TERRITORIAL BANCORP INC.
                              EMPLOYMENT AGREEMENT


     THIS AGREEMENT (the  "Agreement") is made and entered into this 13th day of
November,  2009, by and between  Territorial Bancorp Inc., a corporation located
at 1132 Bishop Street, 22nd Floor, Honolulu,  Hawaii 96813 (the "Company"),  and
Ralph Nakatsuka ("Executive").

                                   WITNESSETH

     WHEREAS,  Executive is currently  employed as Co-Chief Operating Officer of
Territorial Savings Bank (the "Bank"); and

     WHEREAS,  the Bank has  adopted  a Plan of  Conversion  and  Reorganization
pursuant to which the Bank has become a wholly owned  subsidiary  of the Company
(the "Conversion"); and

     WHEREAS, the Company desires to assure itself of the continued availability
of the Executive's services as provided in this Agreement; and

     WHEREAS,  Executive  is  willing  to serve  the  Company  on the  terms and
conditions hereinafter set forth; and

     WHEREAS,  Executive  has  previously  entered  into a  separate  employment
agreement with the Bank.

     NOW, THEREFORE,  in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:

1. Employment.  During the term of this Agreement,  which is effective as of the
date first set forth above (the "Commencement  Date"),  Executive shall continue
to serve in the capacity of Co-Chief Operating Officer of the Company. Executive
shall  continue to render such  administrative  and  management  services to the
Company as are currently  rendered and as are  customarily  performed by persons
situated in a similar  executive  capacity.  Executive shall continue to promote
the business of the Company. Executive's other duties shall be such as the Board
of Directors of the Company (the "Board of  Directors" or "Board") may from time
to time reasonably direct, including normal duties as an officer of the Company.

2. Base  Compensation.  The Company  agrees to pay Executive  during the Term of
this Agreement (as  hereinafter  defined in Section 6) a base salary at the rate
of  $282,555  per  annum,  payable  in  accordance  with the  customary  payroll
practices of the Company;  provided,  however, that the rate of Executive's base
salary shall be reviewed by the Board of Directors not less often than annually,
and Executive  shall be entitled to receive annual  increases at such percentage
or in such an amount  as the Board of  Directors,  in its sole  discretion,  may
decide.

3. Discretionary  Bonus.  Executive shall be entitled to receive an annual bonus
in an amount which is based on the bonus program maintained by the Company as of
the date of this  Agreement and shall be eligible to  participate  in any future
bonus  program  adopted  by  the


<PAGE>


Company in an  equitable  manner.  No other  compensation  provided  for in this
Agreement shall be deemed a substitute for Executive's  right to receive bonuses
when and as declared by the Board of Directors or as provided for by any plan or
program of the Company.

4. Expenses.  During the term of this Agreement,  Executive shall be entitled to
receive prompt  reimbursement of all reasonable expenses incurred (in accordance
with the policies and  procedures of the Company) in performing  services  under
this  Agreement,  provided  that  Executive  properly  accounts  for expenses in
accordance  with the policies of the Company and provided  further that all such
reimbursements  pursuant to this Section 4 shall be paid promptly by the Company
and in any event no later than March 15 of the year  immediately  following  the
year in which the expense was incurred.

5. Employee Benefits.

     (a)  Participation  in Retirement and Executive  Benefit  Plans.  Executive
shall be entitled,  while employed under the terms of this Agreement, to receive
all benefits under any  tax-qualified or non-qualified  employee benefit plan or
arrangement  in  effect  as of the date of this  Agreement  or that the  Company
implements  at any time during the term of this  Agreement.  Executive  shall be
entitled to participate in such future plans or  arrangements  on the same terms
as other employees of the Company or as established by the Company for Executive
or other selected employees.

     (b) Fringe  Benefits.  Executive  shall be entitled to receive any benefits
under any fringe benefit plan or policy that is in effect as of the date of this
Agreement,  including any discount or reduced fee employee loan program, or that
the Company  implements  at any time during the term of this  Agreement,  on the
same  terms  as the  Company's  senior  management  employees.  Nothing  paid to
Executive under any plan or arrangement presently in effect or made available in
the future will be deemed to be in lieu of base salary or other  compensation to
Executive under this Agreement.

     (c) Automobile,  Cellular Phone Use, Computer and Memberships.  The Company
or the Bank shall provide  Executive with the use of an automobile in accordance
with the Company's or the Bank's automobile policy for executive vice presidents
and  above,  as in  effect  from time to time.  The  Company  or the Bank  shall
annually include on Executive's Form W-2 any amount  attributable to Executive's
personal  use of such  automobile.  The  Company or the Bank shall also  provide
Executive  with  the  use of a  cellular  phone  and  shall  pay  (or  reimburse
Executive) for all  reasonable  expenses  related to the use of such phone.  The
Company  or the Bank  shall also  provide  Executive  with the use of a personal
digital assistant or similar device, and home, portable and office computers and
shall pay (or reimburse  Executive) for all reasonable  expenses  related to the
use of such  computers or devices.  In  addition,  the Company or the Bank shall
reimburse  or  pay  Executive  amounts   sufficient  to  establish  or  maintain
membership in any club or  organization  (business,  social or otherwise)  which
will benefit the Company or the Bank  (including  such fees or dues  relating to
the use of the club or organization).


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<PAGE>


     (d)  Paid  Leave  Time.  Executive  shall  be  entitled  to  leave  time in
accordance  with the  standard  policies or  practices of the Company for senior
executive officers, as in effect from time to time.

     (e) Financial Planning.  Executive shall be entitled to use the services of
a tax professional and a personal financial planning  professional (which may be
the same person or entity for both services (the "Tax Service  Professional") of
his choosing and seek  reimbursement  by the Company for the reasonable  cost of
such Tax Service Professional  actually incurred by the Executive.  The services
to be provided shall include (i) the preparation of all required federal,  state
and local  personal  income tax  returns,  (ii) advice with  respect to federal,
state and local  income tax  treatment  of cash and other forms of  compensation
paid to the  Executive  by the  Company  and  (iii)  investment  and  retirement
counseling and estate planning.  Notwithstanding the foregoing,  the annual cost
to the Company of such  services  shall not exceed  $5,000 (the "Annual  Cost").
Reimbursement  of the Annual  Cost shall be paid  promptly by the Company and in
any event no later than March 15 of the year  immediately  following the year in
which the Annual Cost was incurred.  The Annual Cost shall be reviewed  annually
by the  Compensation  Committee  of the  Company  and,  if  increased,  shall be
reflected in an addendum hereto.

6. Term of  Agreement.  Executive's  employment  under this  Agreement  shall be
deemed to have  commenced as of the  Commencement  Date and shall continue for a
period of thirty-six (36) calendar months thereafter.  Commencing on February 1,
2010  and  continuing  on  February  1st  of  each  year  thereafter   (each  an
"Anniversary Date"), the disinterested  members of the Board of Directors of the
Company may extend the Agreement an additional year such that the remaining term
of the Agreement shall be thirty-six (36) months, unless Executive elects not to
extend the term of this Agreement by giving  written  notice in accordance  with
Section 14 of this Agreement.  The Board of Directors of the Company will review
the Agreement and Executive's  performance  annually for purposes of determining
whether to extend the Agreement  and the rationale and results  thereof shall be
included in the minutes of the Board's  meeting.  The Board of  Directors of the
Company  shall give written  notice to Executive as soon as possible  after such
review as to whether the Agreement is to be extended;  provided, however, if the
Board  fails to  conduct  such  review or if  written  notice of  nonrenewal  is
provided to Executive, then in such case the term of this Agreement shall become
fixed  and  shall  cease at the end of  thirty-six  (36)  full  calendar  months
following the Anniversary Date.

7. Noncompetition and Confidentiality.

     (a) Executive  shall devote his full time and attention to the  performance
of his  employment  under this  Agreement.  Upon any  termination of Executive's
employment  hereunder  pursuant to Section 8(b) of this Agreement  (other than a
termination  which  occurs  after the  effective  date of a Change in  Control),
Executive  agrees  not to compete  with the  Company  or any  subsidiary  of the
Company for a period of one (1) year  following  such  termination  in any city,
town or county in which  Executive's  normal  business  office is  located or in
which the Company or any subsidiary of the Company has an office or has filed an
application for regulatory approval to establish an office, determined as of the
effective date of such termination, except as agreed to pursuant to a resolution
duly adopted by the Board of Directors. Executive agrees that during such period
and within said  cities,  towns and  counties,  Executive  shall not work for or
advise,  consult or otherwise  serve with,  directly or  indirectly,  any entity
whose


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<PAGE>


business  materially  competes with the  depository,  lending or other  business
activities of the Company or any subsidiary of the Company.  The parties hereto,
recognizing that irreparable injury will result to the Company or any subsidiary
of the Company,  and their  business  and  property in the event of  Executive's
breach of this  Section  7(a),  agree  that in the  event of any such  breach by
Executive,  the Company will be entitled,  in addition to any other remedies and
damages  available,  to an  injunction  to  restrain  the  violation  hereof  by
Executive,  Executive's partners,  agents,  servants,  employees and all persons
acting for or under the direction of Executive.  Executive represents and admits
that in the event he terminates  employment with the Company pursuant to Section
8(b) of this Agreement,  Executive's  experience and  capabilities are such that
Executive can obtain employment in a business engaged in other lines and/or of a
different  nature than the Company,  and that the enforcement of a remedy by way
of injunction  will not prevent  Executive  from earning a  livelihood.  Nothing
herein will be construed  as  prohibiting  the Company  from  pursuing any other
remedies available to the Company for breach or threatened breach, including the
recovery of damages from Executive.

     (b)  Executive  recognizes  and  acknowledges  that  the  knowledge  of the
business  activities  and plans for  business  activities  of the  Company  is a
valuable,  special and unique asset of the  business of the  Company.  Executive
will not, during or after the term of his employment,  disclose any knowledge of
the past,  present,  planned or considered business activities of the Company to
any  person,  firm,  corporation,  or other  entity  for any  reason or  purpose
whatsoever.  Notwithstanding the foregoing, Executive may disclose any knowledge
of banking,  financial and/or economic  principles,  concepts or ideas which are
not solely and exclusively derived from the business plans and activities of the
Company.  Further,  Executive  may disclose  information  regarding the business
activities of the Company to the Office of Thrift  Supervision  ("OTS") or other
regulatory or judicial body pursuant to a formal regulatory request or subpoena.

     (c) Nothing contained in this Section 7 shall be deemed to prevent or limit
the right of Executive to invest in any entity which conducts  business  similar
to that of the Company, solely as a passive or minority investor.

8. Termination.

     Executive's employment under this Agreement shall be terminated upon any of
the following occurrences:

     (a) Death. Executive's employment under this Agreement shall terminate upon
his death.  Executive's  estate  shall be entitled  to receive  payments of base
salary, payable in accordance with the regular payroll practices of the Company,
for sixty (60) days immediately  following the date of Executive's death and any
other compensation accrued as of the date of death.

     (b) Termination of Employment by the Board of Directors  Without Just Cause
or by the  Executive  for  Good  Reason.  In the  event  that  (i) the  Board of
Directors terminates  Executive's employment without "Just Cause" (as defined in
Section  8(d)) or (ii) such  employment is terminated by the Executive for "Good
Reason" (as defined in Section 8(b)(iii), Executive shall be entitled to:


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<PAGE>


          (i) his base salary for the remaining term of the Agreement, including
          any  renewals or  extensions  thereof,  at the current  rate in effect
          pursuant to Section 2 of this Agreement, plus the amount of the annual
          cash  bonus  earned  in  the  calendar  year  preceding  the  year  of
          termination,  and a cash  equivalent  amount  equal to the  additional
          retirement    benefits   under   any   retirement   program   (whether
          tax-qualified  or  non-qualified)   that  Executive  would  have  been
          entitled to had his employment continued through the remaining term of
          the Agreement (with the amount of benefits  determined by reference to
          the benefits  received by the Executive or accrued on his behalf under
          such   programs   during  the  twelve   (12)  months   preceding   his
          termination).

          (ii) coverage under the Company's life insurance plans and non-taxable
          medical, health, and dental plans (each being a "Welfare Plan") in the
          same manner in which  Executive  received  coverage on the last day of
          his employment with the Company.  Executive and his covered dependents
          (if any) shall continue  participating in such Welfare Plans,  subject
          to the same premium contributions (if any) on the part of Executive as
          were required  immediately  prior to his termination until the earlier
          of (i) his death;  (ii) his employment by another  employer other than
          one of which he is the majority  owner;  or (iii) three (3) years from
          his termination date.

          (iii) For  purposes  of this  Agreement,  termination  of  Executive's
          employment hereunder for "Good Reason" shall be limited to Executive's
          voluntary termination of employment after the occurrence of any of the
          following  events  which  have not been  consented  to in  advance  by
          Executive in writing; provided that Executive has given written notice
          to the Company within ninety (90) days after the initial occurrence of
          such event and that the  Company  has been given at least  thirty (30)
          days to cure the  situation  (but the  Company  may waive its right to
          cure):  (i) if  Executive  would  be  required  to move  his  personal
          residence  or perform  his  principal  executive  functions  more than
          twenty-five  (25)  miles  from  Executive's  primary  office as of the
          Commencement  Date;  (ii) if, in the  organizational  structure of the
          Company,  Executive would be required to report to a person or persons
          other than the Chief  Executive  Officer;  (iii) if the Company should
          fail to maintain  Executive's base  compensation in effect pursuant to
          Section 2 of this Agreement, or fail to maintain the existing employee
          benefit plans or arrangements  in which  Executive  participates as of
          the date of this  Agreement,  including any material  fringe  benefit,
          bonus plan  and/or  retirement  plan,  except to the extent  that such
          reduction in  compensation  or benefit  programs is part of an overall
          adjustment  in  compensation  and  benefits  for all  employees of the
          Company and the Executive is otherwise compensated for such an overall
          adjustment in an equitable manner; (iv) if Executive would be assigned
          duties and responsibilities  other than those normally associated with
          his  position as  referenced  in Section 1 of this  Agreement;  (v) if
          Executive's  responsibilities  or  authority  have  in  any  way  been
          materially diminished or reduced other than for reasons of Just Cause;
          or (vi) if Executive is not annually reappointed as Co-Chief Operating
          Officer other than for reasons of Just Cause.


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<PAGE>


          (iv) The sum due under  Section  8(b)(i) shall be paid in one lump sum
          within   thirty   (30)   calendar   days   after   such   termination.
          Notwithstanding  the foregoing,  in the event Executive is a Specified
          Employee (within the meaning of Treasury Regulations  ss.1.409A-1(i)),
          then, to the extent  necessary to avoid  penalties  under Code Section
          409A,  payment shall be withheld and shall be paid to Executive on the
          first day of the seventh month  following  Executive's  termination of
          employment by the Company without Just Cause.

          (v) For purposes of Section  8(b),  termination  of employment as used
          herein shall mean "Separation from Service" as defined in Code Section
          409A and the Treasury Regulations promulgated thereunder.

     (c) Disability.

          (i)  Termination  by the Company of  Executive's  employment  based on
          "Disability"  shall occur if: (A) Executive is unable to engage in any
          substantial  gainful activity by reason of any medically  determinable
          physical or mental impairment that can be expected to result in death,
          or last for a  continuous  period of not less than twelve (12) months;
          (B) by  reason  of  any  medically  determinable  physical  or  mental
          impairment  that can be  expected  to  result  in  death,  or last for
          continuous  period of not less than twelve (12)  months,  Executive is
          receiving  income  replacement  benefits for a period of not less than
          three (3) months under an accident and health plan covering  employees
          of the Company;  or (C) Executive is determined to be totally disabled
          by the Social Security Administration.  Executive shall be entitled to
          receive  benefits  under  any  short  or  long-term   disability  plan
          maintained by the Company.

          (ii) The Company shall pay  Executive,  as  disability  pay, a monthly
          payment equal to three-quarters  (3/4) of Executive's  monthly rate of
          base salary,  plus any bonus paid to Executive for the preceding year.
          These  disability  payments shall commence  within thirty (30) days of
          the date of Executive's  termination due to Disability and will end on
          the  earlier  of (A)  the  date  Executive  returns  to the  full-time
          employment  of the  Company in the same  capacity  as he was  employed
          prior to his  termination for Disability and pursuant to an employment
          agreement  between  Executive  and  the  Company;  (B)  the  date  the
          Executive begins full-time  employment with another employer;  (C) the
          date Executive attains the normal age of retirement (as defined in the
          Company's  defined benefit pension plan) or begins receiving  benefits
          under any substitute  retirement  plan adopted by the Company;  or (D)
          the date of Executive's death.  Notwithstanding any other provision to
          the contrary, the Company's obligation for any payments required to be
          made under this Section 8(c) shall be reduced by any proceeds received
          by Executive from disability  income insurance or any other disability
          policy or plan  maintained by the Company for Executive which was paid
          for by the Company as partial  satisfaction  of its  obligation  under
          this Section 8(c).

          (iii) The  Company  shall cause to be  continued  life  insurance  and
          non-taxable medical and dental coverage substantially identical to the
          coverage  maintained  by


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<PAGE>


          the Company for Executive  prior to his  termination  for  Disability.
          This coverage  shall cease upon the earlier of (A) the date  Executive
          returns  to the  full-time  employment  of the  Company,  in the  same
          capacity as he was employed  prior to his  termination  for Disability
          and pursuant to an  employment  agreement  between  Executive  and the
          Company;  (B) the date  Executive  begins  full-time  employment  with
          another  employer;  (C) the date  Executive  attains the normal age of
          retirement or begins receiving benefits under the Company's retirement
          plan; or (D) the date of Executive's death.

          (iv) Notwithstanding the foregoing,  there will be no reduction in the
          compensation  otherwise  payable to Executive during any period during
          which  Executive is incapable of  performing  his duties  hereunder by
          reason of temporary disability.

     (d)  Termination of Employment by the Board of Directors for Just Cause. In
the event  Executive's  employment is terminated  for "Just Cause," no continued
payments or benefits  shall be due under this  Agreement.  For  purposes of this
Agreement,  termination  for "Just Cause" shall be defined as termination due to
Executive's personal  dishonesty,  incompetence,  willful misconduct,  breach of
fiduciary duty involving personal profit,  intentional failure to perform stated
duties,  willful  violation of any law, rule or  regulation  (other than traffic
violations or similar  offenses) or final  cease-and-desist  order,  or material
breach of any provision of this Agreement Any  determination  of "Just Cause" as
defined by this  Section  8(d)  shall be  determined  by a majority  vote of the
entire  membership  of the Board of  Directors at a meeting of such Board called
and  held  for  the  purpose  (after  reasonable  notice  to  Executive  and  an
opportunity for Executive to be heard before the Board with counsel), of finding
that in the good faith  opinion of the Board,  Executive  committed  the conduct
described above and specifying the particulars thereof.

     (e) Voluntary  Termination  of Employment by Executive  Other Than for Good
Reason. The voluntary  termination of employment by Executive during the term of
this  Agreement,  other than for Good Reason,  with the delivery of no less than
sixty (60) days written notice to the Board of Directors,  entitles Executive to
receive only the base salary,  vested  rights,  and all employee  benefits up to
Executive's termination date.

     (f) Termination and Board  Membership.  To the extent Executive is a member
of the board of directors of the Company or the Bank or any of their  affiliates
on the date of an involuntary  termination of employment with the Company or the
Bank or a termination of employment for Good Reason,  Executive  shall be deemed
to have automatically  resigned from all of the boards of directors  immediately
following such termination of employment with the Company or the Bank.

     (g) Termination  and Release of Claims.  Any payments to be made under this
Agreement shall be contingent on Executive's  execution and  non-revocation of a
mutual  release in a form  acceptable  to the  Company  and the Bank;  provided,
however,  that if the Company or the Bank refuse to execute such mutual release,
the  Executive's  obligation  to  execute  and  not  revoke  the  release  as  a
precondition to receiving such severance  benefits shall  terminate.  The mutual
release agreement shall release the Company and the Bank from any and all claims
and


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<PAGE>


other actions by Executive and it shall also release the Executive  from any and
all claims and other actions by the Company and the Bank.

9. Change in Control.

     (a) For purposes of this  Agreement,  a Change in Control of the Company or
the Bank shall be deemed to have occurred if and when:

          (i) there occurs a change in control of the Company or the Bank within
          the meaning of the Home Owners Loan Act of 1933 or 12 C.F.R.  Part 574
          as  applied  to the  Company  or the  Bank as if it  were a  federally
          chartered institution;

          (ii) as a result  of,  or in  connection  with,  any  merger  or other
          business  combination,  sale of assets or contested election,  wherein
          the persons who were non-employee directors of the Company or the Bank
          before such transaction or event cease to constitute a majority of the
          Board of Directors of the Company or the Bank or any  successor to the
          Company or the Bank;

          (iii)  the  Company  or the Bank  transfers  substantially  all of its
          assets to another  corporation  or entity which is not an affiliate of
          the Company or the Bank; or

          (iv) the Company or the Bank is merged or  consolidated  with  another
          corporation   or  entity   and,   as  a  result  of  such   merger  or
          consolidation, less than sixty percent (60%) of the equity interest in
          the  surviving  or  resulting  corporation  is  owned  by  the  former
          shareholders or depositors of the Company or the Bank.

     For purposes of Section 9 of this Agreement,  a Change in Control shall not
occur as a result of the Conversion.

     (b) If  Executive's  employment is terminated for any reason other than for
Just Cause within twelve months  following a Change in Control,  Executive shall
be entitled to receive the greater of the following:

          (i) the amount of the payment and benefits  specified in Section 8(b),
          or

          (ii) the amount of the payment and benefits specified in Section 9(c).

          Such  payment  shall be made in a lump sum  within  thirty  (30)  days
     following  Executive's  termination  of  employment.  For  purposes of this
     Section 9,  termination of employment as used herein shall mean "Separation
     from Service" as defined in Code Section 409A and the Treasury  Regulations
     promulgated  thereunder.   Notwithstanding  the  foregoing,  in  the  event
     Executive  is  a  Specified   Employee  (within  the  meaning  of  Treasury
     Regulations  ss.1.409A-1(i)),  then,  to  the  extent  necessary  to  avoid
     penalties  under Code Section 409A,  payment shall be withheld and shall be
     paid  to  Executive  on  the  first  day  of the  seventh  month  following
     Executive's termination of employment.

     (c) For  purposes of Section  9(b)(ii),  the amount of payment and benefits
shall be equal to:


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<PAGE>


          (i) an amount  equal to three (3) times his "base  amount," as defined
          in Code Section 280G(b)(3), less one (1) dollar; and

          (ii) coverage  under the Company's or Bank's life  insurance  plan and
          non-taxable  medical,  health and dental  plans (each being a "Welfare
          Plan") in the same manner in which Executive  received coverage on the
          last day of his employment with the Company. Executive and his covered
          dependents  (if any)  shall  continue  participating  in such  Welfare
          Plans, subject to the same premium  contributions (if any) on the part
          of Executive as were  required  immediately  prior to his  termination
          until the  earlier of (i) his death;  (ii) his  employment  by another
          employer  other than one of which he is the majority  owner;  or (iii)
          three (3) years from his termination date.

10. Successors and Assigns.

     (a) This  Agreement  shall inure to the benefit of and be binding  upon any
corporate or other  successor of the Company  which shall  acquire,  directly or
indirectly,   by  merger,   consolidation,   purchase  or   otherwise,   all  or
substantially all of the assets of the Company.

     (b) Since the Company is contracting  for the unique and personal skills of
Executive,  Executive shall be precluded from assigning or delegating his rights
or duties hereunder without first obtaining the written consent of the Company.

11.  Amendments.  No amendments or additions to this Agreement  shall be binding
upon the  parties  hereto  unless  made in writing  and signed by both  parties,
except as herein otherwise specifically provided.

12. Applicable Law. This agreement shall be governed in all respects, whether as
to validity,  construction,  capacity,  performance or otherwise, by the laws of
the State of Hawaii,  except to the extent  that  Federal law shall be deemed to
apply.

13. Severability. The provisions of this Agreement shall be deemed severable and
the  invalidity  or  unenforceability  of any  provision  shall not  affect  the
validity or enforceability of the other provisions hereof.

14. Notices. Any notices,  requests,  demands and other communications  provided
for or deemed  necessary by this  Agreement  shall be sufficient if set forth in
writing and delivered in person or sent by registered or certified mail, postage
prepaid,  to, in the case of  Executive,  the last  address  filed in writing by
Executive  with the Company,  or, in the case of the Company,  to the Company at
its main office to the attention of the Board of Directors.

15.  Indemnification.  The Company shall provide Executive (including his heirs,
executors and  administrators)  with coverage  under a standard  directors'  and
officers' liability  insurance policy at its expense, or in lieu thereof,  shall
indemnify Executive (and his heirs, executors and administrators) to the fullest
extent  permitted  under law and  applicable  regulation  or under any  existing
indemnification  agreement by and between  Executive and the Company against all
expenses  and  liabilities  reasonably  incurred  by him in  connection  with or
arising out of any  action,  suit or  proceeding  in which he may be involved by
reason of his having been a director  or officer of the Company  (whether or not
he continues to be a director or officer at the time of


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<PAGE>


incurring  such  expenses or  liabilities).  Such expenses and  liabilities  may
include,  but are not limited to, judgment,  court costs and attorneys' fees and
the cost of  reasonable  settlements.  The Company  shall pay such  expenses and
liabilities in advance of a final judicial decision (hereinafter an "advancement
of expenses");  provided,  however, that, an advancement of expenses incurred by
Executive in his capacity as a director or executive officer of the Company (and
not in any other  capacity in which  service  was or is  rendered  by  Executive
including,  without  limitation,  services to an employee benefit plan) shall be
made only upon  delivery  to the Company of an  undertaking,  by or on behalf of
Executive, to repay all amounts so advanced if it shall ultimately be determined
by final  judicial  decision from which there is no further right to appeal that
Executive is not entitled to be indemnified for such expenses under this Section
15 or  otherwise.  Indemnification  under  this  Section  15  shall  be  made in
accordance with 12 C.F.R. ss.545.121 or any successor thereto.

16.  Entire  Agreement.  This  Agreement  together  with  any  understanding  or
modifications  thereof  as may be agreed to in  writing  by the  parties,  shall
constitute the entire agreement between the parties hereto.

17. Source of Payments.  Notwithstanding  any provision in this Agreement to the
contrary,  to the extent  payments  and  benefits,  as  provided  for under this
Agreement,  are paid or received by Executive under the employment  agreement in
effect  between  Executive  and the Bank,  the payments and benefits paid by the
Bank  will be  subtracted  from any  amount or  benefit  due  simultaneously  to
Executive under similar provisions of this Agreement. Payments will be allocated
in  proportion  to the level of activity  and the time  expended by Executive on
activities related to the Company and the Bank,  respectively,  as determined by
the Company and the Bank.

18. Required Regulatory Provisions.

     (a) The Company may terminate  Executive's  employment at any time, but any
termination by the Company,  other than  Termination  for Just Cause,  shall not
prejudice  Executive's  right to  compensation  or  other  benefits  under  this
Agreement.  Executive shall not have the right to receive  compensation or other
benefits for any period after  Termination  for Just Cause as defined in Section
8(d) hereinabove.

     (b)  Notwithstanding any other provision of this Agreement to the contrary,
any payments made to the Executive pursuant to this Agreement or otherwise,  are
subject to and conditioned upon their compliance with Section 12 U.S.C.  Section
1828(k),   FDIC   regulation   12  C.F.R.   Part  359,   Golden   Parachute  and
Indemnification Payments.

19. Arbitration.

     (a) Any dispute or  controversy  arising under or in  connection  with this
Agreement shall be settled exclusively by arbitration,  conducted before a panel
of three  arbitrators  sitting in a location  selected by Executive within fifty
(50) miles from the location of the Company, in accordance with the rules of the
American Arbitration  Association then in effect. Judgment may be entered on the
arbitrator's award in any court having  jurisdiction;  provided,  however,  that
Executive shall be entitled to seek specific performance of his right to be paid
until the date of


                                       10


<PAGE>


termination  during the pendency of any dispute or controversy  arising under or
in connection with this Agreement.

     (b) In the event any dispute or controversy  arising under or in connection
with  Executive's  termination  is  resolved in favor of  Executive,  whether by
judgment, arbitration or settlement,  Executive shall be entitled to the payment
of all  back-pay,  including  salary,  bonuses and any other cash  compensation,
fringe  benefits and any  compensation  and benefits  due  Executive  under this
Agreement.


20. Payment of Costs and Legal Fees. All reasonable costs and legal fees paid or
incurred by  Executive  pursuant  to any  dispute or question of  interpretation
relating  to this  Agreement  shall be paid or  reimbursed  by the  Company,  if
Executive   is   successful   with  respect  to  such  dispute  or  question  of
interpretation  pursuant to a legal  judgment,  arbitration or settlement.  Such
reimbursements shall be paid to Executive within two and one-half (2 1/2) months
after the dispute is settled or resolved in Executive's favor.

     IN WITNESS WHEREOF,  the parties have executed this Agreement on the latest
date set forth below.

                                       TERRITORIAL BANCORP INC.


November 13, 2009                 By:  /s/ Harold H. Ohama
-----------------                      ----------------------------------------
Date                                   Chairman of the Compensation Committee


November 13, 2009                      /s/ Ralph Nakatsuka
-----------------                      ----------------------------------------
Date                                   Ralph Nakatsuka