Exhibit 99.1
| | |
| FOR IMMEDIATE RELEASE | |  |
CONTACT:
Walter M. Pressey
President and Interim Chief Financial Officer
(617) 912-1921
Erica E. Smith
Investor Relations
(617) 912-3766
www.bostonprivate.com
BOSTON PRIVATE ANNOUNCES RESULTS FOR FIRST QUARTER 2007
Strong Organic Loan and AUM Growth
Boston, MA, April 25, 2007 – Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) today reported its first quarter 2007 cash earnings of $0.44 per diluted share, consistent with $0.44 in the first quarter of 2006. GAAP earnings for the first quarter 2007 were $0.34 per diluted share versus $0.35 per diluted share for the first quarter of 2006.
Included in the financial performance are the results from the acquisition of Anchor Holdings (“Anchor”), which Boston Private acquired on June 1, 2006. More detailed financial information regarding Anchor’s financial results is outlined later in this press release.
Highlights
| | v | Net Income for the first quarter was up 2.4% to $13.1 million, compared to $12.8 million a year ago. On a linked quarter basis, net income decreased $2.5 million, or 15.9%. On a same affiliate basis, net income was $12.1 million, a decline of 5.8% compared to the first quarter 2006. |
| | v | Total Revenues for the first quarter were up 12.4% to $92.0 million, compared to revenue of $81.9 million a year ago. On a linked quarter basis, revenues were up |
1
| | $1.1 million, or 1.2%. On a same affiliate basis, revenues were $83.9 million, a 2.5% increase compared to the first quarter 2006. |
| | v | Net Interest Incomewas $43.4 million in the first quarter of 2007, compared to $43.6 in the first quarter 2006 and consistent with $43.4 million recorded in the fourth quarter of 2006. |
| | o | Organic growth increased net interest income by $1.4 million on a linked quarter basis. |
| | o | Increased cost of funds, partially offset by an increased yield on earning assets, decreased net interest income by $1.4 million on a linked quarter basis. |
| | o | Net interest margin, including the impact of trust preferred interest expense, was 3.50%, 52 basis points lower than the 2006 level of 4.02%, and 8 basis points lower from 3.58% in the fourth quarter. |
| | o | Core net interest margin, excluding the trust preferred interest expense decreased to 3.76%, 55 basis points lower than the first quarter 2006 level of 4.31%, and 9 basis points lower from 3.85% in the fourth quarter 2006. |
| | v | Allowance for loan losses,including off-balance sheet risk, as a percentage of total loans declined 1 basis point from 1.14% to 1.13% in the quarter. |
| | v | Wealth Advisory Fee Income increased 13.3% over the prior quarter to $7.3 million, primarily driven by continued organic growth of new client relationships and fee increases. Wealth advisory fee income increased 2.6% on a linked quarter basis. |
| | v | Investment Management Fee Income for the first quarter totaled $37.7 million, an increase of 30.9% over the same quarter 2006. The increase was due predominantly to the addition of Anchor’s $8 million investment management fee income. On a same affiliate basis, investment management fee income was $29.7 million, an increase of 3.0%. |
| | v | Total Operating Expenses for the first quarter were up 16.5% to $69.5 million, compared to $59.7 million in the same quarter a year ago. The increase was due predominantly to the addition of Anchor’s operating expenses and continued growth. On a same affiliate basis, operating expenses were $63.7 million, an increase of 6.7%. |
| | v | Operating Leveragefrom the first quarter of 2006 to the first quarter of 2007 declined 4.0%. Net interest income, representing approximately half of the |
2
| | company’s revenue, was flat year over year due to 52 basis points of compression of the net interest margin, while loans increased by 18.6% and deposits increased by 7.8%. |
| | v | Total Balance Sheet Assets at March 31, 2007 were $5.9 billion compared to $5.2 billion, or a 12.2% increase compared to a year ago due to strong organic loan growth. On a linked quarter basis, total balance sheet assets grew by 1.9%. |
| | v | Total Loans increased $700 million, or 18.6%, from March 31, 2006, to $4.5 billion from $3.8 billion. On a linked quarter basis, total loans grew by 3.4%, an annualized growth rate of 13.6%. |
| | v | Total Deposits increased $297 million, or 7.8%, from March 31, 2006, to $4.1 billion from $3.8 billion. On a linked quarter basis, deposits grew by 0.6%, an annualized growth rate of 2.4%. |
| | v | Total Assets Under Management/Advisoryincreased 3.5% to $30.9 billion from consolidated affiliates on a linked quarter basis. Total assets under management / advisory from consolidated and unconsolidated affiliates increased from $32.7 billion to $33.9 billion, or 3.7% on a linked quarter basis, an annualized growth rate of 14.8%. On a same affiliate basis, total assets under management / advisory, including unconsolidated affiliates, increased to $26.9 billion, a year over year growth rate of 6.1%. On a linked quarter basis, market action from our consolidated banks and investment managers contributed $629 million and net new inflows contributed $156 million. |
Timothy L. Vaill, Chairman and Chief Executive Officer, said, “Our results in the first quarter were driven by strong loan growth in each of our private banks, while our wealth advisors and investment management firms experienced the benefits of positive market action and net inflows of funds. I am gratified that during this challenging yield curve environment we have produced consistent levels of net interest income for six quarters despite the fact that our net interest margin has declined 52 basis points, or 12.9 percent. We significantly increased our earnings capacity during this challenging timeframe despite the fact that half of our total revenues have not increased. While we see no immediate interest rate relief, we believe that we have built in long-term profitable growth.”
“We continue to be pleased with our solid credit quality and our client base. Fundamentally, our financial results continue to benefit from our strategy of diversification by business, product, client type, distribution channel, and geography.
3
In addition, we are delighted to report that the investments we have made in new private banking offices are beginning to pay dividends. Specifically, two of the six new offices are now profitable, two are approaching break even and the two newest offices, one of which will open in May, are making great progress. Year over year organic deposit growth for the period ended March 31, 2007 was approximately $300 million. Approximately 25% of that growth was contributed by five of the six new offices in which we have invested. In the aggregate these offices have produced more than $80 million of new deposits. Our success reinforces the acceptance of our business model and the vitality of the wealth management market segment,” stated Walter M. Pressey, President and Interim Chief Financial Officer.
Strategic Expansion Developments
On February 27, 2007, Boston Private announced the signing of a definitive agreement to acquire Charter Financial, a holding company for Charter Bank, which is a Washington-chartered commercial bank (referred together with Charter Financial as Charter Bank). The Company anticipates that the acquisition will close early in the third quarter of 2007.
On April 16, 2007, Boston Private announced that First Private Bank & Trust had entered into a strategic partnership with Wilshire Associates to provide high net worth clients with sophisticated investment services.
Dividend Payment Continues
Concurrent with the release of the first quarter 2007 earnings, the Board of Directors of Boston Private Financial Holdings declared a cash dividend to shareholders of $0.09 per share, reflecting the quarterly earnings performance. The record date for this dividend is May 1, 2007 and the payment date is May 15, 2007.
Cash Earnings
Boston Private calculates its cash earnings by adjusting net income to exclude net amortization of intangibles and the impact of certain non-cash share based compensation plans, and includes related tax benefits that result from purchase accounting. In addition to GAAP earnings, the Company believes its cash earnings reports the additional value to shareholders generated by purchase accounting adjustments and the non-cash share based compensation plans. (A detailed reconciliation table is attached.)
4
Conference Call
Management will host a conference call to review the Company’s financial performance and business developments on April 26, 2007 at 9 a.m. Eastern time. Interested parties may join the call by dialing 800-867-0731 and the password required is “Boston”. The call will be simultaneously web cast and may be accessed on the Internet by linking throughwww.bostonprivate.com or Yahoo! Finance. A continuous telephone replay will be available beginning at 11:30 a.m. Eastern time. The replay telephone number is (800) 388-9064.
Boston Private Wealth Management Group
Boston Private is a financial services company which owns independently-operated affiliates located in key geographic regions of the U.S. Boston Private’s affiliates offer private banking, wealth advisory and investment management services to the high net worth marketplace, selected businesses and institutions. The Company’s strategy is to enter new markets primarily through selected acquisitions, and then expand its wealth management business by way of organic growth. It makes investments in mid-size firms in demographically attractive areas, forming geographic clusters that represent the firm’s core competencies. Boston Private provides continuing assistance to its affiliates with strategic matters, marketing, compliance and operations. For more information about Boston Private, visit the Company’s web site atwww.bostonprivate.com
This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company’s management uses these non-GAAP measures in its analysis of the Company’s performance. These measures typically adjust GAAP performance measures to exclude the effects of charges and expenses related to the consummation of mergers and acquisitions, as well as excluding other significant gains or losses that are unusual in nature. Also included in these non-GAAP measures are net amortization of intangibles, tax benefits related to purchase accounting, stock options and ESPP expense. Because these items and their impact on the Company’s performance are difficult to predict, management believes that presentations of financial measures excluding the impact of these items provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s businesses. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies.
5
Statements in this press release that are not historical facts are forward-looking statements as defined by United States securities laws. Forward-looking statements involve risks and uncertainties. These statements include, but are not limited to,prospects for long term financial performance, the impact on the Company’s results of improved market conditions and prevailing and future interest rates, prospects for growth in balance sheet assets and assets under management and advisory 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 Boston Private’s control and could cause actual results to differ materially from those set forth in the forward-looking statements. Factors that could cause actual results to differ materially from those set forth in the forward-looking statements include, among others, interest rate compression which may adversely impact net interest income; competitive pressures from other financial institutions which, together with other factors, may affect the Company’s growth and financial performance; the effects of national and local economic conditions; and the risk that goodwill and intangibles recorded in the Company’s financial statements will become impaired; the risk that the business of Charter will not be integrated successfully with Boston Private’s; as well as the other risks and uncertainties detailed in Boston Private’s Annual Report on Form 10-K and other filings submitted to the Securities and Exchange Commission. Boston Private 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.
6
Boston Private Financial Holdings, Inc.
Selected Financial Data
(In Thousands, except share data)
(Unaudited)
| | | | | | | | | | | | | | | |
| | | | | | | | | Acquisition | | Same
Affiliates(6) | |
| | | March 31, | | | March 31, | | | March 31, | | March 31, | |
| FINANCIAL DATA: | | 2007 | | | 2006 | | | 2007 | | 2007 | |
Total Balance Sheet Assets | | $ | 5,871,510 | | | $ | 5,231,264 | | | $ | 98,189 | | $ | 5,773,321 | |
Stockholders’ Equity | | | 651,282 | | | | 555,690 | | | | 33,135 | | | 618,147 | |
Tangible Capital: | | | | | | | | | | | | | | | |
Boston Private Bank & Trust | | | 161,414 | | | | 141,979 | | | | — | | | 161,414 | |
Borel Private Bank & Trust | | | 96,270 | | | | 80,211 | | | | — | | | 96,270 | |
First Private Bank & Trust | | | 46,700 | | | | 41,694 | | | | — | | | 46,700 | |
Gibraltar Private Bank & Trust | | | 81,756 | | | | 68,233 | | | | — | | | 81,756 | |
Investment Securities | | | 511,985 | | | | 585,679 | | | | 407 | | | 511,578 | |
Goodwill | | | 332,462 | | | | 286,595 | | | | 38,501 | | | 293,961 | |
Intangible Assets | | | 121,782 | | | | 94,681 | | | | 34,956 | | | 86,826 | |
| | | | |
Commercial and Construction Loans | | | 2,608,172 | | | | 2,109,229 | | | | — | | | 2,608,172 | |
Residential Mortgage Loans | | | 1,581,829 | | | | 1,405,984 | | | | — | | | 1,581,829 | |
Home Equity and Other Consumer Loans | | | 268,956 | | | | 243,565 | | | | — | | | 268,956 | |
| | | | | | | | | | | | | | | |
Total Loans | | | 4,458,957 | | | | 3,758,778 | | | | — | | $ | 4,458,957 | |
| | | | |
Loans Held for Sale | | | 8,911 | | | | 2,842 | | | | — | | | 8,911 | |
| | | | |
Allowance for Loan Losses and Off-Balance Sheet Risk | | | 50,303 | | | | 43,511 | | | | — | | | 50,303 | |
Non-performing Loans | | | 9,564 | | | | 4,901 | | | | — | | | 9,564 | |
Repossessed Assets, Net | | | 475 | | | | — | | | | — | | | 475 | |
Total Non-performing Assets | | | 10,039 | | | | 4,901 | | | | — | | | 10,039 | |
Deposits | | | 4,101,432 | | | | 3,804,122 | | | | — | | | 4,101,432 | |
Borrowings | | | 1,012,088 | | | | 762,436 | | | | — | | | 1,012,088 | |
| | | | |
Book Value Per Share | | $ | 17.72 | | | $ | 15.80 | | | | | | | | |
Market Price Per Share | | $ | 27.92 | | | $ | 33.79 | | | | | | | | |
| | | | |
ASSETS UNDER MANAGEMENT AND ADVISORY: | | | | | | | | | | | | | | | |
Westfield Capital Management | | $ | 10,521,000 | | | $ | 9,200,000 | | | | — | | $ | 10,521,000 | |
Boston Private Bank & Trust | | | 2,499,000 | | | | 2,352,000 | | | | — | | | 2,499,000 | |
Sand Hill Advisors | | | 1,284,000 | | | | 1,143,000 | | | | — | | | 1,284,000 | |
Boston Private Value Investors | | | 915,000 | | | | 904,000 | | | | — | | | 915,000 | |
RINET Company | | | 1,285,000 | | | | 1,203,000 | | | | — | | | 1,285,000 | |
Borel Private Bank & Trust | | | 707,000 | | | | 693,000 | | | | — | | | 707,000 | |
Dalton, Greiner, Hartman, Maher & Co. | | | 2,014,000 | | | | 3,489,000 | | | | — | | | 2,014,000 | |
KLS Professional Advisors Group | | | 3,939,000 | | | | 3,335,000 | | | | — | | | 3,939,000 | |
Gibraltar Private Bank & Trust | | | 959,000 | | | | 802,000 | | | | | | | 959,000 | |
Anchor Capital Holdings | | | 6,976,000 | | | | — | | | | 6,976,000 | | | — | |
First Private Bank & Trust (5) | | | 15,000 | | | | — | | | | — | | | 15,000 | |
Less: Inter-company Relationship | | | (255,000 | ) | | | (222,000 | ) | | | — | | | (255,000 | ) |
| | | | | | | | | | | | | | | |
Consolidated Affiliate Assets Under Management and Advisory | | $ | 30,859,000 | | | $ | 22,899,000 | | | | 6,976,000 | | $ | 23,883,000 | |
| | | | |
Coldstream Capital Management | | | 1,110,000 | | | | 935,000 | | | | — | | | 1,110,000 | |
Bingham, Osborn, & Scarborough | | | 1,930,000 | | | | 1,535,000 | | | | — | | | 1,930,000 | |
| | | | | | | | | | | | | | | |
Total Unconsolidated Assets Under Management and Advisory | | $ | 33,899,000 | | | $ | 25,369,000 | | | $ | 6,976,000 | | $ | 26,923,000 | |
| | | | |
FINANCIAL RATIOS: | | | | | | | | | | | | | | | |
Stockholders’Equity/Total Assets | | | 11.09 | % | | | 10.62 | % | | | | | | | |
Non-performing Loans/Total Loans | | | 0.21 | % | | | 0.13 | % | | | | | | | |
Allowance for Loan Losses and Off-Balance Sheet Risk/Total Loans | | | 1.13 | % | | | 1.16 | % | | | | | | | |
Tangible Capital/ Tangible Assets | | | 3.64 | % | | | 3.60 | % | | | | | | | |
| | | | |
| | | | | | | | | Acquisition | | Same
Affiliates(7) | |
| | | Three Months Ended | | | | | | |
| | | March 31, | | | March 31, | | | March 31, | | March 31, | |
| OPERATING RESULTS: | | 2007 | | | 2006 | | | 2007 | | 2007 | |
Net Interest Income—on a Fully Taxable Equivalent Basis (FTE) | | $ | 45,019 | | | $ | 44,903 | | | $ | 19 | | $ | 45,000 | |
FTE Adjustment | | | 1,635 | | | | 1,335 | | | | — | | | 1,635 | |
| | | | | | | | | | | | | | | |
Net Interest Income | | | 43,3840 | | | | 43,568 | | | | 19 | | | 43,365 | |
| | | | | | | | | | | | | | | |
Investment Management and Trust Fees: | | | | | | | | | | | | | | | |
Westfield Capital Management | | | 16,705 | | | | 13,739 | | | | — | | | 16,705 | |
Boston Private Bank & Trust | | | 3,685 | | | | 3,417 | | | | — | | | 3,685 | |
Boston Private Value Investors | | | 1,765 | | | | 1,632 | | | | — | | | 1,765 | |
Borel Private Bank & Trust | | | 1,127 | | | | 986 | | | | — | | | 1,127 | |
Gibraltar Private Bank & Trust | | | 1,839 | | | | 1,495 | | | | — | | | 1,839 | |
Dalton, Greiner, Hartman, Maher & Co. | | | 4,528 | | | | 7,544 | | | | — | | | 4,528 | |
First Private Bank & Trust | | | 22 | | | | — | | | | — | | | 22 | |
Anchor Capital Holdings | | | 8,036 | | | | — | | | | 8,036 | | | — | |
| | | | | | | | | | | | | | | |
Total Investment Management Fees | | | 37,707 | | | | 28,813 | | | | 8,036 | | | 29,671 | |
Wealth Advisory Fees: | | | | | | | | | | | | | | | |
RINET Company | | | 2,127 | | | | 1,940 | | | | — | | | 2,127 | |
Sand Hill Advisors | | | 1,706 | | | | 1,542 | | | | | | | 1,706 | |
KLS Professional Advisors Group | | | 3,385 | | | | 2,878 | | | | — | | | 3,385 | |
Other | | | 48 | | | | 51 | | | | — | | | 48 | |
| | | | | | | | | | | | | | | |
Total Wealth Advisory Fees | | | 7,266 | | | | 6,411 | | | | — | | | 7,266 | |
| | | | | | | | | | | | | | | |
Other Fees | | | 2,450 | | | | 1,829 | | | | 66 | | | 2,384 | |
| | | | | | | | | | | | | | | |
Total Fees | | | 47,423 | | | | 37,053 | | | | 8,102 | | | 39,321 | |
| | | | | | | | | | | | | | | |
Earnings in Equity Investments | | | 683 | | | | 772 | | | | — | | | 683 | |
Gain on Sale of Loans, Net | | | 532 | | | | 457 | | | | — | | | 532 | |
Gain on Sale of Investments, Net | | | 3 | | | | — | | | | 3 | | | — | |
| | | | | | | | | | | | | | | |
Total Fees and Other Income | | | 48,641 | | | | 38,282 | | | | 8,105 | | | 40,536 | |
| | | | | | | | | | | | | | | |
Total Revenue | | | 92,025 | | | | 81,850 | | | | 8,124 | | | 83,901 | |
| | | | | | | | | | | | | | | |
Provision for Loan Losses | | | 1,176 | | | | 1,163 | | | | — | | | 1,176 | |
| | | | | | | | | | | | | | | |
Salaries and Employee Benefits | | | 46,601 | | | | 39,375 | | | | 4,469 | | | 42,132 | |
Occupancy and Equipment | | | 7,874 | | | | 6,558 | | | | 181 | | | 7,693 | |
Professional Services | | | 3,206 | | | | 2,808 | | | | 25 | | | 3,181 | |
Marketing and Business Development | | | 2,596 | | | | 2,336 | | | | 166 | | | 2,430 | |
Contract Services and Processing | | | 1,435 | | | | 1,230 | | | | 59 | | | 1,376 | |
Amortization of Intangibles | | | 3,549 | | | | 2,875 | | | | 859 | | | 2,690 | |
Other | | | 4,282 | | | | 4,517 | | | | 87 | | | 4,195 | |
| | | | | | | | | | | | | | | |
Total Operating Expense | | | 69,543 | | | | 59,699 | | | | 5,846 | | | 63,697 | |
Minority Interest | | | 914 | | | | 814 | | | | 453 | | | 461 | |
| | | | | | | | | | | | | | | |
Income Before Income Taxes | | | 20,392 | | | | 20,174 | | | | 1,825 | | | 18,567 | |
Income Tax Expense | | | 7,258 | | | | 7,346 | | | | 773 | | | 6,485 | |
| | | | | | | | | | | | | | | |
Net Income | | $ | 13,134 | | | $ | 12,828 | | | $ | 1,052 | | $ | 12,082 | |
Boston Private Financial Holdings, Inc.
Selected Financial Data
(In Thousands, except share data)
(Unaudited)
| | | | | | | | |
| | | Three Months Ended | |
| | | March 31, | | | March 31, | |
| RECONCILIATION OF GAAP EARNINGS | | 2007 | | | 2006 | |
TO CASH EARNINGS: | | | | | | | | |
| | |
Net Income (GAAP Basis) | | $ | 13,134 | | | $ | 12,828 | |
| | |
Cash Basis Earnings (1) | | | | | | | | |
Book Amortization of Purchased Intangibles, Net of Tax | | | 1,912 | | | | 1,627 | |
Cash Benefit of Tax Deductions from Purchased Intangibles & Goodwill | | | 1,098 | | | | 1,023 | |
Stock options and ESPP, Net of Tax | | | 1,121 | | | | 900 | |
| | | | | | | | |
Total Cash Basis Adjustment | | $ | 4,131 | | | $ | 3,550 | |
| | | | | | | | |
Cash Basis Earnings | | $ | 17,265 | | | $ | 16,378 | |
| | | | | | | | |
| |
| | | Three Months Ended | |
| | | March 31, | | | March 31, | |
| PER SHARE DATA: (In thousands, except per share data) | | 2007 | | | 2006 | |
| | |
Calculation of Net Income for EPS: | | | | | | | | |
Net Income as reported and for basic EPS | | $ | 13,134 | | | $ | 12,828 | |
Interest on convertible trust preferred securities, net of tax | | | 750 | | | | 765 | |
| | | | | | | | |
Net Income for diluted EPS | | $ | 13,884 | | | $ | 13,593 | |
| | |
Calculation of Average Shares Outstanding: | | | | | | | | |
Weighted average basic shares | | | 36,277 | | | | 34,621 | |
Dilutive effect of: | | | | | | | | |
Stock Options, Stock Grants, and Other | | | 1,674 | | | | 1,425 | |
Convertible trust preferred securities | | | 3,184 | | | | 3,182 | |
| | | | | | | | |
Dilutive potential common shares | | | 4,858 | | | | 4,607 | |
Weighted Average Diluted Shares | | | 41,135 | | | | 39,228 | |
| | |
Earnings per Share: | | | | | | | | |
Basic | | $ | 0.36 | | | $ | 0.37 | |
Diluted | | $ | 0.34 | | | $ | 0.35 | |
| | |
RECONCILIATION OF GAAP EPS TO CASH EPS: | | | | | | | | |
(on a Diluted Basis) | | | | | | | | |
| | |
Earnings Per Share (GAAP Basis) | | $ | 0.34 | | | $ | 0.35 | |
Cash Basis Adjustment | | $ | 0.10 | | | $ | 0.09 | |
| | | | | | | | |
Cash Basis Earnings Per Diluted Share | | $ | 0.44 | | | $ | 0.44 | |
| | | | | | | | |
| |
| | | Three Months Ended | |
| | | March 31, | | | March 31, | |
| | | 2007 | | | 2006 | |
OPERATING RATIOS & STATISTICS: | | | | | | | | |
Return on Average Equity | | | 8.17 | % | | | 9.34 | % |
Return on Average Assets | | | 0.91 | % | | | 1.01 | % |
Net Interest Margin | | | 3.50 | % | | | 4.02 | % |
Core Net Interest Margin(2) | | | 3.76 | % | | | 4.31 | % |
Total Fees and Other Income/Total Revenue | | | 52.86 | % | | | 46.77 | % |
Efficiency Ratio | | | 71.39 | % | | | 69.33 | % |
Net Loans Charged-off | | $ | 8 | | | $ | 527 | |
| | |
RECONCILIATION OF NIM TO CORE NIM | | | | | | | | |
Net Interest Margin | | | 3.50 | % | | | 4.02 | % |
Effect of Trust Preferred, Net | | | 0.26 | % | | | 0.29 | % |
Core Net Interest Margin(2) | | | 3.76 | % | | | 4.31 | % |
| | |
CASH OPERATING RATIOS: | | | | | | | | |
Return on Average Equity (3) | | | 10.74 | % | | | 11.92 | % |
Return on Average Assets (4) | | | 1.19 | % | | | 1.29 | % |
| | | | | | | | |
Boston Private Financial Holdings, Inc.
Selected Financial Data
(In Thousands, except share data)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Three Months Ended | |
| AVERAGE BALANCE SHEET: | | March 31, 2007 | | | March 31, 2006 | |
| | | Average | | | Income/ | | | Yield/ | | | Average | | | Income/ | | | Yield/ | |
| AVERAGE ASSETS: | | Balance | | | Expense | | | Rate | | | Balance | | | Expense | | | Rate | |
Earnings Assets | | | | | | | | | | | | | | | | | | | | | | |
Cash and investments | | $ | 691,090 | | | $ | 7,313 | | | 4.83 | % | | $ | 768,578 | | | $ | 7,041 | | | 4.13 | % |
Loans | | | | | | | | | | | | | | | | | | | | | | |
Commercial and Construction | | | 2,540,403 | | | | 48,527 | | | 7.74 | % | | | 2,047,660 | | | | 37,534 | | | 7.42 | % |
Residential Mortgage | | | 1,588,980 | | | | 22,834 | | | 5.75 | % | | | 1,385,586 | | | | 19,075 | | | 5.51 | % |
Home Equity and Other Consumer | | | 265,736 | | | | 5,163 | | | 7.72 | % | | | 244,125 | | | | 4,536 | | | 7.43 | % |
| | | | | | | | | | | | | | | | | | | | | | |
Total Earning Assets | | | 5,086,209 | | | | 83,837 | | | 7.02 | % | | | 4,445,949 | | | | 68,186 | | | 6.26 | % |
| | | | | | | | | | | | | | | | | | | | | | |
Allowance for Loan Losses | | | (43,816 | ) | | | | | | | | | | (38,201 | ) | | | | | | | |
Cash and due From Banks | | | 56,127 | | | | | | | | | | | 64,673 | | | | | | | | |
Other Assets | | | 703,881 | | | | | | | | | | | 599,103 | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
TOTAL AVERAGE ASSETS | | $ | 5,802,401 | | | | | | | | | | $ | 5,071,524 | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
AVERAGE LIABILITIES AND STOCKHOLDERS’ EQUITY: | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Interest-Bearing Liabilities: | | | | | | | | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | | | | | | | | |
Savings and NOW | | $ | 550,726 | | | $ | 2,930 | | | 2.16 | % | | $ | 449,269 | | | $ | 1,207 | | | 1.09 | % |
Money Market | | | 1,874,556 | | | | 15,710 | | | 3.40 | % | | | 1,744,204 | | | | 9,298 | | | 2.16 | % |
Certificate of Deposits | | | 888,152 | | | | 10,272 | | | 4.69 | % | | | 698,943 | | | | 6,017 | | | 3.49 | % |
| | | | | | | | | | | | | | | | | | | | | | |
Total Deposits | | | 3,313,434 | | | | 28,912 | | | 3.54 | % | | | 2,892,416 | | | | 16,522 | | | 2.32 | % |
Junior Subordinated Debentures | | | 234,021 | | | | 3,293 | | | 5.63 | % | | | 234,021 | | | | 3,258 | | | 5.57 | % |
FHLB Borrowings and Other | | | 741,425 | | | | 8,248 | | | 4.47 | % | | | 527,970 | | | | 4,838 | | | 3.60 | % |
| | | | | | | | | | | | | | | | | | | | | | |
Total Interest-Bearing Liabilities | | | 4,288,880 | | | | 40,453 | | | 3.81 | % | | | 3,654,407 | | | | 24,618 | | | 2.72 | % |
| | | | | | | | | | | | | | | | | | | | | | |
Non-interest Bearing Demand Deposits | | | 729,887 | | | | | | | | | | | 729,390 | | | | | | | | |
Payables and Other Liabilities | | | 140,719 | | | | | | | | | | | 138,102 | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Total Liabilities | | | 5,159,486 | | | | | | | | | | | 4,521,899 | | | | | | | | |
Stockholders’ Equity | | | 642,915 | | | | | | | | | | | 549,625 | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
TOTAL AVERAGE LIABILITIES & STOCKHOLDERS’EQUITY | | $ | 5,802,401 | | | | | | | | | | $ | 5,071,524 | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Net Interest Income | | | | | | $ | 43,384 | | | | | | | | | | $ | 43,568 | | | | |
Net Interest Margin | | | | | | | 3.50 | % | | | | | | | | | | 4.02 | % | | | |
| | | | | | | | |
| | | March 31, | | | December 31, | |
| | | 2007 | | | 2006 | |
FINANCIAL DATA: | | | | | | | | |
| | |
Total Balance Sheet Assets | | $ | 5,871,510 | | | $ | 5,763,544 | |
Stockholders’ Equity | | | 651,282 | | | | 635,197 | |
Tangible Capital: | | | | | | | | |
Boston Private Bank & Trust | | | 161,414 | | | | 160,639 | |
Borel Private Bank & Trust | | | 96,270 | | | | 91,300 | |
First Private Bank & Trust | | | 46,700 | | | | 48,388 | |
Gibraltar Private Bank & Trust | | | 81,756 | | | | 78,692 | |
Investment Securities | | | 511,985 | | | | 577,903 | |
Goodwill | | | 332,462 | | | | 335,633 | |
Intangible Assets | | | 121,782 | | | | 125,331 | |
| | |
Commercial and Construction Loans | | | 2,608,172 | | | | 2,496,234 | |
Residential Mortgage Loans | | | 1,581,829 | | | | 1,546,965 | |
Home Equity and Other Consumer Loans | | | 268,956 | | | | 268,053 | |
| | | | | | | | |
Total Loans | | | 4,458,957 | | | | 4,311,252 | |
| | |
Loans Held for Sale | | | 8,911 | | | | 5,224 | |
Allowance for Loan Losses and Off-Balance Sheet Risk | | | 50,303 | | | | 48,973 | |
Non-performing Loans | | | 9,564 | | | | 9,999 | |
Repossessed Assets, Net | | | 475 | | | | 550 | |
Total Non-performing Assets | | | 10,039 | | | | 10,549 | |
Deposits | | | 4,101,432 | | | | 4,077,831 | |
Borrowings | | | 1,012,088 | | | | 914,529 | |
| | |
Book Value Per Share | | $ | 17.72 | | | $ | 17.36 | |
Market Price Per Share | | $ | 27.92 | | | $ | 28.21 | |
| | |
ASSETS UNDER MANAGEMENT AND ADVISORY: | | | | | | | | |
| | |
Westfield Capital Management | | $ | 10,521,000 | | | $ | 10,102,000 | |
Boston Private Bank & Trust | | | 2,499,000 | | | | 2,369,000 | |
Sand Hill Advisors | | | 1,284,000 | | | | 1,252,000 | |
Boston Private Value Investors | | | 915,000 | | | | 961,000 | |
RINET Company | | | 1,285,000 | | | | 1,262,000 | |
Borel Private Bank & Trust | | | 707,000 | | | | 731,000 | |
Dalton, Greiner, Hartman, Maher & Co. | | | 2,014,000 | | | | 2,302,000 | |
KLS Professional Advisors Group | | | 3,939,000 | | | | 3,727,000 | |
Gibraltar Private Bank & Trust | | | 959,000 | | | | 907,000 | |
Anchor Capital Holdings | | | 6,976,000 | | | | 6,444,000 | |
First Private Bank & Trust | | | 15,000 | | | | 5,000 | |
Less: Inter-company Relationship | | | (255,000 | ) | | | (238,000 | ) |
| | | | | | | | |
Consolidated Affiliate Assets Under Management and Advisory | | $ | 30,859,000 | | | $ | 29,824,000 | |
Coldstream Capital Management | | | 1,110,000 | | | | 1,090,000 | |
Bingham, Osborn, & Scarborough | | | 1,930,000 | | | | 1,777,000 | |
| | | | | | | | |
Total Unconsolidated Assets Under Management and Advisory | | $ | 33,899,000 | | | $ | 32,691,000 | |
| | |
FINANCIAL RATIOS: | | | | | | | | |
| | |
Stockholders’ Equity/Total Assets | | | 11.09 | % | | | 11.02 | % |
Nonperforming Loans/Total Loans | | | 0.21 | % | | | 0.23 | % |
Allowance for Loan Losses and Off-Balance Sheet Risk/Total Loans | | | 1.13 | % | | | 1.14 | % |
Tangible Capital/Tangible Assets | | | 3.64 | % | | | 3.29 | % |
Boston Private Financial Holdings, Inc.
Selected Financial Data
(In Thousands, except share data)
(Unaudited)
| | | | | | | | |
| | | Three Months Ended | |
| | | March 31, | | | December 31, | |
| OPERATING RESULTS: | | 2007 | | | 2006 | |
Net Interest Income—on a Fully Taxable Equivalent Basis (FTE) | | $ | 45,019 | | | $ | 44,960 | |
FTE Adjustment | | | 1,635 | | | | 1,575 | |
| | | | | | | | |
Net Interest Income | | | 43,384 | | | | 43,385 | |
| | | | | | | | |
Investment Management and Trust Fees: | | | | | | | | |
Westfield Capital Management | | | 16,705 | | | | 15,567 | |
Boston Private Bank & Trust | | | 3,685 | | | | 3,578 | |
Boston Private Value Investors | | | 1,765 | | | | 1,748 | |
Borel Private Bank & Trust | | | 1,127 | | | | 1,130 | |
Gibraltar Private Bank & Trust | | | 1,839 | | | | 1,764 | |
Dalton, Greiner, Hartman, Maher & Co. | | | 4,528 | | | | 5,043 | |
First Private Bank & Trust | | | 22 | | | | 5 | |
Anchor Capital Holdings | | | 8,036 | | | | 7,356 | |
| | | | | | | | |
Total Investment Management Fees | | | 37,707 | | | | 36,191 | |
Wealth Advisory Fees | | | | | | | | |
RINET Company | | | 2,127 | | | | 2,135 | |
Sand Hill Advisors | | | 1,706 | | | | 1,556 | |
KLS Professional Advisors Group | | | 3,385 | | | | 3,336 | |
Other | | | 48 | | | | 55 | |
| | | | | | | | |
Total Wealth Advisory Fees | | | 7,266 | | | | 7,082 | |
| | | | | | | | |
Other Fees | | | 2,450 | | | | 2,312 | |
| | | | | | | | |
Total Fees | | | 47,423 | | | | 45,585 | |
| | | | | | | | |
Earnings in Equity Investments | | | 683 | | | | 1,515 | |
Gain on Sale of Loans, Net | | | 532 | | | | 434 | |
Gain / (Loss) on Sale of Investments, Net | | | 3 | | | | — | |
| | | | | | | | |
Total Fees and Other Income | | | 48,641 | | | | 47,534 | |
| | | | | | | | |
Total Revenue | | | 92,025 | | | | 90,919 | |
| | | | | | | | |
Provision for Loan Losses | | | 1,176 | | | | 987 | |
| | | | | | | | |
Salaries and Benefits | | | 46,601 | | | | 41,611 | |
Occupancy and Equipment | | | 7,874 | | | | 7,900 | |
Professional Services | | | 3,206 | | | | 3,651 | |
Marketing and Business Development | | | 2,596 | | | | 2,169 | |
Contract Services and Processing | | | 1,435 | | | | 1,321 | |
Amortization of Intangibles | | | 3,549 | | | | 3,874 | |
Other | | | 4,282 | | | | 4,512 | |
| | | | | | | | |
Total Operating Expense | | | 69,543 | | | | 65,038 | |
Minority Interest | | | 914 | | | | 1,020 | |
| | | | | | | | |
Income Before Income Taxes | | | 20,392 | | | | 23,874 | |
Income Tax Expense | | | 7,258 | | | | 8,266 | |
| | | | | | | | |
Net Income | | $ | 13,134 | | | $ | 15,608 | |
| | | | | | | | |
| |
| | | Three Months Ended | |
| | | March 31, | | | December 31, | |
| RECONCILIATION OF GAAP EARNINGS TO CASH EARNINGS: | | 2007 | | | 2006 | |
Net Income (GAAP Basis) | | $ | 13,134 | | | $ | 15,608 | |
| | |
Cash Basis Earnings (1) | | | | | | | | |
Book Amortization of Purchased Intangibles, Net of Tax | | | 1,912 | | | | 2,091 | |
Cash Benefit of Tax Deductions from Purchased Intangibles & Goodwill | | | 1,098 | | | | 1,138 | |
Stock options and ESPP, Net of Tax | | | 1,121 | | | | 830 | |
| | | | | | | | |
Total Cash Basis Adjustment | | | 4,131 | | | | 4,059 | |
| | | | | | | | |
Cash Basis Earnings | | $ | 17,265 | | | $ | 19,667 | |
| | | | | | | | |
| |
| | | Three Months Ended | |
| | | March 31, | | | December 31, | |
| | | 2007 | | | 2006 | |
PER SHARE DATA: (In thousands, except per share data) | | | | | | | | |
| | |
Calculation of Net Income for EPS: | | | | | | | | |
Net Income as reported and for basic EPS | | $ | 13,134 | | | $ | 15,608 | |
Interest on convertible trust preferred securities, net of tax | | | 750 | | | | 765 | |
| | | | | | | | |
Net Income for diluted EPS | | $ | 13,884 | | | $ | 16,373 | |
| | |
Calculation of Average Shares Outstanding: | | | | | | | | |
Weighted average basic shares | | | 36,277 | | | | 36,064 | |
Dilutive effect of: | | | | | | | | |
Stock Options, Stock Grants, and Other | | | 1,674 | | | | 1,560 | |
Convertible trust preferred securities | | | 3,184 | | | | 3,183 | |
| | | | | | | | |
Dilutive potential common shares | | | 4,858 | | | | 4,743 | |
Weighted Average Diluted Shares | | | 41,135 | | | | 40,807 | |
| | |
Earnings per Share: | | | | | | | | |
Basic | | $ | 0.36 | | | $ | 0.43 | |
Diluted | | $ | 0.34 | | | $ | 0.40 | |
| | |
RECONCILIATION OF GAAP EPS TO CASH EPS: | | | | | | | | |
(on a Diluted Basis) | | | | | | | | |
| | |
Earnings Per Share (GAAP Basis) | | $ | 0.34 | | | $ | 0.40 | |
Cash Basis Adjustment | | $ | 0.10 | | | $ | 0.10 | |
| | | | | | | | |
Cash Basis Earnings Per Diluted Share | | $ | 0.44 | | | $ | 0.50 | |
| | | | | | | | |
| | |
OPERATING RATIOS & STATISTICS: | | | | | | | | |
| | |
Return on Average Equity | | | 8.17 | % | | | 9.96 | % |
Return on Average Assets | | | 0.91 | % | | | 1.10 | % |
Net Interest Margin | | | 3.50 | % | | | 3.58 | % |
Core Net Interest Margin (2) | | | 3.76 | % | | | 3.85 | % |
Total Fees and Other Income/Total Revenue | | | 52.86 | % | | | 52.28 | % |
Efficiency Ratio | | | 71.39 | % | | | 67.55 | % |
Net Loans Charged-off / (Recovered) | | $ | 8 | | | ($ | 39 | ) |
Boston Private Financial Holdings, Inc.
Selected Financial Data
(In Thousands, except share data)
(Unaudited)
| (1) | The Company calculates its cash earnings by adjusting net income to exclude the amortization of the purchased intangibles (net of tax), includes the tax benefit on the portion of the purchase price which is deductible over a 15 year life, and excludes certain non-cash share based compensation plans (net of tax). The tax savings are deferred under GAAP accounting but are included in cash earnings since the tax savings (lower tax payment) will be retained unless the acquired company is sold. The Company uses certain non-GAAP financial measures, such as Cash Earnings, to provide information for investors to effectively analyze financial trends of ongoing business activities. |
| (2) | The Company defines Core Net Interest Margin as Net Interest Margin excluding the interest expense on the Junior Subordinated Debentures. The Company utilizes Trust Preferred Securities to assist in the funding of acquisitions and believes it is useful to compare Net Interest Margin excluding the impact of this acquisition funding vehicle. |
| (3) | The Company calculates Return on Average Equity on a cash basis as Cash Basis Earnings divided by Average Equity. |
| (4) | The Company calculates Return on Average Assets on a cash basis as Cash Basis Earnings divided by Average Assets. |
| (5) | First Private Bank and Trust opened their Trust Department in the fourth quarter of 2006. |
| (6) | Same Affiliate Financial Data and Assets Under Management and Advisory as of March 31, 2007 and 2006 exclude Anchor Capital Holdings. |
| (7) | Same Affiliate Operating Results for the three months ending March 31, 2007 and 2006 exclude Anchor Capital Holdings. |
11
