Bancorp Rhode Island shareholder plans to nominate two outside directors

By Angela McDaniels

Seattle, Jan. 24 - Bancorp Rhode Island, Inc. shareholder PL Capital LLC principal Richard Lashley filed a notice of intent to nominate himself and fellow PL Capital principal John W. Palmer to serve as directors of the company at the company's 2007 annual meeting of shareholders, according to a PL Capital news release.

"Despite underperforming, Bancorp Rhode Island has an attractive branch network and market share. Their franchise value will likely cause an acquirer of Bancorp Rhode Island to pay more for Bancorp Rhode Island than the company can create by remaining independent," Lashley said in the release.

"We also believe there are many potential acquirers of Bancorp Rhode Island, all of whom are fully capable of serving the needs of local businesses and customers in Rhode Island. We look forward to becoming members of the board of directors so that we can advocate for a realistic examination of the Bancorp Rhode Island's prospects and strategic alternatives."

In July 2006, Palmer and Lashley spoke with Bancorp Rhode Island president and chief executive officer Merrill W. Sherman and treasurer and chief financial officer Linda Simmons, according to a schedule 13D filed with the Securities and Exchange Commission on Wednesday.

Among other things, Palmer and Lashley noted that the company had not acquired any stock under the 5% stock repurchase authorization announced on April 18, 2006 and inquired about the prospects for achieving positive operating leverage, noting that year-over-year revenues for the second quarter of 2006 were down roughly 1% while operating expenses were up 7%.

Management would not provide any details as to why no stock was repurchased or any details on the prospects for positive leverage, according to the filing.

Additionally, Lashley and Palmer were concerned that PL Capital's modeling projected that Bancorp Rhode Island's efficiency ratio will remain above 70% in 2007 and 2008, versus PL Capital's expectation for "well-run" commercial banks of 55% to 60%.

Management claimed that 55% to 60% was unrealistic and that they did not share that level as a goal, according to the filing.

Lashley and Palmer also met with management in December to discuss their qualifications to be board members, though they said in the filing that no agreements were reached.

PL Capital owns 382,220 shares of Bancorp Rhode Island stock, or 8% of the outstanding shares, and paid $13,719,310 to purchase the shares.

Bancorp Rhode Island Inc. is based in Providence, R.I., and is the holding company for Bank Rhode Island, which provides commercial banking services.

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