UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): July 23, 2013
Boston Private Financial Holdings, Inc.
(Exact Name of Registrant as Specified in its Charter)
| Massachusetts | 0-17089 | 04-2976299 |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification Number) |
Ten Post Office Square, Boston, Massachusetts 02109
(Address of principal executive offices)
(617) 912-1900
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
| Item 8.01 | Other Events. |
On July 17, 2013, Boston Private Financial Holdings, Inc. announced its financial results for the quarter ended June 30, 2013. The information provided in this Item 8.01 includes certain financial results previously furnished but not filed for the quarter ended June 30, 2013, and is filed herewith.
Boston Private Financial Holdings, Inc. Reports Second Quarter 2013 Results
Second Quarter Highlights:
• | 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.
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.
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 (10) | $ | 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
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 | % | ||
| Tier I Common Equity/ Risk Weighted Assets * | 9.9 | % | 10.5 | % | 9.0 | % | ||
*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.
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.
###
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 | |||||
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 | |||||||||
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 | |||||||||
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 | |||||
| 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 | % | |||||
| 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 | % | |||||
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 (5) | 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: (6) | ||||||||||||||||||||||||||
| Commercial and Construction (5) | 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 (7): | ||||||||||||||||||||||||||
| 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 (5) | 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 | % | ||||||||||||||||||||
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 (5) | 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: (6) | ||||||||||||||||||
| Commercial and Construction (5) | 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 (7): | ||||||||||||||||||
| 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 (5) | 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 | % | ||||||||||||||
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
| (In Thousands) | June 30, 2013 | March 31, 2013 | June 30, 2012 | ||||||||
| LOAN DATA (8): | |||||||||||
| 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 | |||||
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
| (In Thousands) | June 30, 2013 | March 31, 2013 | June 30, 2012 | ||||||||
| CREDIT QUALITY (8): | |||||||||||
| 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 (9): | |||||||||||
| 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 (10): | |||||||||||
| 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 | ) | |||||
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. |
| (5) | Interest income on non-taxable investments and loans are presented on an FTE basis using the federal statutory rate of 35% for each period presented. |
| (6) | Includes Loans Held for Sale and Nonaccrual Loans. |
| (7) | Includes Deposits Held for Sale. |
| (8) | 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”. |
| (9) | Accruing substandard loans include loans that are classified as substandard but are still accruing interest income. The Bank may classify a loan as substandard where known information about possible credit problems of the related borrowers causes management to have doubts as to the ability of such borrowers to comply with the present repayment terms and which may result in disclosure of such loans as nonaccrual at some time in the future. |
| (10) | In addition to loans 30-89 days past due and accruing, at 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. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunder duly authorized.
| BOSTON PRIVATE FINANCIAL HOLDINGS, INC. | ||
| By: | /S/ DAVID J. KAYE | |
| Name: | David J. Kaye | |
| Title: | Chief Financial Officer | |
| Date: July 23, 2013 | ||