Territorial Savings Bank posted double-digit loan growth and increased its dividend for the seventh time in less than three years despite earnings declining 9.6 percent in the third quarter.

Parent company Territorial Bancorp Inc. said Thursday that net income fell to $3.5 million, or 37 cents a share, from $3.8 million, or 39 cents a share, in the year-earlier period.

Loans receivable at the state’s fifth-largest bank jumped 11.8 percent to $925.5 million from $827.9 million a year ago.

Territorial also said it was boosting its dividend by a penny to 16 cents a share that will be payable Nov. 26 to stockholders of record as of Nov. 13. That equates to an annualized yield of 2.92 percent based on Thursday’s closing price of $21.95.

"During the quarter, loans and deposits continued to grow," Chairman and CEO Allan Kitagawa said. "Our net interest margin (the spread between loans and deposits) has improved while credit quality remains strong. Our balance sheet and capital ratios remain solid."

Territorial, which generates more than 95 percent of its lending from residential mortgages, said residential mortgage loan originations exceeded loan repayments and sales. The loans were funded by a $38.5 million increase in deposits from the second quarter.

On a year-over-year basis, Territorial’s deposits rose 5.5 percent to $1.33 billion from $1.26 billion from the third quarter of 2013.

The bank’s net interest income rose 6.9 percent to $13.4 million from $12.6 million in the year-earlier quarter.

Noninterest income, which includes service charges and fees, decreased 39.8 percent to $1.4 million from $2.3 million primarily due to a $530,000 decrease in investment securities sales and a $247,000 decline in loan sales.

Assets rose 6.1 percent to $1.66 billion from $1.56 billion.

The company’s asset quality remained strong. Its ratio of nonperforming assets — loans 90 or more days delinquent — to total assets improved to 0.30 percent from 0.37 percent and continues to remain one of the lowest in the country.