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Net Interest Margin Improves 28 Basis Points, Nonperforming Assets Decrease by 10%
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 16,537 14,664
Losses
Allowance to Nonperforming 110.99 % 102.05 %
Loans and Leases
Allowance to Total Loans and 1.48 % 1.36 %
Leases
Total Deposits $ 1,091,931 $ 1,042,192
Common Shareholders' Equity 122,476 121,010
Book Value Per Share of Common 26.57 26.45
Stock
Tangible Book Value Per Share 23.96 23.82
of Common Stock
Tangible Common Equity Ratio 7.09 % 7.18 %
(1) (6)
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 1,224 1,186 1,210 1,175
Liabilities
Average Common Shareholders' Equity 121 113 122 113
Quarter Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Income Statement (Dollars in thousands, except per share data)
Data:
Interest and $ 19,000 $ 20,137 $ 56,352 $ 60,650
Dividend Income
Interest Expense 6,334 8,216 21,031 26,997
Net Interest Income 12,666 11,921 35,321 33,653
Provision of Loan 1,900 1,515 6,110 2,770
and Lease Losses
Noninterest Income 2,241 2,333 6,812 7,728
Noninterest Expense 9,812 9,304 29,580 28,376
Income Before 3,195 3,435 6,443 10,235
Income Taxes
Income Tax Expense 992 1,111 2,037 3,344
Net Income 2,203 2,324 4,406 6,891
Preferred Stock (142 ) -- (892 ) --
Dividends
Accretion of
Preferred Shares (1,282 ) -- (1,405 ) --
Discount
Net Income
Applicable to $ 779 $ 2,324 $ 2,109 $ 6,891
Common Shares
Earnings Per Common $ 0.17 $ 0.51 $ 0.46 $ 1.51
Share - Basic
Earnings Per Common $ 0.17 $ 0.50 $ 0.46 $ 1.49
Share - Diluted
Average Common
Shares Outstanding 4,605,809 4,566,563 4,599,448 4,562,225
- Basic
Average Common
Shares Outstanding 4,633,719 4,628,916 4,619,900 4,633,419
- Diluted
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 $ 3,159 $ 4,801 $ 4,884
Nonperforming Loans
Commercial and Industrial 3,263 4,360 2,802
Nonperforming Loans
Small Business Nonperforming 585 542 892
Loans
Multifamily Nonperforming Loans 205 -- --
Construction Nonperforming 469 1,000 1,000
Loans
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 14,899 17,753 14,369
Leases
Other Real Estate Owned 1,995 921 863
Non-Real Estate Foreclosed -- 122 --
Assets
Total Nonperforming Assets $ 16,894 $ 18,796 $ 15,232
Net Charge-Offs $ 2,268 $ 1,118 $ 1,285
Net Charge-Offs to Average 0.81 % 0.40 % 0.48 %
Loans
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 - $ 0.48 $ 0.50 $ 0.95 $ 1.49
Diluted
(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.
Certain June 30, 2009 and December 31, 2008 Nonperforming Asset Data
(8) amounts have been reclassified to conform to the September 30, 2009
presentation. The reclassifications had no effect on previously reported
Net Income.
Reconciliation of Non-GAAP Earnings Per Common Share - Diluted table
included to provide the investor useful information in comparing the
(9) 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 365,706 326,406
cost of $361,158 and $325,767, respectively)
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 -- 28,595
30,000 shares, respectively)*
Common stock, par value $0.01 per share,
authorized 11,000,000 shares:
Issued: (4,965,494 shares and 4,926,920 50 49
shares, respectively)
Additional paid-in capital* 72,600 73,323
Treasury stock, at cost (364,750 shares and (12,309 ) (12,055 )
352,250 shares, respectively)
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 $ 10,437 $ 10,076 $ 30,184 $ 29,624
leases
Residential mortgage 2,302 2,899 7,422 9,232
loans
Consumer and other 2,384 2,776 7,110 8,613
loans
Mortgage-backed 3,336 3,570 10,099 10,257
securities
Investment 540 691 1,527 2,151
securities
Federal Home Loan
Bank of Boston stock -- 119 -- 512
dividends
Overnight 1 6 10 261
investments
Total interest and 19,000 20,137 56,352 60,650
dividend income
Interest expense:
NOW accounts 13 33 45 138
Money market 140 17 192 65
accounts
Savings accounts 707 1,510 2,720 5,688
Certificate of 2,448 3,213 9,069 10,905
deposit accounts
Overnight and
short-term 19 209 67 853
borrowings
Wholesale repurchase 141 136 408 404
agreements
Federal Home Loan
Bank of Boston 2,691 2,864 7,966 8,234
borrowings
Subordinated
deferrable interest 175 234 564 710
debentures
Total interest 6,334 8,216 21,031 26,997
expense
Net interest income 12,666 11,921 35,321 33,653
Provision for loan 1,900 1,515 6,110 2,770
and lease losses
Net interest income
after provision for 10,766 10,406 29,211 30,883
loan and lease
losses
Noninterest income:
Total
other-than-temporary
impairment losses on (696 ) (219 ) (696 ) (219 )
available for sale
securities
Non-credit component
of
other-than-temporary 626 -- 626 --
impairment losses
recognized in other
comprehensive income
Credit component of
other-than-temporary
impairment losses on (70 ) (219 ) (70 ) (219 )
available for sale
securities
Service charges on 1,396 1,469 3,973 4,352
deposit accounts
Commissions on
nondeposit 322 174 589 629
investment products
Income from
bank-owned life 313 266 906 783
insurance
Loan related fees 75 136 703 443
Net gains on lease
sales and
commissions on loans 13 55 61 374
originated for
others
Gain on sale of
available for sale -- 168 61 410
securities
Other income 192 284 589 956
Total noninterest 2,241 2,333 6,812 7,728
income
Noninterest expense:
Salaries and 5,224 5,067 15,303 15,206
employee benefits
Occupancy 864 899 2,652 2,628
Data processing 659 697 1,949 2,124
Professional 609 709 1,953 2,198
services
FDIC insurance 502 216 2,065 478
Marketing 327 367 974 1,100
Equipment 226 233 709 807
Loan workout and
other real estate 219 78 496 314
owned
Loan servicing 174 185 522 503
Other expenses 1,008 853 2,957 3,018
Total noninterest 9,812 9,304 29,580 28,376
expense
Income before income 3,195 3,435 6,443 10,235
taxes
Income tax expense 992 1,111 2,037 3,344
Net income 2,203 2,324 4,406 6,891
Preferred stock (142 ) -- (892 ) --
dividends
Accretion of
preferred shares (1,282 ) -- (1,405 ) --
discount
Net income
applicable to common $ 779 $ 2,324 $ 2,109 $ 6,891
shares
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Per share data:
Basic earnings per $ 0.17 $ 0.51 $ 0.46 $ 1.51
common share
Diluted earnings per $ 0.17 $ 0.50 $ 0.46 $ 1.49
common share
Average common
shares outstanding - 4,605,809 4,566,563 4,599,448 4,562,225
basic
Average common
shares outstanding - 4,633,719 4,628,916 4,619,900 4,633,419
diluted
Source: Bancorp Rhode Island, Inc.
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