Boston Private Reports First Quarter 2020 Results

First Quarter 2020 Highlights include:

  • Net income of $0.8 million, or $0.01 per diluted share
  • Return on average common equity (non-GAAP) of 0.4%
  • Return on average tangible common equity (non-GAAP) of 0.7%
  • Average total deposits of $7.1 billion, a 5% increase year-over-year
  • Average total loans of $7.0 billion, a 2% increase year-over-year
  • Total assets under management/advisory (“AUM”) of $14.5 billion, a 10% decrease year-over-year
  • Total net flows of $150 million, $176 million of which was attributable to the Wealth Management and Trust segment
  • On January 1, 2020, the Company adopted the Current Expected Credit Loss ("CECL") accounting standard
  • Provision for credit losses of $18.8 million ($0.16 per share after tax impact), which includes $17.0 million of provision for loan loss expense and $1.8 million of Other expense for unfunded loan commitments, reflecting the impact of the COVID-19 pandemic
  • $12.8 million of shares repurchased, completing the remaining availability under the existing program

BOSTON--()--Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the “Company” or “BPFH”) today reported first quarter 2020 Net income attributable to the Company of $0.8 million, compared to $21.2 million for the fourth quarter of 2019 and $19.4 million for the first quarter of 2019. First quarter 2020 Diluted earnings per share were $0.01, compared to $0.26 in the fourth quarter of 2019 and $0.25 in the first quarter of 2019.

“I am extremely proud of the commitment and dedication shown by the Boston Private employees throughout the COVID-19 pandemic,” said Anthony DeChellis, CEO of Boston Private. “Many of our employees have worked around the clock in difficult circumstances to deliver much needed capital and advice to our clients as we navigate this crisis together.

“This quarter’s results reflect the implementation of CECL and a reserve build related to the uncertain outlook of the pandemic’s impact on our economy. Before the reserve build, our Company demonstrated net interest income growth and expense discipline, while generating positive net flows in our Wealth Management & Trust business.”

Summary Financial Results - Reported

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Change

($ in millions, except for per share data)

 

1Q20

 

4Q19

 

1Q19

 

LQ

 

Y/Y

Net income

 

$0.8

 

 

$21.2

 

 

$19.4

 

 

(96)

%

 

(96)

%

Diluted earnings per share

 

$0.01

 

 

$0.26

 

 

$0.25

 

 

(96)

%

 

(96)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Measures:

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax, pre-provision income

 

$17.9

 

 

$24.5

 

 

$23.0

 

 

(27)

%

 

(22)

%

Return on average common equity ("ROACE")

 

0.4

%

 

10.3

%

 

10.3

%

 

 

 

 

Return on average tangible common equity ("ROATCE")

 

0.7

%

 

11.5

%

 

11.6

%

 

 

 

 

The Company's reported financial results decreased linked quarter and year-over-year primarily as a result of the total provision for credit losses of $18.8 million in the first quarter of 2020. $1.8 million of the provision for credit loss expense related to unfunded commitments was recognized as noninterest expense, which negatively impacted first quarter 2020 Pre-tax, pre-provision income.

In addition to presenting the Company’s results in conformity with GAAP, the Company uses certain non-GAAP financial measures to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector. For additional information on non-GAAP measures, see page 5. A reconciliation of GAAP to non-GAAP results can be found beginning on page 15.

Summary Financial Results - Operating Basis (non-GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Change

($ in millions, except for per share data)

 

1Q20

 

4Q191

 

1Q192

 

LQ

 

Y/Y

Net income

 

$

0.8

 

 

$

20.5

 

 

$

20.7

 

 

(96

)%

 

(96

)%

Diluted earnings per share

 

$

0.01

 

 

$

0.25

 

 

$

0.27

 

 

(96

)%

 

(96

)%

 

 

 

 

 

 

 

 

 

 

 

Pre-tax, pre-provision income

 

$

17.9

 

 

$

23.4

 

 

$

24.7

 

 

(23

)%

 

(28

)%

Return on average common equity

 

0.4

%

 

9.9

%

 

11.0

%

 

 

 

 

Return on average tangible common equity

 

0.7

%

 

11.1

%

 

12.4

%

 

 

 

 

14Q19 results adjusted to exclude the net after-tax impact of $1.1 million gain related to the revaluation of a receivable from the divestiture of Bingham, Osborn & Scarborough, LLC ("BOS")

21Q19 results adjusted to exclude the net after-tax impact of $1.6 million restructuring expense

Net Interest Income and Margin

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Change

($ in millions)

 

1Q20

 

4Q19

 

1Q19

 

LQ

 

Y/Y

Net interest income

 

$57.3

 

 

$56.1

 

 

$58.3

 

 

2

%

 

(2

)%

Less: Interest recovered on previous nonaccrual loans

 

 

 

 

 

0.3

 

 

(71

)%

 

(97

)%

Core net interest income (non-GAAP)

 

$57.3

 

 

$56.1

 

 

$58.1

 

 

2

%

 

(1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

2.76

%

 

2.70

%

 

2.90

%

 

 

 

 

Core net interest margin (non-GAAP)

 

2.76

%

 

2.70

%

 

2.89

%

 

 

 

 

Net interest income for the first quarter of 2020 was $57.3 million, a 2% increase linked quarter and a 2% decrease year-over-year. The linked quarter increase was driven by lower funding costs, partially offset by lower interest on earning assets.

The Company’s Net interest margin increased 6 basis points on a linked quarter basis to 2.76% driven by higher net interest income while interest-earning assets remained generally flat. The Company's total cost of funds declined 16 basis points from 0.99% to 0.83% as a result of lower deposit costs and higher average deposit balances that replaced higher cost borrowings.

Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Change

($ in millions)

 

1Q20

 

4Q19

 

1Q19

 

LQ

 

Y/Y

Wealth management and trust fees

 

$

18.4

 

 

$

18.7

 

$

19.1

 

(2

)%

 

(4

)%

Investment management fees

 

 

1.9

 

 

 

2.6

 

 

2.7

 

(25

)%

 

(27

)%

Private banking fees 3

 

 

2.6

 

 

 

3.5

 

 

2.6

 

(26

)%

 

1

%

Total core fees and income

 

$

22.9

 

 

$

24.8

 

$

24.3

 

(8

)%

 

(6

)%

Total other income

 

 

(1.4

)

 

 

2.0

 

 

1.0

 

nm

 

 

nm

 

Total noninterest income

 

$

21.5

 

 

$

26.8

 

$

25.2

 

(20

)%

 

(15

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Memo: Excluding Notable Items

 

 

 

 

 

 

 

Wealth management and trust fees

 

$

18.4

 

 

$

18.7

 

$

19.1

 

(2

)%

 

(4

)%

Investment management fees

 

 

1.9

 

 

 

2.6

 

 

2.7

 

(25

)%

 

(27

)%

Private banking fees 3

 

 

2.6

 

 

 

3.5

 

 

2.6

 

(26

)%

 

1

%

Total core fees and income

 

$

22.9

 

 

$

24.8

 

$

24.3

 

(8

)%

 

(6

)%

Total other income (non-GAAP) 4

 

 

(1.4

)

 

 

0.9

 

 

1.0

 

nm

 

 

nm

 

Total noninterest income (non-GAAP) 4

 

$

21.5

 

 

$

25.7

 

$

25.2

 

(16

)%

 

(15

)%

nm = not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

3 Private banking fees includes Other banking fee income and Gain/(loss) on sale of loans, net

4 Excludes $1.1 million gain related to revaluation of a receivable from the divestiture of BOS in 4Q19

Total core fees and income for the first quarter of 2020 was $22.9 million, an 8% decrease linked quarter. The linked quarter decrease was primarily driven by lower Investment management fees and lower revenue associated with the gain on sale of loans, which was elevated during the fourth quarter of 2019 as a result of a residential loan sale.

Total other income of $(1.4) million during the first quarter of 2020 was negative as a result of market-related valuation adjustments on derivatives and securities related to the Company's Deferred Compensation Plan.

Assets Under Management / Advisory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Change

($ in millions)

 

1Q20

 

4Q19

 

1Q19

 

LQ

 

Y/Y

Wealth Management and Trust

 

$

 

13,497

 

$

 

15,224

 

$

 

14,564

 

(11

)

%

 

(7

)

%

Other 6

 

 

1,016

 

 

1,544

 

 

1,558

 

(34

)

%

 

(35

)

%

Total assets under management / advisory

 

$

 

14,513

 

$

 

16,768

 

$

 

16,122

 

(13

)

%

 

(10

)

%

6 Includes results from Dalton, Greiner, Hartman, Maher & Co, LLC ("DGHM")

Total assets under management / advisory were $14.5 billion at the end of the first quarter of 2020, a 13% decrease linked quarter and 10% decrease year-over-year. The linked quarter and year-over-year decreases were primarily driven by lower equity market values.

Total net flows were $150.0 million during the first quarter of 2020, $176.0 million of which was attributable to the Wealth Management and Trust segment.

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Change

($ in millions)

 

1Q20

 

4Q19

 

1Q19

 

LQ

 

Y/Y

Salaries and employee benefits

 

$

35.1

 

$

34.2

 

$

35.7

 

3

%

 

(2

)%

Occupancy and equipment

 

 

7.6

 

 

7.6

 

 

8.3

 

1

%

 

(8

)%

Information systems

 

 

6.7

 

 

6.5

 

 

5.9

 

4

%

 

15

%

Professional services

 

 

3.6

 

 

3.9

 

 

3.6

 

(8

)%

 

1

%

Marketing and business development

 

 

1.9

 

 

2.0

 

 

1.1

 

(6

)%

 

74

%

Amortization of intangibles

 

 

0.7

 

 

0.7

 

 

0.7

 

6

%

 

6

%

FDIC insurance

 

 

 

 

0.7

 

(100

)%

 

(100

)%

Restructuring

 

 

 

 

1.6

 

%

 

(100

)%

Other

 

 

5.2

 

 

3.6

 

 

3.0

 

44

%

 

75

%

Total noninterest expense

 

$

60.9

 

$

58.5

 

$

60.6

 

4

%

 

1

%

 

 

 

 

 

 

 

 

 

 

 

 

Memo: Excluding Notable Items

 

 

 

 

 

 

 

 

 

 

 

Restructuring2

 

 

 

 

1.6

 

nm

 

 

(100

)%

Total noninterest expense (non-GAAP)

 

$

60.9

 

$

58.5

 

$

58.9

 

4

%

 

3

%

21Q19 results adjusted to exclude the net after-tax impact of $1.6 million restructuring expense

Total noninterest expense for the first quarter of 2020 was $60.9 million, which includes $1.8 million of provision expense related to unfunded loan commitments recognized in Other expense. Total noninterest expense increased 4% linked quarter primarily driven by the $1.8 million provision expense and seasonal compensation expense.

Total noninterest expense (non-GAAP) increased 3% year-over-year primarily driven by the $1.8 million provision expense and higher Information systems expense from new initiatives.

Income Tax Expense

The Company's effective tax rate for the first quarter of 2020 was 11.2%. This rate is lower than prior quarters of 2019 primarily because net tax benefits had a more significant impact on the effective tax rate as a result of lower levels of pre-tax income in 2020 as compared to 2019.

Loans and Deposits - QTD Averages

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Change

($ in millions)

 

1Q20

 

4Q19

 

1Q19

 

LQ

 

Y/Y

Commercial and industrial

 

$

1,149

 

 

$

1,142

 

 

$

1,070

 

 

1

%

 

7

%

Commercial real estate

 

 

2,582

 

 

 

2,562

 

 

 

2,398

 

 

1

%

 

8

%

Construction and land

 

 

233

 

 

 

217

 

 

 

211

 

 

8

%

 

10

%

Residential

 

 

2,851

 

 

 

2,935

 

 

 

2,973

 

 

(3

)%

 

(4

)%

Home equity

 

 

86

 

 

 

85

 

 

 

91

 

 

2

%

 

(5

)%

Other consumer

 

 

132

 

 

 

132

 

 

 

134

 

 

%

 

(1

)%

Total loans

 

$

7,034

 

 

$

7,073

 

 

$

6,877

 

 

(1

)%

 

2

%

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing deposits

 

 

2,046

 

 

 

2,002

 

 

 

1,975

 

 

2

%

 

4

%

Interest bearing deposits

 

 

5,061

 

 

 

4,957

 

 

 

4,792

 

 

2

%

 

6

%

Total deposits

 

$

7,107

 

 

$

6,959

 

 

$

6,767

 

 

2

%

 

5

%

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing deposits as a % of Total deposits

 

 

29

%

 

 

29

%

 

 

29

%

 

 

 

 

 

 

The average loan to average deposit ratio declined linked quarter from 101.6% to 99.0% as a result of first quarter 2020 deposit inflows and a linked quarter decline in loans, primarily driven by a residential loan sale late in the fourth quarter of 2019.

Average total loans in the first quarter of 2020 increased 2% year-over-year, primarily driven by growth in commercial real estate and commercial and industrial loans, partially offset by a decline in residential loans.

Average total deposits in the first quarter of 2020 increased 5% year-over-year, primarily driven by an increase in money market accounts and non-interest bearing deposits, partially offset by a decline in brokered certificates of deposits.

The cost of total deposits was 0.72%, a decrease of 14 basis points linked quarter and 12 basis points year-over-year.

Provision and Asset Quality

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in millions)

 

1Q20

 

4Q19

 

3Q19

 

2Q19

 

1Q19

Provision/(credit) for loan losses

 

$

17.0

 

 

$

(3.7

)

 

$

0.2

 

 

$

1.4

 

 

$

(1.4

)

Total net loans (charged-off)/ recovered

 

 

(0.3

)

 

 

0.3

 

 

 

0.1

 

 

 

(0.1

)

 

 

(0.1

)

Total nonaccrual loans

 

 

24.3

 

 

 

16.1

 

 

 

17.6

 

 

 

17.2

 

 

 

12.0

 

Total criticized and classified loans

 

 

204.9

 

 

 

126.0

 

 

 

139.0

 

 

 

141.7

 

 

 

141.3

 

Total loans 30-89 days past due and accruing

 

 

14.9

 

 

 

25.9

 

 

 

4.2

 

 

 

2.4

 

 

 

17.7

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios:

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses as a % of Total loans

 

 

0.97

%

 

 

1.03

%

 

1.07

%

 

 

1.06

%

 

 

1.07

%

Nonaccrual loans as a % of Total loans

 

 

0.35

%

 

 

0.23

%

 

0.25

%

 

 

0.24

%

 

 

0.17

%

On January 1, 2020, the Company adopted the Current Expected Credit Loss accounting standard ("CECL"). Under this standard, the allowance for credit losses reflects expected credit losses over the life of loans and incorporates macroeconomic forecasts as well as historical loss rates. The adoption of CECL resulted in a net decrease in reserves of $19.0 million.

During the first quarter of 2020, the Company recognized a total provision for credit losses and unfunded loan commitments expense of $18.8 million, which includes a provision for loan loss expense of $17.0 million and $1.8 million for unfunded loan commitments, which is recognized as Other expense within Noninterest expense. The provision expense calculated under the CECL methodology was driven by the changes in economic projections late in the first quarter of 2020 to reflect the impact of the COVID-19 pandemic. This quarter's Provision for loan loss expense of $17.0 million compares to a provision credit of $3.7 million in the fourth quarter of 2019 and $1.4 million in the first quarter of 2019, both from the prior accounting basis.

Total net loans charged-off for the quarter was $0.3 million, compared to net loans recovered of $0.3 million in the fourth quarter of 2019 and net loans charged-off of $0.1 million in the first quarter of 2019.

Total nonaccrual loans as of March 31, 2020 was $24.3 million, or 35 basis points of Total loans, compared to $16.1 million, or 23 basis points of Total loans, as of December 31, 2019, and $12.0 million, or 17 basis points of Total loans, as of March 31, 2019.

Total criticized and classified loans as of March 31, 2020 was $204.9 million, an increase of $78.8 million, or 63%, linked quarter and $63.6 million, or 45%, year-over-year.

Capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in millions, except for share and per share data)

 

1Q20

 

4Q19

 

3Q19

 

2Q19

 

1Q19

Tangible common equity/ Tangible assets (non-GAAP)

 

 

8.8

%

 

 

8.6

%

 

 

8.6

%

 

 

8.4

%

 

 

8.3

%

Tangible book value per share (non-GAAP)

 

$

9.31

 

 

$

9.02

 

 

$

8.90

 

 

$

8.71

 

 

$

8.47

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulatory Capital Ratios: 7

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 common equity

 

 

11.2

%

 

 

11.4

%

 

 

11.2

%

 

 

11.2

%

 

 

11.4

%

Total risk-based capital

 

 

13.8

%

 

 

14.1

%

 

 

13.9

%

 

 

13.9

%

 

 

14.2

%

Tier 1 risk-based capital

 

 

12.7

%

 

 

13.0

%

 

 

12.8

%

 

 

12.7

%

 

 

13.0

%

Tier 1 leverage capital

 

 

9.7

%

 

 

9.8

%

 

 

9.7

%

 

 

9.6

%

 

 

9.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Equity Repurchase Program:

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shares of common stock repurchased

 

 

1,565,060

 

 

 

 

 

678,165

 

 

 

 

 

Average price paid per share of common stock

 

$

8.18

 

 

 

 

$

10.61

 

 

 

 

 

Aggregate repurchases of common stock

 

$

12.8

 

 

 

 

$

7.2

 

 

 

 

 

7 Current quarter information is presented based on estimated data.

     

During the first quarter of 2020, the Company completed the remainder of the $20.0 million share repurchase program by repurchasing $12.8 million of common stock. The Company repurchased 1,565,060 shares of common stock at an average cost of $8.18 per share during the quarter.

Tangible book value per share (non-GAAP) as of March 31, 2020 increased 3% linked quarter and 10% year-over-year to $9.31. The linked quarter and year-over year increases in Tangible book value per share were primarily driven by increased Accumulated other comprehensive income, increased Retained earnings, and the impact of the share repurchase program on total shares outstanding.

Dividend Payments

Concurrent with the release of first quarter 2020 earnings, the Board of Directors of the Company declared a cash dividend payable to common shareholders of $0.12 per share. The record date for this dividend is May 8, 2020, and the payment date is May 22, 2020.

Non-GAAP Financial Measures

The Company uses certain non-GAAP financial measures to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector.

These non-GAAP financial measures include: return on average common equity; return on average tangible common equity; pre-tax, pre-provision income; net interest income and net interest margin excluding interest recovered on previous nonaccrual loans, also referred to as core net interest income, and core net interest margin, respectively; tangible common equity / tangible assets, total noninterest expense excluding intangibles and restructuring, if any; the efficiency ratio excluding amortization and intangibles, and restructuring, if any; net income attributable to the Company excluding notable items; net income attributable to the common shareholders, treasury stock method, excluding notable items; diluted earnings per share excluding notable items.

A detailed reconciliation table of the Company’s GAAP to non-GAAP measures is included in the tables of this release and beginning on page 15 of the attached financial statements.

Conference Call

Management will hold a conference call at 8:00 a.m. Eastern Time on Thursday, April 30, 2020, to discuss the financial results, business highlights and outlook. To access the call:

Dial In #: (888) 317-6003
Elite Entry Number: 6465914

Replay Information:
Available from April 30, 2020 at 12:00 p.m Eastern Time until May 7, 2020
Dial In #: (877) 344-7529
Conference Number: 10142181

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

About Boston Private

Boston Private is a leading provider of integrated wealth management, trust and banking services to individuals, families, businesses and nonprofits.

For more than 30 years, Boston Private has delivered comprehensive advice coupled with deep technical expertise to help clients simplify their lives and achieve their goals. The firm offers the capabilities of a large institution with the superior service of a boutique firm to clients across the United States. The Company has total assets of greater than $8 billion, and manages over $14 billion of client assets.

Boston Private is the corporate brand of Boston Private Financial Holdings, Inc. (NASDAQ: BPFH).

For more information, visit www.bostonprivate.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 interest rate trends and future liquidity; expectations as to changes and assets, deposits and results of operations; the impact of the COVID-19 pandemic; future operations; market position and financial position; and prospects, plans and objectives of management. 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, the negative impacts and disruptions of the COVID-19 pandemic and measures taken to contain its spread on our employees, customers, business operations, credit quality, financial position, liquidity and results of operations; the length and extent of the economic contraction as a result of the COVID-19 pandemic; continued deterioration in general business and economic conditions on a national basis and in the local markets in which the Company operates; changes in customer behavior due to changing business and economic conditions or legislative or regulatory initiatives; continued turbulence in the capital and debt markets; changes in interest rates; increases in loan defaults and charge-off rates; decreases in the value of securities and other assets; changes in loan loss reserves; decreases in deposit levels necessitating increased borrowing to fund loans and investments; competitive pressures from other financial institutions; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics; changes in regulation; reputational risk relating to the Company’s participation in the Paycheck Protection Program and other pandemic-related legislative and regulatory initiatives and programs; risks 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 in 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 statements are made.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

 

 

 

 

 

Consolidated Balance Sheets

 

 

 

Unaudited ($ in thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

1Q20

 

4Q19

 

3Q19

 

2Q19

 

1Q19

ASSETS:

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

 

61,714

 

 

$

 

292,479

 

 

$

 

78,010

 

 

$

 

65,756

 

 

$

 

96,211

 

 

Investment securities available-for-sale

 

993,166

 

 

 

978,284

 

 

 

935,538

 

 

 

966,731

 

 

 

981,951

 

 

Investment securities held-to-maturity

 

45,395

 

 

 

48,212

 

 

 

51,379

 

 

 

54,482

 

 

 

67,548

 

 

Equity securities at fair value

 

23,080

 

 

 

18,810

 

 

 

21,780

 

 

 

19,092

 

 

 

7,491

 

 

Stock in Federal Home Loan Bank and Federal Reserve Bank

 

45,273

 

 

 

39,078

 

 

 

47,756

 

 

 

64,453

 

 

 

47,053

 

 

Loans held for sale

 

7,671

 

 

 

7,386

 

 

 

6,658

 

 

 

3,640

 

 

 

280

 

 

Loans

 

7,043,338

 

 

 

6,976,704

 

 

 

7,067,151

 

 

 

7,080,260

 

 

 

6,926,968

 

 

Less: Allowance for loan losses

 

68,211

 

 

 

71,982

 

 

 

75,359

 

 

 

75,067

 

 

 

73,814

 

 

Loans, net of allowance for loan losses

 

6,975,127

 

 

 

6,904,722

 

 

 

6,991,792

 

 

 

7,005,193

 

 

 

6,853,154

 

 

Premises and equipment, net

 

43,544

 

 

 

44,527

 

 

 

42,658

 

 

 

40,244

 

 

 

42,938

 

 

Goodwill

 

57,607

 

 

 

57,607

 

 

 

57,607

 

 

 

57,607

 

 

 

57,607

 

 

Intangible assets, net

 

9,637

 

 

 

10,352

 

 

 

10,622

 

 

 

10,884

 

 

 

11,555

 

 

Accrued interest receivable

 

24,054

 

 

 

24,175

 

 

 

24,851

 

 

 

26,411

 

 

 

25,935

 

 

Deferred income taxes, net

 

5,630

 

 

 

11,383

 

 

 

15,704

 

 

 

17,183

 

 

 

22,844

 

 

Right-of-use assets

 

98,896

 

 

 

102,075

 

 

 

107,045

 

 

 

110,880

 

 

 

104,644

 

 

Other assets

 

355,532

 

 

 

291,411

 

 

 

299,544

 

 

 

270,317

 

 

 

252,932

 

 

TOTAL ASSETS

$

 

8,746,326

 

 

$

 

8,830,501

 

 

$

 

8,690,944

 

 

$

 

8,712,873

 

 

$

 

8,572,143

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

 

 

 

Deposits

$

 

6,835,572

 

 

$

 

7,241,476

 

 

$

 

6,658,242

 

 

$

 

6,437,963

 

 

$

 

6,779,845

 

 

Securities sold under agreements to repurchase

 

45,319

 

 

 

53,398

 

 

 

48,860

 

 

 

62,372

 

 

 

58,329

 

 

Federal funds purchased

 

145,000

 

 

 

 

 

230,000

 

 

 

135,000

 

 

 

 

Federal Home Loan Bank borrowings

 

491,254

 

 

 

350,829

 

 

 

570,904

 

 

 

920,068

 

 

 

615,070

 

 

Junior subordinated debentures

 

106,363

 

 

 

106,363

 

 

 

106,363

 

 

 

106,363

 

 

 

106,363

 

 

Lease liabilities

 

113,574

 

 

 

117,214

 

 

 

122,799

 

 

 

126,740

 

 

 

120,162

 

 

Other liabilities

 

180,452

 

 

 

140,820

 

 

 

143,607

 

 

 

124,370

 

 

 

112,893

 

 

TOTAL LIABILITIES

 

7,917,534

 

 

 

8,010,100

 

 

 

7,880,775

 

 

 

7,912,876

 

 

 

7,792,662

 

 

 

 

 

 

 

 

 

 

 

 

 

REDEEMABLE NONCONTROLLING INTERESTS (“RNCI”)

 

 

 

1,383

 

 

 

1,481

 

 

 

1,786

 

 

 

662

 

 

SHAREHOLDERS' EQUITY:

 

 

 

 

 

 

 

 

 

 

Common stock, $1.00 par value; authorized: 170,000,000 shares

 

81,800

 

 

 

83,266

 

 

 

83,242

 

 

 

83,774

 

 

 

83,774

 

 

Additional paid-in capital

 

593,167

 

 

 

600,708

 

 

 

599,877

 

 

 

603,869

 

 

 

604,288

 

 

Retained earnings

 

131,761

 

 

 

127,469

 

 

 

116,210

 

 

 

106,443

 

 

 

97,155

 

 

Accumulated other comprehensive income/(loss)

 

22,064

 

 

 

7,575

 

 

 

9,359

 

 

 

4,125

 

 

 

(6,398

)

 

TOTAL SHAREHOLDERS' EQUITY

 

828,792

 

 

 

819,018

 

 

 

808,688

 

 

 

798,211

 

 

 

778,819

 

 

TOTAL LIABILITIES, RNCI, AND SHAREHOLDERS' EQUITY

$

 

8,746,326

 

 

$

 

8,830,501

 

 

$

 

8,690,944

 

 

$

 

8,712,873

 

 

$

 

8,572,143

 

 

 

 

 

 

 

 

 

 

 

 

 

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

     

Consolidated Income Statements

Unaudited ($ in thousands, except share and per share data)

 

   

 

1Q20

 

4Q19

 

3Q19

 

2Q19

 

1Q19

REVENUE:

 

     

Interest income

$

73,082

 

 

$

75,291

 

 

$

77,604

 

 

$

78,728

 

 

$

76,824

 

Interest expense

15,825

 

 

19,166

 

 

21,451

 

 

21,268

 

 

18,486

 

Net interest income

57,257

 

 

56,125

 

 

56,153

 

 

57,460

 

 

58,338

 

Provision/(credit) for loan losses 8

16,962

 

 

(3,668

)

 

167

 

 

1,363

 

 

(1,426

)

Net interest income after provision/(credit) for loan losses

40,295

 

 

59,793

 

 

55,986

 

 

56,097

 

 

59,764

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wealth management and trust fees 9

18,371

 

 

18,720

 

 

19,067

 

 

18,912

 

 

19,058

 

Investment management fees

1,925

 

 

2,554

 

 

2,496

 

 

2,455

 

 

2,650

 

Private banking fee income

2,490

 

 

2,924

 

 

2,658

 

 

2,867

 

 

2,499

 

Gain on sale of loans, net

100

 

 

557

 

 

934

 

 

58

 

 

73

 

Total core fees and income

22,886

 

 

24,755

 

 

25,155

 

 

24,292

 

 

24,280

 

Total other income

(1,365

)

 

2,038

 

 

(29

)

 

88

 

 

968

 

TOTAL REVENUE 10

78,778

 

 

82,918

 

 

81,279

 

 

81,840

 

 

83,586

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSE:

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

35,096

 

 

34,186

 

 

31,684

 

 

32,706

 

 

35,726

 

Occupancy and equipment

7,646

 

 

7,578

 

 

8,260

 

 

7,852

 

 

8,348

 

Information systems

6,725

 

 

6,476

 

 

5,169

 

 

5,137

 

 

5,860

 

Professional services

3,601

 

 

3,920

 

 

4,435

 

 

3,313

 

 

3,560

 

Marketing and business development

1,890

 

 

2,017

 

 

1,403

 

 

1,934

 

 

1,085

 

Amortization of intangibles

715

 

 

676

 

 

671

 

 

672

 

 

672

 

FDIC insurance

 

(19

)

 

59

 

 

585

 

 

660

 

Restructuring

 

 

 

 

 

1,646

 

Other 8

5,235

 

 

3,623

 

 

3,856

 

 

3,460

 

 

2,996

 

TOTAL NONINTEREST EXPENSE

60,908

 

 

58,457

 

 

55,537

 

 

55,659

 

 

60,553

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

908

 

 

28,129

 

 

25,575

 

 

24,818

 

 

24,459

 

Provision for income taxes

102

 

 

6,788

 

 

5,517

 

 

5,369

 

 

4,917

 

Net income before attribution to noncontrolling interests

806

 

 

21,341

 

 

20,058

 

 

19,449

 

 

19,542

 

Less: Net income attributable to noncontrolling interests

6

 

 

97

 

 

96

 

 

69

 

 

100

 

NET INCOME ATTRIBUTABLE TO THE COMPANY

$

800

 

 

$

21,244

 

 

$

19,962

 

 

$

19,380

 

 

$

19,442

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments, treasury stock method 11

414

 

 

98

 

 

304

 

 

(816

)

 

1,557

 

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

1,214

 

 

$

21,342

 

 

$

20,266

 

 

$

18,564

 

 

$

20,999

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMMON SHARE DATA:

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average basic shares outstanding

83,005,064

 

 

83,238,982

 

 

83,631,403

 

 

83,565,780

 

 

83,285,095

 

Weighted average diluted shares outstanding 12

83,318,041

 

 

83,637,786

 

 

83,956,708

 

 

84,048,972

 

 

84,010,450

 

Diluted earnings per share

$

0.01

 

 

$

0.26

 

 

$

0.24

 

 

$

0.22

 

 

$

0.25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8 In the first quarter of 2020, there was a $17.0 million provision expense for loan losses. Additionally, there was a $1.8 million provision expense related to the off-balance sheet commitments included in Other expenses. 

9 Wealth management and trust fees consists of revenue from Boston Private Wealth LLC ("BPW"), KLS Professional Advisors Group, LLC ("KLS") through the effective date of its merger with BPW, and the trust operations of Boston Private Bank & Trust Company. 

10 Total revenue is the sum of Net interest income, Total core fees and income, and Total other income. 

11 Adjustments to Net income attributable to the Company to arrive at Net income attributable to common shareholders, treasury stock method, as presented in these tables, include decrease/(increase) in Noncontrolling interests redemption value. 

12 For a description of the Company's policies regarding Diluted earnings per share, please refer to 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, 2019.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Financial Highlights

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited ($ in thousands, except share and per share data)

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1Q20

 

 

4Q19

 

 

3Q19

 

 

2Q19

 

 

 

1Q19

KEY STATISTICS:

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (non-GAAP) 12

0.04

%

 

 

0.96

%

 

 

0.91

%

 

 

0.90

%

 

 

0.93

%

ROACE (non-GAAP) 12

0.39

%

 

 

10.29

%

 

 

9.80

%

 

 

9.83

%

 

 

10.29

%

ROATCE (non-GAAP) 12

0.72

%

 

 

11.51

%

 

 

10.99

%

 

 

11.06

%

 

 

11.63

%

Efficiency ratio (non-GAAP) 12

76.4

%

 

 

69.7

%

 

 

67.5

%

 

 

67.2

%

 

 

69.7

%

Noninterest income to total revenue

27.3

%

 

 

32.3

%

 

 

30.9

%

 

 

29.8

%

 

 

30.2

%

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

2.76

%

 

 

2.70

%

 

 

2.72

%

 

 

2.78

%

 

 

2.90

%

Average loan to average deposit ratio

99.0

%

 

 

101.6

%

 

 

105.9

%

 

 

106.6

%

 

 

101.6

%

Cost of total deposits

 

0.72

%

 

 

0.86

%

 

 

0.92

%

 

 

0.88

%

 

 

0.84

%

Cost of interest-bearing deposits

 

1.02

%

 

 

1.20

%

 

 

1.31

%

 

 

1.25

%

 

 

1.19

%

Cost of total funding

 

0.83

%

 

 

0.99

%

 

 

1.12

%

 

 

1.11

%

 

 

1.00

%

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan loss / Total loans

 

0.97

%

 

 

1.03

%

 

 

1.07

%

 

 

1.06

%

 

 

1.07

%

Nonperforming loans / Total loans

 

0.35

%

 

 

0.23

%

 

 

0.25

%

 

 

0.24

%

 

 

0.17

%

Net (charge-offs)/recoveries / Total loans 12

 

(0.02

)%

 

 

0.02

%

 

 

0.01

%

 

 

(0.01

)%

 

 

%

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CAPITAL HIGHLIGHTS:

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 common equity 7

$

742,044

 

 

 

$

745,926

 

 

$

732,980

 

 

$

726,872

 

 

$

717,138

 

Tier 1 capital 7

$

842,066

 

 

 

$

846,337

 

 

$

833,431

 

 

$

827,299

 

 

$

817,600

 

Total capital 7

$

914,572

 

 

 

$

919,573

 

 

$

910,076

 

 

$

903,675

 

 

$

892,764

 

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk-weighted assets ("RWA") 7

$

6,627,338

 

 

 

$

6,530,804

 

 

$

6,533,884

 

 

$

6,491,184

 

 

$

6,304,444

 

Average assets for leverage 7

$

8,691,254

 

 

 

$

8,659,944

 

 

$

8,588,358

 

 

$

8,617,803

 

 

$

8,447,143

 

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 common equity ratio 7

 

11.20

%

11.42

%

 

11.22

%

 

11.20

%

 

11.38

%

Tier 1 risk-based capital ratio 7

 

12.71

%

12.96

%

 

12.76

%

 

12.74

%

 

12.97

%

Total risk-based capital ratio 7

 

13.80

%

 

14.08

%

 

 

13.93

%

 

 

13.92

%

 

 

14.16

%

Tier 1 leverage capital ratio 7

 

9.69

%

 

 

9.77

%

 

 

9.70

%

 

 

9.60

%

 

 

9.68

%

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total equity / Total assets

 

9.48

%

 

 

9.27

%

 

 

9.30

%

 

 

9.16

%

 

 

9.09

%

Tangible common equity / Tangible assets (non-GAAP)

 

8.77

%

 

 

8.57

%

 

 

8.59

%

 

 

8.44

%

 

 

8.35

%

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

End of period market price per share

$

7.15

 

 

 

$

12.03

 

 

$

11.66

 

 

$

12.07

 

 

$

10.96

 

End of period shares outstanding

 

81,800,486

   

 

83,265,674

 

 

 

83,241,952

 

 

 

83,774,335

 

 

 

83,773,650

 

Book value per common share

$

10.13

 

 

$

9.84

 

 

$

9.71

 

 

$

9.53

 

 

$

9.30

 

Tangible book value per share (non-GAAP)

$

9.31

 

$

9.02

 

 

$

8.90

 

 

$

8.71

 

 

$

8.47

 

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Equity Repurchase Program:

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shares of common stock repurchased

 

1,565,060

 

 

 

 

 

 

678,165

 

 

 

 

 

 

 

Average price paid per share of common stock

$

8.18

 

 

$

 

 

 

$10.61

 

 

$

 

 

$

 

Aggregate repurchases of common stock ($ in millions)

$

12.8

 

 

$

 

 

 

$7.2

 

 

$

 

 

$

 

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7 Current quarter capital highlights are presented based on estimated data.

12 Annualized.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

 

 

 

 

 

 

 

Consolidated AUM and Balance Sheet - End of Period Balances

Unaudited ($ in thousands)

 

 

 

 

 

 

 

 

 

 

1Q20

 

4Q19

 

3Q19

 

2Q19

 

1Q19

ASSETS UNDER MANAGEMENT AND ADVISORY ("AUM"):

 

 

 

 

 

 

 

 

 

Wealth Management and Trust

$

13,497,000

 

 

 

$

15,224,000

 

 

 

$

14,695,000

 

 

 

$

14,649,000

 

 

 

$

14,564,000

 

 

Other

1,016,000

 

 

 

1,544,000

 

 

 

1,533,000

 

 

 

1,550,000

 

 

 

1,558,000

 

 

TOTAL AUM

$

14,513,000

 

 

 

$

16,768,000

 

 

 

$

16,228,000

 

 

 

$

16,199,000

 

 

 

$

16,122,000

 

 

 

 

 

 

 

 

 

 

 

 

AUM Rollforward:

 

 

 

 

 

 

 

 

 

Beginning balance

$

16,768,000

 

 

 

$

16,228,000

 

 

 

$

16,199,000

 

 

 

$

16,122,000

 

 

 

$

15,921,000

 

 

Net flows

150,000

 

 

 

(209,000

)

 

 

(137,000

)

 

 

(269,000

)

 

 

(963,000

)

 

Market

(2,405,000

)

 

 

749,000

 

 

 

166,000

 

 

 

346,000

 

 

 

1,164,000

 

 

Ending balance

$

14,513,000

 

 

 

$

16,768,000

 

 

 

$

16,228,000

 

 

 

$

16,199,000

 

 

 

$

16,122,000

 

 

 

 

 

 

 

 

 

 

 

 

AUM Net Flows:

 

 

 

 

 

 

 

 

 

Wealth Management and Trust

$

176,000

 

 

 

$

(114,000

)

 

 

$

(100,000

)

 

 

$

(233,000

)

 

 

$

(580,000

)

 

Other

(26,000

)

 

 

(95,000

)

 

 

(37,000

)

 

 

(36,000

)

 

 

(383,000

)

 

TOTAL NET FLOWS

$

150,000

 

 

 

$

(209,000

)

 

 

$

(137,000

)

 

 

$

(269,000

)

 

 

$

(963,000

)

 

 

 

 

 

 

 

 

 

 

 

DEPOSITS:

 

 

 

 

 

 

 

 

 

Demand deposits (non-interest bearing)

$

2,020,440

 

 

 

$

1,971,013

 

 

 

$

1,947,363

 

 

 

$

1,854,091

 

 

 

$

2,016,838

 

 

Savings and NOW

653,006

 

 

 

646,199

 

 

 

666,107

 

 

 

631,166

 

 

 

673,954

 

 

Money market

3,468,701

 

 

 

3,969,330

 

 

 

3,366,623

 

 

 

3,228,608

 

 

 

3,302,244

 

 

Certificates of deposit

693,425

 

 

 

654,934

 

 

 

678,149

 

 

 

724,098

 

 

 

786,809

 

 

TOTAL DEPOSITS

$

6,835,572

 

 

 

$

7,241,476

 

 

 

$

6,658,242

 

 

 

$

6,437,963

 

 

 

$

6,779,845

 

 

 

 

 

 

 

 

 

 

 

 

LOANS:

 

 

 

 

 

 

 

 

 

Commercial and industrial

$

670,744

 

 

 

$

694,034

 

 

 

$

695,029

 

 

 

$

656,186

 

 

 

$

615,370

 

 

Commercial tax exempt

445,319

 

 

 

447,927

 

 

 

448,488

 

 

 

450,307

 

 

 

449,492

 

 

Commercial real estate

2,626,299

 

 

 

2,551,274

 

 

 

2,533,346

 

 

 

2,530,556

 

 

 

2,439,048

 

 

Construction and land

238,293

 

 

 

225,983

 

 

 

209,741

 

 

 

200,378

 

 

 

210,618

 

 

Residential

2,841,926

 

 

 

2,839,155

 

 

 

2,964,042

 

 

 

3,025,758

 

 

 

2,993,132

 

 

Home equity

89,350

 

 

 

83,657

 

 

 

84,432

 

 

 

89,930

 

 

 

88,620

 

 

Consumer

131,407

 

 

 

134,674

 

 

 

132,073

 

 

 

127,145

 

 

 

130,688

 

 

TOTAL LOANS

$

7,043,338

 

 

 

$

6,976,704

 

 

 

$

7,067,151

 

 

 

$

7,080,260

 

 

 

$

6,926,968

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Asset Quality

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited ($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1Q20

 

4Q19

 

3Q19

 

2Q19

 

1Q19

CHARGE-OFFS:

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan charge-offs

$

 

(528

)

 

$

 

(285

 

$

 

(185

)

 

$

 

(195

)

 

$

 

(564

)

Loan recoveries

 

180

 

 

 

576

 

 

 

310

 

 

 

85

 

 

 

492

 

NET (CHARGE-OFFS)/RECOVERIES

$

 

(348

)

 

$

 

291

 

 

$

 

125

 

 

$

 

(110

)

 

$

 

(72

)

Net charge-offs to average loans (annualized)

 

(0.02

)%

 

 

0.02

%

 

 

0.01

%

 

 

(0.01

)%

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (Charge-offs)/Recoveries by Loan Type:

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

$

 

(473

)

 

$

 

118

 

 

$

 

95

 

 

$

 

(155

)

 

$

 

188

 

Commercial tax exempt

 

 

 

 

 

Commercial real estate

 

 

183

 

 

 

27

 

 

 

30

 

 

 

189

 

Construction and land

 

 

 

 

 

Residential

 

 

 

 

 

 

100

 

Home equity

 

132

 

 

 

4

 

 

 

6

 

 

 

 

(562

)

Consumer

 

(7

)

 

 

(14

 

 

(3

)

 

 

15

 

 

 

13

 

NET (CHARGE-OFFS)/RECOVERIES

$

 

(348

)

 

$

 

291

 

 

$

 

125

 

 

$

 

(110

)

 

$

 

(72

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOAN QUALITY DATA:

 

 

 

 

 

 

 

 

 

 

 

 

 

Special mention loans

$

 

92,623

 

 

$

 

52,026

 

 

$

 

58,133

 

 

$

 

70,677

 

 

$

 

86,787

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accruing classified loans 13

 

87,948

 

 

 

57,922

 

 

 

63,278

 

 

 

53,883

 

 

 

42,521

 

Nonaccrual loans

 

24,314

 

 

 

16,103

 

 

 

17,565

 

 

 

17,155

 

 

 

12,019

 

Total classified

 

112,262

 

 

 

74,025

 

 

 

80,843

 

 

 

71,038

 

 

 

54,540

 

Criticized and classified loans

$

 

204,885

 

 

$

 

126,051

 

 

$

 

138,976

 

 

$

 

141,715

 

 

$

 

141,327

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans 30-89 days past due and accruing 14

$

 

14,852

 

 

$

 

25,945

 

 

$

 

4,179

 

 

$

 

2,434

 

 

$

 

17,715

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13 Accruing classified 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. 

14 At June 30, 2019, the Company had one loan totaling $0.9 million that was more than 90 days past due but still on accrual status. This loan originated in the New England region. The Company had no other loans outstanding more than 90 days past due but still on accrual status in comparative periods. 

 

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

 

 

 

 

 

 

 

 

 

Average Balances, Yields, and Rates

 

 

 

 

 

 

 

 

 

Unaudited ($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Average Balance

 

Interest Income/Expense

 

Average Yield/Rate

 

1Q20

4Q19

1Q19

 

1Q20

4Q19

1Q19

 

1Q20

4Q19

1Q19

INTEREST-EARNING ASSETS

 

 

 

 

 

 

 

 

 

 

 

Cash and investments:

 

 

 

 

 

 

 

 

 

 

 

Taxable investment securities

$

 

201,174

 

$

 

201,535

 

$

 

244,230

 

 

$

 

868

 

$

 

869

 

$

 

1,185

 

 

1.73

%

1.72

%

1.94

%

Non-taxable investment securities

 

315,681

 

 

311,705

 

 

306,868

 

 

 

1,998

 

 

1,976

 

 

1,901

 

 

2.53

%

2.54

%

2.48

%

Mortgage-backed securities

 

520,629

 

 

489,927

 

 

521,788

 

 

 

2,787

 

 

2,568

 

 

2,897

 

 

2.14

%

2.10

%

2.22

%

Short-term investments and other

 

147,482

 

 

130,519

 

 

79,603

 

 

 

1,071

 

 

1,210

 

 

908

 

 

2.89

%

3.65

%

4.58

%

Total cash and investments

 

1,184,966

 

 

1,133,686

 

 

1,152,489

 

 

 

6,724

 

 

6,623

 

 

6,891

 

 

2.27

%

2.33

%

2.39

%

Loans: 15

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

1,148,986

 

 

1,142,015

 

 

1,070,161

 

 

 

10,724

 

 

11,276

 

 

10,979

 

 

3.69

%

3.86

%

4.10

%

Commercial real estate

 

2,582,305

 

 

2,562,380

 

 

2,398,413

 

 

 

27,482

 

 

28,285

 

 

28,151

 

 

4.21

%

4.32

%

4.69

%

Construction and land

 

233,324

 

 

216,754

 

 

211,351

 

 

 

2,572

 

 

2,588

 

 

2,641

 

 

4.36

%

4.67

%

5.00

%

Residential

 

2,850,833

 

 

2,934,786

 

 

2,972,945

 

 

 

23,468

 

 

24,275

 

 

25,545

 

 

3.29

%

3.31

%

3.44

%

Home equity

 

86,048

 

 

84,632

 

 

90,646

 

 

 

952

 

 

965

 

 

1,121

 

 

4.45

%

4.53

%

5.02

%

Other consumer

 

132,237

 

 

132,143

 

 

133,937

 

 

 

1,160

 

 

1,279

 

 

1,496

 

 

3.53

%

3.84

%

4.53

%

Total loans

 

7,033,733

 

 

7,072,710

 

 

6,877,453

 

 

 

66,358

 

 

68,668

 

 

69,933

 

 

3.75

%

3.83

%

4.07

%

Total earning assets

 

8,218,699

 

 

8,206,396

 

 

8,029,942

 

 

 

73,082

 

 

75,291

 

 

76,824

 

 

3.54

%

3.62

%

3.83

%

 

 

 

 

 

 

 

 

 

 

 

 

LESS: Allowance for loan losses

 

51,730

 

 

75,283

 

 

75,537

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

49,571

 

 

48,287

 

 

46,172

 

 

 

 

 

 

 

 

 

Other assets

 

562,851

 

 

559,350

 

 

493,148

 

 

 

 

 

 

 

 

 

TOTAL AVERAGE ASSETS

$

 

8,779,391

 

$

 

8,738,750

 

$

 

8,493,725

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST-BEARING LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits: 16

 

 

 

 

 

 

 

 

 

 

 

Savings and NOW

$

 

638,926

 

$

 

644,502

 

$

 

674,872

 

 

$

 

232

 

$

 

252

 

$

 

296

 

 

0.15

%

0.16

%

0.18

%

Money market

 

3,753,045

 

 

3,632,258

 

 

3,341,397

 

 

 

9,657

 

 

11,449

 

 

10,072

 

 

1.03

%

1.25

%

1.22

%

Certificates of deposit

 

668,818

 

 

680,466

 

 

775,817

 

 

 

2,907

 

 

3,322

 

 

3,690

 

 

1.75

%

1.94

%

1.93

%

Total interest-bearing deposits 16

 

5,060,789

 

 

4,957,226

 

 

4,792,086

 

 

 

12,796

 

 

15,023

 

 

14,058

 

 

1.02

%

1.20

%

1.19

%

Junior subordinated debentures

 

106,363

 

 

106,363

 

 

106,363

 

 

 

917

 

 

966

 

 

1,121

 

 

3.41

%

3.56

%

4.22

%

FHLB borrowings and other

 

455,813

 

 

591,682

 

 

615,985

 

 

 

2,112

 

 

3,177

 

 

3,307

 

 

1.83

%

2.10

%

2.15

%

Total interest-bearing liabilities 16

 

5,622,965

 

 

5,655,271

 

 

5,514,434

 

 

 

15,825

 

 

19,166

 

 

18,486

 

 

1.13

%

1.34

%

1.36

%

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing demand deposits 16

 

2,046,102

 

 

2,001,714

 

 

1,974,526

 

 

 

 

 

 

 

 

 

Payables and other liabilities

 

270,371

 

 

261,503

 

 

236,426

 

 

 

 

 

 

 

 

 

Total average liabilities

 

7,939,438

 

 

7,918,488

 

 

7,725,386

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

1,018

 

 

1,446

 

 

2,056

 

 

 

 

 

 

 

 

 

Average shareholders’ equity

 

838,935

 

 

818,816

 

 

766,283

 

 

 

 

 

 

 

 

 

TOTAL AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY

$

 

8,779,391

 

$

 

8,738,750

 

$

 

8,493,725

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

 

$

 

57,257

 

$

 

56,125

 

$

 

58,338

 

 

 

 

 

Interest rate spread

 

 

 

 

 

 

 

 

2.41

%

2.28

%

2.47

%

Net interest margin

 

 

 

 

 

 

 

 

2.76

%

2.70

%

2.90

%

 

 

 

 

 

 

 

 

 

 

 

 

Average total deposits 16

$

 

7,106,891

 

$

 

6,958,940

 

$

 

6,766,612

 

 

 

 

 

 

0.72

%

0.86

%

0.84

%

Average total deposits and borrowings 16

$

 

7,669,067

 

$

 

7,656,985

 

$

 

7,488,960

 

 

 

 

 

 

0.83

%

0.99

%

1.00

%

 

 

 

 

 

 

 

 

 

 

 

 

15 Average loans includes Loans held for sale and Nonaccrual loans 

16 Average total deposits is the sum of Average total interest-bearing deposits and Average non-interest bearing demand deposits. Average total deposits and borrowings is the sum of Average total interest-bearing liabilities and Average non-interest bearing demand deposits.

 

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

 

 

 

 

 

 

 

 

Regional Loan Data

 

 

 

 

 

 

 

 

Unaudited ($ in thousands)

 

 

 

 

 

 

 

 

 

1Q20

 

4Q19

 

3Q19

 

2Q19

 

1Q19

New England

$

 

3,724,959

 

 

 

$

 

3,776,747

 

 

 

$

 

3,868,690

 

 

 

$

 

3,957,221

 

 

 

$

 

3,901,644

 

 

Northern California

 

1,618,668

 

 

 

 

1,532,786

 

 

 

 

1,559,569

 

 

 

 

1,538,441

 

 

 

 

1,499,626

 

 

Southern California

 

1,699,711

 

 

 

 

1,667,171

 

 

 

 

1,638,892

 

 

 

 

1,584,598

 

 

 

 

1,525,698

 

 

Total loans

$

 

7,043,338

 

 

 

$

 

6,976,704

 

 

 

$

 

7,067,151

 

 

 

$

 

7,080,260

 

 

 

$

 

6,926,968

 

 

 

 

 

 

 

 

 

 

 

 

Loans (charged-off)/recovered, net:

 

 

 

 

 

 

 

 

 

New England

$

 

15

 

 

 

$

 

414

 

 

 

$

 

275

 

 

 

$

 

31

 

 

 

$

 

222

 

 

Northern California

 

122

 

 

 

 

(10

)

 

 

 

6

 

 

 

 

20

 

 

 

 

18

 

 

Southern California

 

(485

)

 

 

 

(113

)

 

 

 

(156

)

 

 

 

(161

)

 

 

 

(312

)

 

Total net loans (charged-off)/recovered

$

 

(348

)

 

 

$

 

291

 

 

 

$

 

125

 

 

 

$

 

(110

)

 

 

$

 

(72

)

 

 

 

 

 

 

 

 

 

 

 

Special mention loans:

 

 

 

 

 

 

 

 

 

New England

$

 

61,741

 

 

 

$

 

21,691

 

 

 

$

 

19,828

 

 

 

$

 

35,235

 

 

 

$

 

34,675

 

 

Northern California

 

5,947

 

 

 

 

5,227

 

 

 

 

4,821

 

 

 

 

10,360

 

 

 

 

23,486

 

 

Southern California

 

24,935

 

 

 

 

25,108

 

 

 

 

33,484

 

 

 

 

25,082

 

 

 

 

28,626

 

 

Total special mention loans

$

 

92,623

 

 

 

$

 

52,026

 

 

 

$

 

58,133

 

 

 

$

 

70,677

 

 

 

$

 

86,787

 

 

 

 

 

 

 

 

 

 

 

 

Accruing classified loans:

 

 

 

 

 

 

 

 

 

New England

$

 

50,483

 

 

 

$

 

20,428

 

 

 

$

 

21,830

 

 

 

$

 

13,012

 

 

 

$

 

15,830

 

 

Northern California

 

24,843

 

 

 

 

24,946

 

 

 

 

23,938

 

 

 

 

25,957

 

 

 

 

20,801

 

 

Southern California

 

12,622

 

 

 

 

12,548

 

 

 

 

17,510

 

 

 

 

14,914

 

 

 

 

5,890

 

 

Total accruing classified loans

$

 

87,948

 

 

 

$

 

57,922

 

 

 

$

 

63,278

 

 

 

$

 

53,883

 

 

 

$

 

42,521

 

 

 

 

 

 

 

 

 

 

 

 

Nonaccruing loans:

 

 

 

 

 

 

 

 

 

New England

$

 

11,965

 

 

 

$

 

9,764

 

 

 

$

 

8,999

 

 

 

$

 

8,837

 

 

 

$

 

6,161

 

 

Northern California

 

6,575

 

 

 

 

319

 

 

 

 

2,395

 

 

 

 

2,644

 

 

 

 

2,480

 

 

Southern California

 

5,774

 

 

 

 

6,020

 

 

 

 

6,171

 

 

 

 

5,674

 

 

 

 

3,378

 

 

Total nonaccruing loans

$

 

24,314

 

 

 

$

 

16,103

 

 

 

$

 

17,565

 

 

 

$

 

17,155

 

 

 

$

 

12,019

 

 

 

 

 

 

 

 

 

 

 

 

17 The concentration of the Private Banking loan data and credit quality is primarily based on the location of the lenders' regional offices.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

   

 

 

   

 

 

 

 

 

 

 

 

 

Reconciliations of Non-GAAP Financial Measures

 

   

 

 

   

 

 

 

 

 

 

 

 

 

Unaudited ($ in thousands)

 

   

 

 

   

 

 

 

 

 

 

 

 

 

 

1Q20

 

 

4Q19

 

3Q19

 

 

2Q19

 

 

1Q19

 

ROACE AND ROATCE:

 

   

 

 

   

 

 

 

 

 

 

 

 

 

Net income attributable to the Company (GAAP) (A)

$

 

800

 

 

 

$

 

21,244

 

 

 

$

19,962

 

 

 

$

 

 

 

19,380

 

 

 

$

 

 

 

19,442

 

 

ADD: Amortization of intangibles, net of tax

 

565

 

 

 

 

534

 

 

 

 

530

 

 

 

 

 

531

 

 

 

 

 

531

 

 

Tangible common net income (non-GAAP) (B)

$

 

1,365

 

 

 

$

 

21,778

 

 

 

$

20,492

 

 

 

$

 

 

 

19,911

 

 

 

$

 

 

 

19,973

 

 

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

Total average shareholders’ equity (C)

$

 

838,935

 

 

 

$

 

818,816

 

 

 

$

807,890

 

 

 

$

 

 

 

790,844

 

 

 

$

 

 

 

766,283

 

 

LESS: Average goodwill and intangibles, net

 

(67,586

)

 

 

 

(68,031

)

 

 

 

(68,359

)

 

 

 

 

(68,889

)

 

 

 

 

(69,498

)

 

Average tangible common equity (non-GAAP) (D)

$

 

771,349

 

 

 

$

 

750,785

 

 

 

$

739,531

 

 

 

$

 

 

 

721,955

 

 

 

$

 

 

 

696,785

 

 

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

ROACE (annualized) (A/C)

 

0.39

 

%

 

 

10.29

 

%

 

 

9.80

 

%

 

 

 

9.83

 

%

 

 

 

10.29

 

%

ROATCE (annualized) (B/D)

 

0.72

 

%

 

 

11.51

 

%

 

 

10.99

 

%

 

 

 

11.06

 

%

 

 

 

11.63

 

%

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

PRE-TAX, PRE-PROVISION INCOME:

 

   

 

 

   

 

 

 

 

 

 

 

 

 

Income before income taxes (GAAP)

$

 

908

 

 

 

$

 

28,129

 

 

 

$

25,575

 

 

 

$

 

 

 

24,818

 

 

 

$

 

 

 

24,459

 

 

ADD BACK: Provision/ (credit) for loan losses

 

16,962

 

 

 

 

(3,668

)

 

 

 

167

 

 

 

 

 

1,363

 

 

 

 

 

(1,426

)

 

Pre-tax, pre-provision income (non-GAAP)

$

 

17,870

 

 

 

$

 

24,461

 

 

 

$

25,742

 

 

 

$

 

 

 

26,181

 

 

 

$

 

 

 

23,033

 

 

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

CORE NET INTEREST INCOME AND MARGIN:

 

   

 

 

   

 

 

 

 

 

 

 

 

 

Net interest income (GAAP)

$

 

57,257

 

 

 

$

 

56,125

 

 

 

$

56,153

 

 

 

$

 

 

 

57,460

 

 

 

$

 

 

 

58,338

 

 

LESS: Interest recovered on previous nonaccrual loans

 

7

 

 

 

 

24

 

 

 

 

180

 

 

 

 

 

 

 

 

258

 

 

Net interest income, excluding interest recovered while loans on nonaccrual status ("Core net interest income") (non-GAAP)

$

 

57,250

 

 

 

$

 

56,101

 

 

 

$

55,973

 

 

 

$

 

 

 

57,460

 

 

 

$

 

 

 

58,080

 

 

Net interest margin, excluding interest recovered while loans on nonaccrual status ("Core net interest margin") (non-GAAP)

 

2.76

 

%

 

 

2.70

 

%

 

 

2.71

 

%

 

 

 

2.78

 

%

 

 

 

2.89

 

%

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

TANGIBLE COMMON EQUITY:

 

   

 

 

   

 

 

 

 

 

 

 

 

 

Total shareholders’ equity (GAAP)

$

 

828,792

 

 

 

$

 

819,018

 

 

 

$

808,688

 

 

 

$

 

 

 

798,211

 

 

 

$

 

 

 

778,819

 

 

LESS: Goodwill and intangibles, net

 

(67,244

)

 

 

 

(67,959

)

 

 

 

(68,229

)

 

 

 

 

(68,491

)

 

 

 

 

(69,162

)

 

Tangible common equity (non-GAAP) (A)

$

 

761,548

 

 

 

$

 

751,059

 

 

 

$

740,459

 

 

 

$

 

 

 

729,720

 

 

 

$

 

 

 

709,657

 

 

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

Total assets (GAAP)

$

 

8,746,326

 

 

 

$

 

8,830,501

 

 

 

$

8,690,944

 

 

 

$

 

 

 

8,712,873

 

 

 

$

 

 

 

8,572,143

 

 

LESS: Goodwill and intangibles, net

 

(67,244

)

 

 

 

(67,959

)

 

 

 

(68,229

)

 

 

 

 

(68,491

)

 

 

 

 

(69,162

)

 

Tangible assets (non-GAAP) (B)

$

 

8,679,082

 

 

 

$

 

8,762,542

 

 

 

$

8,622,715

 

 

 

$

 

 

 

8,644,382

 

 

 

$

 

 

 

8,502,981

 

 

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

End of period shares outstanding (C)

 

81,800,486

 

 

 

 

83,265,674

 

 

 

 

83,241,952

 

 

 

83,774,335

 

 

 

83,773,650

 

 

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

Tangible common equity/ Tangible assets (non-GAAP) (A/B)

 

8.77

 

%

 

 

8.57

 

%

 

 

8.59

 

%

 

 

 

8.44

 

%

 

 

 

8.35

 

%

Tangible book value per share (non-GAAP) (A/C)

$

 

9.31

 

 

 

 

$

 

9.02

 

 

 

 

$

8.90

 

 

 

 

$

 

8.71

 

 

 

 

$

 

8.47

 

 

 

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

 

             

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

 

 

 

 

 

 

 

 

 

Reconciliations of Non-GAAP Financial Measures

 

 

 

 

 

 

 

 

 

 

Unaudited ($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

1Q20

 

4Q19

 

3Q19

 

2Q19

 

1Q19

RETURN ON AVERAGE ASSETS:

 

 

 

 

 

 

 

 

 

 

Net income (GAAP) (A)

$

 

800

 

 

 

$

 

21,244

 

 

$

 

19,962

 

 

 

$

 

19,380

 

 

$

 

19,442

 

Average assets (non-GAAP) (B)

 

8,779,391

 

 

 

 

8,738,750

 

 

 

8,665,352

 

 

 

 

8,679,506

 

 

 

8,493,725

 

Return on average assets (annualized) (non-GAAP) (A/B)

 

0.04

 

%

 

 

0.96

%

 

 

0.91

 

%

 

 

0.90

%

 

 

0.93

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EFFICIENCY RATIO:

 

 

 

 

 

 

 

 

 

 

Total noninterest expense (GAAP) (A)

$

 

60,908

 

 

 

$

 

58,457

 

 

$

 

55,537

 

 

 

$

 

55,659

 

 

$

 

60,553

 

LESS: Amortization of intangibles

 

715

 

 

 

 

676

 

 

 

671

 

 

 

 

672

 

 

 

672

 

LESS: Restructuring

 

 

 

 

 

 

 

 

 

 

1,646

 

Total noninterest expense (non-GAAP) (B)

$

 

60,193

 

 

 

$

 

57,781

 

 

$

 

54,866

 

 

 

$

 

54,987

 

 

$

 

58,235

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (GAAP)

$

 

57,257

 

 

 

$

 

56,125

 

 

$

 

56,153

 

 

 

$

 

57,460

 

 

$

 

58,338

 

Total core fees and income (GAAP)

 

22,886

 

 

 

 

24,755

 

 

 

25,155

 

 

 

 

24,292

 

 

 

24,280

 

Total other income (GAAP)

 

(1,365

)

 

 

 

2,038

 

 

 

(29

)

 

 

 

88

 

 

 

968

 

Total revenue (GAAP) (C)

$

 

78,778

 

 

 

$

 

82,918

 

 

$

 

81,279

 

 

 

$

 

81,840

 

 

$

 

83,586

 

 

 

 

 

 

 

 

 

 

 

 

Efficiency ratio (GAAP) (A/C)

 

77.3

 

%

 

 

70.5

%

 

 

68.3

 

%

 

 

68.0

%

 

 

72.4

%

Efficiency ratio, excluding amortization of intangibles and restructuring, if any (non-GAAP) (B/C)

 

76.4

 

%

 

 

69.7

%

 

 

67.5

 

%

 

 

67.2

%

 

 

69.7

%

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME/(LOSS): (GAAP)

 

 

 

 

 

 

 

 

 

 

Gain/(loss) on OREO, net

 

 

 

 

 

 

 

 

 

 

91

 

Other

 

(1,365

)

 

 

 

2,038

 

 

 

(29

)

 

 

 

88

 

 

 

877

 

Total other income/(loss) (GAAP)

$

 

(1,365

)

 

 

$

 

2,038

 

 

$

 

(29

)

 

 

$

 

88

 

 

$

 

968

 

 

 

 

 

 

 

 

 

 

 

 

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

 

 

 

 

 

 

 

 

 

 

Reconciliations of Non-GAAP measures: Operating Adjustments

   

Unaudited ($ in thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

1Q20

 

4Q19

 

3Q19

 

2Q19

 

 

1Q19

 

NET INCOME ATTRIBUTABLE TO THE COMPANY:

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to the Company (GAAP)

$

 

800

 

 

$

 

21,244

 

 

$

 

19,962

 

 

$

 

19,380

 

 

$

 

19,442

 

 

LESS: Gain on fair value of contingent considerations receivable 18

 

 

 

1,109

 

 

 

 

 

 

 

 

ADD: Restructuring

 

 

 

 

 

 

 

 

 

1,646

 

 

Tax effect at statutory rate

 

 

 

322

 

 

 

 

 

 

 

(346

)

 

Net income attributable to the Company (non-GAAP)

$

 

800

 

 

$

 

20,457

 

 

$

 

19,962

 

 

$

 

19,380

 

 

$

 

20,742

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS: