Territorial Bancorp Reports $4.3 Million Net Loss for Fiscal Year 2024, Announces Merger with Hope Bancorp

Territorial Bancorp Inc. reported a net loss of $4.3 million for the fiscal year ending December 31, 2024, a significant decline from the net income of $5.0 million recorded in the previous year. This downturn was primarily attributed to a $10.9 million decrease in net interest income, which fell to $31.7 million from $42.6 million in 2023. The increase in interest expense, which rose by 53.5% to $40.6 million, was a key factor, driven by rising costs associated with interest-bearing liabilities. The company's interest income, however, increased by 4.7% to $72.3 million, reflecting a 16 basis point rise in the yield on average interest-earning assets.

In terms of operational metrics, total assets decreased by 3.0% to $2.2 billion, while total loans also saw a decline, dropping to $1.3 billion from $1.3 billion in the previous year. The company maintained a conservative approach to lending, with 96.9% of its loan portfolio consisting of one- to four-family residential mortgage loans. The allowance for credit losses remained stable at $5.1 million, representing 0.40% of total loans, indicating a slight increase from 0.39% in 2023. Nonperforming assets decreased to $1.9 million, or 0.09% of total assets, compared to $2.3 million, or 0.10%, in the prior year.

Strategically, Territorial Bancorp announced a definitive merger agreement with Hope Bancorp, Inc., valued at approximately $78.6 million. Under the terms of the agreement, shareholders of Territorial Bancorp will receive a fixed exchange ratio of 0.8048 shares of Hope Bancorp common stock for each share they own. This transaction is expected to qualify as a tax-free reorganization and is subject to regulatory approvals and customary closing conditions. The merger is anticipated to enhance the company's market presence and operational capabilities.

The company also reported an increase in deposits, which rose by $81.1 million, or 5.0%, to $1.7 billion, primarily driven by a significant increase in certificates of deposit. However, there were notable decreases in passbook savings and checking accounts as customers shifted funds to higher-yielding products. As of December 31, 2024, Territorial Bancorp had 238 full-time employees, reflecting a slight increase from the previous year, and continued to focus on employee development and retention.

Looking ahead, Territorial Bancorp expressed cautious optimism regarding its future performance, emphasizing its commitment to maintaining strong capital ratios and managing interest rate risk effectively. The company remains well-capitalized, exceeding all regulatory capital requirements, and is positioned to navigate the challenges posed by the current economic environment. The management's focus on conservative lending practices and strategic growth initiatives, including the upcoming merger, is expected to support the company's long-term objectives.