Monday, October 5, 2015         

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Territorial Bancorp boosts profits

The bank earned $3.2 million in the fourth quarter but is wary about 2011

By Dave Segal


Territorial Bancorp Inc., holding company for Hawaii's fifth-largest bank, posted a 6.3 percent increase in fourth-quarter earnings as loans and deposits grew, its credit portfolio remained solid and it benefited from a tax settlement with the state.

Fourth-quarter net

$3.2 million

Year-earlier net

$3 million
"We are pleased with Territorial's performance in a difficult economic environment and we will continue to focus on good asset quality," Allan Kitagawa, chairman and chief executive officer, said yesterday. "We just try to do good underwriting. Either people qualify for a loan or they don't."

Yet, Kitagawa echoed the cautious sentiments expressed over the past two weeks by the CEOs of the state's two largest banks: First Hawaiian Bank's Don Horner and Bank of Hawaii's Peter Ho.

"I'm very cautious about 2011," Kitagawa said. "We're just not sure where rates are going to go. It's just unpredictable. One day it's up, the next day it's down. I do agree that the Hawaii economy is improving significantly from the past, but I can't say it's going to continue. I just don't know."

Net income last quarter was $3.2 million, or 28 cents a share, compared with earnings of $3 million, or 27 cents a share, in the year-earlier period. Included in last quarter's income was a $1 million state tax refund settlement dating back over a period of years.

Analysts were forecasting earnings per share of 27 cents.

For the year, Territorial's earnings rose 27.3 percent to $11 million, or 97 cents a share, from $8.7 million, or 77 cents a share, in 2009.

Shares of Territorial Savings Bank's parent, which began trading at $10 in July 2009 after the company converted from mutual to full stock ownership, slipped 27.5 cents, or 1.4 percent, to $19.35 yesterday. Earnings were announced after the market closed.

Territorial also maintained its dividend at 7 cents a share. It will be payable March 3 for shareholders of record as of Feb. 17.

The bank's revenue, which encompasses both net interest and noninterest income, rose 3.1 percent to $12.9 million from $12.5 million. Net interest income, the difference between what it pays depositors and what it brings in from loans, rose 6.9 percent to $12 million from $11.2 million.

Noninterest income, which includes charges and fees, fell 28.7 percent to $939,000 from $1.3 million a year earlier primarily due to a $76,000 reduction in service fees on loan and deposit accounts, a decrease of $115,000 in income earned on bank-owned life insurance and a decrease of $172,000 from the gain on loan sales.

Total assets rose 6.3 percent to $1.44 billion from $1.39 billion a year ago. Deposits grew to $1.08 billion from $1.02 billion, and loans receivable grew 7.4 percent to $641.8 million from $597.7 million due to an increase in residential mortgage loan production.

Territorial's asset quality remained strong as it reduced the amount it set aside for potential loan losses to $69,000, compared with $86,000 in the year-earlier quarter. Nonperforming assets were $808,000, or 0.06 percent of total assets, compared with $679,000, or 0.05 percent of total assets in 2009.

"Asset quality continues to remain very stable with minimal nonperforming assets," Sterne Agee analyst Mike Shafir said. "And net interest income, which accounts for the vast majority of revenue at the bank, continued to increase."

Territorial opened its 26th branch overall and 20th on Oahu in December on the corner of Piikoi and Beretania streets.

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