Blue Hill's Unsolicited Preliminary Indication of Interest is Not in the Best Interest of Territorial Shareholders, Customers, Employees or Communities in Hawai i

After our definitive merger agreement with Hope Bancorp was reached and announced, Blue Hill Advisors LLC ("Blue Hill") -- a recently formed entity with only three disclosed investors -- delivered its self-labeled "preliminary indication of interest" to acquire Territorial Bancorp for $12.50 per share in cash through a tender offer, with the potential option for holders of up to 30% of Territorial shares to remain investors in the Company.

In consultation with its legal and financial advisors, the Territorial Board carefully considered the Blue Hill preliminary indication of interest on multiple occasions. The Board unanimously determined to reject the preliminary indication of interest because the Board does not believe that it is a superior proposal, or likely to lead to a superior proposal, as defined by the terms of the Hope Bancorp merger agreement. We firmly believe that our merger with Hope Bancorp remains in the best interest of Territorial shareholders.

Blue Hill's Non-Binding, Preliminary Indication of Interest is Highly Conditional

   -- No committed financing to purchase Territorial 
 
   -- Requires side agreements with undisclosed terms to be negotiated and 
      signed by numerous unidentified investors 
 
   -- Subject to an undefined due diligence process 
 
   -- Dependent on overcoming significant hurdles in a regulatory process that 
      Blue Hill has not yet started and would be challenging 

Blue Hill's Cloak of Secrecy and Anonymity Creates Substantial Regulatory Risk and Uncertainty for Territorial Shareholders

We find it difficult to believe that either federal or Hawai i regulators would allow Blue Hill to purchase Territorial based on the following:

   -- No evidence that Blue Hill, its named principals nor its undisclosed 
      investors have obtained -- or even tried to obtain -- regulatory approval 
      for a transaction of this size and complexity based on information it has 
      provided to Territorial 
 
   -- Blue Hill says it will immediately reconstitute the Territorial Board 
      after it gains control of the Company, but has not disclosed the names of 
      its new directors or the individuals who will replace Territorial's 
      current management 
 
   -- Blue Hill has not shared any detailed business plan, including specifics 
      on Board, management, strategy, resources, capital planning, policies and 
      procedures if it were to gain control of Territorial -- all of which are 
      required in the regulatory process 
 
   -- Blue Hill was only established in February of 2023 
 
   -- According to public sources, Blue Hill's registered business address 
      appears to be a residential home in Hudson, New York 

Even if Blue Hill were to gain regulatory approval, its ability to complete a tender offer is highly unlikely. Based on advice from a leading proxy solicitation firm whose principals have overseen hundreds of tender offers over the past 40+ years, it is highly unlikely that Blue Hill could achieve its required 70% tender threshold given the composition of Territorial's shareholder base. Abandonment of the Hope Bancorp merger and the failure of the Blue Hill transaction to materialize would leave Territorial significantly weakened in the aftermath of two failed deals with significant standalone business risks.

Under Blue Hill's Preliminary Indication of Interest, Territorial's Stock -- and the Value of Your Investment -- Could be Worth Substantially Less Than It Is Today

If Blue Hill is unable to complete a 100% tender, the remaining Territorial shareholders would be left with an illiquid, stub minority investment in a controlled company. Blue Hill's undisclosed investors -- who would control the Company -- have provided no assurance that they would serve all shareholders' interests and have not defined a governance structure that ensures they do .

As a standalone company, Territorial would face the same business and value downside risks that Territorial faces today as a small, monoline one- to four- family loan focused bank with limited scale.

Unlike the Hope Bancorp stock-based transaction, Blue Hill's cash-based transaction creates immediate tax consequences, which could leave Territorial shareholders with less -- in some cases substantially less -- than the $12.50 per share consideration.

Blue Hill is Not Positioned to Deliver Its Claimed Benefits to Hawai i. Rather, Blue Hill's Transaction Could be Detrimental to Hawai i, Jobs and Communities

In press reports and elsewhere, Blue Hill repeatedly emphasizes "local management," but:

   -- None of Blue Hill's named principals appear to primarily reside in Hawai 
      i, according to public information. 
 
   -- Blue Hill is not based in Hawai i. Blue Hill's registered business 
      address4 appears to be a residential home in Hudson, New York, which is 
      also for rent5 on apartments.com. 
 
   -- Blue Hill has provided no assurances as to whether it would reduce 
      employment levels, change employee compensation or benefits, or reduce 
      investments in communities after it gains control of Territorial. 
 
   -- In order for Blue Hill to reach its targeted 55% efficiency ratio, there 
      would likely need to be significant job cuts and reduced investments in 
      areas such as technology. 

Protect Your Territorial Investment and Ensure You Have the Opportunity to Realize the Upside Value Created by the Territorial + Hope Bancorp Combination by Voting FOR the Merger Today

We are on a path to complete our merger with Hope Bancorp by the end of 2024. The Hope Bancorp merger will create a stronger, more diversified regional bank with an expanded footprint and diversified offerings to drive future growth. The merger will provide Territorial shareholders with compelling value and the opportunity to participate in the considerable upside of our combined business, and it will enable Territorial to build on our more than 100-year legacy of supporting our local Hawai'i communities.

We urge you to consider the concrete and compelling opportunities that the Hope Bancorp merger will create and not be distracted and deceived by Blue Hill's illusory, non-binding, highly conditional preliminary indication of interest.

The Territorial Board of Directors unanimously recommends that you vote FOR the Hope Bancorp merger and related proposals TODAY. You can vote by internet, telephone or mail.

On behalf of the Territorial Board of Directors and management team, thank you for your continued support of Territorial Bancorp.

Allan S. Kitagawa

Chairman of the Board, President and Chief Executive Officer

 
      Your Vote Is Important, No Matter How Many or How 
                     Few Shares You Own! 
 
   Please take a moment to vote FOR the proposals set 
   forth on the enclosed proxy card -- by Internet, telephone 
   toll-free or by signing, dating and returning the 
   enclosed proxy card or voting instruction form. Vote 
   well in advance of the Special Meeting on November 
   6, 2024 at 8:30 a.m. Hawai i Time. 
   If you have questions about how to vote your shares, 
   please contact: 
                 Laurel Hill Advisory Group 
                Call toll-free: (888) 742-1305 
        Banks and brokers should call: (516) 933-3100 
------------------------------------------------------------- 
 
 

About Us

Territorial Bancorp Inc., headquartered in Honolulu, Hawai i, is the stock holding company for Territorial Savings Bank. Territorial Savings Bank is a state-chartered savings bank which was originally chartered in 1921 by the Territory of Hawai i. Territorial Savings Bank conducts business from its headquarters in Honolulu, Hawai i, and has 28 branch offices in the state of Hawai i. For additional information, please visit https://www.tsbHawai i.bank.

Forward-Looking Statements

This communication contains certain statements regarding future events or the future financial performance of Territorial Bancorp Inc. ("Territorial") and its proposed merger with Hope Bancorp, Inc. ("Hope Bancorp") that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, expectations regarding the combined company's deposit base, diversification of the loan portfolio as well as overall risk diversification, capital to support growth, strengthened opportunities, enhanced value, geographic expansion, and statements about the proposed transaction being immediately accretive. Forward-looking statements include, but are not limited to, statements preceded by, followed by or that include the words "will," "believes," "expects," "anticipates," "intends," "plans," "estimates," "outlook," or similar expressions. These statements are subject to risks and uncertainties. Hope Bancorp's actual results, performance or achievements may differ materially from the results, performance or achievements expressed or implied in any forward-looking statements. The closing of the proposed transaction is subject to regulatory approvals, the approval of Territorial Bancorp stockholders, and other customary closing conditions. There is no assurance that such conditions will be met or that the proposed merger will be consummated within the expected time frame, or at all. If the transaction is consummated, factors that may cause actual outcomes to differ from what is expressed or forecasted in these forward-looking statements include, among things: difficulties and delays in integrating Hope Bancorp and Territorial and achieving anticipated synergies, cost savings and other financial benefits from the transaction; higher than anticipated transaction costs; deposit attrition, operating costs, customer loss and business disruption following the merger, including difficulties in maintaining relationships with

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October 07, 2024 08:30 ET (12:30 GMT)