BancorpRI snaps slump with solid 1Q

Low interest rates on deposits helped Bancorp Rhode Island Inc. end a string of quarterly profit declines as its first-quarter net income came in more than 50 percent higher than the same period a year earlier.
BancorpRI, parent of Bank Rhode Island, last week posted a net income of $2.22 million for the first three months of 2010, a 52 percent increase over the $1.46 million income for the first quarter 2009. It was the bank’s first quarterly profit gain since the third quarter of 2008.
That bottom-line improvement came even though first-quarter interest and noninterest revenue fell 1.2 percent to $20.67 million from $18.56 million in the first three months of 2009. Also, the bank’s noninterest expense climbed $756,000 — 9 percent – from the year-earlier period to $10.49 million. The bigger expense “was primarily driven by increases in compensation and expenses related to loan workout and other real estate owned,” BancorpRI said.
The lower revenue and increased noninterest expense was offset by a $2.21 million reduction in total interest expense year over year, to $5.26 million. BancorpRI said its net interest margin was 3.52 percent for the first quarter, 44 basis points above 3.08 percent a year earlier.
Other local banks experienced similar reductions in interest expense over the first quarter as interest rates on deposits remain low.
“While many expect 2010 to remain a challenging year, we got off to a great start and are pleased with our strong financial results,” Merrill W. Sherman, the bank’s president and CEO, said in a statement.
Potential problems in BancorpRI’s loan portfolio appeared to diminish in the first quarter.
Total nonperforming assets – typically loans and leases more than 90 days past due – stood at $16.39 million as of March 31, down from $20.02 million three months ago and down from $17.44 million a year ago.
The bank said nonperforming assets were 1.03 percent of total assets at the end of the first quarter, a ratio that is down from 1.26 percent at the end of 2009 and down from 1.13 percent on March 31, 2009.
Net chargeoffs – loans deemed uncollectible by the banks – declined to $1.51 million in the first quarter, from $3.81 million in the fourth quarter 2009. The first quarter chargeoffs were still higher than a year earlier, when they totaled $851,000.
The loan-loss provision for the first quarter – money set aside in anticipation of bad loans – was $1.6 million, down slightly from $1.61 million a year earlier. •