Territorial Savings Bank has received regulatory approval to convert to a Hawaii-chartered savings bank from a federal savings bank.

The state’s fifth-largest bank had been organized first in 1921 as a mutual building and loan association.

“We are pleased that Territorial Savings Bank wanted to become a state-chartered savings bank,”  Ikeda Catalani, commissioner of the state Division of Financial Institutions, said Friday in a statement. “We understand the local market and provide guidance to our state-chartered institutions of best practices so that those institutions can continue to operate in a safe and sound manner. We note that during the financial crisis, Hawaii did not have any bank closures.” 

As a state-chartered financial institution, Territorial will continue to accept deposits from the public and invest those deposits, together with funds generated from operations and borrowings, in one- to four-family residential mortgage loans and investment securities. Territorial also originates home equity loans and lines of credit, construction, commercial and other non-residential real estate loans, consumer loans, and multi-family mortgage loans. 

Territorial became the first bank in Hawaii to become state-chartered since the passing of Congress’ Dodd-Frank Act in 2010. The act provided many levels of consumer protection, including those at the banking level. 

Territorial, which has 28 branches, applied to convert from a federal chartered savings bank to a state chartered savings bank on Nov. 1, 2013. It has 28 full-service branch offices located throughout the state.  

Territorial Chairman and CEO Allan Kitagawa said the new charter will lower the regulatory cost to the bank.