Breaking Down Territorial Bancorp Inc. (TBNK) Financial Health: Key Insights for Investors

You're looking at Territorial Bancorp Inc. (TBNK) because you want to know what drove its final chapter as an independent entity, and honestly, the numbers tell a clear story of pressure. The company's financial health leading into 2025 showed significant strain, culminating in a reported net loss of $4.3 million for the fiscal year ending December 31, 2024, a sharp reversal from the prior year's $5.0 million net income. This slide, mostly driven by rising interest expenses that hammered net interest income, made the strategic move inevitable. The market's verdict on this situation was delivered in April 2025 when the acquisition by Hope Bancorp closed, valuing the transaction at approximately $78.60 million in an all-stock deal. So, while the bank maintained a Tier 1 leverage capital ratio of 10.98% and held $1.72 billion in deposits, the core profitability engine was sputtering, forcing a sale. The real lesson here isn't just the loss, but the speed at which a bank with $2.2 billion in total assets had to pivot when the interest rate environment turned against its traditional lending model.

Revenue Analysis

You need to know where Territorial Bancorp Inc. (TBNK)'s money came from right before its acquisition, and the quick answer is that the core business was under severe pressure. The most recent available Trailing Twelve Months (TTM) revenue, as of early 2025 just before the merger with Hope Bancorp closed in April, stood at approximately $36.40 million. This figure reflects a significant contraction in their primary revenue engine, Net Interest Income, driven by the higher interest rate environment. The merger complicates a full-year 2025 analysis, but the pre-merger trends tell the real story.

The company's revenue streams, typical for a regional savings bank in Hawaii, break down into two main components: Net Interest Income and Noninterest Income. Net Interest Income-the profit from loans and investments after paying interest on deposits-was the dominant segment, but it was shrinking fast. Noninterest Income provided a small but stable buffer. This is a classic bank model, but the health of the Net Interest Income is everything.

Here's the quick math based on the fiscal year-end 2024 data, reported in March 2025, which gives us the clearest picture of the revenue structure just before the April 2025 merger:

• Net Interest Income: This was the powerhouse, but it dropped to $31.7 million.
• Noninterest Income: This segment, which includes fees and income from bank-owned life insurance (BOLI), was a modest $2.6 million.

That means Net Interest Income accounted for about 92.4% of the total $34.3 million in core revenue, but its year-over-year performance was a flashing red light. The decrease in Net Interest Income was a staggering $10.9 million compared to the previous year, a direct result of rising interest expenses on interest-bearing liabilities. This is a huge headwind for a bank of this size. To be fair, noninterest income did increase slightly, driven by BOLI and other income, but that couldn't offset the core business decline.

The contribution of different business segments to overall revenue highlights this reliance on lending and deposit spreads. You can see the revenue concentration in the table below:

This heavy reliance on Net Interest Income, coupled with the 2024 decline, defintely signaled a need for strategic change, which ultimately materialized in the acquisition. The slight increase in Noninterest Income, derived from services like insurance agency activities and non-deposit investments, wasn't enough to stabilize the ship. If you want to dive deeper into the players involved in the acquisition and their strategic rationale, you should check out Exploring Territorial Bancorp Inc. (TBNK) Investor Profile: Who's Buying and Why?

Profitability Metrics

The profitability picture for Territorial Bancorp Inc. (TBNK) in the lead-up to its April 2025 merger with Hope Bancorp was challenging, showing a clear swing from profit to loss driven by rising interest expenses and operational costs. The direct takeaway is that the company's standalone profitability ratios for the trailing twelve months (TTM) were deeply negative, contrasting sharply with industry peers.

For a bank, the closest measure to Gross Profit is Net Interest Income (NII). The NII for the 2024 fiscal year, reported in early 2025, dropped significantly by $10.9 million to just $31.7 million. This decline was the primary factor eroding margins, as the cost of funding-interest paid on deposits and borrowings-surged due to higher interest rates.

Here's the quick math on the core profitability ratios for the TTM period ending in early 2025, which reflects the company's final standalone performance:

• Net Profit Margin: -5.74%
• Operating Margin: -14.74%
• Pretax Margin: -19.61%

The company reported a full-year net loss of $4.3 million for 2024 (filed in March 2025), a stark reversal from the $5.0 million net income reported in the prior year. This trend is a flashing red light for any investor, showing a swift deterioration in earnings power. The merger was defintely a strategic move to stabilize the business.

The operational efficiency of Territorial Bancorp Inc. also deteriorated rapidly. The efficiency ratio-which measures noninterest expense as a percentage of revenue (net interest income plus noninterest income)-worsened to 107.6% in the first quarter of 2024. This means the bank was spending more than $1.07 in operating expenses for every dollar of revenue it generated, reflecting severe operating deleverage. The noninterest expenses for the 2024 fiscal year totaled $40.9 million, which included merger-related legal and professional fees that further strained the bottom line.

Comparing TBNK's profitability ratios with the industry averages for the TTM period highlights the extent of the bank's financial distress before the merger. The numbers show a clear performance gap:

What this estimate hides is the one-time impact of the merger costs, but even without those, the core Net Interest Margin (NIM) had deteriorated to 1.65% in Q1 2024. This NIM compression, driven by high wholesale funding costs, was the root cause of the negative profitability. For a deeper understanding of the organizational goals that led to this merger, you can review the Mission Statement, Vision, & Core Values of Territorial Bancorp Inc. (TBNK).

The action for investors is clear: TBNK's pre-merger financial health was unsustainable, making the acquisition a necessary exit. The focus now shifts to Hope Bancorp's integration plan and how they can quickly bring the Territorial Savings Bank franchise's efficiency ratio back below the critical 100% threshold.

Debt vs. Equity Structure

You need to know how Territorial Bancorp Inc. (TBNK) was funding its operations right before its acquisition by Hope Bancorp in 2025. The quick takeaway is that while the bank was heavily reliant on deposits, its core debt-to-equity ratio was slightly elevated compared to its peers, signaling a higher reliance on borrowed funds to fuel its balance sheet growth.

As of late 2024, Territorial Bancorp Inc. carried approximately $160.00 million in total debt on its balance sheet, a number that primarily consisted of long-term borrowings like Federal Home Loan Bank (FHLB) advances, which are common for regional banks to manage liquidity and fund mortgage lending. This reliance on wholesale funding, particularly FHLB borrowings, had been increasing, contributing to higher funding costs in early 2025 and putting pressure on the net interest margin (NIM).

Here's the quick math on the pre-merger capital structure:

• Total Debt (Dec 2024): $160.00 million
• Debt-to-Equity Ratio: 0.64
• Regional Bank Industry Average D/E (Nov 2025): 0.5

A Debt-to-Equity (D/E) ratio of 0.64 means that for every dollar of shareholder equity, the company had 64 cents of debt. To be fair, this is not an alarming level of leverage for a bank, but it sits above the US Regional Bank industry average of 0.5 as of November 2025. This higher ratio suggested Territorial Bancorp Inc. was using a bit more debt financing than its typical peer to support its assets, though its regulatory capital ratios remained solid. The bank was considered 'well-capitalized,' with a Tier 1 leverage ratio of 11.58% in Q1 2024.

The conversation around balancing debt and equity for Territorial Bancorp Inc. was definitively settled by the major event of the 2025 fiscal year: the acquisition. The definitive stock-for-stock merger agreement with Hope Bancorp, Inc. closed on April 2, 2025. This merger was the ultimate equity-based funding and restructuring event, effectively injecting Territorial Bancorp Inc. into a larger, more diversified capital structure. The deal was valued at approximately $78.6 million. This move was a strategic decision to strengthen the bank for the long term, providing greater resources and a more robust financial framework to handle the rising funding costs that had plagued its Q1 2024 results.

The merger essentially acted as a massive equity infusion and risk transfer, removing the need for Territorial Bancorp Inc. to issue new debt or equity on its own. It's a clean exit for the independent capital structure. You can dive deeper into the players who made this decision in Exploring Territorial Bancorp Inc. (TBNK) Investor Profile: Who's Buying and Why?

The pre-merger debt structure mostly favored long-term debt, as indicated by the Long-Term Debt-to-Equity ratio being the same as the total D/E ratio at 0.64. This long-term focus provided stability but also locked in costs that became challenging when deposit interest expense surged in early 2025. The short-term debt component was mainly driven by new Federal Reserve Board (FRB) and FHLB borrowings, which increased total interest expense by $4.60 million year-over-year in Q1 2024. This is why the merger was defintely the right strategic call.

Liquidity and Solvency

You need to know if Territorial Bancorp Inc. (TBNK) has the cash on hand to meet its immediate obligations, especially in a banking context where liquidity (the ability to convert assets to cash quickly) is everything. The short answer is that while the bank maintains strong regulatory capital, its operational cash flow trend and reliance on certificates of deposit signal a need for caution in the near term.

For a bank like Territorial Bancorp Inc., the standard Current Ratio (Current Assets / Current Liabilities) and Quick Ratio are not useful metrics; deposits are current liabilities, and a high ratio just means the bank isn't lending. Instead, we look at the ratio of highly liquid assets (Cash and Securities) to its primary liability (Total Deposits).

• Liquid Assets to Deposits Ratio: As of the fiscal year ended December 31, 2024, Territorial Bancorp Inc. held approximately $787.68 million in highly liquid assets (Cash & Equivalents of $123.52 million and Total Investments of $664.16 million) against total deposits of $1.72 billion. This results in a liquid assets-to-deposits ratio of roughly 45.8%.
• Regulatory Strength: The bank's Tier 1 Leverage Capital Ratio was 11.68% at year-end 2024, which is well above the regulatory requirement, showing strong solvency (long-term financial health) even if short-term liquidity is under pressure.

Here's the quick math on the working capital trends: the bank's cash and cash equivalents fell by $3.14 million in the 2024 fiscal year, but total deposits actually increased by $81.06 million to $1.72 billion. That deposit growth is a strength, but it's heavily weighted toward higher-cost, rate-sensitive certificates of deposit (CDs), which made up $685.9 million, or 39.9% of total deposits, due within one year at December 31, 2024. This reliance on short-term funding is a defintely a liquidity risk to watch.

Cash Flow Statement Overview (2024 Fiscal Year)

Analyzing the cash flow statement for the 2024 fiscal year reveals the core challenge. The bank's cash flow from operations turned negative, a clear sign that the high-interest-rate environment is squeezing the core business model. A negative operating cash flow is a red flag.

The cash flow trends for Territorial Bancorp Inc. for the fiscal year ended December 31, 2024 (values in U.S. thousands):

The key takeaway here is that the bank's liquidity was only sustained by a large net inflow from its investing activities ($65.991 million), which offset the negative operational cash flow and the debt repayments. This is not a sustainable long-term model; you can't rely on selling assets to cover your daily operating costs and debt. The bank's liquidity position is currently stable, ending 2024 with $123.52 million in cash, but the underlying operational weakness is clear.

For more detail on the bank's strategy to address these financial pressures, you should read the full blog post: Breaking Down Territorial Bancorp Inc. (TBNK) Financial Health: Key Insights for Investors.

Valuation Analysis

You're looking at Territorial Bancorp Inc. (TBNK) to see if it was a good value before its merger, and the short answer is that the valuation metrics were flashing a clear warning sign, especially when you factor in the negative earnings. The stock is no longer trading, as the acquisition by Hope Bancorp closed on April 2, 2025, delisting Territorial Bancorp Inc. from the NASDAQ. We must look at the pre-merger data to understand the investment case.

The most compelling metric suggesting the stock was undervalued, at least on paper, was the Price-to-Book (P/B) ratio. For a regional bank, a P/B ratio below 1.0 often suggests undervaluation, and Territorial Bancorp Inc.'s P/B stood at a low 0.30 just before the merger. This means the stock price was only trading at about 30 cents for every dollar of book value (assets minus liabilities). That's a deep discount, defintely a classic value trap indicator in banking, but it also explains why an acquirer like Hope Bancorp saw an opportunity.

Here's the quick math on the key valuation multiples based on the last available data, which reflects the company's financial stress:

The Price-to-Earnings (P/E) ratio and Enterprise Value-to-EBITDA (EV/EBITDA) were essentially meaningless because the company was reporting negative earnings per share (EPS). In the fourth quarter of 2024, reported on January 31, 2025, Territorial Bancorp Inc. posted an EPS of ($0.20). When a company is losing money, these ratios break down, and you must focus on the balance sheet quality-hence the importance of that low P/B ratio.

Stock Trend and Analyst View

The stock price trend over the last 12 months leading up to the April 2025 merger showed significant volatility and a clear downward trajectory, reflecting the underlying financial pressure. The final trade price was $8.33 on April 1, 2025. Over the course of 2024 and early 2025, the stock was down, with the annual stock price performance for 2025 showing a -14.39% decline before the acquisition closed. This trend was the market pricing in the risk of sustained negative earnings and the need for a strategic alternative, which ultimately was the merger.

Prior to the merger announcement, the analyst consensus on Territorial Bancorp Inc. was a 'Hold.' The average 12-month price target from analysts was $9.89. This consensus suggested that analysts expected the stock to perform in line with the broader market, but the eventual sale price was closer to the last trading price, indicating the market was more realistic about the immediate risks than the slightly higher price target.

Dividend Health: A Red Flag

The dividend story was a major red flag, even with a seemingly attractive yield. As of November 11, 2025, the forward dividend yield was 0.48%, based on an annual dividend of $0.04. The last declared dividend was a small $0.01 per share on January 31, 2025. But here's the problem: the payout ratio, which measures dividends against earnings, was cited as -400.00% because of the negative EPS of ($0.50). When a company pays a dividend while losing money, that dividend is unsustainable.

• Dividend Yield: 0.48% (as of Nov 2025).
• Annual Dividend: $0.04 per share.
• Payout Ratio: -400.00% (Due to negative earnings).

A negative payout ratio means the dividend is literally being paid out of capital or borrowed funds, not profits. That's a clear signal that the dividend is at risk, which is exactly what happened before the company was acquired and delisted. If you want to dive deeper into the players involved in the acquisition, you can check out Exploring Territorial Bancorp Inc. (TBNK) Investor Profile: Who's Buying and Why?

Risk Factors

You need to understand that Territorial Bancorp Inc. (TBNK) is no longer an independent entity; its ultimate risk mitigation was the merger with Hope Bancorp, Inc. (HOPE), which closed in April 2025. Therefore, the most critical risks to analyze are the ones that fundamentally drove this strategic decision, which were clearly visible in the company's final independent financial reports.

The core financial risk was the severe compression of the net interest margin (NIM), which is the difference between the interest income generated and the amount of interest paid out. For the year ended December 31, 2024, reported in early 2025, the company reported a net loss of $4.3 million, a sharp reversal from the $5.0 million net income in the prior year. Here's the quick math: net interest income plummeted by $10.9 million to just $31.7 million, primarily because interest expenses on interest-bearing liabilities rose significantly faster than interest income. That's a huge headwind for a regional bank.

Operational and strategic risks were also a factor, particularly in the run-up to the merger. Noninterest expenses increased by $2.7 million to $40.9 million, largely due to merger-related legal and professional fees, showing the immediate financial cost of the strategic shift. The underlying strategic risk was the limited scale and geographic concentration of the bank, which is primarily focused on the Hawaii market. This concentration exposes the bank to localized economic downturns and intense competition from larger regional and national players.

• Interest Rate Risk: Higher funding costs severely eroded the core business profitability.
• Geographic Concentration: Reliance on the Hawaii market makes the bank vulnerable to local economic shocks.
• Merger Integration Risk: Post-merger, the risk shifts to Hope Bancorp, Inc. regarding deposit attrition and achieving anticipated synergies.

The ultimate mitigation strategy was the all-stock merger with Hope Bancorp, Inc. The merger consideration provided TBNK shareholders with 0.8048 of a share of Hope Bancorp, Inc. Common Stock (HOPE) for each TBNK share, effectively trading the risks of a small, struggling regional bank for a stake in a larger, more diversified institution. This move addresses the long-term capital and resource constraints, plus it offers TBNK customers enhanced technology platforms and an expanded array of banking products. You can read more about the long-term vision in the Mission Statement, Vision, & Core Values of Territorial Bancorp Inc. (TBNK).

To be fair, the company's capital ratios remained strong right before the merger, with a Tier 1 leverage capital ratio of 10.98% and a total risk-based capital ratio of 27.26%, both well above regulatory requirements. The problem wasn't solvency, but profitability and scale in a tough interest rate environment. The table below summarizes the financial impact of the risk factors leading to the merger:

What this estimate hides is the opportunity cost of not having the scale to invest heavily in technology and compete effectively against larger institutions. The merger was a necessary, defintely strategic action to secure long-term value for shareholders by joining a larger platform.

Growth Opportunities

The future growth for the Territorial Bancorp Inc. (TBNK) franchise is entirely tied to its strategic merger with Hope Bancorp, which officially closed on April 2, 2025. You need to stop thinking of TBNK as a standalone stock and start viewing it as a critical, high-value asset now operating as Territorial Savings, a division of Bank of Hope. The growth prospects aren't about TBNK's independent revenue; they're about the value its $1.72 billion deposit base and unique market position add to the larger, combined entity. This was a necessary move to secure long-term stability and access to greater resources.

Merger as the Primary Growth Driver

The merger itself is the single, most significant growth driver. TBNK's legacy operations in Hawaii provide Hope Bancorp with immediate, material market expansion. This move instantly created the largest regional bank serving multi-cultural customers across the continental U.S. and Hawaii. The strategic initiative is clear: use TBNK's century-old brand and local knowledge to anchor the combined bank in a key, high-barrier-to-entry market. The TBNK franchise brings two specific financial advantages that fuel Hope Bancorp's growth:

• Adds a stable, low-cost deposit base to the combined company.
• Diversifies the loan mix with a residential mortgage portfolio of excellent asset quality.

The former Territorial CEO noted that the combination provides greater resources and enhanced technology platforms, which means better service for Hawaiian customers and a defintely more efficient operation overall.

Earnings and Capital Strength Post-Integration

While TBNK reported a net loss of $4.3 million for the full year 2024, largely due to a decrease in net interest income and $1.53 million in pre-tax merger-related expenses in Q4 2024, the combined entity is positioned for stronger earnings. Hope Bancorp, with $17.05 billion in total assets as of December 31, 2024, gains a stable, low-cost funding source, which is crucial for net interest margin (NIM) expansion in the current rate environment. The growth projection isn't a revenue number for TBNK, but rather the projected accretion to Hope Bancorp's earnings per share (EPS) from this strategic addition.

Here's the quick math on the exchange: TBNK shareholders received 0.8048 shares of Hope Bancorp common stock for each share of TBNK. This all-stock transaction was designed to allow TBNK shareholders to participate directly in the combined entity's future growth and attractive dividends.

Competitive Advantages of the Combined Franchise

The competitive advantage for the Territorial Savings division lies in its preserved local identity and its newly enhanced scale. Its long-standing reputation in Hawaii is now backed by the larger balance sheet and advanced technology of a $17+ billion asset institution. This is a classic 'local expertise meets super-regional scale' play. What this estimate hides, however, is the execution risk of integrating the two banks' systems and cultures, but the preservation of the 'Territorial Savings' trade name suggests a focus on continuity.

For a deeper dive into who was driving the stock price leading up to the merger, you should read Exploring Territorial Bancorp Inc. (TBNK) Investor Profile: Who's Buying and Why?

The key takeaway is that TBNK's growth story is now a story of successful integration and market penetration within a much larger organization.