Territorial Bancorp Inc. Announces Third Quarter 2015 Results

  • 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: Contact: Walter Ida
(808) 946-1400