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The chief executive of Hope Bancorp in Los Angeles called the company’s pending acquisition of Territorial Bancorp in Honolulu a “compelling combination.” But during an earnings call Monday, he warded off inquiries about a competing offer and uncertainty about whether the deal would pass muster with the seller’s shareholders.
“We will not be taking questions about the transaction, given that the purpose of this call today is to discuss our financial results for the third quarter,” Chairman and CEO Kevin Kim said.
In the company’s earnings release, Kim said the deal would “strengthen the Territorial franchise for the long term, providing many advantages for customers and employees as part of a larger organization with greater resources, enhanced technology platforms, and an expanded array of banking products and services.”
The $17.4 billion-asset Hope agreed in April to an
At issue: An investor group led by
After that offer came in, Territorial postponed a shareholder vote on its pending sale to Hope to Nov. 6. In a letter to shareholders earlier this month, it said it remained committed to the Hope deal and rejected the Blue Hill offer, saying it was fraught with uncertainty.
The $2.2 billion-asset bank’s board said that the offer was made on behalf of investors who are largely unidentified and without evidence that they have the financial wherewithal to follow through on their offer or the expertise to secure regulatory approvals.
Territorial’s board said in the letter that the bank would have to pay Hope a $3 million termination fee to pursue the investor group’s offer. The Blue Hill offer involved investors buying at least 70% of Territorial through a process that involved the group acquiring convertible preferred stock, then enabling Territorial to use the proceeds to commence a tender offer. If investors were unable to tender at least 70% of Territorial’s stock, the deal would fall through, and the company would have to return the proceeds.
Last week, however, the Blue Hill-led group said it reduced the amount required to tender to 51% of Territorial’s shares.
It also provided an addendum to its offer that included more details about the “seven seasoned bank investors backing the proposal, whose individual expressions of interest in acquiring Territorial shares total $134 million,” the Blue-Hill group said in a press release. “That is $26 million more than the amount required to tender for 100% of Territorial’s shares at a price of $12.50 per share and nearly $80 million more than the amount required to tender for 51% of Territorial’s shares.”
The investors collectively manage $3.4 billion “and comprise a mix of funds, family offices and private investors who have executed hundreds of transactions like this.”
In an interview this month, Landon said he and the other investors viewed theirs as both a “friendly and superior” offer. “We’re trying to make this as attractive as we can.”
Territorial on Monday said it swung to a third-quarter net loss of $1.3 million, or 15 cents per share, from year-earlier net income of $880,000, or 10 cents per share.
The bank has struggled with fallout from the 2022-2023 spike in interest rates. Like many banks, Territorial holds older bonds and other assets at low rates but has had to pay more for deposits over the past couple years. Its third-quarter net interest income decreased by nearly $2.6 million from a year earlier to $7.5 million.
Hope on Monday reported third-quarter net income of $24.2 million, or 20 cents per share. That compared with net income of $30 million, or 25 cents, a year earlier.