Boston Private Financial (BPFH) 8-K Boston Private Financial Holdings, Inc. Reports Third Quarter 2012 Results

Exhibit 99.1

Boston Private Financial Holdings, Inc. Reports Third Quarter 2012 Results

Third Quarter Highlights:

• Earnings continue to build: GAAP Net Income increased 17% to $16.5 million in the quarter, and 41% year-over-year.

• Fee-based revenue and AUM increase due to positive market action and positive flows: Fee-based revenue increased 4% to $26.7 million in the quarter, and 2% year-over-year. AUM increased 5% to $20.1 billion in the quarter, and 16% year-over-year. Third quarter AUM net inflows were $223 million, up from $16 million linked quarter, and up from AUM net outflows of ($236) million in the third quarter of 2011.

• Provision decreases: Provision for Loan Losses was a credit of ($4.0) million in the quarter, an improvement from a provision of $1.7 million in the second quarter of 2012 and $4.5 million year-over-year.

• Baseline expenses flat; Operating Expenses up due to management restructuring: Operating Expenses (including $3.6 million in restructuring costs) increased 5% to $58.2 million in the quarter.

• Capital builds: Tangible Common Equity/Tangible Assets ratio increased by 31 basis points to 7.7% in the quarter, and 56 basis points year-over-year.

Boston, MA - October 17, 2012 - Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the “Company” or “BPFH”) today reported third quarter 2012 GAAP Net Income Attributable to the Company of $16.5 million, compared to GAAP Net Income Attributable to the Company of $14.2 million in the second quarter of 2012. BPFH reported third quarter diluted earnings per share of $0.19 compared to diluted earnings per share of $0.17 in the second quarter of 2012.

On a year-over-year basis, GAAP Net Income Attributable to the Company increased from $11.7 million in the third quarter of 2011. Earnings per share increased from $0.14 on a year-over-year basis.

“Our third quarter results reflect the three management initiatives we're executing to offset continuing pressure on Net Interest Income,” said Clayton G. Deutsch, CEO and President. “These initiatives are to place greater emphasis on growing our fee-based businesses; continue to improve our credit quality; and continue to tightly manage expenses. This month we have implemented a senior executive restructuring that will enable us to save in excess of $5 million per year of senior executive costs. We remain focused on these three initiatives as we continue our efforts to build earnings,” concluded Mr. Deutsch.

Net Interest Income Flat, Fee Revenue Up in Q3

Net Interest Income in the third quarter was $46.4 million, down 1% from $46.6 million in the second quarter of 2012. Year-over-year, Net Interest Income increased 3% from $45.1 million. Fees and Other Income for the third quarter increased 2% to $28.6 million from $28.0 million in the second quarter of 2012. On a year-over-year basis, Fees and Other Income decreased 4% from $29.7 million.

Net Interest Margin was 3.11% in the third quarter, down 24 basis points from 3.35% in the second quarter of 2012. Net Interest Margin in the third quarter was negatively impacted by a short term deposit that inflated Average Assets. In addition, Net Interest Margin in the second quarter of 2012 had the positive effect of pre-payment penalties and the recovery of nonaccrual interest income. On a year-over-year basis, Net Interest Margin decreased 14 basis points from 3.25%.

Total Assets Under Management/Advisory (“AUM”) increased to $20.1 billion, up 5% from $19.1 billion in the second quarter of 2012. AUM increased 16% from $17.3 billion in the third quarter of 2011 due to market appreciation and net positive flows. The Company experienced third quarter 2012 AUM net inflows of $223 million, as compared to AUM net inflows of $16 million in the second quarter of 2012. AUM net outflows for the third quarter of 2011 were ($236) million.

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Operating Expenses Increase in Q3 Due to Management Restructuring

Operating Expenses (excluding restructuring costs of $3.6 million) in the third quarter of 2012 were $54.6 million and were flat (excluding second quarter restructuring costs of $0.6 million) on a linked quarter basis. On a year-over-year basis, Operating Expenses (excluding third quarter 2011 restructuring costs of $1.1 million) were up 1% from $53.8 million.

The $3.6 million in restructuring charges resulted from severance costs due to changes made in the management structure at the Holding Company and at Boston Private Bank & Trust Company, the Company's largest subsidiary.

Provision Declines in Q3 Due Primarily to Improvements in Criticized Loans

Provision for Loan Losses in the third quarter was a credit of ($4.0) million, down from a provision of $1.7 million in the second quarter of 2012. On a year-over-year basis, Provision for Loan Losses decreased from a provision of $4.5 million in the third quarter of 2011.

Nonaccrual Loans (“Nonaccruals”) increased 9% to $73.4 million on a linked quarter basis. On a year-over-year basis, Nonaccruals were flat at $73.4 million. As a percentage of Total Loans, Nonaccruals were 1.48% in the third quarter of 2012, up 16 basis points from 1.32% in the second quarter of 2012. On a year-over-year basis, Nonaccruals as a percentage of Total Loans declined 16 basis points from 1.64%.

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

(In millions)	September 30, 2012			June 30, 2012			September 30, 2011
Total Criticized Loans	$	275.5		$	298.6		$	355.4
Total Loans 30-89 Days Past Due and Accruing (10)	$	9.5		$	14.2		$	20.9
Total Net Loans (Charged-off)/ Recovered	$	(3.9	)	$	(0.5	)	$	(4.5	)
Allowance for Loan Losses/ Total Loans	1.83		%	1.95		%	2.20		%

Capital Ratios Strengthen in Q3

Both regulatory risk-based capital ratios and tangible common equity ratios increased on a linked quarter basis. The Tier 1 Leverage ratio declined slightly due to a larger Average Balance Sheet.

“Strong Net Income and a reduction in the disallowed portion of our Deferred Tax Asset drove the 90 basis point increase in our Tier 1 Risk-Based Capital ratio in the third quarter,” said David J. Kaye, Chief Financial Officer.

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

	September 30, 2012		June 30, 2012		September 30, 2011
Total Risk-Based Capital *	14.7	%	14.3	%	15.5	%
Tier I Risk-Based Capital *	13.1	%	12.2	%	12.5	%
Tier I Leverage Capital *	9.2	%	9.3	%	8.6	%
TCE/TA	7.7	%	7.4	%	7.1	%
TCE/Risk Weighted Assets *	10.4	%	9.9	%	10.4	%

* September 30, 2012 data is presented based on estimated data.

Dividend Payments

Concurrent with the release of the third quarter 2012 earnings, the Board of Directors of the Company declared a cash dividend to shareholders of $0.01 per share. The record date for this dividend is November 16, 2012, and the payment date is November 30, 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

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Management will hold a conference call at 8 a.m. Eastern Time on Thursday, October 18, 2012, to discuss the financial results in more detail. To access the call:

Dial In #: (877) 883-0383

International Dial In #: (412) 902-6506

Elite Entry Number: 7158329

Replay Information:

Available from October 18 at 12 noon until October 26, 2012

Dial In #: (877) 344-7529

International Dial In #: (412) 317-0088

Conference Number: 10019250

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, Los Angeles, San Francisco and Seattle. The Company has a $6 billion Private Banking balance sheet, and manages over $20 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 wholly-owned subsidiary of BPFH. The information reported in this press release is related to the performance and results of BPFH.

###

CONTACT:

Jeanne Hess

Assistant Vice President, Investor Relations

Boston Private Financial Holdings, Inc.

(617) 912-3798

jhess@bostonprivate.com

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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, 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 continued weakness 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.

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Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)

	September 30, 2012			June 30, 2012			September 30, 2011
	(In thousands, except share and per share data)
Assets:
Cash and cash equivalents	$	83,585		$	102,826		$	329,585
Investment securities available for sale	755,125			734,362			846,267
Loans held for sale	135,169			12,336			13,275
Total loans	4,967,607			5,091,128			4,488,719
Less: Allowance for loan losses	91,129			99,054			98,759
Net loans	4,876,478			4,992,074			4,389,960
Other real estate owned (“OREO”)	3,186			3,054			9,161
Stock in Federal Home Loan Banks	42,886			43,089			44,248
Premises and equipment, net	28,390			28,919			28,707
Goodwill	110,180			110,180			110,180
Intangible assets, net	25,306			26,389			29,690
Fees receivable	9,460			8,363			7,998
Accrued interest receivable	16,731			16,667			16,504
Deferred income taxes, net	62,964			64,968			75,570
Other assets	123,324			121,016			112,627
Assets of discontinued operations (1)	—			—			10,549
Total assets	$	6,272,784		$	6,264,243		$	6,024,321
Liabilities:
Deposits	$	4,662,794		$	4,595,758		$	4,534,076
Securities sold under agreements to repurchase	106,713			100,842			108,294
Federal funds purchased	85,000			85,000			—
Federal Home Loan Bank borrowings	552,946			616,749			527,481
Junior subordinated debentures	158,647			174,397			188,645
Other liabilities	91,407			96,654			90,664
Liabilities of discontinued operations (1)	—			—			1,622
Total liabilities	5,657,507			5,669,400			5,450,782
Redeemable Noncontrolling Interests	19,675			19,221			21,885
The Company’s Shareholders’ Equity:
Preferred stock, $1.00 par value; authorized: 2,000,000 shares;
Series B, issued and outstanding (contingently convertible): 401 shares at September 30, 2012, June 30, 2012, and September 30, 2011; 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: 78,929,750 shares at September 30, 2012; 78,822,462 shares at June 30, 2012; and 78,004,135 shares at September 30, 2011	78,930			78,822			78,004
Additional paid-in capital	644,801			641,992			655,165
Accumulated deficit	(189,838		)	(206,351		)	(243,079		)
Accumulated other comprehensive income	3,620			3,070			3,475
Total shareholders’ equity	595,602			575,622			551,654
Total liabilities, redeemable noncontrolling interests and shareholders’ equity	$	6,272,784		$	6,264,243		$	6,024,321

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Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)

	Three Months Ended								Nine Months Ended
	September 30, 2012			June 30, 2012		September 30, 2011			September 30, 2012		September 30, 2011
Interest and dividend income:	(In thousands, except share and per share data)
Loans	$	52,533		$	53,402	$	53,043		$	157,882	$	160,190
Taxable investment securities	890			1,078		1,456			3,225		4,230
Non-taxable investment securities	782			752		905			2,382		2,922
Mortgage-backed securities	1,537			1,604		1,873			4,743		5,521
Federal funds sold and other	290			72		242			511		842
Total interest and dividend income	56,032			56,908		57,519			168,743		173,705
Interest expense:
Deposits	4,206			4,435		5,921			13,544		18,871
Federal Home Loan Bank borrowings	3,501			3,747		4,203			11,193		12,856
Junior subordinated debentures	1,507			1,690		1,851			4,950		5,648
Repurchase agreements and other short-term borrowings	452			440		485			1,326		1,526
Total interest expense	9,666			10,312		12,460			31,013		38,901
Net interest income	46,366			46,596		45,059			137,730		134,804
Provision/ (credit) for loan losses	(4,000		)	1,700		4,500			1,700		15,660
Net interest income after provision for loan losses	50,366			44,896		40,559			136,030		119,144
Fees and other income:
Investment management and trust fees	15,906			15,484		16,161			46,628		48,581
Wealth advisory fees	9,495			9,183		8,623			27,914		25,672
Other banking fee income	1,250			984		1,339			3,250		3,859
Gain on repurchase of debt	976			715		—			2,570		1,838
Gain on sale of investments, net	25			839		103			878		689
Gain on sale of loans, net	648			430		386			1,499		1,897
Gain/(loss) on OREO, net	(104		)	366		3,156			221		4,110
Other	408			8		(44		)	1,107		2,186
Total fees and other income	28,604			28,009		29,724			84,067		88,832
Operating expense:
Salaries and employee benefits	34,688			34,471		33,796			106,071		104,207
Occupancy and equipment	8,078			7,931		7,519			23,274		22,079
Professional services	3,455			3,021		3,634			9,415		14,062
Marketing and business development	1,346			1,779		1,473			4,454		4,770
Contract services and data processing	1,446			1,355		1,150			3,989		3,503
Amortization of intangibles	1,082			1,090		1,124			3,263		3,679
FDIC insurance	1,138			982		1,356			2,969		4,887
Restructuring expense	3,581			564		1,116			4,280		7,402
Other	3,336			4,142		3,748			11,397		11,298
Total operating expense	58,150			55,335		54,916			169,112		175,887
Income/(loss) before income taxes	20,820			17,570		15,367			50,985		32,089
Income tax expense/(benefit)	5,124			5,240		4,542			14,215		8,559
Net income/(loss) from continuing operations	15,696			12,330		10,825			36,770		23,530
Net income/(loss) from discontinued operations (1)	1,672			2,590		1,594			5,816		4,810
Net income/(loss) before attribution to noncontrolling interests	17,368			14,920		12,419			42,586		28,340
Less: Net income/ (loss) attributable to noncontrolling interests	855			759		740			2,407		2,265
Net income/(loss) attributable to the Company	$	16,513		$	14,161	$	11,679		$	40,179	$	26,075

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Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)

	Three Months Ended									Nine Months Ended
PER SHARE DATA:	September 30, 2012			June 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
	(In thousands, except share and per share data)
Calculation of Income/(Loss) for EPS:
Net income/(loss) attributable to the Company	$	16,513		$	14,161		$	11,679		$	40,179		$	26,075
Adjustments to Net Income/(Loss) Attributable to the Company to Arrive at Net Income/(Loss) Attributable to Common Shareholders (3)	(435		)	71			(285		)	(542		)	(803		)
Net Income/(Loss) Attributable to the Common Shareholders	16,078			14,232			11,394			39,637			25,272
LESS: Amount allocated to participating securities	(1,617		)	(1,471		)	(1,167		)	(4,009		)	(2,484		)
Net Income/(Loss) Attributable to the Common Shareholders, after allocation to participating securities	$	14,461		$	12,761		$	10,227		$	35,628		$	22,788
End of Period Common Shares Outstanding	78,929,750			78,822,462			78,004,135
Weighted Average Shares Outstanding:
Weighted average basic shares, including participating securities	86,180,999			85,099,821			84,665,098			85,777,464			84,164,113
LESS: Participating securities	(9,101,692		)	(9,295,848		)	(9,286,175		)	(9,207,410		)	(9,080,137		)
PLUS: Dilutive potential common shares	1,077,229			701,119			201,954			902,683			175,295
Weighted Average Diluted Shares (2)	78,156,536			76,505,092			75,580,877			77,472,737			75,259,271
Diluted Total Earnings/(Loss) per Share	$	0.19		$	0.17		$	0.14		$	0.46		$	0.30

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Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)

(In thousands, except per share data)	September 30, 2012			June 30, 2012			September 30, 2011
FINANCIAL DATA:
Book Value Per Common Share	$	6.81		$	6.57		$	6.33
Tangible Book Value Per Share (4)	$	5.49		$	5.26		$	4.92
Market Price Per Share	$	9.59		$	8.93		$	5.88
ASSETS UNDER MANAGEMENT AND ADVISORY:
Private Banking	$	3,784,000		$	3,680,000		$	3,427,000
Investment Managers	8,553,000			7,982,000			7,127,000
Wealth Advisory	7,797,000			7,474,000			6,740,000
Less: Inter-company Relationship	(20,000		)	(19,000		)	(18,000		)
Assets Under Management and Advisory of Continuing Operations	$	20,114,000		$	19,117,000		$	17,276,000
Assets Under Management and Advisory of Discontinued Operations (1)	—			—			933,000
Total Assets Under Management and Advisory	$	20,114,000		$	19,117,000		$	18,209,000
FINANCIAL RATIOS:
Total Equity/Total Assets	9.50		%	9.19		%	9.16		%
Tangible Common Equity/Tangible Assets (4)	7.70		%	7.39		%	7.14		%
Tangible Common Equity/Risk Weighted Assets (4)	10.38		%	9.90		%	10.42		%
Allowance for Loan Losses/Total Loans	1.83		%	1.95		%	2.20		%
Allowance for Loan Losses/Nonaccrual Loans	124		%	147		%	134		%
Return on Average Assets - Three Months Ended (Annualized)	1.00		%	0.92		%	0.77		%
Return on Average Equity - Three Months Ended (Annualized)	11.30		%	9.96		%	8.57		%
Efficiency Ratio - Three Months Ended (Annualized)	75.25		%	72.42		%	71.82		%

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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:	09/30/2012		06/30/2012		09/30/2011		09/30/2012		06/30/2012		09/30/2011		09/30/2012		06/30/2012		09/30/2011
AVERAGE ASSETS
Interest-Earning Assets:
Cash and Investments:
Taxable investment securities	$	271,990	$	337,933	$	393,845	$	890	$	1,078	$	1,456	1.31	%	1.28	%	1.48	%
Non-taxable investment securities (5)	188,183		186,030		190,772		1,221		1,174		1,400		2.60	%	2.52	%	2.94	%
Mortgage-backed securities	257,680		245,043		236,105		1,537		1,604		1,873		2.38	%	2.62	%	3.17	%
Federal funds sold and other	440,586		122,977		422,361		290		72		242		0.26	%	0.24	%	0.23	%
Total Cash and Investments	1,158,439		891,983		1,243,083		3,938		3,928		4,971		1.36	%	1.76	%	1.60	%
Loans: (6)
Commercial and Construction (5)	2,768,279		2,691,458		2,346,169		33,932		34,470		32,204		4.88	%	5.15	%	5.39	%
Residential	2,038,277		1,926,628		1,794,929		18,230		17,979		19,022		3.58	%	3.73	%	4.24	%
Home Equity and Other Consumer	280,366		292,353		318,003		2,236		2,336		3,006		3.17	%	3.23	%	3.71	%
Total Loans	5,086,922		4,910,439		4,459,101		54,398		54,785		54,232		4.26	%	4.48	%	4.81	%
Total Earning Assets	6,245,361		5,802,422		5,702,184		58,336		58,713		59,203		3.72	%	4.06	%	4.11	%
LESS: Allowance for Loan Losses	99,778		100,236		99,387
Cash and due From Banks (Non-Interest Bearing)	42,688		73,153		53,582
Other Assets (7)	412,559		405,340		415,951
TOTAL AVERAGE ASSETS	$	6,600,830	$	6,180,679	$	6,072,330
AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY
Interest-Bearing Liabilities:
Deposits:
Savings and NOW	$	458,499	$	501,759	$	539,489	$	127	$	201	$	357	0.11	%	0.16	%	0.26	%
Money Market	2,260,748		2,067,625		1,857,755		2,206		2,147		2,506		0.39	%	0.42	%	0.54	%
Certificates of Deposit	805,540		837,295		1,006,639		1,873		2,087		3,058		0.92	%	1.00	%	1.21	%
Total Deposits	3,524,787		3,406,679		3,403,883		4,206		4,435		5,921		0.47	%	0.52	%	0.69	%
Junior Subordinated Debentures	168,288		177,566		188,645		1,507		1,690		1,851		3.50	%	3.77	%	3.92	%
FHLB Borrowings and Other	637,471		707,315		657,122		3,953		4,187		4,688		2.43	%	2.34	%	2.79	%
Total Interest-Bearing Liabilities	4,330,546		4,291,560		4,249,650		9,666		10,312		12,460		0.88	%	0.96	%	1.16	%
Noninterest Bearing Demand Deposits	1,561,135		1,190,428		1,139,457
Payables and Other Liabilities (7)	105,914		109,578		116,403
Total Average Liabilities	5,997,595		5,591,566		5,505,510
Redeemable Noncontrolling Interests	18,496		20,254		21,516
Average Shareholders' Equity	584,739		568,859		545,304
TOTAL AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY	$	6,600,830	$	6,180,679	$	6,072,330
Net Interest Income - on a Fully Taxable Equivalent Basis (FTE)							$	48,670	$	48,401	$	46,743
LESS: FTE Adjustment (5)							2,304		1,805		1,684
Net Interest Income (GAAP Basis)							$	46,366	$	46,596	$	45,059
Interest Rate Spread													2.84	%	3.10	%	2.95	%
Net Interest Margin													3.11	%	3.35	%	3.25	%

9

Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)

	Average Balance				Interest Income/Expense				Average Yield/Rate
(In Thousands)	Nine Months Ended				Nine Months Ended				Nine Months Ended
AVERAGE BALANCE SHEET:	September 30, 2012		September 30, 2011		September 30, 2012		September 30, 2011		September 30, 2012		September 30, 2011
AVERAGE ASSETS
Interest-Earning Assets:
Cash and Investments:
Taxable investment securities	$	329,337	$	372,687	$	3,225	$	4,230	1.31	%	1.51	%
Non-taxable investment securities (5)	189,536		193,435		3,718		4,443		2.62	%	3.06	%
Mortgage-backed securities	251,593		233,309		4,743		5,521		2.51	%	3.16	%
Federal funds sold and other	245,485		473,590		511		842		0.28	%	0.24	%
Total Cash and Investments	1,015,951		1,273,021		12,197		15,036		1.60	%	1.58	%
Loans: (6)
Commercial and Construction (5)	2,683,936		2,379,006		101,096		98,338		5.03	%	5.47	%
Residential	1,941,345		1,741,302		54,037		56,882		3.71	%	4.36	%
Home Equity and Other Consumer	297,532		328,641		7,331		8,868		3.29	%	3.57	%
Total Loans	4,922,813		4,448,949		162,464		164,088		4.41	%	4.89	%
Total Earning Assets	5,938,764		5,721,970		174,661		179,124		3.93	%	4.15	%
LESS: Allowance for Loan Losses	99,164		100,761
Cash and due From Banks (Non-Interest Bearing)	59,085		39,168
Other Assets (7)	445,116		442,860
TOTAL AVERAGE ASSETS	$	6,343,801	$	6,103,237
AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY
Interest-Bearing Liabilities:
Deposits:
Savings and NOW	$	497,128	$	532,340	$	659	$	1,090	0.18	%	0.27	%
Money Market	2,116,993		1,867,430		6,490		8,107		0.41	%	0.58	%
Certificates of Deposit	863,646		1,039,997		6,395		9,674		0.99	%	1.24	%
Total Deposits	3,477,767		3,439,767		13,544		18,871		0.52	%	0.73	%
Junior Subordinated Debentures	174,665		191,639		4,950		5,648		3.72	%	3.93	%
FHLB Borrowings and Other	684,626		666,263		12,519		14,382		2.40	%	2.85	%
Total Interest-Bearing Liabilities	4,337,058		4,297,669		31,013		38,901		0.95	%	1.20	%
Noninterest Bearing Demand Deposits	1,305,344		1,136,918
Payables and Other Liabilities (7)	108,116		117,046
Total Average Liabilities	5,750,518		5,551,633
Redeemable Noncontrolling Interests	20,001		20,657
Average Shareholders' Equity	573,282		531,947
TOTAL AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY	$	6,343,801	$	6,104,237
Net Interest Income - on a Fully Taxable Equivalent Basis (FTE)					$	143,648	$	140,223
LESS: FTE Adjustment (5)					5,918		5,419
Net Interest Income (GAAP Basis)					$	137,730	$	134,804
Interest Rate Spread									2.98	%	2.95	%
Net Interest Margin									3.23	%	3.25	%

10

Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)

(In Thousands)	September 30, 2012		June 30, 2012		September 30, 2011
LOAN DATA (8):
Commercial and Industrial Loans:
New England	$	642,141	$	666,145	$	502,382
San Francisco Bay	65,034		66,586		57,918
Southern California	31,181		29,631		33,685
Pacific Northwest	47,979		47,014		38,223
Total Commercial and Industrial Loans	$	786,335	$	809,376	$	632,208
Commercial Real Estate Loans:
New England	$	645,222	$	663,038	$	627,413
San Francisco Bay	663,753		679,358		662,436
Southern California	354,097		344,918		204,083
Pacific Northwest	141,739		145,253		109,983
Total Commercial Real Estate Loans	$	1,804,811	$	1,832,567	$	1,603,915
Construction and Land Loans:
New England	$	116,783	$	108,874	$	90,751
San Francisco Bay	36,747		44,628		41,157
Southern California	8,590		7,492		5,530
Pacific Northwest	2,771		3,128		7,279
Total Construction and Land Loans	$	164,891	$	164,122	$	144,717
Residential Loans:
New England	$	1,168,492	$	1,247,117	$	1,237,389
San Francisco Bay	391,782		392,340		322,783
Southern California	306,001		281,113		177,647
Pacific Northwest	74,942		71,117		53,056
Total Residential Loans	$	1,941,217	$	1,991,687	$	1,790,875
Home Equity Loans:
New England	$	81,473	$	84,790	$	90,082
San Francisco Bay	37,122		41,557		49,475
Southern California	7,280		7,484		5,756
Pacific Northwest	2,377		2,727		5,343
Total Home Equity Loans	$	128,252	$	136,558	$	150,656
Other Consumer Loans:
New England	$	116,951	$	135,221	$	137,692
San Francisco Bay	11,551		11,992		12,427
Southern California	8,964		7,570		11,970
Pacific Northwest	1,678		1,338		1,688
Eliminations and other, net	2,957		697		2,571
Total Other Consumer Loans	$	142,101	$	156,818	$	166,348
Total Loans
New England	$	2,771,062	$	2,905,185	$	2,685,709
San Francisco Bay	1,205,989		1,236,461		1,146,196
Southern California	716,113		678,208		438,671
Pacific Northwest	271,486		270,577		215,572
Eliminations and other, net	2,957		697		2,571
Total Loans	$	4,967,607	$	5,091,128	$	4,488,719

11

Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)

(In Thousands)	September 30, 2012			June 30, 2012			September 30, 2011
CREDIT QUALITY (8):
Special Mention Loans:
New England	$	33,174		$	35,308		$	60,383
San Francisco Bay	26,443			31,508			71,640
Southern California	26,967			20,544			32,189
Pacific Northwest	7,838			5,573			13,901
Total Special Mention Loans	$	94,422		$	92,933		$	178,113
Accruing Substandard Loans (9):
New England	$	39,707		$	50,343		$	21,328
San Francisco Bay	49,754			62,736			55,426
Southern California	13,588			20,098			23,815
Pacific Northwest	4,757			5,084			3,310
Total Accruing Substandard Loans	$	107,806		$	138,261		$	103,879
Nonaccruing Loans:
New England	$	36,919		$	29,733		$	33,413
San Francisco Bay	28,710			28,350			27,449
Southern California	6,817			7,273			10,186
Pacific Northwest	948			2,001			2,397
Total Nonaccruing Loans	$	73,394		$	67,357		$	73,445
Other Real Estate Owned:
New England	$	191		$	191		$	1,301
San Francisco Bay	2,383			2,383			5,847
Southern California	—			—			345
Pacific Northwest	612			480			1,668
Total Other Real Estate Owned	$	3,186		$	3,054		$	9,161
Loans 30-89 Days Past Due and Accruing (10):
New England	$	4,832		$	3,272		$	348
San Francisco Bay	3,751			7,270			16,649
Southern California	917			3,058			3,947
Pacific Northwest	—			565			—
Total Loans 30-89 Days Past Due and Accruing	$	9,500		$	14,165		$	20,944
Loans (Charged-off)/ Recovered, Net for the Three Months Ended:
New England	$	(3,528	)	$	(576	)	$	(752	)
San Francisco Bay	189			117			(3,266		)
Southern California	231			(38		)	(179		)
Pacific Northwest	(817		)	(51		)	(286		)
Total Net Loans (Charged-off)/ Recovered	$	(3,925	)	$	(548	)	$	(4,483	)
Loans (Charged-off)/ Recovered, Net for the Nine Months Ended:
New England	$	(4,445	)				$	(2,153	)
San Francisco Bay	(1,674		)				(16,591		)
Southern California	121						4,459
Pacific Northwest	(687		)				(1,019		)
Total Net Loans (Charged-off)/ Recovered	$	(6,685	)				$	(15,304	)

12

Boston Private Financial Holdings, Inc.

Selected Financial Data

(Unaudited)

FOOTNOTES:

(1) In the second quarter of 2012, the Company completed the sale of its affiliate Davidson Trust Company. In 2009, the Company completed the sale of its affiliates Boston Private Value Investors, Inc.; Sand Hill Advisors, LLC; RINET Company, LLC; Gibraltar Private Bank & Trust Company; and Westfield Capital Management Company, LLC. Accordingly, prior period and current financial information related to the divested companies are included with discontinued operations.

(2) When the Company has positive Net Income from Continuing Operations Attributable to the Common Shareholders, the Company adds additional shares to Basic Weighted Average Shares Outstanding to arrive at Diluted Weighted Average Shares Outstanding for the Diluted Earnings Per Share calculation 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 non-participating restricted stock, unexercised stock warrants, and unconverted Convertible Trust Preferred securities. The amount of shares that were anti-dilutive for the three and nine months ended September 30, 2012 was 0.8 million in both periods. The amount of shares that were anti-dilutive for the three and nine months ended September 30, 2011 were 1.7 million in both periods. The amount of shares that were anti-dilutive for the three months ended June 30, 2012 was 1.3 million. 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 for the year ended December 31, 2011 for additional information.

(3) Adjustments to Net Income/(Loss) Attributable to the Company to arrive at Net Income/(Loss) Attributable to the Common Shareholders, as presented in these tables, include decrease/ (increase) in Noncontrolling Interests Redemption Value and Dividends on Participating Securities.

(4) The Company uses certain non-GAAP financial measures, such as: Tangible Book Value; the Tangible Common Equity ("TCE") to Tangible Assets ("TA") ratio; the TCE to Risk Weighted Assets ratio; 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 ratio, and the Non-GAAP TCE to Risk Weighted Assets ratio, and from GAAP Book Value to Non-GAAP Tangible Book Value are presented below:

The Company calculates Tangible Assets by adjusting Total Assets to exclude Goodwill and Intangible Assets.

The Company calculates Tangible Common Equity by adjusting Total Equity to exclude Goodwill and Intangible Assets, net and includes the difference between Redemption Value and value per ASC 810, Consolidation ("ASC 810"), for Redeemable Noncontrolling Interests.

(In thousands, except per share data)	September 30, 2012			June 30, 2012			September 30, 2011
Total Balance Sheet Assets	$	6,272,784		$	6,264,243		$	6,024,321
LESS: Goodwill and Intangible Assets, net *	(135,486		)	(136,569		)	(146,774		)
Tangible Assets (non-GAAP)	6,137,298			6,127,674			5,877,547
Total Equity	595,602			575,622			551,654
LESS: Goodwill and Intangible Assets, net	(135,486		)	(136,569		)	(146,774		)
ADD: Difference between Redemption Value of Non-controlling Interests and value under ASC 810	12,744			13,937			14,641
Total adjusting items	(122,742		)	(122,632		)	(132,133		)
Tangible Common Equity (non-GAAP)	472,860			452,990			419,521
Total Equity/Total Assets	9.50		%	9.19		%	9.16		%
Tangible Common Equity/Tangible Assets (non-GAAP)	7.70		%	7.39		%	7.14		%
Total Risk Weighted Assets **	4,553,776			4,575,120			4,024,575
Tangible Common Equity/Total Risk Weighted Assets (non-GAAP)	10.38		%	9.90		%	10.42		%
End of Period Shares Outstanding	78,930			78,822			78,004
EOP Carlyle Common Convertible Shares	7,261			7,261			7,261
Common Equivalent Shares	86,191			86,084			85,265
Book Value Per Common Share	$	6.81		$	6.57		$	6.33
Tangible Book Value Per Share (non-GAAP)	$	5.49		$	5.26		$	4.92

*    For the TCE to TA ratio, Goodwill and Intangible Assets, net includes Goodwill and Intangible Assets of discontinued operations for September 30, 2011, which are included on the consolidated balance sheet with Assets of Discontinued Operations.

**     Risk Weighted Assets for September 30, 2012 is presented based on estimated data.

13

Boston Private Financial Holdings, Inc.

Selected Financial Data

(Unaudited)

Reconciliations from the Company's GAAP income from continuing operations before income taxes 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)	September 30, 2012			June 30, 2012		September 30, 2011
Income/(loss) before income taxes (GAAP)	$	20,820		$	17,570	$	15,367
ADD BACK: Provision/ (credit) for loan losses	(4,000		)	1,700		4,500
Pre-tax, pre-provision earnings (Non-GAAP)	$	16,820		$	19,270	$	19,867
Total operating expense (GAAP)	$	58,150		$	55,335	$	54,916
LESS: Restructuring expense	3,581			564		1,116
Total operating expenses (excluding restructuring costs) (Non-GAAP)	$	54,569		$	54,771	$	53,800

(5) Interest Income on Non-taxable Investments and Loans are presented on an FTE basis using the federal statutory rate of 35% for each period presented.

(6) Includes Loans Held for Sale and Nonaccrual Loans.

(7) Assets and liabilities of discontinued operations are included in other assets and other liabilities in the average balance sheet presentation.

(8) 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”.

(9) Accruing substandard 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 nonaccrual at some time in the future.

(10) In addition to loans 30-89 days past due and accruing, at September 30, 2012, the Company had three loans totaling $2.7 million that were more than 90 days past due but still on accrual status. These loans originated in the New England and San Francisco regions. At June 30, 2012, 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.

14