LOS ANGELES & HONOLULU - In a significant move within the banking sector, Hope Bancorp, Inc. (NASDAQ: HOPE), the parent company of Bank of Hope, and Territorial Bancorp Inc. (NASDAQ: NASDAQ:TBNK), the holding company for Territorial Savings Bank, have announced a definitive merger agreement. This strategic alliance aims to form the largest regional bank focused on serving multi-ethnic communities across the continental U.S. and Hawaii.
The merger, which is expected to close by the end of 2024, will combine Hope Bancorp's extensive banking network with Territorial's strong presence in Hawaii, where it operates 28 branches. The combined entity will continue to operate under the Territorial Savings Bank brand in Hawaii, honoring its century-long tradition and commitment to local communities.
Territorial Bancorp reported total assets of $2.24 billion, total loans of $1.31 billion, and total deposits of $1.64 billion as of December 31, 2023. The merger is anticipated to bolster the combined company's deposit base and diversify its loan portfolio with the addition of Territorial's high-quality residential mortgage assets.
Kevin S. Kim, Chairman, President, and CEO of Hope Bancorp, expressed confidence that the merger will solidify the bank's position as a leading institution for Asian American customers, particularly in the strategically important Hawaiian market. Allan S. Kitagawa, Chairman, President, and CEO of Territorial, echoed this sentiment, highlighting the shared customer and community commitments of the two organizations.
In terms of financial details, Territorial shareholders will receive 0.8048 shares of Hope Bancorp common stock for each share of Territorial stock they own. Based on Hope Bancorp's closing stock price on April 26, 2024, the transaction is valued at approximately $78.6 million, or $8.82 per share of Territorial stock. Following the merger, Hope Bancorp shareholders are expected to own about 94.4% of the combined company, with Territorial shareholders owning the remaining 5.6%.
The merger is subject to customary closing conditions, including regulatory approvals and the approval of Territorial shareholders. Both companies' Boards of Directors have approved the agreement. The transaction is also intended to qualify as a tax-free reorganization for Territorial shareholders.
Hope Bancorp is being advised by D.A. Davidson & Co. and Greenberg Traurig, LLP, while Territorial is receiving counsel from Keefe, Bruyette & Woods, and Luse Gorman, PC. An investor conference call was scheduled for today to discuss the merger and Hope Bancorp's first-quarter financial results.
This news is based on a press release statement.
InvestingPro Insights
In light of Hope Bancorp's recent announcement of a merger with Territorial Bancorp, current and potential investors may find the following InvestingPro Data and InvestingPro Tips valuable for assessing the company's financial health and future prospects.
InvestingPro Data:
- Hope Bancorp's market capitalization stands at a robust $1.32 billion, reflecting investor confidence in its market position.
- The company's P/E ratio is currently 9.9, with an adjusted P/E ratio for the last twelve months as of Q4 2023 at 9.29, indicating a potentially favorable valuation relative to earnings.
- A notable dividend yield of 5.11% as of early 2024 showcases Hope Bancorp's commitment to returning value to shareholders, a trend that has continued for 13 consecutive years.
InvestingPro Tips:
- Despite downward revisions in earnings by analysts for the upcoming period, the company has maintained a consistent dividend payout.
- Analysts predict Hope Bancorp will be profitable this year, continuing its streak of profitability over the last twelve months.
- The company has experienced a large price uptick over the last six months, with a 31.7% six-month price total return as of early 2024, possibly indicating positive market sentiment.
Investors looking to deepen their analysis of Hope Bancorp can explore additional InvestingPro Tips at https://www.investing.com/pro/HOPE. There are 5 more tips available, which could provide further insights into the company’s financial nuances and investment potential. For those interested in a yearly or biyearly Pro and Pro+ subscription, use the coupon code PRONEWS24 to get an additional 10% off.
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