HONOLULU, Nov. 3, 2011 (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 $3.0 million or $0.28 per basic and diluted share for the three months ended September 30, 2011, compared to $3.1 million or $0.28 per basic and diluted share for the three months ended September 30, 2010. Net income decreased by $148,000 or 4.7% for the three months ended September 30, 2011 compared to the same period in 2010. The decline in earnings is primarily due to the death of a director resulting in the recognition of $696,000 of pre-tax stock benefit plan expense ($418,000 after taxes and $0.04 per basic and fully diluted share for the three months ended September 30, 2011). Excluding this expense, earnings would have increased by $270,000 or 8.6%.
The Company also announced that its Board of Directors today approved a quarterly cash dividend on its common stock of $0.09 per share. The dividend is expected to be paid on December 1, 2011 to stockholders of record as of November 17, 2011.
Allan Kitagawa, Chairman and Chief Executive Officer, said, "We continued to maintain our core earnings for the third quarter of 2011. We have kept our focus on making quality mortgage loans and maintaining our net interest margin in a very difficult economic environment. I am also pleased to announce that due to our strong performance we will again be paying a quarterly dividend of $0.09 per share."
Interest Income
For the three months ended September 30, 2011 and 2010, net interest income was $12.9 million and $11.7 million, respectively. The growth in net interest income is due to a $397,000 increase in interest and dividend income earned and a $807,000 decline in interest expense. Total interest and dividend income was $15.8 million for the three months ended September 30, 2011 compared to $15.4 million for the three months ended September 30, 2010. The growth in interest and dividend income occurred primarily due to an increase in interest earned on investment securities which totaled $6.9 million for the three months ended September 30, 2011 compared to $6.4 million for the three months ended September 30, 2010. The increase in interest income earned on investment securities was partially offset by a decrease in interest earned on loans which totaled $8.8 million for the three months ended September 30, 2011 compared to $8.9 million for the three months ended September 30, 2010.
Interest Expense and Provision for Loan Losses
Total interest expense decreased to $2.9 million for the three months ended September 30, 2011 compared to $3.7 million for the three months ended September 30, 2010. The decrease in interest expense is primarily due to an $855,000 decline in interest expense on deposits due to the lower interest rate environment. Provision for loan losses decreased due to a reversal of $39,000 of loan losses for the three months ended September 30, 2011 compared to $118,000 provision for the three months ended September 30, 2010.
Noninterest Income
Noninterest income was $1.2 million for the three months ended September 30, 2011 compared to $1.0 million for the three months ended September 30, 2010. The increase in noninterest income was primarily due to a $97,000 increase in commissions from the sale of non-deposit products and a $74,000 gain on sale of investment securities.
Noninterest Expense
Noninterest expense increased to $9.2 million for the three months ended September 30, 2011 as compared to $7.7 million for the three months ended September 30, 2010. The increase in noninterest expense was primarily due to higher compensation and employee benefit expense. A significant portion of this increase was due to expenses accrued for awards made under the equity incentive plan that was approved by stockholders in August 2010. As previously mentioned, during the three months ended September 30, 2011, the Company recognized $696,000 of pre-tax stock benefit plan expense ($418,000 after taxes) due to the death of a director.
Assets and Equity
Total assets grew to $1.516 billion at September 30, 2011 from $1.443 billion at December 31, 2010. Cash and cash equivalents decreased to $132.4 million at September 30, 2011 from $194.4 million at December 31, 2010. Investment securities held to maturity increased to $658.6 million as of September 30, 2011 from $530.6 million at December 31, 2010. Loans receivable grew to $662.7 million at September 30, 2011 from $641.8 million at December 31, 2010 due to an increase in residential mortgage loan production. The growth in investment securities and loans receivable was funded by a $62.8 million increase in deposits, a $10.0 million increase in FHLB advances and a $15.0 million increase in securities sold under agreements to repurchase. Deposits increased to $1.139 billion at September 30, 2011 from $1.076 billion at December 31, 2010. Total stockholders' equity decreased to $214.2 million at September 30, 2011 from $227.4 million at December 31, 2010. The change in stockholders' equity was primarily due to the Company's earnings for the nine months ended September 30, 2011, which were offset by the cost of shares repurchased under the Company's stock buyback program and payment of dividends for the fourth quarter of 2010 and the first and second quarters of 2011. The Board of Directors previously authorized two repurchase programs. At the end of September 30, 2011, the first buyback program was completed with 733,988 shares repurchased and 500,743 shares of the second buyback program being repurchased for a total of 1,234,731 shares being repurchased through September 30, 2011, compared to 55,707 shares as of December 31, 2010.
Asset Quality
Total delinquent loans 90 days or more past due and not accruing was $2.4 million (11 loans) at September 30, 2011, compared to $808,000 (7 loans) at December 31, 2010. Asset quality remained strong with the ratio of nonperforming assets to total assets increasing slightly to 0.17% at September 30, 2011 from 0.06% at December 31, 2010. The allowance for loan losses at September 30, 2011 was $1.6 million and represented 0.23% of total loans. At December 31, 2010, the allowance for loan losses was $1.5 million and represented 0.23% of total loans.
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 27 branch offices in the state of Hawaii.
The Territorial Bancorp Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7034
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 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 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 | Nine Months Ended | |||
| 9/30/2011 | 9/30/2010 | 9/30/2011 | 9/30/2010 | |
| Interest and dividend income: | ||||
| Investment securities | $ 6,907 | $ 6,371 | $ 20,167 | $ 19,819 |
| Loans | 8,798 | 8,907 | 26,444 | 26,018 |
| Other investments | 85 | 115 | 258 | 290 |
| Total interest and dividend income | 15,790 | 15,393 | 46,869 | 46,127 |
| Interest expense: | ||||
| Deposits | 1,700 | 2,555 | 5,109 | 8,484 |
| Advances from the Federal Home Loan Bank | 105 | 54 | 295 | 99 |
| Securities sold under agreements to repurchase | 1,067 | 1,070 | 3,153 | 3,211 |
| Total interest expense | 2,872 | 3,679 | 8,557 | 11,794 |
| Net interest income | 12,918 | 11,714 | 38,312 | 34,333 |
| Provision (reversal of allowance) for loan losses | (39) | 118 | 83 | 276 |
| Net interest income after provision for loan losses | 12,957 | 11,596 | 38,229 | 34,057 |
| Noninterest income: | ||||
| Total other-than-temporary impairment losses | -- | -- | -- | (3,510) |
| Portion of loss recognized in other comprehensive income (before taxes) | -- | -- | -- | 1,106 |
| Net other-than-temporary impairment losses | -- | -- | -- | (2,404) |
| Service fees on loan and deposit accounts | 534 | 546 | 1,690 | 1,834 |
| Income on bank-owned life insurance | 245 | 256 | 725 | 765 |
| Gain on sale of investment securities | 74 | -- | 140 | 350 |
| Gain on sale of loans | 138 | 165 | 374 | 420 |
| Other | 177 | 76 | 588 | 224 |
| Total noninterest income | 1,168 | 1,043 | 3,517 | 1,189 |
| Noninterest expense: | ||||
| Salaries and employee benefits | 6,017 | 4,526 | 16,630 | 13,533 |
| Occupancy | 1,267 | 1,146 | 3,714 | 3,428 |
| Equipment | 792 | 734 | 2,366 | 2,184 |
| Federal deposit insurance premiums | 191 | 308 | 678 | 898 |
| Other general and administrative expenses | 954 | 952 | 2,887 | 2,843 |
| Total noninterest expense | 9,221 | 7,666 | 26,275 | 22,886 |
| Income before income taxes | 4,904 | 4,973 | 15,471 | 12,360 |
| Income taxes | 1,918 | 1,839 | 6,100 | 4,530 |
| Net income | $ 2,986 | $ 3,134 | $ 9,371 | $ 7,830 |
| Basic earnings per share | $ 0.28 | $ 0.28 | $ 0.85 | $ 0.69 |
| Diluted earnings per share | $ 0.28 | $ 0.28 | $ 0.84 | $ 0.69 |
| Cash dividends declared per common share | $ 0.09 | $ 0.07 | $ 0.25 | $ 0.17 |
| Basic weighted average shares outstanding | 10,659,532 | 11,334,058 | 10,969,320 | 11,321,912 |
| Diluted weighted average shares outstanding | 10,835,649 | 11,344,622 | 11,117,444 | 11,356,737 |
| TERRITORIAL BANCORP INC. AND SUBSIDIARIES | ||
| Consolidated Balance Sheets (Unaudited) | ||
| (Dollars in thousands, except share data) | ||
| Assets | September 30, 2011 | December 31, 2010 |
| Cash and cash equivalents | $ 132,448 | $ 194,435 |
| Investment securities available for sale | -- | 15,010 |
| Investment securities held to maturity, at amortized cost (fair value of $694,996 and $546,844 at September 30, 2011 and December 31, 2010, respectively) | 658,574 | 530,555 |
| Federal Home Loan Bank stock, at cost | 12,348 | 12,348 |
| Loans held for sale | 2,987 | 3,234 |
| Loans receivable, net | 662,734 | 641,790 |
| Accrued interest receivable | 4,882 | 4,536 |
| Premises and equipment, net | 5,564 | 5,426 |
| Real estate owned | 162 | -- |
| Bank-owned life insurance | 29,991 | 29,266 |
| Deferred income taxes receivable | 1,029 | 22 |
| Prepaid expenses and other assets | 5,247 | 6,790 |
| Total assets | $ 1,515,966 | $ 1,443,412 |
| Liabilities and Stockholders' Equity | ||
| Liabilities: | ||
| Deposits | $ 1,139,317 | $ 1,076,470 |
| Advances from the Federal Home Loan Bank | 20,000 | 10,000 |
| Securities sold under agreements to repurchase | 120,200 | 105,200 |
| Accounts payable and accrued expenses | 19,727 | 20,430 |
| Current income taxes payable | 416 | 577 |
| Advance payments by borrowers for taxes and insurance | 2,088 | 3,376 |
| Total liabilities | 1,301,748 | 1,216,053 |
| 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 11,124,553 and 12,177,418 shares at September 30, 2011 and December 31, 2010 | 111 | 122 |
| Additional paid-in capital | 98,842 | 119,153 |
| Unearned ESOP shares | (8,441) | (8,808) |
| Retained earnings | 126,022 | 119,397 |
| Accumulated other comprehensive loss | (2,316) | (2,505) |
| Total stockholders' equity | 214,218 | 227,359 |
| Total liabilities and stockholders' equity | $ 1,515,966 | $ 1,443,412 |
| TERRITORIAL BANCORP INC. AND SUBSIDIARIES | ||
| Selected Financial Data (Unaudited) | ||
| September 30, 2011 | ||
| Three Months Ended | ||
| September 30, | ||
| 2011 | 2010 | |
| Performance Ratios (annualized): | ||
| Return on average assets | 0.79% | 0.86% |
| Return on average equity | 5.37% | 5.56% |
| Net interest margin on average interest earning assets | 3.53% | 3.33% |
| At September | At December | |
| 30, 2011 | 31, 2010 | |
| Selected Balance Sheet Data: | ||
| Book value per share (1) | $19.26 | $18.67 |
| Stockholders' equity to total assets | 14.13% | 15.75% |
| Asset Quality | ||
| (Dollars in thousands): | ||
| Delinquent loans 90 days or more past due and not accruing (2) | $2,437 | $808 |
| Non-performing assets (2) | 2,599 | 808 |
| Allowance for loan losses | 1,552 | 1,488 |
| Non-performing assets to total assets | 0.17% | 0.06% |
| Allowance for loan losses to total loans | 0.23% | 0.23% |
| Allowance for loan losses to non-performing assets | 59.72% | 184.16% |
| Note: | ||
| (1) Book value per share is equal to stockholders' equity divided by number of shares issued and outstanding | ||
| (2) Amounts are net of charge-offs | ||