Territorial Determines Not to Engage in Discussions With Blue Hill Advisors

HONOLULU, Oct. 29, 2024 (GLOBE NEWSWIRE) -- Territorial Bancorp Inc. (NASDAQ: TBNK) (“Territorial” or the “Company”) today announced that the Company’s Board of Directors has reaffirmed its recommendation that Territorial shareholders vote “FOR” the merger with Hope Bancorp, Inc. (“Hope Bancorp”) (NASDAQ: HOPE) at the November 6, 2024, Special Meeting of Stockholders.

On October 25, 2024, Territorial received additional information from Blue Hill Advisors (“Blue Hill”) with respect to its preliminary indication of interest to acquire the Company.

Territorial’s Board of Directors (the “Territorial Board”), with the assistance of its legal and financial advisors, over the course of several meetings, carefully reviewed this information in accordance with its fiduciary duties, its commitment to serving the best interests of all Territorial shareholders and its obligations under Territorial’s merger agreement with Hope Bancorp.

Specifically, the Territorial Board reviewed information provided by Blue Hill, recently and previously, to ascertain whether Blue Hill has provided sufficient verifiable and objective information to justify a Territorial Board determination that Blue Hill’s preliminary indication of interest is reasonably likely to lead to a Superior Proposal as defined by Territorial’s merger agreement with Hope Bancorp. The Territorial Board has also considered whether it would be a breach of its fiduciary duty not to enter into a confidentiality agreement or otherwise engage with Blue Hill based on the information provided by Blue Hill to date. The Territorial Board concluded that the totality of the information provided by Blue Hill does not provide a sufficient basis for a finding that both: (i) the Blue Hill preliminary indication of interest is reasonably likely to lead to a Superior Proposal under the terms and conditions required by the merger agreement; and (ii) a failure to enter into a confidentiality agreement or otherwise negotiate with Blue Hill would be more likely than not to result in a violation of its fiduciary duties under applicable law. Accordingly, the Territorial Board concluded that Territorial may not engage with Blue Hill under the terms and conditions of the Hope Bancorp merger agreement and that it continues to support the merger with Hope Bancorp.

In reaching this conclusion, the Territorial Board considered, among other things:

• the all-stock nature of the strategic merger with Hope Bancorp and the benefits the combination with Hope Bancorp will have for shareholders as compared to a cash-out transaction, including the comparison of Hope Bancorp’s liquid, dividend-paying stock to what would be the Blue Hill-controlled Territorial stock, which would be expected to be a relatively more illiquid investment that would likely not pay a dividend for a prolonged period of time;
  

• continued questions regarding the conditional nature of the financing of the transaction by the Blue Hill investors, despite Territorial's repeated statements with respect to this deficiency for several weeks;
  

• Blue Hill’s failure to address in a reasoned manner how the Blue Hill investor group would overcome the likely regulatory approval hurdles. In contrast, Hope Bancorp is well known by bank regulators and its approval process is well underway;
  

• Blue Hill’s failure to address the impact of the expected changes in regulatory capital and the Company’s business plan, all of which should be expected to be considered as part of any regulatory approval process - despite Blue Hill’s claims that regulatory approvals will be less complicated than the Hope Bancorp approvals;
  

• Blue Hill’s failure to realistically address transaction timing considerations, particularly including timing related to the application and regulatory approval process, in contrast to the expected timing of the Hope Bancorp merger approvals and expected timing of the closing of the Hope Bancorp merger;
  

• the overall execution risk associated with the Blue Hill preliminary indication of interest, including the necessary steps and approvals required to conduct a recapitalization, a tender offer and negotiations with multiple Blue Hill investors versus Hope Bancorp’s standard merger transaction where all required applications are currently being processed;
  

• Blue Hill’s failure to identify the expected key management team members that would manage the revised Company if acquired by Blue Hill. These individuals will be required to be identified to, and vetted by, the banking regulators before any approvals could be obtained;   
  

• Blue Hill’s failure to identify all expected directors of the newly-reconstituted Board that would govern Territorial if acquired by Blue Hill, as these individuals will also be required to be identified to, and vetted by, the banking regulators before any approvals could be obtained;
  

• Blue Hill’s failure to specify how it would address any limitations established by or approvals that may be required from the banking regulators to pay any termination fee or conduct a tender offer, which would be an outflow of capital that would require regulatory approval; and
  

• Blue Hill’s failure to substantiate its projected financial results for Territorial on a stand-alone basis, which Blue Hill has asserted as part of the rationale for its proposed acquisition and which represent a risk for existing shareholders who continue as shareholders if the Blue Hill proposal is completed.