Security sale, loan growth boost Territorial Savings Bank

Territorial Savings Bank’s net income surged 35.4% in the first quarter amid solid loan growth and the sale of a security that exceeded a previous write-down nine years ago.

The holding company of the state’s fifth-largest bank, Territorial Bancorp Inc., said Thursday its net income rose to $6.5 million, or 70 cents a share, to easily top analysts’ consensus estimate of 49 cents. A year earlier Territorial earned $4.8 million, or 51 cents a share.

“The company has had another successful quarter,” Territorial Chairman and CEO Allan Kitagawa said. “Despite the increase in interest rates that has occurred over the past year, we have been able to increase the size of our loan portfolio and our interest income.”

Territorial, which generates more than 95 percent of its loans from residential lending, said its overall loans receivable increased 5.4% to $1.6 billion as residential mortgage loan originations exceeded loan repayments. Deposits inched up 0.1% to $1.7 billion. Assets rose 0.4% to $2.1 billion.

The bank’s total interest income from loans, investment securities and other investments rose 2.6% to $18.7 million.

Territorial’s noninterest income, which includes service charges and fees, more than quadrupled to $3.4 million primarily due to a $2.72 million gain on the sale of a trust preferred security investment. The security had been written down in 2010. The $2.72 million gain exceeded the write-down.

The bank’s net interest income — the difference between how much it pays for deposits compared with what it charges to lend out money — slipped 2.6% in the first quarter to $14.8 million. Its net interest margin fell to 2.99% from 3.13%.

Territorial kept its dividend at 22 cents a share. It will be payable May 23 to stockholders of record as of May 9.

Shares of the company fell 19 cents to $28.50 before the results were announced after the close of the market. Territorial’s stock is up 9.7% this year.