Territorial Bancorp Inc. (NASDAQ:TBNK) (the “Company”),
headquartered in Honolulu, Hawaii, the holding company parent of
Territorial Savings Bank, announced net income of $4.32 million or
$0.46 per diluted share for the three months ended March 31, 2017,
compared to $3.78 million or $0.41 per diluted share for the three
months ended March 31, 2016.
The Company also announced that its Board of
Directors approved a quarterly cash dividend of $0.20 per
share. The dividend is expected to be paid on May 25, 2017 to
stockholders of record as of May 11, 2017.
Allan Kitagawa, Chairman and Chief Executive
Officer, said, “Our first quarter of 2017 has been strong and we
are looking forward to continuing this momentum through the
remainder of the year. Hawaii’s tourism industry saw a record
number of visitors in 2016 and this growth has continued in
2017. The strength of Hawaii’s economy has given us an
opportunity to successfully expand our loan portfolio, which in
turn has increased our net income and earnings per share. In
early April we opened our 29th branch in the middle of the thriving
Keeaumoku area.”
Interest Income
Net interest income after provision for loan losses increased to
$14.59 million for the three months ended March 31, 2017 from
$14.47 million for the three months ended March 31, 2016. Total
interest income was $16.78 million for the three months ended March
31, 2017 compared to $16.38 million for the three months ended
March 31, 2016. The increase in interest income was primarily due
to a $1.15 million increase in interest income on loans, which
occurred primarily because of the $150.42 million growth in average
loans receivable over the past year as new loan originations
exceeded loan repayments and loan sales. The increase in
interest income on loans was offset by a $794,000 decline in
interest income on investment securities primarily due to an $87.86
million decrease in the average investment securities over the past
year, as repayments and sales exceeded securities
purchased.
Interest Expense and Provision for Loan
Losses
Total interest expense increased to $2.12 million for the three
months ended March 31, 2017 from $1.88 million for the three months
ended March 31, 2016. Interest expense on deposits grew to
$1.65 million for the three months ended March 31, 2017 from $1.41
million for the three months ended March 31, 2016. The
increase in interest expense on deposits occurred because of a
$51.16 million growth in average total deposits over the past year
and a five basis point increase in the cost of savings deposits.
For the three months ended March 31, 2017, the provision for
loan losses was $71,000 compared to a $28,000 provision for the
three months ended March 31, 2016.
Noninterest Income
Noninterest income was $1.02 million for the three months ended
March 31, 2017 compared to $886,000 for the three months ended
March 31, 2016. The $136,000 increase in noninterest income
was primarily due to a $100,000 increase in service fees on loan
and deposit accounts and a $95,000 increase in the gain on sale of
investment securities, which were offset by a $21,000 decrease in
income on bank-owned life insurance and a $40,000 decrease in other
non-interest income for the three months ended March 31, 2017 as
compared to the three months ended March 31, 2016. The
$100,000 growth in service fees on loan and deposit accounts is due
to an increase in appraisal fee and debit card income and a
reduction in the amortization of premiums on loans sold.
Noninterest Expense
Noninterest expense decreased by $352,000 to $8.71 million for
the three months ended March 31, 2017 compared to $9.06 million for
the three months ended March 31, 2016. The primary cause of
the decrease in noninterest expense was a $308,000 reduction in
salaries and employee benefits. The decrease in salaries and
employee benefits is primarily related to a reduction in the costs
of our share-based compensation plans, which occurred when a
majority of the awards issued under the 2010 equity incentive plan
became fully vested in August of 2016. In addition, an
increase in the capitalized cost of new loan originations reduced
compensation expense. As new loans are originated, the Bank
capitalizes the cost of new loan originations and reduces salary
expense attributable to such originations. Equipment expense
was $866,000 for the three months ended March 31, 2017 compared to
$906,000 for the three months ended March 31, 2016. The
decrease in equipment expense is primarily due to a decline in
equipment depreciation expense and data processing expense.
Federal deposit insurance premiums for the three months ended
March 31, 2017 was $148,000 compared to $225,000 for the three
months ended March 31, 2016. The decrease in federal deposit
insurance premiums occurred because of a decline in the Bank’s
insurance premium rate. Other general and administrative
expenses was $1.13 million for the three months ended March 31,
2017 compared to $1.08 million for the three months ended March 31,
2016. The increase in other general and administrative
expenses is primarily due to an increase in other professional
services. Income Taxes
Income tax expense for the three months ended March 31, 2017 was
$2.58 million compared to $2.51 million for the three months ended
March 31, 2016. Income tax expense in the first quarter of
2017 included a $208,000 tax benefit related to the exercise of
stock options. Starting in 2017, a new accounting standard
requires that any excess tax benefits resulting from the exercise
of stock options be recognized in income tax expense. Prior
to the adoption of the new standard, the excess tax benefits were
recorded as additional paid-in capital. The amount of tax
benefits or deficiencies recognized in income tax expense depends
on the number of options exercised and the stock price at the time
the options were exercised and at the time of vesting.
Assets and Equity
Total assets increased to $1.936 billion at March 31, 2017 from
$1.878 billion at December 31, 2016. Loans receivable rose by
$31.23 million to $1.367 billion at March 31, 2017 from $1.336
billion at December 31, 2016 as residential mortgage loan
originations exceeded loan repayments and sales. Cash and cash
equivalents also grew by $41.85 million to $103.12 million at March
31, 2017 from $61.27 million at December 31, 2016. The growth
in loans receivable and cash and cash equivalents was funded
primarily by a $55.71 million increase in deposits and a $15.67
million decrease in investment securities. Deposits increased
to $1.549 billion at March 31, 2017 from $1.493 billion at December
31, 2016. The growth in deposits is primarily due to a $40.7
million increase in public deposits held in certificates of
deposit. Investment securities declined to $391.99 million at
March 31, 2017 from $407.66 million at December 31, 2016 as
repayments and the sale of securities exceeded new purchases. Total
stockholders’ equity increased to $232.62 million at March 31, 2017
from $229.79 million at December 31, 2016. The increase in
stockholders’ equity occurred as the Company’s net income for the
year exceeded dividends paid to shareholders.
Share Repurchases
For the quarter ended March 31, 2017, the Company did not
repurchase any shares under its previously announced seventh
repurchase program, which permits the repurchase of up to 275,000
shares or approximately 3% of the current outstanding shares.
The Company uses share repurchases as part of its overall program
to enhance shareholder value. In evaluating the share
repurchase programs, the Company 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 continue to limit the Company’s share repurchases.
The Company will continue to closely monitor this issue and,
depending on market and other conditions, will conduct repurchases
when it makes financial sense.
Asset Quality
Total delinquent loans 90 days or more past due and not accruing
totaled $923,000 (7 loans) at March 31, 2017, compared to $1.40
million (7 loans) at December 31, 2016. Non-performing assets
totaled $3.49 million at March 31, 2017 compared to $4.56 million
at December 31, 2016. The ratio of non-performing assets to
total assets declined to 0.18% at March 31, 2017 from 0.24% at
December 31, 2016 and continues to remain one of the lowest in the
country. The allowance for loan losses at March 31, 2017 was
$2.54 million and represented 0.19% of total loans compared to
$2.45 million and 0.18% of total loans as of December 31,
2016.
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, 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 |
|
|
March 31, |
|
|
2017 |
|
2016 |
Interest
income: |
|
|
|
|
|
|
Loans |
|
$ |
13,513 |
|
$ |
12,361 |
Investment securities |
|
|
3,081 |
|
|
3,875 |
Other
investments |
|
|
187 |
|
|
144 |
Total
interest income |
|
|
16,781 |
|
|
16,380 |
|
|
|
|
|
|
|
Interest
expense: |
|
|
|
|
|
|
Deposits |
|
|
1,651 |
|
|
1,408 |
Advances
from the Federal Home Loan Bank |
|
|
254 |
|
|
257 |
Securities sold under agreements to repurchase |
|
|
216 |
|
|
218 |
Total
interest expense |
|
|
2,121 |
|
|
1,883 |
|
|
|
|
|
|
|
Net
interest income |
|
|
14,660 |
|
|
14,497 |
Provision for loan losses |
|
|
71 |
|
|
28 |
|
|
|
|
|
|
|
Net
interest income after provision for loan losses |
|
|
14,589 |
|
|
14,469 |
|
|
|
|
|
|
|
Noninterest income: |
|
|
|
|
|
|
Service
fees on loan and deposit accounts |
|
|
556 |
|
|
456 |
Income on
bank-owned life insurance |
|
|
226 |
|
|
247 |
Gain on
sale of investment securities |
|
|
95 |
|
|
— |
Gain on
sale of loans |
|
|
63 |
|
|
61 |
Other |
|
|
82 |
|
|
122 |
Total
noninterest income |
|
|
1,022 |
|
|
886 |
|
|
|
|
|
|
|
Noninterest expense: |
|
|
|
|
|
|
Salaries
and employee benefits |
|
|
5,118 |
|
|
5,426 |
Occupancy |
|
|
1,449 |
|
|
1,420 |
Equipment |
|
|
866 |
|
|
906 |
Federal
deposit insurance premiums |
|
|
148 |
|
|
225 |
Other
general and administrative expenses |
|
|
1,126 |
|
|
1,082 |
Total
noninterest expense |
|
|
8,707 |
|
|
9,059 |
|
|
|
|
|
|
|
Income
before income taxes |
|
|
6,904 |
|
|
6,296 |
Income
taxes |
|
|
2,583 |
|
|
2,512 |
Net
income |
|
$ |
4,321 |
|
$ |
3,784 |
|
|
|
|
|
|
|
Basic
earnings per share |
|
$ |
0.47 |
|
$ |
0.42 |
Diluted
earnings per share |
|
$ |
0.46 |
|
$ |
0.41 |
Cash
dividends paid per common share |
|
$ |
0.20 |
|
$ |
0.18 |
Basic
weighted-average shares outstanding |
|
|
9,215,142 |
|
|
9,034,919 |
Diluted
weighted-average shares outstanding |
|
|
9,445,989 |
|
|
9,305,615 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Territorial Bancorp Inc. and
Subsidiaries |
Consolidated Balance sheets (Unaudited) |
(Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December
31, |
|
|
|
2017 |
|
|
|
2016 |
|
ASSETS |
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
103,123 |
|
|
$ |
61,273 |
|
Investment securities held to maturity, at amortized cost (fair
value of $392,384 and $407,922 at March 31, 2017 and
December 31, 2016, respectively) |
|
|
391,988 |
|
|
|
407,656 |
|
Loans
held for sale |
|
|
1,752 |
|
|
|
1,601 |
|
Loans
receivable, net |
|
|
1,367,217 |
|
|
|
1,335,987 |
|
Federal
Home Loan Bank stock, at cost |
|
|
5,013 |
|
|
|
4,945 |
|
Federal
Reserve Bank stock, at cost |
|
|
3,103 |
|
|
|
3,095 |
|
Accrued
interest receivable |
|
|
4,766 |
|
|
|
4,732 |
|
Premises
and equipment, net |
|
|
4,843 |
|
|
|
4,327 |
|
Bank-owned life insurance |
|
|
43,520 |
|
|
|
43,294 |
|
Income
taxes receivable |
|
|
— |
|
|
|
122 |
|
Deferred
income tax assets, net |
|
|
7,537 |
|
|
|
7,905 |
|
Prepaid
expenses and other assets |
|
|
2,929 |
|
|
|
2,625 |
|
Total
assets |
|
$ |
1,935,791 |
|
|
$ |
1,877,562 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
Deposits |
|
$ |
1,548,906 |
|
|
$ |
1,493,200 |
|
Advances
from the Federal Home Loan Bank |
|
|
69,000 |
|
|
|
69,000 |
|
Securities sold under agreements to repurchase |
|
|
55,000 |
|
|
|
55,000 |
|
Accounts
payable and accrued expenses |
|
|
23,419 |
|
|
|
23,258 |
|
Income
taxes payable |
|
|
3,328 |
|
|
|
1,616 |
|
Advance
payments by borrowers for taxes and insurance |
|
|
3,514 |
|
|
|
5,702 |
|
Total liabilities |
|
|
1,703,167 |
|
|
|
1,647,776 |
|
|
|
|
|
|
|
|
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 9,805,248 and 9,778,974 shares at March 31, 2017
and December 31, 2016, respectively |
|
|
98 |
|
|
|
98 |
|
Additional paid-in capital |
|
|
72,149 |
|
|
|
71,914 |
|
Unearned
ESOP shares |
|
|
(5,750 |
) |
|
|
(5,872 |
) |
Retained
earnings |
|
|
171,441 |
|
|
|
168,962 |
|
Accumulated other comprehensive loss |
|
|
(5,314 |
) |
|
|
(5,316 |
) |
Total stockholders’ equity |
|
|
232,624 |
|
|
|
229,786 |
|
Total liabilities and stockholders’ equity |
|
$ |
1,935,791 |
|
|
$ |
1,877,562 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TERRITORIAL BANCORP INC. AND SUBSIDIARIES |
|
|
|
|
|
|
|
|
Selected Financial Data (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
March 31, |
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
Performance
Ratios (annualized): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on
average assets |
|
|
|
|
|
0.92 |
% |
|
|
0.83 |
% |
Return on
average equity |
|
|
|
|
|
7.53 |
% |
|
|
6.84 |
% |
Net
interest margin on average interest earning assets |
|
|
3.21 |
% |
|
|
3.28 |
% |
Efficiency
Ratio |
|
|
|
|
|
55.52 |
% |
|
|
58.89 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At March |
|
At December |
|
|
|
|
|
|
|
31, 2017 |
|
|
|
31, 2016 |
|
Selected
Balance Sheet Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value
per share (1) |
|
|
|
|
$ |
23.72 |
|
|
$ |
23.50 |
|
Stockholders' equity to total assets |
|
|
|
|
12.02 |
% |
|
|
12.24 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality |
|
|
|
|
|
|
|
|
(Dollars in
thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delinquent
loans 90 days past due and not accruing (2) |
|
$ |
923 |
|
|
$ |
1,401 |
|
Non-performing assets (2) |
|
|
|
$ |
3,492 |
|
|
|
4,559 |
|
Allowance
for loan losses |
|
|
|
|
$ |
2,540 |
|
|
|
2,452 |
|
Non-performing assets to total assets |
|
|
|
|
0.18 |
% |
|
|
0.24 |
% |
Allowance
for loan losses to total loans |
|
|
|
0.19 |
% |
|
|
0.18 |
% |
Allowance
for loan losses to non-performing assets |
|
|
72.74 |
% |
|
|
53.78 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Book
value per share is equal to stockholders' equity divided by number
of shares issued and outstanding |
(2)
Non-performing assets consist of non-accrual loans and real estate
owned. Amounts are net of charge-offs |
|
|
|
|
|
|
|
|
|
Contact:
Walter Ida
(808) 946-1400
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