Blue Hill Advisors to Territorial Shareholders: No Risk to Territorial if Board Engages with Us

Hope Cannot Walk Away if Board Allows Investors to Perform Due Diligence

Hope Can Only Walk Away if Board Changes Recommendation or Breaches Merger Agreement

Calls on Board to Exercise Risk-Free Option to Explore Potentially Superior Offer

Encourages Territorial Shareholders to Force Another Postponement by Voting AGAINST Hope Sale Again at the Adjourned Special Meeting of Stockholders on November 6, 2024

Responds to Illogical Board Excuses for not Engaging with Investors

HONOLULU, Oct. 29, 2024 /PRNewswire/ -- Blue Hill Advisors today issued the following open letter to shareholders of Territorial Bancorp Inc. ("Territorial" or the "Company") (NASDAQ: TBNK).

Dear Fellow Territorial Shareholders,

Territorial's Board of Directors has flooded you with materials urging you to support the Company's proposed sale to Hope Bancorp, Inc. ("Hope") (NASDAQ: HOPE) and dismiss our proposal. Most of their arguments are based on a false premise: that they cannot engage with us for fear of losing the Hope deal. This is simply not true.

Under the Hope merger agreement, Territorial is entitled to explore a competing offer that is "reasonably likely to lead to a Superior Proposal." We believe we have always cleared that bar. And since sending more information about our offer in an addendum to the Board last week, we have no doubt.

We will keep our message simple because it really is:

1. Seven investors, including Blue Hill Advisors, have made a $12.50 per share cash offer for up to 100% of Territorial shares – that's a 25% premium to the current value of the Hope consideration. Our proposal also allows up to 49% of existing holders to stay on as shareholders if they choose to participate in Territorial's considerable upside. Territorial has bizarrely attacked the proposal both for being too liquid (citing taxes on imaginary gains under the cash option) and too illiquid (for shareholders who choose not to tender and instead participate with us in the potential upside). The point is that our proposal lets you, the shareholder, decide—isn't whatever you choose going to be superior?
   
   
2. We have contacted Territorial's Board, management team or outside advisers on at least 9 occasions since August, seeking to engage constructively. The Board has declined every request and repeatedly attacked our offer instead. Last Wednesday we offered to share information with the Board under a limited scope NDA and were told that Territorial would respond the following Monday, five days later. We waited two days and sent them the information anyway on Friday without an NDA.
   
   
3. Territorial's merger agreement with Hope explicitly permits the Board to sign an NDA and proceed to due diligence if the Board determines that another offer is "reasonably likely to lead to a Superior Proposal." Our offer is financially superior, superior in optionality and the result of extensive analysis by each of the investors individually. There are no conditions attached, other than for the Board to stop manufacturing concerns and engage with us constructively in the manner the merger agreement expressly contemplates. The Board claims to have a lot of unanswered questions about our proposal. There is a very simple way for them to get those answers: sign an NDA and ask us.
   
   
4. Allowing us to perform due diligence has no impact on the Hope deal. Hope cannot walk away unless Territorial changes its recommendation or breaches the merger agreement. Logically, the Board will only change its recommendation after they're fully satisfied with our offer and any lingering concerns or uncertainties have been put to rest.
   
   
5. The entire point of signing an NDA (and the "reasonably likely" provision of the merger agreement) is to enable due diligence and determine if a preliminary offer can advance to a definitive agreement. Nobody is asking Territorial to sign a definitive agreement with us today. As with any transaction, diligence is a two-way process. We will be happy to address the Board's questions if they will just engage with us.
   
   
6. The Board is asking shareholders to approve the Hope deal on November 6 without having engaged on a deal that values the Company at a 25% premium. Is the Board breaching its fiduciary duty by not pursuing a better offer?
   
   
7. The merger agreement calls for two postponements if Territorial cannot get enough votes. Shareholders should force another postponement so that the Board can sign an NDA with us immediately and let us work toward a definitive offer. This does not force Territorial to do a deal with us and Hope cannot walk away.
   
   
8. Territorial is playing "chicken" with shareholders: Approve the Hope deal or else. How bad is or else? The Hope deal is one of the worst we've ever seen and the banking environment has improved since it was struck. Are there really no better options? 
   
   
9. The Hope deal is not a sure thing by any stretch – Hope's last attempt to buy a bank in 2017 failed to obtain regulatory approval and its application for this deal still has not been accepted by the FDIC.
   
   
10. Territorial shareholders should once again oppose the Hope merger so that this superior offer can be pursued.

Sincerely,

Jason Blumberg
Managing Member
Blue Hill Advisors

More information on the investor proposal can be found at www.NewTerritorial.com and in a presentation titled, "A Better Deal for Territorial".

Territorial shareholders are encouraged to contact Blue Hill Advisors for more information or to contact Territorial's Board to express their support for this proposal. Shareholders who have already voted FOR the Hope merger but who wish to change their vote can still do so before the November 6 special meeting of Territorial stockholders by following the instructions for changing votes as described in the prospectus that Hope filed with the U.S. Securities and Exchange Commission (the "SEC") on August 22, 2024.

Contacts

For Media:

Breitenbush Partners
Andrew Wilson, 773-425-4991
[e-mail] 

For Investors:

Blue Hill Advisors
Jason Blumberg, 917-733-0381
[e-mail]

About Blue Hill Advisors

Blue Hill Advisors is an advisor to and investor in regional and community banks. The firm looks for opportunities that it believes have been substantially mispriced by the market and seeks to build long-term value through active management.

FORWARD-LOOKING STATEMENTS

Certain statements and information contained in this communication may be forward looking in nature and may constitute forward-looking statements. Forward-looking statements include all statements that are not historical facts and can typically be identified by words such as "may", "will ", "expect", "could", "should", "intend", "commit", "estimate", "anticipate", "believe", "remain", "on track", "design", "target", "objective", "goal", "forecast", "projection", "outlook", "prospects", "plan", "intend", or similar terminology, including by way of example and without limitation plans, intentions and expectations regarding the proposal to acquire Territorial and the anticipated results, benefits, synergies, costs, timing and other expectations of the benefits of a potential transaction.

Forward-looking statements are related to future, not past, events and are not guarantees of future performance. These statements are based on current expectations and projections about future events and, by their nature, address matters that are, to different degrees, uncertain and are subject to inherent risks and uncertainties. They relate to events and depend on circumstances that may or may not occur or exist in the future, and, as such, undue reliance should not be placed on them. Actual results may differ materially from those expressed in such statements as a result of a variety of factors, including, among other things, the ability of Territorial, on the one hand, and Blue Hill Advisors and certain other investors (collectively, the "Investors"), on the other hand, to agree on terms for the proposed transaction and, in the event a definitive transaction agreement is executed, the ability of the parties to obtain any necessary shareholder and regulatory approvals and financing, to satisfy any other conditions to the closing of the transaction and to consummate the proposed transaction on a timely basis, as well as changes in general economic, financial and market conditions and other changes in business conditions, changes in regulations, and many other factors, most of which are outside of the control of the Investors. The Investors expressly disclaim and do not assume any liability in connection with any inaccuracies in any of these forward-looking statements or in connection with any use by any party of such forward-looking statements. Any forward-looking statements contained in this communication speaks only as of the date of this communication.

The Investors undertake no obligation to update or revise its outlook or forward-looking statements, whether as a result of new developments or otherwise. Names, organizations and company names referred to may be the trademarks of their respective owners. This communication does not represent investment advice, a solicitation, a recommendation, an invitation, an offer for the purchase or sale of financial products and/or of any kind of financial services as contemplated by the laws in any country or state.

NO OFFER OR SOLICITATION

This document shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.

ADDITIONAL INFORMATION AND WHERE TO FIND IT

This communication does not constitute an offer to buy or solicitation of an offer to sell any securities. This communication relates to a proposal that Investors have made for a transaction with Territorial. In furtherance of this proposal and subject to future developments, Investors or certain affiliated entities (and, if a negotiated transaction is agreed to, Territorial) may file one or more registration statements, proxy statements, tender offer statements or other documents with the SEC. This communication is not a substitute for any proxy statement, registration statement, tender offer statement, prospectus or other document Investors or any of their affiliates and/or Territorial may file with the SEC in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF TERRITORIAL ARE URGED TO READ THE PROXY STATEMENT(S), REGISTRATION STATEMENT, TENDER OFFER STATEMENT, PROSPECTUS AND/OR OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Any definitive proxy statement(s) or prospectus(es) (if and when available) will be mailed to stockholders of Territorial, as applicable. Investors and security holders of Territorial will be able to obtain free copies of these documents (if and when available) and other documents filed with the SEC through the web site maintained by the SEC at www.sec.gov.

PARTICIPANTS IN THE SOLICITATION

This communication is neither a solicitation of a proxy nor a substitute for any proxy statement or other filings that may be made with the SEC.

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