BARI Bancorp Rhode Island, Inc. (MM)

Bancorp Rhode Island, Inc. (NASDAQ: BARI), the parent company of Bank Rhode Island, today reported net income of $2.6 million, or $0.55 diluted earnings per share (EPS), for the quarter ended September 30, 2011. These results reflect expenses of $533,000 (after-tax), or $0.11 per diluted share, related to the pending merger with Brookline Bancorp, Inc. Net income for the third quarter 2011 compares to net income of $2.8 million, or $0.60 diluted EPS, for the third quarter 2010 and net income of $1.8 million, or $0.38 diluted EPS, for the second quarter 2011.

For the nine month period ended September 30, 2011, the Company reported net income of $6.8 million, or $1.42 diluted EPS, compared to net income of $7.7 million, or $1.65 diluted EPS, for the same period in 2010. The nine month results for the period ended September 30, 2011 reflect expenses of $2.0 million (after-tax), or $0.43 per diluted share, related to the pending merger with Brookline Bancorp, Inc.

The Company’s commercial loan and lease portfolio grew to $792.1 million as of September 30, 2011. This represented increases of $11.9 million, or 1.5 percent, from year-end 2010 and $20.4 million, or 2.6 percent, from September 30, 2010. Consumer loans were $204.1 million at September 30, 2011, down $6.2 million, or 3.0 percent, compared to December 31, 2010 and up $1.7 million, or 0.9 percent, from a year ago. Residential mortgage loans were $151.4 million as of September 30, 2011, down $13.5 million, or 8.2 percent, from year-end 2010.

Core deposit (demand deposits, NOW, money market and savings accounts) trends remain positive with growth of 6.5 percent from year-end 2010 and 9.0 percent from a year ago. The growth over the prior periods was driven primarily by money market and demand deposit accounts, partly offset by a reduction in savings accounts and certificates of deposit. At the end of the third quarter, core deposits rose to 73.4 percent of total deposits compared to 69.0 percent at year-end 2010 and 67.7 percent a year ago. Total deposits were $1.1 billion at September 30, 2011, up slightly from year-end 2010 and from a year ago.

Net interest income for the third quarter 2011 increased to $13.8 million from $13.5 million in the third quarter 2010 and decreased compared to $14.0 million in the second quarter 2011. The net interest margin for the third quarter 2011 was 3.66 percent, representing an improvement of 5 basis points from the third quarter 2010 and a decrease of 3 basis points from the second quarter 2011. On a year-to-date basis, net interest income was $41.3 million, an increase of $1.1 million, or 2.8 percent, from the same period in 2010, and the net interest margin was 3.65 percent, an increase of 6 basis points from the same period in 2010.

Noninterest income was $2.2 million for the third quarter 2011, down slightly from the third quarter 2010 and the second quarter 2011. On a year-to-date basis, noninterest income was $6.8 million, relatively flat compared to the same period in 2010.

Noninterest expense was $9.9 million in the third quarter 2011, down $417,000 compared to the third quarter 2010 due to a reduction in FDIC insurance expense. The decrease in noninterest expense for the third quarter 2011 of $2.7 million from the second quarter 2011 was primarily attributable to lower merger-related and FDIC insurance expenses. On a year-to-date basis, noninterest expense was $33.8 million, an increase of $2.6 million over the same period in 2010. The increase in the year-to-date comparison was primarily driven by merger-related expenses and an accrual related to a judgment issued with respect to a previously disclosed jury verdict against the Bank recorded in the first quarter 2011, partially offset by a reduction in FDIC insurance expense.

Nonperforming assets at September 30, 2011 totaled $22.1 million or 1.40 percent of total assets. This represented an increase from $19.4 million, or 1.20 percent of total assets, at June 30, 2011. Net charge-offs were $1.5 million, or 0.53 percent of average loans and leases, for the third quarter 2011. Net charge-offs for the third quarter 2010 were $459,000, or 0.16 percent of average loans and leases, and were $989,000, or 0.34 percent of average loans and leases, in the second quarter 2011. On a year-to-date basis, net charge-offs were $4.1 million, or 0.47 percent of average loans and leases, an increase of $1.3 million over the same period in 2010.

The provision for loan and lease losses was $1.6 million for the third quarter 2011, compared to $1.3 million in the third quarter 2010 and $850,000 in the second quarter 2011. On a year-to-date basis, the provision was $3.6 million, a decrease of $850,000 from the same period in 2010.

The allowance for loan and lease losses was $18.1 million at September 30, 2011 compared to $18.7 million at December 31, 2010. The allowance for loan and lease losses as a percent of total loans and leases was 1.58 percent at September 30, 2011 compared to 1.61 percent at December 31, 2010.

At September 30, 2011, the Company’s tier 1 capital ratio was approximately 8.40 percent and its total risk-based capital ratio was approximately 13.10 percent.

The Company’s Board of Directors approved a dividend of $0.19 per share. The dividend will be paid on November 14, 2011, to shareholders of record on November 7, 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 September 30, 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.

BANCORP RHODE ISLAND, INC. Selected Financial Highlights (unaudited)                 Three Months Ended Nine Months Ended September 30, September 30, 2011 2010 2011 2010 (In thousands, except per share data)   FINANCIAL DATA: Net interest income $ 13,807 $ 13,478 $ 41,321 $ 40,192 Provision for loan and lease losses 1,600 1,275 3,575 4,425 Noninterest income 2,199 2,289 6,803 6,889 Noninterest expense 9,933 10,350 33,820 31,268 Net income 2,643 2,808 6,769 7,708   FINANCIAL PERFORMANCE RATIOS: Return on assets (3) (6) 0.66 % 0.71 % 0.57 % 0.66 % Return on equity (4) (6) 7.71 % 8.57 % 6.84 % 8.16 % Net interest margin (2) (6) 3.66 % 3.61 % 3.65 % 3.59 % Efficiency ratio (5) (6) 62.06 % 65.64 % 70.28 % 66.41 %   PER SHARE DATA: Earnings per share - basic $ 0.56 $ 0.60 $ 1.44 $ 1.65 Earnings per share - diluted 0.55 0.60 1.42 1.65 Book value per share of common stock 29.58 27.98 29.58 27.98 Tangible book value per share of common stock 26.96 25.35 26.96 25.35 Market value (at period end) 42.39 27.93 42.39 27.93 Dividends per share 0.19 0.17 0.57 0.51   CAPITAL RATIOS: Tier 1 capital ratio (7) 8.40 % 8.10 % Total risk-based capital ratio (7) 13.10 % 12.52 % Tangible common equity ratio (1) (6) 8.09 % 7.59 %       Three Months Ended Sep 30, 2011 Jun 30, 2011 Mar 31, 2011 Dec 31, 2010 Sep 30, 2010 (In thousands)   BALANCE SHEET: Total assets $ 1,575,216 $ 1,618,756 $ 1,606,508 $ 1,603,759 $ 1,573,323 Total loans and leases 1,147,584 1,152,677 1,154,448 1,155,489 1,135,227 Total deposits 1,121,708 1,095,845 1,101,661 1,120,166 1,115,683 Shareholders' equity 138,643 133,531 130,192 128,678 130,769   ASSET QUALITY: Total nonperforming assets $ 22,108 $ 19,447 $ 17,473 $ 17,643 $ 15,152 Nonperforming assets / total assets 1.40 % 1.20 % 1.09 % 1.10 % 0.96 % Allowance for loans and leases $ 18,149 $ 18,083 $ 18,222 $ 18,654 $ 18,212 Allowance to total loans and leases 1.58 % 1.57 % 1.58 % 1.61 % 1.60 % Net charge-offs $ 1,534 $ 989 $ 1,557 $ 1,993 $ 459 Net charge-offs to average loans and leases 0.53 % 0.34 % 0.55 % 0.69 % 0.16 % BANCORP RHODE ISLAND, INC. Selected Financial Highlights (unaudited)               Sep 30, 2011 Jun 30, 2011 Mar 31, 2011 Dec 31, 2010 Sep 30, 2010 (In thousands)   LOAN AND LEASE PORTFOLIO:   Commercial loans and leases: Commercial real estate - non-owner occupied $ 219,147 $ 210,888 $ 196,353 $ 200,809 $ 202,342 Commercial real estate - owner occupied 170,913 176,059 183,111 179,766 177,526 Commercial & industrial 170,783 159,512 161,004 157,879 156,042 Multifamily 89,750 86,387 84,772 79,934 73,375 Small business 59,166 60,141 62,233 62,841 59,756 Construction 19,046 27,071 28,273 30,349 31,035 Leases and other 66,753 70,777 72,156 73,054 76,417 Subtotal 795,558 790,835 787,902 784,632 776,493 Unearned lease income (5,194) (5,828) (5,962) (6,159) (6,516) Net deferred loan origination costs 1,750 1,697 1,756 1,791 1,777 Total commercial loans and leases 792,114 786,704 783,696 780,264 771,754   Consumer loans 204,112 208,558 210,094 210,348 202,367   Residential mortgages 151,358 157,415 160,658 164,877 161,106             Total loans and leases $ 1,147,584 $ 1,152,677 $ 1,154,448 $ 1,155,489 $ 1,135,227 (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 September 30, 2011. BANCORP RHODE ISLAND, INC. Consolidated Balance Sheet (unaudited)     September 30, December 31, 2011 2010 (In thousands) ASSETS: Cash and due from banks $ 29,695 $ 14,384 Overnight investments   599     395   Total cash and cash equivalents 30,294 14,779 Available for sale securities (amortized cost of $316,991 and $357,402, respectively) 327,060 360,025 Stock in Federal Home Loan Bank of Boston 16,274 16,274 Loans and leases receivable: Commercial loans and leases 792,114 780,264 Consumer and other loans 204,112 210,348 Residential mortgage loans   151,358     164,877   Total loans and leases receivable 1,147,584 1,155,489 Allowance for loan and lease losses   (18,149 )   (18,654 ) Net loans and leases receivable 1,129,435 1,136,835 Premises and equipment, net 11,208 11,889 Goodwill 12,262 12,262 Accrued interest receivable 4,181 4,842 Investment in bank-owned life insurance 32,193 31,277 Prepaid expenses and other assets   12,309     15,576   Total assets $ 1,575,216   $ 1,603,759     LIABILITIES: Deposits: Demand deposit accounts $ 284,959 $ 264,274 NOW accounts 75,915 70,327 Money market accounts 132,305 96,285 Savings accounts 329,796 341,667 Certificates of deposit accounts   298,733     347,613   Total deposits 1,121,708 1,120,166 Overnight and short-term borrowings 38,501 40,997 Wholesale repurchase agreements 10,000 20,000 Federal Home Loan Bank of Boston borrowings 231,870 260,889 Subordinated deferrable interest debentures 13,403 13,403 Other liabilities   21,091     19,626   Total liabilities   1,436,573     1,475,081   SHAREHOLDERS’ EQUITY: Common stock, par value $0.01 per share, authorized 11,000,000 shares: Issued: (5,083,991 shares and 5,047,942 shares, respectively) 50 50 Additional paid-in capital 75,771 73,866 Treasury stock, at cost (396,986 shares and 373,850 shares, respectively) (13,406 ) (12,527 ) Retained earnings 69,683 65,584 Accumulated other comprehensive income, net   6,545     1,705   Total shareholders’ equity   138,643     128,678   Total liabilities and shareholders’ equity $ 1,575,216   $ 1,603,759   BANCORP RHODE ISLAND, INC. Consolidated Statements of Operations (unaudited)         Three Months Ended Nine Months Ended September 30, September 30, 2011 2010   2011 2010 (In thousands, except per share data) Interest and dividend income: Overnight investments $ - $ 1 $ 1 $ 6 Mortgage-backed securities 2,508 2,764 7,739 9,034 Investment securities 399 462 1,167 1,502 Federal Home Loan Bank of Boston stock dividends 11 - 36 - Loans and leases   14,243   14,927     43,298   44,600   Total interest and dividend income   17,161   18,154     52,241   55,142   Interest expense: Deposits 1,271 1,910 3,978 6,352 Overnight and short-term borrowings 10 16 29 53 Wholesale repurchase agreements 10 139 291 421 Federal Home Loan Bank of Boston borrowings 1,897 2,438 6,124 7,621 Subordinated deferrable interest debentures   166   173     498   503   Total interest expense   3,354   4,676     10,920   14,950   Net interest income 13,807 13,478 41,321 40,192 Provision for loan and lease losses   1,600   1,275     3,575   4,425   Net interest income after provision for loan and lease losses   12,207   12,203     37,746   35,767   Noninterest income: Total other-than-temporary impairment losses on available for sale securities - 5 - 54 Non-credit component of other-than-temporary impairment losses recognized in other comprehensive income   -   (422 )   -   (1,086 ) Credit component of other-than-temporary impairment losses on available for sale securities - (417 ) - (1,032 ) Service charges on deposit accounts 1,177 1,337 3,532 3,949 Commissions on nondeposit investment products 336 144 886 529 Income from bank-owned life insurance 307 320 916 953 Loan related fees 127 162 478 484 Net gain on lease sales and commissions on loans originated for others 58 44 118 86 Gain on sale of available for sale securities - 465 212 1,043 Other income   194   234     661   877   Total noninterest income   2,199   2,289     6,803   6,889   Noninterest expense: Salaries and employee benefits 5,769 5,829 18,358 17,418 Occupancy 815 827 2,568 2,517 Data processing 702 667 2,070 1,975 Professional services 558 549 3,296 1,718 Loan workout and other real estate owned 392 196 759 869 Operating 370 461 1,252 1,390 Equipment 275 266 807 776 Marketing 267 333 998 974 Loan servicing 155 133 434 480 FDIC insurance 72 475 991 1,425 Other expenses   558   614     2,287   1,726   Total noninterest expense   9,933   10,350     33,820   31,268   Income before income taxes 4,473 4,142 10,729 11,388 Income tax expense   1,830   1,334     3,960   3,680   Net income $ 2,643 $ 2,808   $ 6,769 $ 7,708     Per share data: Basic earnings per common share $ 0.56 $ 0.60 $ 1.44 $ 1.65 Diluted earnings per common share $ 0.55 $ 0.60 $ 1.42 $ 1.65 Cash dividends declared per common share $ 0.19 $ 0.17 $ 0.57 $ 0.51 Weighted average common shares outstanding – basic 4,685 4,674 4,685 4,653 Weighted average common shares outstanding – diluted 4,783 4,703 4,757 4,682 BANCORP RHODE ISLAND, INC. Asset Quality Analysis (unaudited)           Three Months Ended Sep 30, 2011 Jun 30, 2011 Mar 31, 2011 Dec 31, 2010 Sep 30, 2010 (Dollars in thousands) NONPERFORMING ASSETS:   Nonperforming loans & leases: Commercial real estate $ 6,195 $ 5,432 $ 4,792 $ 5,273 $ 5,384 Commercial & industrial 3,807 2,362 2,255 2,462 1,455 Multifamily 2,664 1,568 1,050 717 - Small business 1,176 817 1,059 1,090 1,158 Construction - 45 232 469 469 Leases 758 1,713 591 581 1,115 Consumer 1,023 1,038 993 876 871 Residential mortgage   5,820     5,722     4,926     5,045     3,570   Total nonperforming loans & leases 21,443 18,697 15,898 16,513 14,022   Other real estate owned 464 750 1,575 1,130 1,130 Non-real estate foreclosed assets 201 - - - -           Total nonperforming assets $ 22,108   $ 19,447   $ 17,473   $ 17,643   $ 15,152       Total nonperforming loans & leases / total loans & leases 1.87 % 1.62 % 1.38 % 1.43 % 1.24 % Total nonperforming assets / total assets 1.40 % 1.20 % 1.09 % 1.10 % 0.96 %     PROVISION AND ALLOWANCE FOR LOAN LOSSES:   Balance at beginning of period $ 18,083 $ 18,222 $ 18,654 $ 18,212 $ 17,396 Charged-off loans & leases (1,582 ) (1,137 ) (1,686 ) (2,154 ) (487 ) Recoveries on charged-off loans & leases   48     148     129     161     28   Net loans & leases charged-off (1,534 ) (989 ) (1,557 ) (1,993 ) (459 ) Provision for loan and lease losses   1,600     850     1,125     2,435     1,275   Balance at end of period $ 18,149   $ 18,083   $ 18,222   $ 18,654   $ 18,212       Allowance to nonperforming loans & leases 84.64 % 96.72 % 114.62 % 112.97 % 129.88 % Allowance to total loans & leases 1.58 % 1.57 % 1.58 % 1.61 % 1.60 %     NET CHARGE-OFFS:   Commercial real estate $ 167 $ - $ 532 $ 726 $ - Commercial & industrial 254 (47 ) - 487 (5 ) Construction - 62 237 - - Other commercial loans & leases 974 427 397 565 226 Consumer 4 32 12 74 149 Residential mortgages   135     515     379     141     89   Total net charge-offs $ 1,534   $ 989   $ 1,557   $ 1,993   $ 459       Net charge-offs to average loans & leases 0.53 % 0.34 % 0.55 % 0.69 % 0.16 %     DELINQUENCIES AND NONACCRUING LOANS AND LEASES AS % OF TOTAL LOANS:   Loans & leases 30-59 days past due 0.83 % 0.37 % 0.83 % 0.56 % 0.47 % Loans & leases 60-89 days past due 0.08 % 0.16 % 0.28 % 0.21 % 0.22 % Loans & leases 90+ days past due and still accruing   0.03 %   0.01 %   0.06 %   -     -   Total accruing past due loans & leases 0.94 % 0.54 % 1.17 % 0.77 % 0.69 %   Nonaccrual loans & leases   1.84 %   1.61 %   1.32 %   1.43 %   1.24 %   Total delinquent and nonaccrual loans & leases   2.78 %   2.15 %   2.49 %   2.20 %   1.93 % BANCORP RHODE ISLAND, INC. Consolidated Average Balances, Yields and Costs (unaudited)                     Three Months Ended September 30, (Dollars in thousands) 2011   2010   Average Interest Average Average Interest Average Balance Earned/Paid Yield Balance Earned/Paid Yield   ASSETS: Earning assets: Overnight investments $ 834 $ - 0.42 % $ 5,220 $ 1 0.08 % Available for sale securities 340,587 2,907 3.41 % 344,872 3,226 3.74 % Stock in the FHLB 16,274 11 0.27 % 16,274 - 0.00 % Loans and leases receivable: Commercial loans and leases 788,877 10,522 5.30 % 760,236 10,788 5.64 % Consumer and other loans 206,315 2,168 4.17 % 205,978 2,265 4.36 % Residential mortgages loans   154,352     1,553 4.02 %   162,473     1,874 4.61 % Total earning assets   1,507,239     17,161 4.53 %   1,495,053     18,154 4.83 % Cash and due from banks 17,632 15,617 Allowance for loans and leases (18,150 ) (17,683 ) Premises and equipment 11,371 12,136 Goodwill, net 12,262 12,262 Accrued interest receivable 4,048 4,346 Bank-owned life insurance 31,992 30,761 Prepaid expenses and other assets   15,684     16,535   Total assets $ 1,582,078   $ 1,569,027       LIABILITIES AND SHAREHOLDERS' EQUITY: Interest-bearing liabilities: Deposits: NOW accounts $ 67,085 $ 11 0.06 % $ 71,493 $ 10 0.06 % Money market accounts 130,253 226 0.69 % 81,539 138 0.68 % Savings accounts 330,208 273 0.33 % 366,125 395 0.43 % Certificate of deposit accounts 305,751 761 0.99 % 364,245 1,367 1.49 % Overnight and short-term borrowings 37,292 10 0.10 % 39,675 16 0.16 % Wholesale repurchase agreements 12,717 10 0.32 % 13,804 139 3.94 % FHLB borrowings 255,761 1,897 2.90 % 233,124 2,438 4.09 % Subordinated deferrable interest debentures   13,403     166 4.90 %   13,403     173 5.08 % Total interest-bearing liabilities   1,152,470     3,354 1.15 %   1,183,408     4,676 1.57 %   Noninterest-bearing deposits 277,591 242,389 Other liabilities   16,051     13,223   Total liabilities 1,446,112 1,439,020   Shareholders' equity:   135,966     130,007   Total liabilities and shareholders' equity $ 1,582,078   $ 1,569,027         Net interest income $ 13,807 $ 13,478   Net interest spread 3.38 % 3.26 %   Net interest margin 3.66 % 3.61 % BANCORP RHODE ISLAND, INC. Consolidated Average Balances, Yields and Costs (unaudited)                   Nine Months Ended September 30, (Dollars in thousands) 2011 2010   Average Interest Average Average Interest Average Balance Earned/Paid Yield Balance Earned/Paid Yield   ASSETS: Earning assets: Overnight investments $ 765 $ 1 0.26 % $ 3,174 $ 6 0.27 % Available for sale securities 348,742 8,906 3.41 % 354,663 10,536 3.96 % Stock in the FHLB 16,274 36 0.29 % 16,274 - 0.00 % Loans and leases receivable: Commercial loans and leases 783,659 31,730 5.41 % 750,035 32,042 5.71 % Consumer and other loans 208,235 6,573 4.22 % 204,692 6,716 4.39 % Residential mortgages loans   159,407     4,995 4.18 %   167,354     5,842 4.65 % Total earning assets   1,517,082     52,241 4.60 %   1,496,192     55,142 4.92 % Cash and due from banks 16,910 15,963 Allowance for loans and leases (18,381 ) (17,316 ) Premises and equipment 11,592 12,246 Goodwill, net 12,262 12,235 Accrued interest receivable 4,103 4,323 Bank-owned life insurance 31,691 30,440 Prepaid expenses and other assets   15,389     16,103   Total assets $ 1,590,648   $ 1,570,186       LIABILITIES AND SHAREHOLDERS' EQUITY: Interest-bearing liabilities: Deposits: NOW accounts $ 67,935 $ 66 0.13 % $ 69,857 $ 37 0.07 % Money market accounts 118,677 599 0.67 % 78,103 452 0.77 % Savings accounts 337,199 807 0.32 % 369,686 1,432 0.52 % Certificate of deposit accounts 318,197 2,506 1.05 % 374,848 4,431 1.58 % Overnight and short-term borrowings 37,706 29 0.10 % 38,617 53 0.18 % Wholesale repurchase agreements 17,414 291 2.21 % 17,326 421 3.20 % FHLB borrowings 268,389 6,124 3.01 % 250,721 7,621 4.01 % Subordinated deferrable interest debentures   13,403     498 4.92 %   13,403     503 4.98 % Total interest-bearing liabilities   1,178,920     10,920 1.22 %   1,212,561     14,950 1.65 %   Noninterest-bearing deposits 264,663 220,576 Other liabilities   14,712     10,742   Total liabilities 1,458,295 1,443,879   Shareholders' equity:   132,353     126,307   Total liabilities and shareholders' equity $ 1,590,648   $ 1,570,186         Net interest income $ 41,321 $ 40,192   Net interest spread 3.38 % 3.27 %   Net interest margin 3.65 % 3.59 %