PROVIDENCE – Bancorp Rhode Island Inc. (Nasdaq: BARI), the parent of Bank Rhode Island, today posted a second-quarter profit of $2.24 million, an increase of 2.14 percent from the year-ago period’s $2.19 million. Diluted earnings per common share rose to 48 cents, a 9.09-percent increase from the year-ago 44 cents.
But the company’s profit fell 3.82 percent compared with the profit of $2.33 million, or 50 cents per share, it posted for the first quarter of 2008. (READ MORE)
Revenue for the quarter fell 6.28 percent compared with the 2007 second quarter, to $22.47 million. The decline reflected a $1.33 million drop in interest income, caused mostly by shrinking residential mortgages and consumer loan balances as the bank continued its “strategic conversion to a more commercially oriented balance sheet,” BancorpRI said. But that loss of income was largely offset by a $1.25 million reduction in interest expenses.
“Our second-quarter results reflect the continued execution of our strategic plan,” BancorpRI President and CEO Merrill W. Sherman said in a statement today.
“We are pleased with our commercial loan generation, and our disciplined pricing has enabled us to maintain our deposit base while significantly increasing our net interest margin.
“For the six months ending June 30, year over year, we have expanded revenues 5 percent while keeping expenses flat,” she noted, adding: “We believe that our strong capital base should allow us to take advantage of opportunities in this environment.”
The bank continued to maintain its “well-capitalized” status in the second quarter, reporting a Tier 1 capital ratio of 7.89 percent and a risk-weighted capital ratio of more than 12.5 percent.
Total interest and dividend income fell 6.26 percent to $19.98 million from the year-ago $21.3 million, the company said. Non-interest income declined 6.46 percent to $2.49 million.
Total assets remained unchanged from the start of the quarter at $1.49 billion.
The company increased its loan-loss provision to $970,000 for the second quarter, more than nine times its $100,000 setaside for the 2007 second quarter. For the first six months of the year, Bank Rhode Island’s loan-loss provision – money reserved against anticipated bad loans – totaled $1.26 million, or more than six times its $200,000 provision in the first half of 2007.
Nonperforming loans declined to $6.98 million, or 0.47 percent of total assets as of June 30, from the March 31 total of $8.62 million, or 0.58 percent of assets. Net charge-offs for the second quarter amounted to $402,000, the company said.
BankRI’s net interest margin widened to 3.24 percent for the second quarter, an increase of 27 basis points from the 2.97 percent it recorded for the both the first quarter of this year and the second quarter of 2007.
Among liabilities, total deposits grew to $1.04 billion on June 30 from $1.01 billion at the beginning of the quarter and $1.03 billion a year ago, as growth in money-market, savings and certificate of deposit accounts more than offset a decline in NOW accounts.
Two key performance measures – return on assets and return on equity – both showed improvement. BankRI’s return on assets in the quarter just ended was 0.61 percent, slightly better than the first quarter’s 0.60 percent and the year-ago’s 0.60 percent. The bank’s return on equity rose to 7.90 percent from the first quarter’s 7.63 percent and from the year-ago ROE of 7.72 percent.
The board of directors, citing its confidence in BankRI’s long-term growth prospects, approved a 1-cent increase in the company’s regular quarterly dividend. The hike – to 17 cents per share, an increase of 6 percent from the first quarter’s 16-cent dividend and 13.33 percent from the 2007 second quarter’s 15 cents – was the second in the past year. The new dividend will be payable Sept. 3 to shareholders of record on Aug. 13.
Bancorp Rhode Island Inc. (Nasdaq: BARI) is the parent of Bank Rhode Island, a state-chartered, FDIC-insured institution with 16 branches in Providence, Kent and Washington counties. Additional information on BankRI and its parent company is available at bankri.com.
Bank Rhode Island's dividend decision is a sign that the board and the banks administrators are out of touch with reality.The conference call yesterday was woefully lacking in details on asset quality and reasons for this unusual dividend change.
Keeping in mind this quote from the governor of Rhode Island yeaterday. "The State's economy is showing signs of worsening, adding even greater pressure to the budget, and I have an obligation to take whatever steps necessary to balance the budget. I will be meeting be with staff over the next several days and will decide the best course of action for all Rhode Islanders." This statement leads me to wonder what State the bank is operating in.
The bank yesterday also discussed the fact that they are able to purchase loans well below what they consider fair value. Doesnt this fact fly in the face of the existing loans current stated values?
So here's the question . What is the exact nature of the loans that are assets on your books (currently valued at 100 cents on the dollar)? Should a financial analyst apply any haircut at all to these stated values?
Michael G Riley
Narragansett,RI