Territorial earnings
increase 13%

Territorial Savings Bank posted a 13 percent increase in earnings for the second quarter, as net income for the period rose to $3.6 million from $3.2 million during the same time last year.

Stanley Tanaka, senior vice president for Territorial, attributed the rise in net income to an increase in the bank's assets, which was driven largely by retail banking business.

"Our strategy has always been on passbook accounts," Tanaka said.

Total assets also rose by about 9 percent to $1.2 billion from $1.1 billion, while total deposits grew by about 6 percent, from $1.03 billion in the quarter ended this June from $964 million in the quarter ended June 2004.

Territorial has been in a growth mode recently, enlarging from 18 branches last June to 22, including recently opened branches in Kahala and Kapolei. The bank has two more branches in the works, in Waipio and Kalihi, Tanaka said.

The bank, fifth largest in the state in terms of assets, is privately held by Territorial Mutual Holding Co.

Territorial also enjoyed growth in its mortgage holdings, as its mortgage loans and mortgage-backed securities rose to $1.2 billion from about $1 billion. Mortgage-backed securities are securitized loans backed by Freddie Mac, Freddie Mae and Ginnie Mae.

Territorial's net interest margin, which measures the spread between what it pays depositors and what it brings in from loans, dropped to 3.5 percent this year compared with 3.8 percent in last year's quarter, but net interest income rose to $10.6 million from $9.9 million during the same quarter a year ago.

The bank's return on equity, a measure of how well it used reinvested earnings to generate additional earnings, dropped to 15.2 percent from 15.6 percent, while its efficiency ratio, which measures in percentage terms how much it costs the bank to make a dollar of revenue, rose to 50.5 percent from 44.4 percent.