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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C.
 FORM 10-K
 (Annual Report Under Section 13 of the Securities Exchange Act of 1934)
 For the fiscal year ended December 31, 2010
 Commission File No. 001-16101
 BANCORP RHODE ISLAND, INC.
  Rhode Island
    
    05-0509802(State or Other Jurisdiction of
    
    (IRS EmployerIncorporation or Organization)
    
    Identification No.)
 ONE TURKS HEAD PLACE, PROVIDENCE, RI 02903
   (Issuers Telephone Number, Including Area Code)
 Securities registered pursuant to Section 12(b) of the Act: None
 Securities registered pursuant to Section 12(g) of the Act:
 Common Stock, par value $0.01 per share
  
 Yes o No þ
 Yes o No þ
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 o þ
 SM
  Documents incorporated by reference:




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Bancorp Rhode Island, Inc.
Annual Report on Form 10-K
Table of Contents
 Description
    
    Page NumberPart I.Item 1    Business
    
    
    1Item 1A  Risk Factors
    
    
    17Item 1B   Unresolved Staff Comments
    
    
    24Item 2  Properties
    
    
    24Item 3  Legal Proceedings
    
    
    25Part II.Item 5    Market for the Companys Common Stock, Related Stockholder
Matters and Issuer Purchases of Equity Securities
    
    
    26Item 6  Selected Consolidated Financial Data
    
    
    28Item 7  Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    29Item 7A  Qualitative and Quantitative Disclosures about Market Risk
    
    
    53Item 8  Financial Statements and Supplementary Data
    
    
    54Item 9  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
    
    
    54Item 9A  Controls and Procedures
    
    
    55Item 9B  Other Information
    
    
    55Part III.Item 10  Directors, Executive Officers and Corporate Governance
    
    
    56Item 11  Executive Compensation
    
    
    57Item 12  Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
    
    
    57Item 13   Certain Relationships, Related Transactions and Director
Independence
    
    
    57Item 14  Principal Accountant Fees and Services
    
    
    57Part IV.Item 15   Exhibits and Financial Statement Schedules
    
    
    58Signatures
    
    
    61Exhibit 10.1 (c)Exhibit 10.2 (b)Exhibit 10.9 (b)Exhibit 10.13 (b)Exhibit 21Exhibit 23Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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PART I
 SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
  
    
    statements of our goals, intentions and expectations;
 
    
    statements regarding our business plans and prospects and growth and operating
strategies;
 
    
    statements regarding the quality of our products and our loan and investment portfolios;
and
 
    
    estimates of our risks and future costs and benefits.
  
 ITEM 1.
    
    BUSINESS
 Introduction
     1




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Overview
           2




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Lending Activities
         Commercial Real Estate and Multifamily Loans 
  3




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Commercial and Industrial Loans 
  Leases
  Small Business Loans 
  4




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Construction Loans 
   Residential Mortgage Loans 
     5




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Consumer and Other Loans 
  Asset Quality
  Investment Activities
    Deposits and Service Charges on Deposit Accounts
     6




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Borrowings and Liquidity
   Nondeposit Investment Products and Services
  Employees
  Supervision and Regulation
 Overview 
  7




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Rhode Island Regulation
     Federal Supervision: FDIC
 Overview 
  8




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Deposit Insurance 
      9




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i.e.
   Safety and Soundness Standards 
 Examination 
 Federal Supervision: FRB
  Regulatory Capital Requirements
 FDIC Requirements 
  10




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Prompt Corrective Action Provisions 
    FRB Requirements
   11




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U.S. Treasury Capital Purchase Program 
   Basel Accord 
      12




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Restrictions on Transactions with Affiliates and Insiders
     Interstate Banking
   Gramm-Leach-Bliley Act
   13




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Other Aspects of Federal and State Laws
 Community Reinvestment Act 
 USA PATRIOT Act 
 Sarbanes-Oxley Act of 2002  ,
  14




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Insurance Sales 
 Miscellaneous 
 Recent Regulatory Developments
 Dodd-Frank Wall Street Reform and Consumer Protection Act
   
    
    Change of the deposit insurance assessment base from the amount of
insured deposits to consolidated assets less tangible capital, elimination of the
ceiling on the size of the DIF and increase to the floor applicable to the size of
the DIF, which are expected to require financial institutions with assets in excess
of $10 billion to pay a higher percentage of the aggregate insurance assessment than
smaller institutions, such as the Bank;
    
    Permanent increase of the standard maximum amount of deposit insurance
per customer to $250,000, and unlimited federal deposit insurance until January 1,
2013 for noninterest-bearing demand transaction accounts at all insured depository
institutions;
    
    Repeal of the current prohibition on the payment of interest on demand
deposits effective July 21, 2011, thereby permitting, and perhaps competitively
compelling, depository institutions to pay interest on business transaction and
other accounts;
    
    Requires the FRB to establish rules regarding interchange fees charged
for electronic debit transactions by payment card issuers having assets over $10
billion and to enforce a new statutory requirement that such fees be reasonable and
proportional to the actual cost of a transaction to the issuer;
    
    New minimum capital requirements for holding companies will be adopted
and any new trust preferred securities (issued after May 19, 2010) will no longer be
eligible as Tier I capital;
    
    New regulations on mortgage originators and new disclosure requirements
and appraisal reforms intended to curb predatory lending; and
    
    New corporate governance requirements, including with regard to executive
compensation and proxy access by shareholders, which apply to all public companies,
not just financial institutions.
  15




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Overdraft Protection 
 S.A.F.E. Act Registration Requirements
 Incentive Compensation Policies and Restrictions
  Interagency Appraisal and Evaluation Guidelines
   16




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Proposed Legislation and Regulatory Action
  Effect of Governmental Policy
  
 ITEM 1A.
    
    RISK FACTORS
 Overview
  Risks Related to Our Business
 Negative developments in the financial services industry and U.S. and global credit markets have
and may continue to have an adverse effect on our operations and results.
  The continuation of adverse market conditions in the U.S. economy and the markets in which we
operate could adversely impact us.
   17




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Recent legislative and regulatory initiatives to address difficult market and economic conditions
may not stabilize the U.S. banking system.
  The Dodd-Frank Act and other recent legislative and regulatory initiatives contain numerous
provisions and requirements that could detrimentally affect our business.
  Current regional and local economic conditions could adversely affect our profitability.
    18




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Competition with other financial institutions could adversely affect our franchise growth and
profitability.
    Fluctuations in interest rates could adversely impact our net interest margin.
  Increases in FDIC insurance premiums may adversely affect our net income and profitability.
  Restrictions on debit card interchange fees may adversely affect our profitability.
   19




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Changes in customer behavior could adversely affect our profitability.
  Our focus on commercial lending may result in greater risk of losses.
  Our allowance for loan and lease losses may be insufficient to cover actual loan and lease losses.
  We may experience a decline in the market value of our available for sale securities.
   20




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Mortgage loan modification programs and future legislative action may adversely affect the value
of, and the returns, on the investment securities that we own.
  We are exposed to risk of environmental liabilities with respect to properties to which we take
title
  Expanding the franchise may limit increases in profitability.
  Our growth is substantially dependent on our management team.
   21




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Our operating history is not necessarily indicative of future operating results.
  Our controls and procedures may fail or be circumvented.
  We face various technological risks.
  Our business is highly reliant on third party vendors and our ability to manage the operational
risks associated with outsourcing those services
  We encounter technological change continually.
  Extensive government regulation and supervision have a significant impact on our operations.
    22




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Risks Related to the Companys Common Stock
 Our common stock has limited liquidity.
 SM
  Fluctuations in the price of our stock could adversely impact your investment.
  There are limitations on our ability to pay dividends.
  Certain Anti-Takeover measures affect the ability of shareholders to effect takeover transactions.
    23




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Directors and executive officers own a significant portion of our common stock.
  
 ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
  
 ITEM 2.
    
    PROPERTIES
   Size
    
    
    Year Opened
    
    
    Owned or
    
    
    LeaseLocation
    
    (Square feet)
    
    
    or Acquired
    
    
    Leased
    
    
    Expiration DateBranch offices:1047 Park Avenue, Cranston, RI
    
    
    4,700
    
    
    
    1996
    
    
    Owned
    
    Not Applicable383 Atwood Avenue, Cranston, RI
    
    
    4,700
    
    
    
    1996
    
    
    Owned
    
    Not Applicable2104 Plainfield Pike, Cranston, RI
    
    
    700
    
    
    
    2002
    
    
    Owned
    
    Not Applicable1269 South County Trail, East Greenwich, RI
    
    
    2,600
    
    
    
    2005
    
    
    Leased
    
    
    5/31/25999 South Broadway, East Providence, RI
    
    
    3,200
    
    
    
    1996
    
    
    Leased
    
    
    11/30/12195 Taunton Avenue, East Providence, RI
    
    
    3,100
    
    
    
    1996
    
    
    Leased
    
    
    12/31/201440 Hartford Avenue, Johnston, RI
    
    
    4,700
    
    
    
    1996
    
    
    Land Leased
    
    
    12/31/12625 G. Washington Highway, Lincoln, RI
    
    
    1,000
    
    
    
    2005
    
    
    Owned
    
    Not Applicable1140 Ten Rod Road, North Kingstown, RI
    
    
    4,000
    
    
    
    2004
    
    
    Land Leased
    
    
    6/30/18499 Smithfield Avenue, Pawtucket, RI
    
    
    3,500
    
    
    
    2007
    
    
    Land Leased
    
    
    5/31/21One Turks Head Place, Providence, RI
    
    
    5,000
    
    
    
    1996
    
    
    Leased
    
    
    4/30/14165 Pitman Street, Providence, RI
    
    
    3,300
    
    
    
    1998
    
    
    Leased
    
    
    10/31/13445 Putnam Pike, Smithfield, RI
    
    
    3,500
    
    
    
    1996
    
    
    Leased
    
    
    7/31/191062 Centerville Road, Warwick, RI
    
    
    2,600
    
    
    
    1996
    
    
    Owned
    
    Not Applicable1300 Warwick Avenue, Warwick, RI
    
    
    4,200
    
    
    
    1996
    
    
    Leased
    
    
    6/30/142975 West Shore Road, Warwick, RI
    
    
    3,500
    
    
    
    2000
    
    
    Leased
    
    
    3/31/141175 Cumberland Hill Road, Woonsocket, RI
    
    
    3,300
    
    
    
    1998
    
    
    Owned
    
    Not ApplicableAdministrative and operational offices:625 G. Washington Highway, Lincoln, RI
    
    
    23,600
    
    
    
    2003
    
    
    Owned
    
    Not ApplicableOne Turks Head Place, Providence, RI
    
    
    20,600
    
    
    
    1999
    
    
    Leased
    
    
    6/30/14One Ames Court, Plainview, NY
    
    
    4,400
    
    
    
    2005
    
    
    Leased
    
    
    1/31/13Planned branch office:40 Newport Avenue, East Providence, RI
    
    
    (A
    )
    
    Not Applicable
    
    
    Leased
    
    
    12/31/17
 (A)
    
    Facility currently under construction or in planning. 
  24




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ITEM 3.
    
    LEGAL PROCEEDINGS
    25




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PART II
 
 ITEM 5.
    
    MARKET FOR THE COMPANYS COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
 Common Stock Prices and Dividends  SM
 Stock Price
    
    
    DividendHigh
    
    
    Low
    
    
    Paid2009:First Quarter
    
    $
    21.88
    
    
    $
    15.44
    
    
    $
    0.17Second Quarter
    
    
    21.97
    
    
    
    17.50
    
    
    
    0.17Third Quarter
    
    
    27.00
    
    
    
    19.40
    
    
    
    0.17Fourth Quarter
    
    
    27.00
    
    
    
    24.50
    
    
    
    0.172010:First Quarter
    
    $
    29.64
    
    
    $
    23.53
    
    
    $
    0.17Second Quarter
    
    
    29.65
    
    
    
    25.02
    
    
    
    0.17Third Quarter
    
    
    29.98
    
    
    
    25.35
    
    
    
    0.17Fourth Quarter
    
    
    30.99
    
    
    
    27.30
    
    
    
    0.19
   26




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Period EndingIndex
    
    12/31/05
    
    
    12/31/06
    
    
    12/31/07
    
    
    12/31/08
    
    
    12/31/09
    
    
    12/31/10Bancorp Rhode Island, Inc.
    
    
    100.00
    
    
    
    131.98
    
    
    
    106.47
    
    
    
    66.39
    
    
    
    85.19
    
    
    
    97.73Russell 3000
    
    
    100.00
    
    
    
    115.71
    
    
    
    122.46
    
    
    
    75.01
    
    
    
    98.91
    
    
    
    114.59SNL Bank $1B-$5B Index
    
    
    100.00
    
    
    
    115.72
    
    
    
    84.36
    
    
    
    67.88
    
    
    
    49.93
    
    
    
    57.38
  27




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ITEM 6.
    
    SELECTED CONSOLIDATED FINANCIAL DATA
  As of and for theyear ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(Dollars in thousands, except per share data)Statements of operations data:Interest income
    
    $
    72,802
    
    
    $
    75,277
    
    
    $
    80,298
    
    
    $
    86,070
    
    
    $
    81,202Interest expense
    
    
    19,395
    
    
    
    26,955
    
    
    
    34,930
    
    
    
    44,826
    
    
    
    38,974Net interest income
    
    
    53,407
    
    
    
    48,322
    
    
    
    45,368
    
    
    
    41,244
    
    
    
    42,228Provision for loan and lease losses
    
    
    6,860
    
    
    
    9,917
    
    
    
    4,520
    
    
    
    700
    
    
    
    1,202Noninterest income
    
    
    9,562
    
    
    
    9,165
    
    
    
    10,609
    
    
    
    10,785
    
    
    
    8,988Noninterest expense
    
    
    41,203
    
    
    
    39,529
    
    
    
    37,886
    
    
    
    38,025
    
    
    
    38,727Income before taxes
    
    
    14,906
    
    
    
    8,041
    
    
    
    13,571
    
    
    
    13,304
    
    
    
    11,287Income taxes
    
    
    5,071
    
    
    
    2,502
    
    
    
    4,427
    
    
    
    4,259
    
    
    
    3,576Net income
    
    
    9,835
    
    
    
    5,539
    
    
    
    9,144
    
    
    
    9,045
    
    
    
    7,711Preferred stock dividends
    
    
    
    
    
    
    (892
    )
    
    
    (50
    )
    
    
    
    
    
    
    Prepayment charges and accretion of preferred
stock discount
    
    
    
    
    
    
    (1,405
    )
    
    
    (8
    )
    
    
    
    
    
    
    Net income applicable to common shares
    
    $
    9,835
    
    
    $
    3,242
    
    
    $
    9,086
    
    
    $
    9,045
    
    
    $
    7,711Per share data:Basic earnings per common share
    
    $
    2.10
    
    
    $
    0.71
    
    
    $
    1.99
    
    
    $
    1.89
    
    
    $
    1.62Diluted earnings per common share
    
    $
    2.10
    
    
    $
    0.70
    
    
    $
    1.96
    
    
    $
    1.84
    
    
    $
    1.57Dividends per common share
    
    $
    0.70
    
    
    $
    0.68
    
    
    $
    0.66
    
    
    $
    0.62
    
    
    $
    0.60Dividend pay-out ratio
    
    
    33.3
    %
    
    
    97.1
    %
    
    
    33.7
    %
    
    
    33.7
    %
    
    
    38.2
    %Book value per share of common stock
    
    $
    27.53
    
    
    $
    26.16
    
    
    $
    26.34
    
    
    $
    24.68
    
    
    $
    23.28Tangible book value per share of common stock
    
    $
    24.91
    
    
    $
    23.50
    
    
    $
    23.71
    
    
    $
    22.10
    
    
    $
    20.92Average common shares outstanding  basic
    
    
    4,658,668
    
    
    
    4,604,308
    
    
    
    4,561,396
    
    
    
    4,793,055
    
    
    
    4,766,854Average common shares outstanding  diluted
    
    
    4,687,316
    
    
    
    4,626,434
    
    
    
    4,631,208
    
    
    
    4,918,763
    
    
    
    4,920,569Balance sheet data:Total assets
    
    $
    1,603,759
    
    
    $
    1,589,946
    
    
    $
    1,528,178
    
    
    $
    1,476,323
    
    
    $
    1,478,303Available for sale securities
    
    
    360,025
    
    
    
    381,839
    
    
    
    326,406
    
    
    
    335,181
    
    
    
    343,887Total loans and leases receivable
    
    
    1,155,489
    
    
    
    1,111,847
    
    
    
    1,077,742
    
    
    
    1,038,132
    
    
    
    1,004,292Allowance for loan and lease losses
    
    
    18,654
    
    
    
    16,536
    
    
    
    14,664
    
    
    
    12,619
    
    
    
    12,377Goodwill, net
    
    
    12,262
    
    
    
    12,239
    
    
    
    12,019
    
    
    
    11,772
    
    
    
    11,317Deposits
    
    
    1,120,166
    
    
    
    1,098,284
    
    
    
    1,042,192
    
    
    
    1,014,780
    
    
    
    1,016,423Borrowings
    
    
    335,289
    
    
    
    350,757
    
    
    
    320,015
    
    
    
    331,703
    
    
    
    337,097Total shareholders equity
    
    
    128,678
    
    
    
    120,661
    
    
    
    149,090
    
    
    
    112,593
    
    
    
    111,570Common shareholders equity
    
    
    128,678
    
    
    
    120,661
    
    
    
    120,495
    
    
    
    112,593
    
    
    
    111,570Average balance sheet data:Total assets
    
    $
    1,573,772
    
    
    $
    1,558,278
    
    
    $
    1,484,071
    
    
    $
    1,468,778
    
    
    $
    1,451,163Available for sale securities
    
    
    354,477
    
    
    
    362,706
    
    
    
    335,132
    
    
    
    342,333
    
    
    
    372,433Total loans and leases receivable
    
    
    1,126,972
    
    
    
    1,107,640
    
    
    
    1,052,552
    
    
    
    1,014,951
    
    
    
    980,598Allowance for loan and lease losses
    
    
    17,604
    
    
    
    16,159
    
    
    
    13,350
    
    
    
    12,503
    
    
    
    12,002Goodwill, net
    
    
    12,242
    
    
    
    12,055
    
    
    
    11,982
    
    
    
    11,318
    
    
    
    11,290Deposits
    
    
    1,115,407
    
    
    
    1,073,366
    
    
    
    1,018,510
    
    
    
    1,010,162
    
    
    
    965,194Borrowings
    
    
    318,792
    
    
    
    333,866
    
    
    
    332,602
    
    
    
    326,398
    
    
    
    362,721Total shareholders equity
    
    
    127,276
    
    
    
    139,551
    
    
    
    115,977
    
    
    
    114,357
    
    
    
    106,359Common shareholders equity
    
    
    127,276
    
    
    
    121,911
    
    
    
    113,668
    
    
    
    114,357
    
    
    
    106,359Operating ratios:Interest rate spread
    
    
    3.24
    %
    
    
    2.85
    %
    
    
    2.72
    %
    
    
    2.29
    %
    
    
    2.50
    %Net interest margin
    
    
    3.56
    %
    
    
    3.25
    %
    
    
    3.21
    %
    
    
    2.96
    %
    
    
    3.06
    %Efficiency ratio (a)
    
    
    65.43
    %
    
    
    68.76
    %
    
    
    67.68
    %
    
    
    73.08
    %
    
    
    75.62
    %Return on assets
    
    
    0.62
    %
    
    
    0.36
    %
    
    
    0.62
    %
    
    
    0.62
    %
    
    
    0.53
    %Return on common equity
    
    
    7.73
    %
    
    
    2.66
    %
    
    
    7.99
    %
    
    
    7.91
    %
    
    
    7.25
    %Tangible common equity ratio
    
    
    7.31
    %
    
    
    6.87
    %
    
    
    7.15
    %
    
    
    6.88
    %
    
    
    6.83
    %Asset quality ratios:Nonperforming loans and leases to
total loans and leases
    
    
    1.43
    %
    
    
    1.65
    %
    
    
    1.33
    %
    
    
    0.40
    %
    
    
    0.14
    %Nonperforming assets to total assets
    
    
    1.10
    %
    
    
    1.26
    %
    
    
    1.00
    %
    
    
    0.28
    %
    
    
    0.10
    %Allowance for loan and lease losses to
nonperforming loans and leases
    
    
    112.97
    %
    
    
    90.29
    %
    
    
    102.05
    %
    
    
    304.15
    %
    
    
    875.94
    %Allowance for loan and lease losses to
total loans and leases
    
    
    1.61
    %
    
    
    1.49
    %
    
    
    1.36
    %
    
    
    1.22
    %
    
    
    1.23
    %Net loans and leases charged-off to
average loans and leases
    
    
    0.42
    %
    
    
    0.73
    %
    
    
    0.24
    %
    
    
    0.05
    %
    
    
    0.05
    %
  28




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As of and for theyear ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(Dollars in thousands, except per share data)Capital ratios:Average common shareholders equity to
average total assets
    
    
    8.09
    %
    
    
    7.82
    %
    
    
    7.66
    %
    
    
    7.79
    %
    
    
    7.33
    %Tier I leverage ratio
    
    
    8.10
    %
    
    
    7.65
    %
    
    
    10.04
    %
    
    
    7.87
    %
    
    
    8.37
    %Tier I risk-based capital ratio
    
    
    11.27
    %
    
    
    10.71
    %
    
    
    14.23
    %
    
    
    11.06
    %
    
    
    12.05
    %Total risk-based capital ratio
    
    
    12.53
    %
    
    
    11.97
    %
    
    
    15.48
    %
    
    
    12.28
    %
    
    
    13.27
    %
 (a)
    
    Calculated by dividing total noninterest expenses by net interest income plus noninterest
income. 
 ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Introduction
  http://www.bankri.com
 Overview
   Average Balances, Yields and
Costs
 Asset and Liability
Management
  29




---



##### Table of Contents



Financial Condition  Asset
Quality
       Critical Accounting Policies
   30




---



##### Table of Contents



Allowance for loan and lease losses
    Review of goodwill for impairment
     Valuation of available for sale securities
   31




---



##### Table of Contents



Income taxes
   Results of Operations
 Net Interest Income
   32




---



##### Table of Contents



Average Balances, Yields and Costs
  Year ended December 31,2010
    
    
    2009
    
    
    2008Interest
    
    
    
    
    
    
    
    
    
    
    Interest
    
    
    
    
    
    
    
    
    
    
    InterestAverage
    
    
    earned/
    
    
    Average
    
    
    Average
    
    
    earned/
    
    
    Average
    
    
    Average
    
    
    earned/
    
    
    Averagebalance
    
    
    paid
    
    
    yield
    
    
    balance
    
    
    paid
    
    
    yield
    
    
    balance
    
    
    paid
    
    
    yield(Dollars in thousands)AssetsEarning assets:Overnight investments
    
    $
    2,674
    
    
    $
    7
    
    
    
    0.25
    %
    
    $
    1,456
    
    
    $
    10
    
    
    
    0.78
    %
    
    $
    8,577
    
    
    $
    264
    
    
    
    3.07
    %Available for sale securities
    
    
    354,477
    
    
    
    13,497
    
    
    
    3.81
    %
    
    
    362,706
    
    
    
    15,514
    
    
    
    4.28
    %
    
    
    335,132
    
    
    
    16,422
    
    
    
    4.90
    %Stock in the FHLB
    
    
    16,274
    
    
    
    
    
    
    
    0.00
    %
    
    
    15,912
    
    
    
    
    
    
    
    0.00
    %
    
    
    15,671
    
    
    
    610
    
    
    
    3.89
    %Loans receivable:Commercial loans and leases
    
    
    756,293
    
    
    
    42,829
    
    
    
    5.66
    %
    
    
    703,982
    
    
    
    40,823
    
    
    
    5.80
    %
    
    
    617,254
    
    
    
    39,709
    
    
    
    6.43
    %Residential mortgage loans
    
    
    165,999
    
    
    
    7,570
    
    
    
    4.56
    %
    
    
    192,853
    
    
    
    9,486
    
    
    
    4.92
    %
    
    
    226,483
    
    
    
    12,095
    
    
    
    5.34
    %Consumer and other loans
    
    
    204,680
    
    
    
    8,899
    
    
    
    4.35
    %
    
    
    210,805
    
    
    
    9,444
    
    
    
    4.48
    %
    
    
    208,815
    
    
    
    11,198
    
    
    
    5.36
    %Total earning assets
    
    
    1,500,397
    
    
    
    72,802
    
    
    
    4.85
    %
    
    
    1,487,714
    
    
    
    75,277
    
    
    
    5.06
    %
    
    
    1,411,932
    
    
    
    80,298
    
    
    
    5.69
    %Cash and due from banks
    
    
    16,075
    
    
    
    
    
    
    
    
    
    
    
    18,186
    
    
    
    
    
    
    
    
    
    
    
    23,062Allowance for loan and lease losses
    
    
    (17,604
    )
    
    
    
    
    
    
    
    
    
    
    (16,159
    )
    
    
    
    
    
    
    
    
    
    
    (13,350
    )Premises and equipment
    
    
    12,184
    
    
    
    
    
    
    
    
    
    
    
    12,512
    
    
    
    
    
    
    
    
    
    
    
    13,195Goodwill, net
    
    
    12,242
    
    
    
    
    
    
    
    
    
    
    
    12,055
    
    
    
    
    
    
    
    
    
    
    
    11,982Accrued interest receivable
    
    
    4,312
    
    
    
    
    
    
    
    
    
    
    
    4,252
    
    
    
    
    
    
    
    
    
    
    
    4,888Bank-owned life insurance
    
    
    30,601
    
    
    
    
    
    
    
    
    
    
    
    29,323
    
    
    
    
    
    
    
    
    
    
    
    25,033Prepaid expenses and other assets
    
    
    15,565
    
    
    
    
    
    
    
    
    
    
    
    10,395
    
    
    
    
    
    
    
    
    
    
    
    7,329Total assets
    
    $
    1,573,772
    
    
    
    
    
    
    
    
    
    
    $
    1,558,278
    
    
    
    
    
    
    
    
    
    
    $
    1,484,071Liabilities and Shareholders EquityInterest-bearing liabilities:Deposits:NOW accounts
    
    $
    70,243
    
    
    $
    48
    
    
    
    0.07
    %
    
    $
    65,471
    
    
    $
    60
    
    
    
    0.09
    %
    
    $
    60,438
    
    
    $
    162
    
    
    
    0.27
    %Money market accounts
    
    
    80,272
    
    
    
    583
    
    
    
    0.73
    %
    
    
    31,157
    
    
    
    367
    
    
    
    1.18
    %
    
    
    5,249
    
    
    
    69
    
    
    
    1.31
    %Savings accounts
    
    
    366,691
    
    
    
    1,739
    
    
    
    0.47
    %
    
    
    377,755
    
    
    
    3,380
    
    
    
    0.89
    %
    
    
    388,060
    
    
    
    7,042
    
    
    
    1.81
    %Certificate of deposit accounts
    
    
    369,372
    
    
    
    5,660
    
    
    
    1.53
    %
    
    
    409,564
    
    
    
    11,061
    
    
    
    2.70
    %
    
    
    389,021
    
    
    
    14,306
    
    
    
    3.68
    %Overnight and short-term borrowings
    
    
    38,952
    
    
    
    63
    
    
    
    0.16
    %
    
    
    44,298
    
    
    
    86
    
    
    
    0.19
    %
    
    
    54,878
    
    
    
    902
    
    
    
    1.64
    %Wholesale repurchase agreements
    
    
    17,479
    
    
    
    564
    
    
    
    3.19
    %
    
    
    13,699
    
    
    
    551
    
    
    
    3.97
    %
    
    
    10,000
    
    
    
    540
    
    
    
    5.32
    %FHLB borrowings
    
    
    248,958
    
    
    
    10,068
    
    
    
    3.99
    %
    
    
    262,466
    
    
    
    10,720
    
    
    
    4.03
    %
    
    
    254,321
    
    
    
    10,960
    
    
    
    4.31
    %Subordinated deferrable interest
debentures
    
    
    13,403
    
    
    
    670
    
    
    
    5.00
    %
    
    
    13,403
    
    
    
    730
    
    
    
    5.45
    %
    
    
    13,403
    
    
    
    949
    
    
    
    7.08
    %Total interest-bearing
liabilities
    
    
    1,205,370
    
    
    
    19,395
    
    
    
    1.61
    %
    
    
    1,217,813
    
    
    
    26,955
    
    
    
    2.21
    %
    
    
    1,175,370
    
    
    
    34,930
    
    
    
    2.97
    %Noninterest-bearing deposits
    
    
    228,829
    
    
    
    
    
    
    
    
    
    
    
    189,419
    
    
    
    
    
    
    
    
    
    
    
    175,742Other liabilities
    
    
    12,297
    
    
    
    
    
    
    
    
    
    
    
    11,495
    
    
    
    
    
    
    
    
    
    
    
    16,982Total liabilities
    
    
    1,446,496
    
    
    
    
    
    
    
    
    
    
    
    1,418,727
    
    
    
    
    
    
    
    
    
    
    
    1,368,094Shareholders equity
    
    
    127,276
    
    
    
    
    
    
    
    
    
    
    
    139,551
    
    
    
    
    
    
    
    
    
    
    
    115,977Total liabilities and
shareholders equity
    
    $
    1,573,772
    
    
    
    
    
    
    
    
    
    
    $
    1,558,278
    
    
    
    
    
    
    
    
    
    
    $
    1,484,071Net interest income
    
    
    
    
    
    $
    53,407
    
    
    
    
    
    
    
    
    
    
    $
    48,322
    
    
    
    
    
    
    
    
    
    
    $
    45,368Net interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.24
    %
    
    
    
    
    
    
    
    
    
    
    2.85
    %
    
    
    
    
    
    
    
    
    
    
    2.72
    %Net interest rate margin
    
    
    
    
    
    
    
    
    
    
    3.56
    %
    
    
    
    
    
    
    
    
    
    
    3.25
    %
    
    
    
    
    
    
    
    
    
    
    3.21
    %
  33




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##### Table of Contents



Rate/Volume Analysis
  Year ended December 31,2010 vs. 2009
    
    
    2009 vs. 2008Increase/(decrease) due to
    
    
    Increase/(decrease) due toRate
    
    
    Volume
    
    
    Total
    
    
    Rate
    
    
    Volume
    
    
    Total(In thousands)Interest income:Overnight investments
    
    $
    (10
    )
    
    $
    7
    
    
    $
    (3
    )
    
    $
    (120
    )
    
    $
    (134
    )
    
    $
    (254
    )Available for sale securities
    
    
    (1,305
    )
    
    
    (712
    )
    
    
    (2,017
    )
    
    
    (1,791
    )
    
    
    883
    
    
    
    (908
    )Stock in the FHLB
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (619
    )
    
    
    9
    
    
    
    (610
    )Commercial loans and leases
    
    
    (776
    )
    
    
    2,782
    
    
    
    2,006
    
    
    
    (5,064
    )
    
    
    6,178
    
    
    
    1,114Residential mortgage loans
    
    
    (701
    )
    
    
    (1,215
    )
    
    
    (1,916
    )
    
    
    (923
    )
    
    
    (1,686
    )
    
    
    (2,609
    )Consumer and other loans
    
    
    (97
    )
    
    
    (448
    )
    
    
    (545
    )
    
    
    (1,528
    )
    
    
    (226
    )
    
    
    (1,754
    )Total interest income
    
    
    (2,889
    )
    
    
    414
    
    
    
    (2,475
    )
    
    
    (10,045
    )
    
    
    5,024
    
    
    
    (5,021
    )Interest expense:NOW accounts
    
    
    (16
    )
    
    
    4
    
    
    
    (12
    )
    
    
    (114
    )
    
    
    12
    
    
    
    (102
    )Money market accounts
    
    
    (187
    )
    
    
    403
    
    
    
    216
    
    
    
    (8
    )
    
    
    306
    
    
    
    298Savings accounts
    
    
    (1,545
    )
    
    
    (96
    )
    
    
    (1,641
    )
    
    
    (3,479
    )
    
    
    (183
    )
    
    
    (3,662
    )Certificate of deposit accounts
    
    
    (4,322
    )
    
    
    (1,079
    )
    
    
    (5,401
    )
    
    
    (3,960
    )
    
    
    715
    
    
    
    (3,245
    )Overnight & short-term borrowings
    
    
    (13
    )
    
    
    (10
    )
    
    
    (23
    )
    
    
    (669
    )
    
    
    (147
    )
    
    
    (816
    )Wholesale repurchase agreements
    
    
    (122
    )
    
    
    135
    
    
    
    13
    
    
    
    (156
    )
    
    
    167
    
    
    
    11FHLB borrowings
    
    
    (112
    )
    
    
    (540
    )
    
    
    (652
    )
    
    
    (623
    )
    
    
    383
    
    
    
    (240
    )Capital trust and other subordinated securities
    
    
    (60
    )
    
    
    
    
    
    
    (60
    )
    
    
    (219
    )
    
    
    
    
    
    
    (219
    )Total interest expense
    
    
    (6,377
    )
    
    
    (1,183
    )
    
    
    (7,560
    )
    
    
    (9,228
    )
    
    
    1,253
    
    
    
    (7,975
    )Net interest income
    
    $
    3,488
    
    
    $
    1,597
    
    
    $
    5,085
    
    
    $
    (817
    )
    
    $
    3,771
    
    
    $
    2,954
 Comparison of Years Ended December 31, 2010 and December 31, 2009
 General
  Net Interest Income
  Interest Income  Investments
  Interest Income  Loans and Leases
   34




---



##### Table of Contents



Interest Expense  Deposits and Borrowings
    Provision for Loan and Lease Losses
  Allowance for
Loan and Lease Losses
 Noninterest Income
  Year ended December 31,2010
    
    
    2009(In thousands)Service charges on deposit accounts
    
    $
    5,178
    
    
    $
    5,377Income from bank-owned life insurance
    
    
    1,267
    
    
    
    1,245Gain on sale of available for sale securities
    
    
    1,260
    
    
    
    61Loan related fees
    
    
    836
    
    
    
    869Commissions on nondeposit investment products
    
    
    740
    
    
    
    776Net gains on lease sales and commissions on loans originated for others
    
    
    127
    
    
    
    408Impairment of available for sale securites
    
    
    (1,032
    )
    
    
    (384
    )Other income
    
    
    1,186
    
    
    
    813Total noninterest income
    
    $
    9,562
    
    
    $
    9,165
  35




---



##### Table of Contents



Noninterest Expense
  Year ended December 31,2010
    
    
    2009(In thousands)Salaries and employee benefits
    
    $
    22,973
    
    
    $
    20,573Occupancy
    
    
    3,340
    
    
    
    3,552Data processing
    
    
    2,623
    
    
    
    2,640Professional services
    
    
    2,283
    
    
    
    2,612FDIC insurance
    
    
    1,934
    
    
    
    2,527Operating
    
    
    1,860
    
    
    
    1,877Marketing
    
    
    1,211
    
    
    
    1,318Equipment
    
    
    1,029
    
    
    
    1,001Loan workout and other real estate owned
    
    
    987
    
    
    
    688Loan servicing
    
    
    646
    
    
    
    665Other expenses
    
    
    2,317
    
    
    
    2,076Total noninterest expense
    
    $
    41,203
    
    
    $
    39,529
    Income Tax Expense
   36




---



##### Table of Contents



Comparison of Years Ended December 31, 2009 and December 31, 2008
 General
  Net Interest Income
  Interest Income  Investments
  Interest Income  Loans and Leases
   Interest Expense  Deposits and Borrowings
    Provision for Loan and Lease Losses
   37




---



##### Table of Contents



Allowance for
Loan and Lease Losses
 Noninterest Income
  Year ended December 31,2009
    
    
    2008(In thousands)Service charges on deposit accounts
    
    $
    5,377
    
    
    $
    5,711Income from bank-owned life insurance
    
    
    1,245
    
    
    
    1,080Loan related fees
    
    
    869
    
    
    
    803Commissions on nondeposit investment products
    
    
    776
    
    
    
    745Net gains on lease sales and commissions on loans originated for others
    
    
    408
    
    
    
    454Impairment of available for sale securities
    
    
    (384
    )
    
    
    (219
    )Gain on sale of available for sale securities
    
    
    61
    
    
    
    725Other income
    
    
    813
    
    
    
    1,310Total noninterest income
    
    $
    9,165
    
    
    $
    10,609
     38




---



##### Table of Contents



Noninterest Expense
  Year ended December 31,2009
    
    
    2008(In thousands)Salaries and employee benefits
    
    $
    20,573
    
    
    $
    20,091Occupancy and equipment
    
    
    4,553
    
    
    
    4,578Data processing
    
    
    2,640
    
    
    
    2,816FDIC insurance
    
    
    2,527
    
    
    
    694Professional services
    
    
    2,612
    
    
    
    2,968Marketing
    
    
    1,318
    
    
    
    1,607Loan workout and other real estate owned
    
    
    688
    
    
    
    543Loan servicing
    
    
    665
    
    
    
    643Other expenses
    
    
    3,953
    
    
    
    3,946Total noninterest expense
    
    $
    39,529
    
    
    $
    37,886
    Income Tax Expense
  Financial Condition
 Loans and Leases Receivable
   39




---



##### Table of Contents



December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(In thousands)Commercial loans and leases:Commercial real estate 
nonowner occupied
    
    $
    200,809
    
    
    $
    180,416
    
    
    $
    133,782
    
    
    $
    102,990
    
    
    $
    102,390Commercial real estate 
owner occupied
    
    
    179,766
    
    
    
    168,425
    
    
    
    175,472
    
    
    
    157,431
    
    
    
    140,812Commercial and industrial
    
    
    157,879
    
    
    
    167,968
    
    
    
    164,569
    
    
    
    131,927
    
    
    
    106,017Multifamily
    
    
    79,934
    
    
    
    66,350
    
    
    
    53,159
    
    
    
    42,536
    
    
    
    34,294Small business
    
    
    62,841
    
    
    
    56,148
    
    
    
    50,464
    
    
    
    45,778
    
    
    
    41,785Construction
    
    
    30,349
    
    
    
    23,405
    
    
    
    22,300
    
    
    
    38,832
    
    
    
    37,237Leases and other (1)
    
    
    73,054
    
    
    
    75,057
    
    
    
    63,799
    
    
    
    58,702
    
    
    
    62,979Subtotal
    
    
    784,632
    
    
    
    737,769
    
    
    
    663,545
    
    
    
    578,196
    
    
    
    525,514Unearned lease income (1)
    
    
    (6,159
    )
    
    
    (7,693
    )
    
    
    (6,980
    )
    
    
    (5,742
    )
    
    
    (6,651
    )Net deferred loan origination costs
    
    
    1,791
    
    
    
    2,321
    
    
    
    1,857
    
    
    
    1,214
    
    
    
    927Total commercial loans and leases
    
    
    780,264
    
    
    
    732,397
    
    
    
    658,422
    
    
    
    573,668
    
    
    
    519,790Residential mortgage loans:One- to four-family adjustable rate
    
    
    106,341
    
    
    
    115,855
    
    
    
    126,689
    
    
    
    155,087
    
    
    
    165,140One- to four-family fixed rate
    
    
    57,948
    
    
    
    56,724
    
    
    
    85,057
    
    
    
    92,485
    
    
    
    96,880Subtotal
    
    
    164,289
    
    
    
    172,579
    
    
    
    211,746
    
    
    
    247,572
    
    
    
    262,020Premium on loans acquired
    
    
    598
    
    
    
    738
    
    
    
    953
    
    
    
    1,198
    
    
    
    1,979Net deferred loan origination fees
    
    
    (10
    )
    
    
    (23
    )
    
    
    (34
    )
    
    
    (42
    )
    
    
    (54
    )Total residential mortgage loans
    
    
    164,877
    
    
    
    173,294
    
    
    
    212,665
    
    
    
    248,728
    
    
    
    263,945Consumer and other loans:Home equity  term loans
    
    
    125,114
    
    
    
    119,909
    
    
    
    127,142
    
    
    
    149,192
    
    
    
    152,484Home equity  lines of credit
    
    
    82,778
    
    
    
    83,771
    
    
    
    76,038
    
    
    
    62,357
    
    
    
    64,208Unsecured and other
    
    
    1,511
    
    
    
    1,410
    
    
    
    2,216
    
    
    
    2,774
    
    
    
    2,359Subtotal
    
    
    209,403
    
    
    
    205,090
    
    
    
    205,396
    
    
    
    214,323
    
    
    
    219,051Net deferred loan origination costs
    
    
    945
    
    
    
    1,066
    
    
    
    1,259
    
    
    
    1,413
    
    
    
    1,506Total consumer and other loans
    
    
    210,348
    
    
    
    206,156
    
    
    
    206,655
    
    
    
    215,736
    
    
    
    220,557Total loans and leases receivable
    
    $
    1,155,489
    
    
    $
    1,111,847
    
    
    $
    1,077,742
    
    
    $
    1,038,132
    
    
    $
    1,004,292
 (1)
    
    Included within commercial loans and leases were $156,000 of leases held for sale at December
31, 2008. Commercial loans and leases 
    40




---



##### Table of Contents



Residential mortgage loans 
 Consumer loans 
  Principal repayments contractually dueAfter one,One year
    
    
    but within
    
    
    Afteror less
    
    
    five years
    
    
    five years(In thousands)Commercial and industrial loans
    
    $
    67,100
    
    
    $
    65,926
    
    
    $
    24,853Construction loans
    
    
    3,224
    
    
    
    5,034
    
    
    
    22,091Home equity lines of credit
    
    
    617
    
    
    
    19
    
    
    
    82,142Interest-only residential first mortgages
    
    
    9,175
    
    
    
    13,005
    
    
    
    1,351Small business loans
    
    
    24,048
    
    
    
    28,170
    
    
    
    10,623Total
    
    $
    104,164
    
    
    $
    112,154
    
    
    $
    141,060
  41




---



##### Table of Contents



Loans due after one yearFloating oradjustableFixed rates
    
    
    rates(In thousands)Commercial and industrial loans
    
    $
    61,304
    
    
    $
    29,475Construction loans
    
    
    7,296
    
    
    
    19,829Home equity lines of credit
    
    
    
    
    
    
    82,161Interest-only residential first mortgages
    
    
    3,064
    
    
    
    11,292Small business loans
    
    
    9,501
    
    
    
    29,292Total
    
    $
    81,165
    
    
    $
    172,049
 Asset Quality
  Nonperforming Assets
  42




---



##### Table of Contents



December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(Dollars in thousands)Loans and leases accounted for on a nonaccrual basis
    
    $
    15,069
    
    
    $
    16,830
    
    
    $
    14,045
    
    
    $
    4,012
    
    
    $
    1,407Loans and leases past due 90 days or more,
but still accruing
    
    
    
    
    
    
    826
    
    
    
    324
    
    
    
    100
    
    
    
    6Restructured loans and leases on a nonaccrual basis
    
    
    1,444
    
    
    
    659
    
    
    
    
    
    
    
    37
    
    
    
    Total nonperforming loans and leases
    
    
    16,513
    
    
    
    18,315
    
    
    
    14,369
    
    
    
    4,149
    
    
    
    1,413Other real estate owned
    
    
    1,130
    
    
    
    1,700
    
    
    
    863
    
    
    
    
    
    
    
    Total nonperforming assets
    
    $
    17,643
    
    
    $
    20,015
    
    
    $
    15,232
    
    
    $
    4,149
    
    
    $
    1,413Restructured loans and leases not included in
nonperforming assets
    
    $
    485
    
    
    $
    445
    
    
    $
    32
    
    
    $
    
    
    
    $
    Nonperforming loans and leases as a percent
of total loans and leases
    
    
    1.43
    %
    
    
    1.65
    %
    
    
    1.33
    %
    
    
    0.40
    %
    
    
    0.14
    %Nonperforming assets as a percent
of total assets
    
    
    1.10
    %
    
    
    1.26
    %
    
    
    1.00
    %
    
    
    0.28
    %
    
    
    0.10
    %
  December 31,2010
    
    
    2009
    
    
    2008Percent
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percentof Total
    
    
    
    
    
    
    of Total
    
    
    
    
    
    
    of TotalPrincipal
    
    
    Loans and
    
    
    Principal
    
    
    Loans and
    
    
    Principal
    
    
    Loans andBalance
    
    
    Leases
    
    
    Balance
    
    
    Leases
    
    
    Balance
    
    
    Leases(Dollars in thousands)Nonperforming loans and leases:Commercial real estate
    
    $
    5,272
    
    
    
    0.46
    %
    
    $
    6,908
    
    
    
    0.63
    %
    
    $
    4,884
    
    
    
    0.46
    %Commercial and industrial
    
    
    2,462
    
    
    
    0.21
    %
    
    
    2,919
    
    
    
    0.26
    %
    
    
    2,802
    
    
    
    0.26
    %Multifamily
    
    
    717
    
    
    
    0.06
    %
    
    
    205
    
    
    
    0.02
    %
    
    
    
    
    
    
    0.00
    %Small business
    
    
    1,090
    
    
    
    0.09
    %
    
    
    1,147
    
    
    
    0.10
    %
    
    
    892
    
    
    
    0.08
    %Construction
    
    
    470
    
    
    
    0.04
    %
    
    
    470
    
    
    
    0.04
    %
    
    
    1,000
    
    
    
    0.09
    %Leases
    
    
    581
    
    
    
    0.05
    %
    
    
    1,878
    
    
    
    0.17
    %
    
    
    428
    
    
    
    0.04
    %Residential
    
    
    5,045
    
    
    
    0.44
    %
    
    
    4,124
    
    
    
    0.37
    %
    
    
    4,314
    
    
    
    0.40
    %Consumer
    
    
    876
    
    
    
    0.08
    %
    
    
    664
    
    
    
    0.06
    %
    
    
    49
    
    
    
    0.00
    %Total nonperforming loans and leases
    
    $
    16,513
    
    
    
    1.43
    %
    
    $
    18,315
    
    
    
    1.65
    %
    
    $
    14,369
    
    
    
    1.33
    %
 Nonaccrual Loans and Leases
 Delinquencies 
  43




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##### Table of Contents



December 31,2010
    
    
    2009
    
    
    2008Percent
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percentof Total
    
    
    
    
    
    
    of Total
    
    
    
    
    
    
    of TotalPrincipal
    
    
    Loans and
    
    
    Principal
    
    
    Loans and
    
    
    Principal
    
    
    Loans andBalance
    
    
    Leases
    
    
    Balance
    
    
    Leases
    
    
    Balance
    
    
    Leases(Dollars in thousands)Loans and leases delinquent for 30 to 59 days:Commercial real estate loans
    
    $
    1,114
    
    
    
    0.09
    %
    
    $
    1,506
    
    
    
    0.14
    %
    
    $
    1,325
    
    
    
    0.12
    %Commercial and industrial loans
    
    
    346
    
    
    
    0.03
    %
    
    
    1,167
    
    
    
    0.10
    %
    
    
    95
    
    
    
    0.01
    %Small business loans
    
    
    812
    
    
    
    0.07
    %
    
    
    1,942
    
    
    
    0.17
    %
    
    
    98
    
    
    
    0.01
    %Multifamily loans
    
    
    299
    
    
    
    0.03
    %
    
    
    731
    
    
    
    0.07
    %
    
    
    
    
    
    
    Construction loans
    
    
    
    
    
    
    
    
    
    
    900
    
    
    
    0.08
    %
    
    
    
    
    
    
    Leases
    
    
    1,053
    
    
    
    0.09
    %
    
    
    2,108
    
    
    
    0.19
    %
    
    
    1,817
    
    
    
    0.17
    %Residential loans
    
    
    2,147
    
    
    
    0.19
    %
    
    
    1,248
    
    
    
    0.11
    %
    
    
    921
    
    
    
    0.08
    %Consumer loans
    
    
    704
    
    
    
    0.06
    %
    
    
    980
    
    
    
    0.09
    %
    
    
    1,488
    
    
    
    0.14
    %Total loans and leases delinquent 30 to 59 days
    
    $
    6,475
    
    
    
    0.56
    %
    
    $
    10,582
    
    
    
    0.95
    %
    
    $
    5,744
    
    
    
    0.53
    %Loans and leases delinquent for 60 to 89 days:Commercial real estate loans
    
    $
    143
    
    
    
    0.01
    %
    
    $
    
    
    
    
    
    
    
    $
    599
    
    
    
    0.06
    %Commercial and industrial loans
    
    
    204
    
    
    
    0.02
    %
    
    
    
    
    
    
    
    
    
    
    1,722
    
    
    
    0.16
    %Small business loans
    
    
    180
    
    
    
    0.02
    %
    
    
    285
    
    
    
    0.03
    %
    
    
    
    
    
    
    Multifamily loans
    
    
    661
    
    
    
    0.06
    %
    
    
    410
    
    
    
    0.04
    %
    
    
    
    
    
    
    Construction loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Leases
    
    
    711
    
    
    
    0.05
    %
    
    
    951
    
    
    
    0.09
    %
    
    
    1,194
    
    
    
    0.11
    %Residential loans
    
    
    415
    
    
    
    0.04
    %
    
    
    234
    
    
    
    0.02
    %
    
    
    117
    
    
    
    0.01
    %Consumer loans
    
    
    115
    
    
    
    0.01
    %
    
    
    148
    
    
    
    0.01
    %
    
    
    150
    
    
    
    0.01
    %Total loans and leases delinquent 60 to 89 days
    
    
    2,429
    
    
    
    0.21
    %
    
    
    2,028
    
    
    
    0.19
    %
    
    
    3,782
    
    
    
    0.35
    %Total loans and leases delinquent 30 to 89 days
    
    $
    8,904
    
    
    
    0.77
    %
    
    $
    12,610
    
    
    
    1.14
    %
    
    $
    9,526
    
    
    
    0.88
    %
 Higher-Risk Loans 
  44




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##### Table of Contents



December 31,2010
    
    
    2009Allowance
    
    
    
    
    
    
    Allowancefor Loan
    
    
    
    
    
    
    for LoanPrincipal
    
    
    and Lease
    
    
    Principal
    
    
    and LeaseBalance
    
    
    Losses
    
    
    Balance
    
    
    Losses(In thousands)Option ARM mortgages
    
    $
    1,124
    
    
    $
    11
    
    
    $
    1,365
    
    
    $
    14Interest-only residential first mortgages
    
    
    23,531
    
    
    
    235
    
    
    
    25,947
    
    
    
    259Junior lien home equity loans
    
    
    40,919
    
    
    
    363
    
    
    
    51,489
    
    
    
    474Junior lien home equity lines of credit
    
    
    60,262
    
    
    
    539
    
    
    
    62,075
    
    
    
    555Total higher-risk loans
    
    $
    125,836
    
    
    $
    1,148
    
    
    $
    140,876
    
    
    $
    1,302
  Watch List Assets 
   Allowance for Loan and Lease Losses
     45




---



##### Table of Contents



December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Percent
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percentof Total
    
    
    
    
    
    
    of Total
    
    
    
    
    
    
    of Total
    
    
    
    
    
    
    of Total
    
    
    
    
    
    
    of TotalLoans
    
    
    
    
    
    
    Loans
    
    
    
    
    
    
    Loans
    
    
    
    
    
    
    Loans
    
    
    
    
    
    
    Loansand
    
    
    
    
    
    
    and
    
    
    
    
    
    
    and
    
    
    
    
    
    
    and
    
    
    
    
    
    
    andAmount
    
    
    Leases
    
    
    Amount
    
    
    Leases
    
    
    Amount
    
    
    Leases
    
    
    Amount
    
    
    Leases
    
    
    Amount
    
    
    Leases(Dollars in thousands)Commercial loans and leases
    
    $
    13,370
    
    
    
    67.5
    %
    
    $
    12,409
    
    
    
    65.9
    %
    
    $
    10,708
    
    
    
    61.1
    %
    
    $
    8,786
    
    
    
    55.2
    %
    
    $
    7,944
    
    
    
    51.8
    %Residential mortgage loans
    
    
    1,780
    
    
    
    14.3
    %
    
    
    1,340
    
    
    
    15.6
    %
    
    
    1,239
    
    
    
    19.7
    %
    
    
    1,002
    
    
    
    24.0
    %
    
    
    1,440
    
    
    
    26.2
    %Consumer and other loans
    
    
    1,681
    
    
    
    18.2
    %
    
    
    1,504
    
    
    
    18.5
    %
    
    
    1,609
    
    
    
    19.2
    %
    
    
    1,637
    
    
    
    20.8
    %
    
    
    2,086
    
    
    
    22.0
    %Unallocated
    
    
    1,823
    
    
    NA
    
    
    
    1,283
    
    
    NA
    
    
    
    1,108
    
    
    NA
    
    
    
    1,194
    
    
    NA
    
    
    
    907
    
    
    NATotal
    
    $
    18,654
    
    
    
    100.0
    %
    
    $
    16,536
    
    
    
    100.0
    %
    
    $
    14,664
    
    
    
    100.0
    %
    
    $
    12,619
    
    
    
    100.0
    %
    
    $
    12,377
    
    
    
    100.0
    %
       46




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##### Table of Contents



Year ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(In thousands)Allowance for Loan and Lease LossesBalance at beginning of year
    
    $
    16,536
    
    
    $
    14,664
    
    
    $
    12,619
    
    
    $
    12,377
    
    
    $
    11,665Loans and leases charged-off:Commercial loans and leases
    
    
    (3,730
    )
    
    
    (5,187
    )
    
    
    (1,186
    )
    
    
    (184
    )
    
    
    (472
    )Residential mortgage loans
    
    
    (1,080
    )
    
    
    (2,344
    )
    
    
    (1,235
    )
    
    
    (248
    )
    
    
    Consumer and other loans
    
    
    (352
    )
    
    
    (658
    )
    
    
    (168
    )
    
    
    (96
    )
    
    
    (47
    )Total loans and leases charged-off
    
    
    (5,162
    )
    
    
    (8,189
    )
    
    
    (2,589
    )
    
    
    (528
    )
    
    
    (519
    )Recoveries of loans and leases previously charged-off:Commercial loans and leases
    
    
    382
    
    
    
    97
    
    
    
    79
    
    
    
    32
    
    
    
    19Residential mortgage loans
    
    
    12
    
    
    
    8
    
    
    
    4
    
    
    
    
    
    
    
    Consumer and other loans
    
    
    26
    
    
    
    39
    
    
    
    31
    
    
    
    38
    
    
    
    10Total recoveries of loans and leases
previously charged-off
    
    
    420
    
    
    
    144
    
    
    
    114
    
    
    
    70
    
    
    
    29Net charge-offs
    
    
    (4,742
    )
    
    
    (8,045
    )
    
    
    (2,475
    )
    
    
    (458
    )
    
    
    (490
    )Provision for loan and lease losses charged against income
    
    
    6,860
    
    
    
    9,917
    
    
    
    4,520
    
    
    
    700
    
    
    
    1,202Balance at end of year
    
    $
    18,654
    
    
    $
    16,536
    
    
    $
    14,664
    
    
    $
    12,619
    
    
    $
    12,377Net charge-offs to average loans and leases outstanding
    
    
    0.42
    %
    
    
    0.73
    %
    
    
    0.24
    %
    
    
    0.05
    %
    
    
    0.05
    %
 Investments
    47




---



##### Table of Contents



Amortized
    
    
    Unrealized
    
    
    FairCost (1)
    
    
    Gains
    
    
    Losses
    
    
    Value(In thousands)At December 31, 2010:GSE obligations
    
    $
    80,992
    
    
    $
    436
    
    
    $
    (394
    )
    
    $
    81,034Trust preferred collateralized debt securities
    
    
    1,518
    
    
    
    
    
    
    
    (956
    )
    
    
    562Collateralized mortgage obligations
    
    
    28,885
    
    
    
    517
    
    
    
    (1,234
    )
    
    
    28,168GSE mortgage-backed securities
    
    
    246,007
    
    
    
    6,076
    
    
    
    (1,822
    )
    
    
    250,261Total
    
    $
    357,402
    
    
    $
    7,029
    
    
    $
    (4,406
    )
    
    $
    360,025At December 31, 2009:GSE obligations
    
    $
    80,866
    
    
    $
    347
    
    
    $
    (287
    )
    
    $
    80,926Trust preferred collateralized debt securities
    
    
    2,550
    
    
    
    
    
    
    
    (2,085
    )
    
    
    465Collateralized mortgage obligations
    
    
    45,641
    
    
    
    697
    
    
    
    (2,311
    )
    
    
    44,027GSE mortgage-backed securities
    
    
    251,051
    
    
    
    6,353
    
    
    
    (983
    )
    
    
    256,421Total
    
    $
    380,108
    
    
    $
    7,397
    
    
    $
    (5,666
    )
    
    $
    381,839At December 31, 2008:U.S. Treasury obligations
    
    $
    9,990
    
    
    $
    
    
    
    $
    (2
    )
    
    $
    9,988GSE obligations
    
    
    47,131
    
    
    
    256
    
    
    
    
    
    
    
    47,387Corporate debt securities
    
    
    2,001
    
    
    
    
    
    
    
    (14
    )
    
    
    1,987Trust preferred collateralized debt securities
    
    
    2,735
    
    
    
    
    
    
    
    (1,255
    )
    
    
    1,480Collateralized mortgage obligations
    
    
    62,909
    
    
    
    256
    
    
    
    (2,415
    )
    
    
    60,750GSE mortgage-backed securities
    
    
    201,001
    
    
    
    4,289
    
    
    
    (476
    )
    
    
    204,814Total
    
    $
    325,767
    
    
    $
    4,801
    
    
    $
    (4,162
    )
    
    $
    326,406
 (1)
    
    Amortized cost is net of write-downs as a result of other-than-temporary impairment.  After one, but
    
    
    After five, butwithin five years
    
    
    within ten years
    
    
    After ten yearsWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedFair
    
    
    average
    
    
    Fair
    
    
    average
    
    
    Fair
    
    
    averagevalue
    
    
    yield
    
    
    value
    
    
    yield
    
    
    value
    
    
    yield(Dollars in thousands)At December 31, 2010:GSE obligations
    
    $
    71,076
    
    
    
    1.82
    %
    
    $
    9,957
    
    
    
    2.63
    %
    
    $
    
    
    
    
    0.00
    %Trust preferred collateralized debt securities
    
    
    
    
    
    
    0.00
    %
    
    
    
    
    
    
    0.00
    %
    
    
    562
    
    
    
    6.36
    %Collateralized mortgage obligations
    
    
    
    
    
    
    0.00
    %
    
    
    15,426
    
    
    
    4.58
    %
    
    
    12,743
    
    
    
    5.38
    %GSE mortgage-backed securities
    
    
    2,315
    
    
    
    4.55
    %
    
    
    11,055
    
    
    
    4.80
    %
    
    
    236,891
    
    
    
    3.61
    %Total
    
    $
    73,391
    
    
    
    1.90
    %
    
    $
    36,438
    
    
    
    4.10
    %
    
    $
    250,196
    
    
    
    3.73
    %
   48




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##### Table of Contents



Bank-Owned Life Insurance
   49




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##### Table of Contents



Deposits and Borrowings
   December 31,2010
    
    
    2009
    
    
    2008Percent
    
    
    Weighted
    
    
    
    
    
    
    Percent
    
    
    Weighted
    
    
    
    
    
    
    Percent
    
    
    Weightedof
    
    
    Average
    
    
    
    
    
    
    of
    
    
    Average
    
    
    
    
    
    
    of
    
    
    AverageAmount
    
    
    Total
    
    
    Rate
    
    
    Amount
    
    
    Total
    
    
    Rate
    
    
    Amount
    
    
    Total
    
    
    Rate(Dollars in thousands)NOW accounts
    
    $
    70,327
    
    
    
    6.3
    %
    
    
    0.06
    %
    
    $
    74,558
    
    
    
    6.8
    %
    
    
    0.09
    %
    
    $
    56,703
    
    
    
    5.5
    %
    
    
    0.10
    %Money market accounts
    
    
    96,285
    
    
    
    8.6
    %
    
    
    0.68
    %
    
    
    65,076
    
    
    
    5.9
    %
    
    
    1.10
    %
    
    
    4,445
    
    
    
    0.4
    %
    
    
    0.39
    %Savings accounts
    
    
    341,667
    
    
    
    30.5
    %
    
    
    0.32
    %
    
    
    367,225
    
    
    
    33.4
    %
    
    
    0.64
    %
    
    
    381,106
    
    
    
    36.6
    %
    
    
    1.46
    %Certificate of deposit accounts
    
    
    347,613
    
    
    
    31.0
    %
    
    
    1.34
    %
    
    
    387,144
    
    
    
    35.3
    %
    
    
    1.80
    %
    
    
    423,443
    
    
    
    40.6
    %
    
    
    3.29
    %Total interest-bearing deposits
    
    
    855,892
    
    
    
    76.4
    %
    
    
    0.75
    %
    
    
    894,003
    
    
    
    81.4
    %
    
    
    1.13
    %
    
    
    865,697
    
    
    
    83.1
    %
    
    
    2.26
    %Noninterest bearing accounts
    
    
    264,274
    
    
    
    23.6
    %
    
    
    0.00
    %
    
    
    204,281
    
    
    
    18.6
    %
    
    
    0.00
    %
    
    
    176,495
    
    
    
    16.9
    %
    
    
    0.00
    %Total deposits
    
    $
    1,120,166
    
    
    
    100.0
    %
    
    
    0.58
    %
    
    $
    1,098,284
    
    
    
    100.0
    %
    
    
    0.92
    %
    
    $
    1,042,192
    
    
    
    100.0
    %
    
    
    1.89
    %
    Subordinated Deferrable Interest Debentures
   50




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##### Table of Contents



Liquidity and Capital Resources
 Liquidity
    Commitments and Contingent Liabilities
  Payments due or commitments expiring - by periodLess than
    
    
    One to
    
    
    Four to
    
    
    AfterTotal
    
    
    one year
    
    
    three years
    
    
    five years
    
    
    five years(In thousands)Contractual cash obligations:FHLB term borrowings
    
    $
    260,889
    
    
    $
    86,700
    
    
    $
    33,400
    
    
    $
    10,000
    
    
    $
    130,789Subordinated deferrable interest debentures
    
    
    13,403
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,403Lease obligations
    
    
    10,935
    
    
    
    1,487
    
    
    
    3,631
    
    
    
    1,308
    
    
    
    4,509Other:Treasury, tax and loan payments
    
    
    1,742
    
    
    
    1,742
    
    
    
    
    
    
    
    
    
    
    
    Retail repurchase agreements
    
    
    39,255
    
    
    
    39,255
    
    
    
    
    
    
    
    
    
    
    
    Wholesale repurchase agreements
    
    
    20,000
    
    
    
    20,000
    
    
    
    
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    346,224
    
    
    $
    149,184
    
    
    $
    37,031
    
    
    $
    11,308
    
    
    $
    148,701Other commitments:Commitments to originate or purchase loans
    
    $
    37,043
    
    
    $
    37,043
    
    
    $
    
    
    
    $
    
    
    
    $
    Unused lines of credit and other commitments
    
    
    213,752
    
    
    
    93,535
    
    
    
    38,996
    
    
    
    2,341
    
    
    
    78,880Letters of credit and standby letters of credit
    
    
    5,510
    
    
    
    5,487
    
    
    
    23
    
    
    
    
    
    
    
    Supplemental retirement benefits
    
    
    4,818
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,818Total other commitments
    
    $
    261,123
    
    
    $
    136,065
    
    
    $
    39,019
    
    
    $
    2,341
    
    
    $
    83,698
 Capital Resources
   51




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##### Table of Contents



Note 13  Company-Obligated Mandatorily Redeemable Capital Securities and
Subordinated Deferrable Interest Debentures
 Impact of Inflation and Changing Prices
   52




---



##### Table of Contents



Recent Accounting Developments
 Note 2  Summary of Significant Accounting Policies
 
 ITEM 7A.
    
    QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
 Asset and Liability Management
    Estimated impact onnet interest incomeDollar
    
    
    Percentchange
    
    
    change(Dollars in thousands)Initial Twelve Month Period:Up 300 basis point shock
    
    $
    (3,859
    )
    
    
    -6.99
    %
   53




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##### Table of Contents



Within
    
    
    Over
    
    
    Over Six
    
    
    Over OneThree
    
    
    Three to
    
    
    to Twelve
    
    
    Year to
    
    
    OverMonths
    
    
    Six months
    
    
    months
    
    
    Five Years
    
    
    Five Years
    
    
    Total(Dollars in thousands)Interest-earning assets:Overnight investments
    
    $
    443
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    443Available for sale securities
    
    
    37,520
    
    
    
    37,047
    
    
    
    39,663
    
    
    
    147,220
    
    
    
    94,124
    
    
    
    355,574FHLB Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial loans and leases
    
    
    221,046
    
    
    
    49,781
    
    
    
    87,728
    
    
    
    386,415
    
    
    
    23,799
    
    
    
    768,769Residential mortgage loans
    
    
    28,709
    
    
    
    20,715
    
    
    
    45,991
    
    
    
    44,042
    
    
    
    19,325
    
    
    
    158,782Consumer and other loans
    
    
    89,904
    
    
    
    6,309
    
    
    
    11,750
    
    
    
    60,097
    
    
    
    40,105
    
    
    
    208,165Total interest-earning assets
    
    
    377,622
    
    
    
    113,852
    
    
    
    185,132
    
    
    
    637,774
    
    
    
    177,353
    
    
    
    1,491,733Interest-bearing liabilities:NOW accounts
    
    
    5,861
    
    
    
    5,861
    
    
    
    11,721
    
    
    
    46,885
    
    
    
    
    
    
    
    70,328Money market accounts
    
    
    8,024
    
    
    
    8,024
    
    
    
    16,048
    
    
    
    64,190
    
    
    
    
    
    
    
    96,286Savings accounts
    
    
    28,648
    
    
    
    28,648
    
    
    
    57,296
    
    
    
    229,184
    
    
    
    
    
    
    
    343,776Certificate of deposit accounts
    
    
    156,961
    
    
    
    89,247
    
    
    
    63,590
    
    
    
    35,706
    
    
    
    
    
    
    
    345,504Overnight and short-term borrowings
    
    
    40,997
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,997Wholesale repurchase agreements
    
    
    10,000
    
    
    
    10,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,000FHLB and other borrowings
    
    
    76,807
    
    
    
    10,106
    
    
    
    216
    
    
    
    45,327
    
    
    
    128,433
    
    
    
    260,889Subordinated deferrable interest debentures
    
    
    10,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,403
    
    
    
    13,403Total interest-bearing liabilities
    
    
    337,298
    
    
    
    151,886
    
    
    
    148,871
    
    
    
    421,292
    
    
    
    131,836
    
    
    
    1,191,183Net interest sensitivity gap
during the period
    
    $
    40,324
    
    
    $
    (38,034
    )
    
    $
    36,261
    
    
    $
    216,482
    
    
    $
    45,517
    
    
    $
    300,550Cumulative gap  December 31, 2010
    
    $
    40,324
    
    
    $
    2,290
    
    
    $
    38,551
    
    
    $
    255,033
    
    
    $
    300,550Cumulative gap  December 31, 2009
    
    $
    67,691
    
    
    $
    62,480
    
    
    $
    104,963
    
    
    $
    217,244
    
    
    $
    240,312Interest sensitive assets as a percent of
interest sensitive liabilities (cumulative)
    
    
    111.96
    %
    
    
    100.47
    %
    
    
    106.04
    %
    
    
    124.07
    %
    
    
    125.23
    %Cumulative gap as a percent of total assets
    
    
    2.51
    %
    
    
    0.14
    %
    
    
    2.40
    %
    
    
    15.90
    %
    
    
    18.74
    %
  
 ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIALDISCLOSURE
   54




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##### Table of Contents



ITEM 9A.
    
    CONTROLS AND PROCEDURES
 (a) Evaluation of Disclosure Controls and Procedures.
   (b) Managements Annual Report on Internal Control over Financial Reporting.
  Attestation Report of the Independent Registered Public Accounting Firm.
 (c) Changes in Internal Control over Financial Reporting.
  
 ITEM 9B.
    
    OTHER INFORMATION
   55




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##### Table of Contents



PART III
 
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
   Name
    
    
    Age
    
    
    PositionMerrill W. Sherman
    
    
    62
    
    
    President and Chief Executive OfficerLinda H. Simmons
    
    
    51
    
    
    Chief Financial Officer and TreasurerMark J. Meiklejohn
    
    
    47
    
    
    Vice PresidentRobert H. Wischnowsky
    
    
    54
    
    
    Vice PresidentDaniel W. West
    
    
    69
    
    
    President of Macrolease Corporation
 Merrill W. Sherman
 Linda H. Simmons.
 Mark J. Meiklejohn.
 Robert H. Wischnowsky.
 Daniel W. West.
 Code of Ethics and Governance Principles
 http://www.bankri.com SM
  56




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##### Table of Contents



ITEM 11.
    
    EXECUTIVE COMPENSATION
   
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  Equity Compensation Plan Information
  Number of SecuritiesNumber of Securities to
    
    
    Weighted-Average
    
    
    Remaining Available forbe Issued Upon Exercise
    
    
    Exercise Price of
    
    
    Future Issuance Underof Outstanding Options,
    
    
    Outstanding Options,
    
    
    Equity CompensationPlan category
    
    Warrants and Rights
    
    
    Warrants and Rights
    
    
    PlansEquity Compensation
Plans Approved by
Security Holders
    
    
    286,037
    (1)
    
    $
    30.11
    
    
    
    144,563
    (2)Equity Compensation
Plans Not Approved
by Security Holders
    
    
    
    
    
    Not applicable
    
    
    Total
    
    
    286,037
    
    
    $
    30.11
    
    
    
    144,563
 (1)
    
    Includes 239,537 shares issuable upon exercise of outstanding awards granted under the
Bancorp Rhode Island, Inc. 2002 Equity Incentive Plan and predecessor plan (Amended and
Restated Bancorp Rhode Island, Inc. 1996 Incentive and Nonqualified Stock Option Plan) and
46,500 shares issuable upon exercise of outstanding awards granted under the Amended and
Restated Bancorp Rhode Island, Inc. Non-Employee Directors Stock Plan.(2)
    
    Includes 125,063 shares reserved for awards under the Bancorp Rhode Island, Inc. 2002
Equity Incentive Plan and predecessor plan and 19,500 shares reserved for awards under the
Amended and Restated Bancorp Rhode Island, Inc. Non-Employee Directors Stock Plan. Note 15 
Employee and Director Benefits
 
 ITEM 13.
    
    CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
   57




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##### Table of Contents



PART IV
 
 ITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a) (1)Financial Statements
  Managements Report on Internal Control Over Financial Reporting
    
    
    F-1Report of Independent Registered Public Accounting Firm on the Effectiveness of Internal
Control Over Financial Reporting
    
    
    F-2Report of Independent Registered Public Accounting Firm
    
    
    F-3Consolidated Balance Sheets as of December 31, 2010 and 2009
    
    
    F-4Consolidated Statements of Operations for the Years Ended December 31, 2010, 2009 and 2008
    
    
    F-5Consolidated Statements of Changes in Shareholders Equity for the Years Ended
December 31, 2010, 2009 and 2008
    
    
    F-6Consolidated Statements of Cash Flows for the Years Ended December 31, 2010, 2009 and 2008
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-8
 (2) Financial Statement Schedules
  (3) Exhibits
 Exhibit No.

    
    Description3.1
    
    
    Articles of Incorporation of the Company, as amended (Incorporated by
reference from Exhibit 3.1 to the Companys Annual Report on Form 10-K for the year
ended December 31, 2008).3.2
    
    
    By-laws of the Company, as amended (Incorporated by reference from
Exhibit 3.2 to the Companys Annual Report on Form 10-K for the year ended December
31, 2007).10.1
    
    
    Amended and Restated Employment Agreement of Merrill W. Sherman dated
February 20, 2007 (Incorporated by reference from Exhibit 10.1 to the Companys
Annual Report on Form 10-K for the year ended December 31, 2006).10.1
    (a)
    
    First Amendment to Amended and Restated Executive Employment Agreement of Merrill
W. Sherman dated as of March 6, 2008 (Incorporated by reference from Exhibit 10.1(a)
to the Companys Quarterly Report for the period ended March 31, 2008).10.1
    (b)
    
    Letter Agreement of Merrill W. Sherman dated December 15, 2008
related to CPP restrictions (Incorporated by reference from Exhibit 10.1(b) to the
Companys Annual Report on Form 10-K for the year ended December 31,
2008).10.1
    (c)
    
    Second Amendment to Amended and Restated Executive Employment
Agreement of Merrill W. Sherman dated as of December 20, 2010.10.2
    
    
    Amended and Restated Employment Agreement of Linda H. Simmons dated
February 20, 2007 (Incorporated by reference from Exhibit 10.2 to the Companys
Annual Report on Form 10-K for the year ended December 31, 2006).10.2
    (a)
    
    Letter Agreement of Linda H. Simmons dated December 15, 2008 related
to CPP restrictions (Incorporated by reference from Exhibit 10.2(a) to the Companys
Annual Report on Form 10-K for the year ended December 31, 2008).
  58




---



##### Table of Contents



Exhibit No.

    
    Description10.2
    (b)
    
    First Amendment to Executive Employment Agreement of Linda H. Simmons
dated as of December 20, 2010.10.4
    
    
    Amended and Restated 1996 Incentive and Nonqualified Stock Option Plan
(Incorporated by reference from Exhibit 10.5 to the Companys Annual Report on Form
10-K for the year ended December 31, 2000).10.5
    
    
    Amended and Restated Non-Employee Director Stock Plan (Incorporated by
reference from Exhibit to the Companys Quarterly Report on Form 10-Q for the period
ended September 30, 2000).10.5
    (a)
    
    Amendment to Amended and Restated Non-Employee Director Stock Plan (Incorporated
by reference from Exhibit 10.6(a) to the Companys Quarterly Report on Form 10-Q for
the period ended June 30, 2002).10.5
    (b)
    
    Second Amendment to Amended and Restated Non-Employee Director Stock Plan
(Incorporated by reference from Exhibit 10.6(b) to the Companys Quarterly Report on
Form 10-Q for the period ended June 30, 2006).10.5
    (c)
    
    Third Amendment to Amended and Restated Non-Employee Director Stock Plan
(Incorporated by reference from Exhibit 10.5(b) to the Companys Quarterly Report on
Form 10-Q for the period ended June 30, 2009).10.6
    
    
    Bank Rhode Island Amended and Restated Supplemental Executive Retirement
Plan (Incorporated by reference from Exhibit 10.6 to the Companys Annual Report on
Form 10-K for the year ended December 31, 2008).10.6
    (a)
    
    Amendment No. 1 to Amended and Restated Supplemental Executive Retirement Plan
(Incorporated by reference from Exhibit 10.6(a) to the Companys Quarterly Report on
Form 10-Q for the period ended March 31, 2009).10.6
    (b)
    
    Amendment No. 2 to Amended and Restated Supplemental Executive Retirement Plan
(Incorporated by reference from Exhibit 10.6(b) the Companys Quarterly Report on
Form 10-Q for the period ended September 30, 2009).10.7
    
    
    Bank Rhode Island Nonqualified Deferred Compensation Plan, as amended by
Amendment No. 1 (Incorporated by reference from Exhibit 10.8 to the Companys
Registration Statement on Form S-4, SEC File No. 333-33182).10.7
    (a)
    
    Amendment No. 2 to Bank Rhode Island Nonqualified Deferred Compensation Plan
(Incorporated by reference from Exhibit 10.8(a) to the Companys Annual Report on
Form 10-K for the year ended December 31, 2002).10.7
    (b)
    
    Amendment No. 3 to Bank Rhode Island Nonqualified Deferred Compensation Plan
(Incorporated by reference from Exhibit 10.7(b) to the Companys Annual Report on
Form 10-K for the year ended December 31, 2007).10.7
    (c)
    
    Amendment No. 4 to Bank Rhode Island Nonqualified Deferred Compensation Plan
(Incorporated by reference from Exhibit 10.7(c) to the Companys Annual Report on
Form 10-K for the year ended December 31, 2007).10.7
    (d)
    
    Amendment No. 5 to Bank Rhode Island Nonqualified Deferred Compensation Plan
(Incorporated by reference from Exhibit 10.7(c) to the Companys Annual Report on
Form 10-K for the year ended December 31, 2002).10.8
    (a)
    
    Executive Annual Incentive Plan (Incorporated by reference from Exhibit 99.1 to
the Companys Current Report on Form 8-K dated February 22, 2010).10.8
    (b)
    
    Executive Incentive Compensation Plan (2008 and 2009) (Incorporated by reference
from Exhibit 10 to the Companys Current Report on Form 8-K dated January 28,
2008).10.9
    
    
    Executive Employment Agreement of Mark J. Meiklejohn dated as of April
28, 2008 (Incorporated by reference from Exhibit 10.9 to the Companys Quarterly
Report on Form 10-Q for the period ended June 30, 2008).10.9
    (a)
    
    Letter Agreement of Mark J. Meiklejohn dated December 15, 2008
related to CPP restrictions (Incorporated by reference from Exhibit 10.9(a) to the
Companys Annual Report on Form 10-K for the year ended December 31,
2008).
  59




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##### Table of Contents



Exhibit No.

    
    Description10.9
    (b)
    
    First Amendment to Executive Employment Agreement of Mark J.
Meiklejohn dated as of December 20, 2010.10.10
    
    
    Executive Annual Incentive Plan (Incorporated by reference from Exhibit
99.1 to the Companys Current Report on Form 8-K dated February 22,
2010).10.11
    
    
    Form of Bank Rhode Island Split Dollar Agreement (Incorporated by
reference from Exhibit 10.12 to the Companys Quarterly Report on Form 10-Q for the
period ended March 31, 2002).10.12
    
    
    2002 Equity Incentive Plan (Incorporated by reference to Appendix B to
the Companys Definitive Proxy Statement on Schedule 14A filed on April 15,
2005).10.13
    
    
    Executive Employment Agreement of Robert H. Wischnowsky dated as of
December 1, 2008 (Incorporated by reference from Exhibit 10.13 to the Companys
Annual Report on Form 10-K for the year ended December 31, 2008).10.13
    (a)
    
    Letter Agreement of Robert H. Wischnowsky dated December 15, 2008
related to CPP restrictions (Incorporated by reference from Exhibit 10.13(a) to the
Companys Annual Report on Form 10-K for the year ended December 31,
2008).10.13
    (b)
    
    First Amendment to Executive Employment Agreement of Robert H.
Wischnowsky dated as of December 20, 2010.11
    
    
    Computation of Earnings per Share.(1)21
    
    
    List of Subsidiaries (as of December 31, 2010).23
    
    
    Consent of KPMG LLP, as independent registered public accountants for the Company.31.1
    
    
    Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes  Oxley Act of 2002.31.2
    
    
    Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes  Oxley Act of 2002.32.1
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
1350 as adopted pursuant to Section 906 of the Sarbanes  Oxley Act of 2002.32.2
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section
1350 as adopted pursuant to Section 906 of the Sarbanes  Oxley Act of 2002.
 
 (1)
    
    The calculation of earnings per share is set forth as Note 20  Earnings per
Shareto the Companys audited consolidated financial statements.
    
    Management contract or compensatory plan or arrangement.  60




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
   BANCORP RHODE ISLAND, INC.Date:  March 14, 2011
    By:
    /s/ Merrill W. ShermanMerrill W. ShermanPresident and Chief Executive Officer   /s/ Merrill W. Sherman

Merrill W. Sherman,
    
    /s/ Linda H. Simmons

Linda H. Simmons,
    
    /s/ Tiffany R. Sy

Tiffany R. Sy, CPA,President, Chief Executive Officer and
    
    Chief Financial Officer and
    
    Controller (Principal Accounting Officer)Director (Principal Executive Officer)
    
    Treasurer (Principal Financial Officer)
    
    Date: March 14, 2011Date: March 14, 2011
    
    Date: March 14, 2011/s/ Anthony F. Andrade

Anthony F. Andrade, Director
    
    /s/ Ernest J. Chornyei, Jr.

Ernest J. Chornyei, Jr., Director
    
    /s/ Bogdan Nowak

Bogdan Nowak, DirectorDate: March 14, 2011
    
    Date: March 14, 2011
    
    Date: March 14, 2011/s/ John R. Berger

John R. Berger, Director
    
    /s/ Meredith A. Curren

Meredith A. Curren, Director
    
    /s/ Cheryl W. Snead

Cheryl W. Snead, DirectorDate: March 14, 2011
    
    Date: March 14, 2011
    
    Date: March 14, 2011/s/ Richard L. Bready

Richard L. Bready, Director
    
    /s/ Edward J. Mack

Edward J. Mack, Director
    
    /s/ Pablo Rodriguez

Pablo Rodriguez, DirectorDate: March 14, 2011
    
    Date: March 14, 2011
    
    Date: March 14, 2011/s/ Malcolm G. Chace

Malcolm G. Chace, Director and
    
    /s/ Michael E. McMahon

Michael E. McMahon, Director
    
    /s/ John A. Yena

John A. Yena, DirectorChairman of the Board
    
    Date: March 14, 2011
    
    Date: March 14, 2011Date: March 14, 2011
  61




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
 Managements Report on Internal Control
Over Financial Reporting
     /s/ Merrill W. Sherman

Merrill W. Sherman
    
    /s/ Linda H. Simmons

Linda H. SimmonsPresident and
    
    Chief Financial Officer andChief Executive Officer
    
    Treasurer
  F-1




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
 Report of Independent Registered Public Accounting Firm
 
       
   F-2




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
 Report of Independent Registered Public Accounting Firm
 
     Internal Control  Integrated Framework
 
   F-3




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
 Consolidated Balance Sheets
 December 31,2010
    
    
    2009(In thousands)AssetsAssets:Cash and due from banks
    
    $
    14,384
    
    
    $
    18,866Overnight investments
    
    
    395
    
    
    
    1,964Total cash and cash equivalents
    
    
    14,779
    
    
    
    20,830Available for sale securities (amortized cost of $357,402 and $380,108,
respectively)
    
    
    360,025
    
    
    
    381,839Stock in the Federal Home Loan Bank of Boston
    
    
    16,274
    
    
    
    16,274Loans and leases receivable:Commercial loans and leases
    
    
    780,264
    
    
    
    732,397Residential mortgage loans
    
    
    164,877
    
    
    
    173,294Consumer and other loans
    
    
    210,348
    
    
    
    206,156Total loans and leases receivable
    
    
    1,155,489
    
    
    
    1,111,847Allowance for loan and lease losses
    
    
    (18,654
    )
    
    
    (16,536
    )Net loans and leases receivable
    
    
    1,136,835
    
    
    
    1,095,311Premises and equipment, net
    
    
    11,889
    
    
    
    12,378Goodwill, net
    
    
    12,262
    
    
    
    12,239Accrued interest receivable
    
    
    4,842
    
    
    
    4,964Investment in bank-owned life insurance
    
    
    31,277
    
    
    
    30,010Prepaid expenses and other assets
    
    
    15,576
    
    
    
    16,101Total assets
    
    $
    1,603,759
    
    
    $
    1,589,946Liabilities and Shareholders EquityLiabilities:Deposits:Demand deposit accounts
    
    $
    264,274
    
    
    $
    204,281NOW accounts
    
    
    70,327
    
    
    
    74,558Money market accounts
    
    
    96,285
    
    
    
    65,076Savings accounts
    
    
    341,667
    
    
    
    367,225Certificate of deposit accounts
    
    
    347,613
    
    
    
    387,144Total deposits
    
    
    1,120,166
    
    
    
    1,098,284Overnight and short-term borrowings
    
    
    40,997
    
    
    
    40,171Wholesale repurchase agreements
    
    
    20,000
    
    
    
    20,000Federal Home Loan Bank of Boston borrowings
    
    
    260,889
    
    
    
    277,183Subordinated deferrable interest debentures
    
    
    13,403
    
    
    
    13,403Other liabilities
    
    
    19,626
    
    
    
    20,244Total liabilities
    
    
    1,475,081
    
    
    
    1,469,285Shareholders equity:Common stock, par value $0.01 per share, authorized 11,000,000
shares: Issued: (5,047,942 and 4,969,444 shares, respectively)
    
    
    50
    
    
    
    50Additional paid-in capital
    
    
    73,866
    
    
    
    72,783Treasury stock, at cost (373,850 and 364,750 shares respectively)
    
    
    (12,527
    )
    
    
    (12,309
    )Retained earnings
    
    
    65,584
    
    
    
    59,012Accumulated other comprehensive income, net
    
    
    1,705
    
    
    
    1,125Total shareholders equity
    
    
    128,678
    
    
    
    120,661Total liabilities and shareholders equity
    
    $
    1,603,759
    
    
    $
    1,589,946
   F-4




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
 Consolidated Statements of Operations
 Year Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands, except per share data)Interest and dividend income:Overnight investments
    
    $
    7
    
    
    $
    10
    
    
    $
    264Mortgage-backed securities
    
    
    11,601
    
    
    
    13,357
    
    
    
    13,655Investment securities
    
    
    1,896
    
    
    
    2,157
    
    
    
    2,767Federal Home Loan Bank of Boston stock dividends
    
    
    
    
    
    
    
    
    
    
    610Loans and leases
    
    
    59,298
    
    
    
    59,753
    
    
    
    63,002Total interest and dividend income
    
    
    72,802
    
    
    
    75,277
    
    
    
    80,298Interest expense:Deposits
    
    
    8,030
    
    
    
    14,868
    
    
    
    21,579Overnight and short-term borrowings
    
    
    63
    
    
    
    86
    
    
    
    902Wholesale repurchase agreements
    
    
    564
    
    
    
    551
    
    
    
    540Federal Home Loan Bank of Boston borrowings
    
    
    10,068
    
    
    
    10,720
    
    
    
    10,960Subordinated deferrable interest debentures
    
    
    670
    
    
    
    730
    
    
    
    949Total interest expense
    
    
    19,395
    
    
    
    26,955
    
    
    
    34,930Net interest income
    
    
    53,407
    
    
    
    48,322
    
    
    
    45,368Provision for loan and lease losses
    
    
    6,860
    
    
    
    9,917
    
    
    
    4,520Net interest income after provision
for loan and lease losses
    
    
    46,547
    
    
    
    38,405
    
    
    
    40,848Noninterest income:Total other-than-temporary impairment losses on
available for sale securities
    
    
    54
    
    
    
    (2,469
    )
    
    
    (219
    )Non-credit component of other-than-temporary
losses recognized in other comprehensive income
    
    
    (1,086
    )
    
    
    2,085
    
    
    
    Credit component of other-than-temporary impairment
losses on available for sale securities
    
    
    (1,032
    )
    
    
    (384
    )
    
    
    (219
    )Service charges on deposit accounts
    
    
    5,178
    
    
    
    5,377
    
    
    
    5,711Income from bank-owned life insurance
    
    
    1,267
    
    
    
    1,245
    
    
    
    1,080Gain on sale of available for sale securities
    
    
    1,260
    
    
    
    61
    
    
    
    725Loan related fees
    
    
    836
    
    
    
    869
    
    
    
    803Commissions on nondeposit investment products
    
    
    740
    
    
    
    776
    
    
    
    745Net gains on lease sales and commissions on
loans originated for others
    
    
    127
    
    
    
    408
    
    
    
    454Other income
    
    
    1,186
    
    
    
    813
    
    
    
    1,310Total noninterest income
    
    
    9,562
    
    
    
    9,165
    
    
    
    10,609Noninterest expense:Salaries and employee benefits
    
    
    22,973
    
    
    
    20,573
    
    
    
    20,091Occupancy
    
    
    3,340
    
    
    
    3,552
    
    
    
    3,530Data processing
    
    
    2,623
    
    
    
    2,640
    
    
    
    2,816Professional services
    
    
    2,283
    
    
    
    2,612
    
    
    
    2,968FDIC insurance
    
    
    1,934
    
    
    
    2,527
    
    
    
    694Operating
    
    
    1,860
    
    
    
    1,877
    
    
    
    1,913Marketing
    
    
    1,211
    
    
    
    1,318
    
    
    
    1,607Equipment
    
    
    1,029
    
    
    
    1,001
    
    
    
    1,048Loan workout and other real estate owned
    
    
    987
    
    
    
    688
    
    
    
    543Loan servicing
    
    
    646
    
    
    
    665
    
    
    
    643Other expenses
    
    
    2,317
    
    
    
    2,076
    
    
    
    2,033Total noninterest expense
    
    
    41,203
    
    
    
    39,529
    
    
    
    37,886Income before income taxes
    
    
    14,906
    
    
    
    8,041
    
    
    
    13,571Income tax expense
    
    
    5,071
    
    
    
    2,502
    
    
    
    4,427Net income
    
    
    9,835
    
    
    
    5,539
    
    
    
    9,144Preferred stock dividends
    
    
    
    
    
    
    (892
    )
    
    
    (50
    )Accretion of preferred shares discount
    
    
    
    
    
    
    (1,405
    )
    
    
    (8
    )Net income applicable to common shares
    
    $
    9,835
    
    
    $
    3,242
    
    
    $
    9,086Weighted average shares outstanding  basic
    
    
    4,658,668
    
    
    
    4,604,308
    
    
    
    4,561,396Weighted average shares outstanding  diluted
    
    
    4,687,316
    
    
    
    4,626,434
    
    
    
    4,631,208Per share data:Basic earnings per common share
    
    $
    2.10
    
    
    $
    0.71
    
    
    $
    1.99Diluted earnings per common share
    
    $
    2.10
    
    
    $
    0.70
    
    
    $
    1.96Cash dividends declared per common share
    
    $
    0.70
    
    
    $
    0.68
    
    
    $
    0.66
   F-5




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
 Consolidated Statements of Changes in Shareholders Equity
 For Years Ended December 31, 2010, 2009 and 2008
 AccumulatedOtherAdditional
    
    
    
    
    
    
    Retained
    
    
    ComprehensivePreferred
    
    
    Common
    
    
    Paid-in
    
    
    Treasury
    
    
    Earnings,
    
    
    Income/Stock
    
    
    Stock
    
    
    Capital
    
    
    Stock
    
    
    as Adjusted
    
    
    (Loss)
    
    
    Total(in thousands, except per share data)Balance at December 31, 2007
    
    $
    
    
    
    $
    49
    
    
    $
    70,123
    
    
    $
    (10,189
    )
    
    $
    52,679
    
    
    $
    (69
    )
    
    $
    112,593Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,144
    
    
    
    
    
    
    
    9,144Other comprehensive income:Unrealized holding gains on
securities available for sale,
net of taxes of $(438)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    813
    
    
    
    813Reclassification adjustment,
net of taxes of $177
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (329
    )
    
    
    (329
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,628Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    562
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    562Macrolease acquisition
    
    
    
    
    
    
    
    
    
    
    656
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    656Treasury stock acquisitions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,866
    )
    
    
    
    
    
    
    
    
    
    
    (1,866
    )Share-based compensation
    
    
    
    
    
    
    
    
    
    
    380
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    380Tax benefit from exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    189
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    189Issuance of preferred stock
    
    
    28,587
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,587Accretion of preferred stock discount
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8
    )
    
    
    
    
    
    
    Issuance of warrants
    
    
    
    
    
    
    
    
    
    
    1,413
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,413Dividends on preferred stock
($1.67 per preferred share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50
    )
    
    
    
    
    
    
    (50
    )Dividends on common stock
($0.66 per common share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,002
    )
    
    
    
    
    
    
    (3,002
    )Balance at December 31, 2008
    
    $
    28,595
    
    
    $
    49
    
    
    $
    73,323
    
    
    $
    (12,055
    )
    
    $
    58,763
    
    
    $
    415
    
    
    $
    149,090Cumulative effect of a change in
accounting principle, net of taxes of ($77)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    137
    
    
    
    (137
    )
    
    
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,539
    
    
    
    
    
    
    
    5,539Other comprehensive income, net of tax:Unrealized holding gains on
securities available for sale,
net of taxes of ($1,207)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,242
    
    
    
    2,242Reclassification adjustment for net gains
included in net income, net of taxes of $21
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40
    )
    
    
    (40
    )Non-credit portion OTTI, net of taxes of $730
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,355
    )
    
    
    (1,355
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,386Exercise of stock options
    
    
    
    
    
    
    1
    
    
    
    514
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    515Macrolease acquisition
    
    
    
    
    
    
    
    
    
    
    78
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78Repurchase of warrant
    
    
    
    
    
    
    
    
    
    
    (1,400
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,400
    )Redemption of preferred stock
    
    
    (30,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30,000
    )Treasury stock acquisitions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (254
    )
    
    
    
    
    
    
    
    
    
    
    (254
    )Share-based compensation
    
    
    
    
    
    
    
    
    
    
    180
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    180Tax benefit from stock option exercises
    
    
    
    
    
    
    
    
    
    
    88
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88Preferred stock discount accretion
    
    
    123
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (123
    )
    
    
    
    
    
    
    Prepayment charge on preferred stock
discount
    
    
    1,282
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,282
    )
    
    
    
    
    
    
    Dividends on preferred stock
($29.73 per preferred share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (892
    )
    
    
    
    
    
    
    (892
    )Dividends on common stock
($0.68 per common share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,130
    )
    
    
    
    
    
    
    (3,130
    )Balance at December 31, 2009
    
    $
    
    
    
    $
    50
    
    
    $
    72,783
    
    
    $
    (12,309
    )
    
    $
    59,012
    
    
    $
    1,125
    
    
    $
    120,661Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,835
    
    
    
    
    
    
    
    9,835Other comprehensive income, net of tax:Unrealized holding gains on
securities available for sale,
net of taxes of ($373)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    693
    
    
    
    693Reclassification adjustment for net gains
included in net income, net of taxes of $441
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (819
    )
    
    
    (819
    )Non-credit portion OTTI, net of taxes of ($380)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    706
    
    
    
    706Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,415Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    293
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    293Macrolease acquisition
    
    
    
    
    
    
    
    
    
    
    211
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    211Share repurchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (218
    )
    
    
    
    
    
    
    
    
    
    
    (218
    )Share-based compensation
    
    
    
    
    
    
    
    
    
    
    558
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    558Tax benefit from stock option exercises
    
    
    
    
    
    
    
    
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21Dividends on common stock
($0.70 per common share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,263
    )
    
    
    
    
    
    
    (3,263
    )Balance at December 31, 2010
    
    $
    
    
    
    $
    50
    
    
    $
    73,866
    
    
    $
    (12,527
    )
    
    $
    65,584
    
    
    $
    1,705
    
    
    $
    128,678
   F-6




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
 Consolidated Statements of Cash Flows
 Year Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands)Cash flows from operating activities:Net income
    
    $
    9,835
    
    
    $
    5,539
    
    
    $
    9,144Adjustment to reconcile net income to net cash
provided by operating activities:Depreciation, amortization and accretion, net
    
    
    (1,258
    )
    
    
    (6,201
    )
    
    
    (3,252
    )Provision for loan and lease losses
    
    
    6,860
    
    
    
    9,917
    
    
    
    4,520Income from bank-owned life insurance
    
    
    (1,267
    )
    
    
    (1,245
    )
    
    
    (1,080
    )Net gains on lease sales
    
    
    (66
    )
    
    
    (326
    )
    
    
    (354
    )Net gain on sale of available for sale securities
    
    
    (1,260
    )
    
    
    (61
    )
    
    
    (725
    )Credit component of other-than-temporary impairment
losses on available for sale securities
    
    
    1,032
    
    
    
    384
    
    
    
    219Net loss on sale of premises and equipment
    
    
    
    
    
    
    
    
    
    
    3Gain on sale of other real estate owned
    
    
    (57
    )
    
    
    (76
    )
    
    
    (64
    )Proceeds from sales of leases
    
    
    1,262
    
    
    
    1,476
    
    
    
    11,557Leases originated for sale
    
    
    (1,196
    )
    
    
    (1,287
    )
    
    
    (9,250
    )Share-based compensation expense
    
    
    558
    
    
    
    180
    
    
    
    380Decrease in accrued interest receivable
    
    
    122
    
    
    
    276
    
    
    
    1,317Increase in prepaid expenses and other assets
    
    
    (357
    )
    
    
    (6,818
    )
    
    
    (2,139
    )(Decrease) increase in other liabilities
    
    
    (430
    )
    
    
    3,221
    
    
    
    43Net cash provided by operating activities
    
    
    13,778
    
    
    
    4,979
    
    
    
    10,319Cash flows from investing activities:Available for sale securities:Purchases
    
    
    (175,570
    )
    
    
    (221,868
    )
    
    
    (145,205
    )Maturities and principal repayments
    
    
    172,133
    
    
    
    165,408
    
    
    
    124,707Proceeds from sales
    
    
    25,950
    
    
    
    1,880
    
    
    
    30,543Proceeds from sale of leases
    
    
    
    
    
    
    10,428
    
    
    
    Net increase in loans and leases
    
    
    (46,537
    )
    
    
    (46,747
    )
    
    
    (40,140
    )Purchase of Federal Home Loan Bank of Boston stock
    
    
    
    
    
    
    (603
    )
    
    
    Capital expenditures for premises and equipment
    
    
    (918
    )
    
    
    (1,186
    )
    
    
    (575
    )Proceeds from disposition of other real estate owned
    
    
    1,866
    
    
    
    1,321
    
    
    
    189Purchase of bank-owned life insurance
    
    
    
    
    
    
    
    
    
    
    (3,500
    )Net cash used in investing activities
    
    
    (23,076
    )
    
    
    (91,367
    )
    
    
    (33,981
    )Cash flows from financing activities:Net increase in deposits
    
    
    21,882
    
    
    
    56,092
    
    
    
    27,412Net increase (decrease) in overnight and short-term borrowings
    
    
    826
    
    
    
    (8,882
    )
    
    
    (9,119
    )Proceeds from long-term borrowings
    
    
    80,130
    
    
    
    113,465
    
    
    
    69,293Repayment of long-term borrowings
    
    
    (96,424
    )
    
    
    (73,841
    )
    
    
    (71,862
    )Proceeds from issuance of preferred stock and warrants
    
    
    
    
    
    
    
    
    
    
    30,000Redemption of preferred stock
    
    
    
    
    
    
    (30,000
    )
    
    
    Repurchase of warrant
    
    
    
    
    
    
    (1,400
    )
    
    
    Proceeds from issuance of common stock
    
    
    75
    
    
    
    261
    
    
    
    314Tax benefit from exercise of stock options
    
    
    21
    
    
    
    88
    
    
    
    189Purchases of treasury stock
    
    
    
    
    
    
    
    
    
    
    (1,618
    )Dividends on preferred stock
    
    
    
    
    
    
    (892
    )
    
    
    (50
    )Dividends on common stock
    
    
    (3,263
    )
    
    
    (3,130
    )
    
    
    (3,002
    )Net cash provided by financing activities
    
    
    3,247
    
    
    
    51,761
    
    
    
    41,557Net (decrease) increase in cash and cash equivalents
    
    
    (6,051
    )
    
    
    (34,627
    )
    
    
    17,895Cash and cash equivalents at beginning of year
    
    
    20,830
    
    
    
    55,457
    
    
    
    37,562Cash and cash equivalents at end of year
    
    $
    14,779
    
    
    $
    20,830
    
    
    $
    55,457
   F-7




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
 Notes to Consolidated Financial Statements
 (1) Organization
  http://www.bankri.com
 (2) Summary of Significant Accounting Policies
 Basis of Presentation 
 Use of Estimates 
 Principles of Consolidation 
 Cash and Cash Equivalents 
 Securities 
   F-8




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
   Loans and Leases Receivable
        F-9




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
 Allowance for Loan and Lease Losses
    Other Real Estate Owned 
  Premises and Equipment 
 Impairment of Long-Lived Assets except Goodwill 
 Goodwill
  F-10




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
 Bank-Owned Life Insurance 
 Securities Sold Under Agreements to Repurchase 
 Employee Benefits
 Share-Based Compensation Note 15  Employee and Director Benefits
 Income Taxes 
   F-11




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
 Revenue Recognition 
 Comprehensive Income 
 Earnings Per Share 
 Segment Reporting
 Guarantees
  Interest Rate Swaps  Note 8  Derivatives
 Reclassifications 
 Recently Adopted Accounting Pronouncements Generally Accepted
Accounting Principles.
 Transfers and Servicing
  F-12




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
 Consolidation
 Fair Value
Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Instruments
 Receivables (Topic 320): Disclosures About the
Credit Quality of Financing Receivables and the Allowance for Credit Losses. Receivables, Note 7, Credit Quality of Loans and Leases and Allowance for Loans and Leases.
 (3) Business Combinations
    F-13




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
 (4) Restrictions on Cash and Due from Banks
  (5) Available for sale Securities
   Amortized
    
    
    Unrealized
    
    
    FairCost(1)
    
    
    Gains
    
    
    Losses
    
    
    Value(In thousands)At December 31, 2010:GSE obligations
    
    $
    80,992
    
    
    $
    436
    
    
    $
    (394
    )
    
    $
    81,034Trust preferred collateralized debt obligations
    
    
    1,518
    
    
    
    
    
    
    
    (956
    )
    
    
    562Collateralized mortgage obligations
    
    
    28,885
    
    
    
    517
    
    
    
    (1,234
    )
    
    
    28,168GSE mortgage-backed securities
    
    
    246,007
    
    
    
    6,076
    
    
    
    (1,822
    )
    
    
    250,261Total
    
    $
    357,402
    
    
    $
    7,029
    
    
    $
    (4,406
    )
    
    $
    360,025At December 31, 2009:GSE obligations
    
    $
    80,866
    
    
    $
    347
    
    
    $
    (287
    )
    
    $
    80,926Trust preferred collateralized debt obligations
    
    
    2,550
    
    
    
    
    
    
    
    (2,085
    )
    
    
    465Collateralized mortgage obligations
    
    
    45,641
    
    
    
    697
    
    
    
    (2,311
    )
    
    
    44,027GSE mortgage-backed securities
    
    
    251,051
    
    
    
    6,353
    
    
    
    (983
    )
    
    
    256,421Total
    
    $
    380,108
    
    
    $
    7,397
    
    
    $
    (5,666
    )
    
    $
    381,839
 (1)
    
    Amortized cost is net of other-than-temporary impairment write-downs.  Less than One Year
    
    
    One Year or Longer
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses(In thousands)At December 31, 2010:GSE obligations
    
    $
    39,599
    
    
    $
    (394
    )
    
    $
    
    
    
    $
    
    
    
    $
    39,599
    
    
    $
    (394
    )Trust preferred collateralized debt obligations
    
    
    
    
    
    
    
    
    
    
    562
    
    
    
    (956
    )
    
    
    562
    
    
    
    (956
    )Collateralized mortgage obligations
    
    
    1,912
    
    
    
    (12
    )
    
    
    7,896
    
    
    
    (1,222
    )
    
    
    9,808
    
    
    
    (1,234
    )GSE mortgage-backed securities
    
    
    60,592
    
    
    
    (1,822
    )
    
    
    
    
    
    
    
    
    
    
    60,592
    
    
    
    (1,822
    )Total
    
    $
    102,103
    
    
    $
    (2,228
    )
    
    $
    8,458
    
    
    $
    (2,178
    )
    
    $
    110,561
    
    
    $
    (4,406
    )At December 31, 2009:GSE obligations
    
    $
    37,081
    
    
    $
    (287
    )
    
    $
    
    
    
    $
    
    
    
    $
    37,081
    
    
    $
    (287
    )Trust preferred collateralized debt obligations
    
    
    
    
    
    
    
    
    
    
    465
    
    
    
    (2,085
    )
    
    
    465
    
    
    
    (2,085
    )Collateralized mortgage obligations
    
    
    5,520
    
    
    
    (182
    )
    
    
    12,088
    
    
    
    (2,129
    )
    
    
    17,608
    
    
    
    (2,311
    )GSE mortgage-backed securities
    
    
    69,310
    
    
    
    (982
    )
    
    
    140
    
    
    
    (1
    )
    
    
    69,450
    
    
    
    (983
    )Total
    
    $
    111,911
    
    
    $
    (1,451
    )
    
    $
    12,693
    
    
    $
    (4,215
    )
    
    $
    124,604
    
    
    $
    (5,666
    )
  F-14




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
     Investments  Debt and Equity Securities
   F-15




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
    Credit Component of Other-Than-Temporary Impairment Losses ForWhich a Portion Was Recognized inOther Comprehensive Income2010
    
    
    2009(In thousands)Balance, January 1
    
    $
    (384
    )
    
    $
    Credit losses for which an other-than-temporary impairment was not previously recognized
    
    
    (1,032
    )
    
    
    (384
    )Balance, December 31
    
    $
    (1,416
    )
    
    $
    (384
    )
  F-16




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
  After One, But
    
    
    After Five, ButWithin Five Years
    
    
    Within Ten Years
    
    
    After Ten YearsFair
    
    
    
    
    
    
    
    
    
    
    Fair
    
    
    
    
    
    
    
    
    
    
    FairCost(1)
    
    
    Value
    
    
    Yield(2)
    
    
    Cost(1)
    
    
    Value
    
    
    Yield(2)
    
    
    Cost(1)
    
    
    Value
    
    
    Yield(2)(Dollars in thousands)At December 31, 2010:GSE obligations
    
    $
    70,997
    
    
    $
    71,076
    
    
    
    1.82
    %
    
    $
    9,995
    
    
    $
    9,957
    
    
    
    2.63
    %
    
    $
    
    
    
    $
    
    
    
    
    0.00
    %Trust preferred securities
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    1,518
    
    
    
    562
    
    
    
    6.36
    %Collateralized mortage
obligations
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    15,059
    
    
    
    15,426
    
    
    
    4.58
    %
    
    
    13,827
    
    
    
    12,743
    
    
    
    5.38
    %GSE mortgage-backed
securities
    
    
    2,220
    
    
    
    2,315
    
    
    
    4.55
    %
    
    
    10,396
    
    
    
    11,055
    
    
    
    4.80
    %
    
    
    233,390
    
    
    
    236,891
    
    
    
    3.61
    %Total
    
    $
    73,217
    
    
    $
    73,391
    
    
    
    1.90
    %
    
    $
    35,450
    
    
    $
    36,438
    
    
    
    4.10
    %
    
    $
    248,735
    
    
    $
    250,196
    
    
    
    3.73
    %At December 31, 2009:GSE obligations
    
    $
    75,866
    
    
    $
    76,013
    
    
    
    2.74
    %
    
    $
    5,000
    
    
    $
    4,913
    
    
    
    3.20
    %
    
    $
    
    
    
    $
    
    
    
    
    0.00
    %Trust preferred securities
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    2,550
    
    
    
    465
    
    
    
    3.63
    %Collateralized mortage
obligations
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    23,156
    
    
    
    22,957
    
    
    
    4.55
    %
    
    
    22,485
    
    
    
    21,070
    
    
    
    5.35
    %GSE mortgage-backed
securities
    
    
    1,548
    
    
    
    1,604
    
    
    
    4.75
    %
    
    
    23,589
    
    
    
    24,624
    
    
    
    4.70
    %
    
    
    225,914
    
    
    
    230,193
    
    
    
    4.51
    %Total
    
    $
    77,414
    
    
    $
    77,617
    
    
    
    2.78
    %
    
    $
    51,745
    
    
    $
    52,494
    
    
    
    4.48
    %
    
    $
    250,949
    
    
    $
    251,728
    
    
    
    4.58
    %
 (1)
    
    Represents amortized cost of the available for sale securities, net of
other-than-temporary impairment write-downs.(2)
    
    Represents weighted average yield of the available for sale securities.   Year Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands)Amortized cost of available for sale
securities sold
    
    $
    24,690
    
    
    $
    1,819
    
    
    $
    29,818Gains (losses) realized on sales of
available for sale securities
    
    
    1,260
    
    
    
    61
    
    
    
    725Net proceeds from sales of
available for sale securities
    
    $
    25,950
    
    
    $
    1,880
    
    
    $
    30,543
  F-17




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
 (6) Loans and Leases Receivable
  December 31,2010
    
    
    2009(In thousands)Commercial loans and leases:Commercial real estate  nonowner occupied
    
    $
    200,809
    
    
    $
    180,416Commercial real estate  owner occupied
    
    
    179,766
    
    
    
    168,425Commercial and industrial
    
    
    157,879
    
    
    
    167,968Multifamily
    
    
    79,934
    
    
    
    66,350Small business
    
    
    62,841
    
    
    
    56,148Construction
    
    
    30,349
    
    
    
    23,405Leases and other (1)
    
    
    73,054
    
    
    
    75,057Subtotal
    
    
    784,632
    
    
    
    737,769Unearned lease income
    
    
    (6,159
    )
    
    
    (7,693
    )Net deferred loan origination costs
    
    
    1,791
    
    
    
    2,321Total commercial loans and leases
    
    
    780,264
    
    
    
    732,397Residential mortgage loans:One- to four-family adjustable rate
    
    
    106,341
    
    
    
    115,855One- to four-family fixed rate
    
    
    57,948
    
    
    
    56,724Subtotal
    
    
    164,289
    
    
    
    172,579Premium on loans acquired
    
    
    598
    
    
    
    738Net deferred loan origination fees
    
    
    (10
    )
    
    
    (23
    )Total residential mortgage loans
    
    
    164,877
    
    
    
    173,294Consumer and other loans:Home equity  term loans
    
    
    125,114
    
    
    
    119,909Home equity  lines of credit
    
    
    82,778
    
    
    
    83,771Unsecured and other
    
    
    1,511
    
    
    
    1,410Subtotal
    
    
    209,403
    
    
    
    205,090Net deferred loan origination costs
    
    
    945
    
    
    
    1,066Total consumer and other loans
    
    
    210,348
    
    
    
    206,156Total loans and leases receivable
    
    $
    1,155,489
    
    
    $
    1,111,847
 (1)
    
    There were no leases held for sale at December 31, 2010 and December 31, 2009.     F-18




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
   Year Ended December 31,2010
    
    
    2009(In thousands)Balance at beginning of year
    
    $
    8,361
    
    
    $
    9,835Additions
    
    
    7,285
    
    
    
    190Repayments
    
    
    (7,030
    )
    
    
    (1,664
    )Balance at end of year
    
    $
    8,616
    
    
    $
    8,361
 (7) Credit Quality of Loans and Leases and Allowance for Loan and Lease Losses
   F-19




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
  December 31, 2010
    
    
    December 31, 200990+
    
    
    
    
    
    
    
    
    
    
    90+Days,
    
    
    
    
    
    
    
    
    
    
    Days,Still
    
    
    
    
    
    
    
    
    
    
    StillNonaccrual
    
    
    Accruing
    
    
    Total
    
    
    Nonaccrual
    
    
    Accruing
    
    
    Total(In thousands)Commercial loans and leases:Commercial real estate  nonowner occupied
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,422
    
    
    $
    
    
    
    $
    1,422Commercial real estate  owner occupied
    
    
    5,272
    
    
    
    
    
    
    
    5,272
    
    
    
    5,486
    
    
    
    
    
    
    
    5,486Commercial and industrial
    
    
    2,462
    
    
    
    
    
    
    
    2,462
    
    
    
    2,919
    
    
    
    
    
    
    
    2,919Multifamily
    
    
    717
    
    
    
    
    
    
    
    717
    
    
    
    205
    
    
    
    
    
    
    
    205Small business
    
    
    1,090
    
    
    
    
    
    
    
    1,090
    
    
    
    1,147
    
    
    
    
    
    
    
    1,147Construction
    
    
    470
    
    
    
    
    
    
    
    470
    
    
    
    470
    
    
    
    
    
    
    
    470Leases and other
    
    
    581
    
    
    
    
    
    
    
    581
    
    
    
    1,327
    
    
    
    551
    
    
    
    1,878Total commercial loans and leases
    
    
    10,592
    
    
    
    
    
    
    
    10,592
    
    
    
    12,976
    
    
    
    551
    
    
    
    13,527Residential mortgage loans:One- to four-family adjustable rate
    
    
    4,089
    
    
    
    
    
    
    
    4,089
    
    
    
    922
    
    
    
    
    
    
    
    922One- to four-family fixed rate
    
    
    956
    
    
    
    
    
    
    
    956
    
    
    
    3,202
    
    
    
    
    
    
    
    3,202Total residential mortgage loans
    
    
    5,045
    
    
    
    
    
    
    
    5,045
    
    
    
    4,124
    
    
    
    
    
    
    
    4,124Consumer and other loans:Home equity  term loans
    
    
    826
    
    
    
    
    
    
    
    826
    
    
    
    340
    
    
    
    
    
    
    
    340Home equity  lines of credit
    
    
    50
    
    
    
    
    
    
    
    50
    
    
    
    49
    
    
    
    275
    
    
    
    324Total consumer and other loans
    
    
    876
    
    
    
    
    
    
    
    876
    
    
    
    389
    
    
    
    275
    
    
    
    664Total nonperforming loans and leases
    
    $
    16,513
    
    
    $
    
    
    
    $
    16,513
    
    
    $
    17,489
    
    
    $
    826
    
    
    $
    18,315
  F-20




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
  December 31, 201030-59
    
    
    60-89
    
    
    90+Days
    
    
    Days
    
    
    DaysPast
    
    
    Past
    
    
    PastDue
    
    
    Due
    
    
    Due (1)
    
    
    Total(In thousands)Commercial loans and leases:Commercial real estate  nonowner occupied
    
    $
    282
    
    
    $
    143
    
    
    $
    
    
    
    $
    425Commercial real estate  owner occupied
    
    
    832
    
    
    
    
    
    
    
    
    
    
    
    832Commercial and industrial
    
    
    346
    
    
    
    204
    
    
    
    
    
    
    
    550Multifamily
    
    
    299
    
    
    
    661
    
    
    
    
    
    
    
    960Small business
    
    
    812
    
    
    
    180
    
    
    
    
    
    
    
    992Leases and other
    
    
    1,053
    
    
    
    711
    
    
    
    
    
    
    
    1,764Total past due commercial loans and leases
    
    
    3,624
    
    
    
    1,899
    
    
    
    
    
    
    
    5,523Residential mortgage loans:One- to four-family adjustable
    
    
    2,005
    
    
    
    415
    
    
    
    
    
    
    
    2,420One- to four family fixed rate
    
    
    142
    
    
    
    
    
    
    
    
    
    
    
    142Total past due residential mortgage loans
    
    
    2,147
    
    
    
    415
    
    
    
    
    
    
    
    2,562Consumer and other loans:Home equity  term loans
    
    
    398
    
    
    
    115
    
    
    
    
    
    
    
    513Home equity  lines of credit
    
    
    299
    
    
    
    
    
    
    
    
    
    
    
    299Unsecured and other
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    7Total past due consumer and other loans
    
    
    704
    
    
    
    115
    
    
    
    
    
    
    
    819Total past due loans and leases
    
    $
    6,475
    
    
    $
    2,429
    
    
    $
    
    
    
    $
    8,904
 December 31, 200930-59
    
    
    60-89
    
    
    90+Days
    
    
    Days
    
    
    DaysPast
    
    
    Past
    
    
    PastDue
    
    
    Due
    
    
    Due (1)
    
    
    Total(In thousands)Commercial loans and leases:Commercial real estate  nonowner occupied
    
    $
    734
    
    
    $
    
    
    
    $
    
    
    
    $
    734Commercial real estate  owner occupied
    
    
    772
    
    
    
    
    
    
    
    
    
    
    
    772Commercial and industrial
    
    
    1,167
    
    
    
    
    
    
    
    
    
    
    
    1,167Multifamily
    
    
    731
    
    
    
    410
    
    
    
    
    
    
    
    1,141Small business
    
    
    1,942
    
    
    
    285
    
    
    
    
    
    
    
    2,227Construction
    
    
    900
    
    
    
    
    
    
    
    
    
    
    
    900Leases and other
    
    
    2,108
    
    
    
    951
    
    
    
    552
    
    
    
    3,611Total commercial loans and leases
    
    
    8,354
    
    
    
    1,646
    
    
    
    552
    
    
    
    10,552Residential mortgage loans:One- to four-family adjustable
    
    
    742
    
    
    
    210
    
    
    
    
    
    
    
    952One- to four family fixed rate
    
    
    506
    
    
    
    24
    
    
    
    
    
    
    
    530Total residential mortgage loans
    
    
    1,248
    
    
    
    234
    
    
    
    
    
    
    
    1,482Consumer and other loans:Home equity  term loans
    
    
    522
    
    
    
    148
    
    
    
    
    
    
    
    670Home equity  lines of credit
    
    
    454
    
    
    
    
    
    
    
    275
    
    
    
    729Unsecured and other
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    4Total consumer and other loans
    
    
    980
    
    
    
    148
    
    
    
    275
    
    
    
    1,403Total loans and leases
    
    $
    10,582
    
    
    $
    2,028
    
    
    $
    827
    
    
    $
    13,437
 (1)
    
    90+ Days Past Due includes only those loans and leases that are still
accruing. All other loans and leases 90 days or more are included as a component of
nonaccrual loans and leases.   F-21




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
         F-22




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
    Year Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands)Balance at beginning of year
    
    $
    16,536
    
    
    $
    14,664
    
    
    $
    12,619Loans and leases charged off:Commercial loans and leases
    
    
    (3,730
    )
    
    
    (5,187
    )
    
    
    (1,186
    )Residential mortgage loans
    
    
    (1,080
    )
    
    
    (2,344
    )
    
    
    (1,235
    )Consumer and other loans
    
    
    (352
    )
    
    
    (658
    )
    
    
    (168
    )Total loans and leases charged-off
    
    
    (5,162
    )
    
    
    (8,189
    )
    
    
    (2,589
    )Recoveries of loans and leases previously charged-off:Commercial loans and leases
    
    
    382
    
    
    
    97
    
    
    
    79Residential mortgage loans
    
    
    12
    
    
    
    8
    
    
    
    4Consumer and other loans
    
    
    26
    
    
    
    39
    
    
    
    31Total recoveries of loans and leases previously charged-off
    
    
    420
    
    
    
    144
    
    
    
    114Net charge-offs
    
    
    (4,742
    )
    
    
    (8,045
    )
    
    
    (2,475
    )Provision for loan and lease losses charged against income
    
    
    6,860
    
    
    
    9,917
    
    
    
    4,520Balance at end of year
    
    $
    18,654
    
    
    $
    16,536
    
    
    $
    14,664
    F-23




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
  Individually Evaluated for
    
    
    Collectively Evaluated forImpairment
    
    
    ImpairmentAllowance
    
    
    
    
    
    
    Allowancefor Loan
    
    
    
    
    
    
    for LoanRecorded
    
    
    and Lease
    
    
    Recorded
    
    
    and LeaseInvestment
    
    
    Losses
    
    
    Investment
    
    
    Losses(In thousands)At December 31, 2010:Commercial loans and leases:Commercial real estate  nonowner occupied
    
    $
    
    
    
    $
    
    
    
    $
    200,809
    
    
    $
    2,700Commercial real estate  owner occupied
    
    
    5,272
    
    
    
    392
    
    
    
    174,494
    
    
    
    3,462Commercial and industrial
    
    
    2,288
    
    
    
    287
    
    
    
    155,591
    
    
    
    2,323Multifamily
    
    
    717
    
    
    
    108
    
    
    
    79,217
    
    
    
    1,387Small business
    
    
    462
    
    
    
    141
    
    
    
    62,379
    
    
    
    1,318Construction
    
    
    470
    
    
    
    220
    
    
    
    29,879
    
    
    
    452Leases and other
    
    
    125
    
    
    
    108
    
    
    
    66,770
    
    
    
    472Total commercial loans and leases
    
    
    9,334
    
    
    
    1,256
    
    
    
    769,139
    
    
    
    12,114Residential mortgage loans:One- to four-family adjustable rate
    
    
    549
    
    
    
    7
    
    
    
    105,792
    
    
    
    1,313One- to four-family fixed rate
    
    
    
    
    
    
    
    
    
    
    57,948
    
    
    
    460Total residential mortgage loans
    
    
    549
    
    
    
    7
    
    
    
    163,740
    
    
    
    1,773Consumer and other loans:Home equity  term loans
    
    
    906
    
    
    
    101
    
    
    
    124,208
    
    
    
    721Home equity  lines of credit
    
    
    
    
    
    
    
    
    
    
    82,778
    
    
    
    745Unsecured and other
    
    
    
    
    
    
    
    
    
    
    1,511
    
    
    
    114Total consumer and other loans
    
    
    906
    
    
    
    101
    
    
    
    208,497
    
    
    
    1,580Premium on loans acquired
    
    
    
    
    
    
    
    
    
    
    598
    
    
    
    Net deferred loan origination costs
    
    
    
    
    
    
    
    
    
    
    2,726
    
    
    
    Total loans and leases
    
    $
    10,789
    
    
    $
    1,364
    
    
    $
    1,144,700
    
    
    $
    15,467At December 31, 2009Commercial loans and leases:Commercial real estate  nonowner occupied
    
    $
    1,422
    
    
    $
    323
    
    
    $
    178,994
    
    
    $
    2,257Commercial real estate  owner occupied
    
    
    5,478
    
    
    
    933
    
    
    
    162,947
    
    
    
    2,800Commercial and industrial
    
    
    2,862
    
    
    
    63
    
    
    
    165,106
    
    
    
    2,394Multifamily
    
    
    205
    
    
    
    81
    
    
    
    66,145
    
    
    
    887Small business
    
    
    783
    
    
    
    154
    
    
    
    55,365
    
    
    
    1,107Construction
    
    
    470
    
    
    
    220
    
    
    
    22,935
    
    
    
    397Leases and other
    
    
    682
    
    
    
    249
    
    
    
    66,682
    
    
    
    544Total commercial loans and leases
    
    
    11,902
    
    
    
    2,023
    
    
    
    718,174
    
    
    
    10,386Residential mortgage loans:One- to four-family adjustable rate
    
    
    268
    
    
    
    7
    
    
    
    115,587
    
    
    
    671One- to four-family fixed rate
    
    
    
    
    
    
    
    
    
    
    56,724
    
    
    
    662Total residential mortgage loans
    
    
    268
    
    
    
    7
    
    
    
    172,311
    
    
    
    1,333Consumer and other loans:Home equity  term loans
    
    
    177
    
    
    
    7
    
    
    
    119,732
    
    
    
    621Home equity  lines of credit
    
    
    49
    
    
    
    8
    
    
    
    83,722
    
    
    
    753Unsecured and other
    
    
    
    
    
    
    
    
    
    
    1,410
    
    
    
    115Total consumer and other loans
    
    
    226
    
    
    
    15
    
    
    
    204,864
    
    
    
    1,489Premium on loans acquired
    
    
    
    
    
    
    
    
    
    
    738
    
    
    
    Net deferred loan origination costs
    
    
    
    
    
    
    
    
    
    
    3,364
    
    
    
    Total loans and leases
    
    $
    12,396
    
    
    $
    2,045
    
    
    $
    1,099,451
    
    
    $
    13,208
  F-24




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
  December 31, 2010Not
    
    
    TotalRequiring a
    
    
    Requiring a
    
    
    ImpairedSpecific
    
    
    Specific
    
    
    Loans and
    
    
    UnpaidReserve
    
    
    Reserve
    
    
    Leases
    
    
    Principal(In thousands)Commercial loans and leases:Commercial real estate  owner occupied
    
    $
    3,483
    
    
    $
    1,789
    
    
    $
    5,272
    
    
    $
    5,998Commercial and industrial
    
    
    2,008
    
    
    
    280
    
    
    
    2,288
    
    
    
    3,743Multifamily
    
    
    717
    
    
    
    
    
    
    
    717
    
    
    
    717Small business
    
    
    312
    
    
    
    150
    
    
    
    462
    
    
    
    538Construction
    
    
    470
    
    
    
    
    
    
    
    470
    
    
    
    470Leases and other
    
    
    125
    
    
    
    
    
    
    
    125
    
    
    
    125Total impaired commercial loans and leases
    
    
    7,115
    
    
    
    2,219
    
    
    
    9,334
    
    
    
    11,591Residential mortgage loans:One- to four-family adjustable rate
    
    
    259
    
    
    
    290
    
    
    
    549
    
    
    
    731Total impaired residential mortgage loans
    
    
    259
    
    
    
    290
    
    
    
    549
    
    
    
    731Consumer and other loans:Home equity  term loans
    
    
    745
    
    
    
    161
    
    
    
    906
    
    
    
    906Total impaired consumer and other loans
    
    
    745
    
    
    
    161
    
    
    
    906
    
    
    
    906Total impaired loans and leases
    
    $
    8,119
    
    
    $
    2,670
    
    
    $
    10,789
    
    
    $
    13,228
 December 31, 2009Not
    
    
    TotalRequiring
    
    
    Requiring a
    
    
    Impaireda Specific
    
    
    Specific
    
    
    Loans and
    
    
    UnpaidReserve
    
    
    Reserve
    
    
    Leases
    
    
    Principal(In thousands)Commercial loans and leases:Commercial real estate  nonowner occupied
    
    $
    1,422
    
    
    $
    
    
    
    $
    1,422
    
    
    $
    1,422Commercial real estate  owner occupied
    
    
    3,718
    
    
    
    1,760
    
    
    
    5,478
    
    
    
    5,478Commercial and industrial
    
    
    2,500
    
    
    
    362
    
    
    
    2,862
    
    
    
    5,581Multifamily
    
    
    205
    
    
    
    
    
    
    
    205
    
    
    
    205Small business
    
    
    629
    
    
    
    154
    
    
    
    783
    
    
    
    783Construction
    
    
    470
    
    
    
    
    
    
    
    470
    
    
    
    470Leases and other
    
    
    555
    
    
    
    127
    
    
    
    682
    
    
    
    682Total impaired commercial loans and leases
    
    
    9,499
    
    
    
    2,403
    
    
    
    11,902
    
    
    
    14,621Residential mortgage loans:One- to four-family adjustable rate
    
    
    268
    
    
    
    
    
    
    
    268
    
    
    
    275Total impaired residential mortgage loans
    
    
    268
    
    
    
    
    
    
    
    268
    
    
    
    275Consumer and other loans:Home equity  term loans
    
    
    177
    
    
    
    
    
    
    
    177
    
    
    
    177Home equity  lines of credit
    
    
    49
    
    
    
    
    
    
    
    49
    
    
    
    49Total impaired consumer and other loans
    
    
    226
    
    
    
    
    
    
    
    226
    
    
    
    226Total impaired loans and leases
    
    $
    9,993
    
    
    $
    2,403
    
    
    $
    12,396
    
    
    $
    15,122
  F-25




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 Notes to Consolidated Financial Statements (continued)
  For the years endedDecember 31, 2010
    
    
    December 31, 2009Interest
    
    
    
    
    
    
    
    
    
    
    InterestTotal
    
    
    Income
    
    
    
    
    
    
    
    
    
    
    IncomeAverage
    
    
    Interest
    
    
    Recognized
    
    
    Average
    
    
    Interest
    
    
    RecognizedRecorded
    
    
    Income
    
    
    Using Cash-
    
    
    Recorded
    
    
    Income
    
    
    Using Cash-Investment
    
    
    Recognized
    
    
    Basis
    
    
    Investment
    
    
    Recognized
    
    
    Basis(In thousands)Commercial loans and leases:Commercial real estate  nonowner
occupied
    
    $
    285
    
    
    $
    
    
    
    $
    
    
    
    $
    356
    
    
    $
    
    
    
    $
    Commercial real estate  owner
occupied
    
    
    4,765
    
    
    
    64
    
    
    
    64
    
    
    
    4,404
    
    
    
    
    
    
    
    Commercial and industrial
    
    
    2,037
    
    
    
    15
    
    
    
    15
    
    
    
    3,757
    
    
    
    
    
    
    
    Multifamily
    
    
    184
    
    
    
    
    
    
    
    
    
    
    
    82
    
    
    
    
    
    
    
    Small business
    
    
    542
    
    
    
    4
    
    
    
    4
    
    
    
    421
    
    
    
    6
    
    
    
    6Construction
    
    
    517
    
    
    
    
    
    
    
    
    
    
    
    788
    
    
    
    
    
    
    
    Leases and other
    
    
    688
    
    
    
    22
    
    
    
    22
    
    
    
    641
    
    
    
    
    
    
    
    Total impaired commercial loans
and leases
    
    
    9,018
    
    
    
    105
    
    
    
    105
    
    
    
    10,449
    
    
    
    6
    
    
    
    6Residential mortgage loans:One- to four-family adjustable rate
    
    
    380
    
    
    
    90
    
    
    
    90
    
    
    
    215
    
    
    
    7
    
    
    
    7One- to four-family fixed rate
    
    
    
    
    
    
    45
    
    
    
    45
    
    
    
    
    
    
    
    
    
    
    
    Total impaired residential
mortgage loans
    
    
    380
    
    
    
    135
    
    
    
    135
    
    
    
    215
    
    
    
    7
    
    
    
    7Consumer and other loans:Home equity  term loans
    
    
    438
    
    
    
    30
    
    
    
    30
    
    
    
    107
    
    
    
    
    
    
    
    Home equity  lines of credit
    
    
    39
    
    
    
    2
    
    
    
    2
    
    
    
    29
    
    
    
    
    
    
    
    Total impaired consumer and
other loans
    
    
    477
    
    
    
    32
    
    
    
    32
    
    
    
    136
    
    
    
    
    
    
    
    Total impaired loans and leases
    
    $
    9,875
    
    
    $
    272
    
    
    $
    272
    
    
    $
    10,800
    
    
    $
    13
    
    
    $
    13
  F-26




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 Notes to Consolidated Financial Statements (continued)
  Year Ended December 31,2010
    
    
    2009(In thousands)Commercial loans and leases (risk rating):Pass-rated
    
    $
    735,869
    
    
    $
    689,622Special mention
    
    
    19,825
    
    
    
    23,305Substandard
    
    
    22,779
    
    
    
    17,149Total commercial loans and leases
    
    
    778,473
    
    
    
    730,076Residential mortgage loans (credit score):Greater than 750
    
    
    84,695
    
    
    
    86,498725  750
    
    
    18,930
    
    
    
    16,052680  724
    
    
    19,310
    
    
    
    25,465650  679
    
    
    6,558
    
    
    
    14,500620  649
    
    
    6,278
    
    
    
    5,194Less than 620
    
    
    19,883
    
    
    
    15,167Data not available
    
    
    8,635
    
    
    
    9,703Total residential mortgage loans
    
    
    164,289
    
    
    
    172,579Consumer and other loans (credit score):Greater than 750
    
    
    151,710
    
    
    
    150,955725  750
    
    
    21,984
    
    
    
    22,257680  724
    
    
    20,252
    
    
    
    16,988650  679
    
    
    5,605
    
    
    
    4,938620  649
    
    
    2,756
    
    
    
    2,631Less than 620
    
    
    6,006
    
    
    
    6,238Data not available
    
    
    1,090
    
    
    
    1,083Total consumer and other loans
    
    
    209,403
    
    
    
    205,090Premium on loans acquired
    
    
    598
    
    
    
    738Net deferred loan origination costs
    
    
    2,726
    
    
    
    3,364Total loans and leases
    
    $
    1,155,489
    
    
    $
    1,111,847
 (8) Derivatives
    F-27




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 Notes to Consolidated Financial Statements (continued)
   Asset DerivativesDecember 31,2010
    
    
    2009(In thousands)Other AssetsDerivatives notdesignated as hedging instrumentsInterest rate products
    
    $
    790
    
    
    $
    391Total derivatives notdesignated as hedging instruments
    
    $
    790
    
    
    $
    391
 Liability DerivativesDecember 31,2010
    
    
    2009(In thousands)Other LiabilitiesDerivatives notdesignated as hedging instrumentsInterest rate products
    
    $
    832
    
    
    $
    426Total derivatives notdesignated as hedging instruments
    
    $
    832
    
    
    $
    426
  Location of Gain or (Loss)Derivatives Not Designated as Hedging
    
    Recognized in Income on
    
    
    Amount of Gain or (Loss) RecognizedInstruments
    
    Derivative
    
    
    in Income on Derivative (1)Year  Ended December 31,2010
    
    
    2009(In thousands)Interest Rate Products
    
    Loan related fees
    
    $
    (7
    )
    
    $
    230Total
    
    
    
    
    
    $
    (7
    )
    
    $
    230
 (1)
    
    The amount of gain recognized in income represents net fee income and changes
related to the fair value of the interest rate products.   F-28




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 Notes to Consolidated Financial Statements (continued)
   (9) Premises and Equipment
  December 31,2010
    
    
    2009(In thousands)Land and improvements
    
    $
    1,898
    
    
    $
    1,895Office buildings and improvements
    
    
    5,675
    
    
    
    5,624Leasehold improvements
    
    
    7,701
    
    
    
    7,673Data processing equipment and software
    
    
    7,058
    
    
    
    7,175Furniture, fixtures and other equipment
    
    
    5,461
    
    
    
    5,452Subtotal
    
    
    27,793
    
    
    
    27,819Less accumulated depreciation and amortization
    
    
    (15,904
    )
    
    
    (15,441
    )Total premises and equipment
    
    $
    11,889
    
    
    $
    12,378
     F-29




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 Notes to Consolidated Financial Statements (continued)
  MinimumLeasePayments(In thousands)2011
    
    $
    1,4872012
    
    
    1,4832013
    
    
    1,2722014
    
    
    8762015
    
    
    644Thereafter
    
    
    5,173$
    10,935
  (10) Deposits
  December 31,2010
    
    
    2009(In thousands)1 year or less remaining
    
    $
    311,908
    
    
    $
    307,338More than 1 year to 2 years remaining
    
    
    17,945
    
    
    
    65,485More than 2 years to 3 years remaining
    
    
    10,533
    
    
    
    2,990More than 3 years to 4 years remaining
    
    
    1,745
    
    
    
    9,243More than 4 years remaining
    
    
    5,482
    
    
    
    2,088Total
    
    $
    347,613
    
    
    $
    387,144
  (11) Short-Term Borrowings and Repurchase Agreements
  December 31,2010
    
    
    2009(In thousands)Treasury, tax and loan notes
    
    $
    1,742
    
    
    $
    1,803Retail repurchase agreements
    
    
    39,255
    
    
    
    36,991FHLB short-term line of credit
    
    
    
    
    
    
    1,377Wholesale repurchase agreements
    
    
    20,000
    
    
    
    20,000Total
    
    $
    60,997
    
    
    $
    60,171
  F-30




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 Notes to Consolidated Financial Statements (continued)
  Year Ended December 31,2010
    
    
    2009(Dollars in thousands)Outstanding at end of year
    
    $
    1,742
    
    
    $
    1,803Outstanding collateralized by securities with:Par value
    
    
    1,660
    
    
    
    2,719Fair value
    
    
    1,780
    
    
    
    2,870Average outstanding for the year
    
    
    677
    
    
    
    816Maximum outstanding at any month end
    
    
    1,742
    
    
    
    1,803Weighted average rate at end of year
    
    
    0.00
    %
    
    
    0.00
    %Weighted average rate paid for the year
    
    
    0.00
    %
    
    
    0.00
    %
   Year Ended December 31,2010
    
    
    2009(Dollars in thousands)Outstanding at end of year
    
    $
    
    
    
    $
    1,377Maturity date
    
    Not applicable
    
    
    January 2010Average outstanding for the year
    
    $
    315
    
    
    $
    117Maximum outstanding at any month end
    
    
    3,423
    
    
    
    1,377Weighted average rate at end of year
    
    
    0.62
    %
    
    
    0.51
    %Weighted average rate paid for the year
    
    
    0.60
    %
    
    
    0.60
    %
   F-31




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 Notes to Consolidated Financial Statements (continued)
  Year Ended December 31,2010
    
    
    2009(Dollars in thousands)Outstanding at end of year
    
    $
    39,255
    
    
    $
    36,991Maturity date
    
    January 2011
    
    
    January 2010Outstanding collateralized by securities with:Par value
    
    $
    43,544
    
    
    $
    43,312Fair value
    
    
    44,137
    
    
    
    44,327Average outstanding for the year
    
    
    37,924
    
    
    
    43,313Maximum outstanding at any month end
    
    
    42,240
    
    
    
    56,639Weighted average rate at end of year
    
    
    0.10
    %
    
    
    0.19
    %Weighted average rate paid for the year
    
    
    0.16
    %
    
    
    0.11
    %
  Year Ended December 31,2010
    
    
    2009(Dollars in thousands)Outstanding at end of year
    
    $
    20,000
    
    
    $
    20,000Maturity dates
    
    January 2011
    
    
    January 2010and June 2011
    
    
    and June 2011Outstanding collateralized by securities with:Par value
    
    $
    20,873
    
    
    $
    21,338Fair value
    
    
    21,662
    
    
    
    21,944Average outstanding for the year
    
    
    17,479
    
    
    
    13,699Maximum outstanding at any month end
    
    
    20,000
    
    
    
    20,000Weighted average rate at end of year
    
    
    2.96
    %
    
    
    3.29
    %Weighted average rate paid for the year
    
    
    3.23
    %
    
    
    4.02
    %
 (12) Federal Home Loan Bank of Boston Borrowings
  December 31, 2010
    
    
    December 31, 2009Scheduled
    
    
    First
    
    
    Weighted
    
    
    Scheduled
    
    
    First
    
    
    WeightedFinal
    
    
    Call
    
    
    Average
    
    
    Final
    
    
    Call
    
    
    AverageMaturity
    
    
    Date (1)
    
    
    Rate (2)
    
    
    Maturity
    
    
    Date (1)
    
    
    Rate (2)(Dollars in thousands)Within 1 year
    
    $
    86,700
    
    
    $
    226,700
    
    
    
    3.63
    %
    
    $
    53,584
    
    
    $
    222,584
    
    
    
    3.78
    %Over 1 year to 2 years
    
    
    10,000
    
    
    
    
    
    
    
    
    
    
    
    59,000
    
    
    
    20,000
    
    
    
    4.76
    %Over 2 years to 3 years
    
    
    23,400
    
    
    
    13,400
    
    
    
    4.16
    %
    
    
    10,000
    
    
    
    10,000
    
    
    
    2.92
    %Over 3 years to 5 years
    
    
    10,000
    
    
    
    10,000
    
    
    
    2.32
    %
    
    
    23,400
    
    
    
    13,400
    
    
    
    4.16
    %Over 5 years
    
    
    130,789
    
    
    
    10,789
    
    
    
    4.38
    %
    
    
    131,199
    
    
    
    11,199
    
    
    
    4.39
    %Total
    
    $
    260,889
    
    
    $
    260,889
    
    
    
    3.64
    %
    
    $
    277,183
    
    
    $
    277,183
    
    
    
    3.86
    %
 (1)
    
    Callable FHLB advances of $169.0 million and $199.0 million at December 31, 2010 and
2009, respectively, are reflected assuming that the callable debt is redeemed at the next call
date while all other advances are shown in the periods corresponding to their scheduled
maturity date.(2)
    
    Weighted average rate based on scheduled maturity dates.  F-32




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 Notes to Consolidated Financial Statements (continued)
   (13) Company-Obligated Mandatorily Redeemable Capital Securities and Subordinated Deferrable
Interest Debentures
     F-33




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 Notes to Consolidated Financial Statements (continued)
   (14) Income Taxes
  Year Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands)Current expense:Federal
    
    $
    6,355
    
    
    $
    3,223
    
    
    $
    5,462State
    
    
    563
    
    
    
    94
    
    
    
    51Total current expense
    
    
    6,918
    
    
    
    3,317
    
    
    
    5,513Deferred benefit:Federal
    
    
    (1,825
    )
    
    
    (815
    )
    
    
    (1,086
    )State
    
    
    (22
    )
    
    
    
    
    
    
    Total deferred tax benefit
    
    
    (1,847
    )
    
    
    (815
    )
    
    
    (1,086
    )Total income tax expense
    
    $
    5,071
    
    
    $
    2,502
    
    
    $
    4,427
  Year Ended December 31,2010
    
    
    2009
    
    
    2008Statutory federal income tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %Increase resulting from:State income tax, net of federal tax benefit
    
    
    2.4
    
    
    
    0.8
    
    
    
    0.2Bank-owned life insurance
    
    
    (3.0
    )
    
    
    (5.4
    )
    
    
    (2.8
    )Salary limitations
    
    
    
    
    
    
    1.3
    
    
    
    Other, net
    
    
    (0.4
    )
    
    
    (0.6
    )
    
    
    0.2Effective combined federal and state income
tax rate
    
    
    34.0
    %
    
    
    31.1
    %
    
    
    32.6
    %
  F-34




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 Notes to Consolidated Financial Statements (continued)
  December 31,2010
    
    
    2009(In thousands)Gross deferred tax assets:Allowance for loan and lease losses
    
    $
    6,529
    
    
    $
    5,788Accrued retirement
    
    
    1,686
    
    
    
    1,379Depreciation
    
    
    656
    
    
    
    686Nonaccrual interest
    
    
    555
    
    
    
    383Other-than-temporary impairment on AFS securities
    
    
    496
    
    
    
    134Other
    
    
    1,157
    
    
    
    671Total gross deferred tax assets
    
    
    11,079
    
    
    
    9,041Gross deferred tax liabilities:Goodwill
    
    
    (3,854
    )
    
    
    (3,529
    )Net unrealized gains on AFS securities
    
    
    (918
    )
    
    
    (740
    )Total gross deferred tax liabilities
    
    
    (4,772
    )
    
    
    (4,269
    )Net deferred tax asset
    
    $
    6,307
    
    
    $
    4,772
        F-35




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 Notes to Consolidated Financial Statements (continued)
 (15) Employee and Director Benefits
 Employee 401(k) Plan 
 Nonqualified Deferred Compensation Plan 
 Supplemental Executive Retirement Plans 
 Employee Stock Plans 
  Year Ended December 31,2010
    
    
    2009
    
    
    2008Expected term
    
    6 years
    
    
    6 years
    
    
    5 yearsExpected volatility
    
    
    27
    %
    
    
    26
    %
    
    
    20
    %Risk-free interest rate
    
    
    2.56
    %
    
    
    2.55
    %
    
    
    2.77
    %Dividend yield
    
    
    2.63
    %
    
    
    2.79
    %
    
    
    2.19
    %Fair value of options granted
    
    $
    5.67
    
    
    $
    5.22
    
    
    $
    5.29
  F-36




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 Notes to Consolidated Financial Statements (continued)
 The activity related to these employee stock options is summarized below:
 WeightedWeighted
    
    
    
    
    
    
    AverageOptions
    
    
    Average
    
    
    Aggregate
    
    
    ContractualEmployee Stock Options
    
    Outstanding
    
    
    Exercise Price
    
    
    Intrinsic Value
    
    
    Term (in years)Outstanding, December 31, 2007
    
    
    412,860
    
    
    $
    27.34Granted
    
    
    63,975
    
    
    $
    30.55Exercised
    
    
    (31,450
    )
    
    $
    14.90Forfeited / Canceled
    
    
    (38,830
    )
    
    $
    35.45Outstanding, December 31, 2008
    
    
    406,555
    
    
    $
    28.04Granted
    
    
    87,618
    
    
    $
    24.81Exercised
    
    
    (41,650
    )
    
    $
    12.35Forfeited / Canceled
    
    
    (58,005
    )
    
    $
    31.97Outstanding, December 31, 2009
    
    
    394,518
    
    
    $
    28.40Granted
    
    
    17,195
    
    
    $
    25.86Exercised
    
    
    (23,560
    )
    
    $
    10.66Forfeited / Canceled
    
    
    (14,890
    )
    
    $
    31.38Outstanding, December 31, 2010
    
    
    373,263
    
    
    $
    29.28
    
    
    $
    1,163,000
    
    
    
    4.0Exercisable, December 31, 2010
    
    
    239,537
    
    
    $
    29.85
    
    
    $
    784,000
    
    
    
    3.4
   WeightedWeighted
    
    
    AverageAverage
    
    
    ContractualOptions
    
    
    Exercise
    
    
    Term (inExercise Price
    
    Outstanding
    
    
    Price
    
    
    years)$10.00    $19.99
    
    
    45,400
    
    
    $
    16.38
    
    
    
    1.520.00    29.99
    
    
    137,213
    
    
    $
    24.82
    
    
    
    4.730.00    39.99
    
    
    171,150
    
    
    $
    34.67
    
    
    
    4.340.00    49.99
    
    
    19,500
    
    
    $
    43.45
    
    
    
    3.3Outstanding, December 31, 2010
    
    
    373,263
    
    
    $
    29.28
    
    
    
    4.0
    F-37




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 Notes to Consolidated Financial Statements (continued)
   Year Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands)Share-based compensation
    
    $
    517
    
    
    $
    155
    
    
    $
    326Tax benefit related to share-based
compensation (1)
    
    
    171
    
    
    
    137
    
    
    
    210
 (1)
    
    Represents the tax benefits on stock options exercised and
share-based compensation.  Director Stock Plan 
  Year Ended December 31,2010
    
    
    2009
    
    
    2008Expected term
    
    7 years
    
    
    7 years
    
    
    8 yearsExpected volatility
    
    
    26
    %
    
    
    26
    %
    
    
    21
    %Risk-free interest rate
    
    
    2.82
    %
    
    
    2.05
    %
    
    
    3.43
    %Dividend yield
    
    
    2.36
    %
    
    
    3.27
    %
    
    
    2.01
    %Fair value of options granted
    
    $
    6.88
    
    
    $
    3.95
    
    
    $
    7.59
  F-38




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 Notes to Consolidated Financial Statements (continued)
  WeightedWeighted
    
    
    
    
    
    
    AverageOptions
    
    
    Average
    
    
    Aggregate
    
    
    ContractualDirector Stock Options
    
    Outstanding
    
    
    Exercise Price
    
    
    Intrinsic Value
    
    
    Term (in years)Outstanding, December 31, 2007
    
    
    37,000
    
    
    $
    30.62Granted
    
    
    7,000
    
    
    $
    31.76Exercised
    
    
    (5,500
    )
    
    $
    17.31Outstanding, December 31, 2008
    
    
    38,500
    
    
    $
    32.73Granted
    
    
    6,500
    
    
    $
    20.79Forfeited / Canceled
    
    
    (2,000
    )
    
    $
    29.41Outstanding, December 31, 2009
    
    
    43,000
    
    
    $
    31.08Granted
    
    
    6,000
    
    
    $
    28.85Exercised
    
    
    (2,000
    )
    
    $
    21.02Forfeited / Canceled
    
    
    (500
    )
    
    $
    10.13Outstanding, December 31, 2010
    
    
    46,500
    
    
    $
    31.45
    
    
    $
    89,000
    
    
    
    5.6Exercisable, December 31, 2010
    
    
    46,500
    
    
    $
    31.45
    
    
    $
    89,000
    
    
    
    5.6
   WeightedAverageWeighted
    
    
    ContractualOptions
    
    
    Average
    
    
    Term (inExercise Price
    
    Outstanding
    
    
    Exercise Price
    
    
    years)$10.00    $19.99
    
    
    1,500
    
    
    $
    17.34
    
    
    
    1.320.00    29.99
    
    
    16,000
    
    
    $
    24.62
    
    
    
    7.230.00    39.99
    
    
    28,000
    
    
    $
    35.71
    
    
    
    4.940.00    49.99
    
    
    1,000
    
    
    $
    42.85
    
    
    
    5.8Outstanding, December 31, 2010
    
    
    46,500
    
    
    $
    31.45
    
    
    
    5.6
  Year Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands)Share-based compensation
    
    $
    41
    
    
    $
    25
    
    
    $
    54Tax benefit related to share-based
compensation (1)
    
    
    14
    
    
    
    9
    
    
    
    52
 (1)
    
    Represents the tax benefits on stock options exercised and share-based
compensation.  F-39




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 Notes to Consolidated Financial Statements (continued)
  Change of Control Agreements
 (16) Other Expenses
  Year Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands)Travel and entertainment
    
    $
    337
    
    
    $
    340
    
    
    $
    320Director fees
    
    
    328
    
    
    
    292
    
    
    
    356Credit card and interchange fees
    
    
    324
    
    
    
    310
    
    
    
    305Charitable contributions
    
    
    290
    
    
    
    283
    
    
    
    273Insurance
    
    
    276
    
    
    
    275
    
    
    
    268Other
    
    
    762
    
    
    
    576
    
    
    
    511Total
    
    $
    2,317
    
    
    $
    2,076
    
    
    $
    2,033
 (17) Commitments and Contingent Liabilities
 Financial Instruments with Off-Balance Sheet Risk and Derivative Financial Instruments
   F-40




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 Notes to Consolidated Financial Statements (continued)
  December 31,2010
    
    
    2009(In thousands)Financial instruments whose contract amounts represent credit risk:Commitments to extend credit:Commitments to originate or purchase loans and leases
    
    $
    37,043
    
    
    $
    19,425Unused lines of credit and other commitments
    
    
    213,752
    
    
    
    200,274Letters of credit and standby letters of credit
    
    
    5,510
    
    
    
    4,604Financial instruments whose notional amounts exceed the amount of credit risk:Forward loan commitments:Commitments to originate leases to be sold
    
    
    
    
    
    
    458Interest rate swap contracts:Swaps with customers
    
    
    17,414
    
    
    
    17,815Mirror swaps with counterparties
    
    
    17,414
    
    
    
    17,815
       F-41




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
 (18) Fair Value Measurements
 Fair Value Measurements and Disclosures,
  
    
    Level 1: Inputs are unadjusted quoted prices in active markets for assets and
liabilities identical to those reported at fair value.
    
    Level 2: Inputs other than quoted prices included within Level 1, Level 2 inputs are
observable either directly or indirectly. These inputs might include quoted prices for
similar assets or liabilities in active markets, quoted prices for identical or similar
assets in markets that are not active, inputs other than quoted prices that are observable
for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit
risks, etc.) or inputs that are derived principally from or corroborated by market data by
correlation or other means.
    
    Level 3: Inputs are unobservable inputs for an asset or liability that reflect an
entitys own assumptions about the assumptions that market participants would use in
pricing the assets or liabilities. These inputs are used to determine fair value only when
observable inputs are not available.
  F-42




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
  Fair Value Measurements at December 31, 2010 UsingQuoted Pricesin Active
    
    
    Significant
    
    
    SignificantMarkets for
    
    
    Other
    
    
    OtherIdentical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    InputsTotal
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)(In thousands)GSE obligations
    
    $
    81,034
    
    
    $
    
    
    
    $
    81,034
    
    
    $
    Trust preferred CDOs
    
    
    562
    
    
    
    
    
    
    
    562
    
    
    
    Collateralized mortgage obligations
    
    
    28,168
    
    
    
    
    
    
    
    28,168
    
    
    
    GSE mortgage-backed securities
    
    
    250,261
    
    
    
    
    
    
    
    250,261
    
    
    
    Total available for sale securities
    
    
    360,025
    
    
    
    
    
    
    
    360,025
    
    
    
    Interest rate swap assets
    
    
    790
    
    
    
    
    
    
    
    790
    
    
    
    Interest rate swap liabilities
    
    
    832
    
    
    
    
    
    
    
    832
    
    
    
    
 Fair Value Measurements at December 31, 2009 UsingQuoted Pricesin Active
    
    
    Significant
    
    
    SignificantMarkets for
    
    
    Other
    
    
    OtherIdentical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    InputsTotal
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)(In thousands)GSE obligations
    
    $
    80,926
    
    
    $
    
    
    
    $
    80,926
    
    
    $
    Trust preferred CDOs
    
    
    465
    
    
    
    
    
    
    
    465
    
    
    
    Collateralized mortgage obligations
    
    
    44,027
    
    
    
    
    
    
    
    44,027
    
    
    
    GSE mortgage-backed securities
    
    
    256,421
    
    
    
    
    
    
    
    256,421
    
    
    
    Total available for sale securities
    
    
    381,839
    
    
    
    
    
    
    
    381,839
    
    
    
    Interest rate swap assets
    
    
    391
    
    
    
    
    
    
    
    391
    
    
    
    Interest rate swap liabilities
    
    
    426
    
    
    
    
    
    
    
    426
    
    
    
    
   F-43




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
  Available for sale securities 
   Interest rate swaps  Note 8  Derivatives.
  Fair Value Measurements UsingSignificant Unobservable Inputs2010
    
    
    2009(In thousands)Available for sale securitiesBalance, January 1
    
    $
    
    
    
    $
    1,480Cumulative effect of a change in accounting principle (see Note 5)
    
    
    
    
    
    
    214Increase in unrealized holding losses
    
    
    
    
    
    
    (845
    )Other-than-temporary impairment
    
    
    
    
    
    
    (384
    )Transfers to Level 2
    
    
    
    
    
    
    (465
    )Balance, December 31
    
    $
    
    
    
    $
    
  F-44




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
   Fair Value Measurements at December 31, 2010 UsingQuoted Pricesin Active
    
    
    Significant
    
    
    SignificantMarkets for
    
    
    Other
    
    
    OtherIdentical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    InputsTotal
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)(In thousands)Collateral-dependent loans and leases
    
    $
    7,287
    
    
    $
    
    
    
    $
    7,287
    
    
    $
    Other real estate owned
    
    
    1,239
    
    
    
    
    
    
    
    1,239
    
    
    
    
 Fair Value Measurements at December 31, 2009 UsingQuoted Pricesin Active
    
    
    Significant
    
    
    SignificantMarkets for
    
    
    Other
    
    
    OtherIdentical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    InputsTotal
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)(In thousands)Collateral-dependent loans and leases
    
    $
    8,999
    
    
    $
    
    
    
    $
    8,999
    
    
    $
    Other real estate owned
    
    
    2,083
    
    
    
    
    
    
    
    2,083
    
    
    
    
 Impaired Loans
 OREO 
  Loans and leases receivable 
  F-45




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
 Stock in the Federal Home Loan Bank of Boston
 Deposits 
 Wholesale repurchase agreements 
 Federal Home Loan Bank of Boston borrowings 
 Subordinated deferrable interest debentures 
 Financial instruments with off-balance sheet risk 
  F-46




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
  December 31, 2010
    
    
    December 31, 2009Book
    
    
    Estimated
    
    
    Book
    
    
    EstimatedValue
    
    
    Fair Value
    
    
    Value
    
    
    Fair Value(In thousands)Assets:Cash and due from banks
    
    $
    14,384
    
    
    $
    14,384
    
    
    $
    18,866
    
    
    $
    18,866Overnight investments
    
    
    395
    
    
    
    395
    
    
    
    1,964
    
    
    
    1,964Available for sale securities
    
    
    360,025
    
    
    
    360,025
    
    
    
    381,839
    
    
    
    381,839Stock in the FHLB
    
    
    16,274
    
    
    
    16,274
    
    
    
    16,274
    
    
    
    16,274Loans and leases receivable, net of
allowance for loan and lease losses:Commercial loans and leases
    
    
    765,446
    
    
    
    776,737
    
    
    
    718,943
    
    
    
    725,967Residential mortgage loans
    
    
    162,904
    
    
    
    166,744
    
    
    
    171,842
    
    
    
    175,816Consumer and other loans
    
    
    208,485
    
    
    
    203,545
    
    
    
    204,526
    
    
    
    197,137Interest rate swaps
    
    
    790
    
    
    
    790
    
    
    
    391
    
    
    
    391Accrued interest receivable
    
    
    4,842
    
    
    
    4,842
    
    
    
    4,964
    
    
    
    4,964Liabilities:Deposits:Demand deposit accounts
    
    $
    264,274
    
    
    $
    264,274
    
    
    $
    204,281
    
    
    $
    204,281NOW accounts
    
    
    70,327
    
    
    
    70,327
    
    
    
    74,558
    
    
    
    74,558Money market accounts
    
    
    96,285
    
    
    
    96,285
    
    
    
    65,076
    
    
    
    65,076Savings accounts
    
    
    341,667
    
    
    
    341,667
    
    
    
    367,225
    
    
    
    367,225Certificate of deposit accounts
    
    
    347,613
    
    
    
    349,386
    
    
    
    387,144
    
    
    
    390,210Overnight and short-term borrowings
    
    
    40,997
    
    
    
    40,997
    
    
    
    40,171
    
    
    
    40,171Wholesale repurchase agreements
    
    
    20,000
    
    
    
    20,190
    
    
    
    20,000
    
    
    
    20,432FHLB borrowings
    
    
    260,889
    
    
    
    285,819
    
    
    
    277,183
    
    
    
    301,210Subordinated deferrable interest
debentures
    
    
    13,403
    
    
    
    15,645
    
    
    
    13,403
    
    
    
    15,440Interest rate swaps
    
    
    832
    
    
    
    832
    
    
    
    426
    
    
    
    426Accrued interest payable
    
    
    1,616
    
    
    
    1,616
    
    
    
    2,122
    
    
    
    2,122
 (19) Shareholders Equity
   F-47




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
  For Capital
    
    
    To Be ConsideredActual
    
    
    Adequacy Purposes
    
    
    Well-CapitalizedAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio(Dollars in thousands)At December 31, 2010:Bancorp Rhode Island, Inc.:Tier I capital (to average assets)
    
    $
    127,711
    
    
    
    8.10
    %
    
    $
    63,035
    
    
    
    4.00
    %
    
    $
    78,794
    
    
    
    5.00
    %Tier I capital (to risk-weighted assets)
    
    
    127,711
    
    
    
    11.27
    %
    
    
    45,316
    
    
    
    4.00
    %
    
    
    67,975
    
    
    
    6.00
    %Total capital (to risk-weighted assets)
    
    
    141,925
    
    
    
    12.53
    %
    
    
    90,633
    
    
    
    8.00
    %
    
    
    113,291
    
    
    
    10.00
    %Bank Rhode Island:Tier I capital (to average assets)
    
    $
    126,031
    
    
    
    8.00
    %
    
    $
    63,047
    
    
    
    4.00
    %
    
    $
    78,809
    
    
    
    5.00
    %Tier I capital (to risk-weighted assets)
    
    
    126,031
    
    
    
    11.13
    %
    
    
    45,292
    
    
    
    4.00
    %
    
    
    67,938
    
    
    
    6.00
    %Total capital (to risk-weighted assets)
    
    
    140,245
    
    
    
    12.39
    %
    
    
    90,584
    
    
    
    8.00
    %
    
    
    113,231
    
    
    
    10.00
    %At December 31, 2009:Bancorp Rhode Island, Inc.:Tier I capital (to average assets)
    
    $
    120,297
    
    
    
    7.65
    %
    
    $
    62,941
    
    
    
    4.00
    %
    
    $
    78,676
    
    
    
    5.00
    %Tier I capital (to risk-weighted assets)
    
    
    120,297
    
    
    
    10.71
    %
    
    
    44,913
    
    
    
    4.00
    %
    
    
    67,369
    
    
    
    6.00
    %Total capital (to risk-weighted assets)
    
    
    134,364
    
    
    
    11.97
    %
    
    
    89,825
    
    
    
    8.00
    %
    
    
    112,281
    
    
    
    10.00
    %Bank Rhode Island:Tier I capital (to average assets)
    
    $
    118,412
    
    
    
    7.54
    %
    
    $
    62,855
    
    
    
    4.00
    %
    
    $
    78,569
    
    
    
    5.00
    %Tier I capital (to risk-weighted assets)
    
    
    118,412
    
    
    
    10.55
    %
    
    
    44,882
    
    
    
    4.00
    %
    
    
    67,323
    
    
    
    6.00
    %Total capital (to risk-weighted assets)
    
    
    132,479
    
    
    
    11.81
    %
    
    
    89,764
    
    
    
    8.00
    %
    
    
    112,205
    
    
    
    10.00
    %
     F-48




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
 Stock Repurchase Program st
  (20) Earnings per Share
  Year Ended December 31,2010
    
    
    2009
    
    
    2008(Dollars in thousands)Basic EPS Computation:Numerator:Net income
    
    $
    9,835
    
    
    $
    5,539
    
    
    $
    9,144Preferred stock dividend
    
    
    
    
    
    
    (892
    )
    
    
    (50
    )Preferred stock accretion
    
    
    
    
    
    
    (1,405
    )
    
    
    (8
    )Net income applicable to common
    
    $
    9,835
    
    
    $
    3,242
    
    
    $
    9,086Denominator:Weighted average shares outstanding
    
    
    4,658,668
    
    
    
    4,604,308
    
    
    
    4,561,396Basic EPS
    
    $
    2.10
    
    
    $
    0.71
    
    
    $
    1.99Diluted EPS Computation:Numerator:Net income applicable to common
    
    $
    9,835
    
    
    $
    3,242
    
    
    $
    9,086Denominator:Common shares outstanding
    
    
    4,658,668
    
    
    
    4,604,308
    
    
    
    4,561,396Stock options
    
    
    27,113
    
    
    
    22,126
    
    
    
    64,414Stock warrants
    
    
    
    
    
    
    
    
    
    
    1,486Contingent shares
    
    
    1,535
    
    
    
    
    
    
    
    3,912Total shares
    
    
    4,687,316
    
    
    
    4,626,434
    
    
    
    4,631,208Diluted EPS
    
    $
    2.10
    
    
    $
    0.70
    
    
    $
    1.96
   F-49




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
 (21) Supplementary Disclosures of Cash Flow Information
  Year Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands)Supplementary disclosures:Cash paid for interest
    
    $
    19,901
    
    
    $
    31,667
    
    
    $
    36,738Cash paid for income taxes
    
    
    6,165
    
    
    
    3,429
    
    
    
    5,049Non-cash transactions:Change in accumulated other comprehensive income, net of taxes
    
    
    (126
    )
    
    
    2,202
    
    
    
    484Macrolease acquisition
    
    
    211
    
    
    
    78
    
    
    
    656Transfer of loans to OREO
    
    
    1,239
    
    
    
    2,083
    
    
    
    988Treasury stock acquisitions from shares tendered in stock option exercises
    
    
    218
    
    
    
    254
    
    
    
    248Non-credit component of other-than-temporary impairment,
net of taxes
    
    
    (706
    )
    
    
    1,355
    
    
    
    
 (22) Regulation and Litigation
    F-50




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
 (23) Parent Company Statements
  Balance Sheets
 December 31,2010
    
    
    2009(In thousands)AssetsAssets:Cash and due from banks
    
    $
    18
    
    
    $
    17Overnight investments
    
    
    1,274
    
    
    
    1,180Investment in subsidiaries
    
    
    140,530
    
    
    
    132,299Prepaid expenses and other assets
    
    
    590
    
    
    
    725Total assets
    
    $
    142,412
    
    
    $
    134,221Liabilities and Shareholders EquityLiabilities:Subordinated deferrable interest debentures
    
    $
    13,403
    
    
    $
    13,403Other liabilities
    
    
    331
    
    
    
    157Total liabilities
    
    
    13,734
    
    
    
    13,560Shareholders equity:Common stock: par value $0.01 per share, authorized 11,000,000
shares: Issued: (5,047,942 and 4,969,444 shares, respectively)
    
    
    50
    
    
    
    50Additional paid-in capital
    
    
    73,866
    
    
    
    72,783Treasury stock, at cost (373,850 and 364,750 shares, respectively)
    
    
    (12,527
    )
    
    
    (12,309
    )Retained earnings
    
    
    65,584
    
    
    
    59,012Accumulated other comprehensive income, net
    
    
    1,705
    
    
    
    1,125Total shareholders equity
    
    
    128,678
    
    
    
    120,661Total liabilities and shareholders equity
    
    $
    142,412
    
    
    $
    134,221
  F-51




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
 Statements of Operations
 Year Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands)Income:Dividends received from subsidiaries
    
    $
    4,000
    
    
    $
    6,000
    
    
    $
    5,300Interest on overnight investments
    
    
    3
    
    
    
    39
    
    
    
    21Total income
    
    
    4,003
    
    
    
    6,039
    
    
    
    5,321Expenses:Professional services and other expenses
    
    
    857
    
    
    
    791
    
    
    
    935Subordinated deferrable interest debentures
    
    
    670
    
    
    
    730
    
    
    
    949Compensation expense
    
    
    517
    
    
    
    156
    
    
    
    325Directors fees
    
    
    170
    
    
    
    157
    
    
    
    204Total expenses
    
    
    2,214
    
    
    
    1,834
    
    
    
    2,413Income (loss) before income taxes
    
    
    1,789
    
    
    
    4,205
    
    
    
    2,908Income tax benefit
    
    
    (604
    )
    
    
    (587
    )
    
    
    (755
    )Income before equity in undistributed
earnings of subsidiaries
    
    
    2,393
    
    
    
    4,792
    
    
    
    3,663Equity in undistributed earnings of subsidiaries
    
    
    7,442
    
    
    
    747
    
    
    
    5,481Net income
    
    
    9,835
    
    
    
    5,539
    
    
    
    9,144Preferred stock dividends
    
    
    
    
    
    
    (892
    )
    
    
    (50
    )Prepayment charges and accretion of preferred stock discount
    
    
    
    
    
    
    (1,405
    )
    
    
    (8
    )Net income applicable to common shares
    
    $
    9,835
    
    
    $
    3,242
    
    
    $
    9,086
  F-52




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
 Statements of Cash Flow
 Year Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands)Cash flows from operating activities:Net income
    
    $
    9,835
    
    
    $
    5,539
    
    
    $
    9,144Adjustment to reconcile net income to net cash provided
by operating activities:Equity in undistributed earnings of subsidiaries
    
    
    (7,442
    )
    
    
    (747
    )
    
    
    (5,481
    )Share-based compensation expense
    
    
    558
    
    
    
    180
    
    
    
    380Decrease (increase) in other assets
    
    
    162
    
    
    
    (250
    )
    
    
    (54
    )(Decrease) increase in other liabilities
    
    
    (39
    )
    
    
    193
    
    
    
    (229
    )Net cash provided by operating activities
    
    
    3,074
    
    
    
    4,915
    
    
    
    3,760Cash flows from financing activities:Investment in subsidiaries
    
    
    188
    
    
    
    (330
    )
    
    
    363Proceeds from issuance of preferred stock and warrants
    
    
    
    
    
    
    
    
    
    
    30,000Redemption of preferred stock
    
    
    
    
    
    
    (30,000
    )
    
    
    Repurchase of warrant
    
    
    
    
    
    
    (1,400
    )
    
    
    Proceeds from issuance of common stock
    
    
    75
    
    
    
    261
    
    
    
    314Tax benefit from stock option exercises
    
    
    21
    
    
    
    88
    
    
    
    189Purchases of treasury stock
    
    
    
    
    
    
    
    
    
    
    (1,618
    )Dividends on preferred stock
    
    
    
    
    
    
    (892
    )
    
    
    (50
    )Dividends on common stock
    
    
    (3,263
    )
    
    
    (3,130
    )
    
    
    (3,002
    )Net cash (used in) provided by financing activities
    
    
    (2,979
    )
    
    
    (35,403
    )
    
    
    26,196Net increase (decrease) in cash and due from banks
    
    
    95
    
    
    
    (30,488
    )
    
    
    29,956Cash and cash equivalents at beginning of year
    
    
    1,197
    
    
    
    31,685
    
    
    
    1,729Cash and cash equivalents at end of year
    
    $
    1,292
    
    
    $
    1,197
    
    
    $
    31,685Supplementary disclosures:Cash received for income taxes
    
    $
    (573
    )
    
    $
    (693
    )
    
    $
    (879
    )Non-cash transactions:Change in accumulated other comprehensive income, net of taxes
    
    
    (126
    )
    
    
    2,202
    
    
    
    484Macrolease acquisition
    
    
    211
    
    
    
    78
    
    
    
    656Transfer of loans to OREO
    
    
    1,239
    
    
    
    2,083
    
    
    
    988Treasury stock acquisitions from shares tendered in stock option exercises
    
    
    218
    
    
    
    254
    
    
    
    248Non-credit component of other-than-temporary impairment,
net of taxes
    
    
    (706
    )
    
    
    1,355
    
    
    
    
   F-53




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
 (24) Quarterly Results of Operations (unaudited)
 2010 Quarter EndedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 31(In thousands, except per share data)Interest and dividend income
    
    $
    18,352
    
    
    $
    18,636
    
    
    $
    18,154
    
    
    $
    17,660Interest expense
    
    
    5,264
    
    
    
    5,010
    
    
    
    4,676
    
    
    
    4,445Net interest income
    
    
    13,088
    
    
    
    13,626
    
    
    
    13,478
    
    
    
    13,215Provision for loan and lease losses
    
    
    1,600
    
    
    
    1,550
    
    
    
    1,275
    
    
    
    2,435Net interest income after
provision for loan and lease losses
    
    
    11,488
    
    
    
    12,076
    
    
    
    12,203
    
    
    
    10,780Noninterest income
    
    
    2,315
    
    
    
    2,285
    
    
    
    2,289
    
    
    
    2,673Noninterest expense
    
    
    10,488
    
    
    
    10,430
    
    
    
    10,350
    
    
    
    9,935Income before taxes
    
    
    3,315
    
    
    
    3,931
    
    
    
    4,142
    
    
    
    3,518Income taxes
    
    
    1,096
    
    
    
    1,250
    
    
    
    1,334
    
    
    
    1,392Net income
    
    $
    2,219
    
    
    $
    2,681
    
    
    $
    2,808
    
    
    $
    2,126Basic EPS
    
    $
    0.48
    
    
    $
    0.57
    
    
    $
    0.60
    
    
    $
    0.45Diluted EPS
    
    $
    0.48
    
    
    $
    0.57
    
    
    $
    0.60
    
    
    $
    0.45
 2009 Quarter EndedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 31(In thousands, except per share data)Interest and dividend income
    
    $
    18,560
    
    
    $
    18,792
    
    
    $
    19,000
    
    
    $
    18,925Interest expense
    
    
    7,478
    
    
    
    7,219
    
    
    
    6,334
    
    
    
    5,924Net interest income
    
    
    11,082
    
    
    
    11,573
    
    
    
    12,666
    
    
    
    13,001Provision for loan and lease losses
    
    
    1,610
    
    
    
    2,600
    
    
    
    1,900
    
    
    
    3,807Net interest income after
provision for loan and lease losses
    
    
    9,472
    
    
    
    8,973
    
    
    
    10,766
    
    
    
    9,194Noninterest income
    
    
    2,357
    
    
    
    2,214
    
    
    
    2,241
    
    
    
    2,353Noninterest expense
    
    
    9,623
    
    
    
    10,145
    
    
    
    9,812
    
    
    
    9,949Income before taxes
    
    
    2,206
    
    
    
    1,042
    
    
    
    3,195
    
    
    
    1,598Income taxes
    
    
    743
    
    
    
    302
    
    
    
    992
    
    
    
    465Net income
    
    
    1,463
    
    
    
    740
    
    
    
    2,203
    
    
    
    1,133Preferred stock dividends
    
    
    (375
    )
    
    
    (375
    )
    
    
    (142
    )
    
    
    Prepayment charges and accretion of preferred stock discount
    
    
    (61
    )
    
    
    (62
    )
    
    
    (1,282
    )
    
    
    Net income applicable to common shares
    
    $
    1,027
    
    
    $
    303
    
    
    $
    779
    
    
    $
    1,133Basic EPS
    
    $
    0.22
    
    
    $
    0.07
    
    
    $
    0.17
    
    
    $
    0.25Diluted EPS
    
    $
    0.22
    
    
    $
    0.07
    
    
    $
    0.17
    
    
    $
    0.24
 (25) Subsequent Events
   F-54




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##### Table of Contents



BANCORP RHODE ISLAND, INC.

Notes to Consolidated Financial Statements (continued)
         F-55