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Territorial Bancorp Inc. Reports Operating Results (10-Q)

August 14, 2009 | About:
10qk

Territorial Bancorp Inc. (TBNK) filed Quarterly Report for the period ended 2009-06-30.

Territorial Bancorp Inc. intends to operate as the bank holding company for Territorial Savings Bank a federally chartered FDIC-insured savings bank which provides financial services to individuals families and businesses. Territorial Savings Bank accepts deposits; originates home equity loans and lines of credit construction commercial and other non-residential real estate loans consumer loans multi-family mortgage loans and other loans; offers various deposit accounts including passbook and statement savings accounts certificates of deposit money market accounts commercial and regular checking accounts and Super NOW accounts; engages in insurance agency activities; and provides various non-deposit investments such as annuities and mutual funds through a third-party broker-dealer. Territorial Bancorp Inc. is based in Honolulu Hawaii with banking offices located throughout the State of Hawaii..

Highlight of Business Operations:

Assets. At June 30, 2009, our assets were $1.509 billion, an increase of $284.5 million, or 23.2%, from $1.224 billion at December 31, 2008. The increase was caused by an increase in cash and cash equivalents, partially offset by decreases in loans and investment securities held to maturity.

Cash and Cash Equivalents. Cash and cash equivalents were $322.0 million at June 30, 2009 compared to $11.2 million at December 31, 2008. The increase resulted from the receipt of funds for the purchase of shares of common stock in our stock offering, which did not close until July 10, 2009. We received orders for approximately $284.4 million of shares of common stock in our subscription offering. Of the total subscription orders received, $248.9 million of payments came from new funds deposited and $35.5 million came from existing deposits. The increase in cash and cash equivalents also resulted from repayments of investment securities held to maturity and loan repayments and prepayments exceeding the cash we needed to fund loan originations and other operations.

Loans. At June 30, 2009, total loans (including loans held for sale of $2.4 million) were $616.0 million, or 40.8% of total assets. During the six months ended June 30, 2009, the loan portfolio decreased $26.1 million, or 4.1%. The decrease was caused primarily by a decrease in one- to four-family residential real estate loans of $19.5 million, as we sold $58.2 million of longer-term loans during the six months ended June 30, 2009. Home equity loans and lines of credit also decreased by $5.5 million.

We had previously considered our investment in PreTSL XXIV other-than-temporarily impaired as of December 31, 2008, and we recorded a $2.5 million impairment charge during the quarter ended December 31, 2008. Based on our continued review, we considered our investment in this security to have experienced additional other-than-temporary impairment as of March 31, 2009 and June 30, 2009, and recorded an additional $862,000 impairment charge with respect to this security during the six months ended June 30, 2009, of which $765,000 was a credit loss recorded through our income statement as a debit to non-interest income, and $97,000 was recorded as an increase to other comprehensive loss. In addition, the cumulative effect of our adoption of FSP FAS 157-4 and FSP FAS 115-2 and FAS 124-2, effective March 31, 2009, resulted in the reclassification of $1.5 million, net of tax of $958,000, of securities impairment from retained earnings to accumulated other comprehensive loss.

Deposits. During the six months ended June 30, 2009, our deposits grew $297.8 million, or 32.2%. The increase resulted from the receipt of funds for the purchase of shares of common stock in our stock offering, which did not close until July 10, 2009. We received orders for approximately $284.4 million of shares of common stock in our subscription offering. Of the total subscription orders received, $248.9 million of payments came from new funds deposited and $35.5 million came from existing deposits. The increase was also caused by our continuing to promote higher than market rates for our savings accounts (which increased $97.6 million during the six-month period), offsetting a decrease of $43.3 million in certificates of deposit. During the six months ended June 30, 2009, we continued to lower the rates we pay on certificates of deposit because of increased liquidity from other sources, such as principal repayments on loans and mortgage-backed securities, allowing these deposits to run off.

Equity. At June 30, 2009, our equity was $104.2 million, an increase of $4.9 million, or 4.9%, from $99.4 million at December 31, 2008. The increase resulted from net income of $4.9 million for the six months ended June 30, 2009.

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