On Tuesday, Piper Sandler adjusted its stance on Territorial Bancorp (NASDAQ:TBNK), upgrading the stock from Underweight to Neutral and increasing the price target to $8.50 from the previous target of $8.00. This revision follows the announcement that Territorial Bancorp will be acquired by Hope Bancorp in an all-stock deal valued at approximately $79 million.
The upgrade aligns with Piper Sandler's current outlook for Hope Bancorp shares and reflects about 30% of Territorial's tangible book value (TBV). The acquisition announcement, made on April 29, set the value of Territorial Bancorp shares at $8.82 each. This valuation marked a 25% premium over the closing price before the announcement, equating to 31% of TBV and 16 times Piper Sandler's estimated earnings per share (EPS) for 2025.
The transaction between Territorial Bancorp and Hope Bancorp is anticipated to be finalized by the end of the year, contingent on receiving the necessary regulatory and shareholder approvals. The deal is expected to consolidate Territorial's operations under the Hope Bancorp umbrella, bringing together two significant players in the banking sector.
Investors have been monitoring the progress of the acquisition closely, as mergers and acquisitions in the banking industry can have notable impacts on shareholder value and the competitive landscape. The successful completion of this deal could potentially enhance the combined entity's market position.
InvestingPro Insights
As Territorial Bancorp (NASDAQ:TBNK) navigates through its acquisition by Hope Bancorp, recent metrics from InvestingPro provide a deeper understanding of the company's financial health. With a market capitalization of $70.42 million and a Price/Earnings (P/E) ratio of 14.28, slightly below the adjusted P/E ratio for the last twelve months as of Q4 2023 at 14.14, TBNK appears to be trading at a reasonable valuation.
The Price/Book ratio for the same period stands at a low 0.28, suggesting that the stock may be undervalued compared to its book value, aligning with one of the InvestingPro Tips that TBNK is trading at a low Price/Book multiple.
Despite a decline in revenue growth by 25.16% over the last twelve months as of Q4 2023, TBNK has demonstrated a significant return over the last week, with a 1-week price total return of 8.9%. This performance could be indicative of investor optimism following the acquisition announcement.
Moreover, the company has maintained dividend payments for 15 consecutive years, offering a dividend yield of 2.44% as of the last dividend ex-date on February 8, 2024, which may be appealing for income-focused investors.
For readers interested in a more comprehensive analysis, InvestingPro offers additional insights on Territorial Bancorp. There are 9 additional InvestingPro Tips available for TBNK, including observations on share buybacks, profitability predictions, and gross profit margins. To access these insights and make informed investment decisions, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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