Bancorp Rhode Island, Inc. Announces Third Quarter 2008 Earnings Increase to $2.32...

Bancorp Rhode Island, Inc. Announces Third Quarter 2008 Earnings Increase to $2.32 Million

Net Interest Margin Expands 10 Basis Points
PROVIDENCE, R.I.--(Business Wire)--
Bancorp Rhode Island, Inc. (NASDAQ: BARI), the parent company of
Bank Rhode Island, today announced net income for the third quarter
2008 of $2.32 million, an increase of two percent from $2.28 million
in the third quarter 2007. The company's diluted earnings per share
(EPS) were $0.50 for the third quarter 2008, up nine percent from
$0.46 in the third quarter 2007.

Net interest margin for the third quarter of 2008 expanded to 3.34
percent, an increase of 10 basis points from the second quarter of
2008 and an increase of 43 basis points from the third quarter of
2007.

Total assets ended the third quarter 2008 at $1.49 billion,
unchanged from the second quarter 2008, and a year ago. The bank's
commercial loan portfolio ended the third quarter 2008 at $639.6
million, up 1.4 percent from $630.8 million in the prior quarter and
up 15 percent from $554.9 million in the third quarter 2007.
Residential mortgage balances declined compared to the prior quarter
and year over year as the bank continued its strategic conversion to a
more commercially oriented balance sheet. Consumer loan balances were
also down year over year, but were up from the prior quarter.

The company continues to be well capitalized with a Tier 1 capital
ratio of 8.03 percent and a total risk-weighted capital ratio in
excess of 13 percent.

"There is no question we are operating in a difficult environment.
I am pleased we are able to report a modest earnings increase while
many other institutions are reporting losses or substantial declines
in year-over-year earnings," said Merrill W. Sherman, president and
chief executive officer of Bancorp Rhode Island, Inc. "We believe
these results evidence the value of a prudent, patient and long-term
approach towards investing that has always formed the hallmark of our
business strategy."

Nonperforming loans at September 30, 2008, totaled $11.7 million,
compared to $6.8 million in the prior quarter and $4.0 million a year
ago. As a percentage of total loans, nonperforming loans ended the
third quarter 2008 at 1.11 percent, compared to 0.64 percent in the
second quarter 2008 and 0.39 percent in the third quarter 2007. The
increase came primarily from loans in the purchased mortgage portfolio
and several commercial credits. The third quarter's provision for loan
and lease losses increased to $1.5 million compared to $970 thousand
in the prior quarter and $290 thousand a year ago. Net charge offs for
the third quarter 2008 were $477 thousand or .04 percent of average
loans outstanding, as compared to $273 thousand or .03 percent of
average loans outstanding in the third quarter 2007.

Total deposits were $1.02 billion at the end of the third quarter
2008, compared to $1.04 billion at the prior quarter end and $1.02
billion a year ago. The overall cost of interest bearing deposits was
reduced by 25 basis points during the third quarter.

Noninterest expense was $9.30 million in the third quarter 2008,
compared to $9.61 million in the prior quarter and $9.49 million in
the third quarter 2007.

Noninterest income was $2.33 million in the third quarter 2008,
down from $2.49 million in the prior quarter and $2.86 million a year
ago. The decrease was primarily due to an impairment loss on available
for sale securities of $219 thousand, offset by $168 thousand of gains
on the sale of available for sale securities.

"Our vision and culture has put Bank Rhode Island in a solid
position in our marketplace. We are more than just open for business -
we have both the willingness and ability to provide new loans to our
customers and potential customers," Sherman added.

The company's Board of Directors approved a dividend of $0.17 per
share. The dividend will be paid on December 3, 2008 to shareholders
of record on November 12, 2008.

Bancorp Rhode Island, Inc. will host a conference call at 10:00
a.m. Eastern Daylight Time (EDT) on Thursday, October 23, to discuss
its third quarter 2008 earnings. The conference call can be accessed
by dialing toll free (800) 762-8779, or via webcast at
http://www.bankri.com/investorrelations. Please dial in at least 10
minutes prior to the start of the call to ensure a timely connection.

There will be a playback of the call available the same day
beginning at approximately 1 p.m. EDT that can be accessed through
11:59 p.m. EDT on Saturday, October 25, 2008. The replay dial-in
number is (800) 406-7325; when prompted, enter conference ID number
3927063. The webcast will be archived on the "Investor Relations" page
of the Bank Rhode Island website at
http://www.bankri.com/investorrelations.

Bancorp Rhode Island, Inc. is the parent company of Bank Rhode
Island, a full-service, FDIC-insured, state-chartered financial
institution. The Bank, headquartered in Providence, Rhode Island,
operates 16 branches throughout Providence, Kent and Washington
Counties.

This release may contain "forward-looking statements" within the
meaning of section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements represent the company's
present expectations or beliefs concerning future events. The company
cautions that such statements are necessarily based on certain
assumptions which are subject to risks and uncertainties, including,
but not limited to, changes in general economic conditions and
changing competition which could cause actual future results to differ
materially from those indicated herein. Further information on these
risk factors is included in the company's filings with the Securities
and Exchange Commission.

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BANCORP RHODE ISLAND, INC.
Selected Financial Highlights (unaudited)

September 30, December 31,
2008 2007
-------------- -------------
Balance Sheet Data: (Dollars in thousands, except
per share data)
----------------------------------------

Total Assets $ 1,489,980 $ 1,477,119
Total Loans and Leases 1,060,739 1,038,132
Nonperforming Loans 11,737 4,149
Total Other Real Estate Owned 352 -
Allowance for Loan and Lease Losses 14,199 12,619
Allowance to Nonperforming Loans and
Leases 120.98% 304.15%
Allowance to Total Loans and Leases 1.34% 1.22%
Total Deposits $ 1,022,154 $ 1,014,780
Total Shareholders' Equity 114,226 113,108

Book Value Per Share $ 24.97 $ 24.79
Tangible Book Value Per Share $ 22.34 $ 22.21
*T

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Quarter Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2008 2007 2008 2007
------------------ -----------------
(Dollars in millions)

Average Balance Sheet Data:
-------------------------------

Average Total Assets $ 1,495 $1,487 $ 1,481 $1,469
Average Total Loans and Leases 1,060 1,025 1,046 1,012
Average Total Interest-bearing
Liabilities 1,186 1,163 1,175 1,152
Average Total Equity 113 116 113 115
*T

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Quarter Ended Nine Months Ended
September 30, June 30,
-------------- -----------------
2008 2007 2008 2007
-------------- -----------------
Statement of Operations (Dollars in thousands, except per
Data: share data)
----------------------------

Interest and Dividend Income $20,137 $21,950 $ 60,650 $64,367
Interest Expense 8,216 11,685 26,997 33,582
------ ------ --------- ------
Net Interest Income 11,921 10,265 33,653 30,785
Provision for Loan and Lease
Losses 1,515 290 2,770 490
Noninterest Income 2,333 2,856 7,728 8,082
Noninterest Expense 9,304 9,492 28,376 28,627
------ ------ --------- ------
Income Before Income Taxes 3,435 3,339 10,235 9,750
Income Taxes 1,111 1,061 3,344 3,100
------ ------ --------- ------
Net Income $ 2,324 $ 2,278 $ 6,891 $ 6,650
====== ====== ========= ======
*T

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Quarter Ended Nine Months Ended
September 30, September 30,
--------------------- --------------------
2008 2007 2008 2007
--------------------- --------------------

Data Per Common Share:
-------------------------

Earnings Per Common Share
- Basic $ 0.51 $ 0.47 $ 1.51 $ 1.38
Earnings Per Common Share
- Diluted $ 0.50 $ 0.46 $ 1.49 $ 1.34
Average Common Shares
Outstanding- Basic 4,566,563 4,818,486 4,562,225 4,824,383
Average Common Shares
Outstanding- Diluted 4,628,916 4,925,366 4,633,419 4,953,963

Selected Operating
Ratios:
-------------------------

Net Interest Margin 3.34% 2.91% 3.19% 2.95%
Return on Assets 0.62% 0.61% 0.62% 0.61%
Return on Equity 8.20% 7.79% 8.12% 7.74%
Efficiency Ratio (1) 65.27% 72.34% 68.57% 73.65%

(1) Calculated by dividing total noninterest expenses by net interest
income plus noninterest income.
*T

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BANCORP RHODE ISLAND, INC.
Consolidated Balance Sheets (unaudited)

September 30, December 31,
2008 2007
--------------------------
ASSETS: (In thousands)
Cash and due from banks $ 28,500 $ 20,465
Overnight investments 805 17,097
---------- ----------
Total cash and
cash
equivalents 29,305 37,562
Investment securities available for sale 60,624 76,986
Mortgage-backed securities available for
sale 272,807 258,195
---------- ----------
Total
available for
sale
securities 333,431 335,181
Stock in Federal Home Loan Bank of Boston 15,671 15,671
Loans and leases receivable:
Commercial loans and leases 639,608 573,668
Residential mortgage loans 215,118 248,728
Consumer and other loans 206,013 215,736
---------- ----------
Total loans
and leases
receivable 1,060,739 1,038,132
Less allowance for loan and lease losses (14,199) (12,619)
---------- ----------
Net loans and
leases
receivable 1,046,540 1,025,513
Premises and equipment, net 12,990 13,721
Goodwill 12,019 11,772
Accrued interest receivable 5,664 6,557
Investment in bank-owned life insurance 24,969 24,186
Prepaid expenses and other assets 9,391 6,956
---------- ----------
Total assets $1,489,980 $1,477,119
========== ==========

LIABILITIES:
Deposits:
Demand deposit accounts $ 181,323 $ 172,634
NOW accounts 56,207 65,191
Money market accounts 3,968 6,054
Savings accounts 373,587 396,838
Certificates of deposit accounts 407,069 374,063
---------- ----------
Total deposits 1,022,154 1,014,780
Overnight and short-term borrowings 55,776 66,795
Wholesale repurchase agreements 10,000 10,000
Federal Home Loan Bank of Boston
borrowings 259,683 241,505
Subordinated deferrable interest
debentures 13,403 13,403
Other liabilities 14,738 17,528
---------- ----------
Total
liabilities 1,375,754 1,364,011
---------- ----------

SHAREHOLDERS EQUITY:
Preferred stock, par value $0.01,
authorized 1,000,000 shares - -
Common stock, par value $0.01 per share,
authorized 11,000,000 shares 49 49
Additional paid-in-capital 71,810 70,123
Treasury stock, at cost (12,055) (10,189)
Retained earnings 57,861 53,194
Accumulated other comprehensive income
loss, net (3,439) (69)
---------- ----------
Total
shareholders'
equity 114,226 113,108
---------- ----------
Total
liabilities
and
shareholders'
equity $1,489,980 $1,477,119
========== ==========

Amortized cost
Investment securities $ 62,750 $ 77,193
Mortgage-backed securities 275,972 258,094

Shares of stock
Preferred stock, issued and outstanding - -
Common stock, issued and outstanding 4,926,420 4,867,121
Treasury stock 352,250 305,200
*T

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BANCORP RHODE ISLAND, INC.
Consolidated Statements of Operations (unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
2008 2007 2008 2007
--------------------- ---------------------
(In thousands, except per share data)
Interest and dividend
income:
Commercial loans and
leases $ 10,076 $ 10,200 $ 29,624 $ 29,440
Residential mortgage loans 2,899 3,427 9,232 10,374
Consumer and other loans 2,776 3,507 8,613 10,249
Mortgage-backed securities 3,570 2,620 10,257 8,223
Investment securities 691 1,577 2,151 4,444
Federal Home Loan Bank of
Boston stock dividends 119 254 512 800
Overnight investments 6 365 261 837
--------- --------- --------- ---------
Total interest and
dividend income 20,137 21,950 60,650 64,367
--------- --------- --------- ---------
Interest expense:
NOW accounts 33 99 138 300
Money market accounts 17 40 65 103
Savings accounts 1,510 2,955 5,688 8,094
Certificate of deposit
accounts 3,213 4,479 10,905 13,369
Overnight and short-term
borrowings 209 703 853 2,006
Wholesale repurchase
agreements 136 136 404 466
Federal Home Loan Bank of
Boston borrowings 2,864 2,767 8,234 7,998
Subordinated deferrable
interest debentures 234 506 710 1,246
--------- --------- --------- ---------
Total interest expense 8,216 11,685 26,997 33,582
--------- --------- --------- ---------
Net interest income 11,921 10,265 33,653 30,785
Provision for loan and
lease losses 1,515 290 2,770 490
--------- --------- --------- ---------
Net interest income
after provision for
loan and lease losses 10,406 9,975 30,883 30,295
--------- --------- --------- ---------
Noninterest income:
Service charges on deposit
accounts 1,469 1,386 4,352 4,090
Income from bank-owned
life insurance 266 264 783 775
Gain on sale of available
for sale securities 168 254 410 254
Impairment of available
for sale securities (219) - (219) -
Net gains on lease sales
and commissions on loans
originated for others 55 295 374 1,018
Commissions on nondeposit
investment products 174 146 629 437
Loan related fees 136 119 443 468
Other income 284 392 956 1,040
--------- --------- --------- ---------
Total noninterest
income 2,333 2,856 7,728 8,082
--------- --------- --------- ---------
Noninterest expense:
Salaries and employee
benefits 5,067 5,316 15,206 15,863
Occupancy 899 882 2,628 2,684
Data processing 697 691 2,124 2,129
Professional services 709 446 2,198 1,698
Marketing 367 347 1,100 1,147
Equipment 233 337 807 1,004
Loan servicing 185 220 503 606
Loan workout and other
real estate owned 78 43 314 47
Other expenses 1,069 1,210 3,496 3,449
--------- --------- --------- ---------
Total noninterest
expense 9,304 9,492 28,376 28,627
--------- --------- --------- ---------
Income before income
taxes 3,435 3,339 10,235 9,750
Income tax expense 1,111 1,061 3,344 3,100
--------- --------- --------- ---------
Net income $ 2,324 $ 2,278 $ 6,891 $ 6,650
========= ========= ========= =========

Per share data:
Basic earnings per common
share $ 0.51 $ 0.47 $ 1.51 $ 1.38
Diluted earnings per
common share $ 0.50 $ 0.46 $ 1.49 $ 1.34

Average common shares
outstanding-basic 4,566,563 4,818,486 4,562,225 4,824,383
Average common shares
outstanding-diluted 4,628,916 4,925,366 4,633,419 4,953,963
*T

Bancorp Rhode Island, Inc.
Linda H. Simmons, 401-574-1652
Chief Financial Officer
or
William C. DeWitt, 401-574-1541
Corporate Communications

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