Territorial’s
profit suffers

The bank's expansion helps drive up
expenses in the first quarter

Territorial Savings Bank's profit fell 9.5 percent in the first quarter to $3.7 million from $4.09 million a year ago, the bank said yesterday.

"It's been kind of a ho-hum quarter. Obviously, we're hoping to do better," said Stanley Tanaka, vice president of research and development.

The state's fifth-largest bank in terms of assets has been on a growth track that boosted total deposits and total assets in the quarter, but also increased expenses, Tanaka said.

Territorial opened its 21st branch in Kapolei in the first quarter. The bank also expects to open a branch in Kahala in the second quarter and to expand to Waipio.

"We have to watch our expenses, but we're going to continue trying to grow," Tanaka said. "We're still looking for more branches."

Total deposits rose 13.6 percent to $1.02 billion during the first quarter, up from the year-earlier $899 million.

Territorial's assets rose to $1.24 billion from $1.06 billion, a 17 percent increase from the first quarter of 2004.

"We are very pleased with the growth of our assets," Tanaka said, adding that Territorial's assets have posted double-digit increases for the past three years.

As a result of its expansion efforts, Territorial's new loan volume increased about 29 percent to $1.2 billion as compared with the fourth quarter of 2003's $909.7 million.

The bank's return on equity, which measures how well it used reinvested earnings to generate additional earnings, declined to 16.25 percent from 21 percent.

The bank's efficiency ratio, a measure of how much it costs the bank to make a dollar of revenue, improved to 45.98 percent from 48.14 percent as Territorial spread its expansion efforts.

Territorial's first-quarter performance also slipped because this year there wasn't as much volatility in the securities portfolio, Tanaka said. Last year, the bank capitalized on interest-rate fluctuations by making gains on the sale of mortgage-backed securities.

"There wasn't as much opportunity for those kinds of gains this year," Tanaka said.