Boston Private Financial Holdings, Inc. Reports Third Quarter 2015 GAAP EPS of $0.16

Third Quarter Highlights:

  • Revenue Growth: Total Revenue increased 9% year-over-year and was down 2% on a linked quarter basis at $85.9 million. Year-over-year, Net Interest Income and Core Fees were up $1.7 million and $5.9 million, respectively. On a linked quarter basis, a $1.4 million increase in Net Interest Income was offset by a $0.9 million decline in Core Fees and a $2.3 million reduction in Other Income.
  • Deposit and Loan Growth: Average Total Deposits increased 10% year-over-year to $5.7 billion. On a linked quarter basis, Average Total Deposits increased 7%, while Average Total Loans grew 7% year-over-year and 4% linked quarter. The Average Loan-to-Deposit ratio was 96% at the end of the third quarter, down from 98% in the third quarter of 2014.
  • Assets Under Management: Total Assets Under Management/Advisory (“AUM”) increased 11% year-over-year to $27.4 billion, reflecting the acquisition of Banyan Partners, partially offset by negative net flows and market action. On a linked quarter basis, AUM were down 8% due to negative net flows and market action.
  • Provision for Loan Loss: The Company recorded a $2.6 million provision expense driven by strong commercial loan growth and net charge-offs of $1.6 million.

BOSTON--()--Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the “Company” or “BPFH”) today reported third quarter 2015 GAAP Net Income Attributable to the Company of $13.5 million, compared to $17.6 million for the second quarter of 2015. Third quarter 2015 diluted earnings per share were $0.16, compared to $0.20 in the second quarter of 2015, and $0.22 in the third quarter of 2014.

“Performance was mixed across our business segments in the third quarter," said Clayton G. Deutsch, CEO. "The Private Bank continued to generate strong growth within our key client segments across all of our regions while AUM was lower linked quarter due to the impact of employee transitions at Boston Private Wealth, sector-based headwinds affecting the Investment Managers and heightened market volatility, which weighed on all segments of our Wealth Management business."

Core Fees and Income

Core Fees and Income increased 18% year-over-year to $39.4 million. The increase reflects revenue from Banyan Partners, which was acquired in October 2014. On a linked quarter basis, Core Fees and Income decreased 2% reflecting lower levels of Assets Under Management.

Total Assets Under Management decreased to $27.4 billion in the third quarter, down 8% from $29.6 billion in the second quarter of 2015. AUM increased 11% year-over-year. The year-over-year increase includes AUM related to the Banyan Partners acquisition, partially offset by negative market action and net outflows. The Company experienced third quarter 2015 AUM net outflows of $751 million, as compared to second quarter 2015 AUM net outflows of $193 million. AUM net outflows for the third quarter 2014 were $211 million. AUM net outflows for the year to date 2015 were $1.3 billion as compared to net outflows of $194 million for the same period of 2014.

Net Interest Income

Net Interest Income for the third quarter was $46.5 million, up 3% from $45.1 million for the second quarter of 2015. On a year-over-year basis, Net Interest Income increased 4% from $44.8 million. The current quarter includes $0.3 million of interest recovered on previous non-accrual loans while the second quarter of 2015 and the third quarter of 2014 include recoveries of $0.1 million and $0.8 million, respectively. Excluding interest recovered on previous non-accrual loans, Net Interest Income increased 3% linked quarter and 6% year-over-year.

Net Interest Margin was 2.84% for the third quarter, down six basis points from 2.90% for the second quarter of 2015. Net Interest Margin was down nine basis points from 2.93% in the third quarter of 2014. Excluding interest recovered on previous nonaccrual loans, Net Interest Margin was down eight basis points linked quarter and down six basis points year-over-year.

Other Income

Other income was a loss of $37,000 in the third quarter of 2015 compared to $2.3 million in the second quarter of 2015. The linked quarter decrease in other income reflects the impact of mark-to-market adjustments on loan swaps, a lower market value adjustment related to the earnout of the Banyan Partners acquisition, and lower gains on partnership investments.

Total Operating Expenses

Total Operating Expenses for the third quarter of 2015 were $61.9 million, down 1% from $62.4 million for the second quarter of 2015. On a year-over-year basis, Total Operating Expenses increased 15% from $54.0 million, primarily due to the impact of the Banyan Partners acquisition. The third and second quarters of 2015 include Restructuring Expense of $1.5 million and $0.2 million, respectively. Excluding Restructuring Expense, Total Operating Expenses decreased 3% linked quarter and increased 12% year-over-year.

Provision and Asset Quality

The Company recorded a provision expense of $2.6 million for the third quarter of 2015, compared to no provision for the second quarter of 2015. The provision expense was driven by strong commercial loan growth and $1.6 million of net charge-offs.

Criticized Loans decreased 4% on a linked quarter basis and 10% year-over-year. Nonaccrual Loans (“Nonaccruals”) increased 3% to $30.7 million on a linked quarter basis. On a year-over-year basis, Nonaccruals decreased 8% from $33.5 million. As a percentage of Total Loans, Nonaccruals were 55 basis points at September 30, 2015, flat from June 30, 2015, and down 9 basis points from September 30, 2014.

Additional credit metrics are listed below on a linked quarter and year-over-year basis:

           
(In millions) September 30,
2015
June 30,
2015
September 30,
2014
Total Criticized Loans $ 160.9 $ 167.3 $ 179.5

Total Loans 30-89 Days Past Due and Accruing (12)

$ 7.0 $ 4.3 $ 3.6
Total Net Loans (Charged-off)/ Recovered $ (1.6 ) $ 1.0 $ 3.3
Allowance for Loan Losses/ Total Loans 1.41 % 1.43 % 1.44 %
 

Capital Ratios

Capital ratios are listed below on a linked quarter and year-over-year basis:

           
September 30,
2015
June 30,
2015
September 30,
2014
BPFH Ratios:
Total Risk-Based Capital * 13.8 % 13.9 % 14.8 %
Tier I Risk-Based Capital * 12.6 % 12.7 % 13.5 %
Tier I Leverage Capital * 9.6 % 9.9 % 10.3 %
TCE/TA 7.2 % 7.2 % 7.6 %
Tier I Common Equity/ Risk Weighted Assets * 9.7 % 9.8 % 10.1 %
 

*September 30, 2015 information is presented based on estimated data.

Dividend Payments
Concurrent with the release of third quarter 2015 earnings, the Board of Directors of the Company declared a cash dividend to common stock shareholders of $0.09 per share. The record date for this dividend is November 6, 2015, and the payment date is November 20, 2015.

The Board of Directors of the Company also declared a cash dividend to holders of the Non-Cumulative Perpetual Preferred Stock, Series D of $17.375 per share, which will result in a dividend of $0.434375 per depositary share. The record date for this dividend is November 16, 2015, and the payment date is December 15, 2015.

Non-GAAP Financial Measures
The Company uses certain non-GAAP financial measures, such as tangible book value per share; the TCE/TA ratio; return on average common equity; return on average tangible common equity; pre-tax, pre-provision earnings; total operating expense excluding restructuring; the efficiency ratio (FTE basis); and Net Interest Income and Net Interest Margin excluding interest recovered on previous non-accrual loans; to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector. A detailed reconciliation table of the Company's GAAP to the non-GAAP measures is attached.

Conference Call
Management will hold a conference call at 8 a.m. Eastern Time on Thursday, October 22, 2015, to discuss the financial results, business highlights and outlook. To access the call:

Dial In #: (888) 317-6003
Elite Entry Number: 0566270

Replay Information:
Available from October 22, 2015 at 12 noon until October 29, 2015
Dial In #: (877) 344-7529
Conference Number: 10073575

The call will be simultaneously webcast and may be accessed on www.bostonprivatefinancial.com

Boston Private Financial Holdings, Inc.
Boston Private Financial Holdings, Inc. is a national financial services organization that owns Wealth Management and Private Banking affiliates with offices in Boston, New York, Los Angeles, San Francisco, San Jose, Atlanta, Florida, Wisconsin, and Texas. The Company has a $7 billion Private Banking balance sheet, and manages over $27 billion of client assets.

The Company positions its affiliates to serve the high net worth marketplace with high quality products and services of unique appeal to private clients. The Company also provides strategic oversight and access to resources, both financial and intellectual, to support affiliate management, marketing, compliance and legal activities. (NASDAQ: BPFH)

For more information about BPFH, visit the Company's website at www.bostonprivatefinancial.com.

Forward-Looking Statements
Certain statements in this press release that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties. These statements include, among others, statements regarding our strategy, evaluations of future interest rate trends and liquidity, prospects for growth in assets, and prospects for overall results over the long term. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Company's control. Forward-looking statements are based on the current assumptions and beliefs of management and are only expectations of future results. The Company's actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, adverse conditions in the capital and debt markets and the impact of such conditions on the Company's private banking, investment management and wealth advisory activities; changes in interest rates; competitive pressures from other financial institutions; the effects of weakness in general economic conditions on a national basis or in the local markets in which the Company operates; changes in loan defaults and charge-off rates; changes in the value of securities and other assets, adequacy of loan loss reserves, or decreases in deposit levels necessitating increased borrowing to fund loans and investments; changes in government regulation; the risk that goodwill and intangibles recorded in the Company's financial statements will become impaired; the risk that the Company's deferred tax asset may not be realized; risks related to the identification and implementation of acquisitions, dispositions and restructurings; changes in assumptions used in making such forward-looking statements; and the other risks and uncertainties detailed in the Company's Annual Report on Form 10-K and updated by the Company's Quarterly Reports on Form 10-Q and other filings submitted to the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made. The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statement is made.

Note to Editors:
Boston Private Financial Holdings, Inc. is not to be confused with Boston Private Bank & Trust Company. Boston Private Bank & Trust Company is a wholly-owned subsidiary of BPFH. The information reported in this press release is related to the performance and results of BPFH.

         
Boston Private Financial Holdings, Inc.
Selected Financial Data
(Unaudited)
     
(In thousands, except share and per share data)   9/30/2015   6/30/2015     9/30/2014  
Assets:
Cash and cash equivalents $ 43,640 $ 63,099 $ 308,912
Investment securities available for sale 1,023,255 992,007 724,638
Investment securities held to maturity 121,679 128,258 132,467
Stock in Federal Home Loan Banks 35,518 35,668 32,534
Loans held for sale 7,685 19,512 4,943
Total loans 5,607,472 5,463,250 5,213,491
Less: Allowance for loan losses   79,246   78,251     75,283  
Net loans 5,528,226 5,384,999 5,138,208
Other real estate owned (“OREO”) 776 929 1,074
Premises and equipment, net 30,841 31,337 29,473
Goodwill 152,082 152,082 110,180
Intangible assets, net 34,806 36,461 17,475
Fees receivable 11,308 12,486 11,439
Accrued interest receivable 17,039 16,383 15,018
Deferred income taxes, net 45,438 47,388 48,443
Other assets   128,235   125,330     114,281  
Total assets $ 7,180,528 $ 7,045,939   $ 6,689,085  
Liabilities:
Deposits $ 5,647,859 $ 5,429,028 $ 5,334,881
Securities sold under agreements to repurchase 35,698 26,660 73,422
Federal funds purchased 60,000 100,000
Federal Home Loan Bank borrowings 461,899 541,529 371,367
Junior subordinated debentures 106,363 106,363 106,363
Other liabilities   109,695   95,074     106,024  
Total liabilities   6,421,514   6,298,654     5,992,057  
Redeemable Noncontrolling Interests 18,257 19,200 21,397
Shareholders’ Equity:
Preferred stock, $1.00 par value; authorized: 2,000,000 shares 47,753 47,753 47,753
Common stock, $1.00 par value; authorized: 170,000,000 shares; issued and outstanding: 83,645,364 shares at September 30, 2015; 83,539,785 shares at June 30, 2015; 80,464,390 shares at September 30, 2014 83,645 83,540 80,464
Additional paid-in capital 598,968 597,424 598,036
Retained earnings/ (accumulated deficit) 5,960 (1,003 ) (49,573 )
Accumulated other comprehensive income/ (loss)   1,287   (2,525 )   (1,312 )
Total Company’s shareholders’ equity   737,613   725,189     675,368  
Noncontrolling interests   3,144   2,896     263  
Total shareholders’ equity   740,757   728,085     675,631  
Total liabilities, redeemable noncontrolling interests and shareholders’ equity $ 7,180,528 $ 7,045,939   $ 6,689,085  
                     
Boston Private Financial Holdings, Inc.
Selected Financial Data
(Unaudited)
Three Months Ended Nine Months Ended
(In thousands, except share and per share data)   9/30/2015     6/30/2015   9/30/2014     9/30/2015   9/30/2014  
Interest and dividend income:
Loans $ 48,058 $ 46,663 $ 47,931 $ 142,721 $ 144,541
Taxable investment securities 1,094 1,075 876 3,164 2,242
Non-taxable investment securities 1,264 1,125 942 3,410 2,760
Mortgage-backed securities 2,681 2,775 1,605 8,070 5,230
Federal funds sold and other   425     282   379     941   978  
Total interest and dividend income   53,522     51,920   51,733     158,306   155,751  
Interest expense:
Deposits 4,007 3,822 3,603 11,721 10,194
Federal Home Loan Bank borrowings 2,051 2,017 2,354 5,999 7,039
Junior subordinated debentures 979 967 976 2,902 2,896
Repurchase agreements and other short-term borrowings   12     29   17     54   49  
Total interest expense   7,049     6,835   6,950     20,676   20,178  
Net interest income 46,473 45,085 44,783 137,630 135,573
Provision/ (credit) for loan losses   2,600       (2,600 )   100   (8,800 )
Net interest income after provision/ (credit) for loan losses   43,873     45,085   47,383     137,530   144,373  
Fees and other income:
Investment management fees 11,360 11,731 12,011 34,805 35,226
Wealth advisory fees 12,515 12,678 12,278 37,868 35,730
Wealth management and trust fees 12,424 13,545 7,251 39,527 21,255
Other banking fee income 2,780 2,031 1,835 6,721 5,192
Gain on sale of loans, net   364     362   183     1,029   1,966  

Total core fees and income

  39,443     40,347   33,558     119,950   99,369  
Gain/ (loss) on sale of investments, net 5 8 8 21 9
Gain/ (loss) on OREO, net 35 150 124 988
Other   (37 )   2,305   53     3,356   510  
Total other income   3     2,313   211     3,501   1,507  
Operating expense:
Salaries and employee benefits 37,938 39,816 35,855 119,881 106,767
Occupancy and equipment 9,064 9,095 7,346 27,194 22,492
Professional services 2,848 3,214 2,796 9,083 9,165
Marketing and business development 2,008 1,706 1,408 5,062 5,564
Contract services and data processing 1,600 1,495 1,404 4,532 4,289
Amortization of intangibles 1,655 1,655 1,031 4,912 3,129
FDIC insurance 916 963 857 2,890 2,607
Restructuring 1,504 220 1,724
Other   4,396     4,254   3,302     12,496   9,356  
Total operating expense   61,929     62,418   53,999     187,774   163,369  
Income before income taxes 21,390 25,327 27,153 73,207 81,880
Income tax expense   8,182     8,000   8,993     24,754   26,464  
Net income from continuing operations 13,208 17,327 18,160 48,453 55,416
Net income from discontinued operations (1)   1,316     1,546   1,272     4,956   4,650  
Net income before attribution to noncontrolling interests 14,524 18,873 19,432 53,409 60,066
Less: Net income attributable to noncontrolling interests   994     1,263   1,167     3,486   3,428  
Net income attributable to the Company $ 13,530   $ 17,610 $ 18,265   $ 49,923 $ 56,638  
                       
Boston Private Financial Holdings, Inc.
Selected Financial Data
(Unaudited)
(In thousands, except share and per share data) Three Months Ended Nine Months Ended
PER SHARE DATA:   9/30/2015     6/30/2015     9/30/2014     9/30/2015     9/30/2014  
Calculation of Income for EPS:
Net income attributable to the Company $ 13,530 $ 17,610 $ 18,265 $ 49,923 $ 56,638
Adjustments to Net Income Attributable to the Company to Arrive at Net Income Attributable to Common Shareholders (2)   154     (1,064 )   (796 )   (1,915 )   (3,052 )
Net Income Attributable to the Common Shareholders 13,684 16,546 17,469 48,008 53,586
LESS: Amount allocated to participating securities   (8 )   (33 )   (75 )   (91 )   (328 )
Net Income Attributable to the Common Shareholders, after allocation to participating securities $ 13,676   $ 16,513   $ 17,394   $ 47,917   $ 53,258  
 
End of Period Common Shares Outstanding 83,645,364 83,539,785 80,464,390
 
Weighted Average Shares Outstanding:
Weighted average basic shares, including participating securities 81,204,808 81,074,380 79,222,590 81,088,511 79,175,634
LESS: Participating securities (100,870 ) (295,818 ) (535,528 ) (287,398 ) (750,021 )
PLUS: Dilutive potential common shares   2,265,257     2,259,919     1,923,896     2,216,808     1,899,015  
Weighted Average Diluted Shares (3)   83,369,195     83,038,481     80,610,958     83,017,921     80,324,628  
 
Diluted Total Earnings per Share $ 0.16 $ 0.20 $ 0.22 $ 0.58 $ 0.66
             
Boston Private Financial Holdings, Inc.
Selected Financial Data
(Unaudited)
(In thousands, except per share data)
FINANCIAL DATA:   9/30/2015     6/30/2015     9/30/2014  
Book Value Per Common Share $ 8.29 $ 8.14 $ 7.80
Tangible Book Value Per Share (4) $ 6.05 $ 5.89 $ 6.22
Market Price Per Share $ 11.70 $ 13.41 $ 12.39
 
ASSETS UNDER MANAGEMENT AND ADVISORY:
Wealth Management and Trust $ 8,060,000 $ 9,028,000 $ 4,701,000
Investment Managers 9,830,000 10,695,000 10,376,000
Wealth Advisory 9,537,000 9,941,000 9,731,000
Less: Inter-company Relationship   (21,000 )   (22,000 )   (22,000 )
Total Assets Under Management and Advisory $ 27,406,000   $ 29,642,000   $ 24,786,000  
 
BPFH FINANCIAL RATIOS:
Total Equity/ Total Assets 10.32 % 10.33 % 10.10 %
Tangible Common Equity/ Tangible Assets (4) 7.24 % 7.17 % 7.62 %
Tier I Common Equity/ Risk Weighted Assets (4) 9.73 % 9.77 % 10.11 %
Allowance for Loan Losses/ Total Loans 1.41 % 1.43 % 1.44 %
Allowance for Loan Losses/ Nonaccrual Loans 258 % 262 % 224 %
Return on Average Assets - Three Months Ended (Annualized) 0.75 % 1.02 % 1.10 %
Return on Average Common Equity - Three Months Ended (Annualized) (5) 7.32 % 9.91 % 11.10 %
Return on Average Tangible Common Equity - Three Months Ended (Annualized) (5) 10.93 % 14.63 % 14.53 %
Efficiency Ratio - Three Months Ended (6) 66.18 % 66.99 % 65.47 %
                                         
Boston Private Financial Holdings, Inc.
Selected Financial Data
(Unaudited)
Average Balance Interest Income/Expense Average Yield/Rate
(In thousands) Three Months Ended Three Months Ended Three Months Ended
AVERAGE BALANCE SHEET:   9/30/15       6/30/15       9/30/14   9/30/15       6/30/15       9/30/14 9/30/15       6/30/15       9/30/14  
AVERAGE ASSETS
Interest-Earning Assets:
Cash and Investments:
Taxable investment securities $ 340,170 $ 342,259 $ 295,395 $ 1,094 $ 1,075 $ 876 1.29 % 1.26 % 1.19 %
Non-taxable investment securities (8) 249,854 242,387 223,499 1,945 1,731 1,449 3.12 % 2.86 % 2.59 %
Mortgage-backed securities 526,408 538,688 325,913 2,681 2,775 1,605 2.04 % 2.06 % 1.97 %
Federal funds sold and other   213,372       90,616       359,899   425       282       379 0.78 %     1.23 %     0.42 %
Total Cash and Investments   1,329,804       1,213,950       1,204,706   6,145       5,863       4,309 1.85 %     1.93 %     1.43 %
Loans (9):
Commercial and Construction (8) 3,043,739 2,874,547 2,841,869 31,195 30,013 31,657 4.01 % 4.13 % 4.36 %
Residential 2,208,004 2,160,987 2,071,326 17,083 16,637 16,384 3.09 % 3.08 % 3.16 %
Home Equity and Other Consumer   287,102       290,029       244,690   1,982       2,038       1,733 2.74 %     2.82 %     2.81 %
Total Loans   5,538,845       5,325,563       5,157,885   50,260       48,688       49,774 3.58 %     3.63 %     3.81 %
Total Earning Assets   6,868,649       6,539,513       6,362,591   56,405       54,551       54,083 3.24 %     3.32 %     3.36 %
LESS: Allowance for Loan Losses 78,263 77,938 76,099
Cash and due From Banks (Non-Interest Bearing) 38,631 41,596 42,080
Other Assets   404,945       410,296       341,953
TOTAL AVERAGE ASSETS $ 7,233,962     $ 6,913,467     $ 6,670,525
AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY
Interest-Bearing Liabilities:
Interest-Bearing Deposits:
Savings and NOW $ 581,041 $ 589,123 $ 583,547 $ 103 $ 87 $ 110 0.07 % 0.06 % 0.07 %
Money Market 2,944,893 2,754,817 2,640,762 2,731 2,551 2,273 0.37 % 0.37 % 0.34 %
Certificates of Deposit   593,466       597,617       607,940   1,173       1,184       1,220 0.78 %     0.79 %     0.80 %
Total Interest-Bearing Deposits 4,119,400 3,941,557 3,832,249 4,007 3,822 3,603 0.39 % 0.39 % 0.37 %
Junior Subordinated Debentures 106,363 106,363 106,363 979 967 976 3.60 % 3.60 % 3.59 %
FHLB Borrowings and Other   526,697       576,403       534,062   2,063       2,046       2,371 1.53 %     1.40 %     1.74 %
Total Interest-Bearing Liabilities   4,752,460       4,624,323       4,472,674   7,049       6,835       6,950 0.59 %     0.59 %     0.61 %
Noninterest Bearing Demand Deposits 1,623,524 1,443,228 1,404,875
Payables and Other Liabilities   102,076       97,641       100,106
Total Average Liabilities 6,478,060 6,165,192 5,977,655
Redeemable Noncontrolling Interests 22,020 22,760 23,584
Average Shareholders' Equity   733,882       725,515       669,286
TOTAL AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY $ 7,233,962     $ 6,913,467     $ 6,670,525
Net Interest Income - on a Fully Taxable Equivalent Basis (FTE) $ 49,356 $ 47,716 $ 47,133
LESS: FTE Adjustment (8)   2,883       2,631       2,350
Net Interest Income (GAAP Basis) $ 46,473     $ 45,085     $ 44,783
Interest Rate Spread 2.65 % 2.73 % 2.75 %
Bank only Net Interest Margin 2.91 % 2.97 % 3.00 %
Net Interest Margin 2.84 % 2.90 % 2.93 %
                               
Boston Private Financial Holdings, Inc.
Selected Financial Data
(Unaudited)
Average Balance Interest Income/Expense Average Yield/Rate
(In thousands) Nine Months Ended Nine Months Ended Nine Months Ended
AVERAGE BALANCE SHEET:   9/30/15       9/30/14   9/30/15       9/30/14 9/30/15       9/30/14  
AVERAGE ASSETS
Interest-Earning Assets:
Cash and Investments:
Taxable investment securities $ 334,473 $ 270,914 $ 3,164 $ 2,242 1.27 % 1.10 %
Non-taxable investment securities (8) 240,902 224,061 5,246 4,246 2.90 % 2.53 %
Mortgage-backed securities 527,081 333,252 8,070 5,230 2.04 % 2.09 %
Federal funds sold and other   150,611       250,942   941       978 0.90 %     0.52 %
Total Cash and Investments   1,253,067       1,079,169   17,421       12,696 1.86 %     1.57 %
Loans (9):
Commercial and Construction (8) 2,924,065 2,844,013 92,575 95,975 4.17 % 4.45 %
Residential 2,170,086 2,048,700 50,375 48,537 3.10 % 3.16 %
Home Equity and Other Consumer   285,066       244,421   5,973       5,281 2.80 %     2.89 %
Total Loans   5,379,217       5,137,134   148,923       149,793 3.67 %     3.86 %
Total Earning Assets   6,632,284       6,216,303   166,344       162,489 3.33 %     3.46 %
LESS: Allowance for Loan Losses 77,751 77,462
Cash and due From Banks (Non-Interest Bearing) 39,547 38,628
Other Assets   409,265       357,896
TOTAL AVERAGE ASSETS $ 7,003,345     $ 6,535,365
AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY
Interest-Bearing Liabilities:
Interest-Bearing Deposits:
Savings and NOW $ 589,885 $ 577,012 $ 294 $ 319 0.07 % 0.07 %
Money Market 2,837,614 2,547,039 7,877 6,112 0.37 % 0.32 %
Certificates of Deposit   598,456       615,903   3,550       3,763 0.79 %     0.82 %
Total Interest-Bearing Deposits 4,025,955 3,739,954 11,721 10,194 0.39 % 0.36 %
Junior Subordinated Debentures 106,363 106,363 2,902 2,896 3.60 % 3.59 %
FHLB Borrowings and Other   524,704       522,881   6,053       7,088 1.52 %     1.79 %
Total Interest-Bearing Liabilities   4,657,022       4,369,198   20,676       20,178 0.59 %     0.61 %
Noninterest Bearing Demand Deposits 1,498,105 1,385,966
Payables and Other Liabilities   101,222       104,556
Total Average Liabilities 6,256,349 5,859,720
Redeemable Noncontrolling Interests 22,157 20,795
Average Shareholders' Equity   724,839       654,850
TOTAL AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY $ 7,003,345     $ 6,535,365
Net Interest Income - on a Fully Taxable Equivalent Basis (FTE) $ 145,668 $ 142,311
LESS: FTE Adjustment (8)   8,038       6,738
Net Interest Income (GAAP Basis) $ 137,630     $ 135,573
Interest Rate Spread 2.74 % 2.85 %
Bank only Net Interest Margin 2.98 % 3.10 %
Net Interest Margin 2.91 % 3.03 %
             
Boston Private Financial Holdings, Inc.
Selected Financial Data
(Unaudited)
(In thousands)
LOAN DATA (10):   9/30/2015   6/30/2015   9/30/2014
Commercial and Industrial Loans:
New England $ 827,301 $ 793,897 $ 758,728
San Francisco Bay 125,093 121,477 124,993
Southern California   84,428   87,038   47,107
Total Commercial and Industrial Loans $ 1,036,822 $ 1,002,412 $ 930,828
Commercial Real Estate Loans:
New England $ 766,253 $ 728,820 $ 712,464
San Francisco Bay 625,145 629,258 628,149
Southern California   512,250   469,337   467,428
Total Commercial Real Estate Loans $ 1,903,648 $ 1,827,415 $ 1,808,041
Construction and Land Loans:
New England $ 111,280 $ 102,068 $ 82,492
San Francisco Bay 35,627 45,221 35,668
Southern California   23,504   13,637   12,385
Total Construction and Land Loans $ 170,411 $ 160,926 $ 130,545
Residential Loans:
New England $ 1,356,057 $ 1,316,705 $ 1,273,544
San Francisco Bay 462,630 466,155 456,355
Southern California   393,199   392,648   367,628
Total Residential Loans $ 2,211,886 $ 2,175,508 $ 2,097,527
Home Equity Loans:
New England $ 81,796 $ 85,057 $ 76,142
San Francisco Bay 27,076 30,013 30,060
Southern California   5,915   5,395   3,025
Total Home Equity Loans $ 114,787 $ 120,465 $ 109,227
Other Consumer Loans:
New England $ 161,186 $ 164,522 $ 124,449
San Francisco Bay 5,782 6,793 6,738
Southern California   2,950   5,209   6,136
Total Other Consumer Loans $ 169,918 $ 176,524 $ 137,323
Total Loans:
New England $ 3,303,873 $ 3,191,069 $ 3,027,819
San Francisco Bay 1,281,353 1,298,917 1,281,963
Southern California   1,022,246   973,264   903,709
Total Loans $ 5,607,472 $ 5,463,250 $ 5,213,491
                 
Boston Private Financial Holdings, Inc.
Selected Financial Data
(Unaudited)
(In thousands)
CREDIT QUALITY (10):  

9/30/2015

    6/30/2015   9/30/2014
Special Mention Loans:
New England $ 46,924 $ 53,626 $ 45,788
San Francisco Bay 11,087 17,150 24,623
Southern California   12,718     5,659   32,614
Total Special Mention Loans $ 70,729   $ 76,435 $ 103,025
Accruing Substandard Loans (11):
New England $ 16,996 $ 16,666 $ 13,589
San Francisco Bay 20,108 20,396 24,267
Southern California   22,405     24,554   5,331
Total Accruing Substandard Loans $ 59,509   $ 61,616 $ 43,187
Nonaccruing Loans:
New England $ 22,815 $ 17,943 $ 16,205
San Francisco Bay 5,096 9,163 15,133
Southern California   2,816     2,785   2,203
Total Nonaccruing Loans $ 30,727   $ 29,891 $ 33,541
Other Real Estate Owned:
New England $ 191 $ 344 $ 489
San Francisco Bay 585 585 585
Southern California        
Total Other Real Estate Owned $ 776   $ 929 $ 1,074
Loans 30-89 Days Past Due and Accruing (12):
New England $ 6,733 $ 3,873 $ 1,825
San Francisco Bay 14 110 653
Southern California   227     356   1,145
Total Loans 30-89 Days Past Due and Accruing $ 6,974   $ 4,339 $ 3,623
Loans (Charged-off)/ Recovered, Net for the Three Months Ended:
New England $ (1,618 ) $ 106 $ 912
San Francisco Bay (57 ) 833 465
Southern California   70     49   1,959
Total Net Loans (Charged-off)/ Recovered $ (1,605 ) $ 988 $ 3,336
Loans (Charged-off)/ Recovered, Net for the Nine Months Ended:
New England $ (622 ) $ 830
San Francisco Bay 3,514 3,064
Southern California   416     3,818
Total Net Loans (Charged-off)/ Recovered $ 3,308   $ 7,712
         
Boston Private Financial Holdings, Inc.
Selected Financial Data
(Unaudited)
 
FOOTNOTES:
(1 ) Net income from discontinued operations consists of contingent payments or expenses related to our divested affiliates, including Davidson Trust Company; Boston Private Value Investors, Inc.; Sand Hill Advisors, LLC; RINET Company, LLC; Gibraltar Private Bank & Trust Company; and Westfield Capital Management Company, LLC.
 
(2 ) Adjustments to net income attributable to the Company to arrive at net income attributable to the common shareholders, as presented in these tables, include decrease/ (increase) in noncontrolling interests redemption value, dividends paid on preferred stock, and dividends on participating securities.
 
(3 ) When the Company has positive net income from continuing operations attributable to the common shareholders, the Company adds additional shares to basic weighted average shares outstanding to arrive at diluted weighted average shares outstanding for the diluted earnings per share calculation. These additional shares reflect the assumed exercise, conversion, or contingent issuance of dilutive securities. If the additional shares would result in anti-dilution they would be excluded from the diluted earnings per share calculation. The potential dilutive shares relate to: unexercised stock options, unvested non-participating restricted stock, and unexercised stock warrants. See Part II. Item 8. "Financial Statements and Supplementary Data - Note 16: Earnings Per Share" in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 for additional information.
 
(4 ) The Company uses certain non-GAAP financial measures, such as: Tangible Book Value Per Share and the Tangible Common Equity ("TCE") to Tangible Assets ("TA") ratio to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector.
 
Reconciliations from the Company's GAAP Total Equity to Total Assets ratio to the Non-GAAP TCE to TA ratio, and from GAAP Book Value to Non-GAAP Tangible Book Value are presented below:
 
The Company calculates Tangible Assets by adjusting Total Assets to exclude Goodwill and Intangible Assets.
 
The Company calculates Tangible Common Equity by adjusting Total Equity to exclude non-convertible Series D Preferred stock and exclude Goodwill and Intangible Assets, net.
 
(In thousands, except per share data)

9/30/2015

6/30/2015

9/30/2014

Total Balance Sheet Assets $ 7,180,528 $ 7,045,939 $ 6,689,085
LESS: Goodwill and Intangible Assets, net   (186,888 )   (188,543 )   (127,655 )
Tangible Assets (non-GAAP) $ 6,993,640 $ 6,857,396 $ 6,561,430
Total Shareholders' Equity $ 740,757 $ 728,085 $ 675,631
LESS: Series D Preferred Stock (non-convertible) (47,753 ) (47,753 ) (47,753 )
LESS: Goodwill and Intangible Assets, net   (186,888 )   (188,543 )   (127,655 )
Total adjusting items   (234,641 )   (236,296 )   (175,408 )
Tangible Common Equity (non-GAAP) $ 506,116   $ 491,789   $ 500,223  
Total Equity/Total Assets 10.32 % 10.33 % 10.10 %
Tangible Common Equity/Tangible Assets (non-GAAP) 7.24 % 7.17 % 7.62 %
 
Total Risk Weighted Assets * $ 5,396,783 $ 5,278,908 $ 5,000,790
Tier I Common Equity * $ 525,004 $ 515,546 $ 505,474
Tier I Common Equity/ Risk Weighted Assets 9.73 % 9.77 % 10.11 %
 
End of Period Shares Outstanding 83,645 83,540 80,464
 
Book Value Per Common Share $ 8.29 $ 8.14 $ 7.80
Tangible Book Value Per Share (non-GAAP) $ 6.05 $ 5.89 $ 6.22
* Risk Weighted Assets and Tier I Common Equity for September 30, 2015 are presented based on estimated data.
 
(5 ) The Company uses certain non-GAAP financial measures, such as: Return on Average Common Equity and Return on Average Tangible Common Equity to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector.
 
Reconciliations from the Company's GAAP Return on Average Equity ratio to the Non-GAAP Return on Average Common Equity ratio, and the Non-GAAP Return on Average Tangible Common Equity ratio are presented below:
 
The Company annualizes income data based on the number of days in the period presented and a 365 day year. The Company calculates Average Common Equity by adjusting Average Equity to exclude Average Preferred Equity. The Company calculates Average Tangible Common Equity by adjusting Average Equity to exclude Average Goodwill and Intangible Assets, net and Average Preferred Equity.
Three Months Ended Nine months ended
(In thousands)

9/30/2015

6/30/2015

9/30/2014

 

9/30/2015

 

9/30/2014

Total average shareholders' equity $ 733,882 $ 725,515 $ 669,286 $ 724,839 $ 654,850
LESS: Average Series D preferred stock (non-convertible)   (47,753 )   (47,753 )   (47,753 )   (47,753 )   (47,753 )
Average common equity (non-GAAP)   686,129     677,762     621,533     677,086     607,097  
LESS: Average goodwill and intangible assets, net   (187,728 )   (189,420 )   (128,178 )   (189,391 )   (129,217 )
Total adjusting items   (187,728 )   (189,420 )   (128,178 )   (189,391 )   (129,217 )
Average Tangible Common Equity (non-GAAP) $ 498,401   $ 488,342   $ 493,355   $ 487,695   $ 477,880  
 
Net income attributable to the Company $ 13,530 $ 17,610 $ 18,265 $ 49,923 $ 56,638
LESS: Dividends on Series D preferred stock   (869 )   (869 )   (869 )   (2,606 )   (2,606 )
Common net income (non-GAAP) 12,661 16,741 17,396 47,317 54,032
ADD: Amortization of intangibles, net of tax (35%)   1,076     1,076     670     3,193     2,034  
Tangible common net income (non-GAAP) $ 13,737   $ 17,817   $ 18,066   $ 50,510   $ 56,066  
 
Return on Average Equity - (Annualized) 7.31 % 9.74 % 10.83 % 9.21 % 11.56 %
Return on Average Common Equity - (Annualized) (non-GAAP) 7.32 % 9.91 % 11.10 % 9.34 % 11.90 %
Return on Average Tangible Common Equity - (Annualized) (non-GAAP) 10.93 % 14.63 % 14.53 % 13.85 % 15.69 %
 
(6 ) The Company uses certain non-GAAP financial measures, such as: pre-tax, pre-provision earnings, total operating expenses excluding restructuring expense, and the efficiency ratio to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector.
 
Reconciliations from the Company's GAAP income from continuing operations before income taxes to non-GAAP pre-tax, pre-provision earnings; from GAAP total operating expense to non-GAAP total operating expense excluding restructuring; and from GAAP efficiency ratio to Non-GAAP efficiency ratio (FTE basis), excluding restructuring, are presented below:
Three Months Ended Nine months ended

(In thousands)

9/30/2015

6/30/2015

9/30/2014

9/30/2015

 

9/30/2014

Income before income taxes (GAAP) $ 21,390 $ 25,327 $ 27,153 $ 73,207 $ 81,880
ADD BACK: Provision/ (credit) for loan losses   2,600         (2,600 )   100     (8,800 )
Pre-tax, pre-provision earnings (non-GAAP) $ 23,990 $ 25,327 $ 24,553 $ 73,307 $ 73,080
 
Total operating expense (GAAP) $ 61,929 $ 62,418 $ 53,999 $ 187,774 $ 163,369
Less: Amortization of intangibles 1,655 1,655 1,031 4,912 3,129
Less: Restructuring   1,504     220         1,724      
Total operating expense (excluding amortization of intangibles and restructuring) (non-GAAP) $ 58,770 $ 60,543 $ 52,968 $ 181,138 $ 160,240
Total operating expense (excluding restructuring) (non-GAAP) 60,425 62,198 53,999 186,050 163,369
 
Net interest income $ 46,473 $ 45,085 $ 44,783 $ 137,630 $ 135,573
Total core fees and income 39,443 40,347 33,558 119,950 99,369
Total other income 3 2,313 211 3,501 1,507
FTE income   2,883     2,631     2,350     8,038     6,738  
Total revenue (FTE basis) $ 88,802 $ 90,376 $ 80,902 $ 269,119 $ 243,187
Efficiency Ratio, before deduction of intangible amortization (GAAP) 72.08 % 71.14 % 68.74 % 71.92 % 69.09 %
Efficiency Ratio, FTE Basis excluding restructuring (non-GAAP) 66.18 % 66.99 % 65.47 % 67.31 % 65.89 %
 
(7 ) The Company uses certain non-GAAP financial measures, such as: net interest income excluding interest recovered on previous non-accrual loans and net interest margin excluding interest recovered on previous non-accrual loans to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector.
 
Reconciliations from the Company's GAAP net interest income to non-GAAP net interest income excluding interest recovered on previous non-accrual loans; and from GAAP net interest margin to non-GAAP net interest margin excluding interest recovered on previous non-accrual loans, are presented below:
 
Three Months Ended

(In thousands)

9/30/2015

6/30/2015

9/30/2014

Net interest income (GAAP basis) $ 46,473 $ 45,085 $ 44,783
ADD: FTE income   2,883     2,631     2,350  
Net interest income, FTE basis 49,356 47,716 47,133
LESS: Interest recovered on previously non-accrual loans   298     69     789  
Net interest income, FTE basis, excluding interest recovered on previously non-accrual loans (non-GAAP)   49,058     47,647     46,344  
 
Net Interest Margin (FTE basis) 2.84 % 2.90 % 2.93 %
Net Interest Margin, FTE basis, excluding interest recovered on previously non-accrual loans (non-GAAP) 2.82 % 2.90 % 2.88 %
 
(8 ) Interest Income on Non-taxable Investments and Loans are presented on an FTE basis using the federal statutory rate of 35% for each period presented.
 
(9 ) Includes Loans Held for Sale and Nonaccrual Loans.
 
(10 ) The concentration of the Private Banking loan data and credit quality is primarily based on the location of the lender's regional offices.
 
(11 ) Accruing substandard loans include loans that are classified as substandard but are still accruing interest income. Boston Private Bank & Trust Company may classify a loan as substandard where known information about possible credit problems of the related borrowers causes management to have doubts as to the ability of such borrowers to comply with the present repayment terms and which may result in disclosure of such loans as nonaccrual at some time in the future.
 
(12 ) In addition to loans 30-89 days past due and accruing, at September 30, 2015 the Company had one loan totaling $0.1 million that was more than 90 days past due but still on accrual status. This loan originated in the New England region. At June 30, 2015 the Company had no loans that were more than 90 days past due but still on accrual status. At September 30, 2014, the Company had two loans totaling $0.5 million that were more than 90 days past due but still on accrual status. These loans originated in the New England region.

Contacts

Boston Private Financial Holdings, Inc.
Steven Gaven, 617-912-3793
Vice President Corporate Finance and Director of Investor Relations
sgaven@bostonprivate.com

Contacts

Boston Private Financial Holdings, Inc.
Steven Gaven, 617-912-3793
Vice President Corporate Finance and Director of Investor Relations
sgaven@bostonprivate.com