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HONOLULU, April 25, 2019 (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 $6.52 million or $0.70 per fully- diluted share for the three months ended March 31, 2019, compared to $4.82 million or $0.51 per fully-diluted share for the three months ended March 31, 2018.
The Company also announced that its Board of Directors approved a quarterly cash dividend of $0.22 per share. The dividend is expected to be paid on May 23, 2019 to stockholders of record as of May 9, 2019.
Allan Kitagawa, Chairman and Chief Executive Officer, said, “The Company has had another successful quarter. Despite the increase in interest rates that has occurred over the past year, we have been able to increase the size of our loan portfolio and our interest income.”
Net interest income decreased to $14.84 million for the three months ended March 31, 2019 from $15.24 million for the three months ended March 31, 2018. Total interest income was $18.71 million for the three months ended March 31, 2019 compared to $18.23 million for the three months ended March 31, 2018. The $471,000 growth in total interest income was due to a $701,000 increase in interest income on loans which resulted primarily from the $82.09 million increase in the average loans receivable. The growth in interest income on loans was offset by a $258,000 decline in interest income on investment securities. The decrease earned on securities occurred primarily because of a $34.90 million decline in the average securities portfolio balance that occurred due to repayments on the securities portfolio.
Total interest expense rose to $3.87 million for the three months ended March 31, 2019 from $3.00 million for the three months ended March 31, 2018. Interest expense on deposits increased to $3.22 million for the three months ended March 31, 2019 from $2.45 million for the three months ended March 31, 2018. The increase in interest expense on deposits occurred primarily because of a $24.07 million increase in average total deposits and a 19 basis point increase in the average cost of deposits. Interest expense on advances from the FHLB increased to $555,000 for the three months ended March 31, 2019 compared to $419,000 for the three months ended March 31, 2018. This increase was due to a $9.50 million increase in the average balance of FHLB advances and a 35 basis point increase in the average cost of advances for the three months ended March 31, 2019 as compared to three months ended March 31, 2018.
Noninterest income was $3.44 million for the three months ended March 31, 2019 compared to $742,000 for the three months ended March 31, 2018. The increase in noninterest income was primarily due to a $2.72 million gain on sale of a trust preferred security investment. This security was written down in 2010. The $2.72 million gain exceeded the write down.
Noninterest expense was $9.77 million for the three months ended March 31, 2019 compared to $9.39 million for the three months ended March 31, 2018. The increase in noninterest expense was primarily due to a $151,000 increase in equipment expense, a $76,000 increase in occupancy expense and a $124,000 increase in other general and administrative expenses.
Income tax expense for the three months ended March 31, 2019 was $1.97 million compared to $1.76 million for the three months ended March 31, 2018. This increase in income tax expense was primarily due to the $1.92 million increase in income before taxes for the quarter ended March 31, 2019 as compared to the quarter ended March 31, 2018. The increase in income tax expense that occurred because of the increase in income before taxes was partially offset by a $69,000 increase in the tax benefits related to the exercise of stock options in the quarter ended March 31, 2019.
Assets and Equity
Total assets decreased to $2.06 billion at March 31, 2019 from $2.07 billion at December 31, 2018. Loans receivable grew by $11.88 million to $1.59 billion at March 31, 2019 from $1.57 billion at December 31, 2018. The growth in loans receivable occurred as residential mortgage loan originations exceeded loan repayments. Cash and cash equivalents decreased by $23.40 million to $23.67 million at March 31, 2019 from $47.06 million at December 31, 2018. During the same period, deposits rose by $38.22 million to $1.67 billion at March 31, 2019 from $1.63 billion at December 31, 2018. The decrease in cash and cash equivalents and the additional deposits were used to pay off $37.70 million of Federal Home Loan Bank advances and $20.00 million of securities sold under agreements to repurchase. During the quarter ending March 31, 2019, the Company transferred investment securities with a book value of $11.39 million and a market value of $11.80 million to its available for sale investment portfolio from its held to maturity investment portfolio. The transfer was made when the Company adopted the amended Derivatives and Hedging topic of the FASB ASC. On January 1, 2019, the Company also adopted the amended Lease topic of the FASB ASC by capitalizing net present value of future lease payments and recording a right-of-use asset and a million lease liability. The right-of-use asset and lease liability had balances of $12.30 million and $12.79 million, respectively, at March 31, 2019. Total stockholders’ equity increased to $238.84 million at March 31, 2019 from $235.08 million at December 31, 2018. The increase in stockholders’ equity occurred as the Company’s net income and the increase in capital from the exercise of stock options and the allocation of ESOP shares exceeded dividends paid to shareholders and share repurchases.
During the quarter ended March 31, 2019, the Company repurchased $1.60 million, or 59,700 shares under in its eighth repurchase program. Through March 31, 2019, the Company has repurchased a total of 3,501,353 shares. The shares repurchased represent 28.62% of the total shares issued in its initial public offering.
As of March 31, 2019, the Company has 263,094 of outstanding, exercisable stock options. The exercise of options would increase the number of shares outstanding, which among other things, would reduce earnings per share.
Total delinquent loans 90 days or more past due and not accruing totaled $879,000 at March 31, 2019 and at December 31, 2018. Non-performing assets totaled $2.18 million at March 31, 2019 compared to $2.21 million at December 31, 2018. The ratio of non-performing assets to total assets was 0.11% at March 31, 2019 and at December 31, 2018. The allowance for loan losses at March 31, 2019 was $2.66 million and represented 0.17% of total loans compared to $2.64 million and 0.17% of total loans as of December 31, 2018.
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:
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:
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|
|Total interest income||18,705||18,234|
|Advances from the Federal Home Loan Bank||555||419|
|Securities sold under agreements to repurchase||90||125|
|Total interest expense||3,869||2,995|
|Net interest income||14,836||15,239|
|Provision for loan losses||5||9|
|Net interest income after provision for loan losses||14,831||15,230|
|Service fees on loan and deposit accounts||438||415|
|Income on bank-owned life insurance||207||215|
|Gain on sale of investment securities||2,717||—|
|Gain on sale of loans||6||43|
|Total noninterest income||3,440||742|
|Salaries and employee benefits||5,686||5,647|
|Federal deposit insurance premiums||144||153|
|Other general and administrative expenses||1,259||1,135|
|Total noninterest expense||9,774||9,393|
|Income before income taxes||8,497||6,579|
|Basic earnings per share||$||0.71||$||0.52|
|Diluted earnings per share||$||0.70||$||0.51|
|Cash dividends paid per common share||$||0.22||$||0.20|
|Basic weighted-average shares outstanding||9,169,256||9,284,496|
|Diluted weighted-average shares outstanding||9,313,139||9,484,177|
|Territorial Bancorp Inc. and Subsidiaries|
|Consolidated Balance Sheets (Unaudited)|
|(Dollars in thousands, except per share data)|
|March 31,||December 31,|
|Cash and cash equivalents||$||23,667||$||47,063|
|Investment securities available for sale||14,321||2,560|
|Investment securities held to maturity, at amortized cost (fair value of $356,011 and $364,922 at March 31, 2019 and December 31, 2018, respectively).||356,496||371,517|
|Loans held for sale||—||309|
|Loans receivable, net||1,586,593||1,574,714|
|Federal Home Loan Bank stock, at cost||6,663||8,093|
|Federal Reserve Bank stock, at cost||3,116||3,114|
|Accrued interest receivable||5,472||5,274|
|Premises and equipment, net||4,602||4,823|
|Right-of-use asset, net||12,303||—|
|Bank-owned life insurance||45,273||45,066|
|Deferred income tax assets, net||2,974||4,136|
|Prepaid expenses and other assets||2,585||2,537|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Advances from the Federal Home Loan Bank||104,500||142,200|
|Securities sold under agreements to repurchase||10,000||30,000|
|Accounts payable and accrued expenses||23,605||23,346|
|Income taxes payable||3,055||2,407|
|Advance payments by borrowers for taxes and insurance||3,895||7,010|
|Preferred stock, $.01 par value; authorized 50,000,000 shares, no shares issued or outstanding||—||—|
|Common stock, $.01 par value; authorized 100,000,000 shares; issued and outstanding 9,616,195 and 9,645,955 shares at March 31, 2019 and December 31, 2018, respectively.||96||97|
|Additional paid-in capital||63,748||65,090|
|Unearned ESOP shares||(4,771||)||(4,893||)|
|Accumulated other comprehensive loss||(7,319||)||(7,809||)|
|Total stockholders’ equity||238,838||235,079|
|Total liabilities and stockholders’ equity||$||2,064,065||$||2,069,206|
Territorial Bancorp Inc. and Subsidiaries
|Selected Financial Data (Unaudited)|
|Three Months Ended|
|Performance Ratios (annualized):|
|Return on average assets||1.28||%||0.97||%|
|Return on average equity||11.04||%||8.31||%|
|Net interest margin on average interest earning assets||2.99||%||3.13||%|
|Efficiency ratio (1)||53.48||%||58.78||%|
|At March||At December|
|31, 2019||31, 2018|
|Selected Balance Sheet Data:|
|Book value per share (2)||$||24.84||$||24.37|
|Stockholders' equity to total assets||11.57||%||11.36||%|
|(Dollars in thousands):|
|Delinquent loans 90 days past due and not accruing||$||879||$||879|
|Non-performing assets (3)||$||2,176||$||2,213|
|Allowance for loan losses||$||2,659||$||2,642|
|Non-performing assets to total assets||0.11||%||0.11||%|
|Allowance for loan losses to total loans||0.17||%||0.17||%|
|Allowance for loan losses to non-performing assets||122.20||%||119.39||%|
|(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|