Territorial Bancorp Inc.’s earnings declined 4.7 percent in the third quarter due to expenses related to the death of a longtime board director.

Harold Ohama, 76, who had been a director for 15 years, died July 17. As a result, Territorial accelerated Ohama’s stock options and restricted stock granted under the company’s 2010 Equity Incentive Plan that previously was being amortized through August 2016.

The holding company for Territorial Savings Bank reported $696,000 in pretax stock benefit plan expenses for Ohama.

The state’s fifth-largest bank said Thursday it ended the quarter with net income of $3 million, or 28 cents a share, compared with $3.1 million, or 28 cents a share, in the year-earlier period.

Excluding the one-time expense, which came to $418,000 after taxes or 4 cents a share, earnings would have increased by $270,000, or 8.6 percent, and been 32 cents a share.

The consensus of four analysts surveyed by Reuters was for 29 cents a share, but it wasn’t clear whether the analysts had factored the Ohama expense into their numbers.

The company kept its quarterly dividend at 9 cents a share. It will be payable Dec. 1 to stockholders of record as of Nov. 17.

"We continued to maintain our core earnings for the third quarter of 2011," Territorial Chairman and CEO Allan Kitagawa said. "We have kept our focus on making quality mortgage loans and maintaining our net interest margin in a very difficult economic environment."

Territorial’s net interest income, the difference between what it pays depositors and what it brings in from loans, rose 10.3 percent to $12.9 million last quarter from $11.7 million in the year-ago period. The bank said the gain was due to a $397,000 increase in interest and dividend income earned and a $807,000 decline in interest expense. The bank’s net interest margin improved to 3.53 percent from 3.33 percent in the year-earlier quarter.

Noninterest income, which includes charges and fees, increased 12 percent to $1.2 million from $1 million in the year-ago quarter.

Loans receivable, benefiting from an increase in residential mortgage loans, grew to $662.7 million from $637.8 million a year ago.

"It’s more of the same; it’s pretty positive," New York-based Sterne Agee analyst Mike Shafir said about the bank’s overall financial results. "They had a nonrecurring charge on the death benefit, fee income was down slightly (from the second quarter) but not a lot — and there’s some seasonality in those numbers — and credit remained pretty benign. It’s steady as it goes, and they’re doing a pretty good job."

The bank, which focuses on the residential loan market, had a ratio of nonperforming assets to total assets last quarter of 0.17 percent compared with 0.04 percent a year ago.

The bank said it had 11 delinquent loans — 90 days or more past due — totaling $2.4 million at the end of last quarter. A year earlier its delinquent loans totaled $291,000. It also added to its income $39,000 last quarter that it had set aside for potential loan losses.

In the third quarter of 2010, Territorial put aside $118,000 for potential loan losses.

Territorial said total assets grew last quarter to $1.52 billion from $1.44 billion, while deposits increased to $1.14 billion from $1.08 billion in the year-earlier period.

Territorial’s stock rose 37 cents, or 1.9 percent, to $19.81 Thursday on the Nasdaq Stock Market. Earnings were announced after the market closed.

The bank, which has 27 branches statewide, began trading at $10 in July 2009 after converting from mutual to full stock ownership.