Territorial Bancorp Inc. (NASDAQ: TBNK) (the “Company”),
headquartered in Honolulu, Hawaii, the holding company parent of
Territorial Savings Bank, announced net income of $5.01 million, or
$0.55 per diluted share, for the three months ended March 31, 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 May 27, 2021 to stockholders of record as of
May 13, 2021.
Allan Kitagawa, Chairman and Chief Executive Officer, said,
“2020 was a very difficult year for many residents in the state
because of COVID-19. In the first few months of 2021, Hawaii’s
economy has started to improve as more visitors arrive in the
state, businesses reopen and residents return to work. Our asset
quality and capital remain strong despite the downturn and we
continue to support our customers and community, as needed.”
Interest Income
Net interest income decreased to $13.21 million for the three
months ended March 31, 2021 from $14.52 million for the three
months ended March 31, 2020. Total interest income was $15.11
million for the three months ended March 31, 2021 compared to
$18.58 million for the three months ended March 31, 2020. The $3.48
million decrease in total interest income was primarily due to a
$2.41 million decrease in interest earned on loans and a $955,000
decrease in interest income on investment securities. The decline
in interest income on loans was due to a 14 basis point decrease in
the average yield on loans receivable and a $197.26 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 38 basis point decrease in the average
securities yield and a $91.24 million decrease in the average
balance of investment securities. The decrease in the average
securities yield occurred as higher yielding securities were
paid-off. The decline in the average balance of investment
securities occurred as security repayments and the sale of
securities exceeded the purchase of securities.
Interest Expense and Provision for Loan
Losses
Total interest expense decreased to $1.90 million for the three
months ended March 31, 2021 from $4.06 million for the three months
ended March 31, 2020. Interest expense on deposits decreased by
$1.81 million to $1.32 million for the three months ended March 31,
2021 from $3.12 million for the three months ended March 31, 2020.
The decrease in interest expense on deposits was primarily due to a
46 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 $359,000 to $536,000 for the
three months ended March 31, 2021 from $895,000 for the three
months ended March 31, 2020. The decrease in interest expense on
FHLB advances resulted from a 77 basis point decrease in the
average cost of advances. The decrease in the average cost of
advances occurred as the Company restructured $82.00 million of
FHLB advances in 2020 at lower interest rates. The Company reversed
loan loss provisions of $913,000 for the three months ended March
31, 2021 compared to loan loss provisions of $217,000 for the three
months ended March 31, 2020. The reversal of the loan loss
provisions during the three months ended March 31, 2021 occurred
primarily because of the decrease in the size of the mortgage loan
portfolio and in Hawaii’s unemployment rate, as well as the
increase in the amount of loans with higher loan-to-value ratios
that have made six consecutive payments, all of which contributed
to the reduction in the allowance for loan losses.
Noninterest Income
Noninterest income was $2.24 million for the three months ended
March 31, 2021 compared to $1.30 million for the three months ended
March 31, 2020. The increase in noninterest income was primarily
due to a $542,000 increase in service fees on loans and deposit
accounts and a $348,000 increase in the gain on sale of investment
securities. The increase in service fees on loans and deposit
accounts resulted from the growth in fee income earned for
referring loans to other financial institutions and mortgage
bankers.
Noninterest Expense
Noninterest expense was $9.55 million for the three months ended
March 31, 2021 compared to $9.54 million for the three months ended
March 31, 2020. Salaries and benefits expense decreased by $161,000
to $5.52 million for the three months ended March 31, 2021 from
$5.68 million for the three months ended March 31, 2020. In the
three months ended March 31, 2021, the Company originated $76.81
million of mortgage loans compared to $40.35 million of mortgage
loans originated in the three months ended March 31, 2020. The
increase in new loan originations caused an increase in deferred
salary expense and a decrease in salaries and benefits expense.
FDIC insurance premiums rose to $141,000 for the three months ended
March 31, 2021 from $0 for the three months ended March 31, 2020.
The increase in insurance premiums occurred because the Company
received a credit in 2020 when the FDIC insurance fund was
over-capitalized.
Income Taxes
Income tax expense for the three months ended March 31, 2021 was
$1.79 million compared to $1.59 million for the three months ended
March 31, 2020. The increase in income tax expense was primarily
due to a $741,000 increase in income before taxes during the three
months ended March 31, 2021 as compared to the three months ended
March 31, 2020.
Balance Sheet
Total assets were $2.14 billion at March 31, 2021 and $2.11
billion at December 31, 2020. Loans receivable decreased by $67.5
million to $1.34 billion at March 31, 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 $48.40 million to $296.03
million at March 31, 2021 from $247.64 million at December 31,
2020. The increase in investment securities occurred as the
purchase of new securities exceeded principal repayments and the
sale of securities. Deposits increased to $1.69 billion at March
31, 2021 from $1.66 billion at December 31, 2020. Cash and cash
equivalents increased to $410.79 million at March 31, 2021 from
$363.54 million at December 31, 2020. The increase in cash and cash
equivalents was primarily due to increases in loan and security
repayments and deposits. Total stockholders’ equity increased to
$251.65 million at March 31, 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.
Capital Management
Through December 31, 2020, the Company repurchased 3,705,677
shares in all of its share repurchase programs. The shares
repurchased represent 30.29% of the total shares issued in its
initial public offering. The Company completed its ninth share
repurchase program in 2020. Due to the uncertainty surrounding
COVID-19, the Company has not announced a new share repurchase
program.
Asset Quality
The Company had $99,000 of delinquent mortgage loans 90 days or
more past due at March 31, 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 $4.23
million at March 31, 2021 compared to $4.41 million at December 31,
2020. The ratio of non-performing assets to total assets was 0.20%
at March 31, 2021 and 0.21% at December 31, 2020. The allowance for
loan losses at March 31, 2021 was $3.35 million and represented
0.25% of total loans compared to $4.26 million and 0.30% of total
loans as of December 31. 2020.
As of March 31, 2021, the Company had $29.30 million of loans,
or 2.18% of total loans receivable in its payment deferral program.
As of December 31, 2020, the Company had $34.00 million, or 2.40%
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.
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 |
|
|
March 31 |
|
|
2021 |
|
2020 |
Interest
income: |
|
|
|
|
|
|
|
Loans |
|
$ |
13,049 |
|
|
$ |
15,457 |
|
Investment securities |
|
|
1,825 |
|
|
|
2,780 |
|
Other investments |
|
|
231 |
|
|
|
344 |
|
Total interest income |
|
|
15,105 |
|
|
|
18,581 |
|
|
|
|
|
|
|
|
|
Interest
expense: |
|
|
|
|
|
|
|
Deposits |
|
|
1,317 |
|
|
|
3,124 |
|
Advances from the Federal Home Loan Bank |
|
|
536 |
|
|
|
895 |
|
Securities sold under agreements to repurchase |
|
|
46 |
|
|
|
45 |
|
Total interest expense |
|
|
1,899 |
|
|
|
4,064 |
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
13,206 |
|
|
|
14,517 |
|
(Reversal of
provision) provision for loan losses |
|
|
(913 |
) |
|
|
217 |
|
|
|
|
|
|
|
|
|
Net interest income after (reversal of provision) provision for
loan losses |
|
|
14,119 |
|
|
|
14,300 |
|
|
|
|
|
|
|
|
|
Non-interest
income: |
|
|
|
|
|
|
|
Service fees on loan and deposit accounts |
|
|
995 |
|
|
|
453 |
|
Income on bank-owned life insurance |
|
|
188 |
|
|
|
202 |
|
Gain on sale of investment securities |
|
|
526 |
|
|
|
178 |
|
Gain on sale of loans |
|
|
420 |
|
|
|
407 |
|
Other |
|
|
110 |
|
|
|
61 |
|
Total noninterest income |
|
|
2,239 |
|
|
|
1,301 |
|
|
|
|
|
|
|
|
|
Noninterest
expense: |
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
5,523 |
|
|
|
5,684 |
|
Occupancy |
|
|
1,647 |
|
|
|
1,645 |
|
Equipment |
|
|
1,130 |
|
|
|
1,120 |
|
Federal deposit insurance premiums |
|
|
141 |
|
|
|
— |
|
Other general and administrative expenses |
|
|
1,113 |
|
|
|
1,089 |
|
Total noninterest expense |
|
|
9,554 |
|
|
|
9,538 |
|
|
|
|
|
|
|
|
|
Income
before income taxes |
|
|
6,804 |
|
|
|
6,063 |
|
Income
taxes |
|
|
1,791 |
|
|
|
1,590 |
|
Net income |
|
$ |
5,013 |
|
|
$ |
4,473 |
|
|
|
|
|
|
|
|
|
Basic
earnings per share |
|
$ |
0.55 |
|
|
$ |
0.48 |
|
Diluted
earnings per share |
|
$ |
0.55 |
|
|
$ |
0.48 |
|
Cash
dividends paid per common share |
|
$ |
0.23 |
|
|
$ |
0.23 |
|
Basic
weighted-average shares outstanding |
|
|
9,130,777 |
|
|
|
9,237,466 |
|
Diluted
weighted-average shares outstanding |
|
|
9,153,450 |
|
|
|
9,319,599 |
|
Territorial
Bancorp Inc. and Subsidiaries |
Consolidated Balance
Sheets (Unaudited) |
(Dollars in
thousands, except per share data) |
|
|
|
|
|
|
|
|
|
March
31, |
|
December
31, |
|
|
2021 |
|
2020 |
ASSETS |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
410,793 |
|
|
$ |
363,543 |
|
Investment
securities available for sale |
|
|
2,312 |
|
|
|
3,562 |
|
Investment
securities held to maturity, at amortized cost (fair value of
$303,454 and $262,841 at March 31, 2021 and December 31, 2020,
respectively). |
|
|
296,033 |
|
|
|
247,642 |
|
Loans held
for sale |
|
|
253 |
|
|
|
2,195 |
|
Loans
receivable, net |
|
|
1,339,539 |
|
|
|
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 |
|
|
6,373 |
|
|
|
6,515 |
|
Premises and
equipment, net |
|
|
4,618 |
|
|
|
4,855 |
|
Right-of-use
asset, net |
|
|
13,995 |
|
|
|
12,333 |
|
Bank-owned
life insurance |
|
|
45,832 |
|
|
|
45,644 |
|
Deferred
income tax assets, net |
|
|
2,935 |
|
|
|
3,382 |
|
Prepaid
expenses and other assets |
|
|
5,553 |
|
|
|
2,844 |
|
Total assets |
|
$ |
2,139,561 |
|
|
$ |
2,110,799 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
Deposits |
|
$ |
1,687,122 |
|
|
$ |
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 |
|
|
28,183 |
|
|
|
29,221 |
|
Lease liability |
|
|
14,792 |
|
|
|
13,119 |
|
Income taxes payable |
|
|
3,042 |
|
|
|
2,161 |
|
Advance payments by borrowers for taxes and insurance |
|
|
3,770 |
|
|
|
6,790 |
|
Total liabilities |
|
|
1,887,909 |
|
|
|
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 9,522,833 and 9,513,867 shares at March 31, 2021
and December 31, 2020, respectively. |
|
|
95 |
|
|
|
95 |
|
Additional paid-in capital |
|
|
61,141 |
|
|
|
61,153 |
|
Unearned ESOP shares |
|
|
(3,792 |
) |
|
|
(3,915 |
) |
Retained earnings |
|
|
202,985 |
|
|
|
200,066 |
|
Accumulated other comprehensive loss |
|
|
(8,777 |
) |
|
|
(8,691 |
) |
Total stockholders’ equity |
|
|
251,652 |
|
|
|
248,708 |
|
Total liabilities and stockholders’ equity |
|
$ |
2,139,561 |
|
|
$ |
2,110,799 |
|
Territorial Bancorp Inc. and Subsidiaries |
Selected Financial Data (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
March 31, |
|
|
|
|
|
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
|
Performance Ratios
(annualized): |
|
|
|
|
|
|
Return on average assets |
|
|
|
|
|
0.96 |
% |
|
|
0.86 |
% |
Return on average equity |
|
|
|
|
8.08 |
% |
|
|
7.30 |
% |
Net interest margin on average interest earning assets |
|
|
2.61 |
% |
|
|
2.87 |
% |
Efficiency ratio (1) |
|
|
|
|
|
61.86 |
% |
|
|
60.30 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At March |
|
At December |
|
|
|
|
|
|
|
31, 2021 |
|
|
|
31, 2020 |
|
|
|
|
|
|
|
|
|
|
Selected Balance
Sheet Data: |
|
|
|
|
|
|
Book value per share (2) |
|
|
|
|
$ |
26.43 |
|
|
$ |
26.14 |
|
Stockholders’ equity to total assets |
|
|
|
|
11.76 |
% |
|
|
11.78 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality |
|
|
|
|
|
|
|
|
(Dollars in
thousands): |
|
|
|
|
|
|
|
Delinquent loans 90 days past due and not accruing |
|
$ |
99 |
|
|
$ |
240 |
|
Non-performing assets (3) |
|
|
|
$ |
4,225 |
|
|
$ |
4,405 |
|
Allowance for loan losses |
|
|
|
$ |
3,346 |
|
|
$ |
4,262 |
|
Non-performing assets to total assets |
|
|
|
0.20 |
% |
|
|
0.21 |
% |
Allowance for loan losses to total loans |
|
|
|
0.25 |
% |
|
|
0.30 |
% |
Allowance for loan losses to non-performing assets |
|
|
79.20 |
% |
|
|
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 |
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