Territorial Savings Bank's earnings fall 24% as securities, loan sales drop

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Jan. 28—Territorial Savings Bank's net income sank 24 % in the fourth quarter as income from the sales of securities and loans declined and the company released less money from its loan-loss reserve than it did in the year-earlier quarter.

"The fourth quarter of 2021 was very challenging, " Territorial Chairman and CEO Allan Kitagawa said Thursday in a statement. "We have performed well despite relatively low interest rates for new loans, which has decreased asset yields. Hawaii's economy continues to improve and we remain well-positioned to serve our community with our strong balance sheet."

Territorial Bancorp Inc., holding company of the state's fifth-largest bank, posted net income of $4.2 million, or 46 cents a share, to beat analysts' estimate of 42 cents. In the year-earlier quarter, Territorial earned $5.5 million, or 60 cents a share.

The bank didn't have any sales of investment securities last quarter, compared with $462, 000 in the year-earlier period. The bank also generated just $79, 000 on the sale of loans last quarter, versus $639, 000 in the fourth quarter of 2020.

Territorial released from its loan-loss reserve $140, 000 last quarter that had been put aside for potential loan losses. That compares with the $679, 000 released back to its income statement in the fourth quarter of 2020.

For the year, Territorial's earnings fell 6.3 % to $17.4 million, or $1.91 a share, from $18.6 million, or $2.01 a share, in 2020.

Territorial's loans receivable fell 7.4 % to $1.30 billion as loan repayments and sales exceeded new loan originations. Deposits rose 1.3 % to $1.68 billion.

Territorial's net interest income, which is the difference between what the bank generates from loans and pays out in deposits, edged up 0.4 % to $13.9 million from the year-earlier quarter. Its net interest margin was stable at 2.72 %, compared with 2.73 % in the year-earlier quarter.

The bank's noninterest income, which includes charges and fees, fell 48 % to $1.3 million from $2.5 million. The decline in noninterest income was primarily due to a $441, 000 decrease in service fees on loans and deposit accounts, a $462, 000 decrease in the sale of investment securities and a $560, 000 decrease in the gain on the sale of loans.

Territorial also declared a quarterly dividend of 23 cents a share that will be paid Feb. 24 to stockholders of record as of Feb. 10.

Shares of the company fell 14 cents to $24.62 before the earnings were announced.

FOURTH-QUARTER NET $4.2 million YEAR-EARLIER NET $5.5 million