PRESS RELEASE
FOR IMMEDIATE RELEASE
- ---------------------
Contact: Walter Ida
(808) 946-1400
Territorial Bancorp Inc.
Announces Third Quarter 2009 Results
Honolulu, Hawaii, November 13, 2009 - Territorial Bancorp Inc., (NASDAQ: TBNK)
(the "Company"), headquartered in Honolulu, Hawaii, the holding company parent
of Territorial Savings Bank, announces net income of $729,000 or $.06 per share,
for the three months ended September 30, 2009, compared to $2,386,000 for the
three months ended September 30, 2008.
For the three months ended September 30, 2009, net income was $729,000 or $.06
per share. Net income for this period was adversely impacted by a $2,716,000
pre-tax decrease in the carrying value of an investment in trust preferred
securities during the quarter and the Company's recording of such reduction in
accordance with recent accounting pronouncements. It should be noted that
$2,483,000 of this amount was previously reflected as a charge against income in
the last quarter of 2008, but due to these recent accounting pronouncements, the
Company was required to once again charge income in the amount of $2,483,000
during the quarter ended September 30, 2009. Additionally, during the quarter
ended September 30, 2009, the Company paid off the remaining balance of
subordinated debentures totaling $24,743,000, which resulted in the recognition
of $507,000 of costs relating to the issuance of these debentures during the
quarter. The prospect of recognizing additional impairment on our investment in
trust preferred securities and the recognition of costs relating to the issuance
of these subordinated debentures were previously discussed in the Company's
Prospectus dated May 15, 2009. Excluding these items, net income for the three
months ended September 30, 2009 would have been $2,688,000, or $.24 per share
for the three months ended September 30, 2009.
For the three months ended September 30, 2009 and 2008, net interest income
after provision for loan losses was $10,376,000 and $9,509,000, respectively.
Total interest and dividend income decreased slightly to $15,303,000 for the
three months ended September 30, 2009 from $15,519,000 for the three months
ended September 30, 2008. At the same time, total interest expense decreased to
$4,917,000 for the three months ended September 30, 2009 from $6,023,000 for the
three months ended September 30, 2008. Provision for loan losses was $10,000 for
the three months ended September 30, 2009 compared to a reversal of $13,000 of
loan losses for the three months ended September 30, 2008. Non-interest income
was a loss of $1,426,000 for the three months ended September 30, 2009 compared
to income of $1,181,000 for the three months ended September 30, 2008. The loss
in non-interest income was primarily due to the
recognition of a loss of $2,716,000 resulting from a decrease in the carrying
value of trust preferred securities due to such losses being reclassified as
credit losses in accordance with accounting pronouncements. Without the
recognition of this loss, non-interest income for the three months ended
September 30, 2009 would have been $1,290,000. Non-interest expense was
$7,896,000 for the three months ended September 30, 2009 as compared to
$6,969,000 for the three months ended September 30, 2008. As noted above, in
paying off the remaining balance of subordinated debentures, costs of $507,000
relating to the issuance of these subordinated debentures were required to be
eliminated. With the elimination of these carrying charges, non-interest expense
for the three months ended September 30, 2009 would have been $7,389,000. In
addition, the increase of non-interest expense was due to increases in
compensation and employee benefit expense and federal deposit insurance
premiums.
For the nine months ended September 30, 2009 net interest income after provision
for loan losses was $29,245,000 compared to $26,364,000 for the nine months
ended September 30, 2008 Total interest and dividend income rose to $45,987,000
for the nine months ended September 30, 2009 from $45,681,000 for the nine
months ended September 30, 2008. Total interest expense decreased to $15,630,000
for the nine months ended September 30, 2009 from $19,326,000 for the nine
months ended September 30, 2008. Provision for loan losses was $1,112,000 for
the nine months ended September 30, 2009 compared to a reversal of $9,000 of
loan losses for the nine months ended September 30, 2008 reflecting management's
determination to increase its overall allowance for loan losses as result of an
increase in non-performing loans experienced in the first three quarters of 2009
and deteriorating environmental factors. Non-interest income was $1,188,000 for
the nine months ended September 30, 2009 compared to $3,597,000 for the nine
months ended September 30, 2008. This decrease in non-interest income was
primarily due to the recognition of the loss resulting from the decrease in the
carrying value of trust preferred securities. Non-interest expense was
$21,894,000 for the nine months ended September 30, 2009 and $19,877,000 for the
nine months ended September 30, 2008. The increase in non-interest expense is
due to increases in compensation and employee benefits, occupancy, equipment,
federal deposit insurance premiums and recognition of costs of $507,000 relating
to the issuance of subordinated debentures in the third quarter of 2009.
Total assets at September 30, 2009 were $1,356,523,000 compared to
$1,224,446,000 at December 31, 2008. Cash and cash equivalents increased to
$123,251,000 from $11,216,000, due to stock conversion proceeds from the initial
public offering which was completed in July 2009. Deposits increased to
$985,584,000 at September 30, 2009 from $923,914,000 at December 31, 2008. Total
stockholders' equity increased to $215,791,000 at September 30, 2009 from
$99,381,000 at December 31, 2008. This was principally due to the results of the
initial public offering completed in July 2009.
Total delinquent loans more than ninety days past due was $1,381,000
(representing 6 loans) at September 30, 2009, compared to $149,000 (representing
1 loan) at December 31, 2008. Despite the increase in non-performing assets,
asset quality remained strong
with the ratio of non-performing assets to total assets being 0.23% at September
30, 2009, compared to 0.02% at December 31, 2008. The allowance for loan losses
was $1,913,000 at September 30, 2009 compared to $899,000 at December 31, 2008.
The ratio of the allowance for loan losses to total loans was 0.32% at September
30, 2009 compared to 0.14% at December 31, 2008.
In August, 2009 Territorial Savings Bank opened its twenty-fifth branch in Kihei
to serve the residents of Maui. The Kihei branch is the third Territorial
Savings Bank branch on the island of Maui.
Territorial Bancorp Inc., headquartered in Honolulu, Hawaii, is the stock
holding company for Territorial Savings Bank. Territorial Savings Bank is a
federally 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 25 branch offices in the state of
Hawaii.
Forward-looking statement - 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:
o statements of our goals, intentions and expectations;
o statements regarding our business plans, prospects, growth and
operating strategies;
o statements regarding the asset quality of our loan and investment
portfolios; and
o 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, could cause actual results to differ
materially from the anticipated results or other expectations expressed in the
forward-looking statements:
o general economic conditions, either nationally or in our market areas,
that are worse than expected;
o competition among depository and other financial institutions;
o inflation and changes in the interest rate environment that reduce our
margins or reduce the fair value of financial instruments;
o adverse changes in the securities markets;
o changes in laws or government regulations or policies affecting
financial institutions, including changes in regulatory fees and
capital requirements;
o our ability to enter new markets successfully and capitalize on growth
opportunities;
o our ability to successfully integrate acquired entities, if any;
o changes in consumer spending, borrowing and savings habits;
o 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;
o changes in our organization, compensation and benefit plans;
o changes in our financial condition or results of operations that
reduce capital available to pay dividends; and
o 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 Balance Sheets (Unaudited)
(Dollars in thousands, except share data)
September 30, December 31,
2009 2008
------------- -------------
ASSETS
Cash and cash equivalents $ 123,251 $ 11,216
Investment securities held to maturity, at amortized cost (fair value of
$588,609 and $535,590 at September 30, 2009 and December 31, 2008,
respectively) 575,176 527,767
Federal Home Loan Bank stock, at cost 12,348 12,348
Loans held for sale 3,244 --
Loans receivable, net 602,644 633,160
Accrued interest receivable 4,739 4,787
Premises and equipment, net 4,670 4,444
Real estate owned 131 131
Bank-owned life insurance 27,882 27,107
Prepaid expenses and other assets 2,438 3,486
---------- ----------
Total assets $1,356,523 $1,224,446
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits $ 985,584 $ 923,914
Advances from the Federal Home Loan Bank -- 35,791
Securities sold under agreements to repurchase 130,200 115,200
Subordinated debentures -- 24,221
Accounts payable and accrued expenses 20,136 18,634
Current income taxes payable 521 963
Deferred income taxes payable 2,460 3,228
Advance payments by borrowers for taxes and insurance 1,831 3,114
---------- ----------
Total liabilities 1,140,732 1,125,065
========== ==========
Commitments and contingencies
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 12,233,125 and 0 shares at September 30, 2009 and December
31, 2008 122 --
Additional paid-in capital 118,651 --
Unearned ESOP shares (9,542) --
Retained earnings 108,076 100,897
Accumulated other comprehensive loss (1,516) (1,516)
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Total stockholders' equity 215,791 99,381
---------- ----------
Total liabilities and stockholders' equity $1,356,523 $1,224,446
========== ==========
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,
------------------------ ------------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
Interest and dividend income:
Investment securities $ 6,529 $ 6,476 $ 18,758 $ 19,390
Tax-exempt investment securities -- -- -- 112
Dividends on Federal Home Loan Bank stock -- 43 -- 117
Loans 8,725 8,995 27,157 26,033
Other investments 49 5 72 29
---------- ---------- ---------- ----------
Total interest and dividend income 15,303 15,519 45,987 45,681
---------- ---------- ---------- ----------
Interest expense:
Deposits 3,417 4,343 11,044 14,250
Advances from the Federal Home Loan Bank -- 119 33 440
Securities sold under agreements to
repurchase 1,270 1,165 3,739 3,324
Subordinated debentures and other
borrowings 230 396 814 1,312
---------- ---------- ---------- ----------
Total interest expense 4,917 6,023 15,630 19,326
---------- ---------- ---------- ----------
Net interest income 10,386 9,496 30,357 26,355
Provision for loan losses 10 (13) 1,112 (9)
---------- ---------- ---------- ----------
Net interest income after provision for
loan losses 10,376 9,509 29,245 26,364
---------- ---------- ---------- ----------
Noninterest income:
Total other-than-temporary impairment
losses (2,619) -- (3,481) --
Portion of loss reclassified from other
comprehensive income (97) -- -- --
---------- ---------- ---------- ----------
Net other-than-temporary impairment losses (2,716) -- (3,481) --
Service fees on loan and deposit accounts 651 720 1,968 2,184
Income on bank-owned life insurance 262 261 775 783
Gain on sale of investment securities 37 12 267 145
Gain on sale of loans 265 -- 1,442 --
Other 75 188 217 485
---------- ---------- ---------- ----------
Total noninterest income (1,426) 1,181 1,188 3,597
---------- ---------- ---------- ----------
Noninterest expense:
Salaries and employee benefits 4,337 4,042 11,882 11,363
Occupancy 1,133 1,104 3,361 3,191
Equipment 757 754 2,225 2,118
Loss on extinguishment of debt 507 -- 507 --
Federal deposit insurance premiums 350 242 1,533 813
Other general and administrative expenses 812 827 2,386 2,392
---------- ---------- ---------- ----------
Total noninterest expense 7,896 6,969 21,894 19,877
---------- ---------- ---------- ----------
Income before income taxes 1,054 3,721 8,539 10,084
Income taxes 325 1,335 2,884 3,557
---------- ---------- ---------- ----------
Net income $ 729 $ 2,386 $ 5,655 $ 6,527
========== ========== ========== ==========
Basic earnings per share (1) $ .06 N/A $ .50 N/A
========== ==========
Basic weighted average shares outstanding (1) 11,402,459 N/A 11,402,459 N/A
========== ==========
(1) Calculated from the effective date of July 10, 2009 to the period end
Territorial Bancorp
Financial Tables for Earnings Release
September 30, 2009
Three Months Three Months
Ended Ended
September September
30, 2009 30, 2008
------------ ------------
Performance Ratios:
- ------------------
Return on average assets 0.21% 0.78%
Return on average equity 1.42% 9.73%
Net interest margin on average interest
earning assets 3.04% 3.29%
Selected Balance sheet Data:
- ---------------------------
Book value per share (1) $17.64 N/A
Stockholders' equity to total assets 15.91% 8.12%
At September At December
Asset Quality: 30, 2009 31, 2008
------------ ------------
Delinquent loans more than 90 days past due $1,381 $149
Allowance for loan losses 1,913 899
Non-performing assets to total assets 0.23% 0.02%
Allowance for loan losses to total loans 0.32% 0.14%
Notes:
- -----
(1) Book value per share is equal to stockholder's equity divided by number of
shares issued (12,233,125)
Territorial Bancorp
Income for the Three Months Ended
September 30, 2009
Adjusted for Non-GAAP Items
Income before income taxes
(as reported on the consolidated
statement of income) $1,054
Items added back to income before income taxes:
Net other-than-temporary impairment losses 2,716
Loss on extinguishment of debt 507
-------------
Non-GAAP Income before income taxes 4,277
Income taxes 1,589
-------------
Net income, as adjusted $2,688
=============
Basic earnings per share (1) $0.24
Basic weighted average shares outstanding (1) 11,402,459
(1) Calculated from the effective date of July 10, 2009 to the period end.