DEFA14A: Territorial Bancorp Merger with Hope Bancorp Gains Momentum as Glass Lewis Backs Deal

Territorial Bancorp announces that Glass Lewis, a leading independent proxy advisory firm, joins ISS in recommending shareholders vote FOR the merger with Hope Bancorp, citing value creation and concerns over the Blue Hills proposal.

Summary

• Territorial Bancorp is urging shareholders to vote in favor of its merger with Hope Bancorp.
• Both Glass Lewis and ISS, leading independent proxy advisory firms, recommend shareholders vote FOR the merger.
• The Special Meeting of Stockholders to vote on the transaction is scheduled for November 6, 2024.
• The Territorial Board of Directors and management team collectively own 9.2% of Territorials outstanding shares and have already voted in favor of the transaction.
• Glass Lewis highlights the opportunity for Territorial shareholders to benefit from ongoing participation in a larger, more profitable bank.
• Glass Lewis also expressed concerns about the uncertainty and lack of transparency surrounding the Blue Hills preliminary indication of interest.
• The board determined that engaging with Blue Hill could be seen as a breach of the covenants in the Merger Agreement.

Sentiment

Score: 7

Explanation: The document conveys a positive sentiment towards the proposed merger with Hope Bancorp, supported by endorsements from proxy advisory firms and the board's confidence. However, the risks associated with the merger and the uncertainties surrounding the alternative Blue Hills proposal temper the overall sentiment.

Positives

• The merger with Hope Bancorp is expected to create a more profitable and stable institution.
• Territorial shareholders will have the opportunity to participate in the growth of the combined entity.
• The Hope Bancorp merger is seen as a way to navigate an uncertain economic environment.
• The Territorial Board and management are strongly in favor of the Hope Bancorp transaction.

Negatives

• The Blue Hills proposal is viewed as uncertain and lacking in transparency.
• There are concerns about Blue Hill's ability to close a transaction.
• The board determined that engaging with Blue Hill could be seen as a breach of the covenants in the Merger Agreement.

Risks

• The closing of the proposed transaction is subject to regulatory approvals and the approval of Territorial Bancorp stockholders.
• Difficulties and delays in integrating Hope Bancorp and Territorial Bancorp could occur.
• Higher than anticipated transaction costs are possible.
• Deposit attrition, operating costs, customer loss and business disruption following the merger may be greater than expected.
• Required governmental approvals of the merger may not be obtained on its proposed terms and schedule, or without regulatory constraints that may limit growth.
• Possible further deterioration in economic conditions could impact the combined entity.
• Interest rate risk and liquidity risks are present.
• The outcome of any legal proceedings could have an impact.
• Diversion of managements attention from ongoing business operations and opportunities is a risk.

Future Outlook

The document expresses expectations regarding the benefits of the merger, including a low-cost core deposit base, diversification of the loan portfolio, expansion of market share, capital to support growth, strengthened opportunities, enhanced value, and geographic expansion. The proposed transaction is expected to be immediately accretive.

Management Comments

• The Territorial Board of Directors and management team collectively own 9.2% of Territorials outstanding shares.
• We are confident that the Hope Bancorp transaction is the best path forward for Territorial, our shareholders, customers, employees and the local communities we serve.
• We have already voted all of our shares FOR the transaction, and we urge our fellow Territorial shareholders to join us and also follow the recommendations from the Territorial Board, Glass Lewis and ISS by voting FOR the Hope Bancorp transaction today.

Industry Context

The banking industry is currently seeing consolidation as institutions seek to gain scale and efficiency in a challenging economic environment. This merger aligns with that trend, as Hope Bancorp seeks to expand its presence and Territorial Bancorp aims to enhance its stability and growth prospects.

Comparison to Industry Standards

• Mergers of this size are common in the banking industry, with institutions like Bank of America acquiring smaller regional banks to expand their market share.
• The implied value of the proposed Exchange Ratio is relatively favorable compared to similar transactions.
• The concerns raised by Glass Lewis regarding the Blue Hill proposal are consistent with industry standards for evaluating merger offers, which prioritize certainty and transparency.

Stakeholder Impact

• Shareholders are expected to benefit from the increased value and stability of the combined entity.
• Employees may experience changes in roles and responsibilities as a result of the merger.
• Customers are expected to benefit from a wider range of products and services.
• The merger is expected to have a positive impact on the local communities served by the banks.

Next Steps

• Territorial shareholders are urged to vote on the proposed merger.
• The Special Meeting of Stockholders will be held on November 6, 2024.
• Regulatory approvals for the merger must be obtained.
• The integration of Hope Bancorp and Territorial Bancorp will need to be managed effectively.

Key Dates

Keywords

merger, Hope Bancorp, Territorial Bancorp, Glass Lewis, ISS, proxy, shareholders, Blue Hills, transaction, vote