mortgage loans, the deferred interest will be payable within five years after the six-month deferral period ends. The term of the loan will be extended by six months to allow the loan to fully amortize.
During the payment deferral period, the borrowers are required to continue to make their escrow payments which include insurance and property tax payments. Through October 19, 2020, all of the borrowers who received loan payment deferrals have made their escrow payments.
As of October 19, 2020, we have granted loan payment deferrals on
As of October 19, 2020, the Company has
| Residential 1-to-4 Mortgage Loans | Other Loans (commercial mortgage, commercial and industrial and home equity lines of credit) | |||||||||||||
| Six month deferral ends before or on 10/1/2020 | Six month deferral ends on or after 11/1/2020 | Total Residential 1-to-4 Mortgage Loans on Payment Deferral | Total Loans | Percentage of Total Loans at 9/30/20 | ||||||||||
| Loan payment deferrals granted | $ | 66.0 | $ | 70.9 | $ | 136.9 | $ | 5.3 | $ | 142.2 | 9.6 | % | ||
| Less: | ||||||||||||||
| Loans resuming payment | ||||||||||||||
| currently on accrual | 61.3 | (a) | 61.3 | 1.7 | 63.0 | 4.2 | % | |||||||
| Loans continuing to pay escrow only | 2.1 | (a) | 2.1 | 0 | 2.1 | 0.1 | % | |||||||
| Loans currently working on payment resumption plan | 2.6 | (a) | 2.6 | 0 | 2.6 | 0.2 | % | |||||||
| Loans resuming payment early before deferral period ends and currently on accrual | 0 | 3.3 | 3.3 | 0 | 3.3 | 0.2 | % | |||||||
| Total loans on deferral with first payment on or after November 1, 2020 | $ | 67.6 | $ | 67.6 | $ | 3.6 | $ | 71.2 | 4.9 | % | ||||
| (Dollars in millions) | ||||||||||||||
| (a) to be determined as deferral period ends on or after 11/1/20 | ||||||||||||||
Bank regulators issued an interagency statement on March 22, 2020 and on April 7, 2020 which encouraged financial institutions to work with borrowers who were impacted by COVID-19. The interagency statement indicated that loans, which were less than 30 days past due when they were modified, and receive short-term modifications of six months or less, are not considered to be delinquent or troubled-debt restructurings and are not reported as non-accrual. The Company granted loan payment deferrals using the criteria in the interagency statement.
Since the beginning of the year, and through September 30, 2020, the Company has not seen an increase in loan delinquencies, significant changes in deposits or significant drawdowns on any lines of credit. Loan delinquencies do not include loans requesting payment deferral because of COVID-19. The Company does not have any commercial loans to hotels, businesses in the transportation industry, restaurants or retail establishments.
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.
Contact: Walter Ida
(808) 946-1400
| Territorial Bancorp Inc. and Subsidiaries | |||||||||||||
| Consolidated Statements of Income (Unaudited) | |||||||||||||
| (Dollars in thousands, except per share data) | |||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||
| September 30 | September 30 | ||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||
| Interest income: | |||||||||||||
| Loans | $ | 14,628 | $ | 15,864 | $ | 45,310 | $ | 47,475 | |||||
| Investment securities | 2,264 | 2,865 | 7,654 | 8,583 | |||||||||
| Other investments | 239 | 219 | 753 | 709 | |||||||||
| Total interest income | 17,131 | 18,948 | 53,717 | 56,767 | |||||||||
| Interest expense: | |||||||||||||
| Deposits | 1,897 | 3,382 | 7,385 | 10,120 | |||||||||
| Advances from the Federal Home Loan Bank | 724 | 973 | 2,448 | 2,425 | |||||||||
| Securities sold under agreements to repurchase | 46 | 42 | 137 | 173 | |||||||||
| Total interest expense | 2,667 | 4,397 | 9,970 | 12,718 | |||||||||
| Net interest income | 14,464 | 14,551 | 43,747 | 44,049 | |||||||||
| Provision for loan losses | 692 | 111 | 2,304 | 65 | |||||||||
| Net interest income after provision for loan losses | 13,772 | 14,440 | 41,443 | 43,984 | |||||||||
| Noninterest income: | |||||||||||||
| Service fees on loan and deposit accounts | 728 | 504 | 1,716 | 1,427 | |||||||||
| Income on bank-owned life insurance | 204 | 215 | 607 | 632 | |||||||||
| Gain on sale of investment securities | 261 | 123 | 858 | 2,910 | |||||||||
| Gain on sale of loans | 321 | 1,205 | 987 | 1,211 | |||||||||
| Other | 63 | 55 | 171 | 635 | |||||||||
| Total noninterest income | 1,577 | 2,102 | 4,339 | 6,815 | |||||||||
| Noninterest expense: | |||||||||||||
| Salaries and employee benefits | 5,346 | 5,586 | 16,294 | 17,002 | |||||||||
| Occupancy | 1,701 | 1,610 | 4,972 | 4,780 | |||||||||
| Equipment | 1,155 | 1,039 | 3,439 | 3,150 | |||||||||
| Federal deposit insurance premiums | 138 | 1 | 212 | 288 | |||||||||
| Other general and administrative expenses | 1,046 | 1,165 | 2,978 | 3,466 | |||||||||
| Total noninterest expense | 9,386 | 9,401 | 27,895 | 28,686 | |||||||||
| Income before income taxes | 5,963 | 7,141 | 17,887 | 22,113 | |||||||||
| Income taxes | 1,645 | 1,775 | 4,805 | 5,163 | |||||||||
| Net income | $ | 4,318 | $ | 5,366 | $ | 13,082 | $ | 16,950 | |||||
| Basic earnings per share | $ | 0.47 | $ | 0.58 | $ | 1.43 | $ | 1.83 | |||||
| Diluted earnings per share | $ | 0.47 | $ | 0.57 | $ | 1.42 | $ | 1.81 | |||||
| Cash dividends paid per common share | $ | 0.23 | $ | 0.22 | $ | 0.69 | $ | 0.76 | |||||
| Basic weighted-average shares outstanding | 9,104,079 | 9,212,119 | 9,144,463 | 9,184,741 | |||||||||
| Diluted weighted-average shares outstanding | 9,134,089 | 9,295,729 | 9,201,882 | 9,309,420 | |||||||||
| Territorial Bancorp Inc. and Subsidiaries | ||||||||
| Consolidated Balance Sheets (Unaudited) | ||||||||
| (Dollars in thousands, except per share data) | ||||||||
| September 30, | December 31, | |||||||
| 2020 | 2019 | |||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 237,498 | $ | 44,806 | ||||
| Investment securities available for sale, at fair value | 3,959 | 8,628 | ||||||
| Investment securities held to maturity, at amortized cost (fair value of | 292,528 | 363,883 | ||||||
| Loans held for sale | 834 | 470 | ||||||
| Loans receivable, net | 1,482,639 | 1,584,784 | ||||||
| Federal Home Loan Bank stock, at cost | 8,144 | 8,723 | ||||||
| Federal Reserve Bank stock, at cost | 3,145 | 3,128 | ||||||
| Accrued interest receivable | 7,214 | 5,409 | ||||||
| Premises and equipment, net | 4,937 | 4,370 | ||||||
| Right-of-use asset, net | 13,375 | 11,580 | ||||||
| Bank-owned life insurance | 45,720 | 45,113 | ||||||
| Deferred income tax assets, net | 3,290 | 2,619 | ||||||
| Prepaid expenses and other assets | 3,034 | 2,800 | ||||||
| Total assets | $ | 2,106,317 | $ | 2,086,313 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Liabilities: | ||||||||
| Deposits | $ | 1,662,706 | $ | 1,631,933 | ||||
| Advances from the Federal Home Loan Bank | 141,000 | 156,000 | ||||||
| Securities sold under agreements to repurchase | 10,000 | 10,000 | ||||||
| Accounts payable and accrued expenses | 25,304 | 23,038 | ||||||
| Lease liability | 14,130 | 12,183 | ||||||
| Income taxes payable | 2,411 | 2,305 | ||||||
| Advance payments by borrowers for taxes and insurance | 4,108 | 6,964 | ||||||
| Total liabilities | 1,859,659 | 1,842,423 | ||||||
| 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 9,513,867 and 9,681,493 shares at September 30, 2020 and December 31, 2019, respectively. | 95 | 97 | ||||||
| Additional paid-in capital | 60,905 | 65,057 | ||||||
| Unearned ESOP shares | (4,037 | ) | (4,404 | ) | ||||
| Retained earnings | 197,562 | 190,808 | ||||||
| Accumulated other comprehensive loss | (7,867 | ) | (7,668 | ) | ||||
| Total stockholders’ equity | 246,658 | 243,890 | ||||||
| Total liabilities and stockholders’ equity | $ | 2,106,317 | $ | 2,086,313 | ||||
| Territorial Bancorp Inc. and Subsidiaries | |||||||||
| Selected Financial Data (Unaudited) | |||||||||
| Three Months Ended | |||||||||
| September 30, | |||||||||
| 2020 | 2019 | ||||||||
| Performance Ratios (annualized): | |||||||||
| Return on average assets | |||||||||
| Return on average equity | |||||||||
| Net interest margin on average interest earning assets | |||||||||
| Efficiency ratio (1) | |||||||||
| At September | At December | ||||||||
| 30, 2020 | 31, 2019 | ||||||||
| 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 loan losses | |||||||||
| Non-performing assets to total assets | |||||||||
| Allowance for loan losses to total loans | |||||||||
| Allowance for loan 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 | |||||||||
FAQ
What were Territorial Bancorp's net income figures for Q3 2020?
How did the earnings per share for TBNK change in Q3 2020?
What is the dividend amount approved by the Board of Directors for TBNK?
How did COVID-19 affect TBNK's loan loss provisions?
What was the total asset value listed for TBNK as of September 30, 2020?
