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HONOLULU, July 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 $5.06 million or $0.54 per fully- diluted share for the three months ended June 30, 2019, compared to $4.96 million or $0.53 per fully-diluted share for the three months ended June 30, 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 August 22, 2019 to stockholders of record as of August 8, 2019.
Allan Kitagawa, Chairman and Chief Executive Officer, said, “Our strong performance continued in the second quarter. We were able to increase our total loans and deposits while maintaining good asset quality.”
Total interest income was $19.11 million for the three months ended June 30, 2019 compared to $18.18 million for the three months ended June 30, 2018. The $932,000 growth in total interest income was due to a $1.12 million increase in interest income on loans, which resulted primarily from a $72.78 million increase in average loans receivable. This increase was offset by a $275,000 decline in interest income on investment securities. The decrease earned on investment securities was due to a $37.88 million reduction in the average securities portfolio balance which resulted from repayments in excess of purchases on the securities portfolio.
Interest Expense and Provisions for Loan Losses
Total interest expense rose to $4.45 million for the three months ended June 30, 2019 from $3.28 million for the three months ended June 30, 2018. Interest expense on deposits increased to $3.51 million for the three months ended June 30, 2019 from $2.69 million for the three months ended June 30, 2018. The increase in interest expense on deposits occurred primarily because of a 20 basis point increase in the average cost of deposits and a $30.92 million increase in average total deposits. Interest expense on FHLB advances increased to $897,000 for the three months ended June 30, 2019 compared to $459,000 for the three months ended June 30, 2018. This increase was due to a $19.70 million increase in the average balance of FHLB advances and an increase in the average cost of advances for the three months ended June 30, 2019 as compared to three months ended June 30, 2018.
During the three months ended June 30, 2019, the Company recorded a $51,000 reversal in the provision for loan losses compared to a $60,000 loan provision for the three months ended June 30, 2018. The reversal in loan loss provisions resulted from the improving credit quality of the Company’s loan portfolio and a reduction in loan losses.
Noninterest income was $1.27 million for the three months ended June 30, 2019 compared to $837,000 for the three months ended June 30, 2018. The increase in noninterest income was primarily due to a $429,000 increase in other income, which included $419,000 of proceeds on bank owned life insurance.
Noninterest expense was $9.51 million for the three months ended June 30, 2019 compared to $9.37 million for the three months ended June 30, 2018. The increase in noninterest expense was primarily due to a $234,000 increase in salaries and employee benefits, which was partially reduced by a $111,000 decrease in other general and administrative expenses. The increase in compensation expense is primarily due to an increase in the expense for performance-based stock awards.
Income tax expense for the three months ended June 30, 2019 was $1.42 million compared to $1.35 million for the three months ended June 30, 2018. Income tax expense for the three months ended June 30, 2019 was net of $144,000 of tax benefits related to the exercise of stock options. In addition, $419,000 of proceeds on bank owned life insurance were not taxable, which lowered the effective tax rate. Income tax expense for the three months ended June 30, 2018 was net of tax benefits of $250,000 related to the exercise of stock options and a $1.00 million pension contribution to the Company’s defined benefit pension plan. The tax benefit from the pension contribution occurred as the tax deduction for the pension contribution was calculated at the 35.00% federal corporate tax rate for 2017 rather than the 21.00% corporate tax rate for 2018.
Assets and Equity
Total assets increased to $2.09 billion at June 30, 2019 from $2.07 billion at December 31, 2018. Loans receivable grew by $23.76 million to $1.60 billion at June 30, 2019 from $1.57 billion at December 31, 2018. The growth in loans receivable occurred as residential mortgage loan originations exceeded loan repayments. 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 in 2019. The transfer was made when the Company adopted the amended Derivatives and Hedging topic of the FASB ASC. Investment securities held to maturity declined to $350.94 million at June 30, 2019 from $371.52 million at December 31, 2019. This decline in investment securities included the $11.39 million transferred to available for sale from the held to maturity portfolio and approximately $16.29 million of principal repayments. Cash and cash equivalents decreased to $41.53 million at June 30, 2019 from $47.06 million at December 31, 2018. During the same period, deposits rose by $16.57 million to $1.65 billion at June 30, 2019 from $1.63 billion at December 31, 2018. The additional deposits, along with the repayments on investment securities and the decrease in cash and cash equivalents, were used to fund the growth in the loan portfolio and pay off $20.00 million of securities sold under agreements to repurchase. 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 lease liability. The right-of-use asset and lease liability had balances of $11.62 million and $12.12 million, respectively, at June 30, 2019. Total stockholders’ equity increased to $241.77 million at June 30, 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 June 30, 2019, the Company completed its eighth repurchase program. Through June 30, 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.
During the quarter ended June 30, 2019, the Company announced its ninth stock repurchase program where the Company is authorized to repurchase up to $5,000,000 of its outstanding shares.
As of June 30, 2019, the Company has 155,484 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.
The Company did not have any delinquent loans 90 days or more past due and not accruing at June 30, 2019 compared to $879,000 at December 31, 2018. Non-performing assets totaled $892,000 at June 30, 2019 compared to $2.21 million at December 31, 2018. The ratio of non-performing assets to total assets was 0.04% at June 30, 2019 and 0.11% at December 31, 2018. The allowance for loan losses at June 30, 2019 was $2.62 million and represented 0.16% 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, 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||Six Months Ended|
|June 30,||June 30,|
|Total interest income||19,114||18,182||37,819||36,416|
|Advances from the Federal Home Loan Bank||897||459||1,452||878|
|Securities sold under agreements to repurchase||41||126||131||251|
|Total interest expense||4,452||3,275||8,321||6,270|
|Net interest income||14,662||14,907||29,498||30,146|
|Provision (reversal of provision) for loan losses||(51||)||60||(46||)||69|
|Net interest income after provision for loan losses||14,713||14,847||29,544||30,077|
|Service fees on loan and deposit accounts||485||487||923||902|
|Income on bank-owned life insurance||210||216||417||431|
|Gain on sale of investment securities||70||45||2,787||45|
|Gain on sale of loans||—||10||6||53|
|Total noninterest income||1,273||837||4,713||1,579|
|Salaries and employee benefits||5,730||5,496||11,416||11,143|
|Federal deposit insurance premiums||143||154||287||307|
|Other general and administrative expenses||1,042||1,153||2,301||2,288|
|Total noninterest expense||9,511||9,374||19,285||18,767|
|Income before income taxes||6,475||6,310||14,972||12,889|
|Basic earnings per share||$||0.55||$||0.54||$||1.26||$||1.05|
|Diluted earnings per share||$||0.54||$||0.53||$||1.24||$||1.03|
|Cash dividends paid per common share||$||0.32||$||0.30||$||0.54||$||0.50|
|Basic weighted-average shares outstanding||9,172,376||9,219,859||9,170,825||9,251,999|
|Diluted weighted-average shares outstanding||9,276,680||9,394,031||9,294,327||9,439,618|
|Territorial Bancorp Inc. and Subsidiaries|
|Consolidated Balance Sheets (Unaudited)|
|(Dollars in thousands, except per share data)|
|June 30,||December 31,|
|Cash and cash equivalents||$||41,528||$||47,063|
|Investment securities available for sale||13,349||2,560|
|Investment securities held to maturity, at amortized cost (fair value of $356,321 and
$364,922 at June 30, 2019 and December 31, 2018, respectively).
|Loans held for sale||235||309|
|Loans receivable, net||1,598,476||1,574,714|
|Federal Home Loan Bank stock, at cost||8,303||8,093|
|Federal Reserve Bank stock, at cost||3,116||3,114|
|Accrued interest receivable||5,575||5,274|
|Premises and equipment, net||4,597||4,823|
|Right-of-use asset, net||11,622||—|
|Bank-owned life insurance||44,695||45,066|
|Deferred income tax assets, net||2,919||4,136|
|Prepaid expenses and other assets||2,538||2,537|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Advances from the Federal Home Loan Bank||145,500||142,200|
|Securities sold under agreements to repurchase||10,000||30,000|
|Accounts payable and accrued expenses||24,016||23,346|
|Income taxes payable||1,878||2,407|
|Advance payments by borrowers for taxes and insurance||6,880||7,010|
|Preferred stock, $.01 par value; authorized 50,000,000 shares, no shares issued or outstanding||—||—|
|Common stock, $.01 par value; authorized 100,000,000 shares; issued and outstanding
9,664,793 and 9,645,955 shares at June 30, 2019 and December 31, 2018,
|Additional paid-in capital||64,335||65,090|
|Unearned ESOP shares||(4,649||)||(4,893||)|
|Accumulated other comprehensive loss||(7,200||)||(7,809||)|
|Total stockholders’ equity||241,772||235,079|
|Total liabilities and stockholders’ equity||$||2,087,897||$||2,069,206|
|Territorial Bancorp Inc. and Subsidiaries|
|Selected Financial Data (Unaudited)|
|Three Months Ended|
|Performance Ratios (annualized):|
|Return on average assets||0.98%||0.98%|
|Return on average equity||8.39%||8.46%|
|Net interest margin on average interest earning assets||2.93%||3.04%|
|Efficiency ratio (1)||59.69%||59.54%|
|At June||At December|
|30, 2019||31, 2018|
|Selected Balance Sheet Data:|
|Book value per share (2)||$25.02||$24.37|
|Stockholders' equity to total assets||11.58%||11.36%|
|(Dollars in thousands):|
|Delinquent loans 90 days past due and not accruing||$0||$879|
|Non-performing assets (3)||$892||$2,213|
|Allowance for loan losses||$2,616||$2,642|
|Non-performing assets to total assets||0.04%||0.11%|
|Allowance for loan losses to total loans||0.16%||0.17%|
|Allowance for loan losses to non-performing assets||293.27%||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|