Territorial Bancorp Inc. reported a net loss of $1.3 million for the three months ended September 30, 2024, a significant decline from a net income of $880,000 in the same period of 2023. For the nine months ended September 30, 2024, the company recorded a net loss of $2.6 million, compared to a net income of $4.7 million for the same period in the previous year. This downturn is attributed to a decrease in net interest income, which fell by $2.6 million (25.4%) to $7.5 million for the third quarter, and by $8.7 million (26.3%) to $24.5 million for the nine-month period.

Interest income increased by 5.3% to $18.3 million for the third quarter, driven by a rise in interest income on loans and other investments. However, interest expense surged by 47.3% to $10.8 million, primarily due to higher rates on interest-bearing deposits, which increased by 70.9% to $22.7 million for the nine months. The average rate paid on certificates of deposit rose to 4.30% from 3.34% year-over-year.

Total assets decreased by $38.2 million (1.7%) to $2.2 billion as of September 30, 2024, with total loans declining by $20.8 million (1.6%) to $1.3 billion. Cash and cash equivalents increased by $16.5 million (13.0%) to $143.1 million, while total deposits rose by $33.7 million (2.1%) to $1.7 billion, largely due to a $114.7 million increase in certificates of deposit.

The company’s total stockholders’ equity decreased by $2.3 million (0.9%) to $248.7 million, primarily due to the net loss incurred during the year. The provision for credit losses for the nine months ended September 30, 2024, was $22,000, contrasting with a reversal of $147,000 in the same period of 2023, reflecting an increase in the consumer loan portfolio and a decrease in forecasted prepayments.

Strategically, Territorial Bancorp announced a merger agreement with Hope Bancorp, Inc., which is expected to be a tax-free reorganization for shareholders, valuing the transaction at approximately $78.6 million. The merger is subject to regulatory approvals and customary closing conditions. Additionally, the company dissolved its subsidiary, Territorial Financial Services, Inc., during the nine months ended September 30, 2024.

As of September 30, 2024, the company maintained a well-capitalized status under regulatory guidelines, with Tier 1 Leverage Capital ratios exceeding required thresholds.