Shareholders of Honolulu-based Territorial Bancorp voted to approve the company’s proposed merger with Los Angeles-based Hope Bancorp at a special stockholders meeting Wednesday.

The Hawaiian bank had postponed the meeting by nearly a month to give its board and management time to “continue discussions” with voting investors after it received a higher offer from an investor group.

Despite that offer, Territorial has reiterated its commitment to Hope’s $78.6 million all-stock transaction, announced in April, and urged its shareholders to vote in favor of the merger.

“We expect our combination with Bank of Hope to strengthen Territorial for the long term, providing many advantages for our customers and employees as we become part of a larger organization with greater resources, enhanced technology platforms, and an expanded array of banking products and services,” Allan S. Kitagawa, chairman and CEO of Territorial, said in a statement Wednesday.

The proposed merger – expected to close by year’s end – awaits regulatory approvals.

The merger is a tax-free stock-for-stock transaction under which Territorial’s shareholders will receive 0.8048 shares of Hope Bancorp common stock for each share of Territorial common stock they own, the company said earlier last month. Additionally, Hope’s dividend represents a more than 1,000% increase to Territorial’s, the Hawaii bank said.

Blue Hill Advisors sent a letter to Territorial shareholders on Oct. 29 coaxing them to oppose the Hope merger and support Blue Hill’s $12.50 per share cash offer for up to 100% of Territorial shares – a 25% premium to the current value of the Hope consideration, the letter said. Blue Hill Advisors, one of seven investors backing the offer, noted that the banking landscape has changed since the merger agreement was struck in April.

“Territorial is playing ‘chicken’ with shareholders: Approve the Hope deal or else.” Jason Blumberg, managing member of Blue Hill Advisors, wrote in the letter, adding that the Hope deal “is one of the worst we've ever seen.”

Blumberg further pointed out that Hope’s last attempt to acquire a bank in 2017 failed to secure regulatory approvals and that the current deal has yet to see a green light from the Federal Deposit Insurance Corp.

Territorial declined to comment beyond the initial press release announcing the merger with Hope.

A spokesperson for Blue Hill Advisors said the firm awaits vote totals and will wait until Territorial submits a regulatory filing to the Securities and Exchange Commission to comment.

The merger agreement between Territorial and Hope included several termination rights for both parties, according to an April SEC filing. 

The merger agreement can be terminated by mutual written consent, or by either party if there is a final, non-appealable order or ruling prohibiting the merger; if the merger is not completed by the one-year anniversary, subject to extension; if Territorial 's shareholders don’t approve the merger; if either party breaches representations, warranties or covenants, subject to a cure period; or if Territorial's board withdraws its recommendation for shareholders to approve the merger.

However, the merger agreement also states that Territorial must pay a termination fee of $3 million if the merger falls through under certain circumstances.

Territorial has rejected Blue Hill’s advances three times since the investor group and former Hawaii banking executive Allan Landon approached with a $12-per-share cash offer in August. 

In October, Blue Hill noted proxy adviser Institutional Shareholder Services recommended that Territorial shareholders vote against the Hope acquisition because the deal did not maximize shareholder value, while Blue Hill’s offer seems credible enough to justify the risks of rejecting Hope’s proposal. 

However, within three weeks, ISS issued a new recommendation in support of the Territorial and Hope merger. Soon after, another proxy advisory firm, Glass Lewis, joined ISS and recommended that shareholders vote in favor of the original merger.

For the third quarter, Territorial reported a loss of $1.3 million while Hope reported third-quarter net income of $24.2 million.

Kevin S. Kim, Hope’s chairman and CEO, said in a statement last week the “compelling combination would strengthen the Territorial franchise for the long term” and provide expanded services to its customers and employees.