DEFA14A: Territorial Bancorp Urges Shareholders to Approve Merger with Hope Bancorp, Rejects Unsolicited Offer from Blue Hill Advisors

Territorial Bancorp is urging its shareholders to vote in favor of the merger with Hope Bancorp and has rejected an unsolicited preliminary indication of interest from Blue Hill Advisors.

Summary

• Territorial Bancorp is urging shareholders to approve the merger with Hope Bancorp.
• The company rejected an unsolicited preliminary indication of interest from Blue Hill Advisors, deeming it not superior to the Hope Bancorp merger agreement.
• The merger with Hope Bancorp is expected to create a stronger, more diversified regional bank.
• The company anticipates the merger will be completed by the end of 2024.
• The merger is expected to provide employees with competitive compensation, benefits, and career advancement opportunities.
• The company believes the merger is in the best interest of Territorial shareholders, employees, customers, and communities.
• The company has filed a Registration Statement on Form S-4 with the SEC, containing the Proxy Statement/Prospectus, which has been mailed or otherwise delivered to Territorials stockholders on or about August 29, 2024, as supplemented September 12, 2024.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. The company is confident in the merger with Hope Bancorp and is actively encouraging shareholder approval. However, there are acknowledged risks and uncertainties associated with the transaction.

Positives

• The merger with Hope Bancorp is expected to create a stronger and more diversified regional bank.
• Employees are expected to receive competitive compensation and benefits, along with new career opportunities.
• The company believes the merger is in the best interest of shareholders, employees, customers, and communities.
• The merger is expected to expand the company's footprint and diversify its offerings.

Negatives

• The company had to address confusion caused by an unsolicited preliminary indication of interest from Blue Hill Advisors.
• The closing of the proposed transaction is subject to regulatory approvals, the approval of Territorial Bancorp stockholders, and other customary closing conditions.
• Difficulties and delays in integrating Hope Bancorp and Territorial and achieving anticipated synergies, cost savings and other financial benefits from the transaction.

Risks

• The closing of the proposed transaction is subject to regulatory approvals and shareholder approval.
• Integration of Hope Bancorp and Territorial may face difficulties and delays.
• There is a risk of higher than anticipated transaction costs.
• Deposit attrition, operating costs, customer loss and business disruption could occur following the merger.
• The company may face difficulties in maintaining relationships with employees and customers.
• Inability to obtain required governmental approvals of the merger on its proposed terms and expected time frames, or without regulatory constraints that may limit growth.
• Possible further deterioration in economic conditions in Hope Bancorps or Territorials areas of operation or elsewhere.
• Interest rate risk associated with volatile interest rates and related asset-liability matching risk.
• Liquidity risks.
• Risk of significant non-earning assets, and net credit losses that could occur, particularly in times of weak economic conditions or times of rising interest rates.
• The failure of or changes to assumptions and estimates underlying Hope Bancorps or Territorials allowances for credit losses.
• Potential increases in deposit insurance assessments and regulatory risks associated with current and future regulations.
• The outcome of any legal proceedings that may be instituted against Hope Bancorp or Territorial.
• The risk that any announcements relating to the proposed transaction could have adverse effects on the market price of the common stock of either or both Hope Bancorp and Territorial.
• Diversion of managements attention from ongoing business operations and opportunities.

Future Outlook

The company expects the merger with Hope Bancorp to be completed by the end of 2024, creating a stronger, more diversified regional bank.

Management Comments

• Allan Kitagawa, Chairman, President and CEO, thanked employees for their support and diligence.
• Management believes the merger with Hope Bancorp remains in the best interest of Territorial shareholders and creates exciting benefits for employees, customers and communities.

Industry Context

The banking industry is currently seeing consolidation as banks seek to increase scale, diversify their offerings, and improve efficiency. This merger aligns with that trend.

Comparison to Industry Standards

• It is difficult to compare this merger directly to industry standards without knowing the specific financial terms (e.g., price-to-book ratio, premium paid).
• However, bank mergers are generally assessed based on factors like deposit market share, geographic overlap, and potential cost synergies.
• Comparable transactions would include other regional bank mergers in the United States.

Stakeholder Impact

• Shareholders are being asked to vote on the merger.
• Employees are expected to benefit from competitive compensation, benefits, and career advancement opportunities.
• Customers are expected to benefit from a stronger, more diversified bank.
• Communities are expected to benefit from the combined entity's continued support.

Next Steps

• Shareholder vote on the merger agreement.
• Obtaining regulatory approvals.
• Closing the merger transaction by the end of 2024.
• Integrating Hope Bancorp and Territorial.

Key Dates

Keywords

merger, Hope Bancorp, Territorial Bancorp, shareholders, Blue Hill Advisors, regulatory approval, acquisition