Territorial Bancorp Inc. (NASDAQ: TBNK) (the “Company”),
headquartered in Honolulu, Hawaii, the holding company parent of
Territorial Savings Bank, announced net income of $334,000, or
$0.04 per diluted share, for the three months ended December 31,
2023.
The Board of Directors approved a dividend of $0.05 per share.
The dividend is expected to be paid on February 23, 2024, to
stockholders of record as of February 9, 2024.
“The uncertain interest rate environment continues to be a
challenge for the banking industry. The higher levels of interest
rates will keep pressure on loan growth and deposit retention,
which have an impact on our net interest margin. While interest
rates may decrease in the future, we believe that the competition
for loans and deposits will remain strong as we navigate through
this cycle. We continue our focus on maintaining our strong capital
levels, which are above regulatory required levels, preserving our
solid asset quality, and maintaining our strong liquidity levels,”
said Allan Kitagawa, Chairman and CEO.
Interest Income
Net interest income decreased by $3.86 million to $9.41 million
for the three months ended December 31, 2023, from $13.27 million
for the three months ended December 31, 2022. Total interest income
was $17.69 million for the three months ended December 31, 2023,
compared to $16.22 million for the three months ended December 31,
2022. The $1.47 million increase in total interest income was
primarily due to a $922,000 increase in interest earned on other
investments and a $597,000 increase in interest earned on loans.
Interest income on other investments rose by $922,000 from $357,000
for the three months ended December 31, 2022, to $1.28 million for
the three months ended December 31, 2023. The increase in interest
income on other investments is primarily due to a 227 basis point
increase in the interest rate paid on cash balances at the Federal
Reserve Bank of San Francisco (FRB) and a $51.65 million increase
in the average cash balance with the FRB. The increase in interest
income on loans resulted from a $8.73 million increase in the
average loan balance together with a 16 basis point increase in the
average loan yield.
Interest Expense and Provision for Credit
Losses
As a result of the increases in short-term interest rates, total
interest expense increased by $5.33 million to $8.28 million for
the three months ended December 31, 2023, from $2.95 million for
the three months ended December 31, 2022. Interest expense on
deposits increased by $3.88 million to $6.22 million for the three
months ended December 31, 2023, from $2.35 million for the three
months ended December 31, 2022. The increase in interest expense on
deposits was primarily due to an increase in interest expense on
certificates of deposit (CD). Interest expense on CDs rose by $3.23
million from $2.01 million for the three months ended December 31,
2022, to $5.24 million for the three months ended December 31,
2023. The increase in interest expense was primarily due to a 190
basis point increase in the average cost of CDs and a $142.14
million increase in the average CD balance. The increase in the
average cost of CDs occurred as interest rates were raised in
response to the increase in market interest rates. The increase in
the average balance of CDs occurred as customers transferred
balances from lower rate savings accounts to higher rate CDs.
Interest expense on Federal Home Loan Bank (FHLB) advances rose
from $558,000 for the three months ended December 31, 2022, to
$1.85 million for the three months ended December 31, 2023. The
increase in interest expense on FHLB advances rose primarily
because of a 144 basis point increase in the average cost of
advances and a $102.80 million increase in the average advance
balance. Interest expense on FRB borrowings rose by $154,000 during
the three months ended December 31, 2023, when the Company obtained
a $50.0 million advance from the FRB. Additional FHLB and FRB
advances were obtained in 2023 to enhance the Company’s liquidity
and to fund deposit withdrawals.
The Company recognized $144,000 and $27,000 of credit loss
provisions in the three months ended December 31, 2023 and 2022,
respectively. In 2023, the Company adopted the current expected
credit loss (CECL) accounting standard to calculate its allowance
for credit losses. The increase in credit loss provisions for the
quarter is primarily due to an increase in forecasted charge-offs
in the loan portfolio.
Noninterest Income
Noninterest income was $603,000 for the three months ended
December 31, 2023, compared to $1.17 million for the three months
ended December 31, 2022. The decrease in noninterest income is
primarily due to $713,000 of income related to the Company’s
defined benefit pension plan recognized in the three months ended
December 31, 2022.
Noninterest Expense
Noninterest expense decreased to $9.48 million for the three
months ended December 31, 2023, compared to $9.89 million for the
three months ended December 31, 2022. Salaries and employee
benefits decreased by $632,000 to $5.11 million for the three
months ended December 31, 2023, from $5.74 million for the three
months ended December 31, 2022. The reduction in salaries and
employee benefits is primarily due to a decrease in deferred
compensation accruals, supplemental executive retirement plan
benefits and accruals for the employee stock ownership plan (ESOP).
The decrease in ESOP accruals is primarily due to a decline in the
Company’s share price which is used to calculate the accrual.
Federal Deposit Insurance Corporation (FDIC) premium expense rose
from $144,000 for the three months ended December 31, 2022, to
$245,000 for the three months ended December 31, 2023, because of
an increase in the FDIC insurance premium rate. Other general and
administrative expenses rose from $961,000 for the three months
ended December 31, 2022, to $1.14 million for the three months
ended December 31, 2023. The increase in general and administrative
expenses is primarily due to increases in charitable donations,
accounting and auditing expenses and legal expenses.
Income Taxes
Income tax expense for the three months ended December 31, 2023
was $61,000 with an effective tax rate of 15.44% compared to $1.08
million with an effective tax rate of 23.91% for the three months
ended December 31, 2022. The decrease in income tax expense was
primarily due to a $4.13 million decrease in income before income
taxes during the three months ended December 31, 2023, compared to
the three months ended December 31, 2022. The decrease in the
effective tax rate in 2023 occurred because non-taxable items, such
as the increase in cash surrender value of bank-owned life
insurance, represented a larger portion of income before income
taxes.
Balance Sheet
Total assets were $2.24 billion at December 31, 2023 and $2.17
billion at December 31, 2022. Loans receivable increased by $8.67
million and were $1.30 billion at December 31, 2023 and $1.29
billion at December 31, 2022. The increase in loans receivable
occurred as new loan originations exceeded loan repayments and
sales. Investment securities, including available for sale
securities, decreased by $32.70 million to $705.90 million at
December 31, 2023 from $738.59 million at December 31, 2022. The
decrease in investment securities occurred primarily because of
principal repayments on mortgage-backed securities. Cash and cash
equivalents increased by $86.11 million to $126.66 million at
December 31, 2023 from $40.55 million at December 31, 2022. The
increase in cash and cash equivalents occurred as the Company
obtained additional advances from the FHLB and FRB to enhance its
liquidity.
Deposits decreased by $79.55 million from $1.72 billion at
December 31, 2022 to $1.64 billion at December 31, 2023. The
decrease in deposits occurred as customers sought higher interest
rates on their deposits than what the Company offers. FHLB advances
increased by $101.00 million to $242.00 million at December 31,
2023 from $141.00 million at December 31, 2022. The Company also
borrowed $50.00 million through the FRB’s Term Funding Program. The
proceeds from this advance were used to enhance liquidity and to
fund deposit withdrawals. Total stockholders’ equity decreased to
$251.09 million at December 31, 2023 from $256.55 million at
December 31, 2022. The decrease in stockholders’ equity occurred
primarily because the Company’s dividends paid to stockholders,
share repurchases, and the impact to retained earnings from the
adoption of the CECL standard to calculate its allowance for credit
losses exceeded the Company’s net income.
Asset Quality
In August 2023, wildfires on Maui partially or completely
destroyed 12 homes which were collateral for $3.16 million of
mortgage loans held by the Company. Since the wildfire occurred,
$300,000 of these loans have been paid off using insurance
proceeds. At December 31, 2023, the Company had $2.82 million of
mortgage loans which were collateralized by homes partially or
completely destroyed in the Maui wildfires and all of these loans
were current. A $62,000 mortgage loan, which was collateralized by
a home destroyed in the Maui wildfires, was in the Bank’s
forbearance program and was paid off in January 2024. The
forbearance program allows the borrower to defer their interest
payments for six months. All of the homes which were destroyed are
insured and the Company does not expect to incur a loss on these
loans. The Company also has $18.67 million of mortgage loans on
Maui at December 31, 2023 which were not affected by the wildfires.
As of December 31, 2023, all of these loans were current.
Credit quality continues to be extremely important as the Bank
adheres to its strict underwriting standards. The Company had
$227,000 in delinquent mortgage loans 90 days or more past due at
December 31, 2023, compared to $559,000 at December 31, 2022.
Non-performing assets totaled $2.26 million at December 31, 2023,
compared to $2.30 million at December 31, 2022. The ratio of
non-performing assets to total assets was 0.10% at December 31,
2023 and 0.11% at December 31, 2022. The allowance for credit
losses at December 31, 2023 was $5.12 million and represented 0.39%
of total loans, compared to $2.03 million and 0.16% of total loans
as of December 31, 2022. The increase in the ratio of allowance for
credit losses to total loans occurred when the Company adopted the
CECL accounting standard to calculate its allowance for credit
losses on January 1, 2023. Upon adoption of the standard, the
Company recorded a $3.16 million increase to its allowance for
credit losses. The ratio of the allowance for credit losses to
non-performing loans rose to 226.59% at December 31, 2023, compared
to 88.31% at December 31, 2022 as a result of the increase in the
allowance for credit losses.
About Us
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 28 branch offices in the state of Hawaii. For additional
information, please visit the Company’s website at:
https://www.tsbhawaii.bank.
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, could cause actual results
to differ materially from the anticipated results or other
expectations expressed in the forward-looking statements:
- general economic conditions, either internationally, 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;
- changes in monetary or fiscal policies of the U.S. Government,
including policies of the U.S. Treasury and the Federal Reserve
Board;
- our ability to enter new markets successfully and capitalize on
growth opportunities;
- our ability to successfully integrate acquired entities, if
any;
- changes in consumer demand, 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;
- the timing and amount of revenues that we may recognize;
- the value and marketability of collateral underlying our loan
portfolios;
- our ability to retain key employees;
- cyberattacks, computer viruses and other technological risks
that may breach the security of our websites or other systems to
obtain unauthorized access to confidential information, destroy
data or disable our systems;
- technological change that may be more difficult or expensive
than expected;
- the ability of third-party providers to perform their
obligations to us;
- the ability of the U.S. Government to manage federal debt
limits;
- the quality and composition of our investment portfolio;
- the effect of any pandemic disease, including COVID-19, natural
disaster, war, act of terrorism, accident or similar action or
event;
- changes in market and other conditions that would affect our
ability to repurchase our common stock; and
- changes in our financial condition or results of operations
that reduce capital available to pay dividends.
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 |
|
|
Year Ended |
|
|
December 31, |
|
|
December 31, |
|
|
2023 |
|
2022 |
|
|
2023 |
|
|
|
2022 |
|
Interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
$ |
12,006 |
|
$ |
11,409 |
|
$ |
47,043 |
|
|
$ |
45,318 |
|
Investment securities |
|
|
4,406 |
|
|
4,458 |
|
|
17,918 |
|
|
|
16,211 |
|
Other investments |
|
|
1,279 |
|
|
357 |
|
|
4,127 |
|
|
|
1,173 |
|
Total interest income |
|
|
17,691 |
|
|
16,224 |
|
|
69,088 |
|
|
|
62,702 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
6,223 |
|
|
2,348 |
|
|
19,484 |
|
|
|
4,925 |
|
Advances from the Federal Home Loan Bank |
|
|
1,854 |
|
|
558 |
|
|
6,636 |
|
|
|
2,107 |
|
Securities sold under agreements to repurchase |
|
|
46 |
|
|
46 |
|
|
183 |
|
|
|
183 |
|
Advances from the Federal Reserve Bank |
|
|
154 |
|
|
— |
|
|
154 |
|
|
|
— |
|
Total interest expense |
|
|
8,277 |
|
|
2,952 |
|
|
26,457 |
|
|
|
7,215 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
9,414 |
|
|
13,272 |
|
|
42,631 |
|
|
|
55,487 |
|
Provision (reversal of provision) for credit/loan losses |
|
|
144 |
|
|
27 |
|
|
(3 |
) |
|
|
(576 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income after provision (reversal of provision) for
credit/loan losses |
|
|
9,270 |
|
|
13,245 |
|
|
42,634 |
|
|
|
56,063 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
Service and other fees |
|
|
305 |
|
|
324 |
|
|
1,327 |
|
|
|
1,416 |
|
Income on bank-owned life insurance |
|
|
227 |
|
|
201 |
|
|
855 |
|
|
|
792 |
|
Net gain (loss) on sale of loans |
|
|
— |
|
|
— |
|
|
10 |
|
|
|
(3 |
) |
Other |
|
|
71 |
|
|
645 |
|
|
279 |
|
|
|
2,004 |
|
Total noninterest income |
|
|
603 |
|
|
1,170 |
|
|
2,471 |
|
|
|
4,209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
5,109 |
|
|
5,741 |
|
|
20,832 |
|
|
|
22,259 |
|
Occupancy |
|
|
1,709 |
|
|
1,784 |
|
|
6,910 |
|
|
|
6,708 |
|
Equipment |
|
|
1,278 |
|
|
1,257 |
|
|
5,156 |
|
|
|
5,006 |
|
Federal deposit insurance premiums |
|
|
245 |
|
|
144 |
|
|
982 |
|
|
|
573 |
|
Other general and administrative expenses |
|
|
1,137 |
|
|
961 |
|
|
4,388 |
|
|
|
4,252 |
|
Total noninterest expense |
|
|
9,478 |
|
|
9,887 |
|
|
38,268 |
|
|
|
38,798 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
395 |
|
|
4,528 |
|
|
6,837 |
|
|
|
21,474 |
|
Income taxes |
|
|
61 |
|
|
1,083 |
|
|
1,810 |
|
|
|
5,318 |
|
Net income |
|
$ |
334 |
|
$ |
3,445 |
|
$ |
5,027 |
|
|
$ |
16,156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.04 |
|
$ |
0.39 |
|
$ |
0.58 |
|
|
$ |
1.81 |
|
Diluted earnings per share |
|
$ |
0.04 |
|
$ |
0.39 |
|
$ |
0.57 |
|
|
$ |
1.80 |
|
Cash dividends declared per common share |
|
$ |
0.05 |
|
$ |
0.33 |
|
$ |
0.74 |
|
|
$ |
1.02 |
|
Basic weighted-average shares outstanding |
|
|
8,575,902 |
|
|
8,807,548 |
|
|
8,636,495 |
|
|
|
8,865,946 |
|
Diluted weighted-average shares outstanding |
|
|
8,603,843 |
|
|
8,857,848 |
|
|
8,684,092 |
|
|
|
8,920,714 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Territorial Bancorp Inc. and Subsidiaries |
Consolidated Balance Sheets (Unaudited) |
(Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
2023 |
|
2022 |
ASSETS |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
126,659 |
|
|
$ |
40,553 |
|
Investment securities available for sale, at fair value |
|
|
20,171 |
|
|
|
20,821 |
|
Investment securities held to maturity, at amortized cost (fair
value of $568,128 and |
|
|
685,728 |
|
|
|
717,773 |
|
$591,084 at December 31, 2023 and December 31, 2022,
respectively) |
|
|
|
|
|
|
|
|
Loans receivable |
|
|
1,308,552 |
|
|
|
1,296,796 |
|
Allowance for credit/loan losses |
|
|
(5,121 |
) |
|
|
(2,032 |
) |
Loans receivable, net of allowance for credit/loan losses |
|
|
1,303,431 |
|
|
|
1,294,764 |
|
Federal Home Loan Bank stock, at cost |
|
|
12,192 |
|
|
|
8,197 |
|
Federal Reserve Bank stock, at cost |
|
|
3,180 |
|
|
|
3,170 |
|
Accrued interest receivable |
|
|
6,105 |
|
|
|
6,115 |
|
Premises and equipment, net |
|
|
7,185 |
|
|
|
7,599 |
|
Right-of-use asset, net |
|
|
12,371 |
|
|
|
14,498 |
|
Bank-owned life insurance |
|
|
48,638 |
|
|
|
47,783 |
|
Income taxes receivable |
|
|
344 |
|
|
|
— |
|
Deferred income tax assets, net |
|
|
2,457 |
|
|
|
1,643 |
|
Prepaid expenses and other assets |
|
|
8,211 |
|
|
|
6,676 |
|
Total assets |
|
$ |
2,236,672 |
|
|
$ |
2,169,592 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
Deposits |
|
$ |
1,636,604 |
|
|
$ |
1,716,152 |
|
Advances from the Federal Home Loan Bank |
|
|
242,000 |
|
|
|
141,000 |
|
Advances from the Federal Reserve Bank |
|
|
50,000 |
|
|
|
— |
|
Securities sold under agreements to repurchase |
|
|
10,000 |
|
|
|
10,000 |
|
Accounts payable and accrued expenses |
|
|
23,334 |
|
|
|
24,180 |
|
Lease liability |
|
|
17,297 |
|
|
|
15,295 |
|
Income taxes payable |
|
|
— |
|
|
|
838 |
|
Advance payments by borrowers for taxes and insurance |
|
|
6,351 |
|
|
|
5,577 |
|
Total liabilities |
|
|
1,985,586 |
|
|
|
1,913,042 |
|
|
|
|
|
|
|
|
Stockholders' Equity: |
|
|
|
|
|
|
Preferred stock, $0.01 par value; authorized 50,000,000 shares, no
shares issued or outstanding |
|
|
— |
|
|
|
— |
|
Common stock, $0.01 par value; authorized 100,000,000 shares;
issued and outstanding |
|
|
|
|
|
|
8,826,613 and 9,071,076 shares as of December 31, 2023 and
2022, respectively |
|
|
88 |
|
|
|
91 |
|
Additional paid-in capital |
|
|
48,022 |
|
|
|
51,825 |
|
Unearned ESOP shares |
|
|
(2,447 |
) |
|
|
(2,936 |
) |
Retained earnings |
|
|
211,644 |
|
|
|
215,314 |
|
Accumulated other comprehensive loss |
|
|
(6,221 |
) |
|
|
(7,744 |
) |
Total stockholders’ equity |
|
|
251,086 |
|
|
|
256,550 |
|
Total liabilities and stockholders’ equity |
|
$ |
2,236,672 |
|
|
$ |
2,169,592 |
|
|
|
|
|
|
|
|
Territorial Bancorp Inc. and Subsidiaries |
Selected Financial Data (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
December 31, |
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2023 |
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2022 |
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Performance Ratios
(annualized): |
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Return on average
assets |
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0.06% |
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0.63% |
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Return on average
equity |
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0.53% |
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5.30% |
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Net interest
margin on average interest earning assets |
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1.78% |
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2.56% |
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Efficiency ratio
(1) |
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94.62% |
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68.46% |
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At |
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At |
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December |
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December |
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31, 2023 |
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31, 2022 |
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Selected Balance
Sheet Data: |
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Book value per
share (2) |
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$28.45 |
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$28.28 |
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Stockholders'
equity to total assets |
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11.23% |
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11.83% |
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Asset Quality |
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(Dollars in
thousands): |
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Delinquent loans
90 days past due and not accruing |
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$227 |
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$559 |
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Non-performing
assets (3) |
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$2,260 |
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$2,301 |
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Allowance for
credit losses |
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$5,121 |
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$2,032 |
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Non-performing
assets to total assets |
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0.10% |
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0.11% |
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Allowance for
credit losses to total loans |
|
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0.39% |
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0.16% |
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Allowance for
credit losses to non-performing assets |
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226.59% |
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88.31% |
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Note: |
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(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 |
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Contact: Walter Ida(808)
946-1400
Grafico Azioni Territorial Bancorp (NASDAQ:TBNK)
Storico
Da Ago 2024 a Set 2024
Grafico Azioni Territorial Bancorp (NASDAQ:TBNK)
Storico
Da Set 2023 a Set 2024