"Form 10-Q/A"
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-Q/A
Amendment No. 1 to
Quarterly Report Under Section 13 of the Securities Exchange Act of 1934
For quarter ended: September 30, 2004
Commission File No. 001-16101
BANCORP RHODE ISLAND, INC.
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(Exact Name of Registrant as Specified in Its Charter)
RHODE ISLAND 05-0509802
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(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
ONE TURKS HEAD PLACE, PROVIDENCE, RI 02903
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(Address of Principal Executive Offices)
(401) 456-5000
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(Issuer's Telephone Number, Including Area Code)
Not Applicable
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(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes ( X ) No ( )
This amendment to Form 10-Q for the quarter ended September 30, 2004 is
being filed to correct the table contained in Item 3 on page 27, which
inadvertently had the results for the Up and Down interest rate ramps reversed.
The table in revised Item 3 below contains the corrected information.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
INTEREST RATE RISK
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The principal market risk facing the Company is interest rate risk. The
Company's objective regarding interest rate risk is to manage its assets and
funding sources to produce results which are consistent with its liquidity,
capital adequacy, growth and profitability goals, while minimizing any adverse
effect from changes in interest rates. The primary tools for managing interest
rate risk are the securities portfolio, purchased mortgages and borrowings from
the FHLB.
The Company's actions in this regard are taken under the guidance of the
Bank's Asset/Liability Committee ("ALCO"). The ALCO manages the Company's
interest rate risk position using both income simulation and interest rate
sensitivity "gap" analysis. The ALCO has established internal parameters for
monitoring the Company's interest rate risk. These guidelines serve as
benchmarks for evaluating actions to balance the current position against
overall strategic goals. The ALCO monitors current exposures and reports these
to the Board of Directors.
Simulation is used as the primary tool for measuring the interest rate risk
inherent in the Company's balance sheet at a given point in time by showing the
effect on net interest income, over a 24-month period, of interest rate ramps of
up to 200 basis points. These simulations take into account repricing, maturity
and prepayment characteristics of individual products. The ALCO reviews
simulation results to determine whether the downside exposure resulting from
changes in market interest rates remains within established tolerance levels
over both a 12-month and 24-month horizon, and develops appropriate strategies
to manage this exposure. The Company's guidelines for interest rate risk specify
that if interest rates were to shift up or down 200 basis points over a 12-month
period, estimated net interest income for those 12-months and the subsequent 12
months, should decline by no more than 5.0% or 10.0%, respectively. As of
September 30, 2004, net interest income simulation indicated that the Company's
exposure to changing interest rates was within these tolerances. The ALCO
reviews the methodology utilized for calculating interest rate risk exposure and
will adopt changes based on changing market conditions or industry standards.
The following table presents the estimated impact of changes in market
interest rates on the Company's estimated net interest income over a twenty-four
month period beginning October 1, 2004:
Estimated Exposure
to Net Interest Income
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Dollar Percent
Change Change
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(Dollars in thousands)
Initial Twelve Month Period:
Up 200 basis points $ 299 0.74%
Down 200 basis points (132) (0.33%)
Subsequent Twelve Month Period:
Up 200 basis points $ 291 0.73%
Down 200 basis points (2,798) (7.02%)
The Company also uses interest rate sensitivity gap analysis to provide a
more general overview of its interest rate risk profile. The interest rate
sensitivity gap is defined as the difference between interest-earning assets and
interest-bearing liabilities maturing or repricing within a given time period.
At September 30, 2004, the Company's one year cumulative gap was a positive
$53.1 million, or 4.39% of total assets.
For additional discussion on interest rate risk see the section titled
"Asset and Liability Management" on pages 38 to 40 of the Company's 2003 Annual
Report to Shareholders.
PART II. Other Information
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
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.
BANCORP RHODE ISLAND, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Bancorp Rhode Island, Inc.
November 18, 2004 /s/ Merrill W. Sherman
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(Date) Merrill W. Sherman
President and
Chief Executive Officer
November 18, 2004 /s/ Albert R. Rietheimer
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(Date) Albert R. Rietheimer
Chief Financial Officer
and Treasurer