UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the Quarterly Period ended
or
For transition period from to
Commission File Number
(Exact Name of Registrant as Specified in Charter)
(State or Other Jurisdiction of Incorporation) | (I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and formal fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading symbol | Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer ☐ | |
Smaller reporting company | ||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date:
TERRITORIAL BANCORP INC.
Form 10-Q Quarterly Report
Table of Contents
1 | ||
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 25 | |
36 | ||
37 | ||
39 | ||
39 | ||
39 | ||
39 | ||
39 | ||
39 | ||
39 | ||
41 |
PART I
ITEM 1. FINANCIAL STATEMENTS
TERRITORIAL BANCORP INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
(Dollars in thousands, except share data)
|
| March 31, |
| December 31, |
| ||
|
| 2022 |
| 2021 |
| ||
ASSETS | |||||||
Cash and cash equivalents | $ | | $ | | |||
Investment securities available for sale, at fair value | | — | |||||
Investment securities held to maturity, at amortized cost (fair value of $ |
| |
| | |||
Loans held for sale |
| |
| — | |||
Loans receivable, net |
| |
| | |||
Federal Home Loan Bank stock, at cost |
| |
| | |||
Federal Reserve Bank stock, at cost | | | |||||
Accrued interest receivable |
| |
| | |||
Premises and equipment, net |
| |
| | |||
Right-of-use asset, net | | | |||||
Bank-owned life insurance |
| |
| | |||
Deferred income tax assets, net |
| |
| | |||
Prepaid expenses and other assets |
| |
| | |||
Total assets | $ | | $ | | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Liabilities: | |||||||
Deposits | $ | | $ | | |||
Advances from the Federal Home Loan Bank |
| |
| | |||
Securities sold under agreements to repurchase |
| |
| | |||
Accounts payable and accrued expenses |
| |
| | |||
Lease liability | | | |||||
Income taxes payable |
| |
| | |||
Advance payments by borrowers for taxes and insurance |
| |
| | |||
Total liabilities |
| |
| | |||
Commitments and contingencies | |||||||
Stockholders’ Equity: | |||||||
Preferred stock, $ |
|
| |||||
Common stock, $ |
| |
| | |||
Additional paid-in capital |
| |
| | |||
Unearned ESOP shares |
| ( |
| ( | |||
Retained earnings |
| |
| | |||
Accumulated other comprehensive loss |
| ( |
| ( | |||
Total stockholders’ equity |
| |
| | |||
Total liabilities and stockholders’ equity | $ | | $ | |
See accompanying notes to consolidated financial statements.
1
TERRITORIAL BANCORP INC. AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
(Dollars in thousands, except per share data)
|
| Three Months Ended |
| ||||
|
| March 31, |
| ||||
|
| 2022 |
| 2021 |
| ||
Interest income: | |||||||
Loans | $ | | $ | | |||
Investment securities | | | |||||
Other investments |
| |
| | |||
Total interest income |
| |
| | |||
Interest expense: | |||||||
Deposits |
| |
| | |||
Advances from the Federal Home Loan Bank |
| |
| | |||
Securities sold under agreements to repurchase |
| |
| | |||
Total interest expense |
| |
| | |||
Net interest income |
| |
| | |||
Reversal of provision for loan losses |
| ( |
| ( | |||
Net interest income after reversal of provision for loan losses |
| |
| | |||
Noninterest income: | |||||||
Service and other fees |
| |
| | |||
Income on bank-owned life insurance |
| |
| | |||
Gain on sale of investment securities |
| — |
| | |||
Gain on sale of loans |
| |
| | |||
Other |
| |
| | |||
Total noninterest income |
| |
| | |||
Noninterest expense: | |||||||
Salaries and employee benefits |
| |
| | |||
Occupancy |
| |
| | |||
Equipment |
| |
| | |||
Federal deposit insurance premiums |
| |
| | |||
Other general and administrative expenses |
| |
| | |||
Total noninterest expense |
| |
| | |||
Income before income taxes |
| |
| | |||
Income taxes |
| |
| | |||
Net income | $ | | $ | | |||
Basic earnings per share | $ | | $ | | |||
Diluted earnings per share | $ | | $ | | |||
Cash dividends declared per common share | $ | | $ | | |||
Basic weighted-average shares outstanding |
| |
| | |||
Diluted weighted-average shares outstanding |
| |
| |
See accompanying notes to consolidated financial statements.
2
TERRITORIAL BANCORP INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Unaudited)
(Dollars in thousands)
|
| Three Months Ended |
| ||||
|
| March 31, |
| ||||
|
| 2022 |
| 2021 |
| ||
Net income | $ | | $ | | |||
Unrealized loss on securities, net of tax |
| ( |
| ( | |||
Other comprehensive loss, net of tax |
| ( |
| ( | |||
Comprehensive income | $ | | $ | |
See accompanying notes to consolidated financial statements.
3
TERRITORIAL BANCORP INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders’ Equity (Unaudited)
(Dollars in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
| |
|
| Common |
|
|
|
| Additional |
| Unearned |
|
|
|
| Other |
| Total |
| ||||
|
| Shares |
| Common |
| Paid-in |
| ESOP |
| Retained |
| Comprehensive |
| Stockholders’ |
| ||||||
|
| Outstanding |
| Stock |
| Capital |
| Shares |
| Earnings |
| Loss |
| Equity |
| ||||||
Balances at December 31, 2020 | | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||||
Net income | — |
| — | — | — | | — | | |||||||||||||
Other comprehensive loss | — |
| — | — | — | — | ( | ( | |||||||||||||
Cash dividends declared ($ | — |
| — | — | — | ( | — | ( | |||||||||||||
Share-based compensation | |
| — | | — | — | — | | |||||||||||||
Allocation of | — |
| — | | | — | — | | |||||||||||||
Repurchase of shares of common stock | ( | — | ( | — | — | — | ( | ||||||||||||||
Balances at March 31, 2021 | | $ | | $ | | $ | ( | $ | | $ | ( | $ | |
See accompanying notes to consolidated financial statements.
4
TERRITORIAL BANCORP INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders’ Equity (Unaudited)
(Dollars in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
| |
|
| Common |
|
|
|
| Additional |
| Unearned |
|
|
|
| Other |
| Total | ||||
|
| Shares |
| Common |
| Paid-in |
| ESOP |
| Retained |
| Comprehensive |
| Stockholders’ | ||||||
|
| Outstanding |
| Stock |
| Capital |
| Shares |
| Earnings |
| Loss |
| Equity | ||||||
Balances at December 31, 2021 | | $ | | $ | | $ | ( | $ | | $ | ( | $ | | |||||||
Net income | — |
| — | — | — | | — | | ||||||||||||
Other comprehensive loss | — |
| — | — | — | — | ( | ( | ||||||||||||
Cash dividends declared ($ | — |
| — | — | — | ( | — | ( | ||||||||||||
Share-based compensation | |
| — | | — | — | — | | ||||||||||||
Allocation of | — |
| — | | | — | — | | ||||||||||||
Repurchase of shares of common stock | ( |
| — | ( | — | — | — | ( | ||||||||||||
Balances at March 31, 2022 | | $ | | $ | | $ | ( | $ | | $ | ( | $ | |
See accompanying notes to consolidated financial statements.
5
TERRITORIAL BANCORP INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)
|
| Three Months Ended |
| ||||
|
| March 31, |
| ||||
|
| 2022 |
| 2021 |
| ||
Cash flows from operating activities: | |||||||
Net income | $ | | $ | | |||
Adjustments to reconcile net income to net cash from operating activities: | |||||||
Reversal of provision for loan losses |
| ( |
| ( | |||
Depreciation and amortization |
| |
| | |||
Deferred income tax expense |
| |
| | |||
Amortization of fees, discounts, and premiums, net |
| |
| ( | |||
Amortization of right-of-use asset | | | |||||
Origination of loans held for sale |
| ( |
| ( | |||
Proceeds from sales of loans held for sale |
| |
| | |||
Gain on sale of loans, net |
| ( |
| ( | |||
Gain on sale of investment securities available for sale | — | ( | |||||
Gain on sale of investment securities held to maturity |
| — |
| ( | |||
ESOP expense |
| |
| | |||
Share-based compensation expense |
| |
| | |||
Net (increase) decrease in accrued interest receivable |
| ( |
| | |||
Net increase in bank-owned life insurance |
| ( |
| ( | |||
Net increase in prepaid expenses and other assets |
| ( |
| ( | |||
Net decrease in accounts payable and accrued expenses |
| ( |
| ( | |||
Net decrease in lease liability | ( | ( | |||||
Net decrease in advance payments by borrowers for taxes and insurance |
| ( |
| ( | |||
Net increase in income taxes payable |
| |
| | |||
Net cash from operating activities |
| ( |
| | |||
Cash flows from investing activities: | |||||||
Purchases of investment securities held to maturity |
| ( |
| ( | |||
Purchases of investment securities available for sale | ( | — | |||||
Principal repayments on investment securities held to maturity |
| |
| | |||
Principal repayments on investment securities available for sale | — | | |||||
Proceeds from sale of investment securities held to maturity |
| — |
| | |||
Proceeds from sale of investment securities available for sale | — | | |||||
Principal repayments on loans receivable, net of loan originations |
| |
| | |||
Purchases of Federal Home Loan Bank stock | ( | ( | |||||
Purchases of Federal Reserve Bank stock | ( | ( | |||||
Proceeds from bank-owned life insurance | | — | |||||
Purchases of premises and equipment |
| ( |
| ( | |||
Net cash from investing activities |
| ( |
| |
(Continued)
6
TERRITORIAL BANCORP INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)
|
| Three Months Ended | |||||
|
| March 31, | |||||
|
| 2022 |
| 2021 | |||
Cash flows from financing activities: | |||||||
Net (decrease) increase in deposits | $ | ( | $ | | |||
Repurchases of common stock |
| ( |
| — | |||
Cash dividends paid |
| ( |
| ( | |||
Net cash from financing activities |
| ( |
| | |||
Net (decrease) increase in cash and cash equivalents |
| ( |
| | |||
Cash and cash equivalents at beginning of the period |
| |
| | |||
Cash and cash equivalents at end of the period | $ | | $ | | |||
Supplemental disclosure of cash flow information: | |||||||
Cash paid for: | |||||||
Interest on deposits and borrowings | $ | | $ | | |||
Income taxes |
| |
| | |||
Supplemental disclosure of noncash investing and financing activities: | |||||||
Company stock repurchased through stock swap and net settlement transactions | $ | | $ | | |||
Establishment of right-of-use asset, net of incentives and modifications | | | |||||
Establishment of lease liability, net of modifications | | |
See accompanying notes to consolidated financial statements.
7
TERRITORIAL BANCORP INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(1) Organization
Territorial Bancorp Inc. (the Company) is a Maryland corporation and is the holding company for Territorial Savings Bank (the Bank). Territorial Savings Bank is a Hawaii state-chartered bank headquartered in Honolulu, Hawaii and is a member of the Federal Reserve System. Territorial Savings Bank has inactive subsidiary, Territorial Financial Services, Inc. During 2021, another inactive subsidiary, Territorial Real Estate Co., was dissolved.
(2) Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements of Territorial Bancorp Inc. have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited interim condensed consolidated financial statements and notes should be read in conjunction with the Company’s consolidated financial statements and notes thereto filed as part of the Annual Report on Form 10-K for the year ended December 31, 2021. In the opinion of management, all adjustments necessary for a fair presentation have been made and consist only of normal recurring adjustments. Interim results of operations are not necessarily indicative of results to be expected for the year.
.
(3) Recently Issued Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (FASB) amended various sections of the FASB Accounting Standards Codification (ASC) related to the accounting for credit losses on financial instruments. The amendment changes the threshold for recognizing losses from a “probable” to an “expected” model. The new model is referred to as the current expected credit loss model and applies to loans, leases, held-to-maturity investments, loan commitments and financial guarantees. The amendment requires the measurement of all expected credit losses for financial assets as of the reporting date (including historical experience, current conditions and reasonable and supportable forecasts) and enhanced disclosures that will help financial statement users understand the estimates and judgments used in estimating credit losses and evaluating the credit quality of an organization’s portfolio. The amendment is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. In November 2019, the FASB issued an update that delays the effective date of the amendment for smaller reporting companies, as defined by the Securities and Exchange Commission, to fiscal years beginning after December 15, 2022. The Company is a smaller reporting company. The Company will apply the amendment’s provisions as a cumulative-effect adjustment to retained earnings at the beginning of the first period the amendment is effective. The Company has formed a team that is working on an implementation plan to adopt the amendment. The implementation plan will include developing policies, procedures and internal controls over the model. The Company is also working with a software vendor to measure expected losses required by the amendment. The Company is currently evaluating the effects that the adoption of this amendment will have on its consolidated financial statements and expects that the portfolio composition and economic conditions at the time of adoption will influence the accounting adjustment made at the time the amendment is adopted.
8
(4) Cash and Cash Equivalents
The table below presents the balances of cash and cash equivalents:
|
| March 31, |
| December 31, |
|
| ||
(Dollars in thousands) |
| 2022 |
| 2021 |
|
| ||
Cash and due from banks | $ | | $ | | ||||
Interest-earning deposits in other banks |
| |
| | ||||
Cash and cash equivalents | $ | | $ |
Interest-earning deposits in other banks consist primarily of deposits at the Federal Reserve Bank of San Francisco.
(5) Investment Securities
The amortized cost and fair values of investment securities are as follows:
Amortized | Gross Unrealized | Estimated |
| ||||||||||
(Dollars in thousands) |
| Cost |
| Gains |
| Losses |
| Fair Value |
| ||||
March 31, 2022: | |||||||||||||
Available-for-sale: | |||||||||||||
U.S. government-sponsored mortgage-backed securities | $ | | $ | — |
| $ | ( | $ | | ||||
Total | $ | | $ | — |
| $ | ( | $ | | ||||
Held-to-maturity: | |||||||||||||
U.S. government-sponsored mortgage-backed securities | $ | | $ | |
| $ | ( | $ | | ||||
Total | $ | | $ | |
| $ | ( | $ | | ||||
| |||||||||||||
December 31, 2021: | |||||||||||||
Held-to-maturity: | |||||||||||||
U.S. government-sponsored mortgage-backed securities | $ | | $ | |
| $ | ( | $ | | ||||
Total | $ | | $ | |
| $ | ( | $ | |
The amortized cost and estimated fair value of investment securities by maturity date at March 31, 2022 are shown below. Incorporated in the maturity schedule are mortgage-backed securities, which are allocated using the contractual maturity as a basis. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
|
| Amortized |
| Estimated |
| ||
(Dollars in thousands) |
| Cost |
| Fair Value |
| ||
Available-for-sale: | |||||||
Due after 10 years | $ | | $ | | |||
Total | $ | | $ | | |||
Held-to-maturity: | |||||||
Due within 5 years | $ | | $ | | |||
Due after 5 years through 10 years |
| |
| | |||
Due after 10 years |
| |
| | |||
Total | $ | | $ | | |||
9
Realized gains and losses and the proceeds from sales of held-to-maturity and available-for-sale securities are shown in the table below.
| Three Months Ended | |||||||
March 31, | ||||||||
(Dollars in thousands) |
| 2022 |
| 2021 |
|
| ||
Proceeds from sales | $ | — | $ | | ||||
Gross gains |
| — |
| | ||||
Gross losses |
| — |
| — |
The Company did not sell any held-to-maturity mortgage-backed securities during the three months ended March 31, 2022. During the three months ended March 31, 2021, the Company sold $
The Company did not sell any available-for-sale mortgage-backed securities during the three months ended March 31, 2022. During the three months ended March 31, 2021, the Company sold $
Investment securities with amortized costs of $
Provided below is a summary of investment securities which were in an unrealized loss position at March 31, 2022 and December 31, 2021. The Company does not intend to sell securities until such time as the value recovers or the securities mature and it is not more likely than not that the Company will be required to sell the securities prior to recovery of value or the securities mature.
|
| Less Than 12 Months |
| 12 Months or Longer |
| Total |
| ||||||||||||||
|
|
|
|
| Unrealized |
|
|
|
| Unrealized |
| Number of |
|
|
|
| Unrealized |
| |||
Description of securities |
| Fair Value |
| Losses |
| Fair Value |
| Losses |
| Securities |
| Fair Value |
| Losses |
| ||||||
(Dollars in thousands) |
| ||||||||||||||||||||
March 31, 2022: | |||||||||||||||||||||
Available-for-sale: | |||||||||||||||||||||
U.S. government-sponsored mortgage-backed securities | $ | | $ | ( | $ | — | $ | — |
| | $ | | $ | ( | |||||||
Held-to-maturity: | |||||||||||||||||||||
U.S. government-sponsored mortgage-backed securities | $ | | $ | ( | $ | | $ | ( |
| | $ | | $ | ( | |||||||
December 31, 2021: | |||||||||||||||||||||
Held-to-maturity: | |||||||||||||||||||||
U.S. government-sponsored mortgage-backed securities | $ | | $ | ( | $ | | $ | ( |
| | $ | | $ | ( |
Mortgage-Backed Securities. The unrealized losses on the Company’s investment in mortgage-backed securities were caused by increases in market interest rates subsequent to purchase. All of the mortgage-backed securities are guaranteed by Freddie Mac or Fannie Mae, which are U.S. government-sponsored enterprises, or Ginnie Mae, which is a U.S. government agency. Since the decline in market value is attributable to changes in interest rates and not credit quality, and the Company does not intend to sell these investments until maturity and it is not more likely than not that the Company will be required to sell such investments prior to recovery of its cost basis, the Company does not consider these investments to be other-than-temporarily impaired as of March 31, 2022 and December 31, 2021.
10
(6) Loans Receivable and Allowance for Loan Losses
The components of loans receivable are as follows:
March 31, | December 31, | ||||||
(Dollars in thousands) |
| 2022 |
| 2021 |
| ||
Real estate loans: | |||||||
First mortgages: | |||||||
One- to four-family residential | $ | | $ | | |||
Multi-family residential |
| |
| | |||
Construction, commercial and other |
| |
| | |||
Home equity loans and lines of credit |
| |
| | |||
Total real estate loans |
| |
| | |||
Other loans: | |||||||
Loans on deposit accounts |
| |
| | |||
Consumer and other loans |
| |
| | |||
Total other loans |
| |
| | |||
Less: | |||||||
Net unearned fees and discounts |
| ( |
| ( | |||
Allowance for loan losses |
| ( |
| ( | |||
Total unearned fees, discounts and allowance for loan losses |
| ( |
| ( | |||
Loans receivable, net | $ | | $ | |
The table below presents the activity in the allowance for loan losses by portfolio segment:
|
|
|
|
| Construction, |
| Home |
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
| Commercial |
| Equity |
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
| and Other |
| Loans and |
|
|
|
|
|
|
|
|
|
| ||
|
| Residential |
| Mortgage |
| Lines of |
| Consumer |
|
|
|
|
|
|
| ||||
(Dollars in thousands) |
| Mortgage |
| Loans |
| Credit |
| and Other |
| Unallocated |
| Totals |
| ||||||
Three months ended March 31, 2022: | |||||||||||||||||||
Balance, beginning of period | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
(Reversal of provision) provision for loan losses |
| ( |
| ( |
| — |
| |
| ( |
| ( | |||||||
| |
| |
| |
| |
| |
| | ||||||||
Charge-offs |
| — |
| — |
| — |
| ( |
| — |
| ( | |||||||
Recoveries |
| — |
| — |
| — |
| — |
| — |
| — | |||||||
Net charge-offs |
| — |
| — |
| — |
| ( |
| — |
| ( | |||||||
Balance, end of period | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
Three months ended March 31, 2021: | |||||||||||||||||||
Balance, beginning of period | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
Reversal of provision for loan losses |
| ( |
| ( |
| — |
| ( |
| ( |
| ( | |||||||
| |
| |
| |
| |
| |
| | ||||||||
Charge-offs |
| — |
| — |
| — |
| ( |
| — |
| ( | |||||||
Recoveries |
| — |
| — |
| — |
| — |
| — |
| — | |||||||
Net charge-offs |
| — |
| — |
| — |
| ( |
| — |
| ( | |||||||
Balance, end of period | $ | | $ | | $ | | $ | | $ | | $ | |
Management considers the allowance for loan losses at March 31, 2022 to be at an appropriate level to provide for probable losses that can be reasonably estimated based on general and specific conditions at that date. While the Company uses the best information it has available to make evaluations, future adjustments to the allowance may be necessary if conditions differ substantially from the information used in making the evaluations. To the extent actual outcomes differ from the estimates, additional provisions for credit losses may be required that would reduce future earnings.
11
The table below presents the balance in the allowance for loan losses and the recorded investment in loans, net of unearned fees and discounts, by portfolio segment and based on impairment method:
|
|
|
|
| Construction, |
| Home |
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
| Commercial |
| Equity |
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
| and Other |
| Loans and |
|
|
|
|
|
|
|
|
|
| ||
|
| Residential |
| Mortgage |
| Lines of |
| Consumer |
|
|
|
|
|
|
| ||||
(Dollars in thousands) |
| Mortgage |
| Loans |
| Credit |
| and Other |
| Unallocated |
| Totals |
| ||||||
March 31, 2022: | |||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||
Ending allowance balance: | |||||||||||||||||||
Individually evaluated for impairment | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||
Collectively evaluated for impairment |
| |
| |
| |
| |
| |
| | |||||||
Total ending allowance balance | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
Loans: | |||||||||||||||||||
Ending loan balance: | |||||||||||||||||||
Individually evaluated for impairment | $ | | $ | — | $ | | $ | — | $ | — | $ | | |||||||
Collectively evaluated for impairment |
| |
| |
| |
| |
| — |
| | |||||||
Total ending loan balance | $ | | $ | | $ | | $ | | $ | — | $ | | |||||||
December 31, 2021: | |||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||
Ending allowance balance: | |||||||||||||||||||
Individually evaluated for impairment | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||
Collectively evaluated for impairment |
| |
| |
| |
| |
| |
| | |||||||
Total ending allowance balance | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
Loans: | |||||||||||||||||||
Ending loan balance: | |||||||||||||||||||
Individually evaluated for impairment | $ | | $ | — | $ | | $ | — | $ | — | $ | | |||||||
Collectively evaluated for impairment |
| |
| |
| |
| |
| — |
| | |||||||
Total ending loan balance | $ | | $ | | $ | | $ | | $ | — | $ | |
The table below presents the balance of impaired loans individually evaluated for impairment by class of loans:
|
|
|
|
| Unpaid |
| |
|
| Recorded |
| Principal |
| ||
(Dollars in thousands) |
| Investment |
| Balance |
| ||
March 31, 2022: | |||||||
With no related allowance recorded: | |||||||
One- to four-family residential mortgages | $ | | $ | | |||
Home equity loans and lines of credit |
| |
| | |||
Total | $ | | $ | | |||
December 31, 2021: | |||||||
With no related allowance recorded: | |||||||
One- to four-family residential mortgages | $ | | $ | | |||
Home equity loans and lines of credit | | | |||||
Total | $ | | $ | |
12
The table below presents the average recorded investment and interest income recognized on impaired loans by class of loans:
|
| For the Three Months Ended |
| ||||
|
| March 31, |
| ||||
|
| Average |
| Interest |
| ||
|
| Recorded |
| Income |
| ||
(Dollars in thousands) |
| Investment |
| Recognized |
| ||
2022: |
|
|
| ||||
With no related allowance recorded: | |||||||
One- to four-family residential mortgages | $ | | $ | | |||
Home equity loans and lines of credit |
| |
| — | |||
Total | $ | | $ | | |||
2021: | |||||||
With no related allowance recorded: | |||||||
One- to four-family residential mortgages | $ | | $ | | |||
Home equity loans and lines of credit |
| |
| — | |||
Total | $ | | $ | |
There were
The Company had
13
The table below presents the aging of loans and accrual status by class of loans, net of unearned fees and discounts. Loans with a formal loan payment deferral plan in place are not considered contractually past due or delinquent if the borrower is in compliance with the loan payment deferral plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loans |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 90 Days |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| or More |
| |
|
| 30 - 59 |
| 60 - 89 |
| 90 Days or |
|
|
|
|
|
|
|
|
|
|
|
|
| Past Due |
| ||||
|
| Days Past |
| Days Past |
| More |
| Total Past |
| Loans Not |
| Total |
| Nonaccrual |
| and Still |
| ||||||||
(Dollars in thousands) |
| Due |
| Due |
| Past Due |
| Due |
| Past Due |
| Loans |
| Loans |
| Accruing |
| ||||||||
March 31, 2022: | |||||||||||||||||||||||||
One- to four-family residential mortgages | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
Multi-family residential mortgages |
| — |
| — |
| — |
| — |
| |
| |
| — |
| | |||||||||
Construction, commercial and other mortgages |
| — |
| — |
| — |
| — |
| |
| |
| — |
| | |||||||||
Home equity loans and lines of credit |
| — |
| — |
| — |
| — |
| |
| |
| |
| | |||||||||
Loans on deposit accounts |
| — |
| — |
| — |
| — |
| |
| |
| — |
| | |||||||||
Consumer and other |
| |
| — |
| — |
| |
| |
| |
| — |
| | |||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
December 31, 2021: | |||||||||||||||||||||||||
One- to four-family residential mortgages | $ | | $ | — | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
Multi-family residential mortgages |
| — |
| — |
| — |
| — |
| |
| |
| — |
| | |||||||||
Construction, commercial and other mortgages |
| — |
| — |
| — |
| — |
| |
| |
| — |
| | |||||||||
Home equity loans and lines of credit |
| — |
| — |
| — |
| — |
| |
| |
| |
| | |||||||||
Loans on deposit accounts |
| — |
| — |
| — |
| — |
| |
| |
| — |
| | |||||||||
Consumer and other |
| |
| — |
| |
| |
| |
| |
| — |
| | |||||||||
Total | $ | | $ | — | $ | | $ | | $ | | $ | | $ | | $ | |
The Company primarily uses the aging of loans and accrual status to monitor the credit quality of its loan portfolio. When a mortgage loan becomes seriously delinquent (
There were
The table below summarizes outstanding troubled debt restructurings by class of loans:
| Number of |
| Accrual |
| Number of |
| Nonaccrual |
| ||||||
(Dollars in thousands) | Loans |
| Status |
| Loans |
| Status |
| Total | |||||
March 31, 2022: |
|
|
|
| ||||||||||
One- to four-family residential mortgages | | $ | | | $ | | $ | | ||||||
Total | | $ | | | $ | | $ | | ||||||
December 31, 2021: | ||||||||||||||
One- to four-family residential mortgages | | $ | | | $ | | $ | | ||||||
Total | | $ | | | $ | | $ | |
14
There was
The CARES Act provides relief to financial institutions from categorizing eligible loan modifications as troubled debt restructurings over the remaining life of the modified loan. Eligible loan modifications under the CARES Act were required to be related to the COVID-19 pandemic and the borrower’s payments must not have been more than 30 days past due as of December 31, 2019. Loan modifications under the CARES Act must be executed during the period from March 1, 2020 to January 1, 2022. Banking regulators issued similar guidance, which also clarified that a COVID-19 related loan modification should not be considered a troubled debt restructuring if the borrower was not more than 30 days past due on payments at the time the loan modification program was implemented and the modification is considered short-term (not to exceed six months). The Company uses the provisions of the CARES Act and the Interagency Statements to account for the eligible loans receiving modifications.
The Company has granted loan payment deferrals to borrowers who have been affected by the COVID-19 pandemic. The table below summarizes loans in the loan payment deferral program by class of loan:
March 31, 2022 | December 31, 2021 | |||||||||||
(Dollars in thousands) | Loans in the Loan Payment Deferral Program | Percent of Total Loans | Loans in the Loan Payment Deferral Program | Percent of Total Loans | ||||||||
One- to- four family residential mortgage | $ | | % | $ | | % | ||||||
Non-residential mortgage | | | ||||||||||
Total | $ | | | % | $ | | | % |
The loans on which the Company has granted loan payment deferrals are included in the ALLL calculation. However, loans performing under a loan payment deferral agreement are not considered contractually past due and are excluded from the past due statistics above.
The ratio of the current loan balance to the current tax-assessed value of the property securing the mortgage loans in the payment deferral program averaged
As of March 31, 2022, of the $
As of March 31, 2022, all of the $
Since the beginning of the year, there has not been a significant increase in loan delinquencies, significant changes in deposits or significant drawdowns on any lines of credit. We do not have any commercial loans to hotels, businesses in the transportation industry, restaurants or retail establishments.
The Company had
15
Nearly all of our real estate loans are collateralized by real estate located in the State of Hawaii. Loan-to-value ratios on these real estate loans generally do not exceed
During the three months ended March 31, 2022 and 2021, the Company sold mortgage loans held for sale with principal balances of $
The Company serviced loans for others with principal balances of $
(7) Securities Sold Under Agreements to Repurchase
Securities sold under agreements to repurchase are treated as financings and the obligations to repurchase the identical securities sold are reflected as a liability with the securities collateralizing the agreements classified as an asset. Securities sold under agreements to repurchase are summarized as follows:
|
| March 31, 2022 |
| December 31, 2021 |
| ||||||
|
|
|
|
| Weighted |
|
|
|
| Weighted |
|
|
| Repurchase |
| Average |
| Repurchase |
| Average |
| ||
(Dollars in thousands) |
| Liability |
| Rate |
| Liability |
| Rate |
| ||
Maturing: | |||||||||||
Over 2 years to 3 years | $ | |
| | % | $ | |
| | % | |
Over 3 years to 4 years |
| — |
| — | |
| | % | |||
Total | $ | |
| | % | $ | |
| | % |
Below is a summary comparing the carrying value and fair value of securities pledged to secure repurchase agreements, the repurchase liability, and the amount at risk at March 31, 2022. The amount at risk is the greater of the carrying value or fair value over the repurchase liability and refers to the potential loss to the Company if the secured lender fails to return the security at the maturity date of the agreement. All the agreements to repurchase are with JP Morgan Securities and the securities pledged are mortgage-backed securities issued and guaranteed by U.S. government-sponsored enterprises. The repurchase liability cannot exceed
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted |
|
|
| Carrying |
| Fair |
|
|
|
|
|
|
| Average |
| ||
|
| Value of |
| Value of |
| Repurchase |
| Amount |
| Months to |
| ||||
(Dollars in thousands) |
| Securities |
| Securities |
| Liability |
| at Risk |
| Maturity |
| ||||
Maturing: | |||||||||||||||
Over 90 days | $ | | $ | | $ | | $ | |
|
16
(8) Offsetting of Financial Liabilities
The following table presents our securities sold under agreements to repurchase that are subject to a right of offset in the event of default. See Note 7, Securities Sold Under Agreements to Repurchase, for additional information.
|
|
|
|
|
| Net Amount of |
| Gross Amount Not Offset in the |
|
|
| |||||||
|
| Gross Amount |
| Gross Amount |
| Liabilities |
| Balance Sheet |
|
|
| |||||||
|
| of Recognized |
| Offset in the |
| Presented in the |
| Financial |
| Cash Collateral |
|
|
| |||||
(Dollars in thousands) |
| Liabilities |
| Balance Sheet |
| Balance Sheet |
| Instruments | Pledged |
| Net Amount | |||||||
March 31, 2022: | ||||||||||||||||||
Securities sold under agreements to repurchase | $ | | $ | — | $ | | $ | | $ | — | $ | — | ||||||
December 31, 2021: | ||||||||||||||||||
Securities sold under agreements to repurchase | $ | | $ | — | $ | | $ | | $ | — | $ | — |
(9) Employee Stock Ownership Plan
Effective January 1, 2009, Territorial Savings Bank adopted an Employee Stock Ownership Plan (ESOP) for eligible employees. The ESOP borrowed $
The loan is secured by the shares purchased with the loan proceeds and will be repaid by the ESOP over the
Shares purchased by the ESOP are held by a trustee in an unallocated suspense account, and shares are released annually from the suspense account on a pro-rata basis as principal and interest payments are made by the ESOP to the Company. The trustee allocates the shares released among participants on the basis of each participant’s proportional share of compensation relative to all participants. As shares are committed to be released from the suspense account, Territorial Savings Bank reports compensation expense based on the average fair value of shares released with a corresponding credit to stockholders’ equity. The shares committed to be released are considered outstanding for earnings per share computations. Compensation expense recognized for the three months ended March 31, 2022 and 2021 amounted to $
Shares held by the ESOP trust were as follows:
|
| March 31, |
| December 31, |
|
| ||
|
| 2022 |
| 2021 |
|
| ||
Allocated shares |
| |
| | ||||
Unearned shares |
| |
| | ||||
Total ESOP shares |
| |
| | ||||
Fair value of unearned shares, in thousands | $ | | $ | |
The ESOP restoration plan is a nonqualified plan that provides supplemental benefits to certain executives who are prevented from receiving the full benefits contemplated by the ESOP’s benefit formula. The supplemental cash payments consist of payments representing shares that cannot be allocated to the participants under the ESOP due to IRS limitations imposed on tax-qualified plans. We accrue for these benefits over the period during which employees provide services to earn these benefits. For the three months ended March 31, 2022 and 2021, we accrued $
17
(10) Share-Based Compensation
The shareholders of Territorial Bancorp Inc. have adopted the 2010 Equity Incentive Plan and the 2019 Equity Incentive Plan. These plans provide for the award of stock options and restricted stock to key officers and directors. In accordance with the Compensation – Stock Compensation topic of the FASB ASC, the cost of the equity incentive plans is based on the fair value of the awards on the grant date. The fair value of time-based restricted stock is based on the closing price of the Company’s stock on the grant date. The fair value of performance-based stock that will vest based on a performance condition is based on the closing price of the Company’s stock on the date of grant. The fair value of performance-based restricted stock that will vest on a market condition is based on a Monte Carlo valuation of the Company’s stock on the date of grant. The fair value of time-based stock options is estimated using a Black-Scholes option pricing model using assumptions for dividend yield, stock price volatility, risk-free interest rate and option term. These assumptions are based on our judgments regarding future events, are subjective in nature, and cannot be determined with precision. The cost of the awards will be recognized on a straight-line basis over the , - or
The Company recognized compensation expense, measured as the fair value of the share-based award on the date of grant, on a straight-line basis over the vesting period. Share-based compensation is recorded in the Consolidated Statements of Income as a component of salaries and employee benefits with a corresponding increase in stockholders’ equity. The table below presents information on compensation expense and the related tax benefit for all share-based awards:
|
| Three Months Ended |
| ||||
|
| March 31, |
| ||||
(In thousands) |
| 2022 |
| 2021 |
| ||
Compensation expense | $ | | $ | | |||
Income tax benefit |
| |
| |
Stock Options
The table below presents the stock option activity for the three months ended March 31, 2022 and 2021:
|
| Weighted |
|
| Aggregate |
| |||||
Average | Remaining | Intrinsic |
| ||||||||
Exercise | Contractual | Value |
| ||||||||
Options | Price | Life (years) | (in thousands) |
| |||||||
Options outstanding at December 31, 2021 |
| | $ | |
| $ | | ||||
Granted |
| — |
| — |
| — |
| — | |||
Exercised |
| — |
| — |
| — |
| — | |||
Forfeited |
| — |
| — |
| — |
| — | |||
Expired |
| — |
| — |
| — |
| — | |||
Options outstanding at March 31, 2022 | | $ | |
| $ | ||||||
Options outstanding at December 31, 2020 |
| | $ | |
| $ | | ||||
Granted |
| — |
| — |
| — |
| — | |||
Exercised |
| — |
| — |
| — |
| — | |||
Forfeited |
| — |
| — |
| — |
| — | |||
Expired |
| — |
| — |
| — |
| — | |||
Options outstanding at March 31, 2021 |
| | $ | |
| $ | | ||||
Options vested and exercisable at March 31, 2022 |
| $ |
| $ | |
18
There were
Restricted Stock
Restricted stock awards are accounted for as fixed grants using the fair value of the Company’s stock at the time of grant. Unvested restricted stock may not be disposed of or transferred during the vesting period. Restricted stock carries the right to receive dividends, although dividends attributable to restricted stock are retained by the Company until the shares vest, at which time they are paid to the award recipient. Unvested restricted stock that is time-based contain nonforfeitable dividend rights. Accrued dividends on restricted stock that do not vest based on performance or market conditions are forfeited.
The table below presents the time-based restricted stock activity:
|
|
|
| Weighted |
| |
|
| Time-Based |
| Average Grant |
| |
|
| Restricted |
| Date Fair |
| |
|
| Stock |
| Value |
| |
Unvested at December 31, 2021 |
| | $ | | ||
Granted |
| |
| | ||
Vested |
| |
| | ||
Forfeited |
| — |
| — | ||
Unvested at March 31, 2022 |
| | $ | | ||
Unvested at December 31, 2020 |
| | $ | | ||
Granted |
| |
| | ||
Vested |
| |
| | ||
Forfeited |
| — |
| — | ||
Unvested at March 31, 2021 |
| | $ | |
As of March 31, 2022, the Company had $
The table below presents the performance-based restricted stock units (PRSUs) that will vest on a performance condition:
|
| Performance- |
| ||
Based Restricted | |||||
|
| Stock Units |
| Weighted | |
Based on a | Average Grant | ||||
Performance | Date Fair | ||||
|
| Condition |
| Value | |
Unvested at December 31, 2021 |
| | $ | | |
Granted |
| — |
| — | |
Vested |
| |
| | |
Forfeited |
| |
| | |
Unvested at March 31, 2022 |
| | $ | | |
Unvested at December 31, 2020 |
| | $ | | |
Granted |
| |
| | |
Vested |
| |
| | |
Forfeited |
| |
| | |
Unvested at March 31, 2021 |
| | $ | |
19
The fair value of these PRSUs is based on the fair value of the Company’s stock on the date of grant. As of March 31, 2022, the Company had $
The table below presents the PRSUs that will vest on a market condition:
Performance- | |||||
Based Restricted | Monte Carlo | ||||
Stock Units | Valuation of | ||||
Based on a | the Company's | ||||
|
| Market Condition |
| Stock | |
Unvested at December 31, 2021 |
| | $ | | |
Granted |
| — | — | ||
Vested |
| — |
| — | |
Forfeited |
| |
| | |
Unvested at March 31, 2022 |
| | $ | | |
Unvested at December 31, 2020 |
| | $ | | |
Granted |
| | | ||
Vested |
| |
| | |
Forfeited |
| |
| | |
Unvested at March 31, 2021 |
| | $ | |
As of March 31, 2022, the Company had $
(11) Earnings Per Share
Holders of unvested restricted stock accrue dividends at the same rate as common shareholders and they both share equally in undistributed earnings. Unvested restricted stock awards that are time-based contain nonforfeitable rights to dividends or dividend equivalents and are considered to be participating securities in the earnings per share computation using the two-class method. Under the two-class method, earnings are allocated to common shareholders and participating securities according to their respective rights to earnings. Unvested restricted stock awards that vest based on performance or market conditions are not considered to be participating securities in the earnings per share calculation because accrued dividends on shares that do not vest are forfeited.
20
The table below presents the information used to compute basic and diluted earnings per share:
|
| Three Months Ended |
|
|
| ||||
|
| March 31, |
|
| |||||
(Dollars in thousands, except per share data) |
| 2022 |
| 2021 |
|
|
| ||
Net income | $ | | $ | | |||||
Income allocated to participating securities | ( | ( | |||||||
Net income available to common shareholders | $ | | $ | | |||||
Weighted-average number of shares used in: | |||||||||
Basic earnings per share |
| |
| | |||||
Dilutive common stock equivalents: | |||||||||
Stock options and restricted stock units |
| |
| | |||||
Diluted earnings per share |
| |
| | |||||
Net income per common share, basic | $ | | $ | | |||||
Net income per common share, diluted | $ | | $ | |
(12) Other Comprehensive Loss
The table below presents the changes in the components of accumulated other comprehensive loss, net of taxes:
|
| Unfunded |
| Unrealized |
|
|
|
| ||
|
| Pension |
| (Gain)/Loss on |
|
|
|
| ||
(Dollars in thousands) |
| Liability |
| Securities |
| Total |
| |||
Three months ended March 31, 2022 | ||||||||||
Balances at beginning of period | $ | | $ | — | $ | | ||||
Other comprehensive loss, net of taxes |
| — |
| |
| | ||||
Net current period other comprehensive loss |
| — |
| |
| | ||||
Balances at end of period | $ | | $ | | $ | | ||||
Three months ended March 31, 2021 | ||||||||||
Balances at beginning of period | $ | | $ | ( | $ | | ||||
Other comprehensive loss, net of taxes | — | | | |||||||
Amounts reclassified from other comprehensive income, net of taxes |
| — |
| |
| | ||||
Net current period other comprehensive loss |
| — |
| |
| | ||||
Balances at end of period | $ | | $ | ( | $ | |
The table below presents the tax effect on each component of accumulated other comprehensive loss:
|
| Three Months Ended March 31, |
| ||||||||||||||||
|
| 2022 |
| 2021 |
| ||||||||||||||
|
| Pretax |
|
|
|
| After Tax |
| Pretax |
|
|
|
| After Tax |
| ||||
(Dollars in thousands) |
| Amount |
| Tax |
| Amount |
| Amount |
| Tax |
| Amount |
| ||||||
Unrealized loss on securities | $ | | $ | ( | $ | | $ | | $ | ( | $ | | |||||||
Amount reclassified from other comprehensive income | — | — | — | | ( | | |||||||||||||
Total | $ | | $ | ( | $ | | $ | | $ | ( | $ | |
21
(13) Revenue Recognition
The Company’s contracts with customers are generally short-term in nature, with cycles of one year or less. These can range from an immediate term for services such as wire transfers, foreign currency exchanges and cashier’s check purchases, to several days for services such as processing annuity and mutual fund sales. Some contracts may be of an ongoing nature, such as providing deposit account services, including ATM access, check processing, account analysis and check ordering. However, provision of an assessable service and payment for such service is usually concurrent or closely timed. Contracts related to financial instruments, such as loans, investments and debt, are excluded from the scope of this reporting requirement.
After analyzing the Company’s revenue sources, including the amount of revenue received, the timing of services rendered and the timing of payment for these services, the Company has determined that the rendering of services and the payment for such services are generally closely matched. Any differences are not material to the Company’s Consolidated Financial Statements. Accordingly, the Company generally records income when payment for services is received.
Revenue from contracts with customers is reported in service and other fees in other noninterest income in the Consolidated Statements of Income. The table below reconciles the revenue from contracts with customers and other revenue reported in those line items:
|
| Service and |
|
| |||||
(Dollars in thousands) |
| Other Fees |
| Other |
| Total | |||
Three months ended March 31, 2022 | |||||||||
Revenue from contracts with customers | $ | | $ | | $ | | |||
Other revenue | | | | ||||||
Total | $ | | $ | | $ | | |||
Three months ended March 31, 2021 | |||||||||
Revenue from contracts with customers | $ | | $ | | $ | | |||
Other revenue | | | | ||||||
Total | $ | | $ | | $ | | |||
(14) Leases
The table below presents lease costs and other information for the periods indicated:
| Three Months Ended |
| |||||
| March 31, |
| |||||
(Dollars in thousands) |
| 2022 |
| 2021 |
| ||
Lease costs: | |||||||
Operating lease costs | $ | | $ | | |||
Short-term lease costs |
| |
| | |||
Variable lease costs |
| |
| | |||
Total lease costs | $ | | $ | | |||
Cash paid for amounts included in measurement of lease liabilities | $ | | $ | | |||
ROU assets obtained in exchange for new operating lease liabilities | $ | | $ | |
22
At March 31, 2022, future minimum rental commitments under noncancellable operating leases are as follows:
(Dollars in thousands) |
| ||||||||
2022 | $ | | |||||||
2023 |
| | |||||||
2024 |
| | |||||||
2025 |
| | |||||||
2026 |
| | |||||||
Thereafter |
| | |||||||
Total | | ||||||||
Less lease incentives to be received in 2022 | ( | ||||||||
Less present value discount | ( | ||||||||
Present value of leases | $ | |
The table below presents other lease related information:
March 31, | March 31, | ||||||||
| 2022 |
| 2021 |
| |||||
Weighted-average remaining lease term (years) |
|
| |||||||
Weighted-average discount rate | % | % |
(15) Fair Value
In accordance with the Fair Value Measurements and Disclosures topic of the FASB ASC, the Company groups its financial assets and liabilities measured or disclosed at fair value into three levels based on the markets in which the financial assets and liabilities are traded and the reliability of the assumptions used to determine fair value as follows:
In accordance with the Fair Value Measurements and Disclosures topic, the Company bases its fair values on the price that it would expect to receive if an asset were sold or the price that it would expect to pay to transfer a liability in an orderly transaction between market participants at the measurement date. Also as required, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when developing fair value measurements.
The Company uses fair value measurements to determine fair value disclosures. Investment securities available for sale and derivatives are recorded at fair value on a recurring basis. From time to time, the Company may be required to record other financial assets at fair value on a nonrecurring basis, such as loans held for sale, impaired loans and investments, and mortgage servicing assets. These nonrecurring fair value adjustments typically involve application of the lower of cost or fair value accounting or write-downs of individual assets.
Investment Securities Available for Sale. The estimated fair values of U.S. government-sponsored mortgage-backed securities are considered Level 2 inputs because the valuation for investment securities utilized pricing models that varied based on asset class and included trade, bid and other observable market information.
23
Interest Rate Contracts. The Company may enter into interest rate lock commitments with borrowers on loans intended to be sold. To manage interest rate risk on the lock commitments, the Company may also enter into forward loan sale commitments. The interest rate lock commitments and forward loan sale commitments are treated as derivatives and are recorded at their fair value determined by referring to prices quoted in the secondary market for similar contracts. The fair value inputs are considered Level 2 inputs. Interest rate contracts that are classified as assets are included with prepaid expenses and other assets on the Consolidated Balance Sheet while interest rate contracts that are classified as liabilities are included with accounts payable and accrued expenses.
The estimated fair values of the Company’s financial instruments are as follows:
Carrying | Fair Value Measurements Using |
| ||||||||||||||
(Dollars in thousands) |
| Amount |
| Fair Value |
| Level 1 |
| Level 2 |
| Level 3 |
| |||||
March 31, 2022 | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | | $ | | $ | | $ | — | $ | — | ||||||
Investment securities available for sale | | | — | | — | |||||||||||
Investment securities held to maturity |
| | | — | | — | ||||||||||
Loans held for sale |
| | | — | | — | ||||||||||
Loans receivable, net |
| | | — | — | | ||||||||||
FHLB stock |
| | | — | | — | ||||||||||
FRB stock | | | — | | — | |||||||||||
Accrued interest receivable |
| | | | | | ||||||||||
Interest rate contracts |
| | | — | | — | ||||||||||
Liabilities | ||||||||||||||||
Deposits |
| | | — | | | ||||||||||
Advances from the Federal Home Loan Bank |
| | | — | | — | ||||||||||
Securities sold under agreements to repurchase |
| | | — | | — | ||||||||||
Accrued interest payable |
| | | — | | | ||||||||||
Interest rate contracts |
| | | — | | — | ||||||||||
December 31, 2021 | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | | $ | | $ | | $ | — | $ | — | ||||||
Investment securities held to maturity |
| | | — | | — | ||||||||||
Loans receivable, net |
| | | — | — | | ||||||||||
FHLB stock |
| | | — | | — | ||||||||||
FRB stock | | | — | | — | |||||||||||
Accrued interest receivable |
| | | | | | ||||||||||
Interest rate contracts |
| | | — | | — | ||||||||||
Liabilities | ||||||||||||||||
Deposits |
| | | — | | | ||||||||||
Advances from the Federal Home Loan Bank |
| | | — | | — | ||||||||||
Securities sold under agreements to repurchase |
| | | — | | — | ||||||||||
Accrued interest payable |
| | | — | | | ||||||||||
Interest rate contracts |
| | | — | | — |
At March 31, 2022 and December 31, 2021, neither the commitment fees received on commitments to extend credit nor the fair value thereof was material to the Consolidated Financial Statements of the Company.
24
The table below presents the balance of assets and liabilities measured at fair value on a recurring basis:
(Dollars in thousands) |
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
| ||||
| |||||||||||||
March 31, 2022 | |||||||||||||
Interest rate contracts — assets | $ | — | $ | | $ | — | $ | | |||||
Interest rate contracts — liabilities |
| — |
| ( |
| — |
| ( | |||||
Investment securities available for sale | — | | — | | |||||||||
December 31, 2021 | |||||||||||||
Interest rate contracts — assets | $ | — | $ | | $ | — | $ | | |||||
Interest rate contracts — liabilities |
| — |
| ( |
| — |
| ( |
The table below presents the balance of assets measured at fair value on a nonrecurring basis as of March 31, 2022 and the related loss for the three months ended March 31, 2022. There were
|
| Fair Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
(Dollars in thousands) |
| Adjustment Date | Level 1 |
| Level 2 |
| Level 3 |
| Total |
| Total Losses |
| ||||||
March 31, 2022 | ||||||||||||||||||
Loans held for sale | 3/31/2022 | — | | — | | ( |
(16) Subsequent Events
On April 28, 2022, the Board of Directors of Territorial Bancorp Inc. declared a quarterly cash dividend of $
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-Looking Information
This Quarterly Report 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,” “continue” 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. You should not place undue reliance on such statements. We are under no duty to and do not take any obligation to update any forward-looking statements after the date of this Quarterly Report.
25
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:
● | risks, uncertainties and other factors relating to the COVID-19 pandemic, including the length of time that the pandemic continues, the imposition of any restrictions on individual or business activities; the severity and duration of the effect of the pandemic on the general economy and on the businesses of our borrowers and their ability to make payments on their obligations; the remedial actions and stimulus measures adopted by federal, state and local governments and the inability of employees to work due to illness or quarantine; |
● | general economic conditions, 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 or credit 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 and auditing policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or 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; |
● | cyber attacks, 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 changes 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 effects of any federal government shutdown; |
● | the quality and composition of our investment portfolio; |
26
● | changes in market and other conditions that would affect our ability to repurchase our common stock; |
● | changes in our financial condition or results of operations that reduce capital available to pay dividends; |
● | the effects of climate change and societal, investor and governmental responses to climate change; |
● | the effects of social and governance change and societal and investor sentiment and governmental responses to social and governance matters; |
● | the effects of domestic and international hostilities, including terrorism; and |
● | changes in the financial condition or future prospects of issuers of securities that we own. |
Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 pandemic on our business. The extent of such impact will depend on future developments, which are highly uncertain. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations:
● | demand for our products and services may decline, making it difficult to grow assets and income; |
● | collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; |
● | disruptions to the global supply chain may have a destabilizing effect on financial markets, key market indices and overall economic activity; |
● | our allowance for loan losses may have to be increased if borrowers experience financial difficulties beyond loan deferral periods, which will adversely affect our net income; |
● | the net worth and liquidity of our borrowers and any loan guarantors may decline, impairing their ability to honor commitments to us; |
● | a material decrease in net income or a net loss over several quarters could result in a decrease in the rate of our quarterly cash dividend and reduce the amount of our shares we repurchase; |
● | our cyber security risks are increased as the result of an increase in the number of employees working remotely; |
● | we rely on third party vendors for certain services and the unavailability of a critical service due to the COVID-19 pandemic could have an adverse effect on us; |
● | Federal Deposit Insurance Corporation premiums may increase if the agency experiences additional resolution costs; and |
● | the productivity and availability of key personnel and other employees necessary to conduct business, including through issues with employee retention caused by the pandemic and related governmental actions or otherwise, may be negatively impacted. |
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.
27
Overview
We have historically operated as a traditional thrift institution. The significant majority of our assets consist of long-term, fixed-rate residential mortgage loans and mortgage-backed securities, which we have funded primarily with deposit inflows, cash balances at the Federal Reserve Bank, loan and security repayments, advances from the Federal Home Loan Bank, our capital, proceeds from securities sold under agreements to repurchase and proceeds from loan and security sales. As a result, we may be vulnerable to increases in interest rates, as our interest-bearing liabilities mature or reprice more quickly than our interest-earning assets.
We have continued our focus on originating one- to four-family residential real estate loans. Our emphasis on conservative loan underwriting has resulted in continued low levels of nonperforming assets. Our nonperforming assets, which can include nonaccrual loans and real estate owned, totaled $3.2 million or 0.15% of total assets at March 31, 2022 compared to $3.3 million, or 0.15% of total assets at December 31, 2021. We recorded a reversal of loan loss provisions for $168,000 and $913,000 for the three months ended March 31, 2022 and 2021, respectively. The reversal of loan loss provisions occurred primarily due to decreases in the amount of loans in our loan payment deferral program, Hawaii’s unemployment rate and the size of our loan portfolio. The loan payment deferral program was created to assist borrowers who were experiencing financial hardship due to the COVID-19 pandemic.
Other than our loans for the construction of one- to four-family residential homes, we do not offer “interest only” mortgage loans (where the borrower pays only interest for an initial period, after which the loan converts to a fully amortizing loan) on one- to four-family residential properties. We also do not offer loans that provide for negative amortization of principal, such as “Option ARM” loans, where the borrower can pay less than the interest owed on their loan, resulting in an increased principal balance during the life of the loan. We do not offer “subprime loans” (loans that generally target borrowers with weakened credit histories typically characterized by payment delinquencies, previous charge-offs, judgments, bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burden ratios) or Alt-A loans (traditionally defined as nonconforming loans having less than full documentation). We also do not own any private label mortgage-backed securities that are collateralized by Alt-A, low or no documentation or subprime mortgage loans.
We sold fixed-rate mortgage loans held for sale with principal balances of $2.0 million and $12.2 million during the three months ended March 31, 2022 and 2021, respectively. Federal Home Loan Bank advances remained constant at $141.0 million for the three months ended March 31, 2022 and 2021. Securities sold under agreements to repurchase remained constant at $10.0 million for the three months ended March 31, 2022 and 2021.
Our investments in mortgage-backed securities have been issued by Freddie Mac or Fannie Mae, which are U.S. government-sponsored enterprises, or Ginnie Mae, which is a U.S. government agency. These entities guarantee the payment of principal and interest on our mortgage-backed securities. As of March 31, 2022 and December 31, 2021, we owned $669.1 million and $636.4 million, respectively, of mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae.
Critical Accounting Policies
There are no material changes to the critical accounting policies disclosed in Territorial Bancorp Inc.’s Annual Report on Form 10-K for the year ended December 31, 2021.
Comparison of Financial Condition at March 31, 2022 and December 31, 2021
Assets. Our total assets decreased by $2.6 million, or 0.1%, to $2.1 billion at March 31, 2022. The decrease in assets was primarily due to a $34.1 million decrease in cash and cash equivalents that was partially offset by a $32.7 million increase in total investment securities.
Cash and Cash Equivalents. Cash and cash equivalents were $65.8 million at March 31, 2022, a decrease of $34.1 million, or 34.1%, since December 31, 2021. The decrease in cash and cash equivalents was primarily caused by a
28
$32.7 million increase in total investment securities and a $6.3 million decrease in deposits, which was partially offset by a $6.5 million decrease in total loans.
Loans. Total loans, including $1.0 million of loans held for sale, were $1.3 billion at March 31, 2022, or 60.9% of total assets. During the three months ended March 31, 2022, the loan portfolio, including loans held for sale, decreased by $6.5 million, or 0.5%. The decrease in the loan portfolio primarily occurred as principal repayments and loan sales exceeded the origination of new loans.
Securities. Total securities, including $5.3 million of investments available for sale, were $669.1 million at March 31, 2022, or 31.4% of total assets. During the three months ended March 31, 2022, the securities portfolio increased by $32.7 million, or 5.1%. The increase in the securities balance occurred as purchases exceeded principal repayments. Mortgage-backed securities were purchased to offset the decrease in interest income that occurred because of the decrease in our loan portfolio.
At March 31, 2022, none of the underlying collateral consisted of subprime or Alt-A (traditionally defined as nonconforming loans having less than full documentation) loans.
Deposits. Deposits were $1.7 billion at March 31, 2022, a decrease of $6.3 million, or 0.4%, since December 31, 2021. The decrease in deposits was primarily due to decreases of $12.4 million in savings accounts and $2.5 million in certificates of deposit. These decreases were partially offset by an $8.1 million increase in checking accounts during the three months ended March 31, 2022.
Borrowings. Our borrowings consist of advances from the Federal Home Loan Bank and funds borrowed under securities sold under agreements to repurchase. During the three months ended March 31, 2022, total borrowings remained constant at $151.0 million.
Stockholders’ Equity. Total stockholders’ equity was $258.0 million at March 31, 2022, an increase of $1.7 million, or 0.6% from $256.3 million at December 31, 2021. The increase in stockholders’ equity occurred primarily as our net income exceeded dividends declared and shares repurchased.
Average Balances and Yields
The following tables set forth average balance sheets, yields and rates, and certain other information for the periods indicated. No tax-equivalent yield adjustments were made, as we did not hold any tax-free investments. All average balances are daily average balances. Nonaccrual loans were included in the computation of average balances and are included with accrual loans in the tables. However, no interest income was attributed to nonaccrual loans. The yields set forth below include the effect of net deferred costs, discounts and premiums that are amortized or accreted to interest income of $1,000 and $158,000 for the three months ended March 31, 2022 and 2021, respectively.
29
|
| For the Three Months Ended March 31, |
| ||||||||||||||||
|
| 2022 |
| 2021 |
| ||||||||||||||
|
| Average |
|
|
|
|
|
| Average |
|
|
|
|
|
| ||||
|
| Outstanding |
|
|
|
| Yield/Rate |
| Outstanding |
|
|
|
| Yield/Rate |
| ||||
|
| Balance |
| Interest |
| (1) |
| Balance |
| Interest |
| (1) |
| ||||||
| (Dollars in thousands) | ||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||
Loans: | |||||||||||||||||||
Real estate loans: | |||||||||||||||||||
First mortgage: |
|
|
|
|
|
|
| ||||||||||||
One- to four-family residential (2) | $ | 1,261,293 | $ | 10,923 |
| 3.46 | % | $ | 1,336,957 | $ | 12,566 |
| 3.76 | % | |||||
Multi-family residential |
| 5,265 | 59 |
| 4.48 |
| 6,927 | 80 |
| 4.62 | |||||||||
Construction, commercial and other | 20,075 | 208 |
| 4.14 |
| 18,078 | 199 |
| 4.40 | ||||||||||
Home equity loans and lines of credit |
| 6,866 | 88 |
| 5.13 |
| 8,750 | 107 |
| 4.89 | |||||||||
Other loans |
| 8,741 | 79 |
| 3.62 |
| 9,620 | 97 |
| 4.03 | |||||||||
Total loans |
| 1,302,240 | 11,357 |
| 3.49 |
| 1,380,332 |
| 13,049 |
| 3.78 | ||||||||
Investment securities: | |||||||||||||||||||
U.S. government sponsored mortgage-backed securities (2) |
| 656,885 | 3,423 |
| 2.08 |
| 275,438 | 1,825 |
| 2.65 | |||||||||
Total securities |
| 656,885 | 3,423 |
| 2.08 |
| 275,438 |
| 1,825 |
| 2.65 | ||||||||
Other |
| 71,918 | 176 |
| 0.98 |
| 370,468 | 231 |
| 0.25 | |||||||||
Total interest-earning assets |
| 2,031,043 | 14,956 |
| 2.95 |
| 2,026,238 | 15,105 |
| 2.98 | |||||||||
Non-interest-earning assets |
| 88,764 |
| 84,441 | |||||||||||||||
Total assets | $ | 2,119,807 | $ | 2,110,679 | |||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||
Savings accounts | $ | 1,080,757 | 193 |
| 0.07 | % | $ | 1,029,007 | 354 |
| 0.14 | % | |||||||
Certificates of deposit |
| 207,925 | 388 |
| 0.75 |
| 300,419 | 946 |
| 1.26 | |||||||||
Money market accounts |
| 5,382 | 1 |
| 0.07 |
| 7,793 | 4 |
| 0.21 | |||||||||
Checking and Super NOW accounts |
| 300,827 | 15 |
| 0.02 |
| 252,328 | 13 |
| 0.02 | |||||||||
Total interest-bearing deposits |
| 1,594,891 | 597 |
| 0.15 |
| 1,589,547 | 1,317 |
| 0.33 | |||||||||
Federal Home Loan Bank advances |
| 141,000 | 511 |
| 1.45 |
| 141,000 | 536 |
| 1.52 | |||||||||
Securities sold under agreements to repurchase |
| 10,000 | 44 |
| 1.76 |
| 10,000 | 46 |
| 1.84 | |||||||||
Total interest-bearing liabilities |
| 1,745,891 | 1,152 |
| 0.26 |
| 1,740,547 | 1,899 |
| 0.44 | |||||||||
Non-interest-bearing liabilities |
| 115,458 |
| 118,461 | |||||||||||||||
Total liabilities |
| 1,861,349 |
| 1,859,008 | |||||||||||||||
Stockholders’ equity |
| 258,458 |
| 251,671 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 2,119,807 | $ | 2,110,679 | |||||||||||||||
Net interest income | $ | 13,804 | $ | 13,206 | |||||||||||||||
Net interest rate spread (3) |
| 2.69 | % |
| 2.54 | % | |||||||||||||
Net interest-earning assets (4) | $ | 285,152 | $ | 285,691 | |||||||||||||||
Net interest margin (5) |
| 2.72 | % |
| 2.61 | % | |||||||||||||
Interest-earning assets to interest-bearing liabilities |
| 116.33 | % |
| 116.41 | % |
(1) | Annualized. |
(2) | Average balance includes loans or investments held to maturity and available for sale, as applicable. |
(3) | Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. |
(4) | Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. |
(5) | Net interest margin represents net interest income divided by average total interest-earning assets. |
30
Comparison of Operating Results for the Three Months Ended March 31, 2022 and 2021
General. Net income decreased by $303,000, or 6.0%, from $5.0 million for the three months ended March 31, 2021 to $4.7 million for the three months ended March 31, 2022. The decrease in net income was due to a $745,000 reduction in the reversal of loan loss provisions, a $586,000 decrease in non-interest income and a $44,000 increase in non-interest expense. These decreases to net income were partially offset by a $598,000 increase in net interest income and a $474,000 decrease in income taxes.
Net Interest Income. Net interest income increased by $598,000, or 4.5%, to $13.8 million for the three months ended March 31, 2022 from $13.2 million for the three months ended March 31, 2021. Interest expense decreased by $747,000, or 39.3%, due to an 18 basis point decrease in the cost of average interest-bearing liabilities, which was partially offset by a $5.3 million increase in the average balance of interest-bearing liabilities. Interest income decreased by $149,000, or 1.0%, due to a three basis point decrease in the yield of average interest-earning assets, which was partially offset by a $4.8 million increase in the average balance of interest-earning assets. The interest rate spread and net interest margin were 2.69% and 2.72% respectively, for the three months ended March 31, 2022, compared to 2.54% and 2.61%, respectively, for the three months ended March 31, 2021. The increases in the interest rate spread and in the net interest margin are attributable to the 18 basis point decrease in the cost of average interest-bearing liabilities that was partially offset by the three basis point decrease in the yield on average interest-earning assets.
Interest Income. Interest income decreased by $149,000, or 1.0%, to $15.0 million for the three months ended March 31, 2022 from $15.1 million for the three months ended March 31, 2021. Interest income on loans decreased by $1.7 million, or 13.0%, to $11.4 million for the three months ended March 31, 2022 from $13.0 million for the three months ended March 31, 2021. The decrease in interest income on loans occurred because the average yield on loans decreased by 29 basis points and the average loan balance decreased by $78.1 million, or 5.7%. The decrease in the yield on average loans occurred as higher yielding loans were paid off and new loans with lower interest rates were added to the loan portfolio. The decrease in the average balance of loans occurred as loan repayments and sales exceeded new loan originations. Interest income on securities increased by $1.6 million, or 87.6%, to $3.4 million for the three months ended March 31, 2022 from $1.8 million for the three months ended March 31, 2021. The increase in interest income on securities occurred primarily because of a $381.4 million increase, or 138.5%, in the average balance of securities as security purchases exceeded security repayments. This increase was partially offset by a 57 basis point decrease in the yield on average securities, which occurred as higher yielding securities were paid off or sold and securities with lower interest rates were purchased.
Interest Expense. Interest expense decreased by $747,000, or 39.3%, to $1.2 million for the three months ended March 31, 2022 from $1.9 million for the three months ended March 31, 2021. Interest expense on interest-bearing deposits decreased by $720,000, or 54.7%, from $1.3 million for the three months ended March 31, 2021 to $597,000 for the three months ended March 31, 2022. Interest expense on certificates of deposit decreased by $558,000, or 59.0%, to $388,000 for the three months ended March 31, 2022 from $946,000 for the three months ended March 31, 2021. The decrease in interest expense on certificates of deposit occurred because of a 51 basis point decrease in the average rate which was augmented by a $92.5 million decrease in the average balance of certificates of deposit. The rate paid on savings accounts decreased by seven basis points as average rates dropped from 0.14% to 0.07% which was partially offset by a $51.8 million increase in the average balance of savings accounts. The decrease in the average balance of certificates and increase in the average balance of savings accounts occurred as higher costing certificates matured and depositors rolled over the balances into savings accounts with lower interest rates. The decrease in the average rates on certificates of deposit and savings accounts occurred because of a decline in market interest rates.
Provision for Loan Losses. We recorded a reversal of loan loss provisions of $168,000 and $913,000 for the three months ended March 31, 2022 and 2021, respectively. The reversal of loan loss provisions occurred primarily due to decreases in the amount of loans in our loan payment deferral program, Hawaii’s unemployment rate and the size of our loan portfolio. The loan payment deferral program was created to assist borrowers who were experiencing financial hardship due to the COVID-19 pandemic. The provisions recorded resulted in ratios of the allowance for loan losses to total loans of 0.19% and 0.25% at March 31, 2022 and 2021, respectively. Nonaccrual loans totaled $3.2 million at March 31, 2022, or 0.25% of total loans at that date, compared to $4.2 million of nonaccrual loans at March 31, 2021, or 0.31% of total loans at that date. Nonaccrual loans as of March 31, 2022 and 2021 consisted primarily of one- to
31
four-family residential real estate loans. We have provided for all losses that can be reasonably estimated based on general and specific conditions at March 31, 2022 and 2021. For additional information see Note (6), “Loans Receivable and Allowance for Loan Losses” in our Notes to Consolidated Financial Statements.
Noninterest Income. The following table summarizes changes in noninterest income between the three months ended March 31, 2022 and 2021.
|
| Three Months Ended |
|
|
|
|
|
|
| ||||
|
| March 31, |
| Change |
| ||||||||
|
| 2022 |
| 2021 |
| $ Change |
| % Change |
| ||||
(Dollars in thousands) | |||||||||||||
Service and other fees | $ | 341 | $ | 995 | $ | (654) |
| (65.7) | % | ||||
Income on bank-owned life insurance |
| 197 |
| 188 |
| 9 |
| 4.8 | % | ||||
Gain on sale of investment securities |
| — |
| 526 |
| (526) |
| (100.0) | % | ||||
Gain on sale of loans |
| 18 |
| 420 |
| (402) |
| (95.7) | % | ||||
Other |
| 1,097 |
| 110 |
| 987 |
| 897.3 | % | ||||
Total | $ | 1,653 | $ | 2,239 | $ | (586) |
| (26.2) | % |
Noninterest income decreased by $586,000 for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. Service and other fees decreased primarily due to a decrease in fee income earned for referring mortgage loan applications to other financial institutions and mortgage brokers. During the three months ended March 31, 2021, we sold $4.8 million of held-to-maturity mortgage-backed securities and $943,000 of available-for-sale mortgage-backed securities and recorded gains of $420,000 and $106,000, respectively. We did not sell any mortgage-backed securities in the three months ended March 31, 2022. The sale of the held-to-maturity mortgage-backed securities, for which we had already collected a substantial portion of the outstanding purchased principal (at least 85%), was in accordance with the Investments – Debt and Equity Securities topic of the FASB ASC and do not taint management’s assertion of its intent to hold the remaining securities in the held-to-maturity portfolio to maturity. During the three months ended March 31, 2022 and 2021, we sold mortgage loans held for sale with principal balances of $2.0 million and $12.2 million, respectively, and recognized gains of $18,000 and $420,000, respectively. Other income increased primarily due to $1.0 million of bank-owned life insurance net proceeds received during the three months ended March 31, 2022.
Noninterest Expense. The following table summarizes changes in noninterest expense between the three months ended March 31, 2022 and 2021.
|
| Three Months Ended |
|
|
|
|
|
|
| ||||
|
| March 31, |
| Change |
|
| |||||||
|
| 2022 |
| 2021 |
| $ Change |
| % Change |
| ||||
(Dollars in thousands) | |||||||||||||
Salaries and employee benefits | $ | 5,613 | $ | 5,523 | $ | 90 |
| 1.6 | % | ||||
Occupancy |
| 1,594 |
| 1,647 |
| (53) |
| (3.2) | % | ||||
Equipment |
| 1,196 |
| 1,130 |
| 66 |
| 5.8 | % | ||||
Federal deposit insurance premiums |
| 141 |
| 141 |
| — |
| — | % | ||||
Other general and administrative expenses |
| 1,054 |
| 1,113 |
| (59) |
| (5.3) | % | ||||
Total | $ | 9,598 | $ | 9,554 | $ | 44 |
| 0.5 | % |
Noninterest expense increased by $44,000 for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase in salaries and employee benefits was primarily due to a decrease in the deferred salary expense for originating new loans. The increase in equipment expense was primarily due to an increase in data processing expense. The decrease in other general and administrative expense was primarily due to a decrease in legal expense. The decrease in occupancy was primarily due to a decrease in rent expense that was primarily due to new office space that was leased with lower rent.
32
Income Tax Expense. Income taxes were $1.3 million for the three months ended March 31, 2022, reflecting an effective tax rate of 21.9%, compared to $1.8 million for the three months ended March 31, 2021, reflecting an effective tax rate of 26.3%. The decrease in income tax expense and the effective tax rate during the three months ended March 31, 2022, was primarily due to a $777,000 decrease in income before taxes and the receipt of $1.0 million of proceeds on bank-owned life insurance that was not taxable.
Liquidity and Capital Resources
Liquidity is the ability to meet current and future financial obligations. Our primary sources of funds consist of deposit inflows, cash balances at the Federal Reserve Bank, loan and security repayments, advances from the Federal Home Loan Bank, proceeds from securities sold under agreements to repurchase and proceeds from loan and security sales. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage and mortgage-backed security prepayments are greatly influenced by general interest rates, economic conditions and competition. We have established an Asset/Liability Management Committee, consisting of our President and Chief Executive Officer, our Vice Chairman and Co-Chief Operating Officer, our Senior Vice President and Chief Financial Officer and our Vice President and Senior Treasury Analyst, which is responsible for establishing and monitoring our liquidity targets and strategies in order to ensure that sufficient liquidity exists for meeting the borrowing needs and deposit withdrawals of our customers as well as unanticipated contingencies. We believe that we have enough sources of liquidity to satisfy our short- and long-term liquidity needs as of March 31, 2022.
We regularly monitor and adjust our investments in liquid assets based upon our assessment of:
(i) | expected loan demand; |
(ii) | purchases and sales of investment securities; |
(iii) | expected deposit flows and borrowing maturities; |
(iv) | yields available on interest-earning deposits and securities; and |
(v) | the objectives of our asset/liability management program. |
Excess liquid assets are invested generally in interest-earning deposits or securities and may also be used to pay off short-term borrowings.
Our most liquid asset is cash. The amount of this asset is dependent on our operating, financing, lending and investing activities during any given period. At March 31, 2022, our cash and cash equivalents totaled $65.8 million. On that date, we had $10.0 million in securities sold under agreements to repurchase outstanding and $141.0 million of Federal Home Loan Bank advances outstanding with the ability to borrow an additional $804.7 million under Federal Home Loan Bank advances. We have unpledged securities with a market value of $480.5 million and have the ability to borrow up to $451.7 million using these securities as collateral. We also have securities with a market value of $6.2 million pledged to the Federal Reserve Bank and have the ability to borrow up to $5.8 million using these securities as collateral.
Our cash flows are derived from operating activities, investing activities and financing activities as reported in our Consolidated Statements of Cash Flows included in our Consolidated Financial Statements.
At March 31, 2022, we had $7.2 million in loan commitments outstanding for fixed-rate loans and had $14.6 million in unused lines of credit to borrowers. Certificates of deposit due within one year of March 31, 2022 totaled $171.3 million, or 10.2% of total deposits. If these deposits do not remain with us, we may be required to seek other sources of funds, including loan and security sales, brokered deposits, securities sold under agreements to repurchase and Federal Home Loan Bank advances. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before March 31, 2023.
33
We believe, however, based on past experience that a significant portion of such deposits will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.
Our primary investing activities are originating loans and purchasing mortgage-backed securities. During the three months ended March 31, 2022 and 2021, we originated $58.9 million and $82.5 million of loans, respectively. During the three months ended March 31, 2022 and 2021, we purchased securities with a face value of $53.1 million and $84.1 million, respectively.
Financing activities consist primarily of activity in deposit accounts, Federal Home Loan Bank advances, securities sold under agreements to repurchase, stock repurchases and dividend payments. We experienced a net decrease in deposits of $6.3 million and $27.3 million for the three months ended March 31, 2022 and 2021, respectively. Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by us and our local competitors, and by other factors.
Territorial Bancorp Inc. is a separate legal entity from Territorial Savings Bank and must provide for its own liquidity to pay dividends, repurchase shares of its common stock and for other corporate purposes. Territorial Bancorp Inc.’s primary source of liquidity is dividend payments from Territorial Savings Bank. The ability of Territorial Savings Bank to pay dividends to Territorial Bancorp Inc. is subject to regulatory requirements. At March 31, 2022, Territorial Bancorp Inc. (on an unconsolidated, stand-alone basis) had liquid assets of $22.6 million.
34
Territorial Savings Bank is subject to various regulatory capital requirements, including a risk-based capital measure. The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories. Territorial Bancorp Inc. is not subject to regulatory capital requirements because its total assets are less than $3.0 billion. At March 31, 2022, Territorial Savings Bank exceeded all of the fully phased in regulatory capital requirements and is considered to be “well capitalized” under regulatory guidelines.
The tables below present the fully-phased in capital required to be considered “well-capitalized” and meet the regulatory capital conservation buffer requirement as a percentage of total and risk-weighted assets and the percentage and the total amount of capital maintained for Territorial Savings Bank and the Company at March 31, 2022 and December 31, 2021:
(Dollars in thousands) |
| Required Ratio |
| Actual Amount |
| Actual Ratio |
| |
March 31, 2022: | ||||||||
Tier 1 Leverage Capital | ||||||||
Territorial Savings Bank |
| 5.00 | % | $ | 240,741 | 11.38 | % | |
Territorial Bancorp Inc. |
|
| $ | 263,609 | 12.46 | % | ||
Common Equity Tier 1 Risk-Based Capital (1) | ||||||||
Territorial Savings Bank |
| 9.00 | % | $ | 240,741 | 26.84 | % | |
Territorial Bancorp Inc. |
|
| $ | 263,609 | 29.39 | % | ||
Tier 1 Risk-Based Capital (1) | ||||||||
Territorial Savings Bank |
| 10.50 | % | $ | 240,741 | 26.84 | % | |
Territorial Bancorp Inc. |
|
| $ | 263,609 | 29.39 | % | ||
Total Risk-Based Capital (1) | ||||||||
Territorial Savings Bank |
| 12.50 | % | $ | 243,256 | 27.12 | % | |
Territorial Bancorp Inc. |
|
| $ | 266,124 | 29.67 | % | ||
December 31, 2021: | ||||||||
Tier 1 Leverage Capital | ||||||||
Territorial Savings Bank |
| 5.00 | % | $ | 235,785 | 11.09 | % | |
Territorial Bancorp Inc. |
|
| $ | 261,846 | 12.31 | % | ||
Common Equity Tier 1 Risk-Based Capital (1) | ||||||||
Territorial Savings Bank |
| 9.00 | % | $ | 235,785 | 26.47 | % | |
Territorial Bancorp Inc. |
|
| $ | 261,846 | 29.40 | % | ||
Tier 1 Risk-Based Capital (1) | ||||||||
Territorial Savings Bank |
| 10.50 | % | $ | 235,785 | 26.47 | % | |
Territorial Bancorp Inc. |
|
| $ | 261,846 | 29.40 | % | ||
Total Risk-Based Capital (1) | ||||||||
Territorial Savings Bank |
| 12.50 | % | $ | 238,515 | 26.78 | % | |
Territorial Bancorp Inc. |
|
| $ | 264,576 | 29.70 | % |
(1) | The required Common Equity Tier 1 Risk-Based Capital, Tier 1 Risk-Based Capital and Total Risk-Based Capital ratios are based on the fully-phased in capital ratios in the Basel III capital regulations plus the 2.50% capital conservation buffer that became effective on January 1, 2019. |
Prompt Corrective Action provisions define specific capital categories based on an institution’s capital ratios. However, the regulators may impose higher minimum capital standards on individual institutions or may downgrade an institution from one capital category to a lower category because of safety and soundness concerns. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on our consolidated financial statements.
Prompt Corrective Action provisions impose certain restrictions on institutions that are undercapitalized. The restrictions imposed become increasingly more severe as an institution’s capital category declines from “undercapitalized” to “critically undercapitalized.”
35
At March 31, 2022 and December 31, 2021, the Bank’s capital ratios exceeded the minimum capital thresholds for a “well-capitalized” institution. There are no conditions or events that have changed the institution’s category under the capital guidelines.
Depending on the amount of dividends to be paid, the Bank is required to either notify or make application to the Federal Reserve Bank before dividends are paid to the Company.
Legislation enacted in 2018 requires the federal banking agencies, including the Federal Reserve Board, to establish a “community bank leverage ratio” between 8% to 10% of average total consolidated assets for qualifying institutions with assets of less than $10 billion. Institutions with capital meeting the specified requirements and electing to follow the alternative framework would be deemed to comply with the applicable regulatory capital requirements, including the risk based requirements. The federal regulators adopted 9% as the applicable ratio, effective March 31, 2020. The ratio was temporarily reduced to 8% as a result of the CARES Act and transitioned back to 9% effective January 1, 2022. We have not elected to follow the alternative framework.
Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
Commitments. As a financial services provider, we routinely are a party to various financial instruments with off-balance sheet risks, such as commitments to extend credit and unused lines of credit. While these contractual obligations represent our potential future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process accorded to loans we make. In addition, we enter into commitments to sell mortgage loans.
Contractual Obligations. In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities and agreements with respect to investments. Except for a decrease of $2.5 million in certificates of deposit and a decrease of $4.1 million in loan commitments between December 31, 2021 and March 31, 2022, there have not been any material changes in our contractual obligations and funding needs since December 31, 2021.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
General. Our most significant form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of our net interest income to changes in market interest rates. Our Board of Directors has established an Asset/Liability Management Committee, which is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the Board of Directors.
Because we have historically operated as a traditional thrift institution, the significant majority of our assets consist of long-term, fixed-rate residential mortgage loans and mortgage-backed securities, which we have funded primarily with deposit inflows, cash balances at the Federal Reserve Bank, loan and security repayments, advances from the Federal Home Loan Bank, our capital, proceeds from securities sold under agreements to repurchase and proceeds from loan and security sales. In addition, there is little demand for adjustable-rate mortgage loans in the Hawaii market area. This has resulted in our being particularly vulnerable to increases in interest rates, as our interest-bearing liabilities mature or reprice more quickly than our interest-earning assets. We sold $2.0 million and $12.2 million of fixed-rate mortgage loans during the three months ended March 31, 2022 and 2021, respectively, to reduce our interest rate risk.
Our policies do not permit hedging activities, such as engaging in futures, options or swap transactions, or investing in high-risk mortgage derivatives, such as collateralized mortgage obligation residual interests, real estate mortgage investment conduit residual interests or stripped mortgage-backed securities.
Economic Value of Equity. We use an interest rate sensitivity analysis that computes changes in the economic value of equity (EVE) of our cash flows from assets, liabilities and off-balance sheet items in the event of a range of assumed changes in market interest rates. EVE represents the market value of portfolio equity and is equal to the present
36
value of assets minus the present value of liabilities, with adjustments made for off-balance sheet items. This analysis assesses the risk of loss in market-risk-sensitive instruments in the event of an instantaneous and sustained 100 to 400 basis point increase or a 100 basis point decrease in market interest rates with no effect given to any steps that we might take to counter the effect of that interest rate movement. A basis point equals one-hundredth of one percent, and 100 basis points equals one percent. An increase in interest rates from 3% to 4% would mean, for example, a 100 basis point increase in the “Change in Interest Rates” column below. Given the current relatively low level of market interest rates, an EVE calculation for an interest rate decrease of greater than 100 basis points has not been prepared.
The following table presents our internal calculations of the estimated changes in our EVE as of December 31, 2021 (the latest date for which we have available information) that would result from the designated instantaneous changes in the interest rate yield curve.
|
|
|
|
|
|
|
|
|
|
|
| Increase |
| |
|
|
|
|
|
|
|
|
|
|
|
| (Decrease) in |
| |
|
|
|
| Estimated |
|
|
| EVE Ratio as a |
| EVE Ratio as a |
| |||
Change in |
|
|
| Increase |
|
|
| Percent of |
| Percent of |
| |||
Interest Rates |
| Estimated EVE |
| (Decrease) in |
| Percentage |
| Present Value |
| Present Value of |
| |||
(bp) (1) |
| (2) |
| EVE |
| Change in EVE |
| of Assets (3)(4) |
| Assets (3)(4) |
| |||
(Dollars in thousands) |
| |||||||||||||
+400 | $ | 237,753 | $ | (104,640) |
| (30.56) | % | 13.79 | % | (2.02) | % | |||
+300 | $ | 277,065 | $ | (65,328) |
| (19.08) | % | 15.09 | % | (0.72) | % | |||
+200 | $ | 320,345 | $ | (22,048) |
| (6.44) | % | 16.35 | % | 0.54 | % | |||
+100 | $ | 346,651 | $ | 4,258 |
| 1.24 | % | 16.72 | % | 0.91 | % | |||
0 | $ | 342,393 | $ | — |
| — | % | 15.81 | % | — | % | |||
-100 | $ | 282,617 | $ | (59,776) |
| (17.46) | % | 12.77 | % | (3.04) | % |
(1) | Assumes an instantaneous uniform change in interest rates at all maturities. |
(2) | EVE is the difference between the present value of an institution’s assets and liabilities. |
(3) | Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets. |
(4) | EVE Ratio represents EVE divided by the present value of assets. |
Interest rates on Freddie Mac mortgage-backed securities have increased by 90 basis points between December 31, 2021 and March 31, 2022. The increase in mortgage interest rates has decreased the value of our interest-earning assets. The decrease in the value of our interest-earning assets has been offset by a decrease in the value of interest-bearing liabilities that occurred during the three months ended March 31, 2022 because of the increase in short-term interest rates.
Certain shortcomings are inherent in the methodologies used in determining interest rate risk through changes in EVE. Modeling changes in EVE requires making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the EVE table presented assumes that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the EVE table provides an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our EVE and net interest income and will differ from actual results.
ITEM 4. CONTROLS AND PROCEDURES
An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chairman of the Board, President and Chief Executive Officer and the Senior Vice President and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of March 31, 2022. Based on that evaluation, the Company’s management, including the Chairman of the Board, President and Chief
37
Executive Officer and the Senior Vice President and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective.
During the quarter ended March 31, 2022, there have been no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
38
PART II
ITEM 1. LEGAL PROCEEDINGS
The Company and its subsidiaries are subject to various legal actions that are considered ordinary, routine litigation incidental to the business of the Company. In the opinion of management, based on currently available information, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s results of operations, and no claim for money damages exceeds ten percent of the Company’s consolidated assets.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors as described in our Annual Report on Form 10-K for the period ended December 31, 2021 filed with the Securities and Exchange Commission.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(a) Not applicable.
(b) Not applicable.
(c) Stock Repurchases. The following table sets forth information in connection with repurchases of our shares of common stock during the three months ended March 31, 2022:
|
|
|
|
|
|
| Total Number of |
| Maximum Approximate |
| |
|
|
|
|
|
|
| Shares Purchased as |
| Dollar Value of Shares |
| |
|
| Total Number |
| Average Price |
| Part of Publicly |
| That May Yet be |
| ||
|
| of Shares |
| Paid per |
| Announced Plans or |
| Purchased Under the |
| ||
Period |
| Purchased (1) |
| Share |
| Programs |
| Plans or Programs (2) |
| ||
January 1, 2022 through January 31, 2022 |
| — | $ | — |
| — |
| $ | — | ||
February 1, 2022 through February 28, 2022 |
| 8,586 | 25.01 |
| 8,586 |
| 4,785,301 | ||||
March 1, 2022 through March 31, 2022 |
| 45,155 | 24.71 |
| 37,330 |
| 3,864,252 | ||||
Total |
| 53,741 | $ | 24.76 |
| 45,916 |
| $ | 3,864,252 |
______________________________________
(1) | Includes shares acquired by the Company to settle the payment of taxes in connection with restricted stock vesting. |
(2) | On February 2, 2022, the Company announced its eleventh repurchase program. Under this stock repurchase program, the Company is authorized to repurchase up to $5,000,000 of our common stock based on certain price assumptions. We have entered into a Rule 10b5-1 plan with respect to our stock repurchase program. |
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
The exhibits required by Item 601 of Regulation S-K are included with this Quarterly Report on Form 10-Q and are listed below.
39
INDEX TO EXHIBITS
Exhibit | ||
Number | Description | |
31.1 | ||
31.2 | ||
32 | ||
101 | The following materials from Territorial Bancorp Inc.’s Form 10-Q report for the quarter ended March 31, 2022, formatted in Inline XBRL pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income; (iii) Consolidated Statements of Comprehensive Income; (iv) Consolidated Statements of Stockholders’ Equity (v) Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements. | |
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Cover Page Interactive Data File (formatted as inline XBRL document and contained in Exhibit 101) |
40
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
TERRITORIAL BANCORP INC. | |
(Registrant) | |
Date: May 13, 2022 | /s/ Allan S. Kitagawa |
Allan S. Kitagawa | |
Chairman of the Board, President and | |
Chief Executive Officer | |
Date: May 13, 2022 | /s/ Melvin M. Miyamoto |
Melvin M. Miyamoto | |
Senior Vice President and Chief Financial Officer |
41