Territorial Bancorp (US:TBNK)2020-11-09 15:04Loan Performance and Provisions - As of October 19, 2020, the company granted loan payment deferrals on $142.5 million of loans, representing 9.6% of total loans receivable as of September 30, 2020[135]. - The company has originated 23 Paycheck Protection Program loans totaling $1.7 million to assist customers during COVID-19[137]. - Nonperforming assets totaled $2.2 million, or 0.10% of total assets at September 30, 2020, compared to $736,000, or 0.04% of total assets at December 31, 2019[143]. - The company recorded $2.3 million in provisions for loan losses for the nine months ended September 30, 2020, compared to $65,000 for the same period in 2019[143]. - The allowance for loan losses to total loans ratio was 0.33% at September 30, 2020, compared to 0.17% at September 30, 2019[171]. - Nonaccrual loans totaled $2.2 million at September 30, 2020, or 0.15% of total loans, compared to $864,000, or 0.05% of total loans, at September 30, 2019[171]. - Provision for loan losses increased to $2.3 million for the nine months ended September 30, 2020, compared to $65,000 for the same period in 2019, reflecting increased qualitative factors due to rising unemployment[185]. Financial Performance - Net income decreased by $1.0 million, or 19.5%, to $4.3 million for the three months ended September 30, 2020, compared to $5.4 million for the same period in 2019[166]. - Net income decreased by $3.9 million, or 22.8%, from $17.0 million for the nine months ended September 30, 2019 to $13.1 million for the nine months ended September 30, 2020[179]. - Noninterest income decreased by $525,000 for the three months ended September 30, 2020, totaling $1.577 million compared to $2.102 million for the same period in 2019[173]. - Noninterest income decreased by $2.5 million, or 36.3%, for the nine months ended September 30, 2020 compared to the same period in 2019, primarily due to a significant decrease in gains on the sale of investment securities[187]. - Net interest income for the three months ended September 30, 2020, was $14.464 million, with a net interest margin of 2.89%[161]. - Net interest income decreased by $302,000, or 0.7%, to $43.7 million for the nine months ended September 30, 2020 from $44.0 million for the same period in 2019[180]. Asset and Liability Management - Total assets increased by $20.0 million, or 1.0%, to $2.1 billion as of September 30, 2020[150]. - Cash and cash equivalents rose to $237.5 million, an increase of $192.7 million since December 31, 2019[151]. - Total loans decreased by $101.8 million, or 6.4%, to $1.5 billion, representing 70.4% of total assets[152]. - The securities portfolio decreased by $76.0 million, or 20.4%, to $296.5 million, or 14.1% of total assets[154]. - Total borrowings decreased to $151.0 million from $166.0 million, with a restructuring of $55.0 million of FHLB advances lowering the average cost from 2.28% to 1.54%[157]. - The company has established an Asset/Liability Management Committee to monitor liquidity targets and strategies, ensuring sufficient liquidity for customer needs[197]. - The company has not adopted the alternative framework for regulatory capital requirements, maintaining compliance with existing guidelines[212]. Deposits and Borrowings - Deposits increased by $30.8 million, or 1.9%, to $1.7 billion, driven by increases in savings and checking accounts[156]. - The company experienced a net increase in deposits of $30.8 million for the nine months ended September 30, 2020, compared to a net decrease of $24.0 million for the same period in 2019[201]. - As of September 30, 2020, the company had the ability to borrow an additional $798.8 million from the Federal Home Loan Bank, maintaining strong liquidity[202]. Capital Ratios - The company's Tier 1 Leverage Capital ratio was 11.61% as of September 30, 2020, exceeding the required ratio of 5.00%[208]. - The Common Equity Tier 1 Risk-Based Capital ratio for Territorial Savings Bank was 26.30% as of September 30, 2020, significantly above the required minimum of 9.00%[208]. Interest Rate Sensitivity - Estimated Economic Value (EVE) at 0 interest rate is $250,528,000[221]. - A 400 basis point increase in interest rates would decrease EVE by $112,802,000, a reduction of 45.03%[221]. - A 300 basis point increase in interest rates would decrease EVE by $78,620,000, a reduction of 31.38%[221]. - A 200 basis point increase in interest rates would decrease EVE by $39,682,000, a reduction of 15.84%[221]. - A 100 basis point increase in interest rates would decrease EVE by $6,138,000, a reduction of 2.45%[221]. - A 100 basis point decrease in interest rates would decrease EVE by $62,332,000, a reduction of 24.88%[221]. - Interest rates on Freddie Mac mortgage-backed securities decreased by 25 basis points from June 30, 2020, to September 30, 2020[223]. - The decrease in mortgage interest rates is not expected to significantly affect estimated EVE[223]. - EVE is defined as the difference between the present value of assets and liabilities[222]. - The EVE table assumes a constant composition of interest-sensitive assets and liabilities over the measured period[224].