STAR-BULLETIN / JANUARY 2002
Allan Kitagawa, chief executive officer of Territorial Savings Bank, credits the bank's organization as a mutually owned company with allowing it to pay higher interest rates to customers.
Adding territory Territorial Savings Bank, continuing to fire on all cylinders, saw its net income rocket 172.7 percent in the fourth quarter as assets, loans and deposits all surged at the mutually owned institution.
Territorial Savings Bank
earnings jump 144 percent for 2002By Dave Segal
dsegal@starbulletin.comThe bank, a wholly owned subsidiary of Territorial Mutual Holding Co., also benefited from a strong credit portfolio.
"We may have found some extra cylinders," said Allan S. Kitagawa, chairman and chief executive officer of Territorial. "We're doing very well. Our delinquencies (four as of Dec. 31) are almost nonexistent."
Territorial, which in September converted from a state-chartered savings and loan association to a federally chartered savings bank, had fourth-quarter net income of $3.0 million, up from $1.1 million a year earlier, while its 2002 earnings surged 144.4 percent to $8.8 million from $3.6 million in 2001.
As of Dec. 31, total assets were $741.4 million, up 33.9 percent from $553.6 million a year earlier; total loans were $287.1 million, up 19.6 percent from $240.1 million; and total deposits were $618.8 million, up 29.8 percent from $476.6 million. Included in the total assets are $405.5 million from Territorial's mortgage-backed securities portfolio, which jumped 59.7 percent from $253.9 million a year earlier. Mortgage-backed securities, which use underlying real estate loans as collateral, are 100 percent guaranteed by government-sponsored agencies Freddie Mac, Freddie Mae and Ginnie Mae.
The bank's net interest margin, or the difference between interest earned on loans and investments minus interest paid on deposits, ended the year at 3.85 percent compared with 3.44 percent a year earlier.
Kitagawa said Territorial's assets should keep growing since the bank's 1.75 percent regular passbook savings interest rate is among the highest in the state and will continue to attract depositors.
"That's one of the beauties in staying a mutual," Kitagawa said of the holding company. "We don't have stockholders, and instead of paying them dividends, we can pay the depositors higher rates. I think the majority of (financial institutions) are paying .65 percent. We're paying almost a percent higher than anybody else. If rates do go up, the others have to go up first and we can kind of hold our own."
Territorial Mutual Holding, which comprises the depositors, owns 100 percent of the bank's stock.
Kitagawa, acknowledging that 2002 was "an extraordinary year," said he's projecting earnings to grow 50 percent this year, with assets to grow by $100 million and deposits to increase by $80 million.
Kitagawa also said the bank also has protected itself against the possibility of rising rates by taking long-term advances at 2 percent to 3 percent from the Federal Home Loan Bank, which supplies credit reserves for savings and loans and other financial institutions.
"We've been borrowing money for the last three, four years at about 3 percent, so we've fixed our costs," he said. "That will help us in the long run besides deposits."
Territorial, which didn't open any new branches last year, will open its 18th branch at the end of this month at Kilohana Square in Kapahulu, Kitagawa said. He also said Territorial will open branches in Kapolei and Mililani by the end of the year and currently is scouting locations in Kahala to add a branch. The Territorial branch in Lahaina will be relocated to a better site in the area, Kitagawa added.
Territorial Savings Bank
