Financial Performance - The Company reported a net loss of $775,000, or $(0.09) per diluted share, for the three months ended June 30, 2024[21]. - The company reported a net loss of $775,000 for the three months ended June 30, 2024, compared to a net income of $1.50 million for the same period in 2023[34]. - Basic loss earnings per share were $(0.09) for the three months ended June 30, 2024, compared to earnings of $0.17 for the same period in 2023[34]. - The efficiency ratio increased to 112.20% for the three months ended June 30, 2024, compared to 80.72% for the same period in 2023[34]. Interest Income and Expenses - Total interest income increased by $801,000 to $18.09 million for the three months ended June 30, 2024, compared to $17.29 million for the same period in 2023[5]. - Net interest income decreased by $2.85 million for the three months ended June 30, 2024, compared to the same period in 2023[5]. - Net interest income decreased to $8.24 million for the three months ended June 30, 2024, compared to $11.09 million for the same period in 2023[34]. - Interest income from loans increased to $12.25 million for the three months ended June 30, 2024, from $11.70 million in the same period of 2023[34]. Asset and Deposit Changes - Total deposits decreased by $63.85 million from $1.64 billion at December 31, 2023, to $1.57 billion at June 30, 2024[8]. - Total assets decreased to $2.17 billion as of June 30, 2024, from $2.24 billion at December 31, 2023[27]. - Cash and cash equivalents decreased by $43.88 million to $82.78 million at June 30, 2024, from $126.66 million at December 31, 2023[27]. Non-Performing Assets and Credit Losses - Non-performing assets totaled $1.23 million at June 30, 2024, down from $2.26 million at December 31, 2023, with a non-performing assets to total assets ratio of 0.06%[9]. - The Company had $87,000 in delinquent mortgage loans 90 days or more past due at June 30, 2024, compared to $227,000 at December 31, 2023[9]. - The allowance for credit losses was $5.12 million at June 30, 2024, representing 0.39% of total loans[9]. Capital Ratios - The Company’s tier one leverage and risk-based capital ratios were 11.62% and 28.98%, respectively, as of June 30, 2024[1]. Merger Agreement - A definitive merger agreement was signed with Hope Bancorp, Inc., valued at approximately $78.6 million, with a fixed exchange ratio of 0.8048 shares of Hope Bancorp common stock for each share of the Company[3]. - The company intends to maintain the Territorial franchise in Hawaii following the merger agreement with Hope Bancorp[22]. Dividends - The Company declared a dividend of $0.01 per share, expected to be paid on August 23, 2024[2]. Noninterest Expenses - Noninterest expense increased by $474,000 for the three months ended June 30, 2024, primarily due to a $690,000 rise in general and administrative expenses[25]. Tax Rate - The effective tax rate for the three months ended June 30, 2024, was (26.89)%, compared to 27.33% for the same period in 2023[26].

Core Insights - Cytek Biosciences, Inc. has received NMPA approval for its 1-laser and 2-laser 6-color TBNK reagent cocktails for clinical diagnostic use in China, marking a significant milestone for the company [1][3] Group 1: Product Approval and Market Impact - The approved TBNK reagents are designed for clinical diagnostics, enabling the identification and quantification of key lymphocyte subsets, which are crucial for assessing immune system status [2][3] - This approval enhances Cytek's market presence in China and opens new opportunities while strengthening its competitive advantage [3] Group 2: Technology and Performance - The TBNK assay is validated on the Cytek Northern Lights-Clinical (NL-CLC) cell analysis systems, ensuring optimal performance in a multicolor environment [3] - The use of an on-board volumetric meter for absolute cell counts reduces testing costs compared to traditional bead counting methods [3] Group 3: Company Overview - Cytek Biosciences is a leading cell analysis solutions company that utilizes its patented Full Spectrum Profiling™ (FSP™) technology to deliver high-resolution and high-sensitivity cell analysis [4] - The company's product suite includes core instruments like the Cytek Aurora™ and Northern Lights™ systems, as well as various reagents and software solutions [4]

Financial Position - Total assets decreased by $43.6 million, or 2.0%, to $2.2 billion as of March 31, 2024, primarily due to a decrease in cash and cash equivalents [133]. - Cash and cash equivalents were $90.1 million, a decrease of $36.6 million, or 28.9%, since December 31, 2023, mainly due to a drop in deposits [134]. - Total loans increased by $1.1 million, or 0.1%, to $1.3 billion, representing 59.5% of total assets [135]. - Total investment securities decreased by $8.8 million, or 1.3%, to $697.1 million, accounting for 31.8% of total assets [136]. - Deposits decreased by $36.5 million, or 2.2%, to $1.6 billion, primarily due to customers seeking higher interest rates [137]. - Total stockholders' equity was $250.0 million, a decrease of $1.1 million, or 0.4%, from December 31, 2023, attributed to net loss and unrealized losses on securities [139]. - Nonperforming assets totaled $2.2 million, or 0.10% of total assets, consistent with the previous quarter [126]. Credit and Loan Performance - Credit loss provisions recorded were $19,000 for the three months ended March 31, 2024, compared to a reversal of $100,000 in the same period of 2023 [126]. - Nonaccrual loans totaled $2.2 million at March 31, 2024, or 0.17% of total loans, compared to $2.4 million, or 0.18%, at March 31, 2023 [150]. - The company originated $19.2 million in loans during the three months ended March 31, 2024, compared to $21.2 million in the same period of 2023 [162]. Income and Expenses - The company reported a net loss of $482,000 for the three months ended March 31, 2024, a decrease of $2.8 million, or 120.8%, compared to a net income of $2.3 million for the same period in 2023 [144]. - Net interest income decreased by $3.3 million, or 27.5%, to $8.8 million for the three months ended March 31, 2024, from $12.1 million for the same period in 2023 [145]. - Interest expense increased by $4.6 million, or 99.4%, to $9.2 million for the three months ended March 31, 2024, primarily due to a 98 basis point increase in the cost of average interest-bearing liabilities [147]. - Interest income increased by $1.3 million, or 7.6%, to $18.0 million for the three months ended March 31, 2024, driven by a 20 basis point increase in the yield on average interest-earning assets [146]. - The net interest rate spread and net interest margin were 1.38% and 1.65%, respectively, for the three months ended March 31, 2024, compared to 2.16% and 2.30% for the same period in 2023 [145]. - The company experienced a decrease in service and other fees by $37,000, or 11.9%, to $273,000 for the three months ended March 31, 2024 [152]. - Noninterest expense increased by $447,000, or 4.6%, to $10,060,000 for the three months ended March 31, 2024, compared to $9,613,000 for the same period in 2023 [153]. - Salaries and employee benefits decreased by $442,000, or 8.2%, to $4,962,000, primarily due to a reduction in compensation expenses [153]. - Federal deposit insurance premiums increased by $251,000, or 102.4%, to $496,000, attributed to a rise in the FDIC premium rate retroactive to October 1, 2023 [153]. Regulatory and Capital Position - As of March 31, 2024, Territorial Savings Bank exceeded all regulatory capital requirements and is considered "well capitalized" under regulatory guidelines [165]. - Cash and cash equivalents totaled $90.1 million as of March 31, 2024, with additional borrowing capacity of $613.1 million from the FHLB and $163.5 million from the FRB [158]. - Estimated uninsured deposits were $404.2 million, or 25.3% of total deposits, as of March 31, 2024, down from $419.4 million, or 25.6%, as of December 31, 2023 [160]. Interest Rate Risk and Economic Value of Equity - As of December 31, 2023, the estimated EVE (Economic Value of Equity) is $215,097,000, with a ratio of 11.11% of the present value of assets [180]. - A 400 basis point increase in interest rates would result in a decrease in EVE by $204,587,000, representing a 95.11% change [180]. - The value of interest-earning assets has decreased due to a 21 basis point increase in mortgage interest rates between December 31, 2023, and March 31, 2024 [181]. - The EVE ratio is expected to decrease significantly with rising interest rates, with a 300 basis point increase leading to a 73.92% decrease in EVE [180]. - The EVE table indicates that a 100 basis point decrease in interest rates would increase EVE by $51,773,000, a 24.07% change [180]. - The present value of assets is calculated based on the discounted cash flows from interest-earning assets, which are sensitive to interest rate changes [181]. - The methodologies used to determine interest rate risk through EVE changes have inherent shortcomings, as they rely on certain assumptions [182]. - The EVE table assumes a constant composition of interest-sensitive assets and liabilities over the measured period [182]. - The actual impact of interest rate changes on EVE and net interest income may differ from the estimates provided in the EVE table [182]. - The company acknowledges that the EVE measurements are not intended to provide precise forecasts of market interest rate effects [182].

Financial Performance - Territorial Bancorp Inc. reported a net loss of $482,000, or $(0.06) per diluted share, for Q1 2024[1] - The net loss for the three months ended March 31, 2024, was $482,000, compared to a net income of $2,316,000 in the same period of 2023[21] - Return on average assets was -0.09% for Q1 2024, a decline from 0.43% in Q1 2023[25] - The efficiency ratio for the quarter was 107.55%, significantly higher than 75.81% in the previous year[25] Income and Expenses - Total interest income increased by $1.27 million to $17.99 million in Q1 2024, driven by an $886,000 increase in interest earned on other investments and a $611,000 increase in interest earned on loans[5] - Total interest income for the three months ended March 31, 2024, was $17,991,000, an increase of 7.6% from $16,721,000 in the same period of 2023[21] - Net interest income after provision for credit losses decreased to $8,742,000, down 28.5% from $12,191,000 year-over-year[21] - Total noninterest income remained relatively stable at $593,000 compared to $589,000 in the prior year[21] - Total interest expense rose by $4.60 million in Q1 2024, primarily due to a $3.25 million increase in interest expense on deposits[6] - Noninterest expense increased by $447,000 in Q1 2024, mainly due to higher FDIC premiums and legal expenses[7] - Total noninterest expense increased to $10,060,000, up 4.6% from $9,613,000 in the same period last year[21] Assets and Deposits - Total assets decreased from $2.24 billion at December 31, 2023, to $2.19 billion at March 31, 2024[9] - Total assets decreased to $2,193,029,000 from $2,236,672,000 at the end of 2023[23] - Deposits decreased by $36.46 million from $1.64 billion at December 31, 2023, to $1.60 billion at March 31, 2024[10] - Deposits decreased to $1,600,148,000 from $1,636,604,000 at the end of 2023[23] Tax and Valuation - The effective tax rate for Q1 2024 was (33.52)%, compared to 26.87% in Q1 2023, with an income tax benefit of $243,000[8] - Book value per share slightly decreased to $28.33 from $28.45 at the end of 2023[25] Merger Agreement - The merger agreement with Hope Bancorp is valued at approximately $78.6 million, with a fixed exchange ratio of 0.8048 shares of Hope Bancorp common stock for each share of Territorial common stock[2] Liquidity - The Company maintained a strong liquidity position with $90 million in cash balances and total liquidity access of $901.70 million as of March 31, 2024[4] Asset Quality - The ratio of non-performing assets to total assets remained stable at 0.10% as of March 31, 2024[11]

Economic Conditions and Risks - As of December 31, 2023, the economic value of equity would decrease by $114.0 million with a 200 basis point increase in market interest rates[122]. - Inflation risks have led to increased benchmark interest rates by the Federal Reserve, impacting the value of investment securities[130]. - Economic downturns could lead to increased loan delinquencies and non-performing assets, adversely affecting financial performance[132]. - The concentration of loans in Hawaii increases risk, as nearly all loans are to customers in the state, making economic conditions there critical for loan repayment and origination[149]. - The defense industry accounts for approximately 8.9% of Hawaii's GDP, and reductions in federal defense spending could adversely impact the state's economy and the company's financial condition[162]. - A protracted government shutdown could reduce loan originations and related gains on sale, negatively affecting financial condition[136]. - The ongoing COVID-19 pandemic continues to pose risks to the company's financial condition and operational results, with uncertain future impacts[180][181]. - Climate change poses long-term risks, including rising sea levels and increased costs for borrowers, potentially affecting loan originations[183]. - Severe weather and natural disasters could significantly disrupt operations and impact the stability of the deposit base[184]. - Contaminated water sources on Oahu may adversely affect the company's operations and lead to reduced loan originations in the construction sector[185]. Financial Performance and Capital Requirements - The allowance for credit losses was 0.39% of total loans at December 31, 2023, with potential material additions that could decrease net income[146]. - The company met all capital requirements, including a common equity Tier 1 capital ratio of 7.0% as of December 31, 2023, which includes a 2.5% capital conservation buffer[161]. - The company is subject to minimum capital requirements, including a total capital ratio of 10.5%, which could limit dividend payments and share repurchases if capital levels fall below required thresholds[160]. - The board of directors has discretion over dividend payments, which may be reduced or eliminated based on capital requirements and regulatory considerations[178][179]. - The Federal Reserve Board may require capital injections into the subsidiary bank, which could strain the company's financial resources[154]. Regulatory and Compliance Challenges - Five banks failed in 2023, leading to increased scrutiny on liquidity and capital levels in the banking sector[134]. - Regulatory compliance costs may increase due to new laws and regulations, potentially affecting operations and profitability[159]. - Increased scrutiny on compliance with anti-money laundering regulations may lead to higher operating costs and potential legal liabilities[153]. Competition and Market Position - The company faces intense competition in the financial services industry, which may limit growth and profitability[189]. - The company may face challenges in competing due to its smaller asset size, limiting its ability to invest in marketing and technology[177]. - Expanding market share through new branches may increase expenses faster than revenues, negatively impacting earnings[190]. - The company must adapt its retail delivery model to changing consumer preferences to avoid negative impacts on earnings[191]. Operational Risks - The foreclosure process is protracted, which may adversely impact recoveries on non-performing loans and collateral values[163]. - The company faces risks related to cyber fraud and other financial crimes, which could result in financial losses and regulatory sanctions[171]. - The reliance on external funding sources may pose challenges for future growth if access to these sources becomes constrained[174]. - Visitor arrivals in Hawaii increased by 4.4% in 2023 compared to 2022, with total visitor spending rising by 5.5%[133].

Financial Position - Total assets increased by $41.6 million, or 1.9%, to $2.2 billion at September 30, 2023[139] - Cash and cash equivalents rose to $89.1 million, an increase of $48.6 million, or 119.8%, since December 31, 2022[140] - Total loans were $1.3 billion at September 30, 2023, representing 59.1% of total assets, with a $11.7 million increase, or 0.9%[141] - Deposits decreased by $65.1 million, or 3.8%, to $1.7 billion, primarily due to a $146.4 million decrease in passbook savings accounts[144] - Total borrowings increased by $115.0 million, or 76.2%, to $266.0 million, used to enhance liquidity and fund the decrease in deposits[146] - Total stockholders' equity decreased by $7.8 million, or 3.0%, to $248.8 million at September 30, 2023[147] Income and Expenses - Net income decreased by $3.0 million, or 77.4%, to $880,000 for the three months ended September 30, 2023, compared to $3.9 million for the same period in 2022[154] - Net interest income decreased by $4.3 million, or 30.0%, to $10.0 million for the three months ended September 30, 2023, from $14.3 million for the same period in 2022[155] - Interest expense increased by $5.5 million, or 306.1%, due to a 120 basis point increase in the cost of average interest-bearing liabilities[155] - Interest income increased by $1.2 million, or 7.6%, to $17.4 million for the three months ended September 30, 2023, from $16.2 million for the same period in 2022[156] - Noninterest income decreased by $26,000 for the three months ended September 30, 2023, compared to the same period in 2022, primarily due to a decrease in broker fee income[161] - Net income decreased by $8.0 million, or 63.1%, to $4.7 million for the nine months ended September 30, 2023, from $12.7 million for the same period in 2022[165] - Net interest income decreased by $9.0 million, or 21.3%, to $33.2 million for the nine months ended September 30, 2023, from $42.2 million for the same period in 2022[166] - Noninterest income decreased by $1.2 million to $1.868 million for the nine months ended September 30, 2023, a decline of 38.5% compared to $3.039 million in the same period of 2022[173] Interest Rates and Risk Management - The net interest rate spread decreased to 1.69% for the three months ended September 30, 2023, compared to 2.69% for the same period in 2022[155] - The net interest margin decreased to 1.90% for the three months ended September 30, 2023, compared to 2.75% for the same period in 2022[155] - The company has a significant exposure to interest rate risk due to its majority assets being long-term, fixed-rate residential mortgage loans and mortgage-backed securities[198] - The Economic Value of Equity (EVE) analysis indicates that a 400 basis point increase in interest rates could lead to a decrease in EVE by $196.911 million, representing a 125.33% decline[203] - Interest rates on Freddie Mac mortgage-backed securities increased by 41 basis points from June 30, 2023, to September 30, 2023, negatively impacting the value of interest-earning assets[204] - The company does not engage in hedging activities or invest in high-risk mortgage derivatives, which limits its risk management strategies[199] - The company’s interest-bearing liabilities mature or reprice more quickly than its interest-earning assets, increasing vulnerability to rising interest rates[198] Loan and Deposit Activity - The company originated $83.0 million in loans during the nine months ended September 30, 2023, compared to $127.4 million in the same period of 2022[185] - Deposits decreased by $65.1 million for the nine months ended September 30, 2023, following an increase of $30.0 million in the same period of 2022[186] - The company had $6.1 million in loan commitments outstanding for fixed-rate loans and $14.8 million in unused lines of credit as of September 30, 2023[184] Regulatory and Capital Position - Territorial Savings Bank exceeded all fully phased-in regulatory capital requirements and is considered "well capitalized" as of September 30, 2023[188] - The provision for credit/loan losses resulted in ratios of the allowance for credit/loan losses to total loans of 0.38% and 0.16% at September 30, 2023, and 2022, respectively[171] Other Financial Metrics - Interest income on other interest-earning assets increased by $678,000, or 181.8%, to $1.1 million for the three months ended September 30, 2023[156] - Interest income on loans increased by $510,000, or 4.5%, to $11.9 million for the three months ended September 30, 2023[156] - The average balance of interest-earning assets increased by $25.0 million for the three months ended September 30, 2023[155] - The average balance of interest-bearing liabilities increased by $28.4 million for the three months ended September 30, 2023[155] - Interest expense on interest-bearing deposits increased by $10.7 million, or 414.6%, to $13.3 million for the nine months ended September 30, 2023, from $2.6 million for the same period in 2022[168] - The average rate paid on certificates of deposit increased to 3.34% for the nine months ended September 30, 2023, from 0.96% for the same period in 2022[168] - Interest expense on FHLB advances rose by $3.2 million, or 208.7%, to $4.8 million for the nine months ended September 30, 2023, from $1.5 million for the same period in 2022[170] - Salaries and employee benefits decreased by $795,000 to $15.723 million, a reduction of 4.8% compared to $16.518 million for the nine months ended September 30, 2022[175] - Total noninterest expense decreased by $121,000 to $28.790 million, a decline of 0.4% compared to $28.911 million for the same period in 2022[176] - Income tax expense was $1.7 million for the nine months ended September 30, 2023, with an effective tax rate of 27.1%, down from $4.2 million and 25.0% in the prior year[177]

Financial Position - Total assets increased by $49.6 million, or 2.3%, to $2.2 billion at June 30, 2023[138]. - Cash and cash equivalents rose to $87.7 million, an increase of $47.1 million, or 116.2%, since December 31, 2022[139]. - Total loans were $1.3 billion at June 30, 2023, representing 58.8% of total assets, with a $10.4 million, or 0.8%, increase during the six months ended June 30, 2023[140]. - Total liabilities rose to $1,959,783 thousand as of June 30, 2023, compared to $1,901,839 thousand in the previous year[155]. - Stockholders' equity decreased by $5.9 million, or 2.3%, to $250.6 million at June 30, 2023, primarily due to dividends declared and shares repurchased[145]. Deposits and Borrowings - Deposits decreased by $70.4 million, or 4.1%, to $1.6 billion since December 31, 2022, primarily due to a $119.5 million decrease in passbook savings accounts[143]. - Total borrowings increased by $125.0 million, or 82.8%, to $276.0 million at June 30, 2023, used to enhance liquidity and fund the decrease in deposits[144]. - The company obtained $125.0 million of advances from the Federal Home Loan Bank to enhance liquidity during the six months ended June 30, 2023[128]. - The company has seen an increase of $64.1 million in certificates of deposit between December 31, 2022, and June 30, 2023[198]. Income and Expenses - Net income decreased by $2.6 million, or 63.6%, to $1.5 million for the three months ended June 30, 2023, compared to $4.1 million for the same period in 2022[155]. - Net income decreased by $5.0 million, or 56.8%, to $3.8 million for the six months ended June 30, 2023, from $8.8 million for the same period in 2022[168]. - Net interest income fell by $3.0 million, or 21.2%, to $11.1 million for the three months ended June 30, 2023, from $14.1 million in the prior year[156]. - Noninterest income decreased by $81,000 for the three months ended June 30, 2023, compared to the same period in 2022[163]. - Noninterest income decreased by $1.1 million to $1,279,000 for the six months ended June 30, 2023, a decline of 47.2% compared to $2,424,000 in 2022[176]. - Total noninterest expense slightly decreased by $19,000 to $19,123,000 for the six months ended June 30, 2023, reflecting a 0.1% reduction from $19,142,000 in 2022[178]. Interest Income and Expense - Interest income increased by $1.9 million, or 12.5%, due to a 29 basis point rise in the yield on average interest-earning assets and a $56.1 million increase in the average balance of interest-earning assets[156]. - Interest income increased by $1.9 million, or 12.5%, to $17.3 million for the three months ended June 30, 2023, compared to $15.4 million for the same period in 2022[157]. - Interest expense surged by $4.9 million, or 376.6%, driven by a 106 basis point increase in the cost of average interest-bearing liabilities and a $55.3 million rise in the average balance of interest-bearing liabilities[156]. - Interest expense rose by $4.9 million, or 376.6%, to $6.2 million for the three months ended June 30, 2023, from $1.3 million for the same period in 2022[158]. - Interest expense on interest-bearing deposits increased by $6.5 million, or 488.2%, to $7.9 million for the six months ended June 30, 2023, from $1.3 million for the same period in 2022[171]. Credit Loss Provisions - The company recorded a credit loss provision of $112,000 under ASC 326 during the six months ended June 30, 2023[131]. - The provision for credit losses was $212,000 for the three months ended June 30, 2023, compared to a reversal of $326,000 for the same period in 2022[161]. - Credit loss provisions increased to $112,000 for the six months ended June 30, 2023, compared to a reversal of $494,000 in the same period of 2022, resulting in allowance ratios of 0.40% and 0.17% respectively[174]. - The company experienced a $538,000 increase in credit/loan loss provisions, contributing to the decline in net income[155]. - Nonaccrual loans totaled $2.3 million at June 30, 2023, or 0.18% of total loans, down from $4.0 million, or 0.31% of total loans, at June 30, 2022[161]. Interest Rate Risk Management - The company does not engage in hedging activities or invest in high-risk mortgage derivatives, maintaining a conservative risk management approach[201]. - The company’s interest rate risk is primarily due to the majority of its assets being long-term, fixed-rate residential mortgage loans[200]. - The Board of Directors has established an Asset/Liability Management Committee to manage interest rate risk in alignment with business strategy and performance objectives[199]. - The economic value of equity (EVE) decreased by $144,635 thousand with a 400 basis point increase in interest rates, reflecting a 59.56% decrease in EVE ratio as a percent of present value of assets[205]. - The EVE ratio as a percent of present value of assets was 12.60% at a 0 basis point change in interest rates[205]. - The company’s interest-bearing liabilities mature or reprice more quickly than its interest-earning assets, increasing vulnerability to interest rate hikes[200]. - Interest rates on Freddie Mac mortgage-backed securities increased by 33 basis points between March 31, 2023, and June 30, 2023, negatively impacting the value of interest-earning assets[206]. - The EVE analysis assumes a uniform change in interest rates across all maturities, which may not accurately reflect actual market conditions[207]. Regulatory Capital - Territorial Savings Bank exceeded all regulatory capital requirements and is considered "well capitalized" as of June 30, 2023[190]. - The total risk-based capital ratio for Territorial Savings Bank was 26.62% as of June 30, 2023, significantly above the required 12.50%[192]. Loan Activity - Loan commitments outstanding for fixed-rate loans were $2.0 million, with $13.8 million in unused lines of credit as of June 30, 2023[186]. - Loans originated during the six months ended June 30, 2023, amounted to $55.5 million, a decrease from $97.7 million in the same period of 2022[187]. - Deposits decreased by $70.4 million for the six months ended June 30, 2023, compared to an increase of $47.8 million in 2022[188].

Financial Position - Total assets increased by $43.2 million, or 2.0%, to $2.2 billion at March 31, 2023[131] - Cash and cash equivalents rose to $84.9 million, an increase of $44.3 million, or 109.3%, since December 31, 2022[132] - Total loans were $1.3 billion at March 31, 2023, representing 58.4% of total assets, with a decrease of $3.5 million, or 0.3%[133] - Deposits decreased by $54.2 million, or 3.2%, to $1.7 billion, primarily due to a $71.4 million decrease in passbook savings[136] - Total borrowings increased by $105.0 million, or 69.5%, to $256.0 million at March 31, 2023[137] - Total stockholders' equity decreased by $2.8 million, or 1.1%, to $253.8 million at March 31, 2023[138] - Nonperforming assets totaled $2.4 million, or 0.11% of total assets, consistent with the previous quarter[124] - The investment securities portfolio decreased by $1.9 million, or 0.3%, to $736.7 million at March 31, 2023[134] - Federal Home Loan Bank advances increased by $105.0 million to $246.0 million during the three months ended March 31, 2023[125] Income and Expenses - Net income decreased by $2.4 million, or 50.8%, to $2.3 million for the three months ended March 31, 2023, compared to $4.7 million for the same period in 2022[145] - Net interest income decreased by $1.7 million, or 12.4%, to $12.1 million for the three months ended March 31, 2023, from $13.8 million for the same period in 2022[146] - Interest expense increased by $3.5 million, or 301.9%, to $4.6 million for the three months ended March 31, 2023, due to a 76 basis point increase in the cost of average interest-bearing liabilities[148] - Interest income increased by $1.8 million, or 11.8%, to $16.7 million for the three months ended March 31, 2023, from $15.0 million for the same period in 2022[147] - Noninterest income decreased by $1.0 million, or 64.4%, to $589,000 for the three months ended March 31, 2023, compared to $1.7 million for the same period in 2022[152] - Noninterest expense increased by $15,000 for the three months ended March 31, 2023, compared to the same period in 2022[155] - Income tax expense was $851,000 for the three months ended March 31, 2023, reflecting an effective tax rate of 26.9%, compared to $1.3 million and 21.9% in the same period of 2022[156] Loan and Credit Quality - The company recorded reversals of credit loss provisions of $100,000 during the three months ended March 31, 2023[124] - The provision for credit losses recorded a reversal of $100,000 for the three months ended March 31, 2023, compared to a reversal of $168,000 for the same period in 2022[150] - Nonaccrual loans totaled $2.4 million at March 31, 2023, or 0.18% of total loans, down from $3.2 million, or 0.25%, at March 31, 2022[150] Capital and Regulatory Compliance - As of March 31, 2023, Territorial Savings Bank exceeded all fully phased-in regulatory capital requirements and is considered "well capitalized" under regulatory guidelines[165] - The total risk-based capital ratio for Territorial Savings Bank was 26.53% as of March 31, 2023, exceeding the required 12.50%[167] Interest Rate Sensitivity - Estimated EVE decreased by $176,982 thousand (67.90%) with a +400 basis point change in interest rates[180] - Estimated EVE decreased by $141,177 thousand (54.17%) with a +300 basis point change in interest rates[180] - Estimated EVE decreased by $96,494 thousand (37.02%) with a +200 basis point change in interest rates[180] - Estimated EVE decreased by $48,887 thousand (18.76%) with a +100 basis point change in interest rates[180] - Estimated EVE at $260,635 thousand with no change in interest rates[180] - Estimated EVE increased by $43,724 thousand (16.78%) with a -100 basis point change in interest rates[180] - Estimated EVE increased by $75,682 thousand (29.04%) with a -200 basis point change in interest rates[180] - Interest rates on Freddie Mac mortgage-backed securities decreased by 25 basis points from December 31, 2022, to March 31, 2023[182] - The decrease in mortgage interest rates is not expected to significantly affect estimated EVE[182] - EVE modeling assumes constant composition of interest-sensitive assets and liabilities over the measurement period[183] Loan Origination and Securities - During the three months ended March 31, 2023, the company originated $21.2 million in loans and purchased securities with a face value of $6.8 million[162] - Certificates of deposit due within one year totaled $387.1 million, representing 23.3% of total deposits as of March 31, 2023[161] - The company experienced net decreases in deposits of $54.2 million for the three months ended March 31, 2023, compared to a decrease of $6.3 million in the same period of 2022[163] Hedging Activities - The company does not permit hedging activities, such as engaging in futures, options, or swap transactions[176]

Part I [Item 1. Business](index=4&type=section&id=ITEM%201.%20Business) Territorial Bancorp Inc. is a Hawaii-based bank holding company focused on residential mortgage lending - Territorial Bancorp Inc. is the holding company for Territorial Savings Bank, which provides financial services through **29 offices in Hawaii**[13](index=13&type=chunk)[15](index=15&type=chunk) - The Bank's main activities are accepting deposits and originating **one- to four-family residential mortgage loans** and investing in securities[20](index=20&type=chunk) - The company is regulated by the Hawaii Division of Financial Institutions and the **Federal Reserve Board**[75](index=75&type=chunk)[77](index=77&type=chunk) Consolidated Financial Position as of December 31, 2022 | Metric | Value (in billions) | | :--- | :--- | | Consolidated Assets | $2.2 | | Consolidated Deposits | $1.7 | | Consolidated Stockholders' Equity | $0.257 | [Market Area and Competition](index=5&type=section&id=Market%20Area%20and%20Competition) The company operates exclusively in Hawaii, facing intense competition in a tourism-dependent economy - The company conducts business from **29 full-service branch offices** throughout the State of Hawaii[21](index=21&type=chunk) - Hawaii's economy is primarily driven by the visitor industry and federal spending, with visitor spending in 2022 of **$19.3 billion**, up 8.9% from 2019[23](index=23&type=chunk) - The company faces intense competition and ranked fifth in FDIC-insured deposit market share in Hawaii with a **2.9% market share** as of June 30, 2022[29](index=29&type=chunk)[30](index=30&type=chunk) [Lending Activities](index=6&type=section&id=Lending%20Activities) The company's lending is dominated by one- to four-family residential mortgages, comprising 96.5% of the portfolio Loan Portfolio Composition (December 31, 2022) | Loan Type | Amount (billions) | Percentage of Total | | :--- | :--- | :--- | | One- to Four-Family Residential | $1.3 | 96.5% | | Nonresidential Real Estate | $0.0239 | 1.8% | - The company sold **$5.4 million** in residential mortgage loans in 2022, a significant decrease from the $36.2 million sold in 2021[43](index=43&type=chunk) - Loan approval authority is delegated to designated officers for amounts up to **$5.0 million**, with larger relationships requiring Loan Committee approval[46](index=46&type=chunk) [Investments and Sources of Funds](index=9&type=section&id=Investments%20and%20Sources%20of%20Funds) The company primarily invests in government-backed securities, funded mainly by customer deposits - The investment portfolio consists mainly of mortgage-backed securities issued by Fannie Mae, Freddie Mac, or Ginnie Mae, with a carrying value of **$738.6 million** at year-end 2022[53](index=53&type=chunk) - Deposits are the primary source of funds, totaling **$1.7 billion** (89.7% of total liabilities) at December 31, 2022[57](index=57&type=chunk) - Borrowings at year-end 2022 included **$141.0 million in FHLB advances** and $10.0 million in securities sold under agreements to repurchase[59](index=59&type=chunk) [Item 1A. Risk Factors](index=18&type=section&id=ITEM%201A.%20Risk%20Factors) The company faces significant risks from interest rates, economic dependency, regulatory changes, and cybersecurity - The company is vulnerable to rising interest rates, as a 200 basis point rate increase is estimated to decrease the economic value of equity by **$96.5 million**[115](index=115&type=chunk)[120](index=120&type=chunk) - Economic risks are significant due to reliance on Hawaii's local economy, which is heavily dependent on the **tourism industry**[123](index=123&type=chunk)[128](index=128&type=chunk) - The adoption of the **Current Expected Credit Loss (CECL)** accounting standard is expected to require an increase in the allowance for loan losses[140](index=140&type=chunk) - Operational risks include system failures, **cybersecurity threats** like ransomware, and potential breaches of network security[159](index=159&type=chunk) - Long-term environmental risks for Hawaii, such as **rising sea levels** and severe weather, could negatively impact collateral values and loan originations[170](index=170&type=chunk)[171](index=171&type=chunk) [Item 2. Properties](index=30&type=section&id=ITEM%202.%20Properties) The company operates a corporate office and 29 branches in Hawaii with a net book value of $7.6 million - The company has **29 full-service branches** in Hawaii, with 23 on the island of Oahu[187](index=187&type=chunk) - The net book value of premises, land, and equipment was **$7.6 million** at December 31, 2022[187](index=187&type=chunk) [Item 3. Legal Proceedings](index=30&type=section&id=ITEM%203.%20Legal%20Proceedings) The company reports no material legal proceedings as of year-end 2022 - The company reports **no material legal proceedings** as of December 31, 2022[188](index=188&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=31&type=section&id=ITEM%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on NASDAQ, and a new $5 million share repurchase program was authorized - The company's common stock is traded on the NASDAQ under the symbol **'TBNK'**, with 1,005 holders of record as of February 28, 2023[192](index=192&type=chunk) - On December 5, 2022, a new share repurchase program was authorized, allowing for the repurchase of up to **$5.0 million** of outstanding shares[193](index=193&type=chunk) Stock Repurchases for Q4 2022 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Oct 2022 | — | — | | Nov 2022 | — | — | | Dec 2022 | 42,592 | $22.87 | | **Total** | **42,592** | **$22.87** | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=ITEM%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net income decreased to $16.2 million in 2022 due to lower noninterest income despite asset growth - The decrease in net income was primarily due to a **$2.3 million decrease in noninterest income**, a $1.0 million smaller reversal of loan loss provisions, and a $500,000 increase in noninterest expense[250](index=250&type=chunk) - Total assets increased by $39.0 million (1.8%) to **$2.2 billion**, mainly from a $102.2 million increase in investment securities, offset by a $59.3 million decrease in cash[217](index=217&type=chunk) Key Performance Metrics (2022 vs 2021) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net Income | $16.2 million | $17.4 million | | Diluted EPS | $1.80 | $1.91 | | Net Interest Income | $55.5 million | $54.0 million | | Nonperforming Assets to Total Assets | 0.11% | 0.15% | [Financial Condition Analysis](index=36&type=section&id=Financial%20Condition%20Analysis) Total assets grew to $2.2 billion, driven by deposit growth and an increased investment portfolio - The growth in deposits was driven by a **$204.6 million increase in certificates of deposit**, partially offset by a $174.6 million decrease in savings accounts[235](index=235&type=chunk) Balance Sheet Highlights (December 31, 2022 vs 2021) | Account | 2022 (in millions) | 2021 (in millions) | Change | | :--- | :--- | :--- | :--- | | Total Assets | $2,169.6 | $2,130.6 | +1.8% | | Loans Receivable, net | $1,294.8 | $1,302.8 | -0.6% | | Total Investment Securities | $738.6 | $636.4 | +16.1% | | Deposits | $1,716.2 | $1,681.8 | +2.0% | | Total Stockholders' Equity | $256.6 | $256.3 | +0.1% | [Results of Operations Analysis](index=42&type=section&id=Results%20of%20Operations%20Analysis) Net income fell 7.3% as a sharp drop in noninterest income offset a rise in net interest income - Net interest income increased by **$1.5 million (2.7%)** due to a $2.4 million increase in interest income, partially offset by a $0.9 million increase in interest expense[251](index=251&type=chunk) - Noninterest income decreased by **$2.3 million**, mainly due to the absence of a $1.8 million gain on sale of investment securities that was present in 2021[258](index=258&type=chunk) - Noninterest expense rose by **$512,000 (1.3%)**, driven by higher equipment and occupancy costs[260](index=260&type=chunk) - A reversal of the provision for loan losses of **$576,000** was recorded, smaller than the $1.6 million reversal in 2021[255](index=255&type=chunk) [Asset Quality](index=47&type=section&id=Asset%20Quality) Asset quality improved significantly, with nonperforming assets declining to 0.11% of total assets - The allowance for loan losses decreased to **$2.0 million** at year-end 2022 from $2.7 million at year-end 2021[285](index=285&type=chunk) - Loans in the COVID-19 related payment deferral program decreased to **$63.2 million** (4.9% of total loans) from $78.6 million (6.0% of total loans) in 2021[421](index=421&type=chunk) Nonperforming Assets (December 31) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Nonaccrual loans | $2,301,000 | $3,280,000 | | Real estate owned | $0 | $0 | | **Total Nonperforming Assets** | **$2,301,000** | **$3,280,000** | | Nonperforming assets to total assets | 0.11% | 0.15% | | Nonperforming loans to total loans | 0.18% | 0.25% | [Item 8. Financial Statements and Supplementary Data](index=55&type=section&id=ITEM%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements with an unqualified opinion from Moss Adams LLP - The independent auditor, Moss Adams LLP, issued an **unqualified opinion**, stating the financial statements are presented fairly in all material respects[315](index=315&type=chunk) - The auditor identified the **allowance for loan losses** as a critical audit matter due to the significant management judgment involved[319](index=319&type=chunk)[322](index=322&type=chunk) [Consolidated Financial Statements](index=58&type=section&id=Consolidated%20Financial%20Statements) The financial statements detail assets of $2.17 billion and net income of $16.16 million for 2022 Consolidated Statement of Income Highlights (Year Ended Dec 31) | Line Item | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Net Interest Income | $55,487 | $54,025 | | Reversal of Provision for Loan Losses | $(576) | $(1,592) | | Noninterest Income | $4,209 | $6,472 | | Noninterest Expense | $38,798 | $38,286 | | **Net Income** | **$16,156** | **$17,430** | Consolidated Balance Sheet Highlights (As of Dec 31) | Account | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Total Assets | $2,169,592 | $2,130,602 | | Loans Receivable, net | $1,294,764 | $1,302,824 | | Total Deposits | $1,716,152 | $1,681,828 | | Total Stockholders' Equity | $256,550 | $256,322 | [Notes to Consolidated Financial Statements](index=64&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Key notes detail the upcoming CECL adoption, portfolio compositions, and strong regulatory capital levels - The company will adopt the new **CECL credit loss standard** on January 1, 2023, and expects it to increase the allowance for credit losses by $4.0 million to $6.0 million[390](index=390&type=chunk) - At Dec 31, 2022, held-to-maturity securities had an amortized cost of $717.8 million but a fair value of only $591.1 million, with the **$126.7 million unrealized loss** attributed to interest rate changes[395](index=395&type=chunk)[401](index=401&type=chunk) - The bank is subject to regulatory capital requirements and **exceeded all minimums** to be considered 'well capitalized' as of December 31, 2022[490](index=490&type=chunk)[492](index=492&type=chunk) - The company's defined benefit pension plan was overfunded with a funded status of **$2.5 million** at year-end 2022[457](index=457&type=chunk) [Item 9A. Controls and Procedures](index=102&type=section&id=ITEM%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal controls over financial reporting were effective - Management concluded that the company's **disclosure controls and procedures were effective** as of December 31, 2022[523](index=523&type=chunk) - Based on the COSO 2013 framework, management assessed the company's **internal control over financial reporting to be effective** as of December 31, 2022[528](index=528&type=chunk) Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=103&type=section&id=ITEM%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors and governance is incorporated by reference from the 2023 Proxy Statement - This section incorporates information by reference from the **2023 Proxy Statement**[533](index=533&type=chunk) [Item 11. Executive Compensation](index=103&type=section&id=ITEM%2011.%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the 2023 Proxy Statement - This section incorporates information by reference from the **2023 Proxy Statement**[534](index=534&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=103&type=section&id=ITEM%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership details are incorporated by reference, with 146,347 securities available for issuance - This section incorporates information by reference from the **2023 Proxy Statement**[535](index=535&type=chunk) Equity Compensation Plan Information (as of Dec 31, 2022) | Plan Category | Securities to Be Issued Upon Exercise | Weighted-Average Exercise Price | Securities Available for Future Issuance | | :--- | :--- | :--- | :--- | | Approved by security holders | — | $ — | 146,347 | [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=103&type=section&id=ITEM%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related transactions is incorporated by reference from the 2023 Proxy Statement - This section incorporates information by reference from the **2023 Proxy Statement**[539](index=539&type=chunk) [Item 14. Principal Accountant Fees and Services](index=103&type=section&id=ITEM%2014.%20Principal%20Accountant%20Fees%20and%20Services) Details on accountant fees are incorporated by reference from the 2023 Proxy Statement - This section incorporates information by reference from the **2023 Proxy Statement**[540](index=540&type=chunk) Part IV [Item 15. Exhibits and Financial Statement Schedules](index=104&type=section&id=ITEM%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed with the annual report - Lists all financial statements, schedules, and exhibits filed with the **Form 10-K**[543](index=543&type=chunk) - Exhibits include key corporate documents, executive employment agreements, equity incentive plans, and required **CEO/CFO certifications**[544](index=544&type=chunk)[545](index=545&type=chunk)[546](index=546&type=chunk)

Financial Performance - Net income decreased by $271,000, or 6.5%, to $3.9 million for the three months ended September 30, 2022, compared to $4.2 million for the same period in 2021[143] - Net income decreased by $522,000, or 3.9%, to $12.7 million for the nine months ended September 30, 2022, from $13.2 million for the same period in 2021[155] - Noninterest income decreased by $608,000, or 49.7%, to $615,000 for the three months ended September 30, 2022, compared to $1.2 million for the same period in 2021[151] - Noninterest income decreased by $2.2 million, totaling $3.039 million for the nine months ended September 30, 2022, a 41.4% decline compared to $5.189 million in 2021[163] Assets and Liabilities - Total assets increased by $34.2 million, or 1.6%, to $2.2 billion at September 30, 2022, from $2.1 billion at December 31, 2021[128] - Total loans were $1.3 billion at September 30, 2022, representing 59.8% of total assets, with a decrease of $7.8 million, or 0.6%, during the nine months ended September 30, 2022[131] - Total securities increased by $102.1 million, or 16.0%, to $738.6 million at September 30, 2022, due to purchases exceeding principal repayments[132] - Cash and cash equivalents decreased by $63.6 million, or 63.7%, to $36.3 million at September 30, 2022, primarily due to increased investment securities[130] - Deposits increased by $30.0 million, or 1.8%, to $1.7 billion at September 30, 2022, primarily driven by a $110.2 million increase in certificates of deposit[134] Income and Expenses - Net interest income increased by $478,000, or 3.4%, to $14.3 million for the three months ended September 30, 2022, from $13.9 million for the same period in 2021[144] - Net interest income increased by $2.1 million, or 5.1%, to $42.2 million for the nine months ended September 30, 2022, compared to $40.2 million for the same period in 2021[156] - Interest income rose by $876,000, or 5.7%, to $16.2 million for the three months ended September 30, 2022, driven by a $47.1 million increase in the average balance of interest-earning assets[145] - Interest expense increased by $398,000, or 28.2%, to $1.8 million for the three months ended September 30, 2022, compared to $1.4 million for the same period in 2021[146] - Interest expense decreased by $720,000, or 14.4%, to $4.3 million for the nine months ended September 30, 2022, compared to $5.0 million for the same period in 2021[158] Loan Performance - Nonperforming assets totaled $2.0 million, or 0.09% of total assets, at September 30, 2022, down from $3.3 million, or 0.15% of total assets, at December 31, 2021[123] - The company recorded a reversal of loan loss provisions of $603,000 for the nine months ended September 30, 2022, compared to $1.5 million for the same period in 2021[123] - The ratio of the allowance for loan losses to total loans was 0.16% at September 30, 2022, down from 0.21% at September 30, 2021[161] - Nonaccrual loans totaled $2.0 million at September 30, 2022, or 0.15% of total loans, compared to $4.2 million, or 0.32% of total loans, at September 30, 2021[161] Interest Rate Risk - The company primarily faces interest rate risk due to its significant holdings in long-term, fixed-rate residential mortgage loans and mortgage-backed securities[185] - The Economic Value of Equity (EVE) analysis indicates that a 400 basis point increase in interest rates would result in a decrease of $162.5 million in EVE, representing a 54.80% decline[190] - Interest rates on Freddie Mac mortgage-backed securities increased by 57 basis points from June 30, 2022, to September 30, 2022, negatively impacting the value of interest-earning assets[192] - The company does not engage in hedging activities, such as futures or options, to manage interest rate risk[186] Capital and Commitments - Territorial Savings Bank exceeded all regulatory capital requirements and is considered "well capitalized" as of September 30, 2022[176] - The company had unpledged securities with a market value of $410.8 million, with the ability to borrow up to $386.2 million using these securities as collateral[170] - At September 30, 2022, the company had $6.4 million in loan commitments outstanding for fixed-rate loans and $14.1 million in unused lines of credit[172] Management and Governance - The company’s Board of Directors has established an Asset/Liability Management Committee to evaluate and manage interest rate risk[184]