NET INTEREST INCOME
Net interest income for the second quarter 2012 increased to $42.8 million from $27.8 million in the second quarter 2011 and decreased slightly as compared to $43.6 million in the first quarter 2012. Net interest income for the first half of 2012 increased to $86.4 million from $53.7 million in the first half of 2011.
Net interest margin for the second quarter 2012 was 3.81 percent and 3.85 percent for the six months ended June 30, 2012. The decrease of 6 basis points from the first quarter 2012 reflects management’s ongoing efforts to offset the impact of ongoing price competition with declines in the cost of funds.
Non-interest income was $4.7 million for the second quarter 2012, up $1.1 million from the first quarter 2012. Fee income increased from $3.7 million in the first quarter 2012 to $4.2 million, or 11.6 percent, in the second quarter 2012. Non-interest income also includes $0.8 million of gains on sales of investment securities in the second quarter 2012 resulting from a partial restructuring of the investment portfolios. Non-interest income was $8.3 million for the first half of 2012, up $5.7 million from the first half of 2011. The growth in the first half of 2012 was primarily driven by $5.6 million of non-interest income attributable to Bancorp Rhode Island.
Non-interest expense of $28.7 million in the second quarter 2012 decreased $3.9 million from the first quarter 2012 and increased $12.8 million from the second quarter 2011. The increase from second quarter 2011 to second quarter 2012 reflects the Company’s acquisition of Bancorp Rhode Island. Compensation expense decreased $0.5 million, or 12.3 percent from first quarter 2012. The $3.9 million decrease in professional services, from $6.5 million in the first quarter 2012 to $2.6 million in the second quarter 2012, reflects the decrease in $5.4 million of merger-related expenses included in the quarter ended March 31, 2012, offset by $1.5 million in professional services associated with infrastructure improvements and charter conversions.