Boston Private Reports Second Quarter 2020 Results

Second Quarter 2020 Highlights include:

  • Net loss of $(3.3) million, or $(0.04) per diluted share
  • Return on average common equity (non-GAAP) of (1.6)%
  • Return on average tangible common equity (non-GAAP) of (1.4)%
  • Average total deposits of $7.3 billion, a 10% increase year-over-year
  • Average total loans of $7.3 billion, a 4% increase year-over-year
  • Total assets under management/advisory (“AUM”) of $16.0 billion, a 2% decrease year-over-year
  • Total net flows of negative $40 million, with net inflows of $60 million in the Wealth Management and Trust segment
  • Total provision for credit losses of $25.4 million reflecting the deterioration of the macroeconomic outlook as a result of the COVID-19 pandemic
  • Funded $380 million of loans from the Small Business Administration's Paycheck Protection Program ("PPP"), resulting in $284 million of average loan balances during the quarter
  • Board of Directors declared a cash dividend of $0.06 per common share

 

BOSTON--()--Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the “Company” or “BPFH”) today reported second quarter 2020 Net loss attributable to the Company of $(3.3) million, compared to Net income attributable to the Company of $0.8 million for the first quarter of 2020 and $19.4 million for the second quarter of 2019. Second quarter 2020 Diluted loss per share were $(0.04), compared to Diluted earnings per share of $0.01 in the first quarter of 2020 and $0.22 in the second quarter of 2019.

"I am proud of the way our employees continue to prioritize the health and financial well-being of our clients as we all navigated the challenging environment during the second quarter," said Anthony DeChellis, CEO of Boston Private. "This quarter's financial reflects continued reserve build related to the uncertain macroeconomic environment as a result of the pandemic. Our pre-tax, pre-provision income increased linked quarter, while our Wealth Management & Trust segment delivered net inflows for the second straight quarter.

"Our board declared a dividend of $0.06 per common share, compared to $0.12 in the prior quarter. This prudent action reflects our Company's conservative approach to liquidity and capital management as we adjust our dividend policy to reflect our current strategy."

Summary Financial Results - Reported

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Change

($ in millions, except for per share data)

 

2Q20

 

1Q20

 

2Q19

 

LQ

 

Y/Y

Net income/(loss)

 

$(3.3)

 

$0.8

 

$19.4

 

nm

 

nm

Diluted earnings/(loss) per share

 

$(0.04)

 

$0.01

 

$0.22

 

nm

 

nm

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Measures:

 

 

 

 

 

 

 

 

 

 

Pre-tax, pre-provision income

 

$20.1

 

$17.9

 

$26.2

 

13%

 

(23)%

Return on average common equity ("ROACE")

 

(1.6)%

 

0.4%

 

9.8%

 

 

 

 

Return on average tangible common equity ("ROATCE")

 

(1.4)%

 

0.7%

 

11.1%

 

 

 

 

nm = not meaningful

 

 

 

 

 

 

 

 

 

 

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 $25.4 million in the second quarter of 2020. Pre-tax, pre-provision income increased 13% linked quarter primarily driven by higher other income and net interest income, partially offset by higher noninterest expense.

Net Interest Income and Margin

 

 

 

 

 

 

 

 

 

 

 

 

% Change

($ in millions)

 

2Q20

 

1Q20

 

2Q19

 

LQ

 

Y/Y

Net interest income

 

$58.9

 

$57.3

 

$57.5

 

3

%

 

3

%

Net interest margin

 

2.75%

 

2.76%

 

2.78%

 

 

 

 

 

Net interest income for the second quarter of 2020 was $58.9 million, a 3% increase linked quarter and a 3% increase year-over-year. The linked quarter increase was primarily driven by lower funding costs, PPP-related income and prepayment penalties, partially offset by lower interest income.

Net interest margin decreased 1 basis point on a linked quarter basis to 2.75%. Total cost of funds declined 33 basis points to 0.50% driven by lower deposit costs, while yields on interest earning assets declined 32 basis points to 3.22%.

Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Change

($ in millions)

 

2Q20

 

1Q20

 

2Q19

 

LQ

 

Y/Y

Wealth management and trust fees

 

$17.3

 

$18.4

 

$18.9

 

(6)%

 

(9)%

Investment management fees

 

1.8

 

1.9

 

2.5

 

(8)%

 

(28)%

Private banking fees 1

 

2.6

 

2.6

 

2.9

 

—%

 

(11)%

Total core fees and income

 

$21.6

 

$22.9

 

$24.3

 

(5)%

 

(11)%

Total other income

 

1.0

 

(1.4)

 

0.1

 

nm

 

nm

Total noninterest income

 

$22.7

 

$21.5

 

$24.4

 

5 %

 

(7)%

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

Total core fees and income for the second quarter of 2020 was $21.6 million, a 5% decrease linked quarter. The linked quarter decrease was primarily driven by lower Wealth management and trust fees, which declined as a result of lower equity market values at the end of the first quarter of 2020.

Assets Under Management / Advisory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Change

($ in millions)

 

2Q20

 

1Q20

 

2Q19

 

LQ

 

Y/Y

Wealth Management and Trust

 

$14,889

 

$13,497

 

$14,649

 

10

%

 

2

%

Other 2

 

1,067

 

1,016

 

1,550

 

5

%

 

(31)

%

Total assets under management / advisory

 

$15,956

 

$14,513

 

$16,199

 

10

%

 

(2)

%

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

Total assets under management / advisory were $16.0 billion at the end of the second quarter of 2020, a 10% increase linked quarter. The linked quarter increase was primarily driven by the impact of favorable market action during the second quarter.

Total net flows were negative $40 million during the second quarter of 2020. The Wealth Management and Trust segment had net inflows of $60 million.

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Change

($ in millions)

 

2Q20

 

1Q20

 

2Q19

 

LQ

 

Y/Y

Salaries and employee benefits

 

$33.9

 

$35.1

 

$32.7

 

(3)%

 

4%

Occupancy and equipment

 

7.6

 

7.6

 

7.9

 

(1)%

 

(4)%

Information systems

 

7.1

 

6.7

 

5.1

 

6%

 

38%

Professional services

 

3.4

 

3.6

 

3.3

 

(4)%

 

4%

Marketing and business development

 

2.3

 

1.9

 

1.9

 

22%

 

20%

Amortization of intangibles

 

0.7

 

0.7

 

0.7

 

(2)%

 

4%

FDIC insurance

 

0.8

 

 

0.6

 

nm

 

31%

Other

 

5.6

 

5.2

 

3.5

 

7%

 

62%

Total noninterest expense

 

$61.5

 

$60.9

 

$55.7

 

1 %

 

10 %

 

 

 

 

 

 

 

 

 

 

 

Memo: Excluding Off-Balance Sheet Provision

 

 

 

 

 

 

 

 

 

 

Provision expense for unfunded loan commitments

 

$2.8

 

$1.8

 

 

55%

 

nm

Total noninterest expense (non-GAAP)

 

$58.6

 

$59.1

 

$55.7

 

(1)%

 

5 %

Total noninterest expense for the second quarter of 2020 was $61.5 million, which includes $2.8 million of provision expense related to unfunded loan commitments recognized in Other expense.

Excluding the provision expense for unfunded loan commitments, total noninterest expense (non-GAAP) for the second quarter of 2020 was $58.6 million, a decrease of 1% linked quarter and an increase of 5% year-over-year. The linked quarter decrease was driven primarily by lower salaries and benefits expense, while the year-over-year increase was driven primarily by higher Information systems expense from technology initiatives placed in service.

Income Tax Expense

The Company's effective tax rate for the second quarter of 2020 was negative as a result of moderate positive income tax expense despite a pre-tax loss.

Loans - QTD Averages & Yields

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Change

($ in millions)

 

2Q20

 

1Q20

 

2Q19

 

LQ

 

Y/Y

Commercial and industrial

 

$1,037

 

$1,149

 

$1,092

 

(10)%

 

(5)%

Paycheck Protection Program ("PPP")

 

284

 

 

 

nm

 

nm

Commercial real estate

 

2,659

 

2,582

 

2,507

 

3%

 

6%

Construction and land

 

233

 

233

 

203

 

—%

 

15%

Residential

 

2,863

 

2,851

 

3,009

 

—%

 

(5)%

Home equity

 

88

 

86

 

91

 

3%

 

(3)%

Other consumer

 

124

 

132

 

125

 

(6)%

 

—%

Total loans

 

$7,289

 

$7,034

 

$7,026

 

4 %

 

4 %

Total loans, excluding PPP (non-GAAP)

 

$7,005

 

$7,034

 

$7,026

 

— %

 

— %

 

 

 

 

 

 

 

 

 

 

 

Total loan yields

 

3.42

%

 

3.75

%

 

4.07

%

 

(0.33)%

 

(0.65)%

  • Average total loans in the second quarter of 2020 increased 4% year-over-year reflecting the addition of $283.6 million of PPP loans in the second quarter of 2020.
  • Average total loans, excluding PPP (non-GAAP) in the second quarter of 2020 were flat linked quarter and year-over-year.
  • Linked quarter, Commercial and industrial loans declined 10% primarily driven by the payoff of large loans and lower line usage.
  • Linked quarter, Commercial real estate loans increased 3% primarily driven by increased loan balances attributable to the debt service reserve program. Excluding the debt service reserve program, Commercial real estate loans were flat for the quarter.

Deposits - QTD Averages & Costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Change

($ in millions)

 

2Q20

 

1Q20

 

2Q19

 

LQ

 

Y/Y

Non-interest bearing deposits

 

2,214

 

2,046

 

1,927

 

8

%

 

15

%

Interest bearing deposits

 

5,036

 

5,061

 

4,664

 

%

 

8

%

Total deposits

 

$7,250

 

$7,107

 

$6,590

 

2

%

 

10

%

 

 

 

 

 

 

 

 

 

 

 

Cost of total deposits

 

0.41

%

 

0.72

%

 

0.88

%

 

(0.31)

%

 

(0.47)

%

Cost of total interest-bearing deposits

 

0.59

%

 

1.02

%

 

1.25

%

 

(0.43)

%

 

(0.66)

%

  • Average total deposits in the second quarter of 2020 increased 2% linked quarter and 10% year-over-year.
  • Linked quarter, average total deposits increased primarily driven by a higher average non-interest bearing deposits of commercial clients.
  • Year-over-year, average non-interest bearing deposits increased 15% primarily driven by higher commercial client balances.
  • Year-over-year, average interest bearing deposits increased 8%, primarily driven by higher commercial client money market balances and wealth sweep deposits, partially offset by lower brokered CD balances.

Provision and Asset Quality

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in millions)

 

2Q20

 

1Q20

 

4Q19

 

3Q19

 

2Q19

Provision and Allowance

 

 

 

 

 

 

 

 

 

 

Provision/(credit) for loan losses

 

$22.6

 

$17.0

 

$(3.7)

 

$0.2

 

$1.4

Provision for unfunded loan commitments

 

2.8

 

1.8

 

 

 

Total Provision for credit losses

 

$25.4

 

$18.8

 

$(3.7)

 

$0.2

 

$1.4

Allowance for loan losses as a % of Total loans

 

1.22%

 

0.97%

 

1.03%

 

1.07%

 

1.06%

 

 

 

 

 

 

 

 

 

 

 

Asset Quality

 

 

 

 

 

 

 

 

 

 

Total net loans (charged-off)/ recovered

 

(1.5)

 

(0.3)

 

0.3

 

0.1

 

(0.1)

Total nonaccrual loans

 

25.6

 

24.3

 

16.1

 

17.6

 

17.2

Nonaccrual loans as a % of Total loans

 

0.35%

 

0.35%

 

0.23%

 

0.25%

 

0.24%

 

 

 

 

 

 

 

 

 

 

 

Special Mention Loans (Criticized Loans)

 

$191.9

 

$92.6

 

$52.0

 

$58.1

 

$70.7

Classified Loans

 

114.2

 

112.3

 

74.0

 

80.8

 

71.0

Total criticized and classified loans

 

$306.1

 

$204.9

 

$126.1

 

$139.0

 

$141.7

Total Provision for credit losses of $25.4 million during the second quarter of 2020 was primarily driven by the deterioration of the macroeconomic outlook as a result of the COVID-19 pandemic and increased weightings of more severe scenarios in the CECL model. The allowance for loan losses as a percentage of total loans excluding PPP loans was 1.28% as of June 30, 2020.

Total criticized and classified loans as of June 30, 2020 was $306.1 million, an increase of $101.2 million, or 49%, linked quarter and $164.4 million, or 116%, year-over-year. The increase in criticized and classified loans during the second quarter of 2020 was primarily driven by the downgrade of commercial real estate loans to the special mention category, which represents loans where the borrower is affected by unfavorable economic conditions or has adverse operating trends but has not yet reached the point of jeopardizing loan repayment.

Capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2Q20

 

1Q20

 

4Q19

 

3Q19

 

2Q19

Tangible common equity/ Tangible assets (non-GAAP)

 

8.3%

 

8.8%

 

8.6%

 

8.6%

 

8.4%

Tangible book value per share (non-GAAP)

 

$9.25

 

$9.31

 

$9.02

 

$8.90

 

$8.71

 

 

 

 

 

 

 

 

 

 

 

Regulatory Capital Ratios: 3

 

 

 

 

 

 

 

 

 

 

Tier 1 common equity

 

11.1%

 

11.2%

 

11.4%

 

11.2%

 

11.2%

Tier 1 risk-based capital

 

12.6%

 

12.7%

 

13.0%

 

12.8%

 

12.7%

Total risk-based capital

 

13.9%

 

13.8%

 

14.1%

 

13.9%

 

13.9%

Tier 1 leverage capital

 

9.2%

 

9.7%

 

9.8%

 

9.7%

 

9.6%

3 Current quarter information is presented based on estimated data.

The Company's regulatory capital ratios remained generally flat linked quarter. The declines in Tangible common equity/Tangible assets (non-GAAP) and the Tier 1 leverage ratio are primarily driven by asset growth, which was associated with PPP loans.

Dividend Payments

Concurrent with the release of second quarter 2020 earnings, the Board of Directors of the Company declared a cash dividend payable to common shareholders of $0.06 per share. The record date for this dividend is August 7, 2020, and the payment date is August 21, 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; tangible common equity / tangible assets, total noninterest expense excluding intangibles; total noninterest expense excluding provision for off-balance sheet commitments; and the efficiency ratio excluding amortization of intangibles; net income/(loss) attributable to the Company excluding notable items; net income/(loss) attributable to the common shareholders, treasury stock method, excluding notable items; diluted earnings/(loss) per share excluding notable items; average total loans, excluding PPP.

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 16 of the attached financial statements.

Conference Call

Management will hold a conference call at 8:00 a.m. Eastern Time on Wednesday, July 29, 2020, to discuss the financial results, business highlights and outlook. To access the call:

Dial In #: (888) 317-6003
Elite Entry Number: 3768361

Replay Information:
Available from July 29, 2020 at 12:00 p.m. Eastern Time until August 5, 2020
Dial In #: (877) 344-7529
Conference Number: 10146449

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.

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 in 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 employment levels, general business and economic conditions on a national basis and in the local markets in which the Company operates; changes in customer behavior; the possibility that future credits losses are higher than currently expected due to changes in economic assumptions, customer behavior or adverse economic developments; 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 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 statements are made.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

 

 

 

 

Consolidated Balance Sheets

 

 

 

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

 

 

 

 

 

 

 

 

 

 

2Q20

 

1Q20

 

4Q19

 

3Q19

 

2Q19

ASSETS:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

179,027

 

 

$

61,714

 

 

$

292,479

 

 

$

78,010

 

 

$

65,756

 

Investment securities available-for-sale

1,002,970

 

 

993,166

 

 

978,284

 

 

935,538

 

 

966,731

 

Investment securities held-to-maturity

42,495

 

 

45,395

 

 

48,212

 

 

51,379

 

 

54,482

 

Equity securities at fair value

24,492

 

 

23,080

 

 

18,810

 

 

21,780

 

 

19,092

 

Stock in Federal Home Loan Bank and Federal Reserve Bank

42,407

 

 

45,273

 

 

39,078

 

 

47,756

 

 

64,453

 

Loans held for sale

9,786

 

 

7,671

 

 

7,386

 

 

6,658

 

 

3,640

 

Loans

7,332,954

 

 

7,043,338

 

 

6,976,704

 

 

7,067,151

 

 

7,080,260

 

Less: Allowance for loan losses

89,324

 

 

68,211

 

 

71,982

 

 

75,359

 

 

75,067

 

Loans, net of allowance for loan losses

7,243,630

 

 

6,975,127

 

 

6,904,722

 

 

6,991,792

 

 

7,005,193

 

Premises and equipment, net

43,805

 

 

43,544

 

 

44,527

 

 

42,658

 

 

40,244

 

Goodwill

57,607

 

 

57,607

 

 

57,607

 

 

57,607

 

 

57,607

 

Intangible assets, net

8,935

 

 

9,637

 

 

10,352

 

 

10,622

 

 

10,884

 

Accrued interest receivable

24,918

 

 

24,054

 

 

24,175

 

 

24,851

 

 

26,411

 

Deferred income taxes, net

9,116

 

 

5,630

 

 

11,383

 

 

15,704

 

 

17,183

 

Right-of-use assets

94,143

 

 

98,896

 

 

102,075

 

 

107,045

 

 

110,880

 

Other assets

375,575

 

 

355,532

 

 

291,411

 

 

299,544

 

 

270,317

 

TOTAL ASSETS

$

9,158,906

 

 

$

8,746,326

 

 

$

8,830,501

 

 

$

8,690,944

 

 

$

8,712,873

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

 

 

Deposits

$

7,427,397

 

 

$

6,835,572

 

 

$

7,241,476

 

 

$

6,658,242

 

 

$

6,437,963

 

Securities sold under agreements to repurchase

46,623

 

 

45,319

 

 

53,398

 

 

48,860

 

 

62,372

 

Federal funds purchased

 

 

145,000

 

 

 

 

230,000

 

 

135,000

 

Federal Home Loan Bank borrowings

426,313

 

 

491,254

 

 

350,829

 

 

570,904

 

 

920,068

 

Junior subordinated debentures

106,363

 

 

106,363

 

 

106,363

 

 

106,363

 

 

106,363

 

Lease liabilities

108,234

 

 

113,574

 

 

117,214

 

 

122,799

 

 

126,740

 

Other liabilities

218,771

 

 

180,452

 

 

140,820

 

 

143,607

 

 

124,370

 

TOTAL LIABILITIES

8,333,701

 

 

7,917,534

 

 

8,010,100

 

 

7,880,775

 

 

7,912,876

 

 

 

 

 

 

 

 

 

 

 

REDEEMABLE NONCONTROLLING INTERESTS (“RNCI”)

 

 

 

 

1,383

 

 

1,481

 

 

1,786

 

SHAREHOLDERS' EQUITY:

 

 

 

 

 

 

 

 

 

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

82,058

 

 

81,800

 

 

83,266

 

 

83,242

 

 

83,774

 

Additional paid-in capital

594,463

 

 

593,167

 

 

600,708

 

 

599,877

 

 

603,869

 

Retained earnings

118,647

 

 

131,761

 

 

127,469

 

 

116,210

 

 

106,443

 

Accumulated other comprehensive income

30,037

 

 

22,064

 

 

7,575

 

 

9,359

 

 

4,125

 

TOTAL SHAREHOLDERS' EQUITY

825,205

 

 

828,792

 

 

819,018

 

 

808,688

 

 

798,211

 

TOTAL LIABILITIES, RNCI, AND SHAREHOLDERS' EQUITY

$

9,158,906

 

 

$

8,746,326

 

 

$

8,830,501

 

 

$

8,690,944

 

 

$

8,712,873

 

 

 

 

 

 

 

 

 

 

 

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

 

 

 

 

 

 

 

 

 

Consolidated Income Statements

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

 

 

2Q20

 

1Q20

 

4Q19

 

3Q19

 

2Q19

REVENUE:

 

Interest income

$

68,819

 

 

$

73,082

 

 

$

75,291

 

 

$

77,604

 

 

$

78,728

 

Interest expense

9,881

 

 

15,825

 

 

19,166

 

 

21,451

 

 

21,268

 

Net interest income

58,938

 

 

57,257

 

 

56,125

 

 

56,153

 

 

57,460

 

Provision/(credit) for loan losses 4

22,604

 

 

16,962

 

 

(3,668)

 

 

167

 

 

1,363

 

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

36,334

 

 

40,295

 

 

59,793

 

 

55,986

 

 

56,097

 

 

 

 

 

 

 

 

 

 

 

Wealth management and trust fees 5

17,261

 

 

18,371

 

 

18,720

 

 

19,067

 

 

18,912

 

Investment management fees

1,770

 

 

1,925

 

 

2,554

 

 

2,496

 

 

2,455

 

Private banking fee income

2,395

 

 

2,490

 

 

2,924

 

 

2,658

 

 

2,867

 

Gain on sale of loans, net

204

 

 

100

 

 

557

 

 

934

 

 

58

 

Total core fees and income

21,630

 

 

22,886

 

 

24,755

 

 

25,155

 

 

24,292

 

Total other income

1,032

 

 

(1,365)

 

 

2,038

 

 

(29)

 

 

88

 

TOTAL REVENUE 6

81,600

 

 

78,778

 

 

82,918

 

 

81,279

 

 

81,840

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSE:

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

33,937

 

 

35,096

 

 

34,186

 

 

31,684

 

 

32,706

 

Occupancy and equipment

7,560

 

 

7,646

 

 

7,578

 

 

8,260

 

 

7,852

 

Information systems

7,113

 

 

6,725

 

 

6,476

 

 

5,169

 

 

5,137

 

Professional services

3,446

 

 

3,601

 

 

3,920

 

 

4,435

 

 

3,313

 

Marketing and business development

2,313

 

 

1,890

 

 

2,017

 

 

1,403

 

 

1,934

 

Amortization of intangibles

702

 

 

715

 

 

676

 

 

671

 

 

672

 

FDIC insurance

767

 

 

 

 

(19)

 

 

59

 

 

585

 

Other 4

5,615

 

 

5,235

 

 

3,623

 

 

3,856

 

 

3,460

 

TOTAL NONINTEREST EXPENSE

61,453

 

 

60,908

 

 

58,457

 

 

55,537

 

 

55,659

 

 

 

 

 

 

 

 

 

 

 

INCOME/(LOSS) BEFORE INCOME TAXES

(2,457)

 

 

908

 

 

28,129

 

 

25,575

 

 

24,818

 

Income tax expense

841

 

 

102

 

 

6,788

 

 

5,517

 

 

5,369

 

Net income/(loss) before attribution to noncontrolling interests

(3,298)

 

 

806

 

 

21,341

 

 

20,058

 

 

19,449

 

Less: Net income attributable to noncontrolling interests

 

 

6

 

 

97

 

 

96

 

 

69

 

NET INCOME/(LOSS) ATTRIBUTABLE TO THE COMPANY

$

(3,298)

 

 

$

800

 

 

$

21,244

 

 

$

19,962

 

 

$

19,380

 

 

 

 

 

 

 

 

 

 

 

Adjustments, treasury stock method 7

 

 

414

 

 

98

 

 

304

 

 

(816)

 

NET INCOME/(LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

(3,298)

 

 

$

1,214

 

 

$

21,342

 

 

$

20,266

 

 

$

18,564

 

 

 

 

 

 

 

 

 

 

 

COMMON SHARE DATA:

 

 

 

 

 

 

 

 

 

Weighted average basic shares outstanding

81,929,752

 

 

83,005,064

 

 

83,238,982

 

 

83,631,403

 

 

83,565,780

 

Weighted average diluted shares outstanding 8

81,929,752

 

 

83,318,041

 

 

83,637,786

 

 

83,956,708

 

 

84,048,972

 

Diluted earnings/(loss) per share

$

(0.04)

 

 

$

0.01

 

 

$

0.26

 

 

$

0.24

 

 

$

0.22

 

 

 

 

 

 

 

 

 

 

 

 

4 In the first and second quarter of 2020, there was a $17.0 million and $22.6 million provision expense for loan losses, respectively. Additionally, in the first and second quarter of 2020, there was a $1.8 million and $2.8 million provision expense related to the off-balance sheet commitments included in Other expense, respectively.

5 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.

6 Total revenue is the sum of Net interest income, Total core fees and income, and Total other income/(loss).

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

8 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 Income Statements

 

 

 

 

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

 

 

 

 

 

 

Six months ended June 30,

 

 

2020

 

2019

REVENUE:

 

 

Interest income

 

$

141,901

 

 

$

155,552

 

Interest expense

 

25,706

 

 

39,754

 

Net interest income

 

116,195

 

 

115,798

 

Provision/(credit) for loan losses 4

 

39,566

 

 

(63)

 

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

 

76,629

 

 

115,861

 

 

 

 

 

 

Wealth management and trust fees 5

 

35,632

 

 

37,970

 

Investment management fees

 

3,695

 

 

5,105

 

Private banking fee income

 

4,885

 

 

5,366

 

Gain on sale of loans, net

 

304

 

 

131

 

Total core fees and income

 

44,516

 

 

48,572

 

Total other income

 

(333)

 

 

1,056

 

TOTAL REVENUE 6

 

160,378

 

 

165,426

 

 

 

 

 

 

NONINTEREST EXPENSE:

 

 

 

 

Salaries and employee benefits

 

69,033

 

 

68,432

 

Occupancy and equipment

 

15,206

 

 

16,200

 

Information systems

 

13,838

 

 

10,997

 

Professional services

 

7,047

 

 

6,873

 

Marketing and business development

 

4,203

 

 

3,019

 

Amortization of intangibles

 

1,417

 

 

1,344

 

FDIC insurance

 

767

 

 

1,245

 

Restructuring

 

 

 

1,646

 

Other 4

 

10,850

 

 

6,456

 

TOTAL NONINTEREST EXPENSE

 

122,361

 

 

116,212

 

 

 

 

 

 

INCOME/(LOSS) BEFORE INCOME TAXES

 

(1,549)

 

 

49,277

 

Income tax expense

 

943

 

 

10,286

 

Net income/(loss) before attribution to noncontrolling interests

 

(2,492)

 

 

38,991

 

Less: Net income attributable to noncontrolling interests

 

6

 

 

169

 

NET INCOME/(LOSS) ATTRIBUTABLE TO THE COMPANY

 

$

(2,498)

 

 

$

38,822

 

 

 

 

 

 

Adjustments, treasury stock method 7

 

414

 

 

741

 

NET INCOME/(LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

 

$

(2,084)

 

 

$

39,563

 

 

 

 

 

 

COMMON SHARE DATA

 

 

 

 

Weighted average basic shares outstanding

 

82,464,438

 

 

83,426,213

 

Weighted average diluted shares outstanding 8

 

82,464,438

 

 

84,036,050

 

Diluted earnings/(loss) per share

 

$

(0.03)

 

 

$

0.47

 

 

 

 

 

 

4 In the first and second quarter of 2020, there was a $17.0 million and $22.6 million provision expense for loan losses, respectively. Additionally, in the first and second quarter of 2020, there was a $1.8 million and $2.8 million provision expense related to the off-balance sheet commitments included in Other expense, respectively.

5 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.

6 Total revenue is the sum of Net interest income, Total core fees and income, and Total other income/(loss).

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

8 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)

 

 

 

 

 

 

 

 

 

 

2Q20

 

1Q20

 

4Q19

 

3Q19

 

2Q19

KEY STATISTICS:

 

 

 

 

 

 

 

 

 

Return on average assets (non-GAAP) 9

(0.15)

%

 

0.04

%

 

0.96

%

 

0.91

%

 

0.90

%

ROACE (non-GAAP) 9

(1.58)

%

 

0.39

%

 

10.29

%

 

9.80

%

 

9.83

%

ROATCE (non-GAAP) 9

(1.43)

%

 

0.72

%

 

11.51

%

 

10.99

%

 

11.06

%

Efficiency ratio (non-GAAP) 9

74.4

%

 

76.4

%

 

69.7

%

 

67.5

%

 

67.2

%

Noninterest income to total revenue

27.8

%

 

27.3

%

 

32.3

%

 

30.9

%

 

29.8

%

 

 

 

 

 

 

 

 

 

 

Net interest margin

2.75

%

 

2.76

%

 

2.70

%

 

2.72

%

 

2.78

%

Average loan to average deposit ratio

100.5

%

 

99.0

%

 

101.6

%

 

105.9

%

 

106.6

%

Cost of total deposits

0.41

%

 

0.72

%

 

0.86

%

 

0.92

%

 

0.88

%

Cost of interest-bearing deposits

0.59

%

 

1.02

%

 

1.20

%

 

1.31

%

 

1.25

%

Cost of total funding

0.50

%

 

0.83

%

 

0.99

%

 

1.12

%

 

1.11

%

 

 

 

 

 

 

 

 

 

 

Allowance for loan loss / Total loans

1.22

%

 

0.97

%

 

1.03

%

 

1.07

%

 

1.06

%

Nonperforming loans / Total loans

0.35

%

 

0.35

%

 

0.23

%

 

0.25

%

 

0.24

%

Net (charge-offs)/recoveries / Total loans 9

(0.08)

%

 

(0.02)

%

 

0.02

%

 

0.01

%

 

(0.01)

%

 

 

 

 

 

 

 

 

 

 

CAPITAL HIGHLIGHTS:

 

 

 

 

 

 

 

 

 

Tier 1 common equity 3

$

731,316

 

 

$

742,044

 

 

$

745,926

 

 

$

732,980

 

 

$

726,872

 

Tier 1 capital 3

$

831,338

 

 

$

842,066

 

 

$

846,337

 

 

$

833,431

 

 

$

827,299

 

Total capital 3

$

913,936

 

 

$

914,572

 

 

$

919,573

 

 

$

910,076

 

 

$

903,675

 

 

 

 

 

 

 

 

 

 

 

Risk-weighted assets ("RWA") 3

$

6,593,981

 

 

$

6,627,339

 

 

$

6,530,804

 

 

$

6,533,884

 

 

$

6,491,184

 

Average assets for leverage 3

$

9,009,565

 

 

$

8,691,254

 

 

$

8,659,944

 

 

$

8,588,358

 

 

$

8,617,803

 

 

 

 

 

 

 

 

 

 

 

Tier 1 common equity ratio 3

11.09

%

 

11.20

%

 

11.42

%

 

11.22

%

 

11.20

%

Tier 1 risk-based capital ratio 3

12.61

%

 

12.71

%

 

12.96

%

 

12.76

%

 

12.74

%

Total risk-based capital ratio 3

13.86

%

 

13.80

%

 

14.08

%

 

13.93

%

 

13.92

%

Tier 1 leverage capital ratio 3

9.23

%

 

9.69

%

 

9.77

%

 

9.70

%

 

9.60

%

 

 

 

 

 

 

 

 

 

 

Total equity / Total assets

9.01

%

 

9.48

%

 

9.27

%

 

9.30

%

 

9.16

%

Tangible common equity / Tangible assets (non-GAAP)

8.34

%

 

8.77

%

 

8.57

%

 

8.59

%

 

8.44

%

 

 

 

 

 

 

 

 

 

 

End of period market price per share

$

6.88

 

 

$

7.15

 

 

$

12.03

 

 

$

11.66

 

 

$

12.07

 

End of period shares outstanding

82,058,483

 

81,800,486

 

83,265,674

 

83,241,952

 

83,774,335

Book value per common share

$

10.06

 

 

$

10.13

 

 

$

9.84

 

 

$

9.71

 

 

$

9.53

 

Tangible book value per share (non-GAAP)

$

9.25

 

 

$

9.31

 

 

$

9.02

 

 

$

8.90

 

 

$

8.71

 

 

 

 

 

 

 

 

 

 

 

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

 

 

$

 

 

 

 

 

 

 

 

 

 

 

3 Current quarter information is presented based on estimated data.

9 Annualized.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

 

 

 

 

 

 

Consolidated AUM and Balance Sheet - End of Period Balances

 

 

 

 

 

 

Unaudited ($ in thousands)

 

 

 

 

 

 

 

 

 

 

2Q20

 

1Q20

 

4Q19

 

3Q19

 

2Q19

ASSETS UNDER MANAGEMENT AND ADVISORY ("AUM"):

 

 

 

 

 

 

 

 

Wealth Management and Trust

$

14,889,000

 

 

$

13,497,000

 

 

$

15,224,000

 

 

$

14,695,000

 

 

$

14,649,000

 

Other 2

1,067,000

 

 

1,016,000

 

 

1,544,000

 

 

1,533,000

 

 

1,550,000

 

TOTAL AUM

$

15,956,000

 

 

$

14,513,000

 

 

$

16,768,000

 

 

$

16,228,000

 

 

$

16,199,000

 

 

 

 

 

 

 

 

 

 

 

AUM Rollforward:

 

 

 

 

 

 

 

 

 

Beginning balance

$

14,513,000

 

 

$

16,768,000

 

 

$

16,228,000

 

 

$

16,199,000

 

 

$

16,122,000

 

Net flows

(40,000)

 

 

150,000

 

 

(209,000)

 

 

(137,000)

 

 

(269,000)

 

Market

1,483,000

 

 

(2,405,000)

 

 

749,000

 

 

166,000

 

 

346,000

 

Ending balance

$

15,956,000

 

 

$

14,513,000

 

 

$

16,768,000

 

 

$

16,228,000

 

 

$

16,199,000

 

 

 

 

 

 

 

 

 

 

 

AUM Net Flows:

 

 

 

 

 

 

 

 

 

Wealth Management and Trust

$

60,000

 

 

$

176,000

 

 

$

(114,000)

 

 

$

(100,000)

 

 

$

(233,000)

 

Other 2

(100,000)

 

 

(26,000)

 

 

(95,000)

 

 

(37,000)

 

 

(36,000)

 

TOTAL NET FLOWS

$

(40,000)

 

 

$

150,000

 

 

$

(209,000)

 

 

$

(137,000)

 

 

$

(269,000)

 

 

 

 

 

 

 

 

 

 

 

DEPOSITS:

 

 

 

 

 

 

 

 

 

Demand deposits (non-interest bearing)

$

2,293,864

 

 

$

2,020,440

 

 

$

1,971,013

 

 

$

1,947,363

 

 

$

1,854,091

 

Savings and NOW

758,656

 

 

653,006

 

 

646,199

 

 

666,107

 

 

631,166

 

Money market

3,753,228

 

 

3,468,701

 

 

3,969,330

 

 

3,366,623

 

 

3,228,608

 

Certificates of deposit

621,649

 

 

693,425

 

 

654,934

 

 

678,149

 

 

724,098

 

TOTAL DEPOSITS

$

7,427,397

 

 

$

6,835,572

 

 

$

7,241,476

 

 

$

6,658,242

 

 

$

6,437,963

 

 

 

 

 

 

 

 

 

 

 

LOANS:

 

 

 

 

 

 

 

 

 

Commercial and industrial

$

565,748

 

 

$

670,744

 

 

$

694,034

 

 

$

695,029

 

 

$

656,186

 

Paycheck Protection Program

370,034

 

 

 

 

 

 

 

 

 

Commercial tax exempt

419,264

 

 

445,319

 

 

447,927

 

 

448,488

 

 

450,307

 

Commercial real estate

2,676,708

 

 

2,626,299

 

 

2,551,274

 

 

2,533,346

 

 

2,530,556

 

Construction and land

240,211

 

 

238,293

 

 

225,983

 

 

209,741

 

 

200,378

 

Residential

2,859,627

 

 

2,841,926

 

 

2,839,155

 

 

2,964,042

 

 

3,025,758

 

Home equity

84,588

 

 

89,350

 

 

83,657

 

 

84,432

 

 

89,930

 

Consumer

116,774

 

 

131,407

 

 

134,674

 

 

132,073

 

 

127,145

 

TOTAL LOANS

$

7,332,954

 

 

$

7,043,338

 

 

$

6,976,704

 

 

$

7,067,151

 

 

$

7,080,260

 

 

 

 

 

 

 

 

 

 

 

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

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

 

 

 

 

 

 

 

 

 

Asset Quality

 

 

 

 

 

 

 

 

 

Unaudited ($ in thousands)

 

 

 

 

 

 

 

 

 

 

2Q20

 

1Q20

 

4Q19

 

3Q19

 

2Q19

CHARGE-OFFS:

 

 

 

 

 

 

 

 

 

Loan charge-offs

$

(1,546)

 

 

$

(528)

 

 

$

(285)

 

 

$

(185)

 

 

$

(195)

 

Loan recoveries

55

 

 

180

 

 

576

 

 

310

 

 

85

 

NET (CHARGE-OFFS)/RECOVERIES

$

(1,491)

 

 

$

(348)

 

 

$

291

 

 

$

125

 

 

$

(110)

 

Net charge-offs to average loans (annualized)

(0.08)

%

 

(0.02)

%

 

0.02

%

 

0.01

%

 

(0.01)

%

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Commercial and industrial

$

(337)

 

 

$

(473)

 

 

$

118

 

 

$

95

 

 

$

(155)

 

Commercial real estate

 

 

 

 

183

 

 

27

 

 

30

 

Home equity

(1,157)

 

 

132

 

 

4

 

 

6

 

 

 

Consumer

3

 

 

(7)

 

 

(14)

 

 

(3)

 

 

15

 

NET (CHARGE-OFFS)/RECOVERIES

$

(1,491)

 

 

$

(348)

 

 

$

291

 

 

$

125

 

 

$

(110)

 

 

 

 

 

 

 

 

 

 

 

LOAN QUALITY DATA:

 

 

 

 

 

 

 

 

 

Special mention loans

$

191,882

 

 

$

92,623

 

 

$

52,026

 

 

$

58,133

 

 

$

70,677

 

 

 

 

 

 

 

 

 

 

 

Accruing classified loans 10

88,586

 

 

87,948

 

 

57,922

 

 

63,278

 

 

53,883

 

Nonaccrual loans

25,604

 

 

24,314

 

 

16,103

 

 

17,565

 

 

17,155

 

Total classified

114,190

 

 

112,262

 

 

74,025

 

 

80,843

 

 

71,038

 

Criticized and classified loans

$

306,072

 

 

$

204,885

 

 

$

126,051

 

 

$

138,976

 

 

$

141,715

 

 

 

 

 

 

 

 

 

 

 

Loans 30-89 days past due and accruing 11

$

5,535

 

 

$

14,852

 

 

$

25,945

 

 

$

4,179

 

 

$

2,434

 

 

 

 

 

 

 

 

 

 

 

10 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.

11 At June 30, 2020 and at June 30, 2019, the Company had one loan totaling less than $0.1 million and one loan totaling $0.9 million that was more than 90 days past due but still on accrual status, respectively. Both loans 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

 

2Q20

1Q20

2Q19

 

2Q20

1Q20

2Q19

 

2Q20

1Q20

2Q19

INTEREST-EARNING ASSETS

 

 

 

 

 

 

 

 

 

 

 

Cash and investments:

 

 

 

 

 

 

 

 

 

 

 

Taxable investment securities

$

198,337

 

$

201,174

 

$

227,029

 

 

$

859

 

$

868

 

$

1,121

 

 

1.73

%

1.73

%

1.98

%

Non-taxable investment securities

316,513

 

315,681

 

304,309

 

 

2,005

 

1,998

 

1,901

 

 

2.53

%

2.53

%

2.50

%

Mortgage-backed securities

505,669

 

520,629

 

508,033

 

 

2,566

 

2,787

 

2,706

 

 

2.03

%

2.14

%

2.13

%

Short-term investments and other

186,895

 

147,482

 

130,363

 

 

582

 

1,071

 

1,057

 

 

1.23

%

2.89

%

3.23

%

Total cash and investments

1,207,414

 

1,184,966

 

1,169,734

 

 

6,012

 

6,724

 

6,785

 

 

1.99

%

2.27

%

2.32

%

Loans: 12

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

1,037,285

 

1,148,986

 

1,091,903

 

 

9,708

 

10,724

 

11,170

 

 

3.70

%

3.69

%

4.05

%

Paycheck Protection Program

283,619

 

 

 

 

1,573

 

 

 

 

2.19

%

%

%

Commercial real estate

2,659,074

 

2,582,305

 

2,506,637

 

 

24,602

 

27,482

 

29,953

 

 

3.66

%

4.21

%

4.73

%

Construction and land

233,305

 

233,324

 

202,609

 

 

2,251

 

2,572

 

2,559

 

 

3.82

%

4.36

%

5.00

%

Residential

2,862,708

 

2,850,833

 

3,008,753

 

 

23,079

 

23,468

 

25,735

 

 

3.22

%

3.29

%

3.42

%

Home equity

88,307

 

86,048

 

91,384

 

 

650

 

952

 

1,146

 

 

2.96

%

4.45

%

5.03

%

Other consumer

124,346

 

132,237

 

124,778

 

 

944

 

1,160

 

1,380

 

 

3.05

%

3.53

%

4.43

%

Total loans

7,288,644

 

7,033,733

 

7,026,064

 

 

62,807

 

66,358

 

71,943

 

 

3.42

%

3.75

%

4.07

%

Total earning assets

8,496,058

 

8,218,699

 

8,195,798

 

 

68,819

 

73,082

 

78,728

 

 

3.22

%

3.54

%

3.82

%

 

 

 

 

 

 

 

 

 

 

 

 

LESS: Allowance for loan losses

68,473

 

51,730

 

73,856

 

 

 

 

 

 

 

 

 

Cash and due from banks

39,959

 

49,571

 

45,705

 

 

 

 

 

 

 

 

 

Other assets

641,657

 

562,851

 

511,859

 

 

 

 

 

 

 

 

 

TOTAL AVERAGE ASSETS

$

9,109,201

 

$

8,779,391

 

$

8,679,506

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST-BEARING LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits: 13

 

 

 

 

 

 

 

 

 

 

 

Savings and NOW

$

680,758

 

$

638,926

 

$

684,507

 

 

$

187

 

$

232

 

$

276

 

 

0.11

%

0.15

%

0.16

%

Money market

3,684,147

 

3,753,045

 

3,226,569

 

 

4,848

 

9,657

 

10,476

 

 

0.53

%

1.03

%

1.30

%

Certificates of deposit

671,470

 

668,818

 

752,500

 

 

2,300

 

2,907

 

3,763

 

 

1.38

%

1.75

%

2.01

%

Total interest-bearing deposits 13

5,036,375

 

5,060,789

 

4,663,576

 

 

7,335

 

12,796

 

14,515

 

 

0.59

%

1.02

%

1.25

%

Junior subordinated debentures

106,363

 

106,363

 

106,363

 

 

764

 

917

 

1,080

 

 

2.84

%

3.41

%

4.02

%

FHLB borrowings and other

610,856

 

455,813

 

952,645

 

 

1,782

 

2,112

 

5,673

 

 

1.15

%

1.83

%

2.36

%

Total interest-bearing liabilities 13

5,753,594

 

5,622,965

 

5,722,584

 

 

9,881

 

15,825

 

21,268

 

 

0.69

%

1.13

%

1.48

%

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing demand deposits 13

2,213,829

 

2,046,102

 

1,926,591

 

 

 

 

 

 

 

 

 

Payables and other liabilities

306,896

 

270,371

 

238,544

 

 

 

 

 

 

 

 

 

Total average liabilities

8,274,319

 

7,939,438

 

7,887,719

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

1,018

 

943

 

 

 

 

 

 

 

 

 

Average shareholders’ equity

834,882

 

838,935

 

790,844

 

 

 

 

 

 

 

 

 

TOTAL AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY

$

9,109,201

 

$

8,779,391

 

$

8,679,506

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

 

$

58,938

 

$

57,257

 

$

57,460

 

 

 

 

 

Interest rate spread

 

 

 

 

 

 

 

 

2.53

%

2.41

%

2.34

%

Net interest margin

 

 

 

 

 

 

 

 

2.75

%

2.76

%

2.78

%

 

 

 

 

 

 

 

 

 

 

 

 

Average total deposits 13

$

7,250,204

 

$

7,106,891

 

$

6,590,167

 

 

 

 

 

 

0.41

%

0.72

%

0.88

%

Average total deposits and borrowings 13

$

7,967,423

 

$

7,669,067

 

$

7,649,175

 

 

 

 

 

 

0.50

%

0.83

%

1.11

%

 

 

 

 

 

 

 

 

 

 

 

 

12 Average loans includes Loans held for sale and Nonaccrual loans

13 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.

 

 

 

 

 

 

Average Balances, Yields, and Rates

 

 

 

 

 

 

Unaudited ($ in thousands)

 

 

 

 

 

 

 

 

 

Average Balance

 

Interest Income/Expense

 

Average Yield/Rate

 

Six Months Ended

 

Six Months Ended

 

Six Months Ended

INTEREST-EARNING ASSETS

6/30/20

6/30/19

 

6/30/20

6/30/19

 

6/30/20

6/30/19

Cash and investments:

 

 

 

 

 

 

 

 

Taxable investment securities

$

199,755

 

$

235,218

 

 

$

1,727

 

$

2,306

 

 

1.73

%

1.92

%

Non-taxable investment securities

316,097

 

305,581

 

 

4,003

 

3,802

 

 

2.53

%

2.49

%

Mortgage-backed securities

513,149

 

514,872

 

 

5,353

 

5,603

 

 

2.09

%

2.18

%

Short-term investments and other

167,188

 

105,610

 

 

1,653

 

1,965

 

 

1.96

%

3.61

%

Total cash and investments

1,196,189

 

1,161,281

 

 

12,736

 

13,676

 

 

2.13

%

2.34

%

Loans: 12

 

 

 

 

 

 

 

 

Commercial and industrial

1,091,648

 

1,081,092

 

 

20,432

 

22,150

 

 

3.69

%

4.08

%

Paycheck Protection Program

143,297

 

 

 

1,573

 

 

 

2.23

%

%

Commercial real estate

2,620,689

 

2,452,824

 

 

52,084

 

58,104

 

 

3.93

%

4.71

%

Construction and land

233,315

 

206,956

 

 

4,823

 

5,200

 

 

4.09

%

5.00

%

Residential

2,856,771

 

2,990,948

 

 

46,547

 

51,280

 

 

3.26

%

3.43

%

Home equity

87,178

 

91,017

 

 

1,602

 

2,267

 

 

3.69

%

5.02

%

Other consumer

128,292

 

129,332

 

 

2,104

 

2,875

 

 

3.29

%

4.48

%

Total loans

7,161,190

 

6,952,169

 

 

129,165

 

141,876

 

 

3.58

%

4.07

%

Total earning assets

8,357,379

 

8,113,450

 

 

141,901

 

155,552

 

 

3.38

%

3.82

%

 

 

 

 

 

 

 

 

 

LESS: Allowance for loan losses

60,102

 

74,692

 

 

 

 

 

 

 

Cash and due from banks

44,831

 

46,010

 

 

 

 

 

 

 

Other assets

602,319

 

502,068

 

 

 

 

 

 

 

TOTAL AVERAGE ASSETS

$

8,944,427

 

$

8,586,836

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST-BEARING LIABILITIES

 

 

 

 

 

 

 

 

Interest-bearing deposits: 13

 

 

 

 

 

 

 

 

Savings and NOW

$

659,842

 

$

679,716

 

 

$

419

 

$

572

 

 

0.13

%

0.17

%

Money market

3,717,664

 

3,283,891

 

 

14,505

 

20,549

 

 

0.78

%

1.26

%

Certificates of deposit

670,144

 

764,094

 

 

5,207

 

7,452

 

 

1.56

%

1.97

%

Total interest-bearing deposits 13

5,047,650

 

4,727,701

 

 

20,131

 

28,573

 

 

0.80

%

1.22

%

Junior subordinated debentures

106,363

 

106,363

 

 

1,681

 

2,201

 

 

3.17

%

4.17

%

FHLB borrowings and other

533,334

 

785,245

 

 

3,894

 

8,980

 

 

1.44

%

2.27

%

Total interest-bearing liabilities 13

5,687,347

 

5,619,309

 

 

25,706

 

39,754

 

 

0.90

%

1.42

%

 

 

 

 

 

 

 

 

 

Non-interest bearing demand deposits 13

2,129,758

 

1,950,088

 

 

 

 

 

 

 

Payables and other liabilities

288,846

 

236,894

 

 

 

 

 

 

 

Total average liabilities

8,105,951

 

7,806,291

 

 

 

 

 

 

 

Redeemable noncontrolling interests

573

 

1,619

 

 

 

 

 

 

 

Average shareholders’ equity

837,903

 

778,926

 

 

 

 

 

 

 

TOTAL AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY

$

8,944,427

 

$

8,586,836

 

 

 

 

 

 

 

Net interest income

 

 

 

$

116,195

 

$

115,798

 

 

 

 

Interest rate spread

 

 

 

 

 

 

2.48

%

2.40

%

Net interest margin

 

 

 

 

 

 

2.76

%

2.84

%

 

 

 

 

 

 

 

 

 

Average total deposits 13

$

7,177,408

 

$

6,677,789

 

 

 

 

 

0.56

%

0.86

%

Average total deposits and borrowings 13

$

7,817,105

 

$

7,569,397

 

 

 

 

 

0.66

%

1.06

%

12 Average loans includes Loans held for sale and Nonaccrual loans

13 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)

 

 

 

 

 

 

 

 

 

2Q20

 

1Q20

 

4Q19

 

3Q19

 

2Q19

New England

$

3,781,603

 

 

$

3,724,959

 

 

$

3,776,747

 

 

$

3,868,690

 

 

$

3,957,221

 

Northern California

1,741,255

 

 

1,618,668

 

 

1,532,786

 

 

1,559,569

 

 

1,538,441

 

Southern California

1,810,096

 

 

1,699,711

 

 

1,667,171

 

 

1,638,892

 

 

1,584,598

 

Total loans

$

7,332,954

 

 

$

7,043,338

 

 

$

6,976,704

 

 

$

7,067,151

 

 

$

7,080,260

 

 

 

 

 

 

 

 

 

 

 

Loans (charged-off)/recovered, net:

 

 

 

 

 

 

 

 

 

New England

$

7

 

 

$

15

 

 

$

414

 

 

$

275

 

 

$

31

 

Northern California

3

 

 

122

 

 

(10)

 

 

6

 

 

20

 

Southern California

(1,501)

 

 

(485)

 

 

(113)

 

 

(156)

 

 

(161)

 

Total net loans (charged-off)/recovered

$

(1,491)

 

 

$

(348)

 

 

$

291

 

 

$

125

 

 

$

(110)

 

 

 

 

 

 

 

 

 

 

 

Special mention loans:

 

 

 

 

 

 

 

 

 

New England

$

83,026

 

 

$

61,741

 

 

$

21,691

 

 

$

19,828

 

 

$

35,235

 

Northern California

75,609

 

 

5,947

 

 

5,227

 

 

4,821

 

 

10,360

 

Southern California

33,247

 

 

24,935

 

 

25,108

 

 

33,484

 

 

25,082

 

Total special mention loans

$

191,882

 

 

$

92,623

 

 

$

52,026

 

 

$

58,133

 

 

$

70,677

 

 

 

 

 

 

 

 

 

 

 

Accruing classified loans:

 

 

 

 

 

 

 

 

 

New England

$

53,124

 

 

$

50,483

 

 

$

20,428

 

 

$

21,830

 

 

$

13,012

 

Northern California

21,712

 

 

24,843

 

 

24,946

 

 

23,938

 

 

25,957

 

Southern California

13,750

 

 

12,622

 

 

12,548

 

 

17,510

 

 

14,914

 

Total accruing classified loans

$

88,586

 

 

$

87,948

 

 

$

57,922

 

 

$

63,278

 

 

$

53,883

 

 

 

 

 

 

 

 

 

 

 

Nonaccruing loans:

 

 

 

 

 

 

 

 

 

New England

$

11,630

 

 

$

11,965

 

 

$

9,764

 

 

$

8,999

 

 

$

8,837

 

Northern California

9,459

 

 

6,575

 

 

319

 

 

2,395

 

 

2,644

 

Southern California

4,515

 

 

5,774

 

 

6,020

 

 

6,171

 

 

5,674

 

Total nonaccruing loans

$

25,604

 

 

$

24,314

 

 

$

16,103

 

 

$

17,565

 

 

$

17,155

 

 

 

 

 

 

 

 

 

 

 

14 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, except share and per share data)

 

 

 

 

 

 

 

 

 

2Q20

 

1Q20

 

4Q19

 

3Q19

 

2Q19

ROACE AND ROATCE:

 

 

 

 

 

 

 

 

 

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

$

(3,298)

 

 

$

800

 

 

$

21,244

 

 

$

19,962

 

 

$

19,380

 

ADD: Amortization of intangibles, net of tax

555

 

 

565

 

 

534

 

 

530

 

 

531

 

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

$

(2,743)

 

 

$

1,365

 

 

$

21,778

 

 

$

20,492

 

 

$

19,911

 

 

 

 

 

 

 

 

 

 

 

Total average shareholders’ equity (C)

$

834,882

 

 

$

838,935

 

 

$

818,816

 

 

$

807,890

 

 

$

790,844

 

LESS: Average goodwill and intangibles, net

(66,877)

 

 

(67,586)

 

 

(68,031)

 

 

(68,359)

 

 

(68,889)

 

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

$

768,005

 

 

$

771,349

 

 

$

750,785

 

 

$

739,531

 

 

$

721,955

 

 

 

 

 

 

 

 

 

 

 

ROACE (annualized) (A/C)

(1.58)

%

 

0.39

%

 

10.29

%

 

9.80

%

 

9.83

%

ROATCE (annualized) (B/D)

(1.43)

%

 

0.72

%

 

11.51

%

 

10.99

%

 

11.06

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PRE-TAX, PRE-PROVISION INCOME:

 

 

 

 

 

 

 

 

 

Income/(loss) before income taxes (GAAP)

$

(2,457)

 

 

$

908

 

 

$

28,129

 

 

$

25,575

 

 

$

24,818

 

ADD BACK: Provision/(credit) for loan losses

22,604

 

 

16,962

 

 

(3,668)

 

 

167

 

 

1,363

 

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

$

20,147

 

 

$

17,870

 

 

$

24,461

 

 

$

25,742

 

 

$

26,181

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TANGIBLE COMMON EQUITY:

 

 

 

 

 

 

 

 

 

Total shareholders’ equity (GAAP)

$

825,205

 

 

$

828,792

 

 

$

819,018

 

 

$

808,688

 

 

$

798,211

 

LESS: Goodwill and intangibles, net

(66,542)

 

 

(67,244)

 

 

(67,959)

 

 

(68,229)

 

 

(68,491)

 

Tangible common equity (non-GAAP) (A)

$

758,663

 

 

$

761,548

 

 

$

751,059

 

 

$

740,459

 

 

$

729,720

 

 

 

 

 

 

 

 

 

 

 

Total assets (GAAP)

$

9,158,906

 

 

$

8,746,326

 

 

$

8,830,501

 

 

$

8,690,944

 

 

$

8,712,873

 

LESS: Goodwill and intangibles, net

(66,542)

 

 

(67,244)

 

 

(67,959)

 

 

(68,229)

 

 

(68,491)

 

Tangible assets (non-GAAP) (B)

$

9,092,364

 

 

$

8,679,082

 

 

$

8,762,542

 

 

$

8,622,715

 

 

$

8,644,382

 

 

 

 

 

 

 

 

 

 

 

End of period shares outstanding (C)

82,058,483

 

81,800,486

 

83,265,674

 

83,241,952

 

83,774,335

 

 

 

 

 

 

 

 

 

 

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

8.34

%

 

8.77

%

 

8.57

%

 

8.59

%

 

8.44

%

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

$9.25

 

$9.31

 

$9.02

 

$8.90

 

$8.71

 

 

 

 

 

 

 

 

 

 

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

 

 

 

 

 

 

 

 

Reconciliations of Non-GAAP Financial Measures

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

2Q20

 

1Q20

 

4Q19

 

3Q19

 

2Q19

RETURN ON AVERAGE ASSETS:

 

 

 

 

 

 

 

 

 

Net income/(loss) (GAAP) (A)

$

(3,298)

 

 

$

800

 

 

$

21,244

 

 

$

19,962

 

 

$

19,380

 

Average assets (non-GAAP) (B)

9,109,201

 

 

8,779,391

 

 

8,738,750

 

 

8,665,352

 

 

8,679,506

 

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

(0.15)

%

 

0.04

%

 

0.96

%

 

0.91

%

 

0.90

%

 

 

 

 

 

 

 

 

 

 

EFFICIENCY RATIO:

 

 

 

 

 

 

 

 

 

Total noninterest expense (GAAP) (A)

$

61,453

 

 

$

60,908

 

 

$

58,457

 

 

$

55,537

 

 

$

55,659

 

LESS: Amortization of intangibles

702

 

 

715

 

 

676

 

 

671

 

 

672

 

Total noninterest expense (non-GAAP) (B)

$

60,751

 

 

$

60,193

 

 

$

57,781

 

 

$

54,866

 

 

$

54,987

 

 

 

 

 

 

 

 

 

 

 

Net interest income (GAAP)

$

58,938

 

 

$

57,257

 

 

$

56,125

 

 

$

56,153

 

 

$

57,460

 

Total core fees and income (GAAP)

21,630

 

 

22,886

 

 

24,755

 

 

25,155

 

 

24,292

 

Total other income/(loss) (GAAP)

1,032

 

 

(1,365)

 

 

2,038

 

 

(29)

 

 

88

 

Total revenue (GAAP) (C)

$

81,600

 

 

$

78,778

 

 

$

82,918

 

 

$

81,279

 

 

$

81,840

 

 

 

 

 

 

 

 

 

 

 

Efficiency ratio (GAAP) (A/C)

75.3

%

 

77.3

%

 

70.5

%

 

68.3

%

 

68.0

%

Efficiency ratio, excluding amortization of intangibles (non-GAAP) (B/C)

74.4

%

 

76.4

%

 

69.7

%

 

67.5

%

 

67.2

%

 

 

 

 

 

 

 

 

 

 

NET INCOME/(LOSS) ATTRIBUTABLE TO THE COMPANY:

 

 

 

 

 

 

 

 

 

Net income/(loss) attributable to the Company (GAAP)

$

(3,298)

 

 

$

800

 

 

$

21,244

 

 

$

19,962

 

 

$

19,380

 

LESS: Gain on fair value of contingent considerations receivable 15

 

 

 

 

1,109

 

 

 

 

 

Tax effect at statutory rate

 

 

 

 

322

 

 

 

 

 

Net income/(loss) attributable to the Company (non-GAAP)

$

(3,298)

 

 

$

800

 

 

$

20,457

 

 

$

19,962

 

 

$

19,380

 

 

 

 

 

 

 

 

 

 

 

NET INCOME/(LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS:

 

 

 

 

 

 

 

 

 

Net income/(loss) attributable to common shareholders (GAAP)

$

(3,298)

 

 

$

1,214

 

 

$

21,342

 

 

$

20,266

 

 

$

18,564

 

LESS: Gain on fair value of contingent considerations receivable 15

 

 

 

 

1,109

 

 

 

 

 

Tax effect at statutory rate

 

 

 

 

322

 

 

 

 

 

Net income/(loss) attributable to the common shareholders, treasury stock method, excluding notable items (non-GAAP)

$

(3,298)

 

 

$

1,214

 

 

$

20,555

 

 

$

20,266

 

 

$

18,564

 

 

 

 

 

 

 

 

 

 

 

Weighted average diluted shares outstanding

81,929,752

 

 

83,318,041

 

 

83,637,786

 

 

83,956,708

 

 

84,048,972

 

Diluted earnings/(loss) per share (GAAP)

$

(0.04)

 

 

$

0.01

 

 

$

0.26

 

 

$

0.24

 

 

$

0.22

 

Diluted earnings/(loss) per share, excluding notable items (non-GAAP)

$

(0.04)

 

 

$

0.01

 

 

$

0.25

 

 

$

0.24

 

 

$

0.22

 

 

 

 

 

 

 

 

 

 

 

Average common equity (non-GAAP)

$

834,882

 

 

$

838,935

 

 

$

818,816

 

 

$

807,890

 

 

$

790,844

 

Average tangible common equity (non-GAAP)

$

768,005

 

 

$

771,349

 

 

$

750,785

 

 

$

739,531

 

 

$

721,955

 

ROACE, excluding notable items (non-GAAP)

(1.58)

%

 

0.39

%

 

9.91

%

 

9.80

%

 

9.83

%

ROATCE, excluding notable items (non-GAAP)

(1.43)

%

 

0.72

%

 

11.09

%

 

10.99

%

 

11.06

%

 

 

 

 

 

 

 

 

 

 

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

$

20,147

 

 

$

17,870

 

 

$

24,461

 

 

$

25,742

 

 

$

26,181

 

LESS: Gain on fair value of contingent considerations receivable 15

 

 

 

 

1,109

 

 

 

 

 

Pre-tax, pre-provision income, excluding notable items (non-GAAP)

$

20,147

 

 

$

17,870

 

 

$

23,352

 

 

$

25,742

 

 

$

26,181

 

 

 

 

 

 

 

 

 

 

 

15 In the fourth quarter of 2019, there was a $1.1 million gain related to the revaluation of a receivable from the divestiture of former affiliate, Bingham, Osborn & Scarborough, LLC ("BOS").

Contacts

Adam Bromley
(617) 912-4386
abromley@bostonprivate.com

Contacts

Adam Bromley
(617) 912-4386
abromley@bostonprivate.com