Territorial Bancorp Inc. doubled its net income in the first quarter and boosted its dividend 29 percent as it beat analysts’ estimates during what has been a tough time for banks nationwide.
The holding company for Territorial Savings Bank said yesterday it had earnings of $3 million, or 26 cents a share, compared with $1.5 million, or 13 cents a share, a year ago. The consensus of three analysts was 24 cents.
"Our core earnings for the first quarter were good and we will continue to focus on maintaining the quality of our mortgage loans in a still-difficult economic environment," said Allan Kitagawa, chairman and CEO of Territorial, the state’s fifth-largest bank in terms of assets.
Territorial, which primarily focuses on the home loan market, showed continued growth. Loans receivable increased 8.3 percent to $652.5 million from $602.7 million in the year-earlier quarter due to an increase in home loans.
"They had very solid earnings," said Sterne Agee analyst Mike Shafir in New York. "Their net interest margin was up, loan growth was up and they continue to manage capital in a shareholder-friendly manner in terms of the dividend going up. Loan growth is very positive because there’s been very limited loan growth industrywide."
The company’s board also increased the dividend to 9 cents a share from 7 cents, payable June 1 to stockholders of record as of May 18.
Shares of the company slipped 2 cents to close at $19.93 on the Nasdaq Stock Market yesterday before the earnings were announced.
The bank’s revenue, which encompasses both net interest and noninterest income, rose 35.9 percent to $13.6 million from $10 million in the year-earlier quarter.
Net interest income, the difference between what it pays depositors and what it brings in from loans, rose 10.1 percent to $12.5 million from $11.4 million. The bank said the gain in net interest income was due to its net interest expense declining to $2.8 million from $4 million because of the lower interest rate environment. The bank’s net interest margin improved to 3.53 percent from 3.38 percent in the year-earlier quarter.
Noninterest income, which includes charges and fees, swung to a net of $1.1 million from a loss of $1.3 million in the year-ago quarter when the bank recorded an impairment charge of $2.4 million in its securities portfolio.
Total assets rose 5.6 percent to $1.49 billion from $1.41 billion a year ago and deposits gained 5 percent to $1.1 billion from $1.04 billion.
Its asset quality remained strong as the ratio of nonperforming assets to total assets edged up to 0.08 percent from 0.06 percent in the year-earlier quarter.
The bank set aside $108,000 for potential loan losses last quarter compared with no loan-loss provision in the first quarter of 2010.
Territorial, which has 26 branches statewide, began trading at $10 in July 2009 after the company converted from mutual to full stock ownership.