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Improvement in its basic banking and fee businesses, along with a sharp reduction in loan-loss provisions, fueled Lockport Savings Bank's 14 percent increase in second-quarter net income, the thrift said Friday.

For the three-month period ending June 30, Lockport Savings had net income of $3.1 million, up from $2.71 million one year ago.

Net interest income, or the money earned on loans minus money paid on deposits, rose 10 percent to $9.38 million from the $8.55 million recorded during the second quarter of 1996. The increase was primarily attributed to an additional $2.2 million of loan interest and security investments.

Lockport Savings' loan portfolio grew to $611.76 million at June 30, compared to $559.38 million one year ago, while securities gains jumped $193,000 to $198,000.

"Net income is being positively impacted by a combination of the bank's growth and improved yields earned on loans and securities," said William E. Swan, the thrift's president and chief executive officer.

While the loan portfolio grew, the thrift's total nonperforming and non-interest-accruing loans declined to $7 million from $7.92 million one year ago.

Resolution of its lending relationship with Bennett Funding Inc. allowed the thrift in the quarter to lower its nonperforming assets by more than $1.3 million and to cut its loan-loss provision to just $154,000 from $1.1 million one year ago.

The bank was among 200 financial institutions and 12,000 individual investors scammed for more than $700 million by Bennett, a Syracuse-based office-equipment leasing firm.

Non-interest income, primarily added fee income from annuity sales and the thrift's debit card, rose 17 percent to $1.47 million from $1.26 million. But non-interest expenses, heavily affected by the addition of new offices, jumped 35 percent to $5.93 million from $4.4 million one year ago.

Through the first half of 1997, net income was up 7 percent to $5.98 million from $5.59 million. Total deposits jumped 9 percent to $983.84 million from $900.93 million.

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