BARI Bancorp Rhode Island, Inc. (MM)

Bancorp Rhode Island, Inc. (NASDAQ: BARI), the parent company of Bank Rhode Island, today reported net income of $2.1 million, or $0.44 diluted earnings per share (EPS), for the quarter ended December 31, 2009, compared to net income of $2.3 million, or $0.48 diluted EPS, after preferred stock dividends and discount accretion, for the fourth quarter 2008.

Net income for 2009 was $6.5 million, or $0.90 diluted EPS, after preferred stock dividends and discount accretion, compared to net income of $9.1 million, or $1.96 diluted EPS, after preferred stock dividends and discount accretion for 2008. The Company noted that during the third quarter 2009, it repurchased its preferred stock and the warrant to purchase its common stock previously issued to the U.S. Treasury Department. The repurchase of the preferred stock and the discount accretion associated with its issuance had a negative impact on the Company’s EPS of $0.49 per share for 2009 and $0.01 per share for 2008.

The net interest margin for the fourth quarter 2009 was 3.42 percent, an increase of 13 basis points from the fourth quarter 2008 and an increase of 4 basis points from third quarter 2009. For 2009, the net interest margin was 3.25 percent, an increase of 4 basis points compared to 2008.

At December 31, 2009, the Company’s tier 1 capital ratio was approximately 7.6 percent and its total risk-based capital ratio exceeded 12.0 percent.

“Despite a difficult environment in 2009, we remained profitable with improvement in key fundamentals, continued to maintain a strong capital position and concluded our participation in the government’s Capital Purchase Program,” commented President and CEO, Merrill W. Sherman. “Although we see some signs for a potential economic recovery, we continue to believe that 2010 will be another challenging year in the banking industry. However, BancorpRI remains well-positioned for the long term.”

Net interest income for the fourth quarter 2009 was $13.0 million compared to $11.7 million in the fourth quarter 2008, and $12.7 million in the third quarter 2009. Net interest income for 2009 was $48.3 million, an increase of $2.9 million or 6.5 percent from $45.4 million in 2008.

Noninterest income was $2.4 million for the fourth quarter 2009, compared to $2.9 million in the fourth quarter 2008, and $2.2 million in the third quarter 2009. Noninterest income for the fourth quarter 2009 reflects a charge of $314,000 incurred as the result of an investment security deemed to be other-than-temporarily impaired, offset by a $300,000 gain on sale of leases. Noninterest income was $9.2 million for 2009, a decrease of $1.4 million or 13.6 percent compared to 2008.

Noninterest expense was $9.9 million in the fourth quarter 2009 compared to $9.5 million in the fourth quarter 2008, and $9.8 million in the third quarter 2009. For 2009, noninterest expense was $39.5 million, an increase of $1.6 million or 4.3 percent compared to 2008. The expense increases, for the quarter and full year, were primarily driven by increases in the FDIC insurance assessments and compensation expense in connection with the addition of new professionals to key positions within the organization.

The provision for loan and lease losses was $2.4 million for the fourth quarter 2009 and net charge-offs were $2.4 million. As a comparison, in the fourth quarter 2008 the provision for loan and lease losses was $1.8 million and net charge-offs were $1.3 million, while on a linked-quarter basis they were $1.9 million and $2.3 million, respectively. For 2009, the provision for loan and lease losses was $8.5 million and net charge-offs were $6.6 million compared to $4.5 million and $2.5 million, respectively, for 2008. The allowance for loan and lease losses as a percent of total loans and leases was 1.49 percent at December 31, 2009, up slightly from 1.48 percent at September 30, 2009, and up from 1.36 percent at December 31, 2008.

Nonperforming assets at December 31, 2009, totaled $16.1 million, or 1.01 percent of total assets, down from $16.9 million, or 1.08 percent of total assets, at September 30, 2009, and up from $15.2 million, or 1.00 percent of total assets, at year-end 2008.

As of December 31, 2009, the Company’s commercial loan and lease portfolio totaled $733.9 million, an increase of $75.4 million or 11.5 percent from year-end 2008, and up $9.4 million or 1.3 percent from September 30, 2009. Consumer loans were $206.2 million as of December 31, 2009, down slightly from year-end 2008 and September 30, 2009. Residential mortgage balances were $173.3 million, a decrease of $39.4 million or 18.5 percent from December 31, 2008, and a decrease of $9.0 million or 4.9 percent from September 30, 2009.

Total deposits were $1.1 billion as of December 31, 2009, up $56.1 million or 5.4 percent from year-end 2008, and up $6.4 million or 0.6 percent from September 30, 2009. The increase from year-end 2008 reflects an overall increase of $ 92.4 million in core deposits (demand deposits, NOW, money markets and savings accounts) and a decrease of $36.3 million in certificate of deposits. The 14.9 percent increase from year-end 2008 in core deposits was primarily driven by money market, DDA and NOW accounts. Core deposits at December 31, 2009 represented 64.8 percent of total deposits compared to 59.4 percent at year-end 2008.

“During 2009, because our balance sheet was strong and nonperforming assets remained at a manageable level, we were able to focus on a number of strategic initiatives, including converting to a more commercially-oriented bank and growing our core deposit base,” said Sherman. “The commercial loan and core deposit growth reflect that focus,” she added.

Total assets at December 31, 2009, were $1.6 billion, an increase of $63.1 million or 4.1 percent from year-end 2008. The increase is primarily due to the growth in the commercial loan portfolio and purchase of mortgage-backed securities.

The Company’s Board of Directors approved a dividend of $0.17 per share. The dividend will be paid on March 10, 2010, to shareholders of record on February 17, 2010.

Company executives will host a conference call Thursday, January 28, at 10 a.m. Eastern Time (ET) to discuss the Company’s fourth quarter and full year 2009 results and the Company’s outlook for 2010. Access to the conference call is available by dialing toll free (800) 860-2442, or via webcast in the Investor Relations section of the website at www.bankri.com. International callers can join by dialing 412-858-4600. Please dial in at least 10 minutes prior to the start of the call to ensure a timely connection.

There will be a replay of the call available the same day beginning at approximately 12:00 p.m. ET that can be accessed through 9 a.m. ET on Tuesday, February 2, 2010. The replay dial-in number is (877) 344-7529; when prompted, enter conference ID number 436653. The webcast will be archived in the Investor Relations section of the website at www.bankri.com.

About BancorpRI

Bancorp Rhode Island, Inc. is the parent company of Bank Rhode Island, a full-service, FDIC-insured, state-chartered financial institution. The Bank, headquartered in Providence, Rhode Island, operates 16 branches and more than 60 ATMs throughout Providence, Kent and Washington Counties. As of December 31, 2009, BankRI has $1.6 billion in assets and $1.1 billion in deposits. For more information, visit www.bankri.com.

This release may contain “forward-looking statements” within the meaning of section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent the company's present expectations or beliefs concerning future events. The company cautions that such statements are necessarily based on certain assumptions which are subject to risks and uncertainties, including, but not limited to, changes in general economic conditions and changing competition which could cause actual future results to differ materially from those indicated herein. Further information on these risk factors is included in the company's filings with the Securities and Exchange Commission.

BANCORP RHODE ISLAND, INC.

Selected Financial Highlights (unaudited)

   

December 31,2009

December 31,2008

Balance Sheet Data:

 

(Dollars in thousands, except per share data)

  Total Assets $ 1,591,265 $ 1,528,178 Total Loans and Leases 1,113,304 1,077,742 Total Nonperforming Assets 16,060 15,232 Allowance for Loan and Lease Losses 16,536 14,664 Allowance to Nonperforming Loans and Leases 115.15% 102.05% Allowance to Total Loans and Leases 1.49% 1.36% Total Deposits $ 1,098,284 $ 1,042,192 Common Shareholders’ Equity 121,584 120,495 Book Value Per Share of Common Stock 26.36 26.34 Tangible Book Value Per Share of Common Stock 23.70 23.71 Tangible Common Equity Ratio (1) (6) 6.92% 7.15%  

Quarter EndedDecember 31,

 

Year EndedDecember 31,

 

2009

    2008   2009     2008

Average Balance Sheet Data:

(Dollars in millions)     Average Total Assets $ 1,579 $ 1,513

$

1,559

$ 1,484 Average Total Loans 1,117 1,073 1,108 1,053 Average Total Interest-Earning Assets 1,510 1,420 1,488 1,412 Average Total Interest-Bearing Liabilities 1,241 1,176 1,218 1,175 Average Common Shareholders’ Equity 123 116 122 114  

Quarter EndedDecember 31,

 

Twelve Months EndedDecember 31,

  2009     2008     2009       2008  

Income Statement Data:

(Dollars in thousands, except per share data)     Interest and Dividend Income $ 18,925 $ 19,648

$

75,277

$ 80,298 Interest Expense 5,924 7,933   26,955   34,930   Net Interest Income 13,001 11,715 48,322 45,368 Provision of Loan and Lease Losses 2,350 1,750 8,460 4,520 Noninterest Income 2,353 2,881 9,165 10,609 Noninterest Expense 9,949 9,510   39,529   37,886   Income Before Income Taxes 3,055 3,336 9,498 13,571 Income Tax Expense 999 1,083   3,036   4,427   Net Income 2,056 2,253   6,462   9,144   Preferred Stock Dividends -- (50 ) (892 ) (50 ) Prepayment Charges and Accretion of Preferred Stock Discount

--

(8

)

(1,405

)

(8

)

Net Income Applicable to Common Shares $ 2,056 $ 2,195  

$

4,165

  $ 9,086     Earnings Per Common Share – Basic $ 0.45 $ 0.48

$

0.91

$ 1.99 Earnings Per Common Share – Diluted $ 0.44 $ 0.48

$

0.90

$ 1.96 Average Common Shares Outstanding - Basic 4,618,791 4,569,338 4,604,308 4,560,858 Average Common Shares Outstanding - Diluted 4,650,051 4,614,697 4,626,434 4,631,208  

Quarter EndedDecember 31,

 

Twelve Months EndedDecember 31,

2009   2008 2009   2008

Selected Operating Ratios:

     

Net Interest Margin (2) (6)

3.42% 3.29% 3.25% 3.21% Return on Assets (3) (6) 0.52% 0.59% 0.41% 0.62% Return on Equity (4) (6) 6.64% 7.55% 3.41% 7.99% Efficiency Ratio (5) (6) 64.80% 65.15% 68.76% 67.68%  

Quarter EndedDecember 31,2009

 

Quarter EndedSeptember 30,2009

 

Quarter EndedDecember 31,2008 (8)

Nonperforming Asset Data:

(Dollars in thousands)   Commercial Real Estate Nonperforming Loans $ 4,512 $ 3,159 $ 4,884 Commercial and Industrial Nonperforming Loans 1,361 3,263 2,802 Small Business Nonperforming Loans 1,147 585 892 Multifamily Nonperforming Loans 205 205 -- Construction Nonperforming Loans 469 469 1,000 Nonperforming Leases 1,878 1,059 428 Residential Nonperforming Loans 4,124 5,175 4,314 Consumer Nonperforming Loans   664   984   49 Total Nonperforming Loans and Leases 14,360 14,899 14,369 Other Real Estate Owned   1,700   1,995   863 Total Nonperforming Assets $ 16,060 $ 16,894 $ 15,232   Net Charge-Offs $ 2,351 $ 2,268 $ 1,285 Net Charge-Offs to Average Loans 0.84% 0.81% 0.48%  

Quarter EndedDecember 31,

 

Twelve Months EndedDecember 31,

  2009     2008   2009     2008

Reconciliation of Non-GAAP Earnings Per Common Share – Diluted (7)(9):

  Earnings per Common Share – Diluted $ 0.44 $ 0.48 $ 0.90 $ 1.96 Effect of Preferred Shares Dividend -- 0.01 0.19 0.01 Effect of Preferred Shares Discount   --   --   0.30   -- Non-GAAP Earnings Per Common Share - Diluted

$

0.44

$

0.49

$

1.39

$

1.97

 

(1) Calculated by dividing Common Shareholders’ Equity less Goodwill by Total Assets less Goodwill.(2) Calculated by dividing annualized Net Interest Income by Average Interest-Earning Assets.(3) Calculated by dividing annualized Net Income by Average Total Assets.(4) Calculated by dividing annualized Net Income Applicable to Common Shares by Average Common Shareholders’ Equity.(5) Calculated by dividing Noninterest Expense by Net Interest Income plus Noninterest Income.(6) Non-GAAP performance measure.(7) Nonperforming Asset Data for September 30, 2009 included for trend analysis purposes.(8) Certain December 31, 2008 Nonperforming Asset Data amounts have been reclassified to conform to the December 31, 2009 presentation. The reclassifications had no effect on previously reported Total Nonperforming Assets or Net Income.(9) Reconciliation of Non-GAAP Earnings Per Common Share – Diluted table included to provide the investor useful information in comparing the Company’s operating results to the prior year. Reconciliation excludes the effect of Preferred Stock Dividend and Discount amounts from Diluted Earnings Per Share.

BANCORP RHODE ISLAND, INC.

Consolidated Balance Sheets (unaudited)

   

 

December 31,2009

 

December 31,2008

(In thousands) ASSETS: Cash and due from banks $ 18,866 $ 54,344 Overnight investments 1,964   1,113  

Total cash and cash equivalents

20,830 55,457 Available for sale securities (amortized cost of $380,108 and $325,767, respectively) 381,839 326,406 Stock in Federal Home Loan Bank of Boston 16,274 15,671 Loans and leases receivable: Commercial loans and leases 733,854 658,422 Residential mortgage loans 173,294 212,665 Consumer and other loans 206,156   206,655   Total loans and leases receivable 1,113,304 1,077,742 Allowance for loan and lease losses (16,536 ) (14,664 ) Net loans and leases receivable 1,096,768 1,063,078 Premises and equipment, net 12,378 12,641 Goodwill 12,239 12,019 Accrued interest receivable 4,964 5,240 Investment in bank-owned life insurance 30,010 28,765 Prepaid expenses and other assets** 15,963   8,901   Total assets $ 1,591,265   $ 1,528,178   LIABILITIES: Deposits: Demand deposit accounts $ 204,281 $ 176,495 NOW accounts 74,558 56,703 Money market accounts 65,076 4,445 Savings accounts 367,225 381,106 Certificate of deposit accounts 387,144   423,443   Total deposits 1,098,284 1,042,192 Overnight and short-term borrowings 40,171 57,676 Wholesale repurchase agreements 20,000 10,000 Federal Home Loan Bank of Boston borrowings 277,183 238,936 Subordinated deferrable interest debentures 13,403 13,403 Other liabilities** 20,640   16,881   Total liabilities 1,469,681   1,379,088   SHAREHOLDERS’ EQUITY: Preferred stock, par value $0.01, authorized 1,000,000 shares, liquidation preference per share $1,000: Issued and outstanding: Issued: (0 and 30,000 shares, respectively)*

--

28,595

Common stock, par value $0.01 per share, authorized 11,000,000 shares: Issued: (4,969,444 shares and 4,926,920 shares, respectively) 50 49 Additional paid-in capital* 72,783 73,323 Treasury stock, at cost (364,750 shares and 352,250 shares, respectively) (12,309 ) (12,055 ) Retained earnings** 59,935 58,763 Accumulated other comprehensive income, net 1,125   415   Total shareholders’ equity 121,584   149,090   Total liabilities and shareholders’ equity $ 1,591,265   $ 1,528,178      

* Preferred stock and additional paid-in capital balances at December 31, 2008 were reclassified to reflect the liquidation preference value of shares, less any preferred stock discount.

** December 31, 2008 balances reflect an immaterial adjustment to balances as of January 1, 2005 related to income taxes. Adjustment reduced retained earnings by $515,000, prepaid expenses and other assets by $796,000 and other liabilities by $281,000.

BANCORP RHODE ISLAND, INC.

Consolidated Statements of Operations (unaudited)

       

Three Months EndedDecember 31,

Twelve Months EndedDecember 31,

  2009     2008   2009     2008 (In thousands, except per share data) Interest and dividend income: Commercial loans and leases $ 10,639 $ 10,085

$

40,823

$ 39,709 Residential mortgage loans 2,064 2,863 9,486 12,095 Consumer and other loans 2,334 2,585 9,444 11,198 Mortgage-backed securities 3,258 3,398 13,357 13,655 Investment securities 630 616 2,157 2,767 Federal Home Loan Bank of Boston stock dividends -- 98 -- 610 Overnight investments -- 3 10 264 Total interest and dividend income 18,925 19,648 75,277 80,298 Interest expense: NOW accounts 15 24 60 162 Money market accounts 175 4 367 69 Savings accounts 660 1,354 3,380 7,042 Certificate of deposit accounts 1,992 3,401 11,061 14,306 Overnight and short-term borrowings 19 49 86 902 Wholesale repurchase agreements 143 136 551 540 Federal Home Loan Bank of Boston borrowings 2,754 2,726 10,720 10,960 Subordinated deferrable interest debentures 166 239 730 949 Total interest expense 5,924 7,933 26,955 34,930 Net interest income 13,001 11,715 48,322 45,368 Provision for loan and lease losses 2,350 1,750 8,460 4,520 Net interest income after provision for loan and lease losses 10,651 9,965 39,862 40,848 Noninterest income:

Total other-than-temporary impairment losses on available for sale securities

(1,773)

--

(2,469)

(219)

Non-credit component of other-than-temporary impairment losses recognized in other comprehensive income

1,459

--

2,085

--

Credit component of other-than-temporary impairment losses on available for sale securities

(314)

--

(384)

(219)

Service charges on deposit accounts 1,404 1,359 5,377 5,711

Net gains on lease sales and commissions on loans originated for others

347

80

408

454

Income from bank-owned life insurance 339 297 1,245 1,080 Commissions on nondeposit investment products 187 116 776 745 Loan related fees 166 360 869 803 Gain on sale of available for sale securities -- 315 61 725 Other income 224 354 813 1,310 Total noninterest income 2,353 2,881 9,165 10,609 Noninterest expense: Salaries and employee benefits 5,270 4,885 20,573 20,091 Occupancy 900 902 3,552 3,530 Data processing 691 692 2,640 2,816 Professional services 659 770 2,612 2,968 FDIC insurance 462 216 2,527 694 Marketing 344 507 1,318 1,607 Equipment 292 241 1,001 1,048 Loan workout and other real estate owned 192 229 688 543 Loan servicing 143 140 665 643 Other expenses 996 928 3,953 3,946 Total noninterest expense 9,949 9,510 39,529 37,886 Income before income taxes 3,055 3,336 9,498 13,571 Income tax expense 999 1,083 3,036 4,427 Net income 2,056 2,253 6,462 9,144 Preferred stock dividends -- (50) (892) (50) Prepayment charges and accretion of preferred stock discount -- (8) (1,405) (8) Net income applicable to common shares $ 2,056 $ 2,195

$

4,165

$ 9,086

Three Months EndedDecember 31,

Twelve Months EndedDecember 31,

  2009     2008   2009     2008   Per share data: Basic earnings per common share $ 0.45 $ 0.48

$

0.91

$ 1.99 Diluted earnings per common share $ 0.44 $ 0.48

$

0.90

$ 1.96 Average common shares outstanding – basic 4,618,791 4,569,338 4,604,308 4,560,858 Average common shares outstanding – diluted 4,650,051 4,614,697 4,626,434 4,631,208