Hope Bancorp And Territorial Bancorp Announce Definitive Merger Agreement; Territorial Shareholders Will Receive A Fixed Exchange Ratio Of 0.8048 Shares Of Hope Bancorp Common Stock In Exchange For Each Share Of Territorial Common Stock They Own, ...

Hope Bancorp, Inc. +3.61%
Territorial Bancorp Inc. +4.55%

Hope Bancorp, Inc.

HOPE

12.93

+3.61%

Territorial Bancorp Inc.

TBNK

9.88

+4.55%

Hope Bancorp, Inc. ("Hope Bancorp") (NASDAQ:HOPE), the holding company of Bank of Hope, and Territorial Bancorp Inc. ("Territorial") (NASDAQ:TBNK), the stock holding company of Territorial Savings Bank, today jointly announced the signing of a definitive merger agreement, which is expected to create the largest regional bank catering to multi-ethnic customers across the continental United States and the Hawaiian Islands.

As of December 31, 2023, Territorial had total assets of $2.24 billion, total loans of $1.31 billion and total deposits of $1.64 billion. Territorial Savings Bank, a state-chartered savings bank, originally chartered in 1921 by the Territory of Hawai‘i, conducts business from its headquarters in Honolulu, Hawai‘i, and operates 28 branches in the state. Hope Bancorp intends to preserve the 100-plus year legacy of the Territorial Savings Bank brand name, culture and commitment to local communities. Following the completion of the transaction, the legacy Territorial franchise in Hawai‘i will continue to do business under the Territorial Savings Bank brand, as a trade name of Bank of Hope.

Strategic Highlights of Proposed Transaction

  • Adds stable, low-cost core deposit base to the combined company
  • Accelerates diversification of the combined company's loan mix through the addition of a residential mortgage portfolio with excellent asset quality
  • Opportunity to grow Territorial's market share and enhance the customer experience by leveraging the combined company's larger balance sheet, resources and more extensive array of banking products and services
  • Combined footprint expands to include attractive Hawai‘i market with large Asian American and Pacific Islander communities
  • Strong levels of capital to support the growth of the combined franchise

"We believe this combination will strengthen our position as one of the leading Asian American banks in the country by expanding our footprint to the Hawaiian Islands," stated Kevin S. Kim, Chairman, President and Chief Executive Officer of Hope Bancorp, Inc. "Upon the close of the transaction, we believe Territorial's high-quality deposit base will enhance our core funding mix and Territorial's residential mortgage portfolio will accelerate the diversification of our loans. We look forward to building on Territorial's 100-plus year legacy of exemplary customer service and support of local communities in a strategically important market."

"Our merger with Hope Bancorp will bring together two companies that share long-standing commitments to our customers and the communities where we live and work," said Allan S. Kitagawa, Chairman, President and Chief Executive Officer of Territorial Bancorp Inc. "Our name will remain Territorial Savings Bank, and we expect a seamless transition for our customers, who will continue to benefit from our strong focus on relationship banking, personalized service and tailored financial solutions. At the same time, we believe the proposed combination will strengthen Territorial Savings Bank for the long term, providing many advantages for our customers and employees as we become part of a larger organization with greater resources, enhanced technology platforms, and an expanded array of banking products and services."

Under the terms of the merger agreement, upon completion of the transaction, Territorial shareholders will receive a fixed exchange ratio of 0.8048 shares of Hope Bancorp common stock in exchange for each share of Territorial common stock they own, in a 100% stock-for-stock transaction valued at approximately $78.6 million. Based on the closing price of Hope Bancorp's common stock on April 26, 2024, this represents a value of $8.82 per share of Territorial common stock, although the actual value will be determined upon transaction closing. Upon completion of the transaction, it is expected that Hope Bancorp shareholders will own approximately 94.4% of the combined entity and Territorial shareholders will own approximately 5.6%, with the actual percentages being determined as of the transaction closing date. The transaction is intended to qualify as a tax-free reorganization for Territorial shareholders. The proposed transaction, after the close, is expected to be immediately accretive to Hope Bancorp's earnings.

The Boards of Directors of both companies have approved the merger agreement and the transaction contemplated thereby. The transaction is expected to close by year-end 2024, subject to regulatory approvals, the approval of Territorial shareholders, and the satisfaction of other customary closing conditions.

Hope Bancorp is being advised by the investment banking firm of D.A. Davidson & Co., and the law firm of Greenberg Traurig, LLP. Territorial is being advised by the investment banking firm of Keefe, Bruyette & Woods, a Stifel Company, and the law firm of Luse Gorman, PC.

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