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HONOLULU, Oct. 27, 2022 (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 $3.89 million, or $0.44 per diluted share, for the three months ended September 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 November 23, 2022 to stockholders of record as of November 10, 2022.
Allan Kitagawa, Chairman and Chief Executive Officer, said, “In the third quarter of 2022, we were able to increase our total interest income by 5.73% and net interest income by 3.45%. Rising interest rates have increased interest expense but our strong capital and asset quality will allow us to continue to serve our community well. The Company intends to continue to enhance shareholder value through dividends and share repurchases.”
Interest Income
Net interest income increased to $14.34 million for the three months ended September 30, 2022 from $13.86 million for the three months ended September 30, 2021. Total interest income was $16.15 million for the three months ended September 30, 2022 compared to $15.28 million for the three months ended September 30, 2021. The $876,000 increase in total interest income was primarily due to a $1.15 million increase in interest earned on investment securities. The increase in interest income on investment securities was partially offset by a $460,000 decrease in interest income on loans. The increase in interest income on investment securities was primarily due to a $127.25 million increase in the average securities balance and a 26 basis point increase in the average yield on investment securities. The increase in the average balance of investment securities occurred as security purchases exceeded repayments. The increase in the average securities yield occurred because higher yielding investment securities were purchased. The decrease in interest on loans occurred because of a $19.87 million decrease in the average loan balance and an eight basis point decrease in the average loan yield. 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 increased to $1.81 million for the three months ended September 30, 2022 from $1.41 million for the three months ended September 30, 2021. Interest expense on deposits increased by $398,000 to $1.24 million for the three months ended September 30, 2022 from $844,000 for the three months ended September 30, 2021. The increase in interest expense on deposits was due to a nine basis point increase in the average cost of deposits and a $53.71 million increase in the average deposit balance. The increase in the average cost of deposits occurred because of higher interest rates offered on deposits during the quarter. The Company reversed loan loss provisions of $109,000 for the three months ended September 30, 2022, compared to a reversal of $167,000 of loan loss provisions for the three months ended September 30, 2021. The reversal of the loan loss provisions during the three months ended September 30, 2022 and 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 $615,000 for the three months ended September 30, 2022 compared to $1.22 million for the three months ended September 30, 2021. The decrease in noninterest income was primarily due to a $403,000 decrease in the gain on sale of investment securities and a $138,000 decrease in the gain on sale of loans. The decrease in the gain on sale of investment securities occurred because no securities were sold during the three months ended September 30, 2022. The decrease in the gain on sale of loans occurred because fewer loans were sold during the three months ended September 30, 2022.
Noninterest Expense
Noninterest expense was $9.77 million for the three months ended September 30, 2022 compared to $9.56 million for the three months ended September 30, 2021. Equipment expense rose by $238,000 to $1.32 million for the three months ended September 30, 2022 from $1.08 million for the three months ended September 30, 2021 primarily because of an increase in data processing expenses. Other general and administrative expense decreased by $103,000 to $1.11 million for the three months ended September 30, 2022 from $1.22 million for the three months ended September 30, 2021 primarily because of a decrease in other loan expenses, which occurred because of the decrease in new loan originations.
Income Taxes
Income tax expense for the three months ended September 30, 2022 was $1.40 million with an effective tax rate of 26.53% compared to $1.53 million with an effective tax rate of 26.84% for the three months ended September 30, 2021.
Balance Sheet
Total assets were $2.16 billion at September 30, 2022 and $2.13 billion at December 31, 2021. Loans receivable decreased by $7.78 million during the nine months ended September 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 $102.13 million to $738.58 million at September 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 $36.29 million at September 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 $30.03 million to $1.71 billion at September 30, 2022 from $1.68 billion at December 31, 2021. Total stockholders’ equity increased to $256.75 million at September 30, 2022 from $256.32 million at December 31, 2021. The increase in stockholders’ equity occurred primarily because net income and the increase in capital from the allocation of ESOP shares exceeded share repurchases and dividends paid to shareholders.
Capital Management
On July 12, 2022, the Company announced it had repurchased 220,029 of common shares and completed its eleventh share repurchase program. As of 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 $227,000 of delinquent mortgage loans 90 days or more past due at September 30, 2022 compared to $244,000 of delinquent mortgage loans 90 days or more past due at December 31, 2021. Non-performing assets totaled $2.00 million at September 30, 2022 compared to $3.28 million at December 31, 2021. The ratio of non-performing assets to total assets was 0.09% at September 30, 2022 and 0.15% at December 31, 2021. The allowance for loan losses at September 30, 2022 was $2.02 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 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:
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:
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 | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Interest income: | |||||||||||||||
| Loans | $ | 11,376 | $ | 11,836 | $ | 33,909 | $ | 37,019 | |||||||
| Investment securities | 4,402 | 3,251 | 11,753 | 7,470 | |||||||||||
| Other investments | 373 | 188 | 816 | 647 | |||||||||||
| Total interest income | 16,151 | 15,275 | 46,478 | 45,136 | |||||||||||
| Interest expense: | |||||||||||||||
| Deposits | 1,242 | 844 | 2,577 | 3,251 | |||||||||||
| Advances from the Federal Home Loan Bank | 522 | 522 | 1,549 | 1,595 | |||||||||||
| Securities sold under agreements to repurchase | 46 | 46 | 137 | 137 | |||||||||||
| Total interest expense | 1,810 | 1,412 | 4,263 | 4,983 | |||||||||||
| Net interest income | 14,341 | 13,863 | 42,215 | 40,153 | |||||||||||
| Reversal of provisions for loan losses | (109 | ) | (167 | ) | (603 | ) | (1,452 | ) | |||||||
| Net interest income after reversal of provision for loan losses | 14,450 | 14,030 | 42,818 | 41,605 | |||||||||||
| Non-interest income: | |||||||||||||||
| Service fees on loan and deposit accounts | 339 | 433 | 1,092 | 1,958 | |||||||||||
| Income on bank-owned life insurance | 200 | 192 | 591 | 570 | |||||||||||
| Gain on sale of investment securities | — | 403 | — | 1,840 | |||||||||||
| Net gain (loss) on sale of loans | — | 138 | (3 | ) | 584 | ||||||||||
| Other | 76 | 57 | 1,359 | 237 | |||||||||||
| Total noninterest income | 615 | 1,223 | 3,039 | 5,189 | |||||||||||
| Noninterest expense: | |||||||||||||||
| Salaries and employee benefits | 5,513 | 5,493 | 16,518 | 16,576 | |||||||||||
| Occupancy | 1,682 | 1,636 | 4,924 | 4,855 | |||||||||||
| Equipment | 1,317 | 1,079 | 3,749 | 3,273 | |||||||||||
| Federal deposit insurance premiums | 145 | 141 | 429 | 424 | |||||||||||
| Other general and administrative expenses | 1,112 | 1,215 | 3,291 | 3,602 | |||||||||||
| Total noninterest expense | 9,769 | 9,564 | 28,911 | 28,730 | |||||||||||
| Income before income taxes | 5,296 | 5,689 | 16,946 | 18,064 | |||||||||||
| Income taxes | 1,405 | 1,527 | 4,235 | 4,831 | |||||||||||
| Net income | $ | 3,891 | $ | 4,162 | $ | 12,711 | $ | 13,233 | |||||||
| Basic earnings per share | $ | 0.44 | $ | 0.46 | $ | 1.42 | $ | 1.45 | |||||||
| Diluted earnings per share | $ | 0.44 | $ | 0.46 | $ | 1.41 | $ | 1.44 | |||||||
| Cash dividends paid per common share | $ | 0.23 | $ | 0.23 | $ | 0.69 | $ | 0.69 | |||||||
| Basic weighted-average shares outstanding | 8,802,010 | 9,012,398 | 8,885,626 | 9,086,447 | |||||||||||
| Diluted weighted-average shares outstanding | 8,846,611 | 9,056,569 | 8,938,808 | 9,131,069 | |||||||||||
| Territorial Bancorp Inc. and Subsidiaries | |||||||||
| Consolidated Balance Sheets (Unaudited) | |||||||||
| (Dollars in thousands, except per share data) | |||||||||
| September 30, | December 31, | ||||||||
| 2022 | 2021 | ||||||||
| ASSETS | |||||||||
| Cash and cash equivalents | $ | 36,286 | $ | 99,859 | |||||
| Investment securities available for sale | 21,142 | — | |||||||
| Investment securities held to maturity, at amortized cost (fair value of $585,752 and $634,987 at September 30, 2022 and December 31, 2021, respectively). | 717,434 | 636,442 | |||||||
| Loans receivable, net | 1,295,044 | 1,302,824 | |||||||
| Federal Home Loan Bank stock, at cost | 8,197 | 8,173 | |||||||
| Federal Reserve Bank stock, at cost | 3,171 | 3,158 | |||||||
| Accrued interest receivable | 6,061 | 5,786 | |||||||
| Premises and equipment, net | 6,114 | 4,065 | |||||||
| Right-of-use asset, net | 14,649 | 9,982 | |||||||
| Bank-owned life insurance | 47,583 | 51,423 | |||||||
| Deferred income tax assets, net | 2,335 | 1,927 | |||||||
| Prepaid expenses and other assets | 6,807 | 6,963 | |||||||
| Total assets | $ | 2,164,823 | $ | 2,130,602 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
| Liabilities: | |||||||||
| Deposits | $ | 1,711,853 | $ | 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 | 24,105 | 22,638 | |||||||
| Lease liability | 15,396 | 10,744 | |||||||
| Income taxes payable | 2,684 | 1,863 | |||||||
| Advance payments by borrowers for taxes and insurance | 3,040 | 6,207 | |||||||
| Total liabilities | 1,908,078 | 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 9,113,668 and 9,324,060 shares at September 30, 2022 and December 31, 2021, respectively. | 91 | 93 | |||||||
| Additional paid-in capital | 52,440 | 56,951 | |||||||
| Unearned ESOP shares | (3,058 | ) | (3,425 | ) | |||||
| Retained earnings | 214,787 | 208,227 | |||||||
| Accumulated other comprehensive loss | (7,515 | ) | (5,524 | ) | |||||
| Total stockholders’ equity | 256,745 | 256,322 | |||||||
| Total liabilities and stockholders’ equity | $ | 2,164,823 | $ | 2,130,602 | |||||
| Territorial Bancorp Inc. and Subsidiaries | |||||||||||||||
| Selected Financial Data (Unaudited) | |||||||||||||||
| Three Months Ended | |||||||||||||||
| September 30, | |||||||||||||||
| 2022 | 2021 | ||||||||||||||
| Performance Ratios (annualized): | |||||||||||||||
| Return on average assets | 0.71 | % | 0.78 | % | |||||||||||
| Return on average equity | 5.98 | % | 6.53 | % | |||||||||||
| Net interest margin on average interest earning assets | 2.75 | % | 2.72 | % | |||||||||||
| Efficiency ratio (1) | 65.32 | % | 63.40 | % | |||||||||||
| At September | December | ||||||||||||||
| 30, 2022 | 31, 2021 | ||||||||||||||
| Selected Balance Sheet Data: | |||||||||||||||
| Book value per share (2) | $28.17 | $27.49 | |||||||||||||
| Stockholders' equity to total assets | 11.86% | 12.03% | |||||||||||||
| Asset Quality | |||||||||||||||
| (Dollars in thousands): | |||||||||||||||
| Delinquent loans 90 days past due and not accruing | $227 | $244 | |||||||||||||
| Non-performing assets (3) | $2,001 | $3,280 | |||||||||||||
| Allowance for loan losses | $2,015 | $2,669 | |||||||||||||
| Non-performing assets to total assets | 0.09% | 0.15% | |||||||||||||
| Allowance for loan losses to total loans | 0.16% | 0.20% | |||||||||||||
| Allowance for loan losses to non-performing assets | 100.70% | 81.37% | |||||||||||||
| 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 | |||||||||||||||