Territorial Savings and Loan Association, the only savings and loan in Hawaii that hasn't changed its structure, been bought or merged since its founding in 1921, finally is restructuring. Territorial Savings
plans structural changesBy Russ Lynch
rlynch@starbulletin.comThe association wants to become a federally chartered mutual savings bank under a new three-tier structure. Branches would be renamed Territorial Savings Bank. The top two levels of the corporate structure would become holding companies, while the bottom level becomes the savings bank.
The change will not affect customers -- the depositors and borrowers who own the savings and loan -- or their accounts, and will be transparent to them, Allan S. Kitagawa, chairman and chief executive officer, said yesterday.
Through a complex series of changes, the new structure will allow Territorial to issue stock in a holding company at mid-level in the new structure, allowing outside ownership of up to 49.99 percent of the business.
However, "Territorial has no plans to issue stock," Kitagawa said. The new structure will allow it to bring in outside investors quickly through a debt formula that would keep borrowers and depositors as owners of a holding company while the savings bank itself would get new capital.
The intermediate holding company would be able to borrow funds and the money could be used to boost the capital of the savings and loan, enabling it to expand without interfering with overall ownership by Territorial mutual customers, Kitagawa said.
Territorial is planning a vigorous expansion and the new capital structure is aimed at making that possible, Kitagawa said.
The current owners, or "members," of Territorial Savings and Loan Association will vote on the changes at 10 a.m. Sept. 18 in Territorial's headquarters, 1132 Bishop St.
Financial results listed in the proxy statement for the restructuring plan show Territorial had assets of $553.7 million at the end of 2001, up 11.7 percent from $495.8 million at the end of 2000. In 2001 the business posted a net profit of $3.6 million, up 33.3 percent from $2.7 million in 2000.