bplogo011719a02.jpg


Boston Private Reports Third Quarter 2019 Results


Third Quarter 2019 Highlights include:

•Net income was $20.0 million, or $0.24 per diluted share
•Return on average common equity (non-GAAP) was 9.8%
•Return on average tangible common equity (non-GAAP) was 11.0%
•Average total loans were $7.0 billion, a 4% increase year-over-year
•Average total deposits were $6.7 billion, a 1% decrease year-over-year
•Total assets under management/advisory (“AUM”) were $16.2 billion, a decrease of 8% year-over-year
•Total net flows were negative $137 million, of which negative $100 million were attributable to the Wealth Management & Trust segment
•Completed the integration of wholly-owned affiliates Boston Private Wealth LLC and KLS Professional Advisors Group, LLC ("KLS")

Boston, MA - October 24, 2019 - Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the “Company” or “BPFH”) today reported third quarter 2019 Net income attributable to the Company of $20.0 million, compared to $19.4 million for the second quarter of 2019 and $18.0 million for the third quarter of 2018. Third quarter 2019 Diluted earnings per share were $0.24, compared to $0.22 in the second quarter of 2019 and $0.20 in the third quarter of 2018.
"Our team is making strong progress building a platform to support the growth initiatives we shared during our Investor Day," said Anthony DeChellis, CEO of Boston Private. "Our third quarter results reflect disciplined expense management in a challenging net interest income environment, as we position our businesses to be more cohesive and competitive.
"This quarter, we welcomed John Longley as the President of the Western Region and Pat Dwyer as the Head of Strategic Business Development to help drive growth across the company. We also completed the formal integration of Boston Private Wealth and KLS Professional Advisors, a key milestone towards simplifying the BPFH business model and scaling Boston Private's ability to compete at the highest levels of the financial services industry."
Summary Financial Results - Reported          
        % Change
($ in millions, except for per share data) 3Q19
 2Q19
 3Q18
 LQ Y/Y
Net income $20.0 $19.4 $18.0 3 % 11%
Diluted earnings per share $0.24 $0.22 $0.20 9 % 20%
           
Non-GAAP Financial Measures:          
Pre-tax, pre-provision income $25.7 $26.2 $23.4 (2)% 10%
Return on average common equity ("ROACE") 9.8% 9.8% 9.7%    
Return on average tangible common equity ("ROATCE") 11.0% 11.1% 11.4%    
The Company's reported financial results increased year-over-year primarily as a result of a $5.8 million restructuring expense during the third quarter of 2018.
In addition to presenting the Company’s results in conformity with GAAP, the Company uses certain non-GAAP financial measures to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector. For additional information on non-GAAP measures, see page 6. A reconciliation of GAAP to non-GAAP results can be found beginning on page 17.

1



Summary Financial Results - Operating Basis (non-GAAP)      
        % Change
($ in millions, except for per share data) 3Q19
 2Q19
 
3Q181

 LQ Y/Y
Net income $20.0 $19.4 $22.5 3 % (11)%
Diluted earnings per share $0.24 $0.22 $0.25 9 % (5)%
           
Pre-tax, pre-provision income $25.7 $26.2 $29.2 (2)% (12)%
Return on average common equity 9.8% 9.8% 12.1%    
Return on average tangible common equity 11.0% 11.1% 14.2%    
1 3Q18 results adjusted to exclude the impact of $5.8 million restructuring expense, net of $1.2 million tax effect

Divested Affiliates          
The Company completed the sale of Bingham, Osborn & Scarborough LLC ("BOS") during 2018. Financial results from BOS remain consolidated in the Company's financial results through the closing date of December 3, 2018.
For presentation purposes, BOS's AUM is excluded from AUM amounts, but is included in the calculation of Core fees and income. The discussion below includes non-GAAP measures that exclude the contributions from BOS in order to enhance comparability of trends in the core business.
Net Interest Income and Margin    
        % Change
($ in millions) 3Q19
 2Q19
 3Q18
 LQ Y/Y
Net interest income $56.2 $57.5 $59.6 (2)% (6)%
Less: Interest recovered on previous nonaccrual loans 0.2 —
 1.0 nm
 nm
Core net interest income (non-GAAP) $56.0 $57.5 $58.7 (3)% (5)%
           
Net interest margin 2.72% 2.78% 2.90%    
Core net interest margin (non-GAAP) 2.71% 2.78% 2.90%    
nm = not meaningful          
Net interest income for the third quarter of 2019 was $56.2 million, a decrease of 2% linked quarter and 6% year-over-year. Core net interest income, which excludes interest recovered on previous nonaccrual loans, decreased 3% linked quarter and 5% year-over-year. The linked quarter decrease was primarily driven by the repricing of variable rate loans and lower interest-earning asset volumes, partially offset by lower borrowing volumes.
The Company’s Core net interest margin, which excludes interest recovered on previous nonaccrual loans, decreased 7 basis points on a linked quarter basis to 2.71%, primarily driven by lower interest-earning asset yields and higher deposit costs, partially offset by lower borrowing volumes.

2



Noninterest Income          
        % Change
($ in millions) 3Q19
 2Q19
 3Q18
 LQ Y/Y
Wealth management and trust fees $19.1 $18.9 $25.5 1 % (25)%
Investment management fees 2.5 2.5 3.2 2 % (23)%
Private banking fees 2
 3.6
 2.9
 2.8
 23 % 26 %
Total core fees and income $25.2 $24.3 $31.6 4 % (20)%
Total other income —
 0.1
 0.7
 (100)% (100)%
Total noninterest income $25.1 $24.4 $32.3 3 % (22)%
           
Memo: Excluding BOS    
Wealth management and trust fees (non-GAAP) 3
 $19.1 $18.9 $19.6 1 % (3)%
Investment management fees 2.5
 2.5
 3.2
 2 % (23)%
Private banking fees 3.6
 2.9
 2.8
 23 % 26 %
Total core fees and income (non-GAAP) 3
 $25.2 $24.3 $25.7 4 % (2)%
Total other income —
 0.1
 0.7
 (100)% (100)%
Total noninterest income (non-GAAP) 3
 $25.1 $24.4 $26.4 3 % (5)%
2 Private banking fees includes Other banking fee income and Gain/ (loss) on sale of loans, net
3 Excludes BOS revenue of $5.9 million in 3Q18
As previously announced, KLS and Boston Private Wealth LLC now operate as a single registered investment advisor ("RIA"). Revenue from the RIA, the legacy affiliates, and the trust operations of Boston Private Bank & Trust Company is included as Wealth management and trust fees during the current period and all prior periods.
Total core fees and income for the third quarter of 2019 was $25.2 million, a 4% increase linked quarter, primarily driven by a gain on sale of loans associated with the sale of approximately $90 million of mortgage loans. The 20% decline year-over-year was primarily driven by the divestiture of BOS.
Excluding BOS, Total core fees and income (non-GAAP) decreased 2% year-over-year, primarily driven by lower Investment Management fees and Wealth management and trust fees as a result of negative net flows.
Assets Under Management / Advisory          
        % Change
($ in millions) 3Q19 2Q19 3Q18 LQ Y/Y
Wealth Management and Trust $14,695 $14,649 $15,598 — % (6)%
Other 4
 1,533 1,550 2,125 (1)% (28)%
Total assets under management / advisory $16,228 $16,199 $17,723 — % (8)%
4 Includes results from Dalton, Greiner, Hartman, Maher & Co, LLC ("DGHM")
Total assets under management / advisory were $16.2 billion at the end of the third quarter of 2019, flat linked quarter and a decrease of 8% year-over-year. The linked quarter comparison was impacted by positive market action partially offset by negative net flows, while the year-over-year decrease was primarily driven by negative net flows in excess of positive market action.
Total net flows were negative $137 million during the third quarter of 2019, of which $100 million were attributable to the Wealth Management & Trust segment.


3



Noninterest Expense          
        % Change
($ in millions) 3Q19
 2Q19
 3Q18
 LQ Y/Y
Salaries and employee benefits $31.7 $32.7 $38.9 (3)% (19)%
Occupancy and equipment 8.3
 7.9
 8.2
 5 % 1 %
Professional services 4.4
 3.3
 2.9
 34 % 54 %
Marketing and business development 1.4
 1.9
 1.7
 (27)% (18)%
Information systems 5.2
 5.1
 6.2
 1 % (17)%
Amortization of intangibles 0.7
 0.7
 0.8
 — % (11)%
FDIC insurance 0.1
 0.6
 0.7
 (90)% (91)%
Restructuring —
 —
 5.8
 — % (100)%
Other 3.9
 3.5
 3.4
 11 % 12 %
Total noninterest expense $55.5 $55.7 $68.6 — % (19)%
    
      
Memo: Excluding Notable Items5 and BOS
          
Restructuring —
 —
 5.8
 — % (100)%
BOS noninterest expense —
 —
 4.0
 — % (100)%
Total noninterest expense (non-GAAP) $55.5 $55.7 $58.8 — % (6)%
5 "Notable Items" include a $5.8 million restructuring expense in 3Q18

Total noninterest expense was flat linked quarter as lower salaries and employee benefits expense, marketing and business development expense, and an FDIC insurance assessment credit offset higher professional services expense and higher occupancy and equipment expense.
Excluding Notable Items and BOS, Total noninterest expense (non-GAAP) for the third quarter of 2019 was $55.5 million, flat linked quarter and down 6% year-over-year. The year-over-year decline was primarily attributable to efficiency initiatives primarily impacting compensation and technology.
Income Tax Expense          
           
The Company's effective tax rate for the third quarter of 2019 was 21.6%.
Loans and Deposits - QTD Averages          
        % Change
($ in millions) 3Q19
 2Q19
 3Q18
 LQ Y/Y
Commercial and industrial $1,102 $1,092 $999 1 % 10 %
Commercial real estate 2,518 2,507 2,475 — % 2 %
Construction and land 196 203 179 (3)% 9 %
Residential 3,016 3,009 2,837 — % 6 %
Home equity 89 91 94 (3)% (5)%
Other consumer 128 125 163 3 % (22)%
Total loans $7,049 $7,026 $6,747 — % 4 %
           
Non-interest bearing deposits 1,953 1,927 2,064 1 % (5)%
Interest bearing deposits 4,705 4,664 4,668 1 % 1 %
Total deposits $6,658 $6,591 $6,732 1 % (1)%
           
Non-interest bearing deposits as a % of Total deposits 29%
29%
31%    
Average total loans in the third quarter of 2019 increased 4% year-over-year, primarily driven by increases in Residential loans and Commercial and industrial loans. End of period residential loans declined $62 million linked quarter to $3.0 billion following a loan sale of approximately $90 million that was completed in September of 2019.
Average total deposits decreased 1% year-over-year, primarily driven by a decline in demand deposit accounts, partially offset by growth in money market accounts and certificates of deposits.

4



The cost of total deposits was 0.92%, an increase of 4 basis points linked quarter and 24 basis points year-over-year.
Provision and Asset Quality          
           
($ in millions) 3Q19
 2Q19
 1Q19
 4Q18
 3Q18
Provision/ (credit) for loan loss $0.2 $1.4 $(1.4) $0.1 $(0.9)
Total criticized and classified loans 139.0 141.7 141.3 146.6 134.7
Total nonaccrual loans 17.6 17.2 12.0 14.1 12.1
Total loans 30-89 days past due and accruing 4.2 2.4 17.7 22.3 11.6
Total net loans (charged-off)/ recovered 0.1
 (0.1) (0.1)
 1.7 1.0
           
Ratios:          
Allowance for loan losses as a % of Total loans 1.07% 1.06% 1.07% 1.09% 1.09%
Nonaccrual loans as a % of Total loans 0.25% 0.24% 0.17% 0.20% 0.18%
The Company recorded a provision expense of $0.2 million for the third quarter of 2019, compared to a provision expense of $1.4 million for the second quarter of 2019 and a provision credit of $0.9 million in the third quarter of 2018. The provision expense in the third quarter of 2019 was primarily driven by required reserves for criticized and classified loans, partially offset by lower reserves for pass-rated loans.
Total criticized loans as of September 30, 2019 was $139.0 million, a 2% decline linked quarter and an increase of 3% year-over-year. Total nonaccrual loans as of September 30, 2019 was $17.6 million, or 25 basis points of Total loans, compared to $17.2 million, or 24 basis points of total loans as of June 30, 2019, and $12.1 million, or 18 basis points of Total loans as of September 30, 2018.
Capital          
           
($ in millions, except for per share data) 3Q19
 2Q19
 1Q19
 4Q18
 3Q18
Tangible common equity/ Tangible assets (non-GAAP) 8.6% 8.4% 8.3% 8.1% 7.8%
Tangible book value per share (non-GAAP) $8.90 $8.71 $8.47 $8.18 $7.67
           
Regulatory Capital Ratios: 6
          
Tier 1 common equity 11.2% 11.2% 11.4% 11.4% 11.1%
Total risk-based capital 13.9% 13.9% 14.2% 14.3% 14.1%
Tier 1 risk-based capital 12.8% 12.7% 13.0% 13.0% 12.8%
Tier 1 leverage capital 9.7% 9.6% 9.7% 9.5% 9.2%
           
Common Equity Repurchase Program:          
Total shares of common stock repurchased 678,165
 —
 —
 1,505,521
 137,144
Average price paid per share of common stock $10.61 —
 —
 $12.02 $13.89
Aggregate repurchases of common equity ($ in millions) $7.2 —
 —
 $18.1 $1.9
6 Current quarter information is presented based on estimated data.
During the third quarter of 2019, the Company implemented a $20 million share repurchase program and repurchased 678,165 shares of common stock at an average cost of $10.61 per share. $12.8 million remains available to be repurchased under the current program.
Tangible book value per share as of September 30, 2019 increased 2% linked quarter and 16% year-over-year to $8.90. The linked quarter increase in Tangible book value per share was primarily driven by increased retained earnings and higher accumulated other comprehensive income related to unrealized securities gains, partially offset by common share repurchases.



5



EPS Calculation          
For calculation of income for EPS, third quarter 2019 Net income attributable to the common shareholders was positively impacted by $0.3 million related to the change in value of Redeemable noncontrolling interests (“RNCI”).
Dividend Payments          
Concurrent with the release of third quarter 2019 earnings, the Board of Directors of the Company declared a cash dividend payable to common shareholders of $0.12 per share. The record date for this dividend is November 8, 2019, and the payment date is November 22, 2019.
Non-GAAP Financial Measures          
The Company uses certain non-GAAP financial measures to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector. 
These non-GAAP financial measures include: return on average common equity; return on average tangible common equity; pre-tax, pre-provision income; net interest income and net interest margin excluding interest recovered on previous nonaccrual loans, also referred to as core net interest income, and core net interest margin, respectively; tangible common equity / tangible assets, total noninterest expense excluding intangibles and restructuring, if any; the efficiency ratio excluding amortization and intangibles, and restructuring, if any; net income attributable to the Company excluding notable items; net income attributable to the common shareholders, treasury stock method, excluding notable items; diluted earnings per share excluding notable items; operating basis total revenue; operating basis total noninterest expenses
A detailed reconciliation table of the Company’s GAAP to non-GAAP measures is included in the tables of this release and beginning on page 18 of the attached financial statements.
Conference Call          
Management will hold a conference call at 8:00 a.m. Eastern Time on Friday, October 25, 2019, to discuss the financial results, business highlights and outlook. To access the call:
Dial In #: (888) 317-6003
Elite Entry Number: 9751347

Replay Information:
Available from October 25, 2019 at 12:00 p.m Eastern Time until November 1, 2019
Dial In #: (877) 344-7529
Conference Number: 10135524
The call will be simultaneously webcast and may be accessed on www.bostonprivate.com.

6




About Boston Private          
Boston Private Financial Holdings, Inc. is a national financial services organization that owns Wealth Management, Trust, and Commercial and Private Banking affiliates with offices in Boston, New York, Los Angeles, San Francisco, San Jose, and Florida. The Company has total assets of greater than $8 billion, and manages over $16 billion of client assets.
The Company’s affiliates serve the high net worth marketplace with high quality products and services of unique appeal to private clients. The Company also provides strategic oversight and access to resources, both financial and intellectual, to support affiliate management, marketing, compliance and legal activities. (NASDAQ: BPFH)
For more information about BPFH, visit the Company’s website at www.bostonprivate.com.
Forward-Looking Statements          
Certain statements in this press release that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties. These statements include, among others, statements regarding our strategy, evaluations of future interest rate trends and liquidity, prospects for growth in assets, and prospects for overall results over the long term. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Company’s control. Forward-looking statements are based on the current assumptions and beliefs of management and are only expectations of future results. The Company’s actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, adverse conditions in the capital and debt markets and the impact of such conditions on the Company’s business activities; changes in interest rates; competitive pressures from other financial institutions; the effects of weakness in general economic conditions on a national basis or in the local markets in which the Company operates; 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; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; changes in 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 statement is made.
###
CONTACT:
Adam Bromley
(617) 912-4386
abromley@bostonprivate.com


7



BOSTON PRIVATE FINANCIAL HOLDINGS, INC.    
Consolidated Balance Sheet   
Unaudited ($ in thousands, except share and per share data)         
 3Q19 2Q19 1Q19 4Q18 3Q18
ASSETS:         
Cash and cash equivalents$78,010
 $65,756
 $96,211
 $127,259
 $92,634
Investment securities available-for-sale935,538
 966,731
 981,951
 994,065
 1,056,261
Investment securities held-to-maturity51,379
 54,482
 67,548
 70,438
 75,468
Equity securities at fair value21,780
 19,092
 7,491
 14,228
 7,079
Stock in Federal Home Loan Bank and Federal Reserve Bank47,756
 64,453
 47,053
 49,263
 48,727
Loans held for sale6,658
 3,640
 280
 2,812
 3,344
Loans7,067,151
 7,080,260
 6,926,968
 6,893,158
 6,720,420
Less: Allowance for loan losses75,359
 75,067
 73,814
 75,312
 73,500
Loans, net of allowance for loan losses6,991,792
 7,005,193
 6,853,154
 6,817,846
 6,646,920
Other real estate owned (“OREO”)—
 —
 —
 401
 108
Premises and equipment, net42,658
 40,244
 42,938
 45,412
 47,399
Goodwill 7
57,607
 57,607
 57,607
 57,607
 75,598
Intangible assets, net 7
10,622
 10,884
 11,555
 12,227
 13,834
Accrued interest receivable24,851
 26,411
 25,935
 24,366
 24,641
Deferred income taxes, net15,704
 17,183
 22,844
 26,638
 27,833
Right-of-use assets107,045
 110,880
 104,644
 —
 —
Other assets 7
299,544

270,317

252,932

252,063

255,994
TOTAL ASSETS$8,690,944
 $8,712,873
 $8,572,143
 $8,494,625
 $8,375,840
          
LIABILITIES:         
Deposits$6,658,242
 $6,437,963
 $6,779,845
 $6,781,170
 $6,768,723
Securities sold under agreements to repurchase48,860
 62,372
 58,329
 36,928
 39,453
Federal funds purchased230,000
 135,000
 —
 250,000
 120,000
Federal Home Loan Bank borrowings570,904
 920,068
 615,070
 420,144
 441,836
Junior subordinated debentures106,363
 106,363
 106,363
 106,363
 106,363
Lease liabilities122,799
 126,740
 120,162
 —
 —
Other liabilities 7
143,607
 124,370
 112,893
 143,540
 149,770
TOTAL LIABILITIES7,880,775
 7,912,876
 7,792,662
 7,738,145
 7,626,145
          
REDEEMABLE NONCONTROLLING INTEREST (“RNCI”)1,481
 1,786
 662
 2,526
 11,686
SHAREHOLDERS' EQUITY:         
Common stock, $1.00 par value; authorized: 170,000,000 shares83,242
 83,774
 83,774
 83,656
 84,603
Additional paid-in capital599,877
 603,869
 604,288
 600,196
 614,157
Retained earnings116,210
 106,443
 97,155
 87,821
 64,618
Accumulated other comprehensive income/ (loss)9,359
 4,125
 (6,398) (17,719) (27,578)
TOTAL COMPANY'S SHAREHOLDERS' EQUITY808,688
 798,211
 778,819
 753,954
 735,800
Noncontrolling interests—
 —
 —
 —
 2,209
TOTAL SHAREHOLDERS' EQUITY808,688
 798,211
 778,819
 753,954
 738,009
TOTAL LIABILITIES, RNCI, AND SHAREHOLDERS' EQUITY$8,690,944
 $8,712,873
 $8,572,143
 $8,494,625
 $8,375,840
          
7 On December 3, 2018, the Company completed the sale of its ownership interest in BOS to the management team of BOS for an upfront cash payment and an eight-year revenue sharing agreement with BOS. For regulatory purposes, the goodwill and intangible assets of BOS are included in consolidated calculations through the closing date.



8



BOSTON PRIVATE FINANCIAL HOLDINGS, INC.         
Consolidated Income Statement
Unaudited ($ in thousands, except share and per share data) 
 3Q19 2Q19 1Q19 4Q18 3Q18
REVENUE: 
Interest income$77,604
 $78,728
 $76,824
 $76,892
 $76,101
Interest expense21,451
 21,268
 18,486
 16,895
 16,460
Net interest income56,153
 57,460
 58,338
 59,997
 59,641
Provision/ (credit) for loan losses167
 1,363
 (1,426) 93
 (949)
Net interest income after provision/ (credit) for loan losses55,986
 56,097
 59,764
 59,904
 60,590
          
Wealth management and trust fees 8
19,067
 18,912
 19,058
 23,788
 25,505
Investment management fees2,496
 2,455
 2,650
 2,831
 3,245
Private banking fee income2,658
 2,867
 2,499
 2,033
 2,775
Gain on sale of loans, net934
 58
 73
 39
 67
Total core fees and income25,155
 24,292
 24,280
 28,691
 31,592
Total other income(29) 88
 968
 17,154
 722
TOTAL REVENUE 9
81,279
 81,840
 83,586
 105,842
 91,955
          
NONINTEREST EXPENSE:         
Salaries and employee benefits31,684
 32,706
 35,726
 36,007
 38,944
Occupancy and equipment8,260
 7,852
 8,348
 7,975
 8,164
Professional services4,435
 3,313
 3,560
 4,229
 2,877
Marketing and business development1,403
 1,934
 1,085
 2,275
 1,710
Information systems5,169
 5,137
 5,860
 6,296
 6,233
Amortization of intangibles671
 672
 672
 680
 750
FDIC insurance59
 585
 660
 739
 674
Restructuring—
 —
 1,646
 2,065
 5,763
Other3,856
 3,460
 2,996
 3,291
 3,442
TOTAL NONINTEREST EXPENSE55,537
 55,659
 60,553
 63,557
 68,557
          
INCOME BEFORE INCOME TAXES25,575
 24,818
 24,459
 42,192
 24,347
Provision for income taxes5,517
 5,369
 4,917
 8,651
 5,461
Net income from continuing operations20,058
 19,449
 19,542
 33,541
 18,886
Net income from discontinued operations 10
—
 —
 —
 306
 —
Net income before attribution to noncontrolling interests20,058
 19,449
 19,542
 33,847
 18,886
Less: Net income attributable to noncontrolling interests96
 69
 100
 545
 924
NET INCOME ATTRIBUTABLE TO THE COMPANY$19,962
 $19,380
 $19,442
 $33,302
 $17,962
          
Adjustments, treasury stock method 11
304
 (816) 1,557
 2,694
 (829)
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS$20,266
 $18,564
 $20,999
 $35,996
 $17,133
          
COMMON SHARE DATA:         
Weighted average basic shares outstanding83,631,403
 83,565,780
 83,285,095
 83,750,785
 84,017,284
Weighted average diluted shares outstanding 12
83,956,708
 84,048,972
 84,010,450
 84,863,779
 85,498,568
Diluted total earnings per share$0.24
 $0.22
 $0.25
 $0.42
 $0.20
          
8 Wealth management and trust fees consists of revenue from Boston Private Wealth LLC, KLS Professional Advisors, BOS, and the trust operations of Boston Private Bank & Trust Company.

9 Total revenue is the sum of Net interest income, Total core fees and income, and Total other income.

10 Net income from discontinued operations consists of contingent payments, net of expenses, related to a divested affiliate, Westfield Capital Management Company, LLC. The Company received its final contingent payment in the first quarter of 2018 related to this affiliate and a tax benefit related to deferred taxes in the fourth quarter of 2018.

11 Adjustments to Net income attributable to the Company to arrive at Net income attributable to common shareholders, treasury stock method, as presented in these tables, include decrease/ (increase) in Noncontrolling interests redemption value.

12 For a description of the Company's policies regarding Diluted earnings per share, please refer to 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, 2018.

9



BOSTON PRIVATE FINANCIAL HOLDINGS, INC.    
Consolidated Income Statement    
Unaudited ($ in thousands, except share and per share data)    
  Nine months ended September 30,
  2019 2018
REVENUE:  
Interest income $233,156
 $216,012
Interest expense 61,205
 41,443
Net interest income 171,951
 174,569
Provision/ (credit) for loan losses 104
 (2,291)
Net interest income after provision/ (credit) for loan losses 171,847
 176,860
     
Wealth management and trust fees 8
 57,037
 76,030
Investment management fees 7,601
 18,897
Private banking fee income 8,024
 7,793
Gain on sale of loans, net 1,065
 204
Total core fees and income 73,727
 102,924
Total other income 1,027
 1,228
TOTAL REVENUE 9
 246,705
 278,721
     
NONINTEREST EXPENSE:    
Salaries and employee benefits 100,116
 125,461
Occupancy and equipment 24,460
 24,141
Professional services 11,308
 8,926
Marketing and business development 4,422
 5,373
Information systems 16,166
 18,889
Amortization of intangibles 2,015
 2,249
FDIC insurance 1,304
 2,126
Restructuring 1,646
 5,763
Other 10,312
 10,870
TOTAL NONINTEREST EXPENSE 171,749
 203,798
     
INCOME BEFORE INCOME TAXES 74,852
 77,214
Income tax expense 15,803
 28,886
Net income from continuing operations 59,049
 48,328
Net income from discontinued operations 10
 —
 1,696
Net income before attribution to noncontrolling interests 59,049
 50,024
Less: Net income attributable to noncontrolling interests 265
 2,942
NET INCOME ATTRIBUTABLE TO THE COMPANY $58,784
 $47,082
     
Adjustments, treasury stock method 11
 1,045
 (4,376)
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $59,829
 $42,706
     
COMMON SHARE DATA    
Weighted average basic shares outstanding 83,495,361
 83,544,754
Weighted average diluted shares outstanding 12
 84,003,281
 85,254,295
Diluted total earnings per share $0.71
 $0.50
     
8 Wealth management and trust fees consists of revenue from Boston Private Wealth LLC, KLS Professional Advisors, BOS, and the trust operations of Boston Private Bank & Trust Company.

9 Total revenue is the sum of Net interest income, Total core fees and income, and Total other income.

10 Net income from discontinued operations consists of contingent payments, net of expenses, related to a divested affiliate, Westfield Capital Management Company, LLC. The Company received its final contingent payment in the first quarter of 2018 related to this affiliate and a tax benefit related to deferred taxes in the fourth quarter of 2018.

11 Adjustments to Net income attributable to the Company to arrive at Net income attributable to common shareholders, treasury stock method, as presented in these tables, include decrease/ (increase) in Noncontrolling interests redemption value and dividends paid on preferred stock, if any, including deemed dividends on redemption of the 6.95% non-cumulative perpetual preferred stock, Series D (“the Series D preferred stock”), if any. On June 15, 2018, the Company redeemed all $50 million of the outstanding Series D preferred stock.

12 For a description of the Company's policies regarding Diluted earnings per share, please refer to 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, 2018.


10



BOSTON PRIVATE FINANCIAL HOLDINGS, INC.         
Consolidated Financial Highlights         
Unaudited ($ in thousands, except share and per share data)         
 3Q19 2Q19 1Q19 4Q18 3Q18
KEY STATISTICS:         
Return on average assets (non-GAAP) 13
0.91% 0.90 % 0.93 % 1.56% 0.84%
ROACE (non-GAAP) 13
9.80% 9.83 % 10.29 % 17.87% 9.67%
ROATCE (non-GAAP) 13
10.99% 11.06 % 11.63 % 20.46% 11.37%
Efficiency ratio (non-GAAP) 13
67.5% 67.2 % 69.7 % 57.1% 67.0%
Noninterest income to total revenue30.9% 29.8 % 30.2 % 43.3% 35.1%
          
Net interest margin2.72% 2.78 % 2.90 % 2.94% 2.90%
Average loan to average deposit ratio105.9% 106.6 % 101.6 % 98.0% 100.2%
Cost of total deposits0.92% 0.88 % 0.84 % 0.77% 0.68%
Cost of interest-bearing deposits1.31% 1.25 % 1.19 % 1.11% 0.98%
Cost of total funding1.12% 1.11 % 1.00 % 0.89% 0.86%
          
Allowance for Loan Loss / Total Loans1.07% 1.06 % 1.07 % 1.09% 1.09%
Nonperforming loans / Total Loans0.25% 0.24 % 0.17 % 0.20% 0.18%
Net (charge-offs) / recoveries / Total loans 13
0.01% (0.01)% — % 0.10% 0.06%
          
          
CAPITAL HIGHLIGHTS: 
         
Tier 1 common equity 14
$732,980
 $726,872
 $717,138
 $702,728
 $674,641
Tier 1 capital 14
$833,431
 $827,299
 $817,600
 $803,311
 $776,328
Total capital 14
$910,076
 $903,675
 $892,764
 $879,927
 $851,399
          
Risk-weighted assets ("RWA") 14
$6,533,882
 $6,491,184
 $6,304,444
 $6,161,677
 $6,057,002
Average assets for leverage 14
$8,588,358
 $8,617,803
 $8,447,143
 $8,416,195
 $8,436,411
          
TIer 1 common equity ratio 14
11.22% 11.20 % 11.38 % 11.40% 11.14%
Tier 1 ratio 14
12.76% 12.74 % 12.97 % 13.04% 12.82%
Total capital ratio 14
13.93% 13.92 % 14.16 % 14.28% 14.06%
Leverage ratio 14
9.70% 9.60 % 9.68 % 9.54% 9.20%
          
Total equity / Total assets9.30% 9.16 % 9.09 % 8.88% 8.81%
Tangible common equity / Tangible assets (non-GAAP)8.59% 8.44 % 8.35 % 8.12% 7.83%
          
Market price per share$11.66
 $12.07
 $10.96
 $10.57
 $13.65
End of period shares outstanding83,241,952
 83,774,335
 83,773,650
 83,655,651
 84,602,519
Book value per common share$9.71
 $9.53
 $9.30
 $9.01
 $8.72
Tangible book value per share (non-GAAP)$8.90
 $8.71
 $8.47
 $8.18
 $7.67
          
Common Equity Repurchase Program:         
Total shares of common stock repurchased678,165
 —
 —
 1,505,521
 137,144
Average price paid per share of common stock$10.61
 $—
 $—
 $12.02
 $13.89
Aggregate repurchases of common equity ($ in millions)$7.2
 $—
 $—
 $18.1
 $1.9
          
13  Annualized
14  Current quarter capital highlights are presented based on estimated data.






11



BOSTON PRIVATE FINANCIAL HOLDINGS, INC.      
Consolidated AUM and Balance Sheet - End of Period Balances      
Unaudited ($ in thousands)         
 3Q19 2Q19 1Q19 4Q18 3Q18
          
ASSETS UNDER MANAGEMENT AND ADVISORY ("AUM"):        
Wealth Management and Trust$14,695,000
 $14,649,000
 $14,564,000
 $14,206,000
 $15,598,000
Other1,533,000
 1,550,000
 1,558,000
 1,715,000
 2,125,000
Total AUM, excluding BOS 15
16,228,000
 16,199,000
 16,122,000
 15,921,000
 17,723,000
AUM at BOS—
 —
 —
 —
 4,714,000
Less: Inter-company relationship—
 —
 —
 —
 (7,000)
Total AUM$16,228,000
 $16,199,000
 $16,122,000
 $15,921,000
 $22,430,000
          
AUM Reconciliation:         
Beginning balance$16,199,000
 $16,122,000
 $15,921,000
 $17,723,000
 $16,861,000
Net flows(137,000) (269,000) (963,000) (143,000) 260,000
Market166,000
 346,000
 1,164,000
 (1,659,000) 602,000
Ending balance$16,228,000
 $16,199,000
 $16,122,000
 $15,921,000
 $17,723,000
          
AUM Net Flows:         
Wealth Management & Trust$(100,000) $(233,000) $(580,000) $(137,000) $215,000
Other(37,000) (36,000) (383,000) (6,000) 45,000
Total Net flows$(137,000)
$(269,000)
$(963,000)
$(143,000)
$260,000
          
DEPOSITS:         
Demand deposits (non-interest bearing)$1,947,363
 $1,854,091
 $2,016,838
 $1,951,274
 $2,001,275
NOW598,048
 563,130
 605,852
 626,685
 568,148
Savings68,059
 68,036
 68,102
 73,834
 72,967
Money market3,366,623
 3,228,608
 3,302,244
 3,338,892
 3,363,062
Certificates of deposit678,149
 724,098
 786,809
 790,485
 763,271
TOTAL DEPOSITS$6,658,242
 $6,437,963
 $6,779,845
 $6,781,170
 $6,768,723
          
LOANS:         
Commercial and Industrial$695,029
 $656,186
 $615,370
 $623,037
 $583,214
Commercial tax exempt448,488
 450,307
 449,492
 451,671
 438,807
Commercial real estate2,533,346
 2,530,556
 2,439,048
 2,395,692
 2,399,080
Construction and land209,741
 200,378
 210,618
 240,306
 197,524
Residential2,964,042
 3,025,758
 2,993,132
 2,948,973
 2,862,879
Home Equity84,432
 89,930
 88,620
 90,421
 93,390
Consumer132,073
 127,145
 130,688
 143,058
 145,526
TOTAL LOANS$7,067,151
 $7,080,260
 $6,926,968
 $6,893,158
 $6,720,420
          
15 Assets under management and advisory have been reduced to exclude those assets managed or advised by BOS for periods when BOS was owned by the Company



12



BOSTON PRIVATE FINANCIAL HOLDINGS, INC.         
Asset Quality         
Unaudited ($ in thousands)         
 3Q19 2Q19 1Q19 4Q18 3Q18
CHARGE-OFFS:         
Loan charge-offs$(185) $(195) $(564) $(370) $—
Loan recoveries310
 85
 492
 2,089
 985
NET (CHARGE-OFFS) / RECOVERIES$125
 $(110) $(72) $1,719
 $985
Net charge-offs to average loans (annualized)0.01% (0.01)% — % 0.10% 0.06%
 













Net Charge-offs by Loan Type:













Commercial and industrial$95
 $(155) $188
 $(77) $153
Commercial real estate27
 30
 189
 1,394
 820
Construction and land—
 —
 —
 —
 —
Residential—
 —
 100
 402
 —
Home Equity6
 —
 (562) —
 —
Consumer(3) 15
 13
 —
 12
NET (CHARGE-OFFS) / RECOVERIES$125

$(110)
$(72)
$1,719

$985
 













NONPERFORMING LOAN DATA:













Special mention loans$58,133
 $70,677
 $86,787
 $78,528
 $67,406
          
Accruing classified loans 16
63,278
 53,883
 42,521
 54,095
 55,380
Nonaccrual loans17,565
 17,155
 12,019
 14,057
 12,097
Total Classified80,843

71,038

54,540

68,152

67,477
Criticized and Classified Loans$138,976

$141,715

$141,327

$146,680

$134,883
          
Loans 30-89 days past due and accruing 17
$4,179
 $2,434
 $17,715
 $22,299
 $11,607
          
16 Accruing classified loans include loans that are classified as substandard but are still accruing interest income. Boston Private Bank & Trust Company 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.

17 In addition to loans 30-89 days past due and accruing, at June 30, 2019, the Company had one loan totaling $0.9 million that was more than 90 days past due but still on accrual status. This loan originated in the New England region. The Company had no loans outstanding more than 90 days past due but still on accrual status in comparative periods.






13



BOSTON PRIVATE FINANCIAL HOLDINGS, INC.         
Average Balances, Yields, and Rates         
Unaudited ($ in thousands)           
 Average Balance Interest Income/Expense Average Yield/Rate
 3Q192Q193Q18 3Q192Q193Q18 3Q192Q193Q18
INTEREST-EARNING ASSETS           
Cash and investments:           
Taxable investment securities$198,655
$227,029
$324,583
 $938
$1,121
$1,510
 1.95%1.98%1.86%
Non-taxable investment securities305,108
304,309
297,710
 1,924
1,901
1,779
 2.52%2.50%2.39%
Mortgage-backed securities492,514
508,033
552,820
 2,622
2,706
2,941
 2.13%2.13%2.13%
Short-term investments and other101,958
130,363
204,814
 1,084
1,057
1,617
 4.06%3.23%3.11%
Total cash and investments1,098,235
1,169,734
1,379,927
 6,568
6,785
7,847
 2.39%2.32%2.27%
Loans: 18
           
Commercial and industrial1,101,672
1,091,903
998,817
 11,523
11,170
9,894
 4.09%4.05%3.88%
Commercial real estate2,518,048
2,506,637
2,475,143
 29,118
29,953
29,482
 4.52%4.73%4.66%
Construction and land195,843
202,609
179,248
 2,410
2,559
2,193
 4.82%5.00%4.79%
Residential3,016,265
3,008,753
2,836,593
 25,567
25,735
23,907
 3.39%3.42%3.37%
Home equity89,068
91,384
94,050
 1,121
1,146
1,089
 4.99%5.03%4.59%
Other consumer127,987
124,778
163,224
 1,297
1,380
1,689
 4.02%4.43%4.11%
Total loans7,048,883
7,026,064
6,747,075
 71,036
71,943
68,254
 3.98%4.07%3.99%
Total earning assets8,147,118
8,195,798
8,127,002
 77,604
78,728
76,101
 3.76%3.82%3.70%
            
LESS: Allowance for loan losses75,199
73,856
73,861
        
Cash and due from banks49,065
45,705
46,056
        
Other assets544,368
511,859
392,757
        
TOTAL AVERAGE ASSETS$8,665,352
$8,679,506
$8,491,954
        
            
INTEREST-BEARING LIABILITIES           
Interest-bearing deposits: 19
           
Savings and NOW$615,730
$684,507
$693,419
 $275
$276
$301
 0.18%0.16%0.17%
Money market3,378,006
3,226,569
3,244,628
 11,523
10,476
8,110
 1.35%1.30%0.99%
Certificates of deposit711,299
752,500
730,117
 3,689
3,763
3,076
 2.06%2.01%1.67%
Total interest-bearing deposits 19
4,705,035
4,663,576
4,668,164
 15,487
14,515
11,487
 1.31%1.25%0.98%
Junior subordinated debentures106,363
106,363
106,363
 1,022
1,080
1,028
 3.76%4.02%3.78%
FHLB borrowings and other833,535
952,645
768,015
 4,942
5,673
3,945
 2.32%2.36%2.01%
Total interest-bearing liabilities 19
5,644,933
5,722,584
5,542,542
 21,451
21,268
16,460
 1.50%1.48%1.17%
            
Non-interest bearing demand deposits 19
1,953,214
1,926,591
2,063,642
        
Other liabilities258,371
238,544
135,508
        
Total average liabilities7,856,518
7,887,719
7,741,692
        
Redeemable noncontrolling interests944
943
13,074
        
Average shareholders’ equity807,890
790,844
737,188
        
TOTAL AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY$8,665,352
$8,679,506
$8,491,954
        
Net interest income    $56,153
$57,460
$59,641
    
Interest rate spread        2.26%2.34%2.53%
Net interest margin        2.72%2.78%2.90%
            
Average total deposits 19
$6,658,249
$6,590,167
$6,731,806
     0.92%0.88%0.68%
Average total deposits and borrowings 19
$7,598,147
$7,649,175
$7,606,184
     1.12%1.11%0.86%
18 Average loans includes Loans held for sale and Nonaccrual loans

19 Average total deposits is the sum of Average total interest-bearing deposits and Average non-interest bearing demand deposits. Average total deposits and borrowings is the sum of Average total interest-bearing liabilities and Average non-interest bearing demand deposits.


14



BOSTON PRIVATE FINANCIAL HOLDINGS, INC.      
Average Balances, Yields, and Rates      
Unaudited ($ in thousands)        
 Average Balance Interest Income/Expense Average Yield/Rate
 Nine Months Ended Nine Months Ended Nine Months Ended
INTEREST-EARNING ASSETS9/30/199/30/18 9/30/199/30/18 9/30/199/30/18
Cash and investments:        
Taxable investment securities$223,072
$328,054
 $3,244
$4,521
 1.94%1.84%
Non-taxable investment securities305,422
297,509
 5,726
5,261
 2.50%2.36%
Mortgage-backed securities507,338
570,578
 8,225
9,168
 2.16%2.14%
Short-term investments and other104,225
174,736
 3,049
3,831
 3.78%2.91%
Total cash and investments1,140,057
1,370,877
 20,244
22,781
 2.36%2.21%
Loans: 18
        
Commercial and industrial1,088,027
969,063
 33,673
27,554
 4.08%3.75%
Commercial real estate2,474,804
2,464,788
 87,222
83,020
 4.65%4.44%
Construction and land203,211
171,825
 7,610
6,142
 4.94%4.71%
Residential2,999,480
2,771,875
 76,847
68,263
 3.42%3.28%
Home equity90,361
95,217
 3,388
3,172
 5.01%4.45%
Other consumer128,879
176,086
 4,172
5,080
 4.33%3.86%
Total loans6,984,762
6,648,854
 212,912
193,231
 4.04%3.85%
Total earning assets8,124,819
8,019,731
 233,156
216,012
 3.80%3.57%
         
LESS: Allowance for loan losses74,863
73,894
      
Cash and due from banks (non-interest bearing)46,906
47,859
      
Other assets516,642
404,375
      
TOTAL AVERAGE ASSETS$8,613,504
$8,398,071
      
         
INTEREST-BEARING LIABILITIES        
Interest-bearing deposits: 19
        
Savings and NOW$658,154
$709,751
 $847
$820
 0.17%0.15%
Money market3,317,117
3,139,107
 32,072
17,967
 1.29%0.77%
Certificates of deposit746,453
691,670
 11,141
7,589
 2.00%1.47%
Total interest-bearing deposits 19
4,721,724
4,540,528
 44,060
26,376
 1.25%0.78%
Junior subordinated debentures106,363
106,363
 3,223
2,882
 4.05%3.62%
FHLB borrowings and other801,519
889,178
 13,922
12,185
 2.29%1.81%
Total interest-bearing liabilities 19
5,629,606
5,536,069
 61,205
41,443
 1.45%1.00%
         
Non-interest bearing demand deposits 19
1,949,948
1,948,573
      
Payables and other liabilities243,370
130,410
      
Total average liabilities7,822,924
7,615,052
      
Redeemable noncontrolling interests1,642
16,294
      
Average shareholders’ equity788,938
766,725
      
TOTAL AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY$8,613,504
$8,398,071
      
Net interest income   $171,951
$174,569
   
Interest rate spread      2.35%2.57%
Net interest margin      2.80%2.88%
         
Average total deposits 19
$6,671,672
$6,489,101
    0.88%0.54%
Average total deposits and borrowings 19
$7,579,554
$7,484,642
    1.08%0.74%
18 Average loans includes Loans held for sale and Nonaccrual loans

19 Average total deposits is the sum of Average total interest-bearing deposits and Average non-interest bearing demand deposits. Average total deposits and borrowings is the sum of Average total interest-bearing liabilities and Average non-interest bearing demand deposits.


15




BOSTON PRIVATE FINANCIAL HOLDINGS, INC.        
Regional Loan Data        
Unaudited ($ in thousands)        
 3Q19 2Q19 1Q19 4Q18 3Q18
LOANS: 20
         
New England$3,868,690
 $3,957,221
 $3,901,644
 $3,890,607
 $3,783,032
San Francisco Bay Area1,559,569
 1,538,441
 1,499,626
 1,488,017
 1,491,528
Southern California1,638,892
 1,584,598
 1,525,698
 1,514,534
 1,445,860
Total loans$7,067,151
 $7,080,260
 $6,926,968
 $6,893,158
 $6,720,420
          
Loans (charged-off) / recovered, net:         
New England$275
 $31
 $222
 $(100) $232
San Francisco Bay Area6
 20
 18
 1,804
 706
Southern California(156) (161) (312) 15
 47
Total net loans (charged-off) / recovered$125
 $(110) $(72) $1,719
 $985
          
Special mention loans:         
New England$19,828
 $35,235
 $34,675
 $31,147
 $20,382
San Francisco Bay Area4,821
 10,360
 23,486
 18,585
 18,359
Southern California33,484
 25,082
 28,626
 28,796
 28,665
Total special mention loans$58,133
 $70,677
 $86,787
 $78,528
 $67,406
          
Accruing classified loans:         
New England$21,830
 $13,012
 $15,830
 $10,392
 $10,083
San Francisco Bay Area23,938
 25,957
 20,801
 24,584
 24,252
Southern California17,510
 14,914
 5,890
 19,119
 21,045
Total accruing classified loans$63,278
 $53,883
 $42,521
 $54,095
 $55,380
          
Nonaccruing loans:         
New England$8,999
 $8,837
 $6,161
 $6,728
 $5,131
San Francisco Bay Area2,395
 2,644
 2,480
 2,488
 1,169
Southern California6,171
 5,674
 3,378
 4,841
 5,797
Total nonaccruing loans$17,565
 $17,155
 $12,019
 $14,057
 $12,097
          
20 The concentration of the Private Banking loan data and credit quality is primarily based on the location of the lenders' regional offices.


16



BOSTON PRIVATE FINANCIAL HOLDINGS, INC.        
Reconciliations of Non-GAAP Financial Measures         
Unaudited ($ in thousands)         
 3Q19 2Q19 1Q19 4Q18 3Q18
          
ROACE AND ROATCE:         
Net income attributable to the Company (GAAP) (A)$19,962
 $19,380
 $19,442
 $33,302
 $17,962
ADD: Amortization of intangibles, net of tax530
 531
 531
 537
 593
Tangible common net income (non-GAAP) (B)$20,492
 $19,911
 $19,973
 $33,839
 $18,555
          
Total average shareholders’ equity (C)$807,890
 $790,844
 $766,283
 $739,313
 $737,188
LESS: Average goodwill and intangible assets, net(68,359) (68,889) (69,498) (83,153) (89,830)
Average tangible common equity (non-GAAP) (D)$739,531
 $721,955
 $696,785
 $656,160
 $647,358
          
ROACE (annualized) (A / C)9.80% 9.83% 10.29% 17.87% 9.67%
ROATCE (annualized) (B / D)10.99% 11.06% 11.63% 20.46% 11.37%
          
          
PRE-TAX, PRE-PROVISION INCOME:         
Income before income taxes (GAAP)$25,575
 $24,818
 $24,459
 $42,192
 $24,347
ADD BACK: Provision/ (credit) for loan losses167
 1,363
 (1,426) 93
 (949)
Pre-tax, pre-provision income (non-GAAP)$25,742
 $26,181
 $23,033
 $42,285
 $23,398
          
          
CORE NET INTEREST INCOME AND MARGIN:         
Net interest income (GAAP)$56,153
 $57,460
 $58,338
 $59,997
 $59,641
LESS: Interest recovered on previous nonaccrual loans180
 —
 258
 986
 986
Net interest income, excluding interest recovered while loans on nonaccrual status ("Core net interest income") (non-GAAP)$55,973

$57,460

$58,080

$59,011

$58,655
Net interest margin, excluding interest recovered while loans on nonaccrual status ("Core net interest margin") (non-GAAP)2.71% 2.78% 2.89% 2.90% 2.90%
          
          
TANGIBLE COMMON EQUITY:         
Total Shareholders’ Equity (GAAP)$808,688
 $798,211
 $778,819
 $753,954
 $738,009
LESS: Goodwill and intangible assets, net(68,229) (68,491) (69,162) (69,834) (89,432)
Tangible common equity (non-GAAP) (A)$740,459
 $729,720
 $709,657
 $684,120
 $648,577
          
Total Assets (GAAP)$8,690,944
 $8,712,873
 $8,572,143
 $8,494,625
 $8,375,840
LESS: Goodwill and intangible assets, net(68,229) (68,491) (69,162) (69,834) (89,432)
Tangible assets (non-GAAP) (B)$8,622,715
 $8,644,382
 $8,502,981
 $8,424,791
 $8,286,408
          
End of Period Shares Outstanding (C)83,241,952
 83,774,335 83,773,650 83,655,651 84,602,519
          
Tangible common equity/ Tangible assets (non-GAAP) (A / B)8.59% 8.44% 8.35% 8.12% 7.83%
Tangible Book Value Per Share (non-GAAP) (A / C)$8.90 $8.71 $8.47 $8.18 $7.67
          
          


17




BOSTON PRIVATE FINANCIAL HOLDINGS, INC.        
Reconciliations of Non-GAAP Financial Measures         
Unaudited ($ in thousands)         
 3Q19 2Q19 1Q19 4Q18 3Q18
RETURN ON AVERAGE ASSETS:         
Net income (GAAP) (A)$19,962
 $19,380
 $19,442
 $33,302
 $17,962
Average Assets (non-GAAP) (B)8,665,352
 8,679,506
 8,493,725
 8,445,298
 8,491,954
Return on average assets (non-GAAP) (A / B)0.91% 0.90% 0.93% 1.56% 0.84%
          
          
EFFICIENCY RATIO:         
Total noninterest expense (GAAP) (A)$55,537
 $55,659
 $60,553
 $63,557
 $68,557
Less: Amortization of intangibles671
 672
 672
 680
 750
Less: Restructuring—
 —
 1,646
 2,065
 5,763
Total noninterest expense (non-GAAP) (B)$54,866
 $54,987
 $58,235
 $60,812
 $62,044
          
Net interest income (GAAP)$56,153
 $57,460
 $58,338
 $59,997
 $59,641
Total core fees and income (GAAP)25,155
 24,292
 24,280
 28,691
 31,592
Gain on sale of affiliate (GAAP)—
 —
 —
 18,142
 —
Total other income (GAAP)(29) 88
 968
 (988) 722
Total revenue (C)$81,279
 $81,840
 $83,586
 $105,842
 $91,955
          
Efficiency ratio (GAAP) (A / C)68.3% 68.0% 72.4% 60.0% 74.6%
Efficiency ratio, excluding amortization of intangibles and restructuring, if any (non-GAAP) (B / C)67.5% 67.2% 69.7% 57.1% 67.0%
          
          
OTHER INCOME: (GAAP)         
Gain/ (loss) on sale of investments, net$—
 $—
 $—
 $(596) $—
Gain/ (loss) on OREO, net—
 —
 91
 —
 —
Gain on sale of affiliate—
 —
 —
 18,142
 —
Other(29) 88
 877
 (392) 722
Total other income (GAAP)$(29) $88
 $968
 $17,154
 $722


18



BOSTON PRIVATE FINANCIAL HOLDINGS, INC.        
Reconciliations of Non-GAAP measures: Operating Adjustments
Unaudited ($ in thousands, except share and per share data)        
 3Q19 2Q19 1Q19 4Q18 3Q18
NET INCOME ATTRIBUTABLE TO THE COMPANY:         
NET INCOME ATTRIBUTABLE TO THE COMPANY (GAAP)$19,962
 $19,380
 $19,442
 $33,302
 $17,962
LESS: Gain on sale of affiliate—
 —
 —
 18,142
 —
ADD: Information services 21
—
 —
 —
 (441) —
ADD: Restructuring—
 —
 1,646
 2,065
 5,763
ADD: Tax adjustments 22
—
 —
 —
 3,502
 —
Tax effect at statutory rate—
 —
 (346) (341) (1,210)
NET INCOME ATTRIBUTABLE TO THE COMPANY (NON-GAAP)$19,962
 $19,380
 $20,742
 $19,945
 $22,515
          
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS:         
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS (GAAP)$20,266
 $18,564
 $20,999
 $35,996
 $17,133
LESS: Gain on sale of affiliate—
 —
 —
 18,142
 —
ADD: Information services 21
—
 —
 —
 (441) —
ADD: Restructuring—
 —
 1,646
 2,065
 5,763
ADD: Tax adjustments 22
—
 —
 —
 3,502
 —
Tax effect at statutory rate—
 —
 (346) (341) (1,210)
Net income attributable to the common shareholders, treasury stock method, excluding notable items (non-GAAP)$20,266
 $18,564
 $22,299
 $22,639
 $21,686
          
Weighted average diluted shares outstanding83,956,708
 84,048,972
 84,010,450
 84,863,779
 85,498,568
Diluted total earnings per share (GAAP)$0.24
 $0.22
 $0.25
 $0.42
 $0.20
Diluted total earnings per share, excluding notable items (non-GAAP)$0.24
 $0.22
 $0.27
 $0.27
 $0.25
          
Average common equity (non-GAAP)$807,890
 $790,844
 $766,283
 $739,313
 $737,188
Average tangible common equity (non-GAAP)$739,531
 $721,955
 $696,785
 $656,160
 $647,358
Return on average common equity, excluding notable items (non-GAAP)9.80% 9.83% 10.98% 10.70% 12.12%
Return on average tangible common equity, excluding notable items (non-GAAP)10.99% 11.06% 12.38% 12.38% 14.16%
          
Pre-tax, pre-provision income (non-GAAP)$25,742
 $26,181
 $23,033
 $42,285
 $23,398
LESS: Gain on sale of affiliate—
 —
 —
 18,142
 —
ADD: Information services 21
—
 —
 —
 (441) —
ADD: Restructuring—
 —
 1,646
 2,065
 5,763
Pre-tax, pre-provision income, excluding notable items (non-GAAP)$25,742
 $26,181
 $24,679
 $25,767
 $29,161
          
21 In the fourth quarter of 2018, $0.4 million of Information services expense was reclassified to Restructuring expense in conjunction with the announcement of the Company's formal restructuring plan.

22 Additional tax expense in the fourth quarter of 2018 relates to the completion of the sale of BOS.



19