Territorial earnings Territorial Savings Bank's net income rocketed 150 percent in the first quarter from a year ago as the company continued to take market share from its competitors.
soar 150 percent
Competitive rates have boosted
the bank's market shareBy Dave Segal
dsegal@starbulletin.comAllan Kitagawa, chairman and chief executive officer of Territorial, said yesterday the bank's 1.75 percent regular passbook rate has generated "a lot of activity" because it is higher than the 0.60 percent rate he said is the average of other banks.
Kitagawa cited Territorial's growth in assets, increase in net interest margin and low loan-delinquency rate for its improved performance.
The privately held bank, a wholly owned subsidiary of Territorial Mutual Holding Co., had earnings of $3.274 million in the quarter ending March 31 compared with $1.307 million a year earlier.
He also said the bank continues to see a steady volume of refinancing because of its average loan rates of 5.5 percent for 30-year loans and 4.75 percent for 15-year loans. He said those rates are comparable with industry averages.
"Because interest rates are so low, we're still having a lot of refinancing," Kitagawa said. "So far, the war has not really affected our loan volume. But at some point in time, because tourism is really slowing down in Hawaii with the amount of visitors coming in, it's got to impact new home purchases. I'd hate to see what's going to happen in a couple of months with no tourists coming in. Unemployment will probably start going up slightly."
In fact, Kitagawa said the Federal Open Market Committee may even lower rates from its current 1.25 percent federal funds rate. The committee next meets May 6.
"Some of the (national) numbers coming out show the economy is weak," Kitagawa said. "There may be another Federal Reserve rate cut again. If that happens, rates may stay at this level for awhile. I don't think the end of the war will cause rates to skyrocket. I think we'll still be in this range so it's still a great opportunity for people to refinance."
Territorial's total assets in the quarter jumped 40.8 percent to $821 million from $583 million a year ago. Total deposits rose 32.1 percent to $692 million from $524 million. And mortgage loans and mortgage-backed securities increased 47.6 percent to $781 million from $529 million. Mortgage-backed securities are loans that are 100 percent guaranteed by federal agencies Freddie Mac, Freddie Mae and Ginnie Mae.
"We're growing in assets an average of about 20-plus million a month and a lot is coming from our competitors," Kitagawa acknowledged.
Territorial, which deals nearly exclusively in residential loans, only had three delinquencies on its books, totaling $517,000 as of March 31.
"Those were only like 30 or 60 days, not bad delinquencies," Kitagawa said.
Territorial, which in September converted from a state-chartered savings and loan association to a federally chartered savings bank, saw its net interest margin in the quarter rise to 3.67 percent from 3.39 percent a year ago. Net interest margin is the difference between what the bank earns on loans and investments and the interest it pays on deposits.
The bank's efficiency ratio, which measures in percentages how much it costs the bank to make a dollar of revenue, improved to 46 percent, or 46 cents, from 65 percent, or 65 cents. Territorial's return on equity, which measures how well it used reinvested earnings to generate additional earnings, increased to 24 percent from 16 percent a year ago.
Territorial Savings