Market Overview

Territorial Bancorp Inc. Announces Third Quarter 2015 Results

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  • Earnings per share for the three months ended September 30, 2015 rose to $0.40 per diluted share compared to $0.37 per diluted share for the three months ended September 30, 2014.
  • Net income for the three months ended September 30, 2015 was $3.69 million compared to $3.46 million for the three months ended September 30, 2014, an increase of 6.5%.
  • Net interest income for the three months ended September 30, 2015 was $14.34 million, compared to $13.44 million for the three months ended September 30, 2014, an increase of 6.7%.
  • New loan originations for the nine months ended September 30, 2015 totaled $364.01 million and $168.56 million for the first nine months of 2014, an increase of 116.0%.
  • Loans receivable grew by $195.08 million or 20.1% as compared to December 31, 2014.
  • Board of Directors approved a quarterly cash dividend of $0.17 per share. This is Territorial Bancorp Inc.'s 23rd consecutive quarterly dividend.

HONOLULU, Oct. 29, 2015 (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 $3.69 million or $0.40 per diluted share for the three months ended September 30, 2015, compared to $3.46 million or $0.37 per diluted share for the three months ended September 30, 2014. 

The Company also announced that its Board of Directors approved a quarterly cash dividend of $0.17 per share.  The dividend is expected to be paid on November 27, 2015 to stockholders of record as of November 12, 2015.

Allan Kitagawa, Chairman and Chief Executive Officer, said, "Our loan portfolio grew by 20.1% during the first nine months of 2015.  The growth in our loan portfolio allowed our net interest income to increase by 6.7% for the three months ended September 30, 2015 as compared to the three months ended September 30, 2014.  Our net income for the three months ended September 30, 2015 has grown by 6.5% compared to the three months ended September 30, 2014 while our fully-diluted earnings per share rose to $0.40 per share from $0.37 per share.  Our strong performance will allow us to pay our 23rd consecutive quarterly dividend on November 27, 2015." 

Interest Income

Net interest income after provision for loan losses increased to $14.27 million for the three months ended September 30, 2015 from $13.42 million for the three months ended September 30, 2014. Total interest and dividend income was $15.97 million for the three months ended September 30, 2015 compared to $14.99 million for the three months ended September 30, 2014. The $981,000 growth in interest and dividend income was primarily due to a $1.79 million increase in interest earned on loans which resulted from the increase in loans receivable.  The increase in interest income on loans was offset by a $797,000 decline in interest income from investment securities due to a net reduction in our investment securities portfolio as repayments exceeded securities purchased. 

Interest Expense and Provision for Loan Losses

Total interest expense increased to $1.63 million for the three months ended September 30, 2015 from $1.55 million for the three months ended September 30, 2014.  Total interest expense on deposits increased to $1.20 million for the three months ended September 30, 2015 from $1.14 million for the three months ended September 30, 2014 due to an increase in total deposits. Interest expenses on advances from the Federal Home Loan Bank rose by $144,000 due to an increase in Federal Home Loan Bank advances.  Interest expense on securities sold under agreements to repurchase declined by $125,000 because of a decrease in these borrowings.  During the quarter ended September 30, 2015, the provision for loan losses was $71,000 compared to a $23,000 provision for the three months ended September 30, 2014.

Noninterest Income

Noninterest income was $1.19 million for the three months ended September 30, 2015 compared to $1.40 million for the three months ended September 30, 2014.  The reduction in noninterest income was primarily due to a $392,000 decrease in the gain on sale of investment securities that occurred because there were no securities sold during the three months ended September 30, 2015. 

Noninterest Expense

Noninterest expense was $9.37 million for the three months ended September 30, 2015 compared to $9.08 million for the three months ended September 30, 2014.  Salaries and employee benefits was $5.60 million for the three months ended September 30, 2015 compared to $5.40 million for the three months ended September 30, 2014.  The increase in salaries and employee benefits expense is primarily due to higher loan officer compensation that occurred primarily because of the increase in new loan originations and the hiring of additional staff to originate loans and to handle the additional workload associated with an increase in regulatory requirements.  The rise in these expenses was offset by an increase in the direct costs of new loan originations.

Assets and Equity

Total assets increased to $1.784 billion at September 30, 2015 from $1.692 billion at December 31, 2014.  Loans receivable grew by $195.08 million or 20.1% to $1.163 billion at September 30, 2015 from $968.21 million at December 31, 2014 as residential mortgage loan originations exceeded loan repayments and sales. The growth in loans receivable was funded primarily by a $53.32 million increase in deposits, a $35.59 million decrease in cash and cash equivalents, $64.18 million received from the net repayments and sales of investment securities and a $49.00 million increase in Federal Home Loan Bank advances.  Securities sold under agreements to repurchase decreased to $55.00 million at September 30, 2015 from $72.00 million at December 31, 2014.  Deposits increased to $1.413 billion at September 30, 2015 from $1.360 billion at December 31, 2014.  Total stockholders' equity increased to $218.37 million at September 30, 2015 from $216.38 million at December 31, 2014.  The increase in stockholders' equity occurred as the Company's net income for the year exceeded share repurchases and dividends paid to shareholders.   

Share Repurchases

Through September 30, 2015, the Company has repurchased 3,060,518 shares of stock or 25.02% of the shares issued in its initial public offering in 2009. The Company uses share repurchases as part of its overall program to enhance shareholder value.  The Company also considers the effect of repurchases on its tangible book value per share.  At the Company's current share price level, the amount of dilution to tangible book value may limit the Company's repurchasing of shares.  The Company will closely monitor this issue and conduct repurchases as it makes financial sense, depending on market and other conditions at any given time.

Asset Quality

Total delinquent loans 90 days or more past due and not accruing totaled $1,516,000 (5 loans) at September 30, 2015, compared to $758,000 (4 loans) at December 31, 2014.  Non-performing assets totaled $5.39 million at September 30, 2015 compared to $4.45 million at December 31, 2014.  The ratio of non-performing assets to total assets rose to 0.30% at September 30, 2015 from 0.26% at December 31, 2014 but continues to remain one of the lowest in the country.  The allowance for loan losses at September 30, 2015 was $2.06 million and represented 0.18% of total loans compared to $1.69 million and 0.17% of total loans as of December 31, 2014. 

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.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, including those set forth in the Company's filings with the Securities and Exchange Commission, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

  • general economic conditions, either nationally, internationally 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;

  • our ability to enter new markets successfully and capitalize on growth opportunities;

  • our ability to successfully integrate acquired entities, if any;

  • changes in consumer spending, borrowing and savings habits;

  • changes in market and other conditions that would affect our ability to repurchase our shares of common stock.

  • 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;

  • changes in our financial condition or results of operations that reduce capital available to pay dividends; and

  • changes in the financial condition or future prospects of issuers of securities that we own.

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 Nine Months Ended
        9/30/2015 9/30/2014 9/30/2015 9/30/2014
Interest and dividend income:        
 Loans    $11,809  $10,020  $33,761  $29,320 
 Investment securities  4,098   4,895   12,895   15,055 
 Other investments  64   75   213   153 
     Total interest and dividend income  15,971   14,990   46,869   44,528 
Interest expense:        
 Deposits    1,198   1,138   3,486   3,332 
 Advances from the Federal Home Loan Bank  211   67   438   199 
 Securities sold under agreements to repurchase  221   346   776   1,032 
     Total interest expense  1,630   1,551   4,700   4,563 
     Net interest income  14,341   13,439   42,169   39,965 
Provision for loan losses  71   23   366   188 
     Net interest income after provision for loan losses  14,270   13,416   41,803   39,777 
Noninterest income:        
 Service fees on loan and deposit accounts  590   555   1,577   1,578 
 Income on bank-owned life insurance  259   265   770   797 
 Gain on sale of investment securities  -   392   476   1,047 
 Gain on sale of loans  201   118   440   283 
 Other     138   68   419   330 
     Total noninterest income  1,188   1,398   3,682   4,035 
Noninterest expense:        
 Salaries and employee benefits  5,596   5,402   15,759   16,062 
 Occupancy   1,483   1,474   4,348   4,305 
 Equipment   1,025   956   2,923   2,775 
 Federal deposit insurance premiums  214   202   634   602 
 Other general and administrative expenses  1,048   1,045   3,449   2,946 
     Total noninterest expense  9,366   9,079   27,113   26,690 
Income before income taxes  6,092   5,735   18,372   17,122 
Income taxes   2,406   2,273   7,323   6,479 
     Net income $3,686  $3,462  $11,049  $10,643 
               
Basic earnings per share $0.41  $0.38  $1.22  $1.16 
Diluted earnings per share $0.40  $0.37  $1.19  $1.15 
Cash dividends declared per common share $0.17  $0.15  $0.49  $0.44 
Basic weighted-average shares outstanding  9,085,725   9,218,745   9,086,481   9,190,476 
Diluted weighted-average shares outstanding  9,301,500   9,323,306   9,250,835   9,283,425 
               

 

TERRITORIAL BANCORP INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
(Dollars in thousands, except share data)
 
Assets 9/30/2015 12/31/2014
Cash and cash equivalents $39,466  $75,060 
Investment securities held to maturity, at amortized cost    
 (fair value of $520,534 and $586,710 at September 30, 2015 and    
 December 31, 2014, respectively)  508,747   572,922 
Loans receivable, net  1,163,292   968,212 
Loans held for sale  225   1,048 
Federal Home Loan Bank stock, at cost  4,590   11,234 
Federal Reserve Bank stock, at cost  2,989   2,925 
Accrued interest receivable  4,742   4,436 
Premises and equipment, net  5,026   5,629 
Bank-owned life insurance  42,072   41,303 
Current income taxes receivable  1,523   - 
Deferred income taxes receivable  8,366   7,254 
Prepaid expenses and other assets  2,477   1,874 
     Total assets $1,783,515  $1,691,897 
Liabilities and Stockholders' Equity    
Liabilities:      
 Deposits   $1,412,997  $1,359,679 
 Advances from the Federal Home Loan Bank  64,000   15,000 
 Securities sold under agreements to repurchase  55,000   72,000 
 Accounts payable and accrued expenses  28,582   24,098 
 Current income taxes payable  1,476   826 
 Advance payments by borrowers for taxes and insurance  3,094   3,916 
     Total liabilities  1,565,149   1,475,519 
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 9,698,420 and 9,919,064 shares    
  at September 30, 2015 and December 31, 2014, respectively  97   99 
 Additional paid-in capital  70,295   75,229 
 Unearned ESOP shares  (6,484)  (6,851)
 Retained earnings  159,785   153,289 
 Accumulated other comprehensive loss  (5,327)  (5,388)
     Total stockholders' equity  218,366   216,378 
     Total liabilities and stockholders' equity $1,783,515  $1,691,897 
           

 

           
     TERRITORIAL BANCORP INC. AND SUBSIDIARIES     
     Selected Financial Data (Unaudited)     
           
       Three Months Ended 
       September 30, 
       2015 2014 
 Performance Ratios (annualized):       
           
 Return on average assets     0.83%  0.83% 
 Return on average equity     6.64%  6.38% 
 Net interest margin on average interest earning assets  3.39%  3.37% 
           
       At September At December 
        30, 2015   31, 2014  
 Selected Balance Sheet Data:       
           
 Book value per share (1)    $22.52  $21.81  
 Stockholders' equity to total assets    12.24%  12.79% 
           
 Asset Quality         
 (Dollars in thousands):        
           
 Delinquent loans 90 days or more past due and not accruing (2) $1,516  $758  
 Non-performing assets (2)   $5,389  $4,453  
 Allowance for loan losses    $2,062  $1,691  
 Non-performing assets to total assets    0.30%  0.26% 
 Allowance for loan losses to total loans   0.18%  0.17% 
 Allowance for loan losses to non-performing assets  38.26%  37.97% 
           
 Note:         
           
 (1) Book value per share is equal to stockholders' equity divided by number of shares issued and outstanding 
 (2) Amounts are net of charge-offs       
           



Contact: Walter Ida (808) 946-1400

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