PROVIDENCE – Bancorp Rhode Island Inc., the parent of Bank Rhode Island, posted a second-quarter profit of $2.68 million Thursday, more than three times the $740,000 net income reported in the year-ago period.
The bank – Rhode Island’s second largest independent financial institution – benefited from low interest rates that helped to reduce some of its deposit expenses.
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Earnings per diluted share skyrocketed to 57 cents from 7 cents in the 2009 second quarter. The performance beat the 44 cents consensus estimate of the three analysts who follow BancorpRI, according to Yahoo! Finance.
“Our results for the first half of 2010 send a clear signal of our ability to execute on the fundamentals of the business as we continue to expand our net interest margin and maintain our credit quality,” said Merrill W. Sherman, president and CEO. “Commercial loan and core deposit generation continue to be solid. Our balance sheet remains strong with ample capital levels and manageable credit issues. From the beginning, our business strategy and focus have played a key role in differentiating ourselves from our competitors. Our efforts have put us in an attractive market niche with potential for future growth in earnings and market share.”
BancorpRI reported an increased second-quarter profit even though interest and non-interest revenue shrank by $85,000 to $20.92 million. Non-interest expense also edged up $285,000 to $10.43 million primarily driven by higher compensation, loan workouts and costs related to the disposition of foreclosed properties.
That increase in expenses was partially offset by a reduction in the Federal Deposit Insurance Corporation premium from $1.18 million to $475,000.
Furthermore, total interest expense declined $2.21 million year over year – or 30 percent – to $5.01 million in the three months ended June 30.
BancorpRI said its net interest margin was 3.67 percent for the second quarter, 57 basis points above 3.10 percent a year earlier.
Many local banks experienced similar reductions in interest expense in the first half of 2010 as interest rates on deposits remained low.
Total non-performing assets – typically loans and leases more than 90 days past due as well as foreclosed upon property – stood at $16.76 million as of June 30, up from $16.39 million three months ago but down from $18.80 million a year ago.
The bank said non-performing assets were 1.04 percent of total assets at the end of the second quarter, a ratio that is up slightly from 1.03 percent as of March 31 but down from 1.19 percent a year ago.
Net charge-offs – loans deemed uncollectible by the banks – declined to $779,000 in the second quarter, from $1.51 million in the first quarter and $1.12 million a year earlier.
The loan-loss provision for the second quarter – money set aside in anticipation of bad loans – was $1.55 million, down significantly from $2.6 million a year ago.
Total assets were $1.61 billion as of June 30, 2010, up $23.57 million from three months earlier.
The bank’s returns on average equity and average assets for the second quarter were 8.54 percent and 0.68 percent, respectively, compared with 1 percent and 0.19 percent, respectively, for the same period in 2009.
