Territorial Bancorp Inc. (NASDAQ: TBNK) (the “Company”),
headquartered in Honolulu, Hawaii, the holding company parent of
Territorial Savings Bank, announced net income of $4.11 million, or
$0.46 per diluted share, for the three months ended June 30, 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 August 25, 2022 to stockholders of record as
of August 11, 2022.
Allan Kitagawa, Chairman and Chief Executive Officer, said, “In
the second quarter of 2022, we were able to increase our net
interest income by 7.54% and our fully-diluted earnings per share
by 4.55%. Our strong capital and asset quality will allow us to
serve our community during these uncertain times. The Company
intends to continue to enhance shareholder value through dividends
and share repurchases.”
Interest Income
Net interest income increased to $14.07 million for the three
months ended June 30, 2022 from $13.08 million for the three months
ended June 30, 2021. Total interest income was $15.37 million for
the three months ended June 30, 2022 compared to $14.76 million for
the three months ended June 30, 2021. The $615,000 increase in
total interest income was primarily due to a $1.53 million increase
in interest earned on investment securities. The increase in
interest income on investment securities was partially offset by a
$958,000 decrease in interest income on loans. The increase in
interest income on investment securities was primarily due to a
$294.92 million increase in the average securities balance. The
increase in the average balance of investment securities occurred
as security purchases exceeded repayments. The decrease in interest
on loans occurred because of a 19 basis point decrease in the
average loan yield and a $35.86 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.
Interest Expense and Provision for Loan
Losses
Total interest expense decreased to $1.30 million for the three
months ended June 30, 2022 from $1.67 million for the three months
ended June 30, 2021. Interest expense on deposits decreased by
$352,000 to $738,000 for the three months ended June 30, 2022 from
$1.09 million for the three months ended June 30, 2021. The
decrease in interest expense on deposits was primarily due to a
nine basis point decrease in the average cost of deposits. The
decrease in the average cost of deposits occurred with a reduction
in interest rates offered on deposits during the quarter. The
decrease in the average cost of deposits was partially offset by a
$16.76 million increase in the average deposit balance. The Company
reversed loan loss provisions of $326,000 for the three months
ended June 30, 2022, compared to a reversal of $372,000 of loan
loss provisions for the three months ended June 30, 2021. The
reversal of the loan loss provisions during the three months ended
June 30, 2022 and 2021 occurred primarily because of the decreases
in the size of the mortgage loan portfolio, in Hawaii’s
unemployment rate and in 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 $800,000 for the three months ended June
30, 2022 compared to $1.73 million for the three months ended June
30, 2021. The decrease in noninterest income was primarily due to a
$911,000 decrease in the gain on sale of investment securities that
occurred because no securities were sold during the three months
ended June 30, 2022. Service fees on loans and deposit accounts was
$412,000 for the three months ended June 30, 2022, compared to
$530,000 for the three months ended June 30, 2021. The decrease in
service fees and deposit accounts occurred because of a decrease in
the fees earned for referring mortgage loan applications to other
financial institutions and mortgage brokers. Other noninterest
income was $186,000 for the three months ended June 30, 2022
compared to $70,000 for the three months ended June 30, 2021. The
increase in other income is primarily due to interest on bank-owned
life insurance proceeds received during the three months ended June
30, 2022.
Noninterest Expense
Noninterest expense was $9.57 million for the three months ended
June 30, 2022 compared to $9.61 million for the three months ended
June 30, 2021. Salaries and employee benefits decreased by $168,000
to $5.39 million for the three months ended June 30, 2022 from
$5.56 million for the three months ended June 30, 2021 primarily
because of a decrease in compensation, payroll taxes and employee
stock ownership plan (ESOP) expenses. The decrease in ESOP expenses
occurred because of a decrease in the market value of the Company’s
stock which is used to calculate the expense. Equipment expenses
rose by $172,000 to $1.23 million for the three months ended June
30, 2022 from $1.06 million for the three months ended June 30,
2021 primarily because of an increase in data processing
expenses.
Income Taxes
Income tax expense for the three months ended June 30, 2022 and
June 30, 2021 was $1.51 million with an effective tax rate of
26.91% for the three months ended June 30, 2022 compared to an
effective tax rate of 27.16% for the three months ended June 30,
2021.
Balance Sheet
Total assets were $2.18 billion at June 30, 2022 and $2.13
billion at December 31, 2021. Loans receivable decreased by $16.21
million at June 30, 2022. The decrease in loans receivable occurred
as loan repayments and sales exceeded new loan originations.
Investment securities, including available for sale securities,
increased by $92.68 million to $729.13 million at June 30, 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 to $70.62 million at June 30, 2022 from
$99.86 million at December 31, 2021. The decrease in cash and cash
equivalents occurred primarily because of the purchase of
investment securities. Total deposits increased by $47.76 million
to $1.73 billion at June 30, 2022 from $1.68 billion at December
31, 2021. Total stockholders’ equity decreased to $255.91 million
at June 30, 2022 from $256.32 million at December 31, 2021. The
decrease in stockholders’ equity occurred primarily because share
repurchases and dividends paid to shareholders exceeded net income
and the increase in capital from the allocation of ESOP shares.
Capital Management
On July 12, 2022, the Company announced it repurchased 220,029
of common shares and completed its eleventh share repurchase
program. Through July 12, 2022, the Company has repurchased
4,124,479 shares in all of its share repurchase programs. The
shares repurchased represent 33.72% 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 $353,000 of delinquent mortgage loans 90 days or
more past due at June 30, 2022 compared to $244,000 of delinquent
mortgage loans 90 days or more past due at December 31, 2021.
Non-performing assets totaled $4.02 million at June 30, 2022
compared to $3.28 million at December 31, 2021. The ratio of
non-performing assets to total assets was 0.18% at June 30, 2022
and 0.15% at December 31, 2021. The allowance for loan losses at
June 30, 2022 was $2.13 million and represented 0.17% 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 branches 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.
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 |
|
Six Months Ended |
|
|
|
June 30, |
|
June 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
Interest income: |
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
$ |
11,176 |
|
|
$ |
12,134 |
|
$ |
22,533 |
|
$ |
25,183 |
|
|
Investment securities |
|
|
3,928 |
|
|
|
2,394 |
|
|
7,351 |
|
|
4,219 |
|
|
Other investments |
|
|
267 |
|
|
|
228 |
|
|
443 |
|
|
459 |
|
|
Total interest income |
|
|
15,371 |
|
|
|
14,756 |
|
|
30,327 |
|
|
29,861 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
738 |
|
|
|
1,090 |
|
|
1,335 |
|
|
2,407 |
|
|
Advances from the Federal Home Loan Bank |
|
|
516 |
|
|
|
537 |
|
|
1,027 |
|
|
1,073 |
|
|
Securities sold under agreements to repurchase |
|
|
47 |
|
|
|
45 |
|
|
91 |
|
|
91 |
|
|
Total interest expense |
|
|
1,301 |
|
|
|
1,672 |
|
|
2,453 |
|
|
3,571 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
14,070 |
|
|
|
13,084 |
|
|
27,874 |
|
|
26,290 |
|
|
(Reversal of provision) provision for loan losses |
|
|
(326 |
) |
|
|
(372 |
) |
|
(494 |
) |
|
(1,285 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income after (reversal of provision) provision for
loan losses |
|
|
14,396 |
|
|
|
13,456 |
|
|
28,368 |
|
|
27,575 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest income: |
|
|
|
|
|
|
|
|
|
|
|
Service fees on loan and deposit accounts |
|
|
412 |
|
|
|
530 |
|
|
753 |
|
|
1,525 |
|
|
Income on bank-owned life insurance |
|
|
194 |
|
|
|
190 |
|
|
391 |
|
|
378 |
|
|
Gain on sale of investment securities |
|
|
— |
|
|
|
911 |
|
|
— |
|
|
1,437 |
|
|
Gain on sale of loans |
|
|
8 |
|
|
|
26 |
|
|
26 |
|
|
446 |
|
|
Other |
|
|
186 |
|
|
|
70 |
|
|
1,283 |
|
|
180 |
|
|
Total noninterest income |
|
|
800 |
|
|
|
1,727 |
|
|
2,453 |
|
|
3,966 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
5,392 |
|
|
|
5,560 |
|
|
11,005 |
|
|
11,083 |
|
|
Occupancy |
|
|
1,648 |
|
|
|
1,572 |
|
|
3,242 |
|
|
3,219 |
|
|
Equipment |
|
|
1,236 |
|
|
|
1,064 |
|
|
2,432 |
|
|
2,194 |
|
|
Federal deposit insurance premiums |
|
|
143 |
|
|
|
142 |
|
|
284 |
|
|
283 |
|
|
Loss on sale of loans |
|
|
29 |
|
|
|
— |
|
|
29 |
|
|
— |
|
|
Other general and administrative expenses |
|
|
1,125 |
|
|
|
1,274 |
|
|
2,179 |
|
|
2,387 |
|
|
Total noninterest expense |
|
|
9,573 |
|
|
|
9,612 |
|
|
19,171 |
|
|
19,166 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
5,623 |
|
|
|
5,571 |
|
|
11,650 |
|
|
12,375 |
|
|
Income taxes |
|
|
1,513 |
|
|
|
1,513 |
|
|
2,830 |
|
|
3,304 |
|
|
Net income |
|
$ |
4,110 |
|
|
$ |
4,058 |
|
$ |
8,820 |
|
$ |
9,071 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.46 |
|
|
$ |
0.44 |
|
$ |
0.98 |
|
$ |
0.99 |
|
|
Diluted earnings per share |
|
$ |
0.46 |
|
|
$ |
0.44 |
|
$ |
0.98 |
|
$ |
0.99 |
|
|
Cash dividends paid per common share |
|
$ |
0.23 |
|
|
$ |
0.23 |
|
$ |
0.46 |
|
$ |
0.46 |
|
|
Basic weighted-average shares outstanding |
|
|
8,876,691 |
|
|
|
9,117,467 |
|
|
8,928,127 |
|
|
9,124,086 |
|
|
Diluted weighted-average shares outstanding |
|
|
8,927,173 |
|
|
|
9,162,348 |
|
|
8,977,834 |
|
|
9,166,003 |
|
|
Territorial Bancorp Inc. and Subsidiaries |
|
Consolidated Balance Sheets (Unaudited) |
|
(Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
|
|
2022 |
|
2021 |
|
|
ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
70,620 |
|
|
$ |
99,859 |
|
|
|
Investment securities available for sale |
|
|
23,222 |
|
|
|
— |
|
|
|
Investment securities held to maturity, at amortized cost (fair
value of $616,040 and $634,987 at June 30, 2022 and December 31,
2021, respectively). |
|
|
705,904 |
|
|
|
636,442 |
|
|
|
Loans receivable, net |
|
|
1,286,618 |
|
|
|
1,302,824 |
|
|
|
Federal Home Loan Bank stock, at cost |
|
|
8,197 |
|
|
|
8,173 |
|
|
|
Federal Reserve Bank stock, at cost |
|
|
3,167 |
|
|
|
3,158 |
|
|
|
Accrued interest receivable |
|
|
5,913 |
|
|
|
5,786 |
|
|
|
Premises and equipment, net |
|
|
4,023 |
|
|
|
4,065 |
|
|
|
Right-of-use asset, net |
|
|
13,378 |
|
|
|
9,982 |
|
|
|
Bank-owned life insurance |
|
|
47,383 |
|
|
|
51,423 |
|
|
|
Deferred income tax assets, net |
|
|
2,087 |
|
|
|
1,927 |
|
|
|
Prepaid expenses and other assets |
|
|
9,527 |
|
|
|
6,963 |
|
|
|
Total assets |
|
$ |
2,180,039 |
|
|
$ |
2,130,602 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
Deposits |
|
$ |
1,729,592 |
|
|
$ |
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 |
|
|
21,299 |
|
|
|
22,638 |
|
|
|
Lease liability |
|
|
14,175 |
|
|
|
10,744 |
|
|
|
Income taxes payable |
|
|
2,180 |
|
|
|
1,863 |
|
|
|
Advance payments by borrowers for taxes and insurance |
|
|
5,888 |
|
|
|
6,207 |
|
|
|
Total liabilities |
|
|
1,924,134 |
|
|
|
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 9,120,458 and 9,324,060 shares at June 30, 2022 and
December 31, 2021, respectively. |
|
|
91 |
|
|
|
93 |
|
|
|
Additional paid-in capital |
|
|
52,464 |
|
|
|
56,951 |
|
|
|
Unearned ESOP shares |
|
|
(3,181 |
) |
|
|
(3,425 |
) |
|
|
Retained earnings |
|
|
212,932 |
|
|
|
208,227 |
|
|
|
Accumulated other comprehensive loss |
|
|
(6,401 |
) |
|
|
(5,524 |
) |
|
|
Total stockholders’ equity |
|
|
255,905 |
|
|
|
256,322 |
|
|
|
Total liabilities and stockholders’ equity |
|
$ |
2,180,039 |
|
|
$ |
2,130,602 |
|
|
|
|
Territorial Bancorp Inc. and Subsidiaries |
|
|
|
Selected Financial Data (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Ratios (annualized): |
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets |
|
|
|
|
0.76% |
|
|
|
0.76% |
|
|
|
|
|
|
|
Return on average equity |
|
|
|
|
6.39% |
|
|
|
6.43% |
|
|
|
|
|
|
|
Net interest margin on average interest earning assets |
|
2.72% |
|
|
|
2.54% |
|
|
|
|
|
|
|
Efficiency ratio (1) |
|
|
|
|
|
64.38% |
|
|
|
64.90% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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At June |
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December |
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30, 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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$28.06 |
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$27.49 |
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Stockholders' equity to total assets |
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11.74% |
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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 |
$353 |
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$244 |
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Non-performing assets (3) |
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$4,016 |
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$3,280 |
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Allowance for loan losses |
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$2,131 |
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$2,669 |
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Non-performing assets to total assets |
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0.18% |
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0.15% |
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Allowance for loan losses to total loans |
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0.17% |
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0.20% |
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Allowance for loan losses to non-performing assets |
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53.06% |
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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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Territorial Bancorp (NASDAQ:TBNK)
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