Territorial Bancorp: Q4 Earnings Snapshot - Navigating Merger Challenges and Interest Rate Dynamics

Territorial Bancorp Inc. (NASDAQ: TBNK), the holding company parent of Territorial Savings Bank, reported a net loss of $1.72 million, or $0.20 per diluted share, for the three months ended December 31, 2024. The results reflect $1.53 million of pre-tax merger-related expenses. The Board of Directors approved a dividend of $0.01 per share, payable on February 28, 2025, to stockholders of record as of February 14, 2025.



The company's tier one leverage and risk-based capital ratios were 11.68% and 28.96%, respectively, indicating a "well-capitalized" status at December 31, 2024. The ratio of non-performing assets to total assets was 0.09%, reflecting solid asset quality. Net interest income decreased by $2.21 million compared to the same period last year, primarily due to a $20.63 million decrease in the average loan balance and a $302,000 decrease in interest on investment securities.

The pending merger with Hope Bancorp, Inc. (NASDAQ: HOPE) is expected to create synergies and enhance shareholder value. Under the terms of the merger agreement, Territorial Bancorp stockholders will receive a fixed exchange ratio of 0.8048 share of Hope Bancorp common stock in exchange for each share of Territorial common stock they own. Upon completion of the transaction, Hope Bancorp intends to maintain the Territorial franchise in Hawaii and preserve the 100-plus year legacy of the Territorial Savings Bank brand name, culture, and commitment to local communities.

The reduction in Territorial Bancorp's dividend payout in Q4 2024 aligns with the company's long-term dividend policy and its commitment to maintaining shareholder value. The company's strong capital ratios, solid asset quality, stable income generation, and the expected synergies from the merger with Hope Bancorp all contribute to this alignment.

In conclusion, Territorial Bancorp's Q4 2024 earnings snapshot reflects the challenges and opportunities faced by the company in the current interest rate environment and the strategic implications of the proposed merger with Hope Bancorp. The company's strong capital ratios, solid asset quality, and the expected synergies from the merger provide a solid foundation for navigating these challenges and maintaining shareholder value.