Territorial Savings Bank’s loans increased by double digits for the sixth straight year but net income fell 50.3 percent after taking a $2.05 million one-time charge in the fourth quarter related to the revaluation of tax-related assets.
The state’s fifth-largest bank said today it had net income of $2.2 million, or 23 cents a share, compared with $4.4 million, or 46 cents a share, in the year-earlier quarter. Excluding the write-down resulting from the newly enacted tax law, parent company Territorial Bancorp Inc. said net income would have been $4.2 million, or 44 cents a share. The bank said the reduction of the corporate tax rate to 21 percent from 35 percent will help it in the future.
“The company continues to perform well despite the increase in income tax expense that occurred in the fourth quarter due to changes in federal tax law,” Territorial Chairman and CEO Allan Kitagawa said. “Hawaii’s economy, especially the visitor industry, continues to improve. The growth in Hawaii’s economy has allowed us to increase the size of our loan portfolio and total deposits, which in turn, has increased our net interest income (the spread between interest paid on deposits and the rates received as interest on loans).”
Loans rose 11.5 percent to $1.5 billion. Deposits gained 7 percent to $1.6 billion. And assets grew 6.7 percent to top $2 billion for the first time.
The bank said its non-interest expense rose to $10.3 million in the fourth quarter from $8.2 million in the year-earlier period primarily due to a $1.7 million increase in salaries and employee benefits that resulted from $1,000 year-end bonuses paid to most non-management employees.
For the year, Territorial’s earnings fell 8.5 percent to $15 million, or $1.57 a share, from $16.3 million, or $1.74 a share, in 2016. Excluding the tax write-down, net income would have been $17 million for the year.