##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1937
 For the transition period from _________ to _______
 Commission File No. 001-16101
 BANCORP RHODE ISLAND, INC.
  Rhode Island
    
    05-0509802(State or other jurisdiction of 
incorporation or organization)
    
    (IRS Employer
Identification No.)
 ONE TURKS HEAD PLACE, PROVIDENCE, RI 02903
 (Registrants telephone number, including area code)
 (Former name, former address and former fiscal year, if changed since last report)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 o þ
  Common Stock  Par Value $0.01
    
    4,674,091 shares(class)
    
    (outstanding)




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##### 



BANCORP RHODE ISLAND, INC.
Quarterly Report on Form 10-Q
 
 Table of Contents
 Description
    
    Page NumberCover Page
    
    
    1Table of Contents
    
    
    2Part I  Financial InformationItem 1. Financial Statements (unaudited)Consolidated Balance Sheets
    
    
    3Consolidated Statements of Operations
    
    
    4Consolidated Statements of Changes in Shareholders Equity
    
    
    5Consolidated Statements of Cash Flows
    
    
    6Condensed Notes to Consolidated Financial Statements
    
    
    7-20Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    21-42Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    43Item 4. Controls and Procedures
    
    
    44Part II  Other InformationItem 1. Legal Proceedings
    
    
    45Item 1A. Risk Factors
    
    
    45Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    45Item 3. Defaults Upon Senior Securities
    
    
    45Item 5. Other Information
    
    
    45Item 6. Exhibits
    
    
    46Signature Page
    
    
    47Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
 Special Note Regarding Forward Looking Statements
     2




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
 Consolidated Balance Sheets
 (unaudited)
 June 30,
    
    
    December 31,2010
    
    
    2009(In thousands)ASSETS:Cash and due from banks
    
    $
    23,857
    
    
    $
    18,866Overnight investments
    
    
    30,224
    
    
    
    1,964Total cash and cash equivalents
    
    
    54,081
    
    
    
    20,830Available for sale securities (amortized cost of $336,707 and
$380,108, respectively)
    
    
    345,566
    
    
    
    381,839Stock in Federal Home Loan Bank of Boston
    
    
    16,274
    
    
    
    16,274Loans and leases receivable:Commercial loans and leases
    
    
    764,374
    
    
    
    732,397Residential mortgage loans
    
    
    164,750
    
    
    
    173,294Consumer and other loans
    
    
    207,400
    
    
    
    206,156Total loans and leases receivable
    
    
    1,136,524
    
    
    
    1,111,847Allowance for loan and lease losses
    
    
    (17,396
    )
    
    
    (16,536
    )Net loans and leases receivable
    
    
    1,119,128
    
    
    
    1,095,311Premises and equipment, net
    
    
    12,127
    
    
    
    12,378Goodwill, net
    
    
    12,262
    
    
    
    12,239Accrued interest receivable
    
    
    4,704
    
    
    
    4,964Investment in bank-owned life insurance
    
    
    30,644
    
    
    
    30,010Prepaid expenses and other assets
    
    
    18,734
    
    
    
    16,101Total assets
    
    $
    1,613,520
    
    
    $
    1,589,946LIABILITIES:Deposits:Demand deposit accounts
    
    $
    290,794
    
    
    $
    204,281NOW accounts
    
    
    73,501
    
    
    
    74,558Money market accounts
    
    
    83,315
    
    
    
    65,076Savings accounts
    
    
    366,087
    
    
    
    367,225Certificate of deposit accounts
    
    
    360,323
    
    
    
    387,144Total deposits
    
    
    1,174,020
    
    
    
    1,098,284Overnight and short-term borrowings
    
    
    37,338
    
    
    
    40,171Wholesale repurchase agreements
    
    
    20,000
    
    
    
    20,000Federal Home Loan Bank of Boston borrowings
    
    
    223,396
    
    
    
    277,183Subordinated deferrable interest debentures
    
    
    13,403
    
    
    
    13,403Other liabilities
    
    
    16,236
    
    
    
    20,244Total liabilities
    
    
    1,484,393
    
    
    
    1,469,285SHAREHOLDERS EQUITY:Common stock, par value $0.01 per
share, authorized 11,000,000 shares: Issued: 5,047,941
and 4,969,444 shares, respectively
    
    
    50
    
    
    
    50Additional paid-in capital
    
    
    73,514
    
    
    
    72,783Treasury stock, at cost: 373,850 and 364,750 shares, respectively
    
    
    (12,527
    )
    
    
    (12,309
    )Retained earnings
    
    
    62,332
    
    
    
    59,012Accumulated other comprehensive income, net
    
    
    5,758
    
    
    
    1,125Total shareholders equity
    
    
    129,127
    
    
    
    120,661Total liabilities and shareholders equity
    
    $
    1,613,520
    
    
    $
    1,589,946
 See accompanying notes to unaudited consolidated financial statements
  3




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
 Consolidated Statements of Operations
 (unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(In thousands, except per share data)Interest and dividend income:Overnight investments
    
    $
    
    
    
    $
    
    
    
    $
    5
    
    
    $
    9Mortgage-backed securities
    
    
    3,041
    
    
    
    3,360
    
    
    
    6,270
    
    
    
    6,763Investment securities
    
    
    490
    
    
    
    536
    
    
    
    1,040
    
    
    
    987Loans and leases
    
    
    15,105
    
    
    
    14,896
    
    
    
    29,673
    
    
    
    29,593Total interest and dividend income
    
    
    18,636
    
    
    
    18,792
    
    
    
    36,988
    
    
    
    37,352Interest expense:Deposits
    
    
    2,164
    
    
    
    4,224
    
    
    
    4,442
    
    
    
    8,718Overnight and short-term borrowings
    
    
    19
    
    
    
    21
    
    
    
    37
    
    
    
    48Wholesale repurchase agreements
    
    
    143
    
    
    
    134
    
    
    
    282
    
    
    
    267Federal Home Loan Bank of Boston borrowings
    
    
    2,518
    
    
    
    2,650
    
    
    
    5,183
    
    
    
    5,275Subordinated deferrable interest debentures
    
    
    166
    
    
    
    190
    
    
    
    330
    
    
    
    389Total interest expense
    
    
    5,010
    
    
    
    7,219
    
    
    
    10,274
    
    
    
    14,697Net interest income
    
    
    13,626
    
    
    
    11,573
    
    
    
    26,714
    
    
    
    22,655Provision for loan and lease losses
    
    
    1,550
    
    
    
    2,600
    
    
    
    3,150
    
    
    
    4,210Net interest income after provision for loan and
lease losses
    
    
    12,076
    
    
    
    8,973
    
    
    
    23,564
    
    
    
    18,445Noninterest income:Total other-than-temporary impairment losses on
available for sale securities
    
    
    (49
    )
    
    
    
    
    
    
    49
    
    
    
    Non-credit component of other-than-temporary losses
recognized in other comprehensive income
    
    
    5
    
    
    
    
    
    
    
    (664
    )
    
    
    Credit component of other-than-temporary impairment
losses on available for sale securities
    
    
    (44
    )
    
    
    
    
    
    
    (615
    )
    
    
    Service charges on deposit accounts
    
    
    1,348
    
    
    
    1,367
    
    
    
    2,612
    
    
    
    2,577Income from bank-owned life insurance
    
    
    318
    
    
    
    304
    
    
    
    633
    
    
    
    593Commissions on nondeposit investment products
    
    
    148
    
    
    
    111
    
    
    
    385
    
    
    
    267Loan related fees
    
    
    133
    
    
    
    229
    
    
    
    322
    
    
    
    628Gain on sale of available for sale securities
    
    
    103
    
    
    
    
    
    
    
    578
    
    
    
    61Net gains on lease sales and commissions on loans
originated for others
    
    
    6
    
    
    
    19
    
    
    
    42
    
    
    
    48Other income
    
    
    273
    
    
    
    184
    
    
    
    643
    
    
    
    397Total noninterest income
    
    
    2,285
    
    
    
    2,214
    
    
    
    4,600
    
    
    
    4,571Noninterest expense:Salaries and employee benefits
    
    
    5,746
    
    
    
    4,926
    
    
    
    11,589
    
    
    
    10,079Occupancy
    
    
    829
    
    
    
    832
    
    
    
    1,690
    
    
    
    1,788Data processing
    
    
    654
    
    
    
    670
    
    
    
    1,308
    
    
    
    1,290Professional services
    
    
    537
    
    
    
    646
    
    
    
    1,169
    
    
    
    1,344FDIC insurance
    
    
    475
    
    
    
    1,176
    
    
    
    950
    
    
    
    1,563Marketing
    
    
    383
    
    
    
    332
    
    
    
    641
    
    
    
    647Loan workout and other real estate owned
    
    
    337
    
    
    
    149
    
    
    
    673
    
    
    
    277Equipment
    
    
    255
    
    
    
    242
    
    
    
    510
    
    
    
    483Loan servicing
    
    
    171
    
    
    
    189
    
    
    
    347
    
    
    
    348Other expenses
    
    
    1,043
    
    
    
    983
    
    
    
    2,041
    
    
    
    1,949Total noninterest expense
    
    
    10,430
    
    
    
    10,145
    
    
    
    20,918
    
    
    
    19,768Income before income taxes
    
    
    3,931
    
    
    
    1,042
    
    
    
    7,246
    
    
    
    3,248Income tax expense
    
    
    1,250
    
    
    
    302
    
    
    
    2,346
    
    
    
    1,045Net income
    
    
    2,681
    
    
    
    740
    
    
    
    4,900
    
    
    
    2,203Preferred stock dividends
    
    
    
    
    
    
    (375
    )
    
    
    
    
    
    
    (750
    )Prepayment charges and accretion of preferred stock discount
    
    
    
    
    
    
    (62
    )
    
    
    
    
    
    
    (123
    )Net income applicable to common shares
    
    $
    2,681
    
    
    $
    303
    
    
    $
    4,900
    
    
    $
    1,330Per share data:Basic earnings per common share
    
    $
    0.57
    
    
    $
    0.07
    
    
    $
    1.05
    
    
    $
    0.29Diluted earnings per common share
    
    $
    0.57
    
    
    $
    0.07
    
    
    $
    1.05
    
    
    $
    0.29Cash dividends declared per common share
    
    $
    0.17
    
    
    $
    0.17
    
    
    $
    0.34
    
    
    $
    0.34Weighted average common shares outstanding  basic
    
    
    4,664
    
    
    
    4,602
    
    
    
    4,643
    
    
    
    4,596Weighted average common shares outstanding  diluted
    
    
    4,690
    
    
    
    4,620
    
    
    
    4,670
    
    
    
    4,615
 See accompanying notes to unaudited consolidated financial statements
  4




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
Consolidated Statements of Changes in Shareholders Equity
 (unaudited)
 AccumulatedOtherCompre-Additional
    
    
    
    
    
    
    
    
    
    
    hensivePreferred
    
    
    Common
    
    
    Paid-in
    
    
    Treasury
    
    
    Retained
    
    
    IncomeSix months ended June 30,
    
    Stock
    
    
    Stock
    
    
    Capital
    
    
    Stock
    
    
    Earnings
    
    
    (Loss)
    
    
    Total(In thousands, except per share data)2009Balance 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,203
    
    
    
    
    
    
    
    2,203Other comprehensive income:Unrealized holding losses on
securities available for sale, net of taxes of $303
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (564
    )
    
    
    (564
    )Reclassification adjustment for
net gains included in net
income, net of taxes of $21
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40
    )
    
    
    (40
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,599Exercise of stock options
    
    
    
    
    
    
    1
    
    
    
    413
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    414Macrolease acquisition
    
    
    
    
    
    
    
    
    
    
    78
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78Share repurchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (254
    )
    
    
    
    
    
    
    
    
    
    
    (254
    )Share-based compensation
    
    
    
    
    
    
    
    
    
    
    (19
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19
    )Tax benefit from exercise of stock
options
    
    
    
    
    
    
    
    
    
    
    78
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78Preferred stock discount accretion
    
    
    123
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (123
    )
    
    
    
    
    
    
    Dividends on preferred stock ($25.00
per preferred share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (750
    )
    
    
    
    
    
    
    (750
    )Dividends on common stock ($0.34
per common share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,562
    )
    
    
    
    
    
    
    (1,562
    )Balance at June 30, 2009
    
    $
    28,718
    
    
    $
    50
    
    
    $
    73,873
    
    
    $
    (12,309
    )
    
    $
    58,668
    
    
    $
    (326
    )
    
    $
    148,6742010Balance at December 31, 2009
    
    $
    
    
    
    $
    50
    
    
    $
    72,783
    
    
    $
    (12,309
    )
    
    $
    59,012
    
    
    $
    1,125
    
    
    $
    120,661Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,900
    
    
    
    
    
    
    
    4,900Other comprehensive income:Unrealized holding gains on
securities available for
sale, net of taxes of
($2,465)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,578
    
    
    
    4,578Reclassification adjustment for
net gains included in net
income, net of taxes of $202
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (376
    )
    
    
    (376
    )Non-credit portion OTTI, net of
taxes of ($233)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    431
    
    
    
    431Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,533Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    297
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    297Macrolease acquisition
    
    
    
    
    
    
    
    
    
    
    211
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    211Share repurchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (218
    )
    
    
    
    
    
    
    
    
    
    
    (218
    )Share-based compensation
    
    
    
    
    
    
    
    
    
    
    228
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    228Tax benefit from exercise of stock
options
    
    
    
    
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5
    )Dividends on common stock ($0.34
per common share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,580
    )
    
    
    
    
    
    
    (1,580
    )Balance at June 30, 2010
    
    $
    
    
    
    $
    50
    
    
    $
    73,514
    
    
    $
    (12,527
    )
    
    $
    62,332
    
    
    $
    5,758
    
    
    $
    129,127
 See accompanying notes to unaudited consolidated financial statements
  5




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
 Consolidated Statements of Cash Flows
(unaudited)
 Six Months EndedJune 30,2010
    
    
    2009(In thousands)Cash flows from operating activities:Net income
    
    $
    4,900
    
    
    $
    2,203Adjustments to reconcile net income to net cash provided by (used in) operating
activities:Depreciation, amortization and accretion, net
    
    
    (2,778
    )
    
    
    (2,878
    )Provision for loan and lease losses
    
    
    3,150
    
    
    
    4,210Income from bank-owned life insurance
    
    
    (633
    )
    
    
    (593
    )Share-based compensation expense
    
    
    228
    
    
    
    (19
    )Net gains on lease sales
    
    
    (19
    )
    
    
    (24
    )Gain on sale of available for sale securities
    
    
    (578
    )
    
    
    (61
    )Credit component of other-than-temporary impairment
losses on available for sale securities
    
    
    615
    
    
    
    Gain on sale of other real estate owned
    
    
    (34
    )
    
    
    (32
    )Proceeds from sales of leases
    
    
    909
    
    
    
    759Leases originated for sale
    
    
    (890
    )
    
    
    (579
    )Decrease in accrued interest receivable
    
    
    260
    
    
    
    169Increase in prepaid expenses and other assets
    
    
    (326
    )
    
    
    (328
    )Decrease in other liabilities
    
    
    (3,820
    )
    
    
    (2,882
    )Net cash provided by (used in) operating activities
    
    
    984
    
    
    
    (55
    )Cash flows from investing activities:Available for sale securities:Purchases
    
    
    (71,495
    )
    
    
    (138,662
    )Maturities and principal repayments
    
    
    101,702
    
    
    
    86,252Proceeds from sales
    
    
    8,628
    
    
    
    1,880Net increase in loans and leases
    
    
    (24,469
    )
    
    
    (39,249
    )Capital expenditures for premises and equipment
    
    
    (464
    )
    
    
    (615
    )Proceeds from sale of other real estate owned
    
    
    755
    
    
    
    729Net cash provided by (used in) investing activities
    
    
    14,657
    
    
    
    (89,665
    )Cash flows from financing activities:Net increase in deposits
    
    
    75,736
    
    
    
    42,481Net decrease in overnight and short-term borrowings
    
    
    (2,833
    )
    
    
    (16,875
    )Proceeds from long-term borrowings
    
    
    33,700
    
    
    
    49,805Repayment of long-term borrowings
    
    
    (87,487
    )
    
    
    (16,701
    )Exercise of stock options
    
    
    79
    
    
    
    160Tax benefit from exercise of stock options
    
    
    (5
    )
    
    
    78Dividends on preferred stock
    
    
    
    
    
    
    (608
    )Dividends on common stock
    
    
    (1,580
    )
    
    
    (1,562
    )Net cash provided by financing activities
    
    
    17,610
    
    
    
    56,778Net increase (decrease) in cash and cash equivalents
    
    
    33,251
    
    
    
    (32,942
    )Cash and cash equivalents at beginning of period
    
    
    20,830
    
    
    
    55,457Cash and cash equivalents at end of period
    
    $
    54,081
    
    
    $
    22,515Supplementary Disclosures:Cash paid for interest
    
    $
    10,845
    
    
    $
    15,180Cash paid for income taxes
    
    
    1,955
    
    
    
    2,159Non-cash investing and financing transactions:Change in accumulated other comprehensive income, net of taxes
    
    
    4,202
    
    
    
    (604
    )Cumulative effect of a change in accounting principle, net of taxes
    
    
    
    
    
    
    137Accrual of cumulative preferred dividends payable
    
    
    
    
    
    
    142Macrolease acquisition
    
    
    23
    
    
    
    78Transfer of loans to other real estate owned
    
    
    1,109
    
    
    
    756Transfer of loans to other assets (non-real estate foreclosed assets)
    
    
    
    
    
    
    122Treasury stock acquisitions from shares tendered in stock option exercises
    
    
    218
    
    
    
    254Non-credit component of other-than-temporary impairment, net of taxes
    
    
    431
    
    
    
    Sale of available for sale securities not yet settled
    
    
    4,414
    
    
    
    
 See accompanying notes to unaudited consolidated financial statements
  6




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
 Notes to Consolidated Financial Statements (unaudited)
 (1) Basis of Presentation
       (2) Earnings Per Share
   7




---



##### Table of Contents



Three Months Ended March 31,2010
    
    
    2009(In thousands, except per share data)Basic EPS Computation:Numerator:Net income
    
    $
    2,681
    
    
    $
    740Preferred stock dividend
    
    
    
    
    
    
    (375
    )Preferred stock accretion
    
    
    
    
    
    
    (62
    )Net income applicable to common shares
    
    $
    2,681
    
    
    $
    303Denominator:Weighted average shares outstanding
    
    
    4,664
    
    
    
    4,602Basic EPS
    
    $
    0.57
    
    
    $
    0.07Diluted EPS Computation:Numerator:Net income applicable to common shares
    
    $
    2,681
    
    
    $
    303Denominator:Common shares outstanding
    
    
    4,664
    
    
    
    4,602Stock options
    
    
    25
    
    
    
    18Contingent shares
    
    
    1
    
    
    
    Total shares
    
    
    4,690
    
    
    
    4,620Diluted EPS
    
    $
    0.57
    
    
    $
    0.07
  (3) Recently Adopted Accounting Pronouncements
 Transfers and Servicing Accounting for Transfers of Financial Assets, an amendment of FASB Statement No.
140,
 Consolidations Amendments to FASB
Interpretation No. 46(R),
  8




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##### Table of Contents



Fair Value
Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Instruments
 (4) Recently Issued Accounting Pronouncements
 Receivables (Topic 320): Disclosures About the
Credit Quality of Financing Receivables and the Allowance for Credit Losses Receivables
 (5) Available for Sale Securities
   9




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##### Table of Contents



Amortized
    
    
    Unrealized
    
    
    UnrealizedCost (1)

    
    
    Gains
    
    
    Losses
    
    
    Fair Value( In thousands)At June 30, 2010:GSE obligations
    
    $
    65,981
    
    
    $
    755
    
    
    $
    (12
    )
    
    $
    66,724Trust preferred CDOs
    
    
    1,935
    
    
    
    
    
    
    
    (1,460
    )
    
    
    475Collateralized mortgage obligations
    
    
    37,303
    
    
    
    742
    
    
    
    (1,620
    )
    
    
    36,425GSE mortgage-backed securities
    
    
    231,488
    
    
    
    10,454
    
    
    
    
    
    
    
    241,942Total
    
    $
    336,707
    
    
    $
    11,951
    
    
    $
    (3,092
    )
    
    $
    345,566At December 31, 2009:GSE obligations
    
    $
    80,866
    
    
    $
    347
    
    
    $
    (287
    )
    
    $
    80,926Trust preferred CDOs
    
    
    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 write-downs as a result of other-than-temporary
impairment.   Less than One Year
    
    
    One Year or Longer
    
    
    TotalNumber of
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedHoldings
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses(Dollars in thousands)At June 30, 2010:GSE obligations
    
    
    1
    
    
    $
    4,988
    
    
    $
    (12
    )
    
    $
    
    
    
    $
    
    
    
    $
    4,988
    
    
    $
    (12
    )Trust preferred CDOs
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    475
    
    
    
    (1,460
    )
    
    
    475
    
    
    
    (1,460
    )Collateralized mortgage
obligations
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    8,817
    
    
    
    (1,620
    )
    
    
    8,817
    
    
    
    (1,620
    )GSE mortgage-backed securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    5
    
    
    $
    4,988
    
    
    $
    (12
    )
    
    $
    9,292
    
    
    $
    (3,080
    )
    
    $
    14,280
    
    
    $
    (3,092
    )At December 31, 2009:GSE obligations
    
    
    8
    
    
    $
    37,081
    
    
    $
    (287
    )
    
    $
    
    
    
    $
    
    
    
    $
    37,081
    
    
    $
    (287
    )Trust preferred CDOs
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    465
    
    
    
    (2,085
    )
    
    
    465
    
    
    
    (2,085
    )Collateralized mortgage
obligations
    
    
    5
    
    
    
    5,520
    
    
    
    (182
    )
    
    
    12,088
    
    
    
    (2,129
    )
    
    
    17,608
    
    
    
    (2,311
    )GSE mortgage-backed securities
    
    
    18
    
    
    
    69,310
    
    
    
    (982
    )
    
    
    140
    
    
    
    (1
    )
    
    
    69,450
    
    
    
    (983
    )Total
    
    
    33
    
    
    $
    111,911
    
    
    $
    (1,451
    )
    
    $
    12,693
    
    
    $
    (4,215
    )
    
    $
    124,604
    
    
    $
    (5,666
    )
  10




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##### Table of Contents



After One, But
    
    
    After Five, ButWithin Five Years
    
    
    Within Ten Years
    
    
    After Ten YearsAmortized
    
    
    Fair
    
    
    Amortized
    
    
    Fair
    
    
    Amortized
    
    
    FairCost
    
    
    Value
    
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    Value(In thousands)At June 30, 2010:GSE obligations
    
    $
    36,017
    
    
    $
    36,397
    
    
    $
    29,964
    
    
    $
    30,327
    
    
    $
    
    
    
    $
    Trust preferred CDOs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,935
    
    
    
    475Collateralized mortgage obligations
    
    
    
    
    
    
    
    
    
    
    19,180
    
    
    
    19,705
    
    
    
    18,123
    
    
    
    16,720GSE mortgage-backed securities
    
    
    5,226
    
    
    
    5,539
    
    
    
    16,236
    
    
    
    17,388
    
    
    
    210,026
    
    
    
    219,015Total
    
    $
    41,243
    
    
    $
    41,936
    
    
    $
    65,380
    
    
    $
    67,420
    
    
    $
    230,084
    
    
    $
    236,210At December 31, 2009:GSE obligations
    
    $
    75,866
    
    
    $
    76,013
    
    
    $
    5,000
    
    
    $
    4,913
    
    
    $
    
    
    
    $
    Trust preferred CDOs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,550
    
    
    
    465Collateralized mortgage obligations
    
    
    
    
    
    
    
    
    
    
    23,156
    
    
    
    22,957
    
    
    
    22,485
    
    
    
    21,070GSE mortgage-backed securities
    
    
    1,548
    
    
    
    1,604
    
    
    
    23,589
    
    
    
    24,624
    
    
    
    225,914
    
    
    
    230,193Total
    
    $
    77,414
    
    
    $
    77,617
    
    
    $
    51,745
    
    
    $
    52,494
    
    
    $
    250,949
    
    
    $
    251,728
       11




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##### Table of Contents



Credit Component of Other-Than-Temporary Impairment Losses For Whicha Portion Was Recognized in OtherComprehensive Income(In thousands)
    
    2010
    
    
    2009Balance, January 1
    
    $
    (384
    )
    
    $
    Credit losses for which an
other-than-temporary
impairment was previously
recognized
    
    
    (615
    )
    
    
    Balance, June 30
    
    $
    (999
    )
    
    $
    
  (6) Derivatives
   12




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##### Table of Contents



Asset Derivatives
    
    
    Liability DerivativesAs of
    
    
    As of
    
    
    
    
    
    
    As of
    
    
    As ofBalance
    
    
    June 30,
    
    
    December
    
    
    Balance
    
    
    June 30,
    
    
    DecemberSheet
    
    
    2010
    
    
    31, 2009
    
    
    Sheet
    
    
    2010
    
    
    31, 2009(In thousands)
    
    Location
    
    
    Fair Value
    
    
    Location
    
    
    Fair ValueDerivatives not
designated as hedging
instrumentsInterest rate products
    
    Other assets
    
    
    $
    929
    
    
    $
    391
    
    
    Other liabilities
    
    
    $
    988
    
    
    $
    426Total derivatives not
designated as hedging
instruments
    
    
    
    
    
    $
    929
    
    
    $
    391
    
    
    
    
    
    
    $
    988
    
    
    $
    426
    Amount of Gain or (Loss) Recognized inLocation of Gain or (Loss)
    
    
    Income on Derivative (1)Derivatives Not Designated as
    
    Recognized in Income on
    
    
    Three Months Ended June 30,Hedging Instruments
    
    Derivative
    
    
    2010
    
    
    2009(In thousands)Interest Rate Products
    
    Loan related fees
    
    
    $
    (55
    )
    
    $
    69Total
    
    
    
    
    
    $
    (55
    )
    
    $
    69
 (1)
    
    The amount of gain or (loss) recognized in income represents net fee income and
changes related to the fair value of the interest rate products.  13




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##### Table of Contents



Amount of Gain or (Loss) Recognized inIncome on Derivative(1)Location of Gain or (Loss)
    
    

Six
Months Ended June 30,Derivatives Not Designated as
    
    Recognized in Income onHedging Instruments
    
    Derivative
    
    
    2010
    
    
    2009(In thousands)Interest Rate Products
    

    Loan related fees
    
    $
    (23
    )
    
    $
    322Total
    
    
    
    
    
    $
    (23
    )
    
    $
    322
 (1)
    
    The amount of gain or (loss) recognized in income represents net fee income and
changes related to the fair value of the interest rate products.    (7) Fair Value of Financial Instruments
 Fair Value Measurements and Disclosures
  14




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##### Table of Contents



Fair Value Measurements at June 30, 2010 UsingQuoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Otherfor Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs(In thousands)
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)GSE obligations
    
    $
    66,724
    
    
    $
    
    
    
    $
    66,724
    
    
    $
    Trust preferred CDOs
    
    
    475
    
    
    
    
    
    
    
    475
    
    
    
    Collateralized mortgage obligations
    
    
    36,425
    
    
    
    
    
    
    
    36,425
    
    
    
    GSE mortgage-backed securities
    
    
    241,942
    
    
    
    
    
    
    
    241,942
    
    
    
    Total available for sale securities
    
    
    345,566
    
    
    
    
    
    
    
    345,566
    
    
    
    Interest rate swap assets
    
    
    929
    
    
    
    
    
    
    
    929
    
    
    
    Interest rate swap liabilities
    
    
    988
    
    
    
    
    
    
    
    988
    
    
    
    
 Fair Value Measurements at December 31, 2009 UsingQuoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Otherfor Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs(In thousands)
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)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
    
    
    
    
  15




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##### Table of Contents



Available for sale securities 
   Interest rate swaps  Note 5  Derivatives.
  16




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##### Table of Contents



Fair Value Measurements Using SignificantUnobservable Inputs(In thousands)
    
    2010
    
    
    2009Trust preferred collateralized debt obligationsBalance, January 1
    
    $
    
    
    
    $
    1,480Increase in unrealized holding losses
    
    
    
    
    
    
    (814
    )Other-than-temporary impairment
    
    
    
    
    
    
    Transfers to Level 2
    
    
    
    
    
    
    Transfers to Level 3
    
    
    
    
    
    
    Balance, June 30
    
    $
    
    
    
    $
    666
    Fair Value Measurements at June 30, 2010 UsingQuoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Otherfor Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs(In thousands)
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Collateral-dependent loans and leases
    
    $
    1,823
    
    
    $
    
    
    
    $
    1,823
    
    
    $
    Other real estate owned
    
    
    1,109
    
    
    
    
    
    
    
    1,109
    
    
    
    
 Fair Value Measurements at June 30, 2009 UsingQuoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Otherfor Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs(In thousands)
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Collateral-dependent loans and leases
    
    $
    5,946
    
    
    $
    
    
    
    $
    5,946
    
    
    $
    Other real estate owned
    
    
    756
    
    
    
    
    
    
    
    756
    
    
    
    Non-real estate foreclosed assets
    
    
    122
    
    
    
    
    
    
    
    122
    
    
    
    
 Impaired loans 
  17




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##### Table of Contents



OREO and Non-real estate foreclosed assets 
  Loans and leases receivable
 Stock in the Federal Home Loan Bank of Boston
 Deposits
  18




---



##### Table of Contents



Wholesale repurchase agreements
 Federal Home Loan Bank of Boston borrowings
 Subordinated deferrable interest debentures
 Financial instruments with off-balance sheet risk
  June 30, 2010
    
    
    December 31, 2009Book
    
    
    Estimated
    
    
    Book
    
    
    EstimatedValue
    
    
    Fair Value
    
    
    Value
    
    
    Fair Value(In thousands)Assets:Cash and due from banks
    
    $
    23,857
    
    
    $
    23,857
    
    
    $
    18,866
    
    
    $
    18,866Overnight investments
    
    
    30,224
    
    
    
    30,224
    
    
    
    1,964
    
    
    
    1,964Available for sale securities
    
    
    345,566
    
    
    
    345,566
    
    
    
    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
    
    
    750,462
    
    
    
    768,589
    
    
    
    718,943
    
    
    
    725,967Residential mortgage loans
    
    
    163,073
    
    
    
    166,345
    
    
    
    171,842
    
    
    
    175,816Consumer and other loans
    
    
    205,593
    
    
    
    198,522
    
    
    
    204,526
    
    
    
    197,137Interest rate swaps
    
    
    929
    
    
    
    929
    
    
    
    391
    
    
    
    391Accrued interest receivable
    
    
    4,704
    
    
    
    4,704
    
    
    
    4,964
    
    
    
    4,964Liabilities:Deposits:Demand deposit accounts
    
    $
    290,794
    
    
    $
    290,794
    
    
    $
    204,281
    
    
    $
    204,281NOW accounts
    
    
    73,501
    
    
    
    73,501
    
    
    
    74,558
    
    
    
    74,558Money market accounts
    
    
    83,315
    
    
    
    83,315
    
    
    
    65,076
    
    
    
    65,076Savings accounts
    
    
    366,087
    
    
    
    366,087
    
    
    
    367,225
    
    
    
    367,225Certificate of deposit accounts
    
    
    360,323
    
    
    
    363,021
    
    
    
    387,144
    
    
    
    390,210Overnight and short-term borrowings
    
    
    37,338
    
    
    
    37,338
    
    
    
    40,171
    
    
    
    40,171Wholesale repurchase agreements
    
    
    20,000
    
    
    
    20,295
    
    
    
    20,000
    
    
    
    20,432FHLB borrowings
    
    
    223,396
    
    
    
    246,895
    
    
    
    277,183
    
    
    
    301,210Subordinated deferrable interest
debentures
    
    
    13,403
    
    
    
    15,302
    
    
    
    13,403
    
    
    
    15,440Interest rate swaps
    
    
    988
    
    
    
    988
    
    
    
    426
    
    
    
    426Accrued interest payable
    
    
    1,551
    
    
    
    1,551
    
    
    
    2,122
    
    
    
    2,122
  19




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##### Table of Contents



(8) Contingent Liabilities
   (9) Transfers and Servicing
    20




---



##### Table of Contents



ITEM 2. Managements Discussion and Analysis
 General
 http://www.bankri.com SM
 Critical Accounting Policies
  Overview
  Rate/Volume Analysis Average Balances, Yields and Costs
 Interest Rate Risk
  21




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##### Table of Contents



Financial Condition  Asset Quality
      22




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##### Table of Contents



Financial Condition  Executive Summary
  June 30,
    
    
    March 31,
    
    
    December 31,
    
    
    September 30,
    
    
    June 30,2010
    
    
    2010
    
    
    2009
    
    
    2009
    
    
    2009(Dollars in thousands, except per share data)Total assets
    
    $
    1,613,520
    
    
    $
    1,586,778
    
    
    $
    1,589,946
    
    
    $
    1,569,084
    
    
    $
    1,583,686Loans and leases receivable
    
    
    1,136,524
    
    
    
    1,123,838
    
    
    
    1,111,847
    
    
    
    1,116,627
    
    
    
    1,117,655Available for sale securities
    
    
    345,566
    
    
    
    365,110
    
    
    
    381,839
    
    
    
    365,706
    
    
    
    376,026Goodwill, net
    
    
    12,262
    
    
    
    12,262
    
    
    
    12,239
    
    
    
    12,051
    
    
    
    12,051Core deposits (1)
    
    
    813,697
    
    
    
    728,969
    
    
    
    711,140
    
    
    
    685,104
    
    
    
    681,834Certificates of deposit
    
    
    360,323
    
    
    
    378,102
    
    
    
    387,144
    
    
    
    406,827
    
    
    
    402,839Borrowings
    
    
    294,137
    
    
    
    341,344
    
    
    
    350,757
    
    
    
    340,081
    
    
    
    336,244Common shareholders equity
    
    
    129,127
    
    
    
    123,679
    
    
    
    120,661
    
    
    
    121,961
    
    
    
    119,956Book value per common share
    
    
    27.63
    
    
    
    26.69
    
    
    
    26.16
    
    
    
    26.46
    
    
    
    26.07Tangible book value per common share
    
    
    25.00
    
    
    
    24.05
    
    
    
    23.50
    
    
    
    23.85
    
    
    
    23.45Tangible common equity ratio (2) (3)
    
    
    7.30
    %
    
    
    7.08
    %
    
    
    6.87
    %
    
    
    7.06
    %
    
    
    6.86
    %Core deposits to total deposits(1) (3)
    
    
    69.3
    %
    
    
    65.8
    %
    
    
    64.8
    %
    
    
    62.7
    %
    
    
    62.9
    %
 (1)
    
    Core deposits consist of demand deposit, NOW, money market and savings accounts.(2)
    
    Calculated by dividing common shareholders equity less goodwill by total assets less goodwill.(3)
    
    Non-GAAP performance measure.    23




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##### Table of Contents



Financial Condition  Detailed Analysis
 Investments
        24




---



##### Table of Contents



Loans and Leases
  Commercial loans and leases 
      25




---



##### Table of Contents



Residential mortgage loans 
 Consumer loans 
  26




---



##### Table of Contents



June 30,
    
    
    December 31,2010
    
    
    2009(In thousands)Commercial loans and leases:Commercial real estate  nonowner occupied
    
    $
    185,437
    
    
    $
    170,148Commercial real estate  owner occupied
    
    
    174,267
    
    
    
    167,853Commercial and industrial
    
    
    173,588
    
    
    
    178,808Multi-family
    
    
    67,588
    
    
    
    66,350Small business
    
    
    59,833
    
    
    
    56,148Construction
    
    
    30,925
    
    
    
    23,405Leases and other (a)
    
    
    77,688
    
    
    
    75,057Subtotal
    
    
    769,326
    
    
    
    737,769Unearned lease income
    
    
    (6,777
    )
    
    
    (7,693
    )Net deferred loan origination costs
    
    
    1,825
    
    
    
    2,321Total commercial loans and leases
    
    
    764,374
    
    
    
    732,397Residential mortgage loans:One- to four-family adjustable rate
    
    
    110,344
    
    
    
    115,855One- to four-family fixed rate
    
    
    53,730
    
    
    
    56,724Subtotal
    
    
    164,074
    
    
    
    172,579Premium on loans acquired
    
    
    689
    
    
    
    738Net deferred loan origination fees
    
    
    (13
    )
    
    
    (23
    )Total residential mortgage loans
    
    
    164,750
    
    
    
    173,294Consumer loans:Home equity  term loans
    
    
    119,813
    
    
    
    119,909Home equity  lines of credit
    
    
    85,142
    
    
    
    83,771Unsecured and other
    
    
    1,431
    
    
    
    1,410Subtotal
    
    
    206,386
    
    
    
    205,090Net deferred loan origination costs
    
    
    1,014
    
    
    
    1,066Total consumer loans
    
    
    207,400
    
    
    
    206,156Total loans and leases receivable
    
    $
    1,136,524
    
    
    $
    1,111,847
 (a)
    
    There were no leases held for sale at June 30, 2010 or December 31, 2009. Deposits
   June 30, 2010
    
    
    December 31, 2009Percent
    
    
    Weighted
    
    
    
    
    
    
    Percent
    
    
    WeightedOf
    
    
    Average
    
    
    
    
    
    
    of
    
    
    AverageAmount
    
    
    Total
    
    
    Rate
    
    
    Amount
    
    
    Total
    
    
    Rate(In thousands)NOW accounts
    
    $
    73,501
    
    
    
    6.2
    %
    
    
    0.07
    %
    
    $
    74,558
    
    
    
    6.8
    %
    
    
    0.09
    %Money market accounts
    
    
    83,315
    
    
    
    7.1
    %
    
    
    0.83
    %
    
    
    65,076
    
    
    
    5.9
    %
    
    
    1.10
    %Savings accounts
    
    
    366,087
    
    
    
    31.2
    %
    
    
    0.52
    %
    
    
    367,225
    
    
    
    33.4
    %
    
    
    0.64
    %Certificate of deposit accounts
    
    
    360,323
    
    
    
    30.7
    %
    
    
    1.57
    %
    
    
    387,144
    
    
    
    35.3
    %
    
    
    1.80
    %Total interest bearing deposits
    
    
    883,226
    
    
    
    75.2
    %
    
    
    0.94
    %
    
    
    894,003
    
    
    
    81.4
    %
    
    
    1.13
    %Noninterest bearing accounts
    
    
    290,794
    
    
    
    24.8
    %
    
    
    0.00
    %
    
    
    204,281
    
    
    
    18.6
    %
    
    
    0.00
    %Total deposits
    
    $
    1,174,020
    
    
    
    100.0
    %
    
    
    0.70
    %
    
    $
    1,098,284
    
    
    
    100.0
    %
    
    
    0.92
    %
  27




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##### Table of Contents



Borrowings
   Asset Quality
  Nonperforming assets 
  28




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##### Table of Contents



June 30,
    
    
    December 31,2010
    
    
    2009(In thousands)Loans and leases accounted for on a nonaccrual basis
    
    $
    12,450
    
    
    $
    16,830Loans and leases past due 90 days or more, but still accruing
    
    
    941
    
    
    
    826Restructured loans and leases on a nonaccrual basis
    
    
    1,420
    
    
    
    659Total nonperforming loans and leases
    
    
    14,811
    
    
    
    18,315Other real estate owned
    
    
    1,948
    
    
    
    1,700Total nonperforming assets
    
    $
    16,759
    
    
    $
    20,015Delinquent loans and leases 60-89 days past due
    
    $
    2,343
    
    
    $
    2,028Restructured loans and leases not included in nonperforming assets
    
    $
    445
    
    
    $
    445Nonperforming loans and leases as a percent of total loans and leases
    
    
    1.30
    %
    
    
    1.65
    %Nonperforming assets as a percent of total assets
    
    
    1.04
    %
    
    
    1.26
    %Delinquent loans and leases 60-89 days past due as a percent of
total loans and leases
    
    
    0.21
    %
    
    
    0.19
    %
   June 30,
    
    
    December 31,2010
    
    
    2009(Dollars in thousands)Nonperforming loans and leases:Commercial real estate
    
    $
    5,131
    
    
    $
    6,909Commercial and industrial
    
    
    1,155
    
    
    
    2,919Multifamily
    
    
    
    
    
    
    205Small business
    
    
    986
    
    
    
    1,147Construction
    
    
    469
    
    
    
    469Leases
    
    
    2,252
    
    
    
    1,878Residential
    
    
    3,737
    
    
    
    4,124Consumer
    
    
    1,081
    
    
    
    664Total nonperforming loans and leases
    
    $
    14,811
    
    
    $
    18,315
  Higher-Risk Loans 
  29




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##### Table of Contents



Adversely classified assets
  Allowance for Loan and Lease Losses
   30




---



##### Table of Contents



Six Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30, 2010
    
    
    June 30, 2009(In thousands)Balance at beginning of period
    
    $
    16,536
    
    
    $
    14,664Loans and leases charged-off:Commercial real estate loans
    
    
    (627
    )
    
    
    (1
    )Commercial and industrial loans
    
    
    
    
    
    
    (356
    )Small business loans
    
    
    (415
    )
    
    
    (694
    )Leases
    
    
    (526
    )
    
    
    (4
    )Residential mortgage loans
    
    
    (837
    )
    
    
    (930
    )Consumer and other loans
    
    
    (116
    )
    
    
    (26
    )Total loans charged-off
    
    
    (2,521
    )
    
    
    (2,011
    )Recoveries of loans and leases previously charged-off:Commercial real estate loans
    
    
    179
    
    
    
    Commercial and industrial loans
    
    
    15
    
    
    
    9Small business loans
    
    
    19
    
    
    
    8Leases
    
    
    6
    
    
    
    4Residential mortgage loans
    
    
    
    
    
    
    2Consumer and other loans
    
    
    12
    
    
    
    19Total recoveries of loans previously charged-off
    
    
    231
    
    
    
    42Net charge-offs
    
    
    (2,290
    )
    
    
    (1,969
    )Provision for loan and lease losses charged against income
    
    
    3,150
    
    
    
    4,210Balance at end of period
    
    $
    17,396
    
    
    $
    16,905
  June 30,
    
    
    December 31,2010
    
    
    2009(In thousands)Loan categoryCommercial loans and leases
    
    $
    12,591
    
    
    $
    12,409Residential mortgage loans
    
    
    1,519
    
    
    
    1,340Consumer and other loans
    
    
    1,635
    
    
    
    1,504Unallocated
    
    
    1,651
    
    
    
    1,283Total
    
    $
    17,396
    
    
    $
    16,536
   31




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##### Table of Contents



Results of Operations  Executive Overview
  For the three-month periods endedJune 30,
    
    
    March 31,
    
    
    December 31,
    
    
    September 30,
    
    
    June 30,2010
    
    
    2010
    
    
    2009
    
    
    2009
    
    
    2009(Dollars in thousands, except per share data)Income statement data:Net interest income
    
    $
    13,626
    
    
    $
    13,088
    
    
    $
    13,001
    
    
    $
    12,666
    
    
    $
    11,573Noninterest income
    
    
    2,285
    
    
    
    2,315
    
    
    
    2,353
    
    
    
    2,241
    
    
    
    2,214Noninterest expense
    
    
    10,430
    
    
    
    10,488
    
    
    
    9,949
    
    
    
    9,812
    
    
    
    10,145Net income
    
    
    2,681
    
    
    
    2,219
    
    
    
    1,133
    
    
    
    2,203
    
    
    
    740Net income applicable to common shares
    
    
    2,681
    
    
    
    2,219
    
    
    
    1,133
    
    
    
    779
    
    
    
    303Per share data:Diluted earnings per share
    
    $
    0.57
    
    
    $
    0.48
    
    
    $
    0.24
    
    
    $
    0.17
    
    
    $
    0.07Dividends per common share
    
    $
    0.17
    
    
    $
    0.17
    
    
    $
    0.17
    
    
    $
    0.17
    
    
    $
    0.17Operating ratios:Net interest margin (1) (5)
    
    
    3.67
    %
    
    
    3.52
    %
    
    
    3.42
    %
    
    
    3.38
    %
    
    
    3.10
    %Return on assets (2) (5)
    
    
    0.68
    %
    
    
    0.57
    %
    
    
    0.28
    %
    
    
    0.56
    %
    
    
    0.19
    %Return on equity (3) (5)
    
    
    8.54
    %
    
    
    7.32
    %
    
    
    3.67
    %
    
    
    2.56
    %
    
    
    1.00
    %Efficiency ratio (4) (5)
    
    
    65.55
    %
    
    
    68.09
    %
    
    
    64.80
    %
    
    
    65.82
    %
    
    
    73.58
    %
 (1)
    
    Calculated by dividing annualized net interest income by average interest-earning assets.(2)
    
    Calculated by dividing annualized net income by average total assets.(3)
    
    Calculated by dividing annualized net income applicable to common shares by average common shareholders equity.(4)
    
    Calculated by dividing noninterest expense by net interest income plus noninterest income.(5)
    
    Non-GAAP performance measure.    32




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##### Table of Contents



Results of Operations  Comparison of the Three Months Ended June 30, 2010 and 2009
 General
  Net Interest Income
   33




---



##### Table of Contents



Average Balances, Yields and Costs
 For the three months ended June 30,2010
    
    
    2009Interest
    
    
    
    
    
    
    
    
    
    
    InterestAverage
    
    
    Earned/
    
    
    Average
    
    
    Average
    
    
    Earned/
    
    
    Average(In thousands)
    
    Balance
    
    
    Paid
    
    
    Yield
    
    
    Balance
    
    
    Paid
    
    
    YieldAssetsEarning assets:Overnight investments
    
    $
    2,009
    
    
    $
    
    
    
    
    0.09
    %
    
    $
    3,149
    
    
    $
    
    
    
    
    0.08
    %Available for sale securities
    
    
    346,907
    
    
    
    3,531
    
    
    
    4.08
    %
    
    
    370,685
    
    
    
    3,896
    
    
    
    4.22
    %Stock in the FHLB
    
    
    16,274
    
    
    
    
    
    
    
    0.00
    %
    
    
    15,671
    
    
    
    
    
    
    
    0.00
    %Loans and leases receivable:Commercial loans and leases
    
    
    757,664
    
    
    
    10,943
    
    
    
    5.79
    %
    
    
    694,723
    
    
    
    10,041
    
    
    
    5.79
    %Residential mortgage loans
    
    
    167,289
    
    
    
    1,939
    
    
    
    4.64
    %
    
    
    198,144
    
    
    
    2,460
    
    
    
    4.97
    %Consumer and other loans
    
    
    204,235
    
    
    
    2,223
    
    
    
    4.36
    %
    
    
    214,928
    
    
    
    2,395
    
    
    
    4.47
    %Total earning assets
    
    
    1,494,378
    
    
    
    18,636
    
    
    
    5.00
    %
    
    
    1,497,300
    
    
    
    18,792
    
    
    
    5.03
    %Cash and due from banks
    
    
    18,798
    
    
    
    
    
    
    
    
    
    
    
    12,335Allowance for loan and lease losses
    
    
    (17,034
    )
    
    
    
    
    
    
    
    
    
    
    (15,788
    )Premises and equipment
    
    
    12,244
    
    
    
    
    
    
    
    
    
    
    
    12,425Goodwill, net
    
    
    12,262
    
    
    
    
    
    
    
    
    
    
    
    12,051Accrued interest receivable
    
    
    4,252
    
    
    
    
    
    
    
    
    
    
    
    4,213Bank-owned life insurance
    
    
    30,435
    
    
    
    
    
    
    
    
    
    
    
    29,158Prepaid expenses and other assets
    
    
    16,898
    
    
    
    
    
    
    
    
    
    
    
    9,285Total assets
    
    $
    1,572,233
    
    
    
    
    
    
    
    
    
    
    $
    1,560,979Liabilities and Shareholders EquityInterest-bearing liabilities:Deposits:NOW accounts
    
    $
    69,378
    
    
    $
    12
    
    
    
    0.07
    %
    
    $
    67,072
    
    
    $
    14
    
    
    
    0.08
    %Money market accounts
    
    
    81,271
    
    
    
    165
    
    
    
    0.81
    %
    
    
    16,228
    
    
    
    51
    
    
    
    1.26
    %Savings accounts
    
    
    373,225
    
    
    
    506
    
    
    
    0.54
    %
    
    
    385,887
    
    
    
    930
    
    
    
    0.97
    %Certificate of deposit accounts
    
    
    374,935
    
    
    
    1,481
    
    
    
    1.58
    %
    
    
    424,699
    
    
    
    3,229
    
    
    
    3.05
    %Overnight and short-term borrowings
    
    
    37,011
    
    
    
    19
    
    
    
    0.20
    %
    
    
    45,065
    
    
    
    22
    
    
    
    0.19
    %Wholesale repurchase agreements
    
    
    20,000
    
    
    
    143
    
    
    
    2.82
    %
    
    
    10,000
    
    
    
    134
    
    
    
    5.32
    %FHLB borrowings
    
    
    247,720
    
    
    
    2,518
    
    
    
    4.02
    %
    
    
    249,852
    
    
    
    2,649
    
    
    
    4.20
    %Subordinated deferrable interest debentures
    
    
    13,403
    
    
    
    166
    
    
    
    4.93
    %
    
    
    13,403
    
    
    
    190
    
    
    
    5.67
    %Total interest-bearing liabilities
    
    
    1,216,943
    
    
    
    5,010
    
    
    
    1.65
    %
    
    
    1,212,206
    
    
    
    7,219
    
    
    
    2.39
    %Noninterest-bearing deposits
    
    
    219,136
    
    
    
    
    
    
    
    
    
    
    
    185,196Other liabilities
    
    
    10,168
    
    
    
    
    
    
    
    
    
    
    
    13,565Total liabilities
    
    
    1,446,247
    
    
    
    
    
    
    
    
    
    
    
    1,410,967Shareholders equity:
    
    
    125,986
    
    
    
    
    
    
    
    
    
    
    
    150,012Total liabilities and shareholders equity
    
    $
    1,572,233
    
    
    
    
    
    
    
    
    
    
    $
    1,560,979Net interest income
    
    
    
    
    
    $
    13,626
    
    
    
    
    
    
    
    
    
    
    $
    11,573Net interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.35
    %
    
    
    
    
    
    
    
    
    
    
    2.64
    %Net interest rate margin
    
    
    
    
    
    
    
    
    
    
    3.67
    %
    
    
    
    
    
    
    
    
    
    
    3.10
    %
  34




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##### Table of Contents



Rate/Volume Analysis 
 Three Months Ended June 30,2010 vs. 2009Increase/(Decrease) Due to(In thousands)
    
    Rate
    
    
    Volume
    
    
    TotalInterest income:Available for sale securities
    
    $
    (207
    )
    
    $
    (158
    )
    
    $
    (365
    )Commercial loans and leases
    
    
    45
    
    
    
    857
    
    
    
    902Residential mortgage loans
    
    
    (163
    )
    
    
    (358
    )
    
    
    (521
    )Consumer and other loans
    
    
    9
    
    
    
    (181
    )
    
    
    (172
    )Total interest income
    
    
    (316
    )
    
    
    160
    
    
    
    (156
    )Interest expense:NOW accounts
    
    
    (2
    )
    
    
    
    
    
    
    (2
    )Money market accounts
    
    
    (24
    )
    
    
    138
    
    
    
    114Savings accounts
    
    
    (395
    )
    
    
    (29
    )
    
    
    (424
    )Certificate of deposit accounts
    
    
    (1,358
    )
    
    
    (390
    )
    
    
    (1,748
    )Overnight and short-term borrowings
    
    
    1
    
    
    
    (4
    )
    
    
    (3
    )Wholesales repurchase agreements
    
    
    (82
    )
    
    
    91
    
    
    
    9FHLB borrowings
    
    
    (109
    )
    
    
    (22
    )
    
    
    (131
    )Subordinated deferrable interest debentures
    
    
    (24
    )
    
    
    
    
    
    
    (24
    )Total interest expense
    
    
    (1,993
    )
    
    
    (216
    )
    
    
    (2,209
    )Net interest income
    
    $
    1,677
    
    
    $
    376
    
    
    $
    2,053
 Interest Income  Investments 
  Interest Income  Loans and Leases
  Interest Expense  Deposits and Borrowings 
  35




---



##### Table of Contents



Provision for Loan and Lease Losses
  Allowance for Loan and Lease Losses.
 Noninterest Income
  Noninterest Expense
    36




---



##### Table of Contents



Income Tax Expense
  Note 7  Contingent Liabilities
 Results of Operations  Comparison of the Six Months Ended June 30, 2010 and 2009
 General
  Net Interest Income
   37




---



##### Table of Contents



Average Balances, Yields and Costs
 Six Months Ended June 30,2010
    
    
    2009Interest
    
    
    
    
    
    
    
    
    
    
    InterestAverage
    
    
    Earned/
    
    
    Average
    
    
    Average
    
    
    Earned/
    
    
    Average(In thousands)
    
    Balance
    
    
    Paid
    
    
    Yield
    
    
    Balance
    
    
    Paid
    
    
    YieldAssetsEarning assets:Overnight investments
    
    $
    2,150
    
    
    $
    5
    
    
    
    0.50
    %
    
    $
    1,984
    
    
    $
    9
    
    
    
    0.96
    %Available for sale securities
    
    
    359,640
    
    
    
    7,310
    
    
    
    4.10
    %
    
    
    356,714
    
    
    
    7,750
    
    
    
    4.38
    %Stock in the FHLB
    
    
    16,274
    
    
    
    
    
    
    
    0.00
    %
    
    
    15,671
    
    
    
    
    
    
    
    0.00
    %Loans receivable:Commercial loans and leases
    
    
    744,825
    
    
    
    21,254
    
    
    
    5.74
    %
    
    
    683,843
    
    
    
    19,747
    
    
    
    5.81
    %Residential mortgage loans
    
    
    169,834
    
    
    
    3,968
    
    
    
    4.67
    %
    
    
    202,949
    
    
    
    5,120
    
    
    
    5.05
    %Consumer and other loans
    
    
    204,039
    
    
    
    4,451
    
    
    
    4.40
    %
    
    
    211,361
    
    
    
    4,726
    
    
    
    4.51
    %Total earning assets
    
    
    1,496,762
    
    
    
    36,988
    
    
    
    4.97
    %
    
    
    1,472,522
    
    
    
    37,352
    
    
    
    5.10
    %Cash and due from banks
    
    
    16,139
    
    
    
    
    
    
    
    
    
    
    
    20,288Allowance for loan and lease losses
    
    
    (17,129
    )
    
    
    
    
    
    
    
    
    
    
    (15,224
    )Premises and equipment
    
    
    12,301
    
    
    
    
    
    
    
    
    
    
    
    12,490Goodwill, net
    
    
    12,221
    
    
    
    
    
    
    
    
    
    
    
    12,058Accrued interest receivable
    
    
    4,312
    
    
    
    
    
    
    
    
    
    
    
    4,251Bank-owned life insurance
    
    
    30,277
    
    
    
    
    
    
    
    
    
    
    
    29,011Prepaid expenses and other assets
    
    
    16,232
    
    
    
    
    
    
    
    
    
    
    
    9,109Total assets
    
    $
    1,571,115
    
    
    
    
    
    
    
    
    
    
    $
    1,544,505Liabilities and Shareholders EquityInterest-bearing liabilities:Deposits:NOW accounts
    
    $
    69,025
    
    
    $
    27
    
    
    
    0.08
    %
    
    $
    64,176
    
    
    $
    32
    
    
    
    0.10
    %Money market accounts
    
    
    76,356
    
    
    
    314
    
    
    
    0.83
    %
    
    
    10,450
    
    
    
    52
    
    
    
    1.01
    %Savings accounts
    
    
    371,497
    
    
    
    1,037
    
    
    
    0.56
    %
    
    
    386,046
    
    
    
    2,013
    
    
    
    1.05
    %Certificate of deposit accounts
    
    
    380,237
    
    
    
    3,064
    
    
    
    1.62
    %
    
    
    421,680
    
    
    
    6,621
    
    
    
    3.17
    %Overnight and short-term borrowings
    
    
    38,080
    
    
    
    37
    
    
    
    0.20
    %
    
    
    48,635
    
    
    
    48
    
    
    
    0.20
    %Wholesale repurchase agreements
    
    
    19,116
    
    
    
    282
    
    
    
    2.93
    %
    
    
    10,000
    
    
    
    267
    
    
    
    5.39
    %FHLB borrowings
    
    
    259,665
    
    
    
    5,183
    
    
    
    3.97
    %
    
    
    248,769
    
    
    
    5,275
    
    
    
    4.22
    %Subordinated deferrable interest debentures
    
    
    13,403
    
    
    
    330
    
    
    
    4.95
    %
    
    
    13,403
    
    
    
    389
    
    
    
    5.83
    %Total interest-bearing liabilities
    
    
    1,227,379
    
    
    
    10,274
    
    
    
    1.69
    %
    
    
    1,203,159
    
    
    
    14,697
    
    
    
    2.46
    %Noninterest-bearing deposits
    
    
    209,489
    
    
    
    
    
    
    
    
    
    
    
    178,360Other liabilities
    
    
    9,652
    
    
    
    
    
    
    
    
    
    
    
    13,153Total liabilities
    
    
    1,446,520
    
    
    
    
    
    
    
    
    
    
    
    1,394,672Shareholders Equity:
    
    
    124,595
    
    
    
    
    
    
    
    
    
    
    
    149,833Total liabilities and shareholders equity
    
    $
    1,571,115
    
    
    
    
    
    
    
    
    
    
    $
    1,544,505Net interest income
    
    
    
    
    
    $
    26,714
    
    
    
    
    
    
    
    
    
    
    $
    22,655Net interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.28
    %
    
    
    
    
    
    
    
    
    
    
    2.64
    %Net interest rate margin
    
    
    
    
    
    
    
    
    
    
    3.59
    %
    
    
    
    
    
    
    
    
    
    
    3.09
    %
  38




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##### Table of Contents



Rate/Volume Analysis 
 Six Months Ended June 30,2010 vs. 2009Increase/(decrease) due to(In thousands)
    
    Rate
    
    
    Volume
    
    
    TotalInterest income:Overnight investments
    
    $
    (5
    )
    
    $
    1
    
    
    $
    (4
    )Available for sale securities
    
    
    (583
    )
    
    
    143
    
    
    
    (440
    )Commercial loans and leases
    
    
    (192
    )
    
    
    1,699
    
    
    
    1,507Residential mortgage loans
    
    
    (374
    )
    
    
    (778
    )
    
    
    (1,152
    )Consumer and other loans
    
    
    15
    
    
    
    (290
    )
    
    
    (275
    )Total interest income
    
    
    (1,139
    )
    
    
    775
    
    
    
    (364
    )Interest expense:NOW accounts
    
    
    (7
    )
    
    
    2
    
    
    
    (5
    )Money market accounts
    
    
    (11
    )
    
    
    273
    
    
    
    262Savings accounts
    
    
    (903
    )
    
    
    (73
    )
    
    
    (976
    )Certificate of deposit accounts
    
    
    (2,880
    )
    
    
    (677
    )
    
    
    (3,557
    )Overnight and short-term borrowings
    
    
    (1
    )
    
    
    (10
    )
    
    
    (11
    )Wholesale repurchase agreements
    
    
    (154
    )
    
    
    169
    
    
    
    15FHLB borrowings
    
    
    (313
    )
    
    
    221
    
    
    
    (92
    )Subordinated deferrable interest debentures
    
    
    (59
    )
    
    
    
    
    
    
    (59
    )Total interest expense
    
    
    (4,328
    )
    
    
    (95
    )
    
    
    (4,423
    )Net interest income
    
    $
    3,189
    
    
    $
    870
    
    
    $
    4,059
 Interest Income  Investments 
 Interest Income  Loans and Leases
  Interest Expense  Deposits and Borrowings 
  39




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##### Table of Contents



Provision for Loan and Lease Losses
  Allowance for Loan and Lease Losses.
 Noninterest Income
  Noninterest Expense
     40




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##### Table of Contents



Income Tax Expense
  Note 7  Contingent Liabilities
 Liquidity and Capital Resources
 Liquidity
    Capital Resources
   41




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##### Table of Contents



Minimum Required
    
    
    Minimum RequiredFor Capital
    
    
    To Be ConsideredActual
    
    
    Adequacy Purposes
    
    

Well-CapitalizedAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio(Dollars in thousands)At June 30, 2010:Bancorp Rhode Island, Inc.Tier I capital (to average assets)
    
    $
    124,106
    
    
    
    7.91
    %
    
    $
    62,780
    
    
    
    4.00
    %
    
    $
    78,475
    
    
    
    5.00
    %Tier I capital (to risk weighted assets)
    
    
    124,106
    
    
    
    10.95
    %
    
    
    45,334
    
    
    
    4.00
    %
    
    
    68,002
    
    
    
    6.00
    %Total capital (to risk weighted assets)
    
    
    138,309
    
    
    
    12.20
    %
    
    
    90,669
    
    
    
    8.00
    %
    
    
    113,336
    
    
    
    10.00
    %Bank Rhode IslandTier I capital (to average assets)
    
    $
    122,324
    
    
    
    7.80
    %
    
    $
    62,758
    
    
    
    4.00
    %
    
    $
    78,448
    
    
    
    5.00
    %Tier I capital (to risk weighted assets)
    
    
    122,324
    
    
    
    10.80
    %
    
    
    45,307
    
    
    
    4.00
    %
    
    
    67,960
    
    
    
    6.00
    %Total capital (to risk weighted assets)
    
    
    136,527
    
    
    
    12.05
    %
    
    
    90,614
    
    
    
    8.00
    %
    
    
    113,267
    
    
    
    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 IslandTier 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
    %
 Recent Accounting Pronouncements
 Note 4  Recent Accounting Pronouncements
  42




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##### Table of Contents



ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk
     Estimated Exposureto Net Interest IncomeDollar
    
    
    PercentChange
    
    
    Change(Dollars in thousands)Initial Twelve Month Period:Up 300 bps
    
    $
    399
    
    
    
    0.75
    %
  Asset and Liability
Management
  43




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##### Table of Contents



ITEM 4. Controls and Procedures
    44




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##### Table of Contents



PART II. Other Information
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 5. Other Information
   45




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##### Table of Contents



Item 6. Exhibits
 31.1
    
    
    Certification of Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 200231.2
    
    
    Certification of Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 200232.1
    
    
    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
200232.2
    
    
    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
  46




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
   Bancorp Rhode Island, Inc.August 4, 2010

/s/ Merrill W. Sherman(Date)
    Merrill W. ShermanPresident and
Chief Executive OfficerAugust 4, 2010

/s/ Linda H. Simmons(Date)
    Linda H. SimmonsChief Financial Officer
and Treasurer  47