Territorial Bancorp Inc. (NASDAQ: TBNK) (the “Company”),
headquartered in Honolulu, Hawaii, the holding company parent of
Territorial Savings Bank, announced net income of $3.45 million, or
$0.39 per diluted share, for the three months ended December 31,
2022.
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 February 23, 2023 to stockholders of record
as of February 9, 2023.
Allan Kitagawa, Chairman and Chief Executive Officer, said,
“While 2022’s, and likely 2023’s, interest rate environment makes
it challenging, we expect that our strong capital and solid asset
quality will sustain us through this cycle. We have been through
many different interest rate cycles over the years and believe that
our capital and asset quality positions will continue to be
important to our constituencies. For our shareholders, we are proud
to have announced our twelfth repurchase program during the
December quarter as well as paying a special dividend. We will
continue to look for areas to enhance shareholder value, such as
our recent corporate headquarters move to less expensive space, as
we move forward.”
Interest Income
Net interest income decreased by $600,000 to $13.27 million for
the three months ended December 31, 2022 from $13.87 million for
the three months ended December 31, 2021. Total interest income was
$16.22 million for the three months ended December 31, 2022
compared to $15.17 million for the three months ended December 31,
2021. The $1.06 million increase in total interest income was
primarily due to a $1.20 million increase in interest earned on
investment securities. The increase in interest income on
investment securities resulted from a $109.64 million increase in
the average securities balance together with a 34 basis point
increase in the average securities yield. The increase in interest
income on investment securities was partially offset by a $312,000
decrease in interest income on loans. The decrease in interest
income on loans occurred because of a $7.33 million decrease in the
average loan balance which occurred as loan repayments exceeded new
loan originations. The decrease in the average loan portfolio
balance was augmented by an eight basis point decrease in the
average loan yield.
Interest Expense and Provision for Loan
Losses
Total interest expense increased by $1.66 million to $2.95
million for the three months ended December 31, 2022 from $1.29
million for the three months ended December 31, 2021. Interest
expense on deposits increased by $1.62 million to $2.35 million for
the three months ended December 31, 2022 from $724,000 for the
three months ended December 31, 2021. The increase in interest
expense on deposits was primarily due to a 127 basis point increase
in the average cost of certificates of deposit (CD) and a $143.95
million increase in the average CD balance. The increase in the
average cost of CDs occurred as interest rates were raised in
response to the increase in market interest rates. The increase in
the average balance of CDs occurred as customers transferred
balances from lower rate savings accounts to higher rate CDs.
The Company established a loan loss provision of $27,000 for the
three months ended December 31, 2022 compared to a $140,000
reversal of loan loss provisions for the three months ended
December 31, 2021. The reversal of the loan loss provisions during
the three months ended December 31, 2021 occurred primarily because
of the decreases in the size of the mortgage loan portfolio,
Hawaii’s unemployment rate and the amount of loans in the payment
deferral program, all of which contributed to the reduction in the
allowance for loan losses.
Noninterest Income
Noninterest income was $1.17 million for the three months ended
December 31, 2022 compared to $1.28 million for the three months
ended December 31, 2021. The decrease in noninterest income was
primarily due to a $181,000 decrease in service fees on loans and
deposit accounts and a $79,000 decrease in the gain on the sale of
loans. The decrease in service fees on loans and deposit accounts
occurred because of a decline in the fees earned for referring
mortgage loans to other financial institutions and mortgage
brokers. The decrease in the gain on sale of loans occurred as
fewer mortgage loans were sold. The decreases in service fees on
loan and deposit accounts and in the gains on sale of loans were
partially offset by a $155,000 increase in other income. The
increase in other income included a $62,000 increase in commissions
from the sale of annuities and a $133,000 increase in other
non-interest income as an increase in the return on assets in the
Company’s defined benefit pension plan and a reduction in the
interest costs on the benefit obligation reduced the pension cost
for the year.
Noninterest Expense
Noninterest expense was $9.90 million for the three months ended
December 31, 2022 compared to $9.56 million for the three months
ended December 31, 2021. Salaries and employee benefits rose by
$226,000 to $5.74 million for the three months ended December 31,
2022 from $5.52 million for the three months ended December 31,
2021. The increase in salaries and employee benefits is due to a
reduction in the credit to compensation expense for the cost of
closing new mortgage loans. The reduction in the credit to
compensation expense occurred as fewer mortgage loans were closed
in the three months ended December 31, 2022 compared to the same
period last year. Occupancy expenses increased by $153,000 to $1.78
million for the three months ended December 31, 2022 from $1.63
million for the three months ended December 31, 2021, primarily due
to moving expenses incurred in relocating the corporate
headquarters. The corporate headquarters were relocated because of
a more favorable lease.
Income TaxesIncome tax expense for the three
months ended December 31, 2022 was $1.08 million with an effective
tax rate of 23.91% compared to $1.54 million with an effective tax
rate of 26.87% for the three months ended December 31, 2021. The
decrease in income tax expense was primarily due to a $1.21 million
decrease in income before taxes during the three months ended
December 31, 2022 compared to the three months ended December 31,
2021. The decrease in the effective tax rate occurred when the
Company adjusted income tax expense in the fourth quarter because
of changes in prior year tax estimates.
Balance Sheet
Total assets were $2.17 billion at December 31, 2022 and $2.13
billion at December 31, 2021. Loans receivable, including loans
held for sale, decreased by $8.06 million to $1.29 billion at
December 31, 2022 from $1.30 billion at December 31, 2021. The
decrease in loans receivable occurred as loan repayments and sales
exceeded new loan originations. Investment securities, including
available for sale securities, increased by $102.15 million to
$738.59 million at December 31, 2022 from $636.44 million at
December 31, 2021. The increase in investment securities occurred
as the purchase of new mortgage-backed securities exceeded
principal repayments. Cash and cash equivalents decreased by $59.31
million to $40.55 million at December 31, 2022 from $99.86 million
at December 31, 2021. Deposits rose by $34.32 million from $1.68
billion at December 31, 2021 to $1.72 billion at December 31, 2022.
The decrease in cash and cash equivalents and the proceeds from the
increase in deposits were used to purchase investment securities.
Total stockholders’ equity increased to $256.55 million at December
31, 2022 from $256.32 million at December 31, 2021. The increase in
stockholders’ equity occurred primarily because the Company’s net
income and the increase in capital from the allocation of ESOP
shares exceeded dividends paid to shareholders and share
repurchases.
Capital Management
In 2022, the Company completed its eleventh share repurchase
program and also started its twelfth share repurchase program.
Through December 31, 2022, the Company has repurchased 4,167,071
shares in all of its share repurchase programs. The shares
repurchased represent 34.06% of the total shares issued in its
initial public offering. The Company intends to continue to enhance
shareholder value through the use of capital to support its
dividends, both regular and/or special, as well as its share
repurchase program.
Asset Quality
The Company had $559,000 of delinquent mortgage loans 90 days or
more past due at December 31, 2022 compared to $244,000 of
delinquent mortgage loans 90 days or more past due at December 31,
2021. Non-performing assets totaled $2.30 million at December 31,
2022 compared to $3.28 million at December 31, 2021. The ratio of
non-performing assets to total assets was 0.11% at December 31,
2022 and 0.15% at December 31, 2021. The allowance for loan losses
at December 31, 2022 was $2.03 million and represented 0.16% of
total loans compared to $2.67 million and 0.20% of total loans as
of December 31, 2021.
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:
- 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.
|
|
|
|
Consolidated Statements of Income (Unaudited) |
|
|
|
(Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
|
|
December 31. |
|
December 31, |
|
|
|
2022 |
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
Interest income: |
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
$ |
11,409 |
|
$ |
11,721 |
|
$ |
45,318 |
|
$ |
48,740 |
|
|
Investment securities |
|
|
4,458 |
|
|
3,259 |
|
|
16,211 |
|
|
10,729 |
|
|
Other investments |
|
|
357 |
|
|
185 |
|
|
1,173 |
|
|
832 |
|
|
Total interest income |
|
|
16,224 |
|
|
15,165 |
|
|
62,702 |
|
|
60,301 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
2,348 |
|
|
724 |
|
|
4,925 |
|
|
3,975 |
|
|
Advances from the Federal Home Loan Bank |
|
|
558 |
|
|
522 |
|
|
2,107 |
|
|
2,117 |
|
|
Securities sold under agreements to repurchase |
|
|
46 |
|
|
47 |
|
|
183 |
|
|
184 |
|
|
Total interest expense |
|
|
2,952 |
|
|
1,293 |
|
|
7,215 |
|
|
6,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
13,272 |
|
|
13,872 |
|
|
55,487 |
|
|
54,025 |
|
|
Reversal of provisions for loan losses |
|
|
27 |
|
|
(140 |
) |
|
(576 |
) |
|
(1,592 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income after reversal of provision for loan
losses |
|
|
13,245 |
|
|
14,012 |
|
|
56,063 |
|
|
55,617 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest income: |
|
|
|
|
|
|
|
|
|
|
|
Service fees on loan and deposit accounts |
|
|
324 |
|
|
505 |
|
|
1,416 |
|
|
2,463 |
|
|
Income on bank-owned life insurance |
|
|
201 |
|
|
209 |
|
|
792 |
|
|
779 |
|
|
Gain on sale of investment securities |
|
|
— |
|
|
— |
|
|
— |
|
|
1,840 |
|
|
Net gain (loss) on sale of loans |
|
|
— |
|
|
79 |
|
|
(3 |
) |
|
663 |
|
|
Other |
|
|
645 |
|
|
490 |
|
|
2,004 |
|
|
727 |
|
|
Total noninterest income |
|
|
1,170 |
|
|
1,283 |
|
|
4,209 |
|
|
6,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
5,741 |
|
|
5,515 |
|
|
22,259 |
|
|
22,091 |
|
|
Occupancy |
|
|
1,784 |
|
|
1,631 |
|
|
6,708 |
|
|
6,486 |
|
|
Equipment |
|
|
1,257 |
|
|
1,210 |
|
|
5,006 |
|
|
4,483 |
|
|
Federal deposit insurance premiums |
|
|
144 |
|
|
141 |
|
|
573 |
|
|
565 |
|
|
Other general and administrative expenses |
|
|
961 |
|
|
1,059 |
|
|
4,252 |
|
|
4,661 |
|
|
Total noninterest expense |
|
|
9,887 |
|
|
9,556 |
|
|
38,798 |
|
|
38,286 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
4,528 |
|
|
5,739 |
|
|
21,474 |
|
|
23,803 |
|
|
Income taxes |
|
|
1,083 |
|
|
1,542 |
|
|
5,318 |
|
|
6,373 |
|
|
Net income |
|
$ |
3,445 |
|
$ |
4,197 |
|
$ |
16,156 |
|
$ |
17,430 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.39 |
|
$ |
0.46 |
|
$ |
1.81 |
|
$ |
1.92 |
|
|
Diluted earnings per share |
|
$ |
0.39 |
|
$ |
0.46 |
|
$ |
1.80 |
|
$ |
1.90 |
|
|
Cash dividends paid per common share |
|
$ |
0.33 |
|
$ |
0.33 |
|
$ |
1.02 |
|
$ |
1.02 |
|
|
Basic weighted-average shares outstanding |
|
|
8,807,548 |
|
|
9,878,365 |
|
|
8,865,946 |
|
|
9,059,204 |
|
|
Diluted weighted-average shares outstanding |
|
|
8,857,848 |
|
|
9,032,291 |
|
|
8,920,714 |
|
|
9,110,335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Territorial Bancorp Inc. and Subsidiaries |
|
Consolidated Balance Sheets (Unaudited) |
|
(Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2022 |
|
|
2021 |
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
40,553 |
|
|
$ |
99,859 |
|
|
|
Investment securities available for sale |
|
|
20,821 |
|
|
|
— |
|
|
|
Investment securities held to maturity, at amortized cost (fair
value of $591,084 and $634,987 at December 31, 2022 and December
31, 2021, respectively). |
|
|
717,773 |
|
|
|
636,442 |
|
|
|
Loans receivable, net |
|
|
1,294,764 |
|
|
|
1,302,824 |
|
|
|
Federal Home Loan Bank stock, at cost |
|
|
8,197 |
|
|
|
8,173 |
|
|
|
Federal Reserve Bank stock, at cost |
|
|
3,170 |
|
|
|
3,158 |
|
|
|
Accrued interest receivable |
|
|
6,115 |
|
|
|
5,786 |
|
|
|
Premises and equipment, net |
|
|
7,599 |
|
|
|
4,065 |
|
|
|
Right-of-use asset, net |
|
|
14,498 |
|
|
|
9,982 |
|
|
|
Bank-owned life insurance |
|
|
47,783 |
|
|
|
51,423 |
|
|
|
Income taxes receivable |
|
|
612 |
|
|
|
— |
|
|
|
Deferred income tax assets, net |
|
|
193 |
|
|
|
1,927 |
|
|
|
Prepaid expenses and other assets |
|
|
6,676 |
|
|
|
6,963 |
|
|
|
Total assets |
|
$ |
2,168,754 |
|
|
$ |
2,130,602 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
Deposits |
|
$ |
1,716,152 |
|
|
$ |
1,681,828 |
|
|
|
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 |
|
|
24,180 |
|
|
|
22,638 |
|
|
|
Lease liability |
|
|
15,295 |
|
|
|
10,744 |
|
|
|
Income taxes payable |
|
|
— |
|
|
|
1,863 |
|
|
|
Advance payments by borrowers for taxes and insurance |
|
|
5,577 |
|
|
|
6,207 |
|
|
|
Total liabilities |
|
|
1,912,204 |
|
|
|
1,874,280 |
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
91 |
|
|
|
93 |
|
|
|
9,071,076 and 9,324,060 shares as of December 31, 2022 and December
31, 2021, |
|
|
|
|
|
|
|
|
respectively. |
|
|
|
|
|
|
|
|
Additional paid-in capital |
|
|
51,825 |
|
|
|
56,951 |
|
|
|
Unearned ESOP shares |
|
|
(2,936 |
) |
|
|
(3,425 |
) |
|
|
Retained earnings |
|
|
215,314 |
|
|
|
208,227 |
|
|
|
Accumulated other comprehensive loss |
|
|
(7,744 |
) |
|
|
(5,524 |
) |
|
|
Total stockholders’ equity |
|
|
256,550 |
|
|
|
256,322 |
|
|
|
Total liabilities and stockholders’ equity |
|
$ |
2,168,754 |
|
|
$ |
2,130,602 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Territorial Bancorp Inc. and Subsidiaries |
|
|
|
Selected Financial Data (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Ratios (annualized): |
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets |
|
|
|
|
0.63% |
|
|
|
0.78% |
|
|
|
|
|
|
|
Return on average equity |
|
|
|
|
5.30% |
|
|
|
6.58% |
|
|
|
|
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Net interest margin on average interest earning assets |
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2.56% |
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2.72% |
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Efficiency ratio (1) |
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68.46% |
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63.06% |
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At |
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At |
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December |
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December |
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31, 2022 |
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31, 2021 |
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Selected Balance Sheet Data: |
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Book value per share (2) |
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$ |
28.28 |
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$ |
27.49 |
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Stockholders' equity to total assets |
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11.83% |
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12.03% |
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Asset Quality |
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(Dollars in thousands): |
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Delinquent loans 90 days past due and not accruing |
$ |
559 |
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$ |
244 |
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Non-performing assets (3) |
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$ |
2,301 |
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$ |
3,280 |
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Allowance for loan losses |
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$ |
2,032 |
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$ |
2,669 |
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Non-performing assets to total assets |
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0.11% |
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0.15% |
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Allowance for loan losses to total loans |
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0.16% |
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0.20% |
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Allowance for loan losses to non-performing assets |
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88.31% |
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81.37% |
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Note: |
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(1) Efficiency ratio is equal to noninterest expense divided by the
sum of net interest income and noninterest income |
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(2) Book value per share is equal to stockholders' equity divided
by number of shares issued and outstanding |
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(3) Non-performing assets consist of non-accrual loans and real
estate owned. Amounts are net of charge-offs |
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Contact: Walter Ida(808)
946-1400
Territorial Bancorp (NASDAQ:TBNK)
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