Exhibit 99.1
Boston Private Financial Holdings, Inc. Reports First Quarter 2013 Results
First Quarter Highlights:
• | Earnings increase 39% year-over-year: GAAP Net Income increased to $13.2 million from $9.5 million in the first quarter of 2012. First quarter diluted EPS increased to $0.15 from $0.11 year-over-year. |
• | Core Fees and Income increase for the fifth straight quarter: Core Fees and Income increased 14% year-over-year and 3% on a linked quarter basis. |
• | Strong AUM Build: AUM increased 7% to $21.9 billion in the quarter and 7% year-over-year. First quarter AUM net inflows were $181 million, up from $84 million on a year-over-year basis. |
• | No Provision for Loan Losses: The Company recorded no provision in the quarter due to a reduction in Classified Loans and continued improvement in credit quality. |
• | Capital builds: Tangible Common Equity/Tangible Assets ratio increased by 100 basis points to 8.2% on a year-over-year basis, and increased 50 basis points on a linked quarter basis. |
Boston, MA - April 16, 2013 - Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the "Company" or "BPFH") today reported first quarter 2013 GAAP Net Income Attributable to the Company of $13.2 million, compared to $13.1 million in the fourth quarter of 2012. BPFH reported first quarter diluted earnings per share of $0.15 compared to $0.15 in the fourth quarter of 2012.
On a year-over-year basis, GAAP Net Income Attributable to the Company increased 39% from $9.5 million in the first quarter of 2012. Diluted earnings per share increased 36% from $0.11 in the same period.
"Our Wealth Management businesses performed well in the quarter," said Clayton G. Deutsch, CEO and President. "Core Fees and Income increased 3% on a linked quarter basis and Assets Under Management increased 7% in the same period. Our Wealth Management firms continue to exhibit positive operating leverage. The Private Banking side of our business witnessed a decline in Net Interest Income which was driven by a reduction in earning assets and Net Interest Margin compression. Having said this, our Private Bank is continuing to build profit contribution across all three of our major private banking markets."
Core Fees Increase 3% Linked Quarter
Core Fees and Income (Investment Management and Trust Fees, Private Bank Investment Management and Trust Fees, Wealth Advisory Fees, Other Banking Fee Income and Gain on Sale of Loans) for the first quarter increased 3% to $29.9 million from $29.1 million in the fourth quarter of 2012. Core Fees and Income increased 14% from $26.3 million on a year-over-year basis.
Total Assets Under Management/Advisory ("AUM") increased to $21.9 billion, up 7% from $20.4 billion in the fourth quarter of 2012. AUM also increased 7% from $20.4 billion in the first quarter of 2012. The Company experienced first quarter 2013 AUM net inflows of $181 million, as compared to AUM net inflows of $298 million in the fourth quarter of 2012. AUM net inflows for the first quarter of 2012 were $84 million.
Net Interest Income Declines
Net Interest Income in the first quarter was $44.3 million, down 3% from $45.5 million in the fourth quarter of 2012 due to lower asset yields. On a year-over-year basis, Net Interest Income declined 1% from $44.8 million in the first quarter of 2012.
Net Interest Margin was 3.13% in the first quarter, down six basis points from 3.19% in the fourth quarter. On a year-over-year basis, Net Interest Margin decreased 14 basis points from 3.27% in the first quarter of 2012.
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Total Expenses Decrease Linked Quarter
Total Expenses for the first quarter of 2013 were $56.6 million, a 10% decrease from $62.7 million (including restructuring costs of $1.6 million) in the fourth quarter of 2012. On a year-over-year basis, Total Expenses increased 2% from $55.6 million (including restructuring costs of $0.1 million) in the first quarter of 2012.
"Total Expenses in the quarter were impacted by seasonal compensation expenses such as increased 401(k) employee contribution matches and FICA, as well as a retirement benefit valuation update of $1.5 million," said David J. Kaye, Chief Financial Officer. "We expect to see additional savings related to our $10 million cost reduction program reflected in the second quarter 2013 run rate."
Provision
The Company recorded no Provision for Loan Losses in the first quarter, compared to a fourth quarter credit of ($5.0) million. The lack of provision was driven by a reduction in Classified Loans and continued improvement in credit quality. In the first quarter of 2012, there was a provision of $4.0 million.
Criticized Loans decreased 5% to $223.5 million on a linked quarter basis, and decreased 27% year-over-year. Nonaccrual Loans ("Nonaccruals") increased 20% to $73.0 million, up from $60.7 million on a linked quarter basis. On a year-over-year basis, Nonaccruals were flat. As a percentage of Total Loans, Nonaccruals were 1.53% in the first quarter of 2013, up 27 basis points from 1.26% in the fourth quarter of 2012. On a year-over-year basis, Nonaccruals as a percentage of Total Loans increased 3 basis points from 1.50%.
Additional credit metrics are listed below on a linked quarter and year-over-year basis:
(In millions) | March 31, 2013 | December 31, 2012 | March 31, 2012 | ||||||||
Total Criticized Loans | $ | 223.5 | $ | 235.0 | $ | 306.2 | |||||
Total Loans 30-89 Days Past Due and Accruing (12) | $ | 17.3 | $ | 46.4 | $ | 21.4 | |||||
Total Net Loans (Charged-off)/ Recovered | $ | (1.8 | ) | $ | (2.1 | ) | $ | (2.2 | ) | ||
Allowance for Loan Losses/ Total Loans | 1.72 | % | 1.75 | % | 2.02 | % |
Capital Ratios Strengthen in Q1
All regulatory risk-based capital ratios and tangible common equity ratios increased on a linked quarter basis and year-over-year.
Capital ratios are listed below on a linked quarter and year-over-year basis:
March 31, 2013 | December 31, 2012 | March 31, 2012 | ||||||
Total Risk-Based Capital * | 14.9 | % | 14.6 | % | 14.4 | % | ||
Tier I Risk-Based Capital * | 13.6 | % | 13.4 | % | 12.0 | % | ||
Tier I Leverage Capital * | 10.1 | % | 9.9 | % | 8.8 | % | ||
TCE/TA | 8.2 | % | 7.7 | % | 7.2 | % | ||
TCE/Risk Weighted Assets * | 10.8 | % | 10.5 | % | 9.8 | % |
*March 31, 2013 data is presented based on estimated data.
Dividend Payments
Concurrent with the release of the first quarter 2013 earnings, the Board of Directors of the Company declared a cash dividend to shareholders of $0.05 per share. The record date for this dividend is May 4, 2013, and the payment date is May 17, 2013.
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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 a.m. Eastern Time on Wednesday, April 17, to discuss the financial results, business highlights and outlook. To access the call:
Dial In #: (888) 317-6003
International Dial In #: (412) 317-6061
Elite Entry Number: 2802788
Replay Information:
Available from April 17 at 12 noon until April 24
Dial In #: (877) 344-7529
International Dial In #: (412) 317-0088
Conference Number: 10027506
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 that owns 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.
Forward-Looking Statements
Certain statements in this press release that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties. These statements include, among others, statements regarding our strategy, evaluations of future interest rate trends and liquidity, prospects for growth in assets, and prospects for overall results over the long term. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Company's control. Forward-looking statements are based on the current assumptions and beliefs of management and are only expectations of future results. The Company's actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, adverse conditions in the capital and debt markets and the impact of such conditions on the Company's private banking, investment management and wealth advisory activities; changes in interest rates; competitive pressures from other financial institutions; the effects of 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; 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
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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.
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
Vice President, Investor Relations
Boston Private Financial Holdings, Inc.
(617) 912-3798
jhess@bostonprivate.com
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![](https://capedge.com/proxy/8-K/0000821127-13-000018/bpfhlogo13.jpg)
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
March 31, 2013 | December 31, 2012 | March 31, 2012 | |||||||||
(In thousands, except share and per share data) | |||||||||||
Assets: | |||||||||||
Cash and cash equivalents | $ | 54,136 | $ | 308,744 | $ | 131,136 | |||||
Investment securities available for sale | 736,610 | 699,300 | 825,614 | ||||||||
Loans held for sale (1) | 289,180 | 308,390 | 3,727 | ||||||||
Total loans | 4,783,467 | 4,814,136 | 4,849,048 | ||||||||
Less: Allowance for loan losses | 82,286 | 84,057 | 97,902 | ||||||||
Net loans | 4,701,181 | 4,730,079 | 4,751,146 | ||||||||
Other real estate owned (“OREO”) | 2,329 | 3,616 | 3,886 | ||||||||
Stock in Federal Home Loan Banks | 40,436 | 41,981 | 42,639 | ||||||||
Premises and equipment, net | 29,014 | 27,081 | 29,432 | ||||||||
Goodwill | 110,180 | 110,180 | 110,180 | ||||||||
Intangible assets, net | 23,813 | 24,874 | 27,479 | ||||||||
Fees receivable | 10,452 | 8,836 | 9,042 | ||||||||
Accrued interest receivable | 14,774 | 14,723 | 16,968 | ||||||||
Deferred income taxes, net | 60,634 | 62,245 | 66,105 | ||||||||
Other assets | 123,682 | 124,956 | 120,318 | ||||||||
Assets of discontinued operations (2) | — | — | 10,890 | ||||||||
Total assets | $ | 6,196,421 | $ | 6,465,005 | $ | 6,148,562 | |||||
Liabilities: | |||||||||||
Deposits | $ | 4,517,351 | $ | 4,885,059 | $ | 4,602,451 | |||||
Deposits held for sale (1) | 188,252 | 194,084 | — | ||||||||
Securities sold under agreements to repurchase | 122,187 | 116,319 | 108,551 | ||||||||
Federal funds purchased | 50,000 | — | — | ||||||||
Federal Home Loan Bank borrowings | 461,411 | 408,121 | 582,551 | ||||||||
Junior subordinated debentures | 133,835 | 143,647 | 178,645 | ||||||||
Other liabilities | 88,869 | 95,386 | 91,827 | ||||||||
Liabilities of discontinued operations (2) | — | — | 1,392 | ||||||||
Total liabilities | 5,561,905 | 5,842,616 | 5,565,417 | ||||||||
Redeemable Noncontrolling Interests | 17,438 | 19,287 | 21,604 | ||||||||
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 March 31, 2013, December 31, 2012, and March 31, 2012; 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: 79,053,668 shares at March 31, 2013; 78,743,518 shares at December 31, 2012; and 78,151,609 shares at March 31, 2012 | 79,054 | 78,744 | 78,152 | ||||||||
Additional paid-in capital | 641,918 | 640,891 | 642,276 | ||||||||
Accumulated deficit | (163,543 | ) | (176,746 | ) | (220,512 | ) | |||||
Accumulated other comprehensive income | 1,560 | 2,124 | 3,536 | ||||||||
Total shareholders’ equity | 617,078 | 603,102 | 561,541 | ||||||||
Total liabilities, redeemable noncontrolling interests and shareholders’ equity | $ | 6,196,421 | $ | 6,465,005 | $ | 6,148,562 |
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Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
Three Months Ended | |||||||||||
March 31, 2013 | December 31, 2012 | March 31, 2012 | |||||||||
Interest and dividend income: | (In thousands, except share and per share data) | ||||||||||
Loans | $ | 49,350 | $ | 51,398 | $ | 51,946 | |||||
Taxable investment securities | 514 | 650 | 1,256 | ||||||||
Non-taxable investment securities | 839 | 846 | 848 | ||||||||
Mortgage-backed securities | 1,402 | 1,443 | 1,603 | ||||||||
Federal funds sold and other short-term borrowings | 176 | 208 | 149 | ||||||||
Total interest and dividend income | 52,281 | 54,545 | 55,802 | ||||||||
Interest expense: | |||||||||||
Deposits | 3,786 | 4,096 | 4,903 | ||||||||
Federal Home Loan Bank borrowings | 2,831 | 3,295 | 3,945 | ||||||||
Junior subordinated debentures | 1,154 | 1,308 | 1,752 | ||||||||
Repurchase agreements and other borrowings | 234 | 300 | 434 | ||||||||
Total interest expense | 8,005 | 8,999 | 11,034 | ||||||||
Net interest income | 44,276 | 45,546 | 44,768 | ||||||||
Provision/ (credit) for loan losses | — | (5,000 | ) | 4,000 | |||||||
Net interest income after provision for loan losses | 44,276 | 50,546 | 40,768 | ||||||||
Fees and other income: | |||||||||||
Investment management and trust fees - Investment Managers | 10,086 | 10,094 | 9,471 | ||||||||
Investment management and trust fees - Bank | 6,782 | 6,086 | 5,767 | ||||||||
Wealth advisory fees | 10,068 | 9,745 | 9,236 | ||||||||
Other banking fee income | 1,798 | 1,455 | 1,367 | ||||||||
Gain on sale of loans, net | 1,187 | 1,726 | 421 | ||||||||
Total core fees and income | 29,921 | 29,106 | 26,262 | ||||||||
Gain on repurchase of debt | 574 | 874 | 879 | ||||||||
Gain/(loss) on sale of investments, net | 10 | (7 | ) | 13 | |||||||
Gain/(loss) on OREO, net | 34 | 624 | (41 | ) | |||||||
Other | 57 | (302 | ) | 341 | |||||||
Total other income | 675 | 1,189 | 1,192 | ||||||||
Operating expense: | |||||||||||
Salaries and employee benefits | 37,449 | 37,781 | 36,912 | ||||||||
Occupancy and equipment | 7,503 | 7,516 | 7,265 | ||||||||
Professional services | 2,661 | 3,698 | 2,939 | ||||||||
Marketing and business development | 1,457 | 2,968 | 1,329 | ||||||||
Contract services and data processing | 1,568 | 1,391 | 1,188 | ||||||||
Amortization of intangibles | 1,118 | 1,106 | 1,090 | ||||||||
FDIC insurance | 1,040 | 1,003 | 849 | ||||||||
Restructuring expense | — | 1,631 | 135 | ||||||||
Other | 3,768 | 5,644 | 3,920 | ||||||||
Total operating expense | 56,564 | 62,738 | 55,627 | ||||||||
Income before income taxes | 18,308 | 18,103 | 12,595 | ||||||||
Income tax expense | 5,897 | 6,115 | �� | 3,851 | |||||||
Net income from continuing operations | 12,411 | 11,988 | 8,744 | ||||||||
Net income from discontinued operations (2) | 1,722 | 1,819 | 1,554 | ||||||||
Net income before attribution to noncontrolling interests | 14,133 | 13,807 | 10,298 | ||||||||
Less: Net income attributable to noncontrolling interests | 930 | 715 | 793 | ||||||||
Net income attributable to the Company | $ | 13,203 | $ | 13,092 | $ | 9,505 |
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Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
Three Months Ended | |||||||||||
PER SHARE DATA: | March 31, 2013 | December 31, 2012 | March 31, 2012 | ||||||||
(In thousands, except share and per share data) | |||||||||||
Calculation of Income for EPS: | |||||||||||
Net income attributable to the Company | $ | 13,203 | $ | 13,092 | $ | 9,505 | |||||
Adjustments to Net Income Attributable to the Company to Arrive at Net Income Attributable to Common Shareholders (3) | (457 | ) | (239 | ) | (178 | ) | |||||
Net Income Attributable to the Common Shareholders | 12,746 | 12,853 | 9,327 | ||||||||
LESS: Amount allocated to participating securities | (908 | ) | (1,281 | ) | (932 | ) | |||||
Net Income Attributable to the Common Shareholders, after allocation to participating securities | $ | 11,838 | $ | 11,572 | $ | 8,395 | |||||
End of Period Common Shares Outstanding | 79,053,668 | 78,743,518 | 78,151,609 | ||||||||
Weighted Average Shares Outstanding: | |||||||||||
Weighted average basic shares, including participating securities | 85,635,265 | 85,386,014 | 84,859,038 | ||||||||
LESS: Participating securities | (8,816,655 | ) | (9,047,609 | ) | (9,226,058 | ) | |||||
PLUS: Dilutive potential common shares | 1,006,820 | 1,066,155 | 799,871 | ||||||||
Weighted Average Diluted Shares (4) | 77,825,430 | 77,404,560 | 76,432,851 | ||||||||
Diluted Total Earnings per Share | $ | 0.15 | $ | 0.15 | $ | 0.11 |
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Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(In thousands, except per share data) | March 31, 2013 | December 31, 2012 | March 31, 2012 | ||||||||
FINANCIAL DATA: | |||||||||||
Book Value Per Common Share | $ | 7.07 | $ | 6.92 | $ | 6.44 | |||||
Tangible Book Value Per Share (5) | $ | 5.77 | $ | 5.64 | $ | 5.05 | |||||
Market Price Per Share | $ | 9.88 | $ | 9.01 | $ | 9.91 | |||||
ASSETS UNDER MANAGEMENT AND ADVISORY: | |||||||||||
Private Banking | $ | 4,167,000 | $ | 3,941,000 | $ | 3,696,000 | |||||
Investment Managers | 9,314,000 | 8,444,000 | 8,047,000 | ||||||||
Wealth Advisory | 8,487,000 | 8,052,000 | 7,579,000 | ||||||||
Less: Inter-company Relationship | (21,000 | ) | (20,000 | ) | (20,000 | ) | |||||
Assets Under Management and Advisory of Continuing Operations | 21,947,000 | 20,417,000 | 19,302,000 | ||||||||
Assets Under Management and Advisory of Discontinued Operations (2) | — | — | 1,137,000 | ||||||||
Total Assets Under Management and Advisory | $ | 21,947,000 | $ | 20,417,000 | $ | 20,439,000 | |||||
FINANCIAL RATIOS: | |||||||||||
Total Equity/Total Assets | 9.96 | % | 9.33 | % | 9.13 | % | |||||
Tangible Common Equity/Tangible Assets (5) | 8.21 | % | 7.67 | % | 7.19 | % | |||||
Tangible Common Equity/Risk Weighted Assets (5) | 10.81 | % | 10.49 | % | 9.78 | % | |||||
Allowance for Loan Losses/Total Loans | 1.72 | % | 1.75 | % | 2.02 | % | |||||
Allowance for Loan Losses/Nonaccrual Loans | 113 | % | 138 | % | 135 | % | |||||
Return on Average Assets - Three Months Ended (Annualized) | 0.84 | % | 0.82 | % | 0.62 | % | |||||
Return on Average Equity - Three Months Ended (Annualized) | 8.66 | % | 8.72 | % | 6.74 | % | |||||
Efficiency Ratio - Three Months Ended (Annualized) | 73.58 | % | 80.12 | % | 75.14 | % |
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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: | 03/31/2013 | 12/31/2012 | 03/31/2012 | 03/31/2013 | 12/31/2012 | 03/31/2012 | 03/31/2013 | 12/31/2012 | 03/31/2012 | |||||||||||||||||
AVERAGE ASSETS | ||||||||||||||||||||||||||
Interest-Earning Assets: | ||||||||||||||||||||||||||
Cash and Investments: | ||||||||||||||||||||||||||
Taxable investment securities | $ | 198,833 | $ | 202,970 | $ | 376,206 | $ | 514 | $ | 650 | $ | 1,256 | 1.03 | % | 1.28 | % | 1.34 | % | ||||||||
Non-taxable investment securities (6) | 205,255 | 202,971 | 194,410 | 1,291 | 1,320 | 1,323 | 2.52 | % | 2.60 | % | 2.72 | % | ||||||||||||||
Mortgage-backed securities | 317,686 | 309,359 | 251,989 | 1,402 | 1,443 | 1,603 | 1.76 | % | 1.87 | % | 2.54 | % | ||||||||||||||
Federal funds sold and other | 168,004 | 221,457 | 130,771 | 176 | 208 | 149 | 0.43 | % | 0.37 | % | 0.46 | % | ||||||||||||||
Total Cash and Investments | 889,778 | 936,757 | 953,376 | 3,383 | 3,621 | 4,331 | 1.52 | % | 1.54 | % | 1.82 | % | ||||||||||||||
Loans: (7) | ||||||||||||||||||||||||||
Commercial and Construction (6) | 2,805,685 | 2,773,478 | 2,591,377 | 31,990 | 33,660 | 32,693 | 4.62 | % | 4.83 | % | 5.07 | % | ||||||||||||||
Residential | 2,003,845 | 2,024,279 | 1,857,838 | 16,928 | 17,626 | 17,826 | 3.38 | % | 3.48 | % | 3.84 | % | ||||||||||||||
Home Equity and Other Consumer | 268,156 | 269,954 | 320,160 | 1,987 | 2,104 | 2,760 | 3.01 | % | 3.10 | % | 3.45 | % | ||||||||||||||
Total Loans | 5,077,686 | 5,067,711 | 4,769,375 | 50,905 | 53,390 | 53,279 | 4.05 | % | 4.20 | % | 4.48 | % | ||||||||||||||
Total Earning Assets | 5,967,464 | 6,004,468 | 5,722,751 | 54,288 | 57,011 | 57,610 | 3.67 | % | 3.78 | % | 4.04 | % | ||||||||||||||
LESS: Allowance for Loan Losses | 84,330 | 90,931 | 97,471 | |||||||||||||||||||||||
Cash and due From Banks (Non-Interest Bearing) | 41,897 | 46,916 | 112,844 | |||||||||||||||||||||||
Other Assets (8) | 391,909 | 395,646 | 427,083 | |||||||||||||||||||||||
TOTAL AVERAGE ASSETS | $ | 6,316,940 | $ | 6,356,099 | $ | 6,165,207 | ||||||||||||||||||||
AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||||
Interest-Bearing Liabilities: | ||||||||||||||||||||||||||
Deposits (9): | ||||||||||||||||||||||||||
Savings and NOW | $ | 576,814 | $ | 494,960 | $ | 533,075 | $ | 132 | $ | 168 | $ | 331 | 0.09 | % | 0.13 | % | 0.25 | % | ||||||||
Money Market | 2,387,363 | 2,377,447 | 1,983,558 | 2,086 | 2,287 | 2,136 | 0.35 | % | 0.38 | % | 0.43 | % | ||||||||||||||
Certificates of Deposit | 678,788 | 712,358 | 898,458 | 1,568 | 1,641 | 2,436 | 0.94 | % | 0.92 | % | 1.09 | % | ||||||||||||||
Total Deposits | 3,642,965 | 3,584,765 | 3,415,091 | 3,786 | 4,096 | 4,903 | 0.42 | % | 0.45 | % | 0.58 | % | ||||||||||||||
Junior Subordinated Debentures | 137,016 | 150,089 | 180,817 | 1,154 | 1,308 | 1,752 | 3.37 | % | 3.41 | % | 3.83 | % | ||||||||||||||
FHLB Borrowings and Other | 537,468 | 599,248 | 709,611 | 3,065 | 3,595 | 4,379 | 2.28 | % | 2.35 | % | 2.44 | % | ||||||||||||||
Total Interest-Bearing Liabilities | 4,317,449 | 4,334,102 | 4,305,519 | 8,005 | 8,999 | 11,034 | 0.75 | % | 0.82 | % | 1.02 | % | ||||||||||||||
Noninterest Bearing Demand Deposits | 1,264,803 | 1,304,276 | 1,167,623 | |||||||||||||||||||||||
Other Liabilities (8) | 107,645 | 98,279 | 106,536 | |||||||||||||||||||||||
Total Average Liabilities | 5,689,897 | 5,736,657 | 5,579,678 | |||||||||||||||||||||||
Redeemable Noncontrolling Interests | 17,184 | 18,780 | 21,701 | |||||||||||||||||||||||
Average Shareholders' Equity | 609,859 | 600,662 | 563,828 | |||||||||||||||||||||||
TOTAL AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY | $ | 6,316,940 | $ | 6,356,099 | $ | 6,165,207 | ||||||||||||||||||||
Net Interest Income - on a Fully Taxable Equivalent Basis (FTE) | $ | 46,283 | $ | 48,012 | $ | 46,576 | ||||||||||||||||||||
LESS: FTE Adjustment (6) | 2,007 | 2,466 | 1,808 | |||||||||||||||||||||||
Net Interest Income (GAAP Basis) | $ | 44,276 | $ | 45,546 | $ | 44,768 | ||||||||||||||||||||
Interest Rate Spread | 2.92 | % | 2.96 | % | 3.02 | % | ||||||||||||||||||||
Net Interest Margin | 3.13 | % | 3.19 | % | 3.27 | % |
9
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(In Thousands) | March 31, 2013 | December 31, 2012 | March 31, 2012 | ||||||||
LOAN DATA (10): | |||||||||||
Commercial and Industrial Loans: | |||||||||||
New England | $ | 672,895 | $ | 691,519 | $ | 572,091 | |||||
San Francisco Bay | 61,806 | 61,535 | 74,100 | ||||||||
Southern California | 53,811 | 53,272 | 30,485 | ||||||||
Pacific Northwest | — | — | 41,462 | ||||||||
Total Commercial and Industrial Loans | $ | 788,512 | $ | 806,326 | $ | 718,138 | |||||
Commercial Real Estate Loans: | |||||||||||
New England | $ | 643,756 | $ | 662,964 | $ | 667,014 | |||||
San Francisco Bay | 642,170 | 648,137 | 691,644 | ||||||||
Southern California | 402,515 | 380,249 | 291,430 | ||||||||
Pacific Northwest | — | — | 136,105 | ||||||||
Total Commercial Real Estate Loans | $ | 1,688,441 | $ | 1,691,350 | $ | 1,786,193 | |||||
Construction and Land Loans: | |||||||||||
New England | $ | 99,989 | $ | 92,766 | $ | 99,387 | |||||
San Francisco Bay | 37,923 | 33,655 | 40,390 | ||||||||
Southern California | 11,005 | 11,149 | 5,899 | ||||||||
Pacific Northwest | — | — | 3,979 | ||||||||
Total Construction and Land Loans | $ | 148,917 | $ | 137,570 | $ | 149,655 | |||||
Residential Loans: | |||||||||||
New England | $ | 1,163,647 | $ | 1,173,741 | $ | 1,246,700 | |||||
San Francisco Bay | 436,577 | 431,550 | 335,753 | ||||||||
Southern California | 298,189 | 300,798 | 231,284 | ||||||||
Pacific Northwest | — | — | 65,411 | ||||||||
Total Residential Loans | $ | 1,898,413 | $ | 1,906,089 | $ | 1,879,148 | |||||
Home Equity Loans: | |||||||||||
New England | $ | 78,154 | $ | 79,947 | $ | 85,388 | |||||
San Francisco Bay | 34,745 | 36,730 | 43,064 | ||||||||
Southern California | 5,283 | 6,874 | 6,500 | ||||||||
Pacific Northwest | — | — | 4,006 | ||||||||
Total Home Equity Loans | $ | 118,182 | $ | 123,551 | $ | 138,958 | |||||
Other Consumer Loans: | |||||||||||
New England | $ | 126,409 | $ | 131,999 | $ | 152,190 | |||||
San Francisco Bay | 7,792 | 9,581 | 11,787 | ||||||||
Southern California | 6,606 | 7,148 | 9,376 | ||||||||
Pacific Northwest | — | — | 1,472 | ||||||||
Eliminations and other, net | 195 | 522 | 2,131 | ||||||||
Total Other Consumer Loans | $ | 141,002 | $ | 149,250 | $ | 176,956 | |||||
Total Loans | |||||||||||
New England | $ | 2,784,850 | $ | 2,832,936 | $ | 2,822,770 | |||||
San Francisco Bay | 1,221,013 | 1,221,188 | 1,196,738 | ||||||||
Southern California | 777,409 | 759,490 | 574,974 | ||||||||
Pacific Northwest | — | — | 252,435 | ||||||||
Eliminations and other, net | 195 | 522 | 2,131 | ||||||||
Total Loans | $ | 4,783,467 | $ | 4,814,136 | $ | 4,849,048 |
10
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(In Thousands) | March 31, 2013 | December 31, 2012 | March 31, 2012 | ||||||||
CREDIT QUALITY (10): | |||||||||||
Special Mention Loans: | |||||||||||
New England | $ | 31,132 | $ | 40,389 | $ | 53,929 | |||||
San Francisco Bay | 24,130 | 24,566 | 40,655 | ||||||||
Southern California | 19,917 | 19,784 | 24,784 | ||||||||
Pacific Northwest | — | — | 8,925 | ||||||||
Total Special Mention Loans | $ | 75,179 | $ | 84,739 | $ | 128,293 | |||||
Accruing Substandard Loans (11): | |||||||||||
New England | $ | 17,372 | $ | 27,551 | $ | 25,002 | |||||
San Francisco Bay | 49,306 | 49,854 | 57,629 | ||||||||
Southern California | 8,680 | 12,724 | 19,374 | ||||||||
Pacific Northwest | — | — | 3,317 | ||||||||
Total Accruing Substandard Loans | $ | 75,358 | $ | 90,129 | $ | 105,322 | |||||
Nonaccruing Loans: | |||||||||||
New England | $ | 39,853 | $ | 28,307 | $ | 34,629 | |||||
San Francisco Bay | 25,626 | 25,105 | 28,721 | ||||||||
Southern California | 7,547 | 7,333 | 7,572 | ||||||||
Pacific Northwest | — | — | 1,744 | ||||||||
Total Nonaccruing Loans | $ | 73,026 | $ | 60,745 | $ | 72,666 | |||||
Other Real Estate Owned: | |||||||||||
New England | $ | 1,744 | $ | 1,744 | $ | 98 | |||||
San Francisco Bay | 585 | 1,395 | 2,194 | ||||||||
Southern California | — | — | 1,114 | ||||||||
Pacific Northwest | 477 | 477 | 480 | ||||||||
Total Other Real Estate Owned | $ | 2,806 | $ | 3,616 | $ | 3,886 | |||||
Loans 30-89 Days Past Due and Accruing (12): | |||||||||||
New England | $ | 10,609 | $ | 20,751 | $ | 5,304 | |||||
San Francisco Bay | 5,862 | 11,771 | 10,824 | ||||||||
Southern California | 833 | 13,854 | 5,130 | ||||||||
Pacific Northwest | — | — | 99 | ||||||||
Total Loans 30-89 Days Past Due and Accruing | $ | 17,304 | $ | 46,376 | $ | 21,357 | |||||
Loans (Charged-off)/ Recovered, Net for the Three Months Ended: | |||||||||||
New England | $ | (1,236 | ) | $ | (1,148 | ) | $ | (341 | ) | ||
San Francisco Bay | (1,508 | ) | (1,094 | ) | (1,980 | ) | |||||
Southern California | 973 | 168 | (72 | ) | |||||||
Pacific Northwest | — | 2 | 181 | ||||||||
Total Net Loans (Charged-off)/ Recovered | $ | (1,771 | ) | $ | (2,072 | ) | $ | (2,212 | ) |
11
Boston Private Financial Holdings, Inc.
Selected Financial Data
(Unaudited)
FOOTNOTES:
(1) | On December 17, 2012, Boston Private Bank & Trust Company announced that it had entered into an agreement to sell its three offices in the Pacific Northwest region. Accordingly, the assets and liabilities to be sold as part of this transaction have been classified as held for sale at March 31, 2013 and December 31, 2012. Within loans held for sale on the consolidated balance sheet, $273.6 million and $276.7 million of the balance at March 31, 2013 and December 31, 2012, respectively, relate to the Pacific Northwest transaction. All of the deposits held for sale at March 31, 2013 and December 31, 2012 relate to the Pacific Northwest transaction. All other assets and liabilities that will be included in the Pacific Northwest transaction have been classified as other assets held for sale or other liabilities held for sale and are included within other assets or other liabilities on the consolidated balance sheet at March 31, 2013 and December 31, 2012. |
(2) | 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. |
(3) | Adjustments to Net Income Attributable to the Company to arrive at Net Income Attributable to the Common Shareholders, as presented in these tables, include decrease/ (increase) in Noncontrolling Interests Redemption Value and Dividends on Participating Securities. |
(4) | 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 months ended March 31, 2013 was less than 0.1 million. The amount of shares that were anti-dilutive for the three months ended December 31, 2012 was 0.3 million. The amount of shares that were anti-dilutive for the three months ended March 31, 2012 was 1.4 million. See Part II. Item 8. "Financial Statements and Supplementary Data - Note 16: Earnings Per Share" in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 for additional information. |
(5) | 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.
12
Boston Private Financial Holdings, Inc.
Selected Financial Data
(Unaudited)
(In thousands, except per share data) | March 31, 2013 | December 31, 2012 | March 31, 2012 | ||||||||
Total Balance Sheet Assets | $ | 6,196,421 | $ | 6,465,005 | $ | 6,148,562 | |||||
LESS: Goodwill and Intangible Assets, net * | (133,993 | ) | (135,054 | ) | (144,456 | ) | |||||
Tangible Assets (non-GAAP) | $ | 6,062,428 | $ | 6,329,951 | $ | 6,004,106 | |||||
Total Equity | $ | 617,078 | $ | 603,102 | $ | 561,541 | |||||
LESS: Goodwill and Intangible Assets, net | (133,993 | ) | (135,054 | ) | (144,456 | ) | |||||
ADD: Difference between Redemption Value of Non-controlling Interests and value under ASC 810 | 14,859 | 17,201 | 14,319 | ||||||||
Total adjusting items | (119,134 | ) | (117,853 | ) | (130,137 | ) | |||||
Tangible Common Equity (non-GAAP) | $ | 497,944 | $ | 485,249 | $ | 431,404 | |||||
Total Equity/Total Assets | 9.96 | % | 9.33 | % | 9.13 | % | |||||
Tangible Common Equity/Tangible Assets (non-GAAP) | 8.21 | % | 7.67 | % | 7.19 | % | |||||
Total Risk Weighted Assets ** | $ | 4,604,249 | $ | 4,627,791 | $ | 4,410,389 | |||||
Tangible Common Equity/Total Risk Weighted Assets (non-GAAP) | 10.81 | % | 10.49 | % | 9.78 | % | |||||
End of Period Shares Outstanding | 79,054 | 78,744 | 78,152 | ||||||||
EOP Carlyle Common Convertible Shares | 7,261 | 7,261 | 7,261 | ||||||||
Common Equivalent Shares | 86,315 | 86,005 | 85,413 | ||||||||
Book Value Per Common Share | $ | 7.07 | $ | 6.92 | $ | 6.44 | |||||
Tangible Book Value Per Share (non-GAAP) | $ | 5.77 | $ | 5.64 | $ | 5.05 |
* For the TCE to TA ratio, Goodwill and Intangible Assets, net includes Goodwill and Intangible Assets of discontinued operations for March 31, 2012, which are included on the consolidated balance sheet with Assets of Discontinued Operations.
** Risk Weighted Assets for March 31, 2013 is presented based on estimated data.
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) | March 31, 2013 | December 31, 2012 | March 31, 2012 | ||||||||
Income before income taxes (GAAP) | $ | 18,308 | $ | 18,103 | $ | 12,595 | |||||
ADD BACK: Provision/ (credit) for loan losses | — | (5,000 | ) | 4,000 | |||||||
Pre-tax, pre-provision earnings (Non-GAAP) | $ | 18,308 | $ | 13,103 | $ | 16,595 | |||||
Total operating expense (GAAP) | $ | 56,564 | $ | 62,738 | $ | 55,627 | |||||
LESS: Restructuring expense | — | 1,631 | 135 | ||||||||
Total operating expenses (excluding restructuring costs) (Non-GAAP) | $ | 56,564 | $ | 61,107 | $ | 55,492 |
(6) | 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. |
(7) | Includes Loans Held for Sale and Nonaccrual Loans. |
(8) | Assets and liabilities of discontinued operations are included in other assets and other liabilities in the average balance sheet presentation. |
(9) | Includes Deposits Held for Sale. |
13
Boston Private Financial Holdings, Inc.
Selected Financial Data
(Unaudited)
(10) | The concentration of the Private Banking loan data and credit quality is primarily based on the location of the lender's regional offices. Loans in the Pacific Northwest region not expected to be included the sale of that region's offices at March 31, 2013 and December 31, 2012, have been included with the offices from which they will be managed after the sale. 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”. |
(11) | 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. |
(12) | In addition to loans 30-89 days past due and accruing, at March 31, 2013, the Company had one loan totaling $0.1 million that was more than 90 days past due but still on accrual status. At December 31, 2012, the Company had three loans totaling $3.6 million that were more than 90 days past due but still on accrual status. At March 31, 2012, there were two loans totaling less than $0.1 million that were more than 90 days past due but still on accrual status. At all periods presented, these loans originated in the New England region. |
14