SAN JUAN, Puerto Rico -- Oriental Federal Savings Bank reported a 109% increase in net income for its fiscal year, ended June 30, and an official predicted further improvement during the next two years.

The thrift, the fifth-largest in Puerto Rico, attributed the increase to lower cost of funds.

Oriental president Jose Fernandez said in an interview that a reduction in the average cost of funds - to 5.56% from 6.83% in the preceding fiscal year - had boosted net income to $2.1 million, or $1.25 a share, from $1 million, or 60 cents a share.

For the fourth quarter, the Humacao-based thrift reported net income of $636,000, an 85% increase from the same quarter the year before.

Mr. Fernandez said anticipated growth in mortgages, leasing, and trust services will be supplemented by additional corporate trust services.

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