Territorial Savings Bank, which generates more than 95 percent of its loans from residential mortgages, continues to reap benefits from the state’s improving economy.

The holding company for the state’s fifth-largest bank said Monday that loans jumped 13 percent to $968.2 million in the fourth quarter from $856.5 million in the year-ago period. Interest from the new loans generated an additional $1 million for the bank in the fourth quarter.

However, Territorial Bancorp Inc. said the bank’s net income dipped 1.7 percent to $3.45 million from $3.51 million a year ago. Earnings per share for both periods was 37 cents. Last quarter’s earnings per share matched analysts’ consensus estimate.

The bank’s earnings were hurt by a 33.7 percent reduction in noninterest income to $1.1 million from $1.7 million. The decline primarily was due to a $440,000 decrease in investment securities sales and a $121,000 decline in service fees on loan and deposit accounts.

For the year, Territorial’s earnings slipped 3.8 percent to $14.1 million, or $1.51 a share, from $14.6 million, or $1.49 a share. Net interest income for the full year was up 7.2 percent at $53.5 million.

"We have been very successful in increasing our net interest income and the size of our loan portfolio in 2014," said Allan Kita­gawa, chairman and chief executive officer of Territorial. "We are working to improve our shareholder returns by continuing our stock repurchase program and paying dividends."

The bank’s net interest income — the spread between its loan and deposit rates — rose 4.4 percent in the fourth quarter to $13.5 million from $13 million a year ago. Its net interest margin slipped to 3.35 percent from 3.38 percent.

During 2014 the bank began its sixth share-repurchase program and increased its dividend for the seventh time in less than three years. On Monday, Territorial said its next quarterly dividend will be paid Feb. 23 but would remain at 16 cents a share.

The bank increased its deposits during the quarter by 5.5 percent to $1.36 billion from $1.29 billion while assets rose 4.6 percent to $1.69 billion from $1.62 billion.

Territorial’s thinly traded stock slipped 1 cent to $21.74 Monday on the Nasdaq Stock Market. The earnings were announced after the market closed.