BOSTON PRIVATE FINANCIAL HOLDINGS INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1 10-21-2015 EARNINGS PRESS RELEASE

Attached files

file	filename
8-K - 8-K Q3-15 EARNINGS RELEASE - BOSTON PRIVATE FINANCIAL HOLDINGS INC	a2015q38-kearnings10x21x20.htm

Boston Private Financial Holdings, Inc. Reports Third Quarter 2015 GAAP EPS of $0.16

Third Quarter Highlights:


•	Revenue Growth: Total Revenue increased 9% year-over-year and was down 2% on a linked quarter basis at $85.9 million. Year-over-year, Net Interest Income and Core Fees were up $1.7 million and $5.9 million, respectively. On a linked quarter basis, a $1.4 million increase in Net Interest Income was offset by a $0.9 million decline in Core Fees and a $2.3 million reduction in Other Income.


•	Deposit and Loan Growth: Average Total Deposits increased 10% year-over-year to $5.7 billion. On a linked quarter basis, Average Total Deposits increased 7%, while Average Total Loans grew 7% year-over-year and 4% linked quarter. The Average Loan-to-Deposit ratio was 96% at the end of the third quarter, down from 98% in the third quarter of 2014.


•	Assets Under Management: Total Assets Under Management/Advisory (“AUM”) increased 11% year-over-year to $27.4 billion, reflecting the acquisition of Banyan Partners, partially offset by negative net flows and market action. On a linked quarter basis, AUM were down 8% due to negative net flows and market action.


•	Provision for Loan Loss: The Company recorded a $2.6 million provision expense driven by strong commercial loan growth and net charge-offs of $1.6 million.

Boston, MA - October 21, 2015 - Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the “Company” or “BPFH”) today reported third quarter 2015 GAAP Net Income Attributable to the Company of $13.5 million, compared to $17.6 million for the second quarter of 2015. Third quarter 2015 diluted earnings per share were $0.16, compared to $0.20 in the second quarter of 2015, and $0.22 in the third quarter of 2014.

“Performance was mixed across our business segments in the third quarter,” said Clayton G. Deutsch, CEO. “The Private Bank continued to generate strong growth within our key client segments across all of our regions while AUM was lower linked quarter due to the impact of employee transitions at Boston Private Wealth, sector-based headwinds affecting the Investment Managers and heightened market volatility, which weighed on all segments of our Wealth Management business.”

Core Fees and Income

Core Fees and Income increased 18% year-over-year to $39.4 million. The increase reflects revenue from Banyan Partners, which was acquired in October 2014. On a linked quarter basis, Core Fees and Income decreased 2% reflecting lower levels of Assets Under Management.

Total Assets Under Management decreased to $27.4 billion in the third quarter, down 8% from $29.6 billion in the second quarter of 2015. AUM increased 11% year-over-year. The year-over-year increase includes AUM related to the Banyan Partners acquisition, partially offset by negative market action and net outflows. The Company experienced third quarter 2015 AUM net outflows of $751 million, as compared to second quarter 2015 AUM net outflows of $193 million. AUM net outflows for the third quarter 2014 were $211 million. AUM net outflows for the year to date 2015 were $1.3 billion as compared to net outflows of $194 million for the same period of 2014.

Net Interest Income

Net Interest Income for the third quarter was $46.5 million, up 3% from $45.1 million for the second quarter of 2015. On a year-over-year basis, Net Interest Income increased 4% from $44.8 million. The current quarter includes $0.3 million of interest recovered on previous non-accrual loans while the second quarter of 2015 and the third quarter of 2014 include recoveries of $0.1 million and $0.8 million, respectively. Excluding interest recovered on previous non-accrual loans, Net Interest Income increased 3% linked quarter and 6% year-over-year.

Net Interest Margin was 2.84% for the third quarter, down six basis points from 2.90% for the second quarter of 2015. Net Interest Margin was down nine basis points from 2.93% in the third quarter of 2014. Excluding interest recovered on previous nonaccrual loans, Net Interest Margin was down eight basis points linked quarter and down six basis points year-over-year.

Other Income

Other income was a loss of $37,000 in the third quarter of 2015 compared to $2.3 million in the second quarter of 2015. The linked quarter decrease in other income reflects the impact of mark-to-market adjustments on loan swaps, a lower market value adjustment related to the earnout of the Banyan Partners acquisition, and lower gains on partnership investments.

Total Operating Expenses

Total Operating Expenses for the third quarter of 2015 were $61.9 million, down 1% from $62.4 million for the second quarter of 2015. On a year-over-year basis, Total Operating Expenses increased 15% from $54.0 million, primarily due to the impact of the Banyan Partners acquisition. The third and second quarters of 2015 include Restructuring Expense of $1.5 million and $0.2 million, respectively. Excluding Restructuring Expense, Total Operating Expenses decreased 3% linked quarter and increased 12% year-over-year.

Provision and Asset Quality

The Company recorded a provision expense of $2.6 million for the third quarter of 2015, compared to no provision for the second quarter of 2015. The provision expense was driven by strong commercial loan growth and $1.6 million of net charge-offs.

Criticized Loans decreased 4% on a linked quarter basis and 10% year-over-year. Nonaccrual Loans (“Nonaccruals”) increased 3% to $30.7 million on a linked quarter basis. On a year-over-year basis, Nonaccruals decreased 8% from $33.5 million. As a percentage of Total Loans, Nonaccruals were 55 basis points at September 30, 2015, flat from June 30, 2015, and down 9 basis points from September 30, 2014.

Additional credit metrics are listed below on a linked quarter and year-over-year basis:



(In millions)	September 30, 2015			June 30, 2015			September 30, 2014
Total Criticized Loans	$	160.9		$	167.3		$	179.5
Total Loans 30-89 Days Past Due and Accruing⁽¹²⁾	$	7.0		$	4.3		$	3.6
Total Net Loans (Charged-off)/ Recovered	$	(1.6	)	$	1.0		$	3.3
Allowance for Loan Losses/ Total Loans	1.41		%	1.43		%	1.44		%

Capital Ratios

Capital ratios are listed below on a linked quarter and year-over-year basis:



	September 30, 2015		June 30, 2015		September 30, 2014
BPFH Ratios:
Total Risk-Based Capital *	13.8	%	13.9	%	14.8	%
Tier I Risk-Based Capital *	12.6	%	12.7	%	13.5	%
Tier I Leverage Capital *	9.6	%	9.9	%	10.3	%
TCE/TA	7.2	%	7.2	%	7.6	%
Tier I Common Equity/ Risk Weighted Assets *	9.7	%	9.8	%	10.1	%

*September 30, 2015 information is presented based on estimated data.

Dividend Payments

Concurrent with the release of third quarter 2015 earnings, the Board of Directors of the Company declared a cash dividend to common stock shareholders of $0.09 per share. The record date for this dividend is November 6, 2015, and the payment date is November 20, 2015.

The Board of Directors of the Company also declared a cash dividend to holders of the Non-Cumulative Perpetual Preferred Stock, Series D of $17.375 per share, which will result in a dividend of $0.434375 per depositary share. The record date for this dividend is November 16, 2015, and the payment date is December 15, 2015.

Non-GAAP Financial Measures

The Company uses certain non-GAAP financial measures, such as tangible book value per share; the TCE/TA ratio; return on average common equity; return on average tangible common equity; pre-tax, pre-provision earnings; total operating expense excluding restructuring; the efficiency ratio (FTE basis); and Net Interest Income and Net Interest Margin excluding interest recovered on previous non-accrual loans; to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector. A detailed reconciliation table of the Company's GAAP to the non-GAAP measures is attached.

Conference Call

Management will hold a conference call at 8 a.m. Eastern Time on Thursday, October 22, 2015, to discuss the financial results, business highlights and outlook. To access the call:

Dial In #: (888) 317-6003

Elite Entry Number: 0566270

Replay Information:

Available from October 22, 2015 at 12 noon until October 29, 2015

Dial In #: (877) 344-7529

Conference Number: 10073575

The call will be simultaneously webcast and may be accessed on www.bostonprivatefinancial.com

Boston Private Financial Holdings, Inc.

Boston Private Financial Holdings, Inc. is a national financial services organization that owns Wealth Management and Private Banking affiliates with offices in Boston, New York, Los Angeles, San Francisco, San Jose, Atlanta, Florida, Wisconsin, and Texas. The Company has a $7 billion Private Banking balance sheet, and manages over $27 billion of client assets.

The Company positions its affiliates to serve the high net worth marketplace with high quality products and services of unique appeal to private clients. The Company also provides strategic oversight and access to resources, both financial and intellectual, to support affiliate management, marketing, compliance and legal activities. (NASDAQ: BPFH)

For more information about BPFH, visit the Company's website at www.bostonprivatefinancial.com.

Forward-Looking Statements

Certain statements in this press release that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties. These statements include, among others, statements regarding our strategy, evaluations of future interest rate trends and liquidity, prospects for growth in assets, and prospects for overall results over the long term. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Company's control. Forward-looking statements are based on the current assumptions and beliefs of management and are only expectations of future results. The Company's actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, adverse conditions in the capital and debt markets and the impact of such conditions on the Company's private banking, investment management and wealth advisory activities; changes in interest rates; competitive pressures from other financial institutions; the effects of 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; 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.

Note to Editors:

Boston Private Financial Holdings, Inc. is not to be confused with Boston Private Bank & Trust Company. Boston Private Bank & Trust Company is a wholly-owned subsidiary of BPFH. The information reported in this press release is related to the performance and results of BPFH.

###

CONTACT:

Steven Gaven

Vice President Corporate Finance and Director of Investor Relations

Boston Private Financial Holdings, Inc.

(617) 912-3793

sgaven@bostonprivate.com

Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)



	September 30, 2015		June 30, 2015			September 30, 2014
	(In thousands, except share and per share data)
Assets:
Cash and cash equivalents	$	43,640	$	63,099		$	308,912
Investment securities available for sale	1,023,255		992,007			724,638
Investment securities held to maturity	121,679		128,258			132,467
Stock in Federal Home Loan Banks	35,518		35,668			32,534
Loans held for sale	7,685		19,512			4,943
Total loans	5,607,472		5,463,250			5,213,491
Less: Allowance for loan losses	79,246		78,251			75,283
Net loans	5,528,226		5,384,999			5,138,208
Other real estate owned (“OREO”)	776		929			1,074
Premises and equipment, net	30,841		31,337			29,473
Goodwill	152,082		152,082			110,180
Intangible assets, net	34,806		36,461			17,475
Fees receivable	11,308		12,486			11,439
Accrued interest receivable	17,039		16,383			15,018
Deferred income taxes, net	45,438		47,388			48,443
Other assets	128,235		125,330			114,281
Total assets	$	7,180,528	$	7,045,939		$	6,689,085
Liabilities:
Deposits	$	5,647,859	$	5,429,028		$	5,334,881
Securities sold under agreements to repurchase	35,698		26,660			73,422
Federal funds purchased	60,000		100,000			—
Federal Home Loan Bank borrowings	461,899		541,529			371,367
Junior subordinated debentures	106,363		106,363			106,363
Other liabilities	109,695		95,074			106,024
Total liabilities	6,421,514		6,298,654			5,992,057
Redeemable Noncontrolling Interests	18,257		19,200			21,397
Shareholders’ Equity:
Preferred stock, $1.00 par value; authorized: 2,000,000 shares	47,753		47,753			47,753
Common stock, $1.00 par value; authorized: 170,000,000 shares; issued and outstanding: 83,645,364 shares at September 30, 2015; 83,539,785 shares at June 30, 2015; 80,464,390 shares at September 30, 2014	83,645		83,540			80,464
Additional paid-in capital	598,968		597,424			598,036
Retained earnings/ (accumulated deficit)	5,960		(1,003		)	(49,573		)
Accumulated other comprehensive income/ (loss)	1,287		(2,525		)	(1,312		)
Total Company’s shareholders’ equity	737,613		725,189			675,368
Noncontrolling interests	3,144		2,896			263
Total shareholders’ equity	740,757		728,085			675,631
Total liabilities, redeemable noncontrolling interests and shareholders’ equity	$	7,180,528	$	7,045,939		$	6,689,085

Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)



	Three Months Ended								Nine Months Ended
	September 30, 2015			June 30, 2015		September 30, 2014			September 30, 2015		September 30, 2014
Interest and dividend income:	(In thousands, except share and per share data)
Loans	$	48,058		$	46,663	$	47,931		$	142,721	$	144,541
Taxable investment securities	1,094			1,075		876			3,164		2,242
Non-taxable investment securities	1,264			1,125		942			3,410		2,760
Mortgage-backed securities	2,681			2,775		1,605			8,070		5,230
Federal funds sold and other	425			282		379			941		978
Total interest and dividend income	53,522			51,920		51,733			158,306		155,751
Interest expense:
Deposits	4,007			3,822		3,603			11,721		10,194
Federal Home Loan Bank borrowings	2,051			2,017		2,354			5,999		7,039
Junior subordinated debentures	979			967		976			2,902		2,896
Repurchase agreements and other short-term borrowings	12			29		17			54		49
Total interest expense	7,049			6,835		6,950			20,676		20,178
Net interest income	46,473			45,085		44,783			137,630		135,573
Provision/ (credit) for loan losses	2,600			—		(2,600		)	100		(8,800		)
Net interest income after provision/ (credit) for loan losses	43,873			45,085		47,383			137,530		144,373
Fees and other income:
Investment management fees	11,360			11,731		12,011			34,805		35,226
Wealth advisory fees	12,515			12,678		12,278			37,868		35,730
Wealth management and trust fees	12,424			13,545		7,251			39,527		21,255
Other banking fee income	2,780			2,031		1,835			6,721		5,192
Gain on sale of loans, net	364			362		183			1,029		1,966
Total core fees and income	39,443			40,347		33,558			119,950		99,369
Gain/ (loss) on sale of investments, net	5			8		8			21		9
Gain/ (loss) on OREO, net	35			—		150			124		988
Other	(37		)	2,305		53			3,356		510
Total other income	3			2,313		211			3,501		1,507
Operating expense:
Salaries and employee benefits	37,938			39,816		35,855			119,881		106,767
Occupancy and equipment	9,064			9,095		7,346			27,194		22,492
Professional services	2,848			3,214		2,796			9,083		9,165
Marketing and business development	2,008			1,706		1,408			5,062		5,564
Contract services and data processing	1,600			1,495		1,404			4,532		4,289
Amortization of intangibles	1,655			1,655		1,031			4,912		3,129
FDIC insurance	916			963		857			2,890		2,607
Restructuring	1,504			220		—			1,724		—
Other	4,396			4,254		3,302			12,496		9,356
Total operating expense	61,929			62,418		53,999			187,774		163,369
Income before income taxes	21,390			25,327		27,153			73,207		81,880
Income tax expense	8,182			8,000		8,993			24,754		26,464
Net income from continuing operations	13,208			17,327		18,160			48,453		55,416
Net income from discontinued operations (1)	1,316			1,546		1,272			4,956		4,650
Net income before attribution to noncontrolling interests	14,524			18,873		19,432			53,409		60,066
Less: Net income attributable to noncontrolling interests	994			1,263		1,167			3,486		3,428
Net income attributable to the Company	$	13,530		$	17,610	$	18,265		$	49,923	$	56,638

Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)



	Three Months Ended									Nine Months Ended
PER SHARE DATA:	September 30, 2015			June 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(In thousands, except share and per share data)
Calculation of Income for EPS:
Net income attributable to the Company	$	13,530		$	17,610		$	18,265		$	49,923		$	56,638
Adjustments to Net Income Attributable to the Company to Arrive at Net Income Attributable to Common Shareholders (2)	154			(1,064		)	(796		)	(1,915		)	(3,052		)
Net Income Attributable to the Common Shareholders	13,684			16,546			17,469			48,008			53,586
LESS: Amount allocated to participating securities	(8		)	(33		)	(75		)	(91		)	(328		)
Net Income Attributable to the Common Shareholders, after allocation to participating securities	$	13,676		$	16,513		$	17,394		$	47,917		$	53,258

End of Period Common Shares Outstanding	83,645,364			83,539,785			80,464,390

Weighted Average Shares Outstanding:
Weighted average basic shares, including participating securities	81,204,808			81,074,380			79,222,590			81,088,511			79,175,634
LESS: Participating securities	(100,870		)	(295,818		)	(535,528		)	(287,398		)	(750,021		)
PLUS: Dilutive potential common shares	2,265,257			2,259,919			1,923,896			2,216,808			1,899,015
Weighted Average Diluted Shares (3)	83,369,195			83,038,481			80,610,958			83,017,921			80,324,628

Diluted Total Earnings per Share	$	0.16		$	0.20		$	0.22		$	0.58		$	0.66

Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)



(In thousands, except per share data)	September 30, 2015			June 30, 2015			September 30, 2014
FINANCIAL DATA:	September 30, 2015			June 30, 2015			September 30, 2014
Book Value Per Common Share	$	8.29		$	8.14		$	7.80
Tangible Book Value Per Share (4)	$	6.05		$	5.89		$	6.22
Market Price Per Share	$	11.70		$	13.41		$	12.39

ASSETS UNDER MANAGEMENT AND ADVISORY:
Wealth Management and Trust	$	8,060,000		$	9,028,000		$	4,701,000
Investment Managers	9,830,000			10,695,000			10,376,000
Wealth Advisory	9,537,000			9,941,000			9,731,000
Less: Inter-company Relationship	(21,000		)	(22,000		)	(22,000		)
Total Assets Under Management and Advisory	$	27,406,000		$	29,642,000		$	24,786,000

FINANCIAL RATIOS:
Total Equity/ Total Assets	10.32		%	10.33		%	10.10		%
Tangible Common Equity/ Tangible Assets (4)	7.24		%	7.17		%	7.62		%
Tier I Common Equity/ Risk Weighted Assets (4)	9.73		%	9.77		%	10.11		%
Allowance for Loan Losses/ Total Loans	1.41		%	1.43		%	1.44		%
Allowance for Loan Losses/ Nonaccrual Loans	258		%	262		%	224		%
Return on Average Assets - Three Months Ended (Annualized)	0.75		%	1.02		%	1.10		%
Return on Average Common Equity - Three Months Ended (Annualized) (5)	7.32		%	9.91		%	11.10		%
Return on Average Tangible Common Equity - Three Months Ended (Annualized) (5)	10.93		%	14.63		%	14.53		%
Efficiency Ratio - Three Months Ended (6)	66.18		%	66.99		%	65.47		%

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:	09/30/15		06/30/15		09/30/14		09/30/15		06/30/15		09/30/14		09/30/15		06/30/15		09/30/14
AVERAGE ASSETS
Interest-Earning Assets:
Cash and Investments:
Taxable investment securities	$	340,170	$	342,259	$	295,395	$	1,094	$	1,075	$	876	1.29	%	1.26	%	1.19	%
Non-taxable investment securities (8)	249,854		242,387		223,499		1,945		1,731		1,449		3.12	%	2.86	%	2.59	%
Mortgage-backed securities	526,408		538,688		325,913		2,681		2,775		1,605		2.04	%	2.06	%	1.97	%
Federal funds sold and other	213,372		90,616		359,899		425		282		379		0.78	%	1.23	%	0.42	%
Total Cash and Investments	1,329,804		1,213,950		1,204,706		6,145		5,863		4,309		1.85	%	1.93	%	1.43	%
Loans (9):
Commercial and Construction (8)	3,043,739		2,874,547		2,841,869		31,195		30,013		31,657		4.01	%	4.13	%	4.36	%
Residential	2,208,004		2,160,987		2,071,326		17,083		16,637		16,384		3.09	%	3.08	%	3.16	%
Home Equity and Other Consumer	287,102		290,029		244,690		1,982		2,038		1,733		2.74	%	2.82	%	2.81	%
Total Loans	5,538,845		5,325,563		5,157,885		50,260		48,688		49,774		3.58	%	3.63	%	3.81	%
Total Earning Assets	6,868,649		6,539,513		6,362,591		56,405		54,551		54,083		3.24	%	3.32	%	3.36	%
LESS: Allowance for Loan Losses	78,263		77,938		76,099
Cash and due From Banks (Non-Interest Bearing)	38,631		41,596		42,080
Other Assets	404,945		410,296		341,953
TOTAL AVERAGE ASSETS	$	7,233,962	$	6,913,467	$	6,670,525
AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY
Interest-Bearing Liabilities:
Interest-Bearing Deposits:
Savings and NOW	$	581,041	$	589,123	$	583,547	$	103	$	87	$	110	0.07	%	0.06	%	0.07	%
Money Market	2,944,893		2,754,817		2,640,762		2,731		2,551		2,273		0.37	%	0.37	%	0.34	%
Certificates of Deposit	593,466		597,617		607,940		1,173		1,184		1,220		0.78	%	0.79	%	0.80	%
Total Interest-Bearing Deposits	4,119,400		3,941,557		3,832,249		4,007		3,822		3,603		0.39	%	0.39	%	0.37	%
Junior Subordinated Debentures	106,363		106,363		106,363		979		967		976		3.60	%	3.60	%	3.59	%
FHLB Borrowings and Other	526,697		576,403		534,062		2,063		2,046		2,371		1.53	%	1.40	%	1.74	%
Total Interest-Bearing Liabilities	4,752,460		4,624,323		4,472,674		7,049		6,835		6,950		0.59	%	0.59	%	0.61	%
Noninterest Bearing Demand Deposits	1,623,524		1,443,228		1,404,875
Payables and Other Liabilities	102,076		97,641		100,106
Total Average Liabilities	6,478,060		6,165,192		5,977,655
Redeemable Noncontrolling Interests	22,020		22,760		23,584
Average Shareholders' Equity	733,882		725,515		669,286
TOTAL AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY	$	7,233,962	$	6,913,467	$	6,670,525
Net Interest Income - on a Fully Taxable Equivalent Basis (FTE)							$	49,356	$	47,716	$	47,133
LESS: FTE Adjustment (8)							2,883		2,631		2,350
Net Interest Income (GAAP Basis)							$	46,473	$	45,085	$	44,783
Interest Rate Spread													2.65	%	2.73	%	2.75	%
Bank only Net Interest Margin													2.91	%	2.97	%	3.00	%
Net Interest Margin													2.84	%	2.90	%	2.93	%

Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)



	Average Balance				Interest Income/Expense				Average Yield/Rate
(In thousands)	Nine Months Ended				Nine Months Ended				Nine Months Ended
AVERAGE BALANCE SHEET:	09/30/15		09/30/14		09/30/15		09/30/14		09/30/15		09/30/14
AVERAGE ASSETS
Interest-Earning Assets:
Cash and Investments:
Taxable investment securities	$	334,473	$	270,914	$	3,164	$	2,242	1.27	%	1.10	%
Non-taxable investment securities (8)	240,902		224,061		5,246		4,246		2.90	%	2.53	%
Mortgage-backed securities	527,081		333,252		8,070		5,230		2.04	%	2.09	%
Federal funds sold and other	150,611		250,942		941		978		0.90	%	0.52	%
Total Cash and Investments	1,253,067		1,079,169		17,421		12,696		1.86	%	1.57	%
Loans (9):
Commercial and Construction (8)	2,924,065		2,844,013		92,575		95,975		4.17	%	4.45	%
Residential	2,170,086		2,048,700		50,375		48,537		3.10	%	3.16	%
Home Equity and Other Consumer	285,066		244,421		5,973		5,281		2.80	%	2.89	%
Total Loans	5,379,217		5,137,134		148,923		149,793		3.67	%	3.86	%
Total Earning Assets	6,632,284		6,216,303		166,344		162,489		3.33	%	3.46	%
LESS: Allowance for Loan Losses	77,751		77,462
Cash and due From Banks (Non-Interest Bearing)	39,547		38,628
Other Assets	409,265		357,896
TOTAL AVERAGE ASSETS	$	7,003,345	$	6,535,365
AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY
Interest-Bearing Liabilities:
Interest-Bearing Deposits:
Savings and NOW	$	589,885	$	577,012	$	294	$	319	0.07	%	0.07	%
Money Market	2,837,614		2,547,039		7,877		6,112		0.37	%	0.32	%
Certificates of Deposit	598,456		615,903		3,550		3,763		0.79	%	0.82	%
Total Interest-Bearing Deposits	4,025,955		3,739,954		11,721		10,194		0.39	%	0.36	%
Junior Subordinated Debentures	106,363		106,363		2,902		2,896		3.60	%	3.59	%
FHLB Borrowings and Other	524,704		522,881		6,053		7,088		1.52	%	1.79	%
Total Interest-Bearing Liabilities	4,657,022		4,369,198		20,676		20,178		0.59	%	0.61	%
Noninterest Bearing Demand Deposits	1,498,105		1,385,966
Payables and Other Liabilities	101,222		104,556
Total Average Liabilities	6,256,349		5,859,720
Redeemable Noncontrolling Interests	22,157		20,795
Average Shareholders' Equity	724,839		654,850
TOTAL AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY	$	7,003,345	$	6,535,365
Net Interest Income - on a Fully Taxable Equivalent Basis (FTE)					$	145,668	$	142,311
LESS: FTE Adjustment (8)					8,038		6,738
Net Interest Income (GAAP Basis)					$	137,630	$	135,573
Interest Rate Spread									2.74	%	2.85	%
Bank only Net Interest Margin									2.98	%	3.10	%
Net Interest Margin									2.91	%	3.03	%

Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)



(In thousands)	September 30, 2015		June 30, 2015		September 30, 2014
LOAN DATA (10):	September 30, 2015		June 30, 2015		September 30, 2014
Commercial and Industrial Loans:
New England	$	827,301	$	793,897	$	758,728
San Francisco Bay	125,093		121,477		124,993
Southern California	84,428		87,038		47,107
Total Commercial and Industrial Loans	$	1,036,822	$	1,002,412	$	930,828
Commercial Real Estate Loans:
New England	$	766,253	$	728,820	$	712,464
San Francisco Bay	625,145		629,258		628,149
Southern California	512,250		469,337		467,428
Total Commercial Real Estate Loans	$	1,903,648	$	1,827,415	$	1,808,041
Construction and Land Loans:
New England	$	111,280	$	102,068	$	82,492
San Francisco Bay	35,627		45,221		35,668
Southern California	23,504		13,637		12,385
Total Construction and Land Loans	$	170,411	$	160,926	$	130,545
Residential Loans:
New England	$	1,356,057	$	1,316,705	$	1,273,544
San Francisco Bay	462,630		466,155		456,355
Southern California	393,199		392,648		367,628
Total Residential Loans	$	2,211,886	$	2,175,508	$	2,097,527
Home Equity Loans:
New England	$	81,796	$	85,057	$	76,142
San Francisco Bay	27,076		30,013		30,060
Southern California	5,915		5,395		3,025
Total Home Equity Loans	$	114,787	$	120,465	$	109,227
Other Consumer Loans:
New England	$	161,186	$	164,522	$	124,449
San Francisco Bay	5,782		6,793		6,738
Southern California	2,950		5,209		6,136
Total Other Consumer Loans	$	169,918	$	176,524	$	137,323
Total Loans:
New England	$	3,303,873	$	3,191,069	$	3,027,819
San Francisco Bay	1,281,353		1,298,917		1,281,963
Southern California	1,022,246		973,264		903,709
Total Loans	$	5,607,472	$	5,463,250	$	5,213,491

Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)



(In thousands)	September 30, 2015			June 30, 2015		September 30, 2014
CREDIT QUALITY (10):	September 30, 2015			June 30, 2015		September 30, 2014
Special Mention Loans:
New England	$	46,924		$	53,626	$	45,788
San Francisco Bay	11,087			17,150		24,623
Southern California	12,718			5,659		32,614
Total Special Mention Loans	$	70,729		$	76,435	$	103,025
Accruing Substandard Loans (11):
New England	$	16,996		$	16,666	$	13,589
San Francisco Bay	20,108			20,396		24,267
Southern California	22,405			24,554		5,331
Total Accruing Substandard Loans	$	59,509		$	61,616	$	43,187
Nonaccruing Loans:
New England	$	22,815		$	17,943	$	16,205
San Francisco Bay	5,096			9,163		15,133
Southern California	2,816			2,785		2,203
Total Nonaccruing Loans	$	30,727		$	29,891	$	33,541
Other Real Estate Owned:
New England	$	191		$	344	$	489
San Francisco Bay	585			585		585
Southern California	—			—		—
Total Other Real Estate Owned	$	776		$	929	$	1,074
Loans 30-89 Days Past Due and Accruing (12):
New England	$	6,733		$	3,873	$	1,825
San Francisco Bay	14			110		653
Southern California	227			356		1,145
Total Loans 30-89 Days Past Due and Accruing	$	6,974		$	4,339	$	3,623
Loans (Charged-off)/ Recovered, Net for the Three Months Ended:
New England	$	(1,618	)	$	106	$	912
San Francisco Bay	(57		)	833		465
Southern California	70			49		1,959
Total Net Loans (Charged-off)/ Recovered	$	(1,605	)	$	988	$	3,336
Loans (Charged-off)/ Recovered, Net for the Nine Months Ended:
New England	$	(622	)			$	830
San Francisco Bay	3,514					3,064
Southern California	416					3,818
Total Net Loans (Charged-off)/ Recovered	$	3,308				$	7,712

Boston Private Financial Holdings, Inc.

Selected Financial Data

(Unaudited)

FOOTNOTES:


(1)	Net income from discontinued operations consists of contingent payments or expenses related to 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.


(2)	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.

(3)

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 earnings per share calculation. The potential dilutive shares relate to: unexercised stock options, unvested non-participating restricted stock, and unexercised stock warrants. 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, 2014 for additional information.


(4)	The Company uses certain non-GAAP financial measures, such as: Tangible Book Value Per Share and the Tangible Common Equity (“TCE”) to Tangible Assets (“TA”) ratio to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector.

Reconciliations from the Company's GAAP Total Equity to Total Assets ratio to the Non-GAAP TCE to TA ratio, and from GAAP Book Value to Non-GAAP Tangible Book Value are presented below:

The Company calculates Tangible Assets by adjusting Total Assets to exclude Goodwill and Intangible Assets.

The Company calculates Tangible Common Equity by adjusting Total Equity to exclude non-convertible Series D Preferred stock and exclude Goodwill and Intangible Assets, net.



(In thousands, except per share data)	September 30, 2015			June 30, 2015			September 30, 2014
Total Balance Sheet Assets	$	7,180,528		$	7,045,939		$	6,689,085
LESS: Goodwill and Intangible Assets, net	(186,888		)	(188,543		)	(127,655		)
Tangible Assets (non-GAAP)	$	6,993,640		$	6,857,396		$	6,561,430
Total Shareholders' Equity	$	740,757		$	728,085		$	675,631
LESS: Series D Preferred Stock (non-convertible)	(47,753		)	(47,753		)	(47,753		)
LESS: Goodwill and Intangible Assets, net	(186,888		)	(188,543		)	(127,655		)
Total adjusting items	(234,641		)	(236,296		)	(175,408		)
Tangible Common Equity (non-GAAP)	$	506,116		$	491,789		$	500,223
Total Equity/Total Assets	10.32		%	10.33		%	10.10		%
Tangible Common Equity/Tangible Assets (non-GAAP)	7.24		%	7.17		%	7.62		%

Total Risk Weighted Assets *	$	5,396,783		$	5,278,908		$	5,000,790
Tier I Common Equity *	$	525,004		$	515,546		$	505,474
Tier I Common Equity/ Risk Weighted Assets	9.73		%	9.77		%	10.11		%

End of Period Shares Outstanding	83,645			83,540			80,464

Book Value Per Common Share	$	8.29		$	8.14		$	7.80
Tangible Book Value Per Share (non-GAAP)	$	6.05		$	5.89		$	6.22

* Risk Weighted Assets and Tier I Common Equity for September 30, 2015 are presented based on estimated data.

Boston Private Financial Holdings, Inc.

Selected Financial Data

(Unaudited)


(5)	The Company uses certain non-GAAP financial measures, such as: Return on Average Common Equity and Return on Average Tangible Common Equity to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector.

Reconciliations from the Company's GAAP Return on Average Equity ratio to the Non-GAAP Return on Average Common Equity ratio, and the Non-GAAP Return on Average Tangible Common Equity ratio are presented below:

The Company annualizes income data based on the number of days in the period presented and a 365 day year. The Company calculates Average Common Equity by adjusting Average Equity to exclude Average Preferred Equity. The Company calculates Average Tangible Common Equity by adjusting Average Equity to exclude Average Goodwill and Intangible Assets, net and Average Preferred Equity.



	Three Months Ended									Nine Months Ended
(In thousands)	September 30, 2015			June 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
Total average shareholders' equity	$	733,882		$	725,515		$	669,286		$	724,839		$	654,850
LESS: Average Series D preferred stock (non-convertible)	(47,753		)	(47,753		)	(47,753		)	(47,753		)	(47,753		)
Average common equity (non-GAAP)	686,129			677,762			621,533			677,086			607,097
LESS: Average goodwill and intangible assets, net	(187,728		)	(189,420		)	(128,178		)	(189,391		)	(129,217		)
Total adjusting items	(187,728		)	(189,420		)	(128,178		)	(189,391		)	(129,217		)
Average Tangible Common Equity (non-GAAP)	$	498,401		$	488,342		$	493,355		$	487,695		$	477,880

Net income attributable to the Company	$	13,530		$	17,610		$	18,265		$	49,923		$	56,638
LESS: Dividends on Series D preferred stock	(869		)	(869		)	(869		)	(2,606		)	(2,606		)
Common net income (non-GAAP)	12,661			16,741			17,396			47,317			54,032
ADD: Amortization of intangibles, net of tax (35%)	1,076			1,076			670			3,193			2,034
Tangible common net income (non-GAAP)	$	13,737		$	17,817		$	18,066		$	50,510		$	56,066

Return on Average Equity - (Annualized)	7.31		%	9.74		%	10.83		%	9.21		%	11.56		%
Return on Average Common Equity - (Annualized) (non-GAAP)	7.32		%	9.91		%	11.10		%	9.34		%	11.90		%
Return on Average Tangible Common Equity - (Annualized) (non-GAAP)	10.93		%	14.63		%	14.53		%	13.85		%	15.69		%

Boston Private Financial Holdings, Inc.

Selected Financial Data

(Unaudited)


(6)	The Company uses certain non-GAAP financial measures, such as: pre-tax, pre-provision earnings, total operating expenses excluding restructuring expense, and the efficiency ratio to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector.

Reconciliations from the Company's GAAP income from continuing operations before income taxes to non-GAAP pre-tax, pre-provision earnings; from GAAP total operating expense to non-GAAP total operating expense excluding restructuring; and from GAAP efficiency ratio to Non-GAAP efficiency ratio (FTE basis), excluding restructuring, are presented below:



	Three Months Ended									Nine Months Ended
(In thousands)	September 30, 2015			June 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
Income before income taxes (GAAP)	$	21,390		$	25,327		$	27,153		$	73,207		$	81,880
ADD BACK: Provision/ (credit) for loan losses	2,600			—			(2,600		)	100			(8,800		)
Pre-tax, pre-provision earnings (non-GAAP)	$	23,990		$	25,327		$	24,553		$	73,307		$	73,080

Total operating expense (GAAP)	$	61,929		$	62,418		$	53,999		$	187,774		$	163,369
Less: Amortization of intangibles	1,655			1,655			1,031			4,912			3,129
Less: Restructuring	1,504			220			—			1,724			—
Total operating expense (excluding amortization of intangibles and restructuring) (non-GAAP)	$	58,770		$	60,543		$	52,968		$	181,138		$	160,240
Total operating expense (excluding restructuring) (non-GAAP)	60,425			62,198			53,999			186,050			163,369

Net interest income	$	46,473		$	45,085		$	44,783		$	137,630		$	135,573
Total core fees and income	39,443			40,347			33,558			119,950			99,369
Total other income	3			2,313			211			3,501			1,507
FTE income	2,883			2,631			2,350			8,038			6,738
Total revenue (FTE basis)	$	88,802		$	90,376		$	80,902		$	269,119		$	243,187
Efficiency Ratio, before deduction of intangible amortization (GAAP)	72.08		%	71.14		%	68.74		%	71.92		%	69.09		%
Efficiency Ratio, FTE Basis excluding restructuring (non-GAAP)	66.18		%	66.99		%	65.47		%	67.31		%	65.89		%

(7)

The Company uses certain non-GAAP financial measures, such as: net interest income excluding interest recovered on previous non-accrual loans and net interest margin excluding interest recovered on previous non-accrual loans to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector.

Reconciliations from the Company's GAAP net interest income to non-GAAP net interest income excluding interest recovered on previous non-accrual loans; and from GAAP net interest margin to non-GAAP net interest margin excluding interest recovered on previous non-accrual loans, are presented below:



	Three Months Ended
(In thousands)	September 30, 2015			June 30, 2015			September 30, 2014
Net interest income (GAAP basis)	$	46,473		$	45,085		$	44,783
ADD: FTE income	2,883			2,631			2,350
Net interest income, FTE basis	49,356			47,716			47,133
LESS: Interest recovered on previously non-accrual loans	298			69			789
Net interest income, FTE basis, excluding interest recovered on previously non-accrual loans (non-GAAP)	49,058			47,647			46,344

Net Interest Margin (FTE basis)	2.84		%	2.90		%	2.93		%
Net Interest Margin, FTE basis, excluding interest recovered on previously non-accrual loans (non-GAAP)	2.82		%	2.90		%	2.88		%


(8)	Interest income on Non-taxable Investments and Loans are presented on an FTE basis using the federal statutory rate of 35% for each period presented.


(9)	Includes Loans Held for Sale and Nonaccrual Loans.


(10)	The concentration of the Private Banking loan data and credit quality is primarily based on the location of the lender's regional offices.

(11)

Accruing substandard 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.

(12)

In addition to loans 30-89 days past due and accruing, at September 30, 2015 the Company had one loan totaling $0.1 million that was more than 90 days past due but still on accrual status. This loan originated in the New England region. At June 30, 2015 the Company had no loans that were more than 90 days past due but still on accrual status. At September 30, 2014, the Company had two loans totaling $0.5 million that were more than 90 days past due but still on accrual status. These loans originated in the New England region.

Attached files

Stock widget

Investing forum

BOSTON PRIVATE FINANCIAL HOLDINGS INC Reports