Boston Private Financial Holdings, Inc. Reports Fourth Quarter And Year-End 2011 Results

Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the “Company” or “BPFH”) today reported fourth quarter 2011 GAAP Net Income Attributable to the Company of $13.1 million, compared to GAAP Net Income of $11.7 million in the third quarter of 2011. BPFH reported fourth quarter diluted earnings per share of $0.15 compared to diluted earnings per share of $0.14 in the third quarter of 2011.

For the full year of 2011, BPFH reported GAAP Net Income Attributable to the Company of $39.1 million, compared to a GAAP net loss of $11.0 million for the full year of 2010. BPFH reported diluted earnings per share of $0.46, compared to a $0.29 loss per share for 2010.

“Our fourth quarter results show continued progress with our plan to return the Company to sustainable and acceptable profitability,” said CEO and President Clayton G. Deutsch. “We continue to drive improvements in asset quality, and our overall restructuring program remains on track. As we have made headway with our restructuring program, we are increasingly focused on growth. Our recent fourth quarter loan growth trajectory in all of our markets is encouraging. ”

Revenue Down Slightly in Low Rate Environment

Net Interest Income in the fourth quarter was $44.1 million, down 2% from $45.1 million in the third quarter of 2011. For the full year of 2011, Net Interest Income was down 1% to $178.9 million. Fees and Other Income for the quarter decreased slightly to $31.2 million, from $31.4 million in the third quarter of 2011. For the full year of 2011, Fees and Other Income increased 12% to $125.0 million.

Net Interest Margin was 3.17% in the quarter, down eight basis points from the third quarter of 2011. For the full year of 2011, Net Interest Margin was 3.25%, down five basis points from the full year of 2010.

Total Assets Under Management/Advisory (“AUM”) increased to $19.1 billion in the fourth quarter, up 5% from $18.2 billion in the third quarter 2011. For the full year of 2011, AUM was down 2%. The Company experienced fourth quarter 2011 AUM net outflows of $140 million, as compared to $223 million of net outflows in the prior quarter. AUM net outflows for the year were $477 million.

Operating Expenses Increase in Q4

Operating Expenses (excluding restructuring costs of $0.7 million) in the fourth quarter were $58.8 million, up 6% from $55.4 million (excluding restructuring costs of $1.1 million) on a linked quarter basis. For the full year of 2011, Operating Expenses (excluding restructuring costs of $8.1 million) were down 2% to $232.1 million.

“The expense increase we experienced in the fourth quarter was driven by non-recurring compensation increases related to the Bank integration and attainment of full-year performance goals,” said David J. Kaye, Chief Financial Officer. “Despite these items, we made significant progress on expense reductions throughout the year.”

Asset Quality Continues to Improve

Provision for Loan Losses in the fourth quarter was a credit of $2.5 million, a decrease from a Provision for Loan Losses of $4.5 million in the third quarter of 2011. Provision for Loan Losses was $13.2 million for the year, down 85% from $87.2 million for 2010.

Non-Performing Loans (“NPLs”) declined for the third consecutive quarter. In the fourth quarter of 2011, NPLs were $68.1 million, down 7% from $73.4 million on a linked quarter basis and down 35% from $105.5 million as of the end of 2010. As a percentage of Total Loans, NPLs were 1.46% in the fourth quarter of 2011, down 18 basis points from 1.64% in the third quarter of 2011.

Additional credit metrics are listed below on a linked quarter and year-over-year basis:
            Q4 11           Q3 11           Q4 10
Total Criticized Loans           $309.3M           $355.4M           $392.0M
Loans 30-89 Days Past Due           $27.0M           $20.9M           $24.7M
Net (Charge-Offs)/Recoveries           ($0.1M)           ($4.5M)           ($34.2M)
ALLL/Total Loans           2.07%           2.20%           2.20%
                             

Capital Accumulation Continues

Additional capital ratios are listed below on a linked quarter and year-over-year basis:
            Q4 11           Q3 11           Q4 10
Total Risk-Based Capital           15.34%*           15.51%           14.43%
Tier I Risk-Based Capital           12.76%*           12.58%           13.03%
Tier I Leverage Capital           8.99%*           8.59%           8.77%
TCE/TA           7.37%           7.14%           6.34%
TCE/Risk Weighted Assets           10.36%*           10.42%           9.38%

*December 31, 2011 data is presented based on estimated data.

Board Declassification

The Company also announced today that its Board of Directors approved an amendment to the Company’s Articles of Organization declassifying the Board of Directors, and will propose a stockholder vote to declassify the Board at the Company’s 2012 Annual Meeting of Stockholders. The proposal is in response to the support that a shareholder proposal requesting annual elections of directors received at last year’s annual meeting.

If approved by the requisite vote, beginning at the 2013 Annual Meeting of Stockholders, stockholders will elect directors whose terms are then expiring, or the election of their successors, to one-year terms.

Dividend Payments

Concurrent with the release of the fourth quarter 2011 earnings, the Board of Directors of the Company declared a cash dividend to stockholders of $0.01 per share. The record date for this dividend is February 14, 2012, and the payment date is February 28, 2012.

Non-GAAP Financial Measures

The Company uses certain non-GAAP financial measures, such as the TCE/TA and TCE/Risk Weighted Assets ratios, and Operating Expenses excluding restructuring charges, to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector. A detailed reconciliation table of the Company’s GAAP to the non-GAAP measures is attached.

Conference Call

Management will hold a conference call at 8:00 a.m. Eastern Time on Friday, January 27, to discuss the financial results in more detail. To access the call:

Dial In #: (866) 843-0890International Dial In #: (412) 317-9250Elite Entry Number: 0834657

Replay Information:Available from January 27 at 12 noon until February 6Dial In #: (877) 344-7529International Dial In #: (412) 317-0088Conference Number: 10008620

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

Boston Private Financial Holdings, Inc.

Boston Private Financial Holdings, Inc. is a national financial services organization with Wealth Management and Private Banking affiliates in Boston, New York, Philadelphia, Los Angeles, San Francisco and Seattle. The Company has a $6 billion Private Banking balance sheet, and manages over $19 billion of client assets.

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

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

Note to Editors:

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

Statements in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties. These statements include, among others, statements regarding our strategy, evaluations of future interest rate trends and liquidity, prospects for growth in assets, and prospects for overall results over the long term. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Company’s control. Forward-looking statements are based on the current assumptions and beliefs of management and are only expectations of future results. The Company’s actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, changes in assumptions or unanticipated factors adversely affecting the timing, among other matters, of expenses or cost savings relating to or resulting from the consolidation of the Company’s banking subsidiaries; adverse conditions in the capital and debt markets and the impact of such conditions on the Company’s private banking, investment management and wealth advisory activities; changes in interest rates; competitive pressures from other financial institutions; the effects of a continuing deterioration in general economic conditions on a national basis or in the local markets in which the Company operates, including changes which adversely affect borrowers’ ability to service and repay our loans; changes in loan defaults and charge-off rates; changes in the value of securities and other assets, adequacy of loan loss reserves, or decreases in deposit levels necessitating increased borrowing to fund loans and investments; increasing government regulation, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; the risk that goodwill and intangibles recorded in the Company’s financial statements will become impaired; the risk that the Company’s deferred tax asset may not be realized; risks related to the identification and implementation of acquisitions; 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. 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.      
Selected Financial Data (Unaudited)
     
(In thousands, except share and per share data) Dec 31, 2011 Sep 30, 2011 Dec 31, 2010
Assets:
Cash and cash equivalents $ 203,901 $ 330,425 $ 494,439
Investment securities:
Available for sale 847,582 848,855 795,438
Held to maturity   -     -     2,515  
Total investment securities 847,582 848,855 797,953
Loans held for sale 12,069 13,275 9,145
Total loans 4,650,228 4,487,719 4,480,347
Less: Allowance for loan losses   96,114     98,759     98,403  
Net loans 4,554,114 4,388,960 4,381,944
Other real estate owned (“OREO”) 5,103 9,161 12,925
Stock in Federal Home Loan Banks 43,714 44,248 45,846
Premises and equipment, net 29,353 28,812 26,642
Goodwill 115,038 115,038 115,051
Intangible assets, net 30,562 31,736 36,161
Fees receivable 8,147 7,998 8,213
Accrued interest receivable 16,875 16,492 16,707
Income tax receivable and deferred 70,921 77,886 84,641
Other assets   110,993     110,423     123,234  
Total assets $ 6,048,372   $ 6,023,309   $ 6,152,901  
Liabilities:
Deposits $ 4,530,411 $ 4,534,076 $ 4,486,726
Securities sold under agreements to repurchase 130,791 108,294 258,598
Federal Home Loan Bank borrowings 521,827 527,481 575,682
Junior subordinated debentures 182,053 188,645 193,645
Other liabilities   95,474     91,274     99,774  
Total liabilities   5,460,556     5,449,770     5,614,425  
Redeemable Noncontrolling Interests 21,691 21,885 19,598
The Company’s Stockholders’ Equity:

Preferred stock, $1.00 par value; authorized: 2,000,000 shares;

 

 

 

Series B, issued and outstanding (contingently

convertible): 401 shares at December 31, 2011, September

30, 2011, and December 31, 2010; liquidation value:

$100,000 per share

58,089

58,089

58,089

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

 

 

 

shares; issued and outstanding: 78,023,317 shares at December

31, 2011; 78,004,135 shares at September 30, 2011; and

76,307,329 shares at December 31, 2010

78,023

78,004

76,307
Additional paid-in capital 656,436 655,165 652,288
Accumulated deficit (230,017 ) (243,079 ) (269,154 )
Accumulated other comprehensive income   3,594     3,475     1,348  
Total stockholders’ equity   566,125     551,654     518,878  
Total liabilities, redeemable noncontrolling interests and stockholders’ equity $ 6,048,372   $ 6,023,309   $ 6,152,901  
 
Boston Private Financial Holdings, Inc.          
Selected Financial Data (Unaudited)
 

Three Months Ended
Twelve Months Ended
(In thousands, except share and per share data) Dec 31, 2011 Sep 30, 2011 Dec 31, 2010 Dec 31, 2011 Dec 31, 2010
Interest and dividend income:
Loans $ 51,844 $ 53,030 $ 55,944 $ 211,997 $ 229,281
Taxable investment securities 1,330 1,493 1,380 5,593 6,123
Non-taxable investment securities 846 891 1,265 3,768 5,134
Mortgage-backed securities 1,775 1,873 1,858 7,297 8,086
Federal funds sold and other   229     245     371     1,077   1,313  
Total interest and dividend income   56,024     57,532     60,818     229,732   249,937  
Interest expense:
Deposits 5,608 5,921 8,049 24,479 36,770
Federal Home Loan Bank borrowings 4,059 4,203 4,767 16,915 20,125
Junior subordinated debentures 1,786 1,851 2,523 7,434 10,028
Repurchase agreements and other short-term borrowings   434     485     526     1,960   2,289  
Total interest expense   11,887     12,460     15,865     50,788   69,212  
Net interest income 44,137 45,072 44,953 178,944 180,725
Provision/ (credit) for loan losses   (2,500 )   4,500     32,551     13,160   87,178  
Net interest income/(loss) after provision for loan losses   46,637     40,572     12,402     165,784   93,547  
Fees and other income:
Investment management and trust fees 14,774 16,161 15,525 63,356 60,198
Wealth advisory fees 10,485 10,249 9,787 41,082 37,874
Other banking fee income 1,179 1,339 1,414 5,038 5,401
Gain on repurchase of debt 2,392 - - 4,230 -
Gain on sale of investments, net 109 103 86 798 3,653
Gain on sale of loans, net 593 386 3,579 2,489 5,249
Gain/(loss) on OREO, net 1,261 3,156 (193 ) 5,372 (2,839 )
Other   420     (44 )   1,214     2,605   2,236  
Total fees and other income   31,213     31,350     31,412     124,970   111,772  
Operating expense:
Salaries and employee benefits 39,772 34,900 36,084 147,311 143,248
Occupancy and equipment 7,677 7,627 7,254 30,078 27,773
Professional services 2,767 3,667 5,470 16,932 19,495
Marketing and business development 2,053 1,510 2,082 6,922 7,312
Contract services and data processing 1,276 1,306 1,346 5,293 5,398
Amortization of intangibles 1,175 1,177 1,296 5,014 5,264
FDIC insurance 1,253 1,356 2,113 6,139 8,603
Restructuring expense 653 1,116 - 8,055 -
Other   2,859     3,819     7,532     14,389   19,762  
Total operating expense   59,485     56,478     63,177     240,133   236,855  
Income/(loss) before income taxes 18,365 15,444 (19,363 ) 50,621 (31,536 )
Income tax expense/(benefit)   5,747     4,570     (8,172 )   14,367   (19,451 )
Net income/(loss) from continuing operations 12,618 10,874 (11,191 ) 36,254 (12,085 )
Net income/(loss) from discontinued operations (1)   1,347     1,567     1,917     6,099   3,729  
Net income/(loss) before attribution to noncontrolling interests 13,965 12,441 (9,274 ) 42,353 (8,356 )
Less: Net income/ (loss) attributable to noncontrolling interests   903     762     684     3,216   2,614  
Net income/(loss) attributable to the Company $ 13,062   $ 11,679   $ (9,958 ) $ 39,137 $ (10,970 )
 
Boston Private Financial Holdings, Inc.          
Selected Financial Data (Unaudited)
 
(In thousands, except share and per share data) Three Months Ended Twelve Months Ended
PER SHARE DATA: Dec 31, 2011 Sep 30, 2011 Dec 31, 2010 Dec 31, 2011 Dec 31, 2010
Calculation of Income/(Loss) for EPS:
Net Income/(Loss) from Continuing Operations $ 12,618 $ 10,874 $ (11,191 ) $ 36,254 $ (12,085 )
Less: Net Income Attributable to Noncontrolling Interests   903     762     684     3,216     2,614  
Net Income/(Loss) from Continuing Operations Attributable to the Company $ 11,715 $ 10,112 $ (11,875 ) 33,038 (14,699 )
Adjustments to Net Income/(Loss) Attributable to the Company to Arrive at Net Income/(Loss) Attributable to Common Stockholders (3)   (66 )   (265 )   (300 )   (805 )   (9,766 )
Net Income/(Loss) from Continuing Operations Attributable to the Common Stockholders $ 11,649 $ 9,847 $ (12,175 ) $ 32,233 $ (24,465 )
Net Income/(Loss) from Discontinued Operations (1) $ 1,347   $ 1,567   $ 1,917   $ 6,099   $ 3,729  
Net Income/(Loss) Attributable to the Common Stockholders $ 12,996 $ 11,414 $ (10,258 ) $ 38,332 $ (20,736 )
 
Dividends Paid on Series B Preferred Stock for Diluted EPS $ 73 $ 73 $ - $ 290 $ -
 
End of Period Common Shares Outstanding 78,023,317 78,004,135 76,307,329
 
Average Shares Outstanding:
Weighted Average Basic Shares 75,423,723 75,378,923 74,371,160 75,169,611 71,321,162
Weighted Average Diluted Shares (4) 84,433,448 83,556,408 74,371,160 83,451,422 71,321,162
 
Earnings/(Loss) per Share - Basic
Earnings/(Loss) per Share from Continuing Operations $ 0.15 $ 0.13 $ (0.16 ) $ 0.43 $ (0.34 )
Income/(Loss) per Share from Discontinued Operations (1) $ 0.02 $ 0.02 $ 0.02 $ 0.08 $ 0.05
Earnings/(Loss) per Share $ 0.17 $ 0.15 $ (0.14 ) $ 0.51 $ (0.29 )
 
Earnings/(Loss) per Share - Diluted (4)
Earnings/(Loss) per Share from Continuing Operations $ 0.14 $ 0.12 $ (0.16 ) $ 0.39 $ (0.34 )
Income/(Loss) per Share from Discontinued Operations (1) $ 0.01 $ 0.02 $ 0.02 $ 0.07 $ 0.05
Earnings/(Loss) per Share $ 0.15 $ 0.14 $ (0.14 ) $ 0.46 $ (0.29 )
 
Boston Private Financial Holdings, Inc.      
Selected Financial Data (Unaudited)
 
(In thousands, except per share data)      
FINANCIAL DATA: Dec 31, 2011 Sep 30, 2011 Dec 31, 2010
Book Value Per Common Share $ 6.51 $ 6.33 $ 6.04
Tangible Book Value Per Share (2) $ 5.10 $ 4.92 $ 4.55
Market Price Per Share $ 7.94 $ 5.88 $ 6.55
 
 
ASSETS UNDER MANAGEMENT AND ADVISORY:
Private Banking $ 3,571,000 $ 3,427,000 $ 3,592,000
Investment Managers 7,594,000 7,127,000 8,140,000
Wealth Advisory 7,979,000 7,673,000 7,836,000
Less: Inter-company Relationship   (19,000 )   (18,000 )   (19,000 )
Assets Under Management and Advisory $ 19,125,000 $ 18,209,000 $ 19,549,000
 
FINANCIAL RATIOS:
Total Equity/Total Assets 9.36 % 9.16 % 8.43 %
Tangible Common Equity/Tangible Assets (2) 7.37 % 7.14 % 6.34 %
Tangible Common Equity/Risk Weighted Assets (2) 10.36 % 10.42 % 9.38 %
Allowance for Loan Losses/Total Loans 2.07 % 2.20 % 2.20 %
Allowance for Loan Losses/Non-performing Loans 141 % 134 % 93 %
Return on Average Assets - Three Months Ended (Annualized) 0.85 % 0.77 % (0.64 )%
Return on Average Equity - Three Months Ended (Annualized) 9.37 % 8.57 % (7.53 )%
Efficiency Ratio - Three Months Ended (Annualized) (2) 77.16 % 72.31 % 80.76 %
 
Boston Private Financial Holdings, Inc.                  
Selected Financial Data (Unaudited)
 
Average Balance Interest Income/Expense Average Yield/Rate
(In Thousands) Three Months Ended Three Months Ended Three Months Ended
AVERAGE BALANCE SHEET: Dec 31, 2011   Sep 30, 2011   Dec 31, 2010 Dec 31, 2011   Sep 30, 2011   Dec 31, 2010 Dec 31, 2011   Sep 30, 2011   Dec 31, 2010
AVERAGE ASSETS
Earning Assets:
Cash and Investments:
Taxable investment securities $ 401,631 $ 396,415 $ 289,531 $ 1,330 $ 1,493 $ 1,380 1.32 % 1.51 % 1.91 %
Non-taxable investment securities (5) 191,206 190,772 206,370 1,321 1,386 1,910 2.76 % 2.91 % 3.69 %
Mortgage-backed securities 245,423 236,105 229,716 1,775 1,873 1,858 2.89 % 3.17 % 3.24 %
Federal funds sold and other   378,897   423,046   577,739   229   245   370 0.24 % 0.23 % 0.26 %
Total Cash and Investments   1,217,157   1,246,338   1,303,356   4,655   4,997   5,518 1.53 % 1.60 % 1.69 %
Loans: (6)
Commercial and Construction (5) 2,417,467 2,346,169 2,568,964 32,103 32,204 34,920 5.26 % 5.39 % 5.35 %
Residential Mortgage 1,810,530 1,794,929 1,660,775 18,189 19,022 19,183 4.02 % 4.24 % 4.61 %
Home Equity and Other Consumer   318,035   318,003   300,273   2,816   2,993   3,064 3.47 % 3.71 % 4.02 %
Total Loans   4,546,032   4,459,101   4,530,012   53,108   54,219   57,167 4.64 % 4.81 % 4.99 %
Total Earning Assets   5,763,189   5,705,439   5,833,368   57,763   59,216   62,685 3.98 % 4.11 % 4.25 %
Less: Allowance for Loan Losses 99,520 99,387 99,025
Cash and due From Banks (Non-Interest Bearing) 41,968 53,582 32,516
Other Assets   416,374   411,696   441,632
TOTAL AVERAGE ASSETS $ 6,122,011 $ 6,071,330 $ 6,208,491
AVERAGE LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-Bearing Liabilities:
Deposits:
Savings and NOW $ 492,959 $ 539,489 $ 608,474 $ 285 $ 357 $ 454 0.23 % 0.26 % 0.30 %
Money Market 1,971,631 1,857,755 1,814,159 2,418 2,506 3,718 0.49 % 0.54 % 0.81 %
Certificates of Deposit   985,530   1,006,639   1,183,250   2,905   3,058   3,877 1.17 % 1.21 % 1.30 %
Total Deposits 3,450,120 3,403,883 3,605,883 5,608 5,921 8,049 0.64 % 0.69 % 0.89 %
Junior Subordinated Debentures 186,970 188,645 193,645 1,786 1,851 2,523 3.82 % 3.92 % 5.21 %
FHLB Borrowings and Other   638,690   657,122   685,208   4,493   4,688   5,293 2.75 % 2.79 % 3.02 %
Total Interest-Bearing Liabilities   4,275,780   4,249,650   4,484,736   11,887   12,460   15,865 1.10 % 1.16 % 1.40 %
Non-interest Bearing Demand Deposits 1,157,151 1,139,457 1,063,592
Payables and Other Liabilities   109,193   115,403   112,406
Total Liabilities 5,542,124 5,504,510 5,660,734
Redeemable Noncontrolling Interests 22,314 21,516 19,070
Stockholders' Equity   557,573   545,304   528,687
TOTAL AVERAGE LIABILITIES & STOCKHOLDERS' EQUITY $ 6,122,011 $ 6,071,330 $ 6,208,491
Net Interest Income - on a Fully Taxable Equivalent Basis (FTE) $ 45,876 $ 46,756 $ 46,820
FTE Adjustment (5)   1,739   1,684   1,867
Net Interest Income (GAAP Basis) $ 44,137 $ 45,072 $ 44,953
Interest Rate Spread 2.88 % 2.95 % 2.85 %
Net Interest Margin 3.17 % 3.25 % 3.18 %
 
Boston Private Financial Holdings, Inc.            
Selected Financial Data (Unaudited)
 
Average Balance Interest Income/Expense Average Yield/Rate
(In Thousands) Twelve Months Ended Twelve Months Ended Twelve Months Ended
AVERAGE BALANCE SHEET: Dec 31, 2011   Dec 31, 2010 Dec 31, 2011   Dec 31, 2010 Dec 31, 2011   Dec 31, 2010
AVERAGE ASSETS
Earning Assets:
Cash and Investments:
Taxable investment securities $ 380,436 $ 292,763 $ 5,593 $ 6,123 1.47 % 2.09 %
Non-taxable investment securities (5) 191,513 194,119 5,764 7,838 3.01 % 4.04 %
Mortgage-backed securities 236,435 237,540 7,297 8,086 3.09 % 3.40 %
Federal funds sold and other   447,523   531,345   1,077   1,313 0.24 % 0.25 %
Total Cash and Investments   1,255,907   1,255,767   19,731   23,360 1.57 % 1.86 %
Loans: (6)
Commercial and Construction (5) 2,399,402 2,567,009 130,441 144,402 5.44 % 5.63 %
Residential Mortgage 1,761,736 1,595,056 75,071 76,940 4.26 % 4.82 %
Home Equity and Other Consumer   312,507   286,044   11,647   12,482 3.73 % 4.36 %
Total Loans   4,473,645   4,448,109   217,159   233,824 4.85 % 5.26 %
Total Earning Assets   5,729,552   5,703,876   236,890   257,184 4.13 % 4.51 %
Less: Allowance for Loan Losses 100,483 81,393
Cash and due From Banks (Non-Interest Bearing) 58,349 30,375
Other Assets   413,653   485,170
TOTAL AVERAGE ASSETS $ 6,101,071 $ 6,138,028
AVERAGE LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-Bearing Liabilities:
Deposits:
Savings and NOW $ 517,659 $ 555,244 $ 1,375 $ 2,029 0.27 % 0.37 %
Money Market 1,898,999 1,701,772 10,524 15,223 0.55 % 0.89 %
Certificates of Deposit   1,027,347   1,316,818   12,580   19,518 1.22 % 1.48 %
Total Deposits 3,444,005 3,573,834 24,479 36,770 0.71 % 1.03 %
Junior Subordinated Debentures 190,427 193,645 7,434 10,028 3.90 % 5.18 %
FHLB Borrowings and Other   656,772   648,226   18,875   22,414 2.87 % 3.46 %
Total Interest-Bearing Liabilities   4,291,204   4,415,705   50,788   69,212 1.18 % 1.57 %
Non-interest Bearing Demand Deposits 1,141,563 1,025,431
Payables and Other Liabilities   108,970   103,836
Total Liabilities 5,541,737 5,544,972
Redeemable Noncontrolling Interests 21,018 20,175
Stockholders' Equity   538,316   572,881
TOTAL AVERAGE LIABILITIES & STOCKHOLDERS' EQUITY $ 6,101,071 $ 6,138,028
Net Interest Income - on a Fully Taxable Equivalent Basis (FTE) $ 186,102 $ 187,972
FTE Adjustment (5)   7,158   7,247
Net Interest Income (GAAP Basis) $ 178,944 $ 180,725
Interest Rate Spread 2.95 % 2.94 %
Net Interest Margin 3.25 % 3.30 %
 
Boston Private Financial Holdings, Inc.      
Selected Financial Data (Unaudited)
 
(In Thousands)      
LOAN DATA (7): Dec 31, 2011 Sep 30, 2011 Dec 31, 2010
Commercial and Industrial Loans:
New England $ 531,632 $ 502,382 $ 500,745
San Francisco Bay 72,850 57,918 61,613
Southern California 47,593 42,770 53,447
Pacific Northwest 35,027 38,223 42,522
Eliminations and other, net   -   -   (180 )
Total Commercial and Industrial Loans $ 687,102 $ 641,293 $ 658,147  
Commercial Real Estate Loans:
New England $ 643,263 $ 627,413 $ 624,924
San Francisco Bay 679,995 662,436 797,460
Southern California 224,362 194,998 181,479
Pacific Northwest   121,600   109,983   94,223  
Total Commercial Real Estate Loans $ 1,669,220 $ 1,594,830 $ 1,698,086  
Construction and Land Loans:
New England $ 106,385 $ 90,751 $ 80,021
San Francisco Bay 36,339 41,157 55,284
Southern California 5,622 5,530 1,840
Pacific Northwest   5,363   7,279   13,557  
Total Construction and Land Loans $ 153,709 $ 144,717 $ 150,702  
Residential Mortgage Loans:
New England $ 1,247,975 $ 1,237,389 $ 1,181,399
San Francisco Bay 322,352 322,783 293,622
Southern California 192,708 177,647 153,102
Pacific Northwest   60,368   53,056   45,811  
Total Residential Mortgage Loans $ 1,823,403 $ 1,790,875 $ 1,673,934  
Home Equity Loans:
New England $ 85,118 $ 90,082 $ 95,195
San Francisco Bay 48,182 49,475 52,854
Southern California 6,265 5,756 4,412
Pacific Northwest   4,133   5,343   5,969  
Total Home Equity Loans $ 143,698 $ 150,656 $ 158,430  
Other Consumer Loans:
New England $ 147,356 $ 137,692 $ 104,259
San Francisco Bay 12,526 12,427 20,317
Southern California 10,123 11,970 13,242
Pacific Northwest 1,622 1,688 1,130
Eliminations and other, net   1,469   1,571   2,100  
Total Other Consumer Loans $ 173,096 $ 165,348 $ 141,048  
Total Loans
New England $ 2,761,729 $ 2,685,709 $ 2,586,543
San Francisco Bay 1,172,244 1,146,196 1,281,150
Southern California 486,673 438,671 407,522
Pacific Northwest 228,113 215,572 203,212
Eliminations and other, net   1,469   1,571   1,920  
Total Loans $ 4,650,228 $ 4,487,719 $ 4,480,347  
 
Boston Private Financial Holdings, Inc.      
Selected Financial Data (Unaudited)
 
(In Thousands)      
CREDIT QUALITY (7): Dec 31, 2011 Sep 30, 2011 Dec 31, 2010
Special Mention Loans:
New England $ 36,680 $ 60,383 $ 70,114
San Francisco Bay 59,065 71,640 74,991
Southern California 36,048 32,189 22,691
Pacific Northwest   11,328     13,901     19,819  
Total Special Mention Loans $ 143,121   $ 178,113   $ 187,615  
Accruing Classified Loans (8):
New England $ 23,133 $ 21,328 $ 19,745
San Francisco Bay 57,199 55,426 62,518
Southern California 15,723 23,815 6,802
Pacific Northwest   2,186     3,310     8,373  
Total Accruing Classified Loans $ 98,241   $ 103,879   $ 97,438  
Non-performing Loans:
New England $ 33,411 $ 33,413 $ 25,172
San Francisco Bay 25,598 27,449 60,373
Southern California (9) 7,323 10,186 9,137
Pacific Northwest   1,777     2,397     10,783  
Total Non-performing Loans $ 68,109   $ 73,445   $ 105,465  
Other Real Estate Owned:
New England $ 98 $ 1,301 $ -
San Francisco Bay 2,194 5,847 10,207
Southern California 1,143 345 1,128
Pacific Northwest   1,668     1,668     1,590  
Total Other Real Estate Owned $ 5,103   $ 9,161   $ 12,925  
Loans 30-89 Days Past Due and Accruing:
New England (10) $ 9,834 $ 348 $ 12,844
San Francisco Bay 11,446 16,649 11,219
Southern California 5,677 3,947 682
Pacific Northwest   -     -     -  
Total Loans 30-89 Days Past Due and Accruing (10) $ 26,957   $ 20,944   $ 24,745  
Loans (Charged-off)/ Recovered, Net for the Three Months Ended:
New England $ (1,379 ) $ (752 ) $ (510 )
San Francisco Bay 1,612 (3,266 ) (33,957 )
Southern California (393 ) (179 ) 118
Pacific Northwest   15     (286 )   191  
Total Net Loans (Charged-off)/ Recovered $ (145 ) $ (4,483 ) $ (34,158 )
Loans (Charged-off)/ Recovered, Net for the Twelve Months Ended:
New England $ (3,532 ) $ (3,725 )
San Francisco Bay (14,979 ) (54,858 )
Southern California 4,066 1,753
Pacific Northwest   (1,004 )   (389 )
Total Net Loans (Charged-off)/ Recovered $ (15,449 ) $ (57,219 )
 
Boston Private Financial Holdings, Inc.      
Selected Financial Data (Unaudited)
(In Thousands, except share data)
 
(1) In 2009, the Company completed the sale of its affiliates Boston Private Value Investors, Sand Hill Advisors, RINET, Gibraltar, and Westfield Capital Management. Accordingly, prior period and current financial information related to the divested companies are included with discontinued operations.
 
(2) The Company uses certain non-GAAP financial measures, such as: Tangible Book Value; Tangible Common Equity ("TCE") to Tangible Assets ("TA"); TCE to Risk Weighted Assets; pre-tax, pre-provision earnings; and operating expenses excluding restructuring costs to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector.
 
Reconciliations from the Company's GAAP Total Equity to Total Assets ratio to the Non-GAAP TCE to TA, and the Non-GAAP TCE to Risk Weighted Assets ratios, and from GAAP Book Value to Non-GAAP Tangible Book Value are presented below:
The Company calculates Tangible Assets by adjusting Total Assets to exclude Goodwill and Intangible Assets.
The Company calculates Tangible Common Equity by adjusting Total Equity to exclude Goodwill and Intangible Assets, net and includes the difference between Redemption Value and value per ARB 51 for Redeemable Non-controlling Interests.
The Company calculates Tangible Book Value per share by dividing the Tangible Common Equity by adjusted end of period shares. For this calculation, end of period common shares outstanding are increased by assumed conversion of the preferred stock held by Carlyle into common stock (the EOP Carlyle Common Convertible Shares).
 
Dec 31, 2011 Sep 30, 2011 Dec 31, 2010
Total Balance Sheet Assets $ 6,048,372 $ 6,023,309 $ 6,152,901
LESS: Goodwill and Intangible Assets, net   (145,600 )   (146,774 )   (151,212 )
Tangible Assets (non-GAAP)   5,902,772     5,876,535     6,001,689  
Total Equity 566,125 551,654 518,878
LESS: Goodwill and Intangible Assets, net (145,600 ) (146,774 ) (151,212 )
ADD: Difference between Redemption Value of Non-controlling Interests and value under ARB 51   14,381     14,641     12,578  
Total adjusting items   (131,219 )   (132,133 )   (138,634 )
Tangible Common Equity (non-GAAP)   434,906     419,521     380,244  
Total Equity/Total Assets 9.36 % 9.16 % 8.43 %
Tangible Common Equity/Tangible Assets (non-GAAP) 7.37 % 7.14 % 6.34 %
 
Total Risk Weighted Assets * 4,196,452 4,024,575 4,053,897
Tangible Common Equity/Total Risk Weighted Assets (non-GAAP) 10.36 % 10.42 % 9.38 %
 
End of Period Shares outstanding 78,023 78,004 76,307
EOP Carlyle Common Convertible Shares   7,261     7,261     7,261  
Common Equivalent Shares   85,284     85,265     83,568  
 
Book Value Per Common Share $ 6.51 $ 6.33 $ 6.04
Tangible Book Value Per Share $ 5.10 $ 4.92 $ 4.55
 

* Risk Weighted Assets for December 31, 2011 is presented based on estimated data.
 
Reconciliations from the Company's GAAP net income attributable to the Company to Non-GAAP pre-tax, pre-provision earnings and from GAAP operating expenses to Non-GAAP operating expenses excluding restructuring costs are presented below:
    Three months ended
(In Thousands) Dec 31, 2011   Sep 30, 2011   Dec 31, 2010
Net income/(loss) attributable to the Company (GAAP) $ 13,062 $ 11,679 $ (9,958 )
ADD BACK: Provision/ (credit) for loan losses (2,500 ) 4,500 32,551
ADD BACK: Income tax expense/(benefit)   5,747     4,570   (8,172 )
Pre-tax, pre-provision earnings (Non-GAAP) $ 16,309 $ 20,749 $ 14,421
 
Total operating expense (GAAP) $ 59,485 $ 56,478 $ 63,177
LESS: Restructuring expense   653     1,116   -  
Total operating expenses (excluding restructuring costs) (Non-GAAP) $ 58,832 $ 55,362 $ 63,177
 
(3) Adjustments to Net Income/(Loss) Attributable to the Company to arrive at Net Income/(Loss) Attributable to the Common Stockholders, as presented in these tables, include decrease/ (increase) in Noncontrolling Interests Redemption Value; Dividends on Preferred Securities; and Accretion of Discount on Series C Preferred Stock.
 
(4) When the Company has positive Net Income from Continuing Operations Attributable to the Common Stockholders, the Company adds additional shares to Basic Weighted Average Shares Outstanding to arrive at Diluted Weighted Average Shares Outstanding for the Diluted Earnings Per Share calculation to reflect the assumed exercise, conversion, or contingent issuance of dilutive securities. If the additional shares would result in anti-dilution they would be excluded from the Diluted Earning Per Share calculation.
 
The potential dilutive shares relate to: unexercised stock options, unvested restricted stock, unexercised stock warrants, contingently issuable shares, unconverted Convertible Preferred stock, and unconverted Convertible Trust Preferred securities.
The amount of shares that were anti-dilutive for the three and twelve month periods ended December 31, 2011 were 1.5 million for both periods.
The amount of shares that were anti-dilutive for the three months ended September 30, 2011 were 1.7 million.
The amount of shares that were anti-dilutive for the three and twelve month periods ended December 31, 2010 were 10.3 million and 10.5 million, respectively.
 
See Part II. Item 8. "Financial Statements and Supplementary Data - Note 1: Basis of Presentation and Summary of Significant Accounting Policies" in the Company's Annual Report on Form 10-K, as amended, for the year ended December 31, 2010 for additional information.
 
(5) Interest Income on Non-taxable Investments and Loans are presented on an FTE basis using the federal statutory rate.
 
(6) Includes Loans Held for Sale and Non-accrual Loans.
 
(7) The concentration of the Private Banking loan data and credit quality is based on the location of the lender's regional offices. Net loans from the Holding Company to certain principals of the Company's affiliate partners, loans at the Company's non-banking segments, and inter-company loan eliminations are identified as “Eliminations and other, net”.
 
(8) Accruing classified loans include loans that are classified as substandard but are still accruing interest income. The Bank 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 nonperforming at some time in the future.
 
(9) Excludes the non-strategic loans held for sale of $1.5 million at December 31, 2010. There were no non-strategic loans held for sale at December 31, 2011 or September 30, 2011.
 
(10) In addition to loans 30-89 days past due and accruing, at December 31, 2011, the Company had two loans totaling less than $0.1 million that were more than 90 days past due but still on accrual status. These loans originated in the New England region. There were no loans more than 90 days past due and still on accrual status at September 30, 2011 or December 31, 2010.

Copyright Business Wire 2010

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