Territorial Savings Bank’s earnings declined 7.6 percent in the fourth quarter, primarily due to a decrease in loan sales and an increase in its provision for income taxes.

The state’s fifth-largest bank, which generates more than 95 percent of its loans from residential mortgages, said Thursday that net income fell to $3.5 million, or 37 cents a share, from $3.8 million, or 37 cents a share, in the year-earlier period.

For the year, Territorial’s net income declined 1.3 percent to $14.6 million, or $1.49 a share, from $14.8 million, or $1.45 a share.

"Despite the low-interest-rate environment of the past year, we have worked hard to increase our net interest margin and our earnings," said Allan Kitagawa, chairman and chief executive officer of Territorial.

Territorial’s net interest margin, the spread between its lending rates and deposit rates, has increased for three consecutive quarters and was 3.38 percent in the fourth quarter. A year ago the net interest margin was 3.24 percent.

"I am pleased with the performance of the company since our stock conversion in 2009," Kitagawa said.

In July of that year, the company converted from mutual to full stock ownership. The stock of parent company Territorial Bancorp Inc. has more than doubled since its initial public offering at $10 a share. Territorial Bancorp Inc.’s stock closed up 12 cents Thursday at $22.44. The results were announced after the market closed.

Unlike other Hawaii banks, Territorial has aggressively been increasing its quarterly dividends. It raised its quarterly payout six times in the past three years, as well as declaring two additional 10-cents-a-share special dividends. The bank said Thursday it would maintain its next quarterly dividend at 14 cents a share. It will be payable Feb. 27 to shareholders of record as of Feb. 13.

Territorial’s noninterest income, which includes an 83.1 percent drop in gains from loan sales, declined 25 percent last quarter to $1.7 million from $2.3 million in the year-earlier quarter.

Net interest income rose 7.6 percent to $13 million from $12.3 million.

Assets increased 2.7 percent to $1.62 billion from $1.58 billion. Loans receivable grew 10.5 percent to $856.5 million from $774.9 million due to an increase in residential mortgage loan originations. And deposits rose 4.1 percent to $1.29 billion from $1.24 billion.