The parent of Territorial Savings Bank, which generates more than 95 percent of its lending from residential mortgages, said earnings edged up 1.6 percent in the second quarter due to increased interest and dividend income generated from loans and investment securities.

Territorial Bancorp Inc., holding company for the state’s fifth-largest bank, said Thursday it had net income of $3.72 million, or 40 cents a share, compared with $3.66 million, or 36 cents a share, in the year-earlier period. The bank said the interest from loans rose year-over-year by $561,000 to $9.8 million while interest from investment securities increased $568,000 to $5.1 million.

The bank’s loans receivable also jumped 9.9 percent to $903 million from $821.8 million.

"The increase in the size of our loan portfolio has been a major contributor to our net interest income growth for the (past) three months," said Allan Kitagawa, chairman and chief executive officer of Territorial.

Territorial’s deposits rose 6.7 percent to $1.32 billion from $1.24 billion in the year-earlier quarter, and assets increased 5.5 percent to $1.65 billion from $1.56 billion.

Net interest income — the spread between lending and deposit rates — rose 9.8 percent to $13.4 million from $12.2 million as total interest and dividend income increased to $14.9 million from $13.8 million in the year-earlier quarter. Net interest margin improved to 3.39 percent from 3.23 percent.

Noninterest income, which includes service charges and fees, fell 44.7 percent to $1.3 million from $2.3 million in the year-earlier quarter due to smaller gains on the sale of loans and investment securities.

The company’s asset quality remained strong. Its ratio of nonperforming assets — loans 90 or more days delinquent — to total assets improved to 0.31 percent from 0.34 percent and continues to remain one of the lowest in the country.

The bank, which had increased its quarterly dividend six times in just more than two years, maintained its quarterly payout at 15 cents a share.

Territorial’s stock closed down 5 cents at $20.10 Thursday. Earnings were released after the market closed.