Los Angeles-based Hope Bancorp has received regulatory approval to merge with Honolulu-based Territorial Bancorp, the lenders announced Monday.
Following the merger’s completion, expected at the beginning of April, the Territorial franchise in Hawaii will operate under the trade name Territorial Savings, a unit of Bank of Hope. The combined entity aims to create the largest regional bank across the continental U.S. and the Hawaiian Islands, according to the press release.
“We believe this combination will strengthen our position as one of the leading Asian American banks in the country, add a stable, low-cost deposit base to the combined company, and accelerate the diversification of our loan mix with the addition of a residential mortgage portfolio with excellent asset quality,” Kevin S. Kim, chairman and CEO of Hope Bancorp said in a statement.
The regulatory green light comes less than a year after Hope announced its intention to buy Territorial in an all-stock transaction valued at $78.6 million last April. The deal would add Territorial Savings Bank’s 28 branches in Hawaii to Hope’s footprint and expand the company’s reach targeting Asian American and Pacific Islander communities.
However, in August, investor group Blue Hill Advisors swooped in with an unsolicited offer to acquire Territorial at $12 per share. The Hawaiian lender rejected Blue Hill’s advances, but the investor reiterated its offer to buy Territorial.
Hope, in its agreement, had offered to buy Territorial at $8.82 per share.
Blue Hill did not back down and bumped the per share price by 50 cents to $12.50 following the rejection, making the “offer even more attractive,” according to former Bank of Hawaii CEO Allan Landon, who represented Blue Hill.
Territorial turned down the offer again last September – the third time since Aug. 26, when the first offer was made.
The Hawaii bank also postponed its stockholders meeting so its board and management could “continue discussions” with voting investors. In an attempt to back Hope’s acquisition offer, Territorial sent shareholders a letter outlining why they should vote for the Hope deal, rather than be swayed by Blue Hill’s attempts to purchase the bank at a higher price.
Blue Hill countered by issuing a statement indicating that proxy adviser Institutional Shareholder Services recommended that Territorial shareholders vote against the Hope acquisition since the deal did not maximize shareholder value, and Blue Hill’s offer seemed credible enough to justify the risks of rejecting Hope’s proposal.
Still, Territorial shareholders voted to approve Hope’s merger proposal last November.
Territorial must pay a termination fee of $3 million if the merger falls through under certain circumstances, according to the merger agreement. Territorial Bancorp is the parent company of Territorial Savings Bank, a state-chartered savings bank chartered in 1921 by the Territory of Hawaii.
Hope and Territorial did not immediately respond to requests for comment.
Hope Bancorp, the parent company of Bank of Hope, is a regional Korean American bank in the U.S. with roughly $17.5 billion in total assets as of Dec. 31, 2024. The California-chartered bank has 46 full-service branches in California, Washington, Texas, Illinois, New York, New Jersey, Alabama, and Georgia.
While reporting fourth quarter and 2024 results in January, Kim said the company is “well positioned to support growth in the new year,” adding that it was in the final stages of preparing for the integration of Territorial Savings Bank.
“We expect a seamless transition for our customers, and we believe our employees and shareholders stand to enjoy greater long-term benefits as part of a larger organization,” Territorial chairman and CEO Allan S. Kitagawa said in a statement Monday.
