Boston Private Financial Holdings, Inc. Reports Second Quarter 2013 Results
Second Quarter Highlights:
| • | Core earnings growth: Excluding the effect of the significant transactions in the second quarter, Net Income Attributable to the Company was $15.1 million, or $0.18 per share, versus Net Income of $13.2 million, or $0.15 per share in the first quarter of 2013. |
| • | Repurchased preferred stock held by an affiliate of The Carlyle Group: Resulted in a second quarter 2013 charge to EPS of $11.7 million, or $0.14 per diluted share. |
| • | Completed sale of Pacific Northwest offices: Resulted in a second quarter 2013 pre-tax gain of $10.6 million. |
| • | Loan and deposit growth: Total Loans increased 1% linked quarter to $4.8 billion. Deposits increased 1% linked quarter to $4.6 billion. |
| • | Fee-based revenues increased: Investment Management segment fees increased 8% linked quarter and 13% year-over-year. Wealth Advisory fees increased 2% linked quarter and 12% year-over-year. |
| • | Criticized Loans declined: Criticized Loans declined 14% linked quarter and 36% year-over-year. |
| • | Provision credit: The Company recorded a provision credit of $2.0 million in the quarter due to recoveries of previously charged-off loan amounts, a reduction in Criticized Loans and continued improvement in credit quality. |
| • | Quarterly dividend increased: The Board of Directors of the Company raised the quarterly dividend from $0.05 per share to $0.07 per share. |
Boston, MA - July 17, 2013 - Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the "Company" or "BPFH") today reported second quarter 2013 GAAP Net Income Attributable to the Company of $21.3 million, compared to $13.2 million in the first quarter of 2013. Second quarter GAAP Net Income included a $6.3 million after-tax gain on the sale of the Company's Pacific Northwest private banking offices, which closed during the second quarter. BPFH reported second quarter diluted earnings per share of $0.11 compared to $0.15 in the first quarter of 2013. Second quarter diluted earnings per share was adversely impacted by the $11.7 million deemed dividend resulting from the repurchase of the preferred stock held by an affiliate of The Carlyle Group. While this deemed dividend impacted earnings per share, it did not impact Net Income Attributable to the Company.
On a year-over-year basis, GAAP Net Income Attributable to the Company increased 51% from $14.2 million in the second quarter of 2012. Diluted earnings per share decreased 35% from $0.17 in the same period, due to the above noted deemed dividend related to the Company's preferred stock repurchase.
"In the second quarter, we completed two significant transactions: the sale of our Pacific Northwest private banking offices and the repurchase of our preferred shares held by The Carlyle Group," said Clayton G. Deutsch, Chief Executive Officer and President. "While these transactions complicated our second quarter results, they strengthened the Company. With these transactions completed, we are fixated on core business growth and performance."
Fee-Based Revenues Held Steady
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 second quarter increased 1% to $30.1 million from $29.9 million in the first quarter of 2013. Core Fees and Income increased 14% from $26.4 million on a year-over-year basis.
1
Total Assets Under Management/Advisory ("AUM") decreased to $21.8 billion in the second quarter, down 1% from $21.9 billion in the first quarter of 2013. AUM increased 14% from $19.1 billion in the second quarter of 2012. The Company experienced second quarter 2013 AUM net outflows of $228 million, as compared to first quarter 2013 AUM net inflows of $181 million. AUM net inflows for the second quarter of 2012 were $16 million.
Net Interest Income Declined Due to Lower Volumes
Net Interest Income in the second quarter was $43.9 million, down 1% from $44.3 million in the first quarter of 2013 due to lower volumes related to the sale of the Pacific Northwest private banking offices. On a year-over-year basis, Net Interest Income declined 6% from $46.6 million in the second quarter of 2012.
Net Interest Margin was 3.14% in the second quarter, up four basis points from 3.10% in the first quarter. On a year-over-year basis, Net Interest Margin decreased 21 basis points from 3.35% in the second quarter of 2012.
Total Expenses Flat Linked Quarter
Total Expenses for the second quarter of 2013 were $56.7 million, flat with $56.6 million in the first quarter of 2013. Second quarter expenses were elevated due to a $1.4 million charge related to liability restructuring. On a year-over-year basis, Total Expenses increased 2% from $55.3 million (including restructuring costs of $0.6 million) in the second quarter of 2012.
Criticized Loans Decreased 14% Linked Quarter, 36% YOY
The Company recorded a $2.0 million credit to its Provision for Loan Losses in the second quarter of 2013, compared to no provision in the first quarter. The provision credit was driven by recoveries of previously charged-off loan amounts, a reduction in Criticized Loans and continued improvement in credit quality. In the second quarter of 2012, there was a provision of $1.7 million.
Criticized Loans decreased 14% to $191.4 million on a linked quarter basis, and decreased 36% year-over-year. Nonaccrual Loans ("Nonaccruals") decreased 28% to $52.3 million, down from $73.0 million on a linked quarter basis. On a year-over-year basis, Nonaccruals decreased 22% from $67.4 million. As a percentage of Total Loans, Nonaccruals were 1.08% at June 30, 2013, down 45 basis points from 1.53% at March 31, 2013. On a year-over-year basis, Nonaccruals as a percentage of Total Loans decreased 24 basis points from 1.32%.
Additional credit metrics are listed below on a linked quarter and year-over-year basis:
| (In millions) | June 30, 2013 | March 31, 2013 | June 30, 2012 | ||||||||
| Total Criticized Loans | $ | 191.4 | $ | 223.5 | $ | 298.6 | |||||
| Total Loans 30-89 Days Past Due and Accruing (13) | $ | 11.5 | $ | 17.3 | $ | 14.2 | |||||
| Total Net Loans (Charged-off)/ Recovered | $ | 0.5 | $ | (1.8 | ) | $ | (0.5 | ) | |||
| Allowance for Loan Losses/ Total Loans | 1.67 | % | 1.72 | % | 1.95 | % | |||||
Transactions Drove More Efficient Capital Base
“The transactions we completed during the second quarter made our capital base more efficient,” said David J. Kaye, Chief Financial Officer. “Selling our Pacific Northwest private banking offices allowed us to free up stranded capital and reinvest it at a higher rate of return. By repurchasing our preferred stock from Carlyle and completing the Non-Cumulative Perpetual Preferred offering, we were able to secure a lower cost of capital that will be accretive to future EPS and Return on Common Equity.”
2
Capital ratios are listed below on a linked quarter and year-over-year basis:
| June 30, 2013 | March 31, 2013 | June 30, 2012 | ||||||
| Total Risk-Based Capital * | 15.6 | % | 14.9 | % | 14.3 | % | ||
| Tier I Risk-Based Capital * | 14.3 | % | 13.6 | % | 12.2 | % | ||
| Tier I Leverage Capital * | 10.4 | % | 10.1 | % | 9.3 | % | ||
| TCE/TA | 7.6 | % | 8.2 | % | 7.4 | % | ||
| Tier I Common Equity/ Risk Weighted Assets * | 9.9 | % | 10.5 | % | 9.0 | % | ||
| TCE/Risk Weighted Assets * | 10.1 | % | 10.8 | % | 9.9 | % | ||
*June 30, 2013 data is presented based on estimated data.
Dividend Payments
Concurrent with the release of the second quarter 2013 earnings, the Board of Directors of the Company declared a cash dividend to common shareholders of $0.07 per share, up from $0.05 per share last quarter. The record date for this dividend is August 8, 2013, and the payment date is August 22, 2013.
Non-GAAP Financial Measures
The Company uses certain non-GAAP financial measures, such as Net Income excluding the effect of significant transactions, earnings per share excluding the effect of significant transactions, 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 Thursday, July 18, 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: 0075374
Replay Information:
Available from July 18 at 12 noon until July 25
Dial In #: (877) 344-7529
International Dial In #: (412) 317-0088
Conference Number: 10030922
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 and the San Francisco Bay Area. 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.
3
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 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
4
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
| June 30, 2013 | March 31, 2013 | June 30, 2012 | |||||||||
| (In thousands, except share and per share data) | |||||||||||
| Assets: | |||||||||||
| Cash and cash equivalents | $ | 67,654 | $ | 54,136 | $ | 102,826 | |||||
| Investment securities available for sale | 724,153 | 736,610 | 734,362 | ||||||||
| Loans held for sale (1) | 12,414 | 289,180 | 12,336 | ||||||||
| Total loans | 4,838,713 | 4,783,467 | 5,091,128 | ||||||||
| Less: Allowance for loan losses | 80,800 | 82,286 | 99,054 | ||||||||
| Net loans | 4,757,913 | 4,701,181 | 4,992,074 | ||||||||
| Other real estate owned (“OREO”) | 776 | 2,329 | 3,054 | ||||||||
| Stock in Federal Home Loan Banks | 40,622 | 40,436 | 43,089 | ||||||||
| Premises and equipment, net | 29,093 | 29,014 | 28,919 | ||||||||
| Goodwill | 110,180 | 110,180 | 110,180 | ||||||||
| Intangible assets, net | 22,712 | 23,813 | 26,389 | ||||||||
| Fees receivable | 9,950 | 10,452 | 8,363 | ||||||||
| Accrued interest receivable | 14,831 | 14,774 | 16,667 | ||||||||
| Deferred income taxes, net | 60,019 | 60,634 | 64,968 | ||||||||
| Other assets | 116,613 | 123,682 | 121,016 | ||||||||
| Total assets | $ | 5,966,930 | $ | 6,196,421 | $ | 6,264,243 | |||||
| Liabilities: | |||||||||||
| Deposits | $ | 4,576,383 | $ | 4,517,351 | $ | 4,595,758 | |||||
| Deposits held for sale (1) | — | 188,252 | — | ||||||||
| Securities sold under agreements to repurchase | 26,700 | 122,187 | 100,842 | ||||||||
| Federal funds purchased | 65,000 | 50,000 | 85,000 | ||||||||
| Federal Home Loan Bank borrowings | 448,706 | 461,411 | 616,749 | ||||||||
| Junior subordinated debentures | 133,168 | 133,835 | 174,397 | ||||||||
| Other liabilities | 90,035 | 88,869 | 96,654 | ||||||||
| Total liabilities | 5,339,992 | 5,561,905 | 5,669,400 | ||||||||
| Redeemable Noncontrolling Interests | 17,661 | 17,438 | 19,221 | ||||||||
| Shareholders’ Equity: | |||||||||||
| Preferred stock, $1.00 par value; authorized: 2,000,000 shares; | |||||||||||
| Series B, issued and outstanding (contingently convertible): 0 shares at June 30, 2013, 401 shares at March 31, 2013 and June 30, 2012; liquidation value: $100,000 per share | — | 58,089 | 58,089 | ||||||||
| Series D, 6.95% Non-Cumulative Perpetual, issued and outstanding: 50,000 shares at June 30, 2013, 0 shares at March 31, 2013 and June 30, 2012; liquidation preference: $1,000 per share | 47,754 | — | — | ||||||||
| Common stock, $1.00 par value; authorized: 170,000,000 shares; issued and outstanding: 79,734,389 shares at June 30, 2013; 79,053,668 shares at March 31, 2013; and 78,822,462 shares at June 30, 2012 | 79,734 | 79,054 | 78,822 | ||||||||
| Additional paid-in capital | 626,950 | 641,918 | 641,992 | ||||||||
| Accumulated deficit | (142,215 | ) | (163,543 | ) | (206,351 | ) | |||||
| Accumulated other comprehensive income/ (loss) | (3,081 | ) | 1,560 | 3,070 | |||||||
| Total Company’s shareholders’ equity | 609,142 | 617,078 | 575,622 | ||||||||
| Noncontrolling interests | 135 | — | — | ||||||||
| Total shareholders’ equity | 609,277 | 617,078 | 575,622 | ||||||||
| Total liabilities, redeemable noncontrolling interests and shareholders’ equity | $ | 5,966,930 | $ | 6,196,421 | $ | 6,264,243 | |||||
5
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||||
| June 30, 2013 | March 31, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | |||||||||||||||
| Interest and dividend income: | (In thousands, except share and per share data) | ||||||||||||||||||
| Loans | $ | 48,339 | $ | 49,350 | $ | 53,402 | $ | 97,689 | $ | 105,349 | |||||||||
| Taxable investment securities | 493 | 514 | 1,078 | 1,007 | 2,335 | ||||||||||||||
| Non-taxable investment securities | 778 | 839 | 752 | 1,617 | 1,600 | ||||||||||||||
| Mortgage-backed securities | 1,340 | 1,402 | 1,604 | 2,742 | 3,206 | ||||||||||||||
| Federal funds sold and other short-term borrowings | 175 | 176 | 72 | 351 | 221 | ||||||||||||||
| Total interest and dividend income | 51,125 | 52,281 | 56,908 | 103,406 | 112,711 | ||||||||||||||
| Interest expense: | |||||||||||||||||||
| Deposits | 3,120 | 3,786 | 4,435 | 6,906 | 9,338 | ||||||||||||||
| Federal Home Loan Bank borrowings | 2,818 | 2,831 | 3,747 | 5,649 | 7,692 | ||||||||||||||
| Junior subordinated debentures | 1,156 | 1,154 | 1,690 | 2,310 | 3,443 | ||||||||||||||
| Repurchase agreements and other borrowings | 132 | 234 | 440 | 366 | 874 | ||||||||||||||
| Total interest expense | 7,226 | 8,005 | 10,312 | 15,231 | 21,347 | ||||||||||||||
| Net interest income | 43,899 | 44,276 | 46,596 | 88,175 | 91,364 | ||||||||||||||
| Provision/ (credit) for loan losses | (2,000 | ) | — | 1,700 | (2,000 | ) | 5,700 | ||||||||||||
| Net interest income after provision for loan losses | 45,899 | 44,276 | 44,896 | 90,175 | 85,664 | ||||||||||||||
| Fees and other income: | |||||||||||||||||||
| Investment management and trust fees - Investment Managers | 10,848 | 10,086 | 9,581 | 20,934 | 19,052 | ||||||||||||||
| Investment management and trust fees - Bank | 6,492 | 6,782 | 5,903 | 13,274 | 11,670 | ||||||||||||||
| Wealth advisory fees | 10,317 | 10,068 | 9,183 | 20,385 | 18,419 | ||||||||||||||
| Other banking fee income | 1,704 | 1,798 | 1,295 | 3,502 | 2,662 | ||||||||||||||
| Gain on sale of loans, net | 746 | 1,187 | 430 | 1,933 | 851 | ||||||||||||||
| Total core fees and income | 30,107 | 29,921 | 26,392 | 60,028 | 52,654 | ||||||||||||||
| Gain on repurchase of debt | 46 | 574 | 715 | 620 | 1,594 | ||||||||||||||
| Gain/(loss) on sale of investments, net | 18 | 10 | 839 | 28 | 853 | ||||||||||||||
| Gain/(loss) on OREO, net | (47 | ) | 34 | 366 | (13 | ) | 325 | ||||||||||||
| Other | 10,732 | 57 | (303 | ) | 10,789 | 37 | |||||||||||||
| Total other income | 10,749 | 675 | 1,617 | 11,424 | 2,809 | ||||||||||||||
| Operating expense: | |||||||||||||||||||
| Salaries and employee benefits | 34,054 | 37,449 | 34,471 | 71,503 | 71,383 | ||||||||||||||
| Occupancy and equipment | 7,594 | 7,503 | 7,931 | 15,097 | 15,196 | ||||||||||||||
| Professional services | 2,585 | 2,661 | 3,021 | 5,246 | 5,960 | ||||||||||||||
| Marketing and business development | 2,759 | 1,457 | 1,779 | 4,216 | 3,108 | ||||||||||||||
| Contract services and data processing | 1,484 | 1,568 | 1,355 | 3,052 | 2,543 | ||||||||||||||
| Amortization of intangibles | 1,101 | 1,118 | 1,090 | 2,219 | 2,181 | ||||||||||||||
| FDIC insurance | 954 | 1,040 | 982 | 1,994 | 1,831 | ||||||||||||||
| Restructuring expense | — | — | 564 | — | 699 | ||||||||||||||
| Other | 6,157 | 3,768 | 4,142 | 9,925 | 8,061 | ||||||||||||||
| Total operating expense | 56,688 | 56,564 | 55,335 | 113,252 | 110,962 | ||||||||||||||
| Income before income taxes | 30,067 | 18,308 | 17,570 | 48,375 | 30,165 | ||||||||||||||
| Income tax expense | 10,551 | 5,897 | 5,240 | 16,448 | 9,091 | ||||||||||||||
| Net income from continuing operations | 19,516 | 12,411 | 12,330 | 31,927 | 21,074 | ||||||||||||||
| Net income from discontinued operations (2) | 2,781 | 1,722 | 2,590 | 4,503 | 4,144 | ||||||||||||||
| Net income before attribution to noncontrolling interests | 22,297 | 14,133 | 14,920 | 36,430 | 25,218 | ||||||||||||||
| Less: Net income attributable to noncontrolling interests | 969 | 930 | 759 | 1,899 | 1,552 | ||||||||||||||
| Net income attributable to the Company | $ | 21,328 | $ | 13,203 | $ | 14,161 | $ | 34,531 | $ | 23,666 | |||||||||
6
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||||
| PER SHARE DATA: | June 30, 2013 | March 31, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||||
| (In thousands, except share and per share data) | |||||||||||||||||||
| Calculation of Income for EPS: | |||||||||||||||||||
| Net income attributable to the Company | $ | 21,328 | $ | 13,203 | $ | 14,161 | $ | 34,531 | $ | 23,666 | |||||||||
| Adjustments to Net Income Attributable to the Company to Arrive at Net Income Attributable to Common Shareholders (3) | (12,468 | ) | (457 | ) | 71 | (12,925 | ) | (107 | ) | ||||||||||
| Net Income Attributable to the Common Shareholders | 8,860 | 12,746 | 14,232 | 21,606 | 23,559 | ||||||||||||||
| LESS: Amount allocated to participating securities | (199 | ) | (908 | ) | (1,471 | ) | (998 | ) | (2,402 | ) | |||||||||
| Net Income Attributable to the Common Shareholders, after allocation to participating securities | $ | 8,661 | $ | 11,838 | $ | 12,761 | $ | 20,608 | $ | 21,157 | |||||||||
| End of Period Common Shares Outstanding | 79,734,389 | 79,053,668 | 78,822,462 | ||||||||||||||||
| Weighted Average Shares Outstanding: | |||||||||||||||||||
| Weighted average basic shares, including participating securities | 80,472,013 | 85,635,265 | 85,099,821 | 83,039,376 | 84,980,095 | ||||||||||||||
| LESS: Participating securities | (3,221,015 | ) | (8,816,655 | ) | (9,295,848 | ) | (6,003,378 | ) | (9,261,146 | ) | |||||||||
| PLUS: Dilutive potential common shares | 1,127,880 | 1,006,820 | 701,119 | 1,069,292 | 714,158 | ||||||||||||||
| Weighted Average Diluted Shares (4) | 78,378,878 | 77,825,430 | 76,505,092 | 78,105,290 | 76,433,107 | ||||||||||||||
| Diluted Total Earnings per Share | $ | 0.11 | $ | 0.15 | $ | 0.17 | $ | 0.26 | $ | 0.28 | |||||||||
7
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
| (In thousands, except per share data) | June 30, 2013 | March 31, 2013 | June 30, 2012 | ||||||||
| FINANCIAL DATA: | |||||||||||
| Book Value Per Common Share | $ | 7.04 | $ | 7.07 | $ | 6.57 | |||||
| Tangible Book Value Per Share (5) | $ | 5.57 | $ | 5.77 | $ | 5.26 | |||||
| Market Price Per Share | $ | 10.64 | $ | 9.88 | $ | 8.93 | |||||
| ASSETS UNDER MANAGEMENT AND ADVISORY: | |||||||||||
| Private Banking | $ | 4,126,000 | $ | 4,167,000 | $ | 3,680,000 | |||||
| Investment Managers | 9,149,000 | 9,314,000 | 7,982,000 | ||||||||
| Wealth Advisory | 8,516,000 | 8,487,000 | 7,474,000 | ||||||||
| Less: Inter-company Relationship | (20,000 | ) | (21,000 | ) | (19,000 | ) | |||||
| Total Assets Under Management and Advisory | $ | 21,771,000 | $ | 21,947,000 | $ | 19,117,000 | |||||
| FINANCIAL RATIOS: | |||||||||||
| Total Equity/Total Assets | 10.21 | % | 9.96 | % | 9.19 | % | |||||
| Tangible Common Equity/ Tangible Assets (5) | 7.61 | % | 8.21 | % | 7.39 | % | |||||
| Tangible Common Equity/ Risk Weighted Assets (5) | 10.13 | % | 10.84 | % | 9.90 | % | |||||
| Tier I Common Equity/ Risk Weighted Assets | 9.95 | % | 10.51 | % | 9.01 | % | |||||
| Allowance for Loan Losses/Total Loans | 1.67 | % | 1.72 | % | 1.95 | % | |||||
| Allowance for Loan Losses/Nonaccrual Loans | 155 | % | 113 | % | 147 | % | |||||
| Return on Average Assets - Three Months Ended (Annualized) | 1.39 | % | 0.84 | % | 0.92 | % | |||||
| Return on Average Common Equity - Three Months Ended (Annualized) (6) | 14.58 | % | 8.66 | % | 9.96 | % | |||||
| Return on Average Tangible Common Equity - Three Months Ended (Annualized) (6) | 18.41 | % | 10.75 | % | 12.70 | % | |||||
| Efficiency Ratio - Three Months Ended (Annualized) (7) | 64.06 | % | 72.12 | % | 70.99 | % | |||||
8
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: | 06/30/2013 | 03/31/2013 | 06/30/2012 | 06/30/2013 | 03/31/2013 | 06/30/2012 | 06/30/2013 | 03/31/2013 | 06/30/2012 | |||||||||||||||||
| AVERAGE ASSETS | ||||||||||||||||||||||||||
| Interest-Earning Assets: | ||||||||||||||||||||||||||
| Cash and Investments: | ||||||||||||||||||||||||||
| Taxable investment securities | $ | 208,717 | $ | 198,833 | $ | 337,933 | $ | 493 | $ | 514 | $ | 1,078 | 0.94 | % | 1.03 | % | 1.28 | % | ||||||||
| Non-taxable investment securities (8) | 204,219 | 205,255 | 186,030 | 1,196 | 1,291 | 1,174 | 2.34 | % | 2.52 | % | 2.52 | % | ||||||||||||||
| Mortgage-backed securities | 294,976 | 317,686 | 245,043 | 1,340 | 1,402 | 1,604 | 1.82 | % | 1.76 | % | 2.62 | % | ||||||||||||||
| Federal funds sold and other | 152,037 | 168,004 | 122,977 | 175 | 176 | 72 | 0.46 | % | 0.43 | % | 0.24 | % | ||||||||||||||
| Total Cash and Investments | 859,949 | 889,778 | 891,983 | 3,204 | 3,383 | 3,928 | 1.49 | % | 1.52 | % | 1.76 | % | ||||||||||||||
| Loans: (9) | ||||||||||||||||||||||||||
| Commercial and Construction (8) | 2,702,401 | 2,805,685 | 2,691,458 | 31,855 | 31,990 | 34,470 | 4.66 | % | 4.56 | % | 5.15 | % | ||||||||||||||
| Residential | 1,963,701 | 2,003,845 | 1,926,628 | 16,097 | 16,928 | 17,979 | 3.28 | % | 3.38 | % | 3.73 | % | ||||||||||||||
| Home Equity and Other Consumer | 271,063 | 268,156 | 292,353 | 1,984 | 1,987 | 2,336 | 2.94 | % | 3.01 | % | 3.23 | % | ||||||||||||||
| Total Loans | 4,937,165 | 5,077,686 | 4,910,439 | 49,936 | 50,905 | 54,785 | 4.02 | % | 4.01 | % | 4.48 | % | ||||||||||||||
| Total Earning Assets | 5,797,114 | 5,967,464 | 5,802,422 | 53,140 | 54,288 | 58,713 | 3.64 | % | 3.64 | % | 4.06 | % | ||||||||||||||
| LESS: Allowance for Loan Losses | 83,711 | 84,330 | 100,236 | |||||||||||||||||||||||
| Cash and due From Banks (Non-Interest Bearing) | 43,143 | 41,897 | 73,153 | |||||||||||||||||||||||
| Other Assets | 380,462 | 391,909 | 405,340 | |||||||||||||||||||||||
| TOTAL AVERAGE ASSETS | $ | 6,137,008 | $ | 6,316,940 | $ | 6,180,679 | ||||||||||||||||||||
| AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||||
| Interest-Bearing Liabilities: | ||||||||||||||||||||||||||
| Deposits (10): | ||||||||||||||||||||||||||
| Savings and NOW | $ | 523,229 | $ | 576,814 | $ | 501,759 | $ | 107 | $ | 132 | $ | 201 | 0.08 | % | 0.09 | % | 0.16 | % | ||||||||
| Money Market | 2,272,302 | 2,387,363 | 2,067,625 | 1,627 | 2,086 | 2,147 | 0.29 | % | 0.35 | % | 0.42 | % | ||||||||||||||
| Certificates of Deposit | 669,996 | 678,788 | 837,295 | 1,386 | 1,568 | 2,087 | 0.85 | % | 0.94 | % | 1.00 | % | ||||||||||||||
| Total Deposits | 3,465,527 | 3,642,965 | 3,406,679 | 3,120 | 3,786 | 4,435 | 0.37 | % | 0.42 | % | 0.52 | % | ||||||||||||||
| Junior Subordinated Debentures | 133,605 | 137,016 | 177,566 | 1,156 | 1,154 | 1,690 | 3.42 | % | 3.37 | % | 3.77 | % | ||||||||||||||
| FHLB Borrowings and Other | 584,030 | 537,468 | 707,315 | 2,950 | 3,065 | 4,187 | 2.00 | % | 2.28 | % | 2.34 | % | ||||||||||||||
| Total Interest-Bearing Liabilities | 4,183,162 | 4,317,449 | 4,291,560 | 7,226 | 8,005 | 10,312 | 0.69 | % | 0.75 | % | 0.96 | % | ||||||||||||||
| Noninterest Bearing Demand Deposits | 1,212,127 | 1,264,803 | 1,190,428 | |||||||||||||||||||||||
| Other Liabilities | 116,744 | 107,645 | 109,578 | |||||||||||||||||||||||
| Total Average Liabilities | 5,512,033 | 5,689,897 | 5,591,566 | |||||||||||||||||||||||
| Redeemable Noncontrolling Interests | 15,966 | 17,184 | 20,254 | |||||||||||||||||||||||
| Average Shareholders' Equity | 609,009 | 609,859 | 568,859 | |||||||||||||||||||||||
| TOTAL AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY | $ | 6,137,008 | $ | 6,316,940 | $ | 6,180,679 | ||||||||||||||||||||
| Net Interest Income - on a Fully Taxable Equivalent Basis (FTE) | $ | 45,914 | $ | 46,283 | $ | 48,401 | ||||||||||||||||||||
| LESS: FTE Adjustment (8) | 2,015 | 2,007 | 1,805 | |||||||||||||||||||||||
| Net Interest Income (GAAP Basis) | $ | 43,899 | $ | 44,276 | $ | 46,596 | ||||||||||||||||||||
| Interest Rate Spread | 2.95 | % | 2.89 | % | 3.10 | % | ||||||||||||||||||||
| Net Interest Margin | 3.14 | % | 3.10 | % | 3.35 | % | ||||||||||||||||||||
9
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
| Average Balance | Interest Income/Expense | Average Yield/Rate | ||||||||||||||||
| (In Thousands) | Six Months Ended | Six Months Ended | Six Months Ended | |||||||||||||||
| AVERAGE BALANCE SHEET: | June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||
| AVERAGE ASSETS | ||||||||||||||||||
| Interest-Earning Assets: | ||||||||||||||||||
| Cash and Investments: | ||||||||||||||||||
| Taxable investment securities | $ | 203,873 | $ | 357,533 | $ | 1,007 | $ | 2,335 | 0.99 | % | 1.31 | % | ||||||
| Non-taxable investment securities (8) | 204,734 | 190,220 | 2,487 | 2,497 | 2.43 | % | 2.63 | % | ||||||||||
| Mortgage-backed securities | 306,268 | 248,516 | 2,742 | 3,206 | 1.79 | % | 2.58 | % | ||||||||||
| Federal funds sold and other | 159,976 | 126,477 | 351 | 221 | 0.44 | % | 0.35 | % | ||||||||||
| Total Cash and Investments | 874,851 | 922,746 | 6,587 | 8,259 | 1.51 | % | 1.79 | % | ||||||||||
| Loans: (9) | ||||||||||||||||||
| Commercial and Construction (8) | 2,753,758 | 2,641,302 | 63,844 | 67,164 | 4.61 | % | 5.11 | % | ||||||||||
| Residential | 1,983,662 | 1,892,347 | 33,025 | 35,806 | 3.33 | % | 3.78 | % | ||||||||||
| Home Equity and Other Consumer | 269,635 | 306,260 | 3,971 | 5,096 | 2.97 | % | 3.35 | % | ||||||||||
| Total Loans | 5,007,055 | 4,839,909 | 100,840 | 108,066 | 4.02 | % | 4.48 | % | ||||||||||
| Total Earning Assets | 5,881,906 | 5,762,655 | 107,427 | 116,325 | 3.64 | % | 4.05 | % | ||||||||||
| LESS: Allowance for Loan Losses | 84,019 | 98,854 | ||||||||||||||||
| Cash and due From Banks (Non-Interest Bearing) | 42,579 | 88,808 | ||||||||||||||||
| Other Assets | 385,142 | 431,091 | ||||||||||||||||
| TOTAL AVERAGE ASSETS | $ | 6,225,608 | $ | 6,183,700 | ||||||||||||||
| AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY | ||||||||||||||||||
| Interest-Bearing Liabilities: | ||||||||||||||||||
| Deposits (10): | ||||||||||||||||||
| Savings and NOW | $ | 549,873 | $ | 517,291 | $ | 239 | $ | 532 | 0.09 | % | 0.21 | % | ||||||
| Money Market | 2,329,515 | 2,020,871 | 3,713 | 4,283 | 0.32 | % | 0.43 | % | ||||||||||
| Certificates of Deposit | 674,367 | 882,885 | 2,954 | 4,523 | 0.91 | % | 1.03 | % | ||||||||||
| Total Deposits | 3,553,755 | 3,421,047 | 6,906 | 9,338 | 0.40 | % | 0.55 | % | ||||||||||
| Junior Subordinated Debentures | 135,311 | 179,355 | 2,310 | 3,443 | 3.39 | % | 3.80 | % | ||||||||||
| FHLB Borrowings and Other | 560,878 | 708,463 | 6,015 | 8,566 | 2.13 | % | 2.39 | % | ||||||||||
| Total Interest-Bearing Liabilities | 4,249,944 | 4,308,865 | 15,231 | 21,347 | 0.72 | % | 0.99 | % | ||||||||||
| Noninterest Bearing Demand Deposits | 1,238,320 | 1,175,414 | ||||||||||||||||
| Other Liabilities | 112,333 | 111,551 | ||||||||||||||||
| Total Average Liabilities | 5,600,597 | 5,595,830 | ||||||||||||||||
| Redeemable Noncontrolling Interests | 16,697 | 20,886 | ||||||||||||||||
| Average Shareholders' Equity | 608,314 | 566,984 | ||||||||||||||||
| TOTAL AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY | $ | 6,225,608 | $ | 6,183,700 | ||||||||||||||
| Net Interest Income - on a Fully Taxable Equivalent Basis (FTE) | $ | 92,196 | $ | 94,978 | ||||||||||||||
| LESS: FTE Adjustment (8) | 4,021 | 3,614 | ||||||||||||||||
| Net Interest Income (GAAP Basis) | $ | 88,175 | $ | 91,364 | ||||||||||||||
| Interest Rate Spread | 2.92 | % | 3.06 | % | ||||||||||||||
| Net Interest Margin | 3.12 | % | 3.31 | % | ||||||||||||||
10
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
| (In Thousands) | June 30, 2013 | March 31, 2013 | June 30, 2012 | ||||||||
| LOAN DATA (11): | |||||||||||
| Commercial and Industrial Loans: | |||||||||||
| New England | $ | 670,377 | $ | 672,895 | $ | 666,145 | |||||
| San Francisco Bay | 72,511 | 61,806 | 66,586 | ||||||||
| Southern California | 53,745 | 53,811 | 29,631 | ||||||||
| Pacific Northwest | — | — | 47,014 | ||||||||
| Total Commercial and Industrial Loans | $ | 796,633 | $ | 788,512 | $ | 809,376 | |||||
| Commercial Real Estate Loans: | |||||||||||
| New England | $ | 622,529 | $ | 643,756 | $ | 663,038 | |||||
| San Francisco Bay | 622,743 | 642,170 | 679,358 | ||||||||
| Southern California | 433,396 | 402,515 | 344,918 | ||||||||
| Pacific Northwest | — | — | 145,253 | ||||||||
| Total Commercial Real Estate Loans | $ | 1,678,668 | $ | 1,688,441 | $ | 1,832,567 | |||||
| Construction and Land Loans: | |||||||||||
| New England | $ | 104,451 | $ | 99,989 | $ | 108,874 | |||||
| San Francisco Bay | 34,073 | 37,923 | 44,628 | ||||||||
| Southern California | 11,721 | 11,005 | 7,492 | ||||||||
| Pacific Northwest | — | — | 3,128 | ||||||||
| Total Construction and Land Loans | $ | 150,245 | $ | 148,917 | $ | 164,122 | |||||
| Residential Loans: | |||||||||||
| New England | $ | 1,172,993 | $ | 1,163,647 | $ | 1,247,117 | |||||
| San Francisco Bay | 452,344 | 436,577 | 392,340 | ||||||||
| Southern California | 313,031 | 298,189 | 281,113 | ||||||||
| Pacific Northwest | — | — | 71,117 | ||||||||
| Total Residential Loans | $ | 1,938,368 | $ | 1,898,413 | $ | 1,991,687 | |||||
| Home Equity Loans: | |||||||||||
| New England | $ | 81,588 | $ | 78,154 | $ | 84,790 | |||||
| San Francisco Bay | 32,705 | 34,745 | 41,557 | ||||||||
| Southern California | 6,301 | 5,283 | 7,484 | ||||||||
| Pacific Northwest | — | — | 2,727 | ||||||||
| Total Home Equity Loans | $ | 120,594 | $ | 118,182 | $ | 136,558 | |||||
| Other Consumer Loans: | |||||||||||
| New England | $ | 139,533 | $ | 126,409 | $ | 135,221 | |||||
| San Francisco Bay | 8,024 | 7,792 | 11,992 | ||||||||
| Southern California | 6,463 | 6,606 | 7,570 | ||||||||
| Pacific Northwest | — | — | 1,338 | ||||||||
| Eliminations and other, net | 185 | 195 | 697 | ||||||||
| Total Other Consumer Loans | $ | 154,205 | $ | 141,002 | $ | 156,818 | |||||
| Total Loans | |||||||||||
| New England | $ | 2,791,471 | $ | 2,784,850 | $ | 2,905,185 | |||||
| San Francisco Bay | 1,222,400 | 1,221,013 | 1,236,461 | ||||||||
| Southern California | 824,657 | 777,409 | 678,208 | ||||||||
| Pacific Northwest | — | — | 270,577 | ||||||||
| Eliminations and other, net | 185 | 195 | 697 | ||||||||
| Total Loans | $ | 4,838,713 | $ | 4,783,467 | $ | 5,091,128 | |||||
11
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
| (In Thousands) | June 30, 2013 | March 31, 2013 | June 30, 2012 | ||||||||
| CREDIT QUALITY (11): | |||||||||||
| Special Mention Loans: | |||||||||||
| New England | $ | 28,644 | $ | 31,132 | $ | 35,308 | |||||
| San Francisco Bay | 21,617 | 24,130 | 31,508 | ||||||||
| Southern California | 19,077 | 19,917 | 20,544 | ||||||||
| Pacific Northwest | — | — | 5,573 | ||||||||
| Total Special Mention Loans | $ | 69,338 | $ | 75,179 | $ | 92,933 | |||||
| Accruing Substandard Loans (12): | |||||||||||
| New England | $ | 17,657 | $ | 17,372 | $ | 50,343 | |||||
| San Francisco Bay | 43,460 | 49,306 | 62,736 | ||||||||
| Southern California | 8,656 | 8,680 | 20,098 | ||||||||
| Pacific Northwest | — | — | 5,084 | ||||||||
| Total Accruing Substandard Loans | $ | 69,773 | $ | 75,358 | $ | 138,261 | |||||
| Nonaccruing Loans: | |||||||||||
| New England | $ | 25,361 | $ | 39,853 | $ | 29,733 | |||||
| San Francisco Bay | 19,379 | 25,626 | 28,350 | ||||||||
| Southern California | 7,549 | 7,547 | 7,273 | ||||||||
| Pacific Northwest | — | — | 2,001 | ||||||||
| Total Nonaccruing Loans | $ | 52,289 | $ | 73,026 | $ | 67,357 | |||||
| Other Real Estate Owned: | |||||||||||
| New England | $ | 191 | $ | 1,744 | $ | 191 | |||||
| San Francisco Bay | 585 | 585 | 2,383 | ||||||||
| Southern California | — | — | — | ||||||||
| Pacific Northwest (1) | — | 477 | 480 | ||||||||
| Total Other Real Estate Owned | $ | 776 | $ | 2,806 | $ | 3,054 | |||||
| Loans 30-89 Days Past Due and Accruing (13): | |||||||||||
| New England | $ | 7,433 | $ | 10,609 | $ | 3,272 | |||||
| San Francisco Bay | 3,504 | 5,862 | 7,270 | ||||||||
| Southern California | 605 | 833 | 3,058 | ||||||||
| Pacific Northwest | — | — | 565 | ||||||||
| Total Loans 30-89 Days Past Due and Accruing | $ | 11,542 | $ | 17,304 | $ | 14,165 | |||||
| Loans (Charged-off)/ Recovered, Net for the Three Months Ended: | |||||||||||
| New England | $ | (864 | ) | $ | (1,236 | ) | $ | (576 | ) | ||
| San Francisco Bay | 175 | (1,508 | ) | 117 | |||||||
| Southern California | 1,203 | 973 | (38 | ) | |||||||
| Pacific Northwest | — | — | (51 | ) | |||||||
| Total Net Loans (Charged-off)/ Recovered | $ | 514 | $ | (1,771 | ) | $ | (548 | ) | |||
| Loans (Charged-off)/ Recovered, Net for the Six Months Ended: | |||||||||||
| New England | $ | (2,100 | ) | $ | (917 | ) | |||||
| San Francisco Bay | (1,333 | ) | (1,863 | ) | |||||||
| Southern California | 2,176 | (110 | ) | ||||||||
| Pacific Northwest | — | 130 | |||||||||
| Total Net Loans (Charged-off)/ Recovered | $ | (1,257 | ) | $ | (2,760 | ) | |||||
12
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. The sale closed in May 2013. Accordingly, the assets and liabilities to be sold as part of this transaction have been classified as held for sale at March 31, 2013. Within loans held for sale on the consolidated balance sheet, $273.6 million of the balance at March 31, 2013 relate to the Pacific Northwest transaction. All of the deposits held for sale at March 31, 2013 relate to the Pacific Northwest transaction. All other assets and liabilities that were identified to 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. |
| (2) | Net income from discontinued operations consists of contingent payments from certain of our divested affiliates, including Davidson Trust Company; Boston Private Value Investors, Inc.; Sand Hill Advisors, LLC; RINET Company, LLC; Gibraltar Private Bank & Trust Company; and Westfield Capital Management Company, LLC. |
| (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, dividends paid on preferred stock, and dividends on participating securities. In the second quarter of 2013, the Company repurchased its Series B Preferred stock, and the deemed dividend related to the repurchase of $11.7 million is considered a dividend for the calculation of earnings per share. |
| (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. These additional shares 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 six months ended June 30, 2013 was less than 0.1 million. 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 and six months ended June 30, 2012 was 1.3 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. |
13
Boston Private Financial Holdings, Inc.
Selected Financial Data
(Unaudited)
| (5) | The Company uses certain non-GAAP financial measures, such as: Tangible Book Value Per Share; the Tangible Common Equity ("TCE") to Tangible Assets ("TA") ratio; and the TCE to Risk Weighted Assets ratio 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 non-convertible Series D Preferred stock; exclude Goodwill and Intangible Assets, net; and include the difference between Redemption Value and value per ASC 810, Consolidation ("ASC 810"), for Redeemable Noncontrolling Interests.
| (In thousands, except per share data) | June 30, 2013 | March 31, 2013 | June 30, 2012 | ||||||||
| Total Balance Sheet Assets | $ | 5,966,930 | $ | 6,196,421 | $ | 6,264,243 | |||||
| LESS: Goodwill and Intangible Assets, net | (132,892 | ) | (133,993 | ) | (136,569 | ) | |||||
| Tangible Assets (non-GAAP) | $ | 5,834,038 | $ | 6,062,428 | $ | 6,127,674 | |||||
| Total Shareholders' Equity | $ | 609,277 | $ | 617,078 | $ | 575,622 | |||||
| LESS: Series D Preferred Stock (non-convertible) | (47,754 | ) | — | — | |||||||
| LESS: Goodwill and Intangible Assets, net | (132,892 | ) | (133,993 | ) | (136,569 | ) | |||||
| ADD: Difference between Redemption Value of Non-controlling Interests and value under ASC 810 | 15,146 | 14,859 | 13,937 | ||||||||
| Total adjusting items | (165,500 | ) | (119,134 | ) | (122,632 | ) | |||||
| Tangible Common Equity (non-GAAP) | $ | 443,777 | $ | 497,944 | $ | 452,990 | |||||
| Total Equity/Total Assets | 10.21 | % | 9.96 | % | 9.19 | % | |||||
| Tangible Common Equity/Tangible Assets (non-GAAP) | 7.61 | % | 8.21 | % | 7.39 | % | |||||
| Total Risk Weighted Assets * | $ | 4,380,220 | $ | 4,592,071 | $ | 4,575,120 | |||||
| Tangible Common Equity/Total Risk Weighted Assets (non-GAAP) | 10.13 | % | 10.84 | % | 9.90 | % | |||||
| End of Period Shares Outstanding | 79,734 | 79,054 | 78,822 | ||||||||
| EOP Carlyle Common Convertible Shares | — | 7,261 | 7,261 | ||||||||
| Common Equivalent Shares | 79,734 | 86,315 | 86,084 | ||||||||
| Book Value Per Common Share | $ | 7.04 | $ | 7.07 | $ | 6.57 | |||||
| Tangible Book Value Per Share (non-GAAP) | $ | 5.57 | $ | 5.77 | $ | 5.26 | |||||
* Risk Weighted Assets for June 30, 2013 is presented based on estimated data.
14
Boston Private Financial Holdings, Inc.
Selected Financial Data
(Unaudited)
| (6) | The Company uses certain non-GAAP financial measures, such as: Return on Average Common Equity and Return on Average Tangible Common Equity 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 Return on Average Equity ratio to the Non-GAAP Return on Average Common Equity ratio, and the Non-GAAP Return on Average Tangible Common Equity ratio are presented below:
The Company calculates Average Common Equity by adjusting Average Equity to exclude Average Preferred Equity.
The Company calculates Average Tangible Common Equity by adjusting Average Equity to exclude Average Goodwill and Intangible Assets, net and Average Preferred Equity, and includes the Average Difference between Redemption Value and value per ASC 810, Consolidation ("ASC 810"), for Redeemable Noncontrolling Interests.
| (In thousands, except per share data) | June 30, 2013 | March 31, 2013 | June 30, 2012 | ||||||||
| Total average shareholders' equity | $ | 609,009 | $ | 609,859 | $ | 568,859 | |||||
| LESS: Average Series D preferred stock (non-convertible) | (39,358 | ) | — | — | |||||||
| Average common equity (non-GAAP) | 569,651 | 609,859 | 568,859 | ||||||||
| LESS: Average goodwill and intangible assets, net | (133,451 | ) | (134,511 | ) | (137,121 | ) | |||||
| ADD: Average difference between redemption value of non-controlling interests and value under ASC 810 | 15,003 | 16,030 | 14,128 | ||||||||
| Total adjusting items | (118,448 | ) | (118,481 | ) | (122,993 | ) | |||||
| Average Tangible Common Equity (non-GAAP) | $ | 451,203 | $ | 491,378 | $ | 445,866 | |||||
| Net income attributable to the Company | $ | 21,328 | $ | 13,203 | $ | 14,161 | |||||
| Less: Dividends on Series D preferred stock* | (560 | ) | — | — | |||||||
| Net income, after dividends on Series D preferred stock (non-GAAP) | $ | 20,768 | $ | 13,203 | $ | 14,161 | |||||
| Return on Average Equity - Three Months Ended (Annualized) | 14.01 | % | 8.66 | % | 9.96 | % | |||||
| Return on Average Common Equity - Three Months Ended (Annualized) (non-GAAP) | 14.58 | % | 8.66 | % | 9.96 | % | |||||
| Return on Average Tangible Common Equity - Three Months Ended (Annualized) (non-GAAP) | 18.41 | % | 10.75 | % | 12.70 | % | |||||
| * Represents dividend paid for the portion of the dividend period ending June 15, 2013 that the Series D preferred stock was outstanding. Going forward, full period dividends of $0.9 million are expected to be paid each quarter on September 15, December 15, March 15, and June 15. | |||||||||||
15
Boston Private Financial Holdings, Inc.
Selected Financial Data
(Unaudited)
| (7) | The Company uses certain non-GAAP financial measures, such as: pre-tax, pre-provision earnings; net income excluding the effect of significant transactions; earnings per share excluding the effect of significant transactions; and the efficiency ratio 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 income from continuing operations before income taxes to Non-GAAP pre-tax, pre-provision earnings; from GAAP Net income attributable to the Company to Non-GAAP net income attributable to the Company, excluding the sale of the Pacific Northwest offices; from GAAP diluted total EPS to Non-GAAP diluted total EPS, excluding the effect of significant transactions; and from GAAP efficiency ratio to Non-GAAP efficiency ratio (FTE basis) are presented below:
| Three Months Ended | Six Months Ended | ||||||||||||||||||
| (In thousands, except per share data) | June 30, 2013 | March 31, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||||
| Income before income taxes (GAAP) | $ | 30,067 | $ | 18,308 | $ | 17,570 | $ | 48,375 | $ | 30,165 | |||||||||
| ADD BACK: Provision/ (credit) for loan losses | (2,000 | ) | — | 1,700 | (2,000 | ) | 5,700 | ||||||||||||
| Pre-tax, pre-provision earnings (Non-GAAP) | $ | 28,067 | $ | 18,308 | $ | 19,270 | $ | 46,375 | $ | 35,865 | |||||||||
| Net income attributable to the Company (GAAP) | $ | 21,328 | $ | 13,203 | $ | 14,161 | $ | 34,531 | $ | 23,666 | |||||||||
| LESS: Gain on sale of Pacific Northwest offices, net of tax | 6,267 | — | — | 6,267 | — | ||||||||||||||
| Net income attributable to the Company, excluding the sale of the Pacific Northwest offices (Non-GAAP) | $ | 15,061 | $ | 13,203 | $ | 14,161 | $ | 28,264 | $ | 23,666 | |||||||||
| Net Income Attributable to the Common Shareholders, after allocation to participating securities (GAAP) | $ | 8,661 | $ | 11,838 | $ | 12,761 | $ | 20,608 | $ | 21,157 | |||||||||
| ADD BACK: Deemed dividend due to repurchase of Series B Preferred | 11,738 | — | — | 11,738 | — | ||||||||||||||
| LESS: Gain on sale of Pacific Northwest offices, net of tax | (6,267 | ) | — | — | (6,267 | ) | — | ||||||||||||
| Net Income Attributable to the Common Shareholders, after allocation to participating securities, excluding the effect of significant transactions (Non-GAAP) | $ | 14,132 | $ | 11,838 | $ | 12,761 | $ | 26,079 | $ | 21,157 | |||||||||
| Diluted Total Earnings per Share (GAAP) | $ | 0.11 | $ | 0.15 | $ | 0.17 | $ | 0.26 | $ | 0.28 | |||||||||
| Diluted Total Earnings Per Share, excluding the effect of significant transactions (Non-GAAP) | $ | 0.18 | $ | 0.15 | $ | 0.17 | $ | 0.33 | $ | 0.28 | |||||||||
| Total operating expense (GAAP) | $ | 56,688 | $ | 56,564 | $ | 55,335 | $ | 113,252 | $ | 110,962 | |||||||||
| Less: Amortization of intangibles | 1,101 | 1,118 | 1,090 | 2,219 | 2,181 | ||||||||||||||
| Total operating expense (excluding amortization of intangibles) (Non-GAAP) | $ | 55,587 | $ | 55,446 | $ | 54,245 | $ | 111,033 | $ | 108,781 | |||||||||
| Net interest income | $ | 43,899 | $ | 44,276 | $ | 46,596 | $ | 88,175 | $ | 91,364 | |||||||||
| Total core fees and income | 30,107 | 29,921 | 26,392 | 60,028 | 52,654 | ||||||||||||||
| Total other income | 10,749 | 675 | 1,617 | 11,424 | 2,809 | ||||||||||||||
| FTE income | 2,015 | 2,007 | 1,805 | 4,021 | 3,614 | ||||||||||||||
| Total revenue (FTE basis) | $ | 86,770 | $ | 76,879 | $ | 76,410 | $ | 163,648 | $ | 150,441 | |||||||||
| Efficiency Ratio, before deduction of intangible amortization (GAAP) | 66.88 | % | 75.55 | % | 74.17 | % | 70.95 | % | 75.57 | % | |||||||||
| Efficiency Ratio, FTE Basis (non-GAAP) | 64.06 | % | 72.12 | % | 70.99 | % | 67.85 | % | 72.31 | % | |||||||||
| (8) | 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. |
| (9) | Includes Loans Held for Sale and Nonaccrual Loans. |
| (10) | Includes Deposits Held for Sale. |
16
| (11) | 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 were 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”. |
| (12) | 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. |
| (13) | In addition to loans 30-89 days past due and accruing, at June 30, 2013, the Company had one loan totaling less than $0.1 million that was more than 90 days past due but still on accrual status. 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 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. At all periods presented, these loans originated in the New England region. |
17