Bancorp Rhode Island shareholder group fires back, claims company failed to address issues

By Lisa Kerner

Charlotte, N.C., Feb. 4 - PL Capital Group, a group of Bancorp Rhode Island, Inc. shareholders led by PL Capital, LLC, said it is considering adding a proposal on executive compensation to the three proposals the group plans to formally submit for consideration at the 2009 annual shareholders meeting.

PL Capital Group made its comments in a Feb. 3 letter to Bancorp Rhode Island in response to the company's letter to the shareholder group on the same day, it was reported in a schedule 13D/A filed with the Securities and Exchange Commission.

According to PL Capital Group, Bancorp Rhode Island failed in its letter to address the shareholder group's "substantive concerns" regarding the company's performance, the loss of shareholder value and "missed strategic opportunities."

Bancorp Rhode Island's letter also failed to address PL Capital Group's request that the company's earnings release be issued the afternoon prior to the next morning's conference call.

PL Capital Group, with an 8.3% stake in the company, said Bancorp Rhode Island management's mishandling of a Jan. 29 conference call with analysts, investors and shareholders could have been unintentional. However, another stockholder was also unable to ask questions as the call ended abruptly, PL Capital Group's letter said.

"With regard to costs incurred by the company in the 2008 proxy contest ($500,000 pretax), we are not responsible for management's inability to control costs," PL Capital Group said.

"If management's inability to complete this project (the proxy contest) without incurring such high costs is indicative of all of its activities, it may explain why the company's efficiency ratio is so high," said PL Capital Group, noting that it spent less than one-third of what Bancorp Rhode Island did.

While PL Capital Group's nominees for election to the Bancorp Rhode Island board may have been "soundly defeated" in the past two years as the company said, PL Capital Group believes many shareholders simply gave the Providence, R.I.-based financial institution "the benefit of the doubt."

"In hindsight, this appears to be a mistake, in our view, given the results," PL Capital Group said.

It was previously reported that PL Capital Group's shareholder proposals will include a majority voting standard and declassifying and reducing the size of Bancorp Rhode Island's board.

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