BARI Bancorp Rhode Island, Inc. (MM)

Bancorp Rhode Island, Inc. (NASDAQ: BARI), the parent company of Bank Rhode Island, today reported net income of $2.3 million for the quarter ended March 31, 2011, an increase of 4.0 percent compared to the first quarter 2010 net income of $2.2 million and a 8.5 percent increase from net income of $2.1 million in the fourth quarter 2010. The Company’s diluted earnings per share (EPS) was $0.49 for the first quarter 2011 compared to $0.48 for the prior year first quarter and $0.45 for the fourth quarter 2010.

“We have maintained a disciplined operating approach in what continues to be a less than favorable economic environment,” commented President and CEO, Merrill W. Sherman. “We are pleased to be off to a solid start in 2011.”

The Company’s commercial loan and lease portfolio continued its upward trend, growing to $783.7 million as of March 31, 2011. This represented increases of $3.4 million from year-end 2010 and $31.5 million, or 4.2 percent, from March 31, 2010. Consumer loans were $210.1 million at March 31, 2011, flat compared to December 31, 2010 and up 4.3 percent from a year ago. Residential mortgage loans were $160.7 million as of March 31, 2011, down 2.6 percent from year-end 2010.

Core deposit (demand deposits, NOW, money market and savings accounts) trends remain positive at March 31, 2011. The growth from year-end was driven primarily by money market and savings accounts, partly offset by a decline in demand deposits which posted record annual growth in the fourth quarter 2010. At the end of the first quarter, core deposits stood at 70.4 percent of total deposits compared to 65.8 percent a year ago and 69.0 percent at year-end 2010. Higher cost time deposits continue to decline as expected, consistent with the Company’s objective to lower its funding costs. Total deposits were $1.1 billion at March 31, 2011, a decrease of $18.5 million from December 31, 2010.

Net interest income for the first quarter 2011 increased to $13.5 million from $13.1 million in the first quarter 2010 and $13.2 million in the fourth quarter 2010. Net interest margin for the first quarter 2011 rose to 3.58 percent, representing an improvement of 6 basis points from the first quarter 2010 and 9 basis points from the fourth quarter 2010.

Noninterest income was $2.3 million for the first quarter 2011, unchanged from the first quarter 2010 and down $341,000 from $2.7 million in the fourth quarter 2010. The latter decline was primarily due to a reduction in loan related fees and service charges on deposit accounts.

Noninterest expense was $11.3 million in the first quarter 2011, up $781,000 compared to the first quarter 2010 and up $1.3 million from the fourth quarter 2010. The increase compared to the prior periods was largely attributable to an accrual related to a judgment issued with respect to a previously disclosed jury verdict against the Bank. Excluding this accrual, noninterest expenses were flat compared to the first quarter 2010.

Nonperforming assets at March 31, 2011 totaled $17.5 million or 1.09 percent of total assets. This represented a slight decrease from $17.6 million, or 1.10 percent of total assets, at December 31, 2010. Net charge-offs were $1.6 million, or 0.55 percent of average loans and leases, for the first quarter 2011, up slightly from $1.5 million, or 0.55 percent of average loans and leases, in the first quarter 2010 but down from $2.0 million, or 0.69 percent of average loans and leases, in the fourth quarter 2010.

The provision for loan and lease losses was $1.1 million for the first quarter 2011, compared to $1.6 million in the first quarter 2010 and $2.4 million on a linked-quarter basis. The allowance for loan and lease losses was $18.2 million at March 31, 2011, a decrease of $432,000, or 2.3 percent, from year-end 2010. The allowance for loan and lease losses as a percent of total loans and leases was 1.58 percent at March 31, 2011 compared to 1.61 percent at December 31, 2010.

Total assets at March 31, 2011 were $1.6 billion, up slightly from year-end 2010.

At March 31, 2011, the Company’s tier 1 capital ratio was approximately 8.10 percent and its total risk-based capital ratio was approximately 12.60 percent.

The Company’s Board of Directors approved a dividend of $0.19 per share. The dividend will be paid on June 8, 2011, to shareholders of record on May 18, 2011.

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 17 branches and more than 60 ATMs throughout Providence, Kent and Washington Counties. As of March 31, 2011, BankRI had $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.

On April 19, 2011, the Company entered into a merger agreement with Brookline Bancorp, Inc. (“Brookline Bancorp”) pursuant to which the Company will merge with and into Brookline Bancorp, whereupon the separate corporate existence of the Company will cease and its subsidiary, Bank Rhode Island will become a wholly owned subsidiary of Brookline Bancorp. In connection with the merger, Brookline Bancorp intends to file with the Securities and Exchange Commission (“SEC”) a registration statement on Form S-4, which will include a proxy statement of the Company and a prospectus of Brookline Bancorp, as well as other relevant materials concerning the merger. Investors and security holders of the Company are urged to read the proxy statement/prospectus and the other relevant materials when they become available because they will contain important information about Brookline Bancorp, the Company and the proposed transaction. The proxy statement/prospectus and other relevant materials (when they become available), and any and all documents filed by Brookline Bancorp or the Company with the SEC, may be obtained free of charge at the SEC’s website at www.sec.gov. In addition, investors may obtain free copies of the documents filed by Brookline Bancorp with the SEC by directing a written request to Paul R. Bechet, Chief Financial Officer, Brookline Bancorp, 160 Washington Street, Brookline, MA 02445. Investors may obtain free copies of the documents filed by the Company with the SEC by directing a written request to Linda H. Simmons, Chief Financial Officer, One Turks Head Place, Providence, Rhode Island 02903. The Company and certain of their directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of the Company in connection with the merger. Information about the directors and executive officers of the Company is set forth in the proxy statement for the Company’s 2011 annual meeting of shareholders, as filed with the SEC on a Schedule 14A on April 15, 2011. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the proxy statement regarding the merger when it becomes available.

  BANCORP RHODE ISLAND, INC. Selected Financial Highlights (unaudited)                 Three Months Ended

 

March 31,

 

  2011     2010  

 

 

 

  FINANCIAL DATA:

(In thousands, except per share data)

Net interest income $ 13,515 $ 13,088

 

 

Provision for loan and lease losses 1,125 1,600

 

 

Noninterest income 2,332 2,315

 

 

Noninterest expense 11,269 10,488

 

 

Net income 2,307 2,219

 

 

  FINANCIAL PERFORMANCE RATIOS: Return on assets (3) (6) 0.59 % 0.57 %

 

 

Return on equity (4) (6) 7.25 % 7.32 %

 

 

Net interest margin (2) (6) 3.58 % 3.52 %

 

 

Efficiency ratio (5) (6) 71.11 % 68.09 %

 

 

  PER SHARE DATA: Earnings per share - basic $ 0.49 $ 0.48

 

 

Earnings per share - diluted 0.49 0.48

 

 

Book value per share of common stock 27.77 26.69

 

 

Tangible book value per share of common stock 25.15 24.05

 

 

Market value (at period end) 30.87 27.35

 

 

Dividends per share 0.19 0.17

 

 

  CAPITAL RATIOS: Tier 1 capital ratio (7) 8.10 % 7.80 % Total risk-based capital ratio (7) 12.60 % 12.03 % Tangible common equity ratio (1) (6) 7.40 % 7.08 %       Three Months Ended Mar 31, 2011 Dec 31, 2010 Sep 30, 2010 Jun 30, 2010 Mar 31, 2010 (In thousands)   BALANCE SHEET: Total assets $ 1,606,508 $ 1,603,759 $ 1,573,323 $ 1,613,520 $ 1,586,778 Total loans and leases 1,154,448 1,155,489 1,135,227 1,136,524 1,123,838 Total deposits 1,101,661 1,120,166 1,115,683 1,174,020 1,107,071 Shareholders' equity 130,192 128,678 130,769 129,127 123,679   ASSET QUALITY: Total nonperforming assets $ 17,473 $ 17,643 $ 15,152 $ 16,759 $ 16,392 Nonperforming assets / total assets 1.09 % 1.10 % 0.96 % 1.04 % 1.03 % Allowance for loans and leases $ 18,222 $ 18,654 $ 18,212 $ 17,396 $ 16,625 Allowance to total loans and leases 1.58 % 1.61 % 1.60 % 1.53 % 1.48 % Net charge-offs $ 1,557 $ 1,993 $ 459 $ 779 $ 1,511 Net charge-offs to average loans 0.55 % 0.69 % 0.16 % 0.28 % 0.55 %     BANCORP RHODE ISLAND, INC. Selected Financial Highlights (unaudited)             Mar 31, 2011 Dec 31, 2010 Sep 30, 2010 Jun 30, 2010 Mar 31, 2010 (in thousands)   LOAN AND LEASE PORTFOLIO:   Commercial loans and leases: Commercial real estate - non-owner occupied $ 196,353 $ 200,809 $ 202,342 $ 191,345 $ 193,868 Commercial real estate - owner occupied 183,111 179,766 177,526 179,109 172,174 Commercial & industrial 161,004 157,879 156,042 163,088 164,448 Multifamily 84,772 79,934 73,375 67,588 66,716 Small business 62,233 62,841 59,756 59,833 57,911 Construction 28,273 30,349 31,035 30,675 30,105 Leases and other   72,156     73,054     76,417     77,688     72,969   Subtotal 787,902 784,632 776,493 769,326 758,191 Unearned lease income (5,962 ) (6,159 ) (6,516 ) (6,777 ) (7,039 ) Net deferred loan origination costs   1,756     1,791     1,777     1,825     1,041   Total commercial loans and leases 783,696 780,264 771,754 764,374 752,193   Residential mortgages 160,658 164,877 161,106 164,750 170,200   Consumer loans 210,094 210,348 202,367 207,400 201,445             Total loans and leases $ 1,154,448   $ 1,155,489   $ 1,135,227   $ 1,136,524   $ 1,123,838      

(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) Tier 1 capital and total risk-based capital ratio are estimated for March 31, 2011.

    BANCORP RHODE ISLAND, INC. Consolidated Balance Sheet (unaudited)     March 31, December 31,   2011     2010   (In thousands) ASSETS: Cash and due from banks $ 16,573 $ 14,384 Overnight investments   551     395   Total cash and cash equivalents 17,124 14,779

Available for sale securities (amortized cost of $359,299 and $357,402, respectively)

361,579 360,025 Stock in Federal Home Loan Bank of Boston 16,274 16,274 Loans and leases receivable: Commercial loans and leases 783,696 780,264 Residential mortgage loans 160,658 164,877 Consumer and other loans   210,094     210,348   Total loans and leases receivable 1,154,448 1,155,489 Allowance for loan and lease losses   (18,222 )   (18,654 ) Net loans and leases receivable 1,136,226 1,136,835 Premises and equipment, net 11,677 11,889 Goodwill 12,262 12,262 Accrued interest receivable 4,411 4,842 Investment in bank-owned life insurance 31,580 31,277 Prepaid expenses and other assets   15,375     15,576   Total assets $ 1,606,508   $ 1,603,759     LIABILITIES: Deposits: Demand deposit accounts $ 254,291 $ 264,274 NOW accounts 65,127 70,327 Money market accounts 113,126 96,285 Savings accounts 343,286 341,667 Certificates of deposit accounts   325,831     347,613   Total deposits 1,101,661 1,120,166 Overnight and short-term borrowings 36,068 40,997 Wholesale repurchase agreements 19,801 20,000 Federal Home Loan Bank of Boston borrowings 273,582 260,889 Subordinated deferrable interest debentures 13,403 13,403 Other liabilities   31,801     19,626   Total liabilities   1,476,316     1,475,081   SHAREHOLDERS’ EQUITY: Common stock, par value $0.01 per share, authorized 11,000,000 shares: Issued: (5,074,192 shares and 5,047,942 shares, respectively) 50 50 Additional paid-in capital 74,556 73,866 Treasury stock, at cost (385,950 shares and 373,850 shares, respectively) (12,897 ) (12,527 ) Retained earnings 67,001 65,584 Accumulated other comprehensive income, net   1,482     1,705   Total shareholders’ equity   130,192     128,678   Total liabilities and shareholders’ equity $ 1,606,508   $ 1,603,759       BANCORP RHODE ISLAND, INC. Consolidated Statements of Operations (unaudited)     Three Months Ended March 31,   2011     2010   (In thousands, except per share data) Interest and dividend income: Overnight investments $ - $ 5 Mortgage-backed securities 2,625 3,229 Investment securities 397 550 Federal Home Loan Bank of Boston stock dividends 12 - Loans and leases   14,550     14,568   Total interest and dividend income   17,584     18,352   Interest expense: Deposits 1,459 2,278 Overnight and short-term borrowings 10 18 Wholesale repurchase agreements 139 139 Federal Home Loan Bank of Boston borrowings 2,296 2,665 Subordinated deferrable interest debentures   165     164   Total interest expense   4,069     5,264   Net interest income 13,515 13,088 Provision for loan and lease losses   1,125       1,600   Net interest income after provision for loan and lease losses   12,390     11,488   Noninterest income:

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

- (1,592 )

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

  -     1,021  

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

- (571 ) Service charges on deposit accounts 1,140 1,264 Income from bank-owned life insurance 303 315 Loan related fees 220 189 Gain on sale of available for sale securities 212 475 Commissions on nondeposit investment products 194 237

Net (loss) gain on lease sales and commissions on loans originated for others

(4 ) 36 Other income   267     370   Total noninterest income   2,332     2,315   Noninterest expense: Salaries and employee benefits 5,934 5,843 Occupancy 907 861 Data processing 681 654 Professional services 606 632 FDIC insurance 477 475 Operating 454 462 Marketing 353 258 Equipment 276 255 Loan workout and other real estate owned 206 336 Loan servicing 144 176 Other expenses   1,231     536   Total noninterest expense   11,269     10,488   Income before income taxes 3,453 3,315 Income tax expense   1,146     1,096   Net income $ 2,307   $ 2,219     Per share data: Basic earnings per common share $ 0.49 $ 0.48 Diluted earnings per common share $ 0.49 $ 0.48 Cash dividends declared per common share $ 0.19 $ 0.17 Weighted average common shares outstanding – basic 4,683 4,622 Weighted average common shares outstanding – diluted 4,715 4,650     BANCORP RHODE ISLAND, INC. Asset Quality Analysis (unaudited)           Three Months Ended Mar 31, 2011 Dec 31, 2010 Sep 30, 2010 Jun 30, 2010 Mar 31, 2010 (Dollars in thousands) NONPERFORMING ASSETS:   Nonperforming loans & leases: Commercial real estate $ 4,792 $ 5,273 $ 5,384 $ 5,131 $ 4,952 Commercial & industrial 2,255 2,462 1,455 1,155 1,544 Multifamily 1,050 717 - - - Small business 1,059 1,090 1,158 986 957 Construction 232 469 469 469 710 Leases 591 581 1,115 2,252 1,415 Residential mortgage 4,926 5,045 3,570 3,737 4,349 Consumer   993     876     871     1,081     442   Total nonperforming loans & leases 15,898 16,513 14,022 14,811 14,369   Other real estate owned 1,575 1,130 1,130 1,948 2,023           Total nonperforming assets $ 17,473   $ 17,643   $ 15,152   $ 16,759   $ 16,392       Total nonperforming loans & leases / total loans & leases 1.38 % 1.43 % 1.24 % 1.30 % 1.28 % Total nonperforming assets / total assets 1.09 % 1.10 % 0.96 % 1.04 % 1.03 %     PROVISION AND ALLOWANCE FOR LOAN LOSSES:   Balance at beginning of period $ 18,654 $ 18,212 $ 17,396 $ 16,625 $ 16,536 Charged-off loans & leases (1,686 ) (2,154 ) (487 ) (909 ) (1,612 ) Recoveries on charged-off loans & leases   129     161     28     130     101   Net loans & leases charged-off (1,557 ) (1,993 ) (459 ) (779 ) (1,511 ) Provision for loan and lease losses   1,125     2,435     1,275     1,550     1,600   Balance at end of period $ 18,222   $ 18,654   $ 18,212   $ 17,396   $ 16,625       Allowance to nonperforming loans & leases 114.62 % 112.97 % 129.88 % 117.45 % 115.70 % Allowance to total loans & leases 1.58 % 1.61 % 1.60 % 1.53 % 1.48 %     NET CHARGE-OFFS:   Commercial real estate $ 532 $ 726 $ - $ (100 ) $ 549 Commercial & industrial - 487 (5 ) (4 ) (11 ) Construction 237 - - - - Other commercial loans & leases 397 565 226 387 529 Residential mortgages 379 141 89 490 347 Consumer   12     74     149     6     97   Total net charge-offs $ 1,557   $ 1,993   $ 459   $ 779   $ 1,511       Net charge-offs to average loans & leases 0.55 % 0.69 % 0.16 % 0.28 % 0.55 %     DELINQUENCIES AND NON-ACCRUING LOANS AND LEASES AS % OF TOTAL LOANS:   Loans & leases 30-59 days past due 0.83 % 0.56 % 0.47 % 0.90 % 0.90 % Loans & leases 60-89 days past due 0.28 % 0.21 % 0.22 % 0.21 % 0.22 % Loans & leases 90+ days past due and still accruing   0.06 %   -     -     0.08 %   -   Total accruing past due loans & leases 1.17 % 0.77 % 0.69 % 1.19 % 1.12 %   Non-accrual loans & leases   1.32 %   1.43 %   1.24 %   1.22 %   1.28 %   Total delinquent and nonaccrual loans & leases   2.49 %   2.20 %   1.93 %   2.41 %   2.40 %     BANCORP RHODE ISLAND, INC. Consolidated Average Balances, Yields and Costs (unaudited)                     Three Months Ended March 31, (Dollars in thousands) 2011 2010

AverageBalance

InterestEarned/Paid

AverageYield

AverageBalance

InterestEarned/Paid

AverageYield

  ASSETS: Earning assets: Overnight investments $ 762 $ - 0.19 % $ 2,292 $ 5 0.87 % Available for sale securities 355,404 3,022 3.40 % 372,516 3,779 4.06 % Stock in the FHLB 16,274 12 0.31 % 16,274 - 0.00 % Loans and leases receivable: Commercial loans and leases 777,681 10,656 5.54 % 730,907 10,311 5.71 % Residential mortgages loans 163,640 1,699 4.15 % 172,408 2,029 4.71 % Consumer and other loans   210,548     2,195 4.23 %   203,840     2,228 4.43 % Total earning assets   1,524,309     17,584 4.65 %   1,498,237     18,352 4.94 % Cash and due from banks 17,117 13,451 Allowance for loans and leases (18,528 ) (17,225 ) Premises and equipment 11,797 12,359 Goodwill, net 12,262 12,179 Accrued interest receivable 4,269 4,372 Bank-owned life insurance 31,388 30,118 Prepaid expenses and other assets   15,366     18,579   Total assets $ 1,597,980   $ 1,572,070       LIABILITIES AND SHAREHOLDERS' EQUITY: Interest-bearing liabilities: Deposits: NOW accounts $ 68,042 $ 46 0.27 % $ 68,669 $ 15 0.08 % Money market accounts 105,289 172 0.66 % 71,387 149 0.85 % Savings accounts 343,366 270 0.32 % 369,750 531 0.58 % Certificate of deposit accounts 335,236 971 1.17 % 385,599 1,583 1.67 % Overnight and short-term borrowings 39,769 10 0.10 % 39,161 18 0.19 % Wholesale repurchase agreements 20,045 139 2.77 % 18,222 139 3.06 % FHLB borrowings 272,971 2,296 3.37 % 271,742 2,665 3.92 % Subordinated deferrable interest debentures   13,403     165 4.94 %   13,403     164 4.90 % Total interest-bearing liabilities   1,198,121     4,069 1.38 %   1,237,933     5,264 1.72 %   Noninterest-bearing deposits 254,722 199,735 Other liabilities   16,076     11,427   Total liabilities 1,468,919 1,449,095   Shareholders' equity:   129,061     122,975   Total liabilities and shareholders' equity $ 1,597,980   $ 1,572,070         Net interest income $ 13,515 $ 13,088   Net interest spread 3.27 % 3.22 %   Net interest margin 3.58 % 3.52 %