Shareholders of Territorial Bancorp in Honolulu on Wednesday voted in favor of a sale to Los Angeles-based Hope Bancorp, ending a contentious and protracted campaign to derail the deal and paving a path to close it by the end of this year.

The deal, announced in April, faced major hurdles in recent weeks after an investor group stepped in with a competing offer — and a higher price tag — that called into question the merits of Hope’s offer. The shareholder vote was originally scheduled for October but was delayed to muster support.

The combination still needs regulatory approval.

“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,” Territorial Chairman and CEO Allan Kitagawa said in a press release after the vote. “We greatly appreciate the hard work of our employees and their unwavering commitment to delivering outstanding service as we progress toward the closing of this transaction.”

The $17.4 billion-asset Hope agreed in April to an all-stock deal valued at $78.6 million. Hope previously said its offer priced Territorial at $8.82 per share and that it expected to close the transaction by Dec. 31.

However, an investor group led by Blue Hill Advisors and former Bank of Hawaii CEO Allan Landon made a competing offer in August. Its initial cash bid valued Territorial at $12 per share. It later upped that to $12.50 per share.

“We think our offer is clearly superior,” Landon said in an interview ahead of the vote.

Territorial’s shares traded above $11 on Wednesday.

Landon said the Hope offer came before the Federal Reserve made clear that it planned to cut interest rates and provide relief to community banks such as Territorial, whose securities portfolios and earnings have been under pressure. The Fed lowered its benchmark interest rate by 50 basis points in September and signaled more reductions could follow.

Territorial swung to a third-quarter net loss of $1.3 million, or 15 cents per share, from year-earlier net income of $880,000, or 10 cents per share. Territorial holds older bonds and other assets at low rates and had to pay more for deposits over the past couple years. As a result, its third-quarter net interest income decreased by nearly $2.6 million from a year earlier to $7.5 million.

However, with rates now declining, Landon said the bank’s earnings are poised to recover, and Territorial was worth more than the Hope offer implied.

Before the vote, Yakira Capital Management, one of Territorial’s largest shareholders, urged the bank to consider the Blue Hill offer, calling it financially superior.

“We continue to question why the board is so vehemently against an offer that provides approximately 25% more value for shareholders,” the Westport, Connecticut-based investment manager said. It owns more than 1% of Territorial’s shares. 

That statement came on the heels of proxy advisor Institutional Shareholder Services supporting consideration of the Blue Hill offer.

However, ISS reversed its position ahead of the vote, and proxy advisor Glass Lewis also recommended that shareholders get behind the Hope deal.

In a letter to shareholders last week, Territorial’s board said it remained committed to the Hope deal. The board said the Blue Hill bid presented too many uncertainties and ultimately did not appear stronger than the Hope package when all factors were considered.

The $2.2 billion-asset bank’s board said that the Blue Hill offer was made on behalf of investors who had not presented sufficient evidence that they had the financial wherewithal to follow through on their offer or the expertise to secure regulatory approvals.

Territorial also said it would have to pay Hope a $3 million termination fee to pursue the investor group’s offer — an expensive risk given uncertainty about whether the competing offer was sound.

The Blue Hill-led group in October provided an addendum to its offer to provide additional details about the “seven seasoned bank investors backing the proposal, whose individual expressions of interest in acquiring Territorial shares total $134 million,” according to a press release at the time. “That is $26 million more than the amount required to tender for 100% of Territorial’s shares at a price of $12.50 per share.”

The investors collectively manage $3.4 billion “and comprise a mix of funds, family offices and private investors who have executed hundreds of transactions like this,” according to the group’s press release.

Territorial’s shareholder vote was webcast Wednesday afternoon Eastern time. Executives, who were not immediately available to comment, said on the webcast that a majority of shareholders voted in favor of the Hope sale. They said a precise tally would follow in a forthcoming Securities and Exchange Commission filing.

A Blue Hill spokesman said Wednesday the group would await the SEC filing before commenting.

Hawaii County has elected a new mayor.

Kimo Alameda, the former CEO of Bay Clinic, cruised to victory over incumbent Mitch Roth Tuesday evening in the nonpartisan runoff race to become the county’s chief executive. Alameda received 35,577 votes, or 53.7% of the valid votes, to Roth’s 30,717 votes or 46.3%.

Long lines at polling places delayed initial returns to the public. The initial report has a time stamp of 11:40 p.m., but the returns didn’t appear online until about 12:30 a.m. today.

Alameda, a newcomer to elected politics served as the leader of the Fentanyl Task Force. He also was executive of the county’s Office of Aging under former mayors Harry Kim and the late Billy Kenoi. He received the endorsement of the two public workers unions, the Hawaii Government Employees Association and United Public Workers.

Both unions sought hazard pay for working during the pandemic, which Roth opposed on fiscal grounds. Arbitration is ongoing over hazard pay.

The District 5 County Council seat in Puna was won by incumbent Matt Kaneali‘i-Kleinfelder in a rematch against Ikaika Rodenhurst. Kaneali‘i-Kleinfelder garnered 3,556 votes, or 57.25% of the valid vote, while Rodenhurst tallied 2,655 votes, or 42.75%

The only other contested council seat, District 9 in Kohala, will have a new occupant.

James Hustace, another electoral newcomer, defeated incumbent Cindy Evans. Hustace received 4,191 votes, or 56.8%, to Evans’ 3,192 votes, or 43.2%.

All incumbent Democrat Big Island state legislators — Sen. Dru Kanuha and Reps. Chris Todd, Greggor Ilagan, Jeanne Kapela, Kirstin Kahaloa, Nicole Lowen and David Tarnas — also won re-election on Tuesday.

See Thursday’s Tribune-Herald for full stories.

Email John Burnett at jburnett@hawaiitribune-herald.com

Hawaiian Electric Industries formalized a $2 billion agreement to settle damage claims from a wildfire that razed the historic town of Lahaina and killed more than 100 people.

The utility-owner had reached a tentative agreement in August in which it, along with other defendants including the state of Hawaii, Maui County and landowners, would pay $4 billion to resolve hundreds of lawsuits stemming from last year’s wildfire, according to a filing Tuesday.