Territorial’s earnings fall 4.8% but exceed analysts’ estimates

Territorial Bancorp Inc. said net income slipped 4.8 percent in the second quarter due to lower interest earned on its investment securities.

The parent of Territorial Savings Bank, the state’s fifth largest, said Thursday it had net income of $3.7 million, or 36 cents a share, to beat analysts’ consensus estimate of 32 cents a share. A year ago the company had earnings of $3.8 million, or 37 cents a share.

Territorial said the return on its investment securities fell to $4.5 million from $6.3 million in the year-earlier quarter as higher-yielding mortgage-backed securities were repaid and securities with lower yields were added to the investment portfolio.

An increase in the number of new residential mortgages resulted in the bank’s loans jumping 13.2 percent to $821.8 million from $726.2 million in the year-earlier period. Territorial typically generates about 95 percent of its loans from residential mortgages.

"Hawaii’s economy continues to improve primarily because of growth in the visitor and construction industries," Territorial Chairman and CEO Allan Kita­gawa said.

"We have been successful in increasing the size of our mortgage loan portfolio despite the increase in mortgage interest rates that occurred in the second quarter."

Total assets and deposits were both virtually flat compared with a year ago at $1.6 billion and $1.2 billion, respectively.

Nonperforming assets — loans delinquent 90 days or more — rose 22.2 percent to $5.4 million from $4.4 million a year ago. But the ratio of nonperforming assets to total assets of 0.34 percent remained one of the lowest in the country, the bank said.

Territorial has 27 branches statewide. Shares of the company rose 8 cents Thursday to $22.82 on the Nasdaq Stock Market. Earnings were released after the market closed.