BancorpRI Announces Fourth Quarter and Full Year 2009 Financial Results

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.

⁽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.