(Updated, July 22)
PROVIDENCE – Bancorp Rhode Island Inc. said Thursday that its second-quarter profit dropped by a third to $1.82 million as it recorded expenses related to BancorpRI’s pending acquisition by a Massachusetts bank.
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BancorpRI, parent of Bank Rhode Island, said the acquisition-related expenses totaled $1.5 million for the quarter and included “compensation expense attributable to the accelerated vesting of restricted stock award.”
Those expenses weighed down earnings per diluted share, which stood at 38 cents for the quarter. But Linda Simmons, BancorpRI’s chief financial officer and treasurer, noted that “core” earnings – without counting the acquisition-related expenses – were 70 cents per share.
“In fact, this would have been record earnings for the company,” Simmons said Friday.
The four analysts who follow the bank estimates second-quarter earnings of 56 cents per share, according to Yahoo! Finance.
The bank’s total interest and non-interest revenue for the second quarter was $19.77 million, down 5.5 percent from the $20.92 million reported in the 2010 second quarter.
A reduction in the amount of money the bank sets aside quarterly for loan losses helped offset some that revenue decline and the compensation-related expenses.
The second-quarter loan-loss provision was $850,000, down from $1.55 million a year earlier.
Still, net income sank from $2.68 million in the second quarter last year to $1.82 million in the most recently completed quarter, a 32 percent decline.
In April, Brookline Bancorp Inc. announced it will purchase BancorpRI in a $234 million deal that is expected to close in the third or fourth quarter. Since then, BancorpRI executives have canceled the quarterly conference calls with analysts.
Merrill Sherman, who will step down as BancorpRI’s president and CEO as part of the transaction, is due for a big payout, according to regulatory filings.
An agreement with Brookline Bancorp calls for Sherman to receive a $2.2 million severance payment after the deal closes. In addition, she would be eligible to receive $4.42 million in a lump sum as part of BancorpRI’s supplemental executive retirement plan.
Sherman is also due to receive $750,000 as part of a 24-month noncompete agreement in which she consented to serve as a consultant for Brookline Bancorp.
Meanwhile, Sherman’s stock holdings — she owns 6.1 percent of BancorpRI shares — would be valued at more than $14.1 million if she cashes out when the bank is sold.
At least one of the bank’s performance measures showed improvement in the second quarter.
The bank said its net interest margin stood at 3.69 percent in the second quarter, up 11 basis points from the first quarter and up 2 basis points from a year earlier.
But the total amount of nonperforming assets on BancorpRI’s books climbed higher in the second quarter, increasing to $19.45 million as of June 30, up from $17.47 million as of March 31 and $16.76 million a year earlier.
BancorpRI’s return on assets in the second quarter was 0.46 percent, down from 0.68 percent in the same period in 2010.
The bank’s return on equity sank from 8.54 percent in the second quarter of 2010 to 5.54 percent in the quarter just completed.
The updated version of the story includes comments from BancorpRI’s Linda Simmons on the bank’s earnings per diluted share for the quarter.
