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BancorpRI Announces Third Quarter Financial Results

PROVIDENCE, R.I. - (BUSINESS WIRE) - Bancorp Rhode Island, Inc. (NASDAQ: BARI), the parent company of Bank Rhode Island, today reported net income of $2.2 million, or $0.17 diluted earnings per share (EPS), after preferred stock dividends and discount accretion, for the quarter ended September 30, 2009, compared to net income of $2.3 million, or $0.50 diluted EPS for the third quarter 2008. For the nine month period ended September 30, 2009, the Company reported net income of $4.4 million, or $0.46 diluted EPS, after preferred stock dividends and discount accretion, compared to net income of $6.9 million, or $1.49 diluted EPS, for the same period in 2008.

During the third quarter, the Company repurchased both the $30.0 million of its preferred stock and the warrant to purchase 192,967 shares of its common stock previously issued to the U.S. Treasury Department. The warrant was repurchased for $1.4 million. The repurchase of the preferred stock resulted in the recognition of $1.3 million of discount accretion associated with its issuance and had a negative impact on the Company's EPS of $0.28 per share for the quarter ended September 30, 2009.

"I am pleased we have fully concluded our participation in the government's Capital Purchase Program," said President & CEO Merrill W. Sherman. "Our well-capitalized stature and healthy balance sheet provided us with flexibility and speaks to our strength as a financial institution."

At September 30, 2009, the Company's tier 1 capital ratio was approximately 7.7 percent and its total risk-based capital ratio exceeded 11.5 percent.

Net interest income for the third quarter 2009 was $12.7 million compared to $11.9 million in the third quarter 2008 and $11.6 million in the second quarter 2009. On a year-to-date basis, net interest income was $35.3 million, an increase of $1.7 million or 5.0 percent from 2008.

The net interest margin for the third quarter was 3.38 percent, an increase of 28 basis points from second quarter 2009, and an increase of 4 basis points from the third quarter 2008. For the nine months ended September 30, 2009, the net interest margin was 3.19 percent and flat compared to the same period in 2008.

"Bancorp Rhode Island's positive third quarter earnings reflect the results of our expanded net interest margin. That expansion is primarily attributed to lower funding costs, as we carefully managed our deposit pricing and replaced higher yielding certificate of deposits with lower cost funds," Sherman stated.

Noninterest income was $2.2 million for the third quarter 2009, compared to $2.3 million in the third quarter 2008, and $2.2 million in the second quarter 2009. For the third quarter 2009, a loss of $70,000 was charged to earnings for an investment security deemed to be other-than-temporarily impaired.

Noninterest expense was $9.8 million in the third quarter 2009 compared to $9.3 million in the third quarter 2008, and $10.2 million in the second quarter 2009. On a year-to-date basis, noninterest expense was $29.6 million, an increase of $1.2 million or 4.2 percent over the same period in 2008. The expense increases, on a quarter and year-to-date basis, were primarily driven by increases in the FDIC insurance assessments, compensation expense due to expanding our team and expenses related to loan workout and other real estate owned.

The provision for loan and lease losses was $1.9 million for the third quarter 2009, and net charge-offs were $2.3 million. As a comparison, in the third quarter 2008 the provision for loan and lease losses was $1.5 million and net charge-offs were $477,000, while on a linked-quarter basis they were $2.6 million and $1.1 million, respectively. The allowance for loan and lease losses as a percent of total loans and leases was 1.48 percent as of September 30, 2009, slightly down from 1.51 percent as of June 30, 2009, and up from 1.36 percent at December 31, 2008.

Nonperforming assets as of September 30, 2009, totaled $16.9 million, or 1.08 percent of total assets, down from $18.8 million, or 1.19 percent of total assets, at June 30, 2009, and up from $15.2 million, or 1.00 percent of total assets, at year-end 2008.

"Our ongoing resolution efforts, combined with net charge-offs resulted in a reduction in our non-performing assets," said Sherman. "Given the current economic conditions, we continue to dedicate resources to monitoring the credit risks associated with our portfolio."

Total assets for the third quarter 2009 ended at $1.57 billion, an increase of approximately $40.9 million from year-end 2008. The increase is primarily due to the growth in the commercial loan portfolio and purchase of mortgage-backed securities which was offset by a decrease in the residential mortgage portfolio.

As of September 30, 2009, the Company's commercial loan and lease portfolio totaled $724.4 million, an increase of $66.0 million or 10.0 percent from year-end 2008, and up $12.8 million or 1.8 percent from June 30, 2009. Consumer loans were $209.9 million as of September 30, 2009, an increase of $3.2 million or 1.6 percent from year-end 2008, and a slight decrease on a linked-quarter basis. Residential mortgage balances were $182.3 million, a decrease of $30.4 million or 14.3 percent from December 31, 2008, and a decrease of $9.0 million or 4.7 percent from June 30, 2009.

Total deposits were $1.09 billion as of September 30, 2009, up $49.7 million or 4.8 percent from year-end 2008, and up $7.3 million or 0.7 percent from June 30, 2009. The increase was driven primarily by demand deposit and money market accounts.

The Company's Board of Directors approved a dividend of $0.17 per share. The dividend will be paid on December 9, 2009, to shareholders of record on November 18, 2009.

Company executives will host a conference call Thursday, October 29, at 10 a.m. Eastern Time (ET) to discuss the Company's third quarter results. 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, November 3, 2009. The replay dial-in number is (877) 344-7529; when prompted, enter conference ID number 433952. 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 September 30, 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)

	September 30,			December 31,
	2009			2008
Balance Sheet Data:	(Dollars in thousands, except per share data)

Total Assets	$	1,569,880		$	1,528,974
Total Loans and Leases		1,116,627			1,077,742
Total Nonperforming Assets		16,894			15,232
Allowance for Loan and Lease Losses		16,537			14,664
Allowance to Nonperforming Loans and Leases		110.99	%		102.05	%
Allowance to Total Loans and Leases		1.48	%		1.36	%
Total Deposits	$	1,091,931		$	1,042,192
Common Shareholders' Equity		122,476			121,010
Book Value Per Share of Common Stock		26.57			26.45
Tangible Book Value Per Share of Common Stock		23.96			23.82
Tangible Common Equity Ratio ^{(1) (6)}		7.09	%		7.18	%

	Quarter Ended					Nine Months Ended
	September 30,					September 30,
	2009			2008		2009		2008
Average Balance Sheet Data:	(Dollars in millions)

Average Total Assets	$	1,563	$	1,495	$	1,551	$	1,481
Average Total Loans		1,117		1,060		1,105		1,046
Average Total Interest-Earning Assets		1,495		1,424		1,480		1,409
Average Total Interest-Bearing Liabilities		1,224		1,186		1,210		1,175
Average Common Shareholders' Equity		121		113		122		113

	Quarter Ended						Nine Months Ended
	September 30,						September 30,
	2009				2008		2009			2008
Income Statement Data:	(Dollars in thousands, except per share data)

Interest and Dividend Income	$	19,000		$	20,137	$	56,352		$	60,650
Interest Expense		6,334			8,216		21,031			26,997
Net Interest Income		12,666			11,921		35,321			33,653
Provision of Loan and Lease Losses		1,900			1,515		6,110			2,770
Noninterest Income		2,241			2,333		6,812			7,728
Noninterest Expense		9,812			9,304		29,580			28,376
Income Before Income Taxes		3,195			3,435		6,443			10,235
Income Tax Expense		992			1,111		2,037			3,344
Net Income		2,203			2,324		4,406			6,891
Preferred Stock Dividends		(142	)		--		(892	)		--
Accretion of Preferred Shares Discount		(1,282	)		--		(1,405	)		--
Net Income Applicable to Common Shares	$	779		$	2,324	$	2,109		$	6,891

Earnings Per Common Share - Basic	$	0.17		$	0.51	$	0.46		$	1.51
Earnings Per Common Share - Diluted	$	0.17		$	0.50	$	0.46		$	1.49
Average Common Shares Outstanding - Basic		4,605,809			4,566,563		4,599,448			4,562,225
Average Common Shares Outstanding - Diluted		4,633,719			4,628,916		4,619,900			4,633,419

	Quarter Ended				Nine Months Ended
	September 30,				September 30,
	2009		2008		2009		2008
Selected Operating Ratios:

Net Interest Margin ^{(2) (6)}	3.38	%	3.34	%	3.19	%	3.19	%
Return on Assets ^{(3) (6)}	0.56	%	0.62	%	0.38	%	0.62	%
Return on Equity ^{(4) (6)}	2.54	%	8.20	%	2.32	%	8.12	%
Efficiency Ratio ^{(5) (6)}	65.82	%	65.27	%	70.21	%	68.57	%

	Quarter Ended			Quarter Ended			Quarter Ended
	September 30,			June 30,			December 31,
	2009			2009 ⁽⁷⁾⁽⁸⁾			2008 ⁽⁸⁾
Nonperforming Asset Data:	(Dollars in thousands)

Commercial Real Estate Nonperforming Loans	$	3,159		$	4,801		$	4,884
Commercial and Industrial Nonperforming Loans		3,263			4,360			2,802
Small Business Nonperforming Loans		585			542			892
Multifamily Nonperforming Loans		205			--			--
Construction Nonperforming Loans		469			1,000			1,000
Nonperforming Leases		1,059			833			428
Residential Nonperforming Loans		5,175			5,933			4,314
Consumer Nonperforming Loans		984			284			49
Total Nonperforming Loans and Leases		14,899			17,753			14,369
Other Real Estate Owned		1,995			921			863
Non-Real Estate Foreclosed Assets		--			122			--
Total Nonperforming Assets	$	16,894		$	18,796		$	15,232

Net Charge-Offs	$	2,268		$	1,118		$	1,285
Net Charge-Offs to Average Loans		0.81	%		0.40	%		0.48	%

	Quarter Ended				Nine Months Ended
	September 30,				September 30,
	2009		2008		2009		2008
Reconciliation of Non-GAAP Earnings Per Common Share - Diluted ⁽⁷⁾⁽⁹⁾:

Earnings per Common Share - Diluted	$	0.17	$	0.50	$	0.46	$	1.49
Effect of Preferred Shares Dividend		0.03		--		0.19		--
Effect of Preferred Shares Discount		0.28		--		0.30		--
Non-GAAP Earnings Per Common Share - Diluted	$	0.48	$	0.50	$	0.95	$	1.49

⁽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 June 30, 2009 included for trend analysis purposes.
⁽⁸⁾			Certain June 30, 2009 and December 31, 2008 Nonperforming Asset Data amounts have been reclassified to conform to the September 30, 2009 presentation. The reclassifications had no effect on previously reported 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)

		September 30,			December 31,
		2009			2008
		(In thousands)
ASSETS:
Cash and due from banks	$	19,020		$	54,344
Overnight investments		523			1,113
Total cash and cash equivalents		19,543			55,457
Available for sale securities (amortized cost of $361,158 and $325,767, respectively)		365,706			326,406
Stock in Federal Home Loan Bank of Boston		16,274			15,671
Loans and leases receivable:
Commercial loans and leases		724,421			658,422
Residential mortgage loans		182,303			212,665
Consumer and other loans		209,903			206,655
Total loans and leases receivable		1,116,627			1,077,742
Allowance for loan and lease losses		(16,537	)		(14,664	)
Net loans and leases receivable		1,100,090			1,063,078
Premises and equipment, net		12,518			12,641
Goodwill		12,051			12,019
Accrued interest receivable		4,826			5,240
Investment in bank-owned life insurance		29,672			28,765
Prepaid expenses and other assets		9,200			9,697
Total assets	$	1,569,880		$	1,528,974
LIABILITIES:
Deposits:
Demand deposit accounts	$	206,534		$	176,495
NOW accounts		62,333			56,703
Money market accounts		50,380			4,445
Savings accounts		365,857			381,106
Certificate of deposit accounts		406,827			423,443
Total deposits		1,091,931			1,042,192
Overnight and short-term borrowings		39,031			57,676
Wholesale repurchase agreements		20,000			10,000
Federal Home Loan Bank of Boston borrowings		267,647			238,936
Subordinated deferrable interest debentures		13,403			13,403
Other liabilities		15,392			17,162
Total liabilities		1,447,404			1,379,369
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: (4,965,494 shares and 4,926,920 shares, respectively)		50			49
Additional paid-in capital*		72,600			73,323
Treasury stock, at cost (364,750 shares and 352,250 shares, respectively)		(12,309	)		(12,055	)
Retained earnings		59,179			59,278
Accumulated other comprehensive income, net		2,956			415
Total shareholders' equity		122,476			149,605
Total liabilities and shareholders' equity	$	1,569,880		$	1,528,974

*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.

BANCORP RHODE ISLAND, INC.
Consolidated Statements of Operations (unaudited)

	Three Months Ended							Nine Months Ended
	September 30,							September 30,
	2009			2008				2009		2008
	(In thousands, except per share data)
Interest and dividend income:
Commercial loans and leases	$	10,437		$	10,076		$	30,184		$	29,624
Residential mortgage loans		2,302			2,899			7,422			9,232
Consumer and other loans		2,384			2,776			7,110			8,613
Mortgage-backed securities		3,336			3,570			10,099			10,257
Investment securities		540			691			1,527			2,151
Federal Home Loan Bank of Boston stock dividends		--			119			--			512
Overnight investments		1			6			10			261
Total interest and dividend income		19,000			20,137			56,352			60,650
Interest expense:
NOW accounts		13			33			45			138
Money market accounts		140			17			192			65
Savings accounts		707			1,510			2,720			5,688
Certificate of deposit accounts		2,448			3,213			9,069			10,905
Overnight and short-term borrowings		19			209			67			853
Wholesale repurchase agreements		141			136			408			404
Federal Home Loan Bank of Boston borrowings		2,691			2,864			7,966			8,234
Subordinated deferrable interest debentures		175			234			564			710
Total interest expense		6,334			8,216			21,031			26,997
Net interest income		12,666			11,921			35,321			33,653
Provision for loan and lease losses		1,900			1,515			6,110			2,770
Net interest income after provision for loan and lease losses		10,766			10,406			29,211			30,883
Noninterest income:
Total other-than-temporary impairment losses on available for sale securities		(696	)		(219	)		(696	)		(219	)
Non-credit component of other-than-temporary impairment losses recognized in other comprehensive income		626			--			626			--
Credit component of other-than-temporary impairment losses on available for sale securities		(70	)		(219	)		(70	)		(219	)
Service charges on deposit accounts		1,396			1,469			3,973			4,352
Commissions on nondeposit investment products		322			174			589			629
Income from bank-owned life insurance		313			266			906			783
Loan related fees		75			136			703			443
Net gains on lease sales and commissions on loans originated for others		13			55			61			374
Gain on sale of available for sale securities		--			168			61			410
Other income		192			284			589			956
Total noninterest income		2,241			2,333			6,812			7,728
Noninterest expense:
Salaries and employee benefits		5,224			5,067			15,303			15,206
Occupancy		864			899			2,652			2,628
Data processing		659			697			1,949			2,124
Professional services		609			709			1,953			2,198
FDIC insurance		502			216			2,065			478
Marketing		327			367			974			1,100
Equipment		226			233			709			807
Loan workout and other real estate owned		219			78			496			314
Loan servicing		174			185			522			503
Other expenses		1,008			853			2,957			3,018
Total noninterest expense		9,812			9,304			29,580			28,376
Income before income taxes		3,195			3,435			6,443			10,235
Income tax expense		992			1,111			2,037			3,344
Net income		2,203			2,324			4,406			6,891
Preferred stock dividends		(142	)		--			(892	)		--
Accretion of preferred shares discount		(1,282	)		--			(1,405	)		--
Net income applicable to common shares	$	779		$	2,324		$	2,109		$	6,891

	Three Months Ended							Nine Months Ended
	September 30,							September 30,
	2009			2008				2009		2008

Per share data:
Basic earnings per common share	$	0.17		$	0.51		$	0.46		$	1.51
Diluted earnings per common share	$	0.17		$	0.50		$	0.46		$	1.49
Average common shares outstanding - basic		4,605,809			4,566,563			4,599,448			4,562,225
Average common shares outstanding - diluted		4,633,719			4,628,916			4,619,900			4,633,419

Bancorp Rhode Island, Inc.
Chief Financial Officer
Linda H. Simmons, 401-574-1652
simmonsl@bankri.com
or
Investor Relations Officer
Debbie Mandeville, 401-574-1547
dmandevi@bankri.com

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BancorpRI Announces Third Quarter Financial Results