Boston Private Reports Fourth Quarter and Full Year 2019 Results

Fourth Quarter 2019 Highlights include:

  • GAAP Net income was $21.2 million, or $0.26 per diluted share, and operating net income was $20.5 million, or $0.25 per diluted share

  • Return on average common equity (non-GAAP) was 10.3%; operating return on average common equity was 9.9%

  • Return on average tangible common equity (non-GAAP) was 11.5%; operating return on average tangible common equity was 11.1%

  • Average total deposits were $7.0 billion, a 1% increase year-over-year

  • Average total loans were $7.1 billion, a 4% increase year-over-year

  • Total assets under management/advisory ("AUM") were $16.8 billion, a 5% increase year-over-year

  • Total net flows were negative $209 million, of which negative $114 million were attributable to the Wealth Management and Trust segment

Notable Items impacting Fourth Quarter 2019 Results ("Notable Items"):

  • $1.1 million gain related to the revaluation of a receivable from the divestiture of Bingham, Osborn & Scarborough, LLC ("BOS")

Full Year 2019 Highlights include:

  • GAAP Net income was $80.0 million, or $0.97 per diluted share, and operating net income was $80.5 million, or $0.97 per diluted share

  • Returned $47.6 million of capital to common shareholders through dividends and share repurchases

  • Tangible book value per share increased 10% year-over-year to $9.02

Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the "Company" or "BPFH") today reported fourth quarter 2019 Net income attributable to the Company of $21.2 million, compared to $20.0 million for the third quarter of 2019 and $33.3 million for the fourth quarter of 2018. Fourth quarter 2019 Diluted earnings per share were $0.26, compared to $0.24 in the third quarter of 2019 and $0.42 in the fourth quarter of 2018.

"Our fourth quarter results reflect linked quarter net income growth as continued strength in asset quality drove a provision credit," said Anthony DeChellis, CEO of Boston Private. "During the quarter, we increased our client advisor count, while achieving key technology milestones. As we move into 2020 and execute on our growth initiatives, investing in talent and technology will remain the key priorities to achieving our strategic objectives."

Summary Financial Results - Reported

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Change

($ in millions, except for per share data)

 

4Q19

 

3Q19

 

4Q18

 

LQ

 

Y/Y

Net income

 

$21.2

 

$20.0

 

$33.3

 

6%

 

(36)%

Diluted earnings per share

 

$0.26

 

$0.24

 

$0.42

 

8%

 

(38)%

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Measures:

 

 

 

 

 

 

 

 

 

 

Pre-tax, pre-provision income

 

$24.5

 

$25.7

 

$42.3

 

(5)%

 

(42)%

Return on average common equity ("ROACE")

 

10.3%

 

9.8%

 

17.9%

 

 

 

 

Return on average tangible common equity ("ROATCE")

 

11.5%

 

11.0%

 

20.5%

 

 

 

 

The Company's reported financial results decreased year-over-year primarily as a result of a gain on sale related to the divestiture of BOS in the fourth quarter of 2018.

In addition to presenting the Companys 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.

Summary Financial Results - Operating Basis (non-GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Change

($ in millions, except for per share data)

 

4Q19 1

 

3Q19

 

4Q18 2

 

LQ

 

Y/Y

Net income

 

$20.5

 

$20.0

 

$19.9

 

2%

 

3%

Diluted earnings per share

 

$0.25

 

$0.24

 

$0.27

 

2%

 

(8)%

 

 

 

 

 

 

 

 

 

 

 

Pre-tax, pre-provision income

 

$23.4

 

$25.7

 

$25.8

 

(9)%

 

(9)%

Return on average common equity

 

9.9%

 

9.8%

 

10.7%

 

 

 

 

Return on average tangible common equity

 

11.1%

 

11.0%

 

12.4%

 

 

 

 

1 4Q19 results adjusted to exclude the net after-tax impact of $1.1 million gain related to the revaluation of a receivable from the divestiture of BOS and $0.3 million of tax expense

2 4Q18 results adjusted to exclude the net after-tax impact of $18.1 million gain on sale and $3.2 million tax expense related to the divestiture of BOS and $1.6 million restructuring expense

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)

 

4Q19

 

3Q19

 

4Q18

 

LQ

 

Y/Y

Net interest income

 

$56.1

 

$56.2

 

$60.0

 

%

 

(6)%

Less: Interest recovered on previous nonaccrual loans

 

 

0.2

 

1.0

 

(87)%

 

(98)%

Core net interest income (non-GAAP)

 

$56.1

 

$56.0

 

$59.0

 

%

 

(5)%

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

2.70%

 

2.72%

 

2.94%

 

 

 

 

Core net interest margin (non-GAAP)

 

2.70%

 

2.71%

 

2.90%

 

 

 

 

nm = not meaningful

 

 

 

 

 

 

 

 

 

 

Net interest income for the fourth quarter of 2019 was $56.1 million, flat linked quarter and a 6% decrease year-over-year. Core net interest income, which excludes interest recovered on previous nonaccrual loans, was flat linked quarter and decreased 5% year-over-year. The linked quarter comparison was positively impacted by lower deposit costs, lower borrowing costs, and lower borrowing volumes, while it was negatively impacted by variable rate loans repricing lower.

The Companys Core net interest margin, which excludes interest recovered on previous nonaccrual loans, decreased 1 basis point on a linked quarter basis to 2.70% as net interest income was flat and interest-earning assets increased 1%. Client deposit inflows during the fourth quarter enabled the repayment of higher cost borrowings, which contributed to a linked quarter decrease of 13 basis points in the total cost of funds from 1.12% to 0.99%.

Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Change

($ in millions)

 

4Q19

 

3Q19

 

4Q18

 

LQ

 

Y/Y

Wealth management and trust fees

 

$18.7

 

$19.1

 

$23.8

 

(2)%

 

(21)%

Investment management fees

 

2.6

 

2.5

 

2.8

 

2%

 

(10)%

Private banking fees 3

 

3.5

 

3.6

 

2.1

 

(3)%

 

68%

Total core fees and income

 

$24.8

 

$25.2

 

$28.7

 

(2)%

 

(14)%

Total other income

 

2.0

 

 

17.2

 

nm

 

(88)%

Total noninterest income

 

$26.8

 

$25.1

 

$45.8

 

7 %

 

(42)%

 

 

 

 

 

 

 

 

 

 

 

Memo: Excluding BOS and Notable Items

 

 

 

 

Wealth management and trust fees (non-GAAP) 4

 

$18.7

 

$19.1

 

$20.0

 

(2)%

 

(6)%

Investment management fees

 

2.6

 

2.5

 

2.8

 

2%

 

(10)%

Private banking fees

 

3.5

 

3.6

 

2.1

 

(3)%

 

68%

Total core fees and income (non-GAAP) 4

 

$24.8

 

$25.2

 

$24.9

 

(2)%

 

%

Total other income (non-GAAP) 5

 

0.9

 

 

(1.0)

 

nm

 

nm

Total noninterest income (non-GAAP) 4 5

 

$25.7

 

$25.1

 

$23.9

 

2 %

 

8 %

3 Private banking fees includes Other banking fee income and Gain/ (loss) on sale of loans, net

4 Excludes BOS revenue of $3.9 million in 4Q18

5 Excludes $18.1 million gain on sale related to BOS in 4Q18 and $1.1 gain related to revaluation of a receivable from the divestiture of BOS in 4Q19

Total core fees and income for the fourth quarter of 2019 was $24.8 million, a 2% decrease linked quarter, primarily driven by lower Wealth management and trust fees. The 14% decline year-over-year was primarily driven by the divestiture of BOS.

Excluding BOS and Notable Items, Total core fees and income (non-GAAP) were flat year-over-year primarily driven by higher Private banking fees associated with higher swap fees and gain on sale of loans, partially offset by lower Wealth management and trust fees associated with negative net flows.

Assets Under Management / Advisory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Change

($ in millions)

 

4Q19

 

3Q19

 

4Q18

 

LQ

 

Y/Y

Wealth Management and Trust

 

$15,224

 

$14,695

 

$14,206

 

4%

 

7%

Other 6

 

1,544

 

1,533

 

1,715

 

1%

 

(10)%

Total assets under management / advisory

 

$16,768

 

$16,228

 

$15,921

 

3 %

 

5 %

6 Includes results from Dalton, Greiner, Hartman, Maher & Co, LLC ("DGHM")

Total assets under management / advisory were $16.8 billion at the end of the fourth quarter of 2019, a 3% increase linked quarter and 5% increase year-over-year. The linked quarter and year-over-year comparisons were impacted by positive market action partially offset by negative net flows.

Total net flows were negative $209 million during the fourth quarter of 2019, of which $114 million were attributable to the Wealth Management and Trust segment.

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Change

($ in millions)

 

4Q19

 

3Q19

 

4Q18

 

LQ

 

Y/Y

Salaries and employee benefits

 

$34.2

 

$31.7

 

$36.0

 

8%

 

(5)%

Occupancy and equipment

 

7.6

 

8.3

 

8.0

 

(8)%

 

(5)%

Professional services

 

3.9

 

4.4

 

4.2

 

(12)%

 

(7)%

Marketing and business development

 

2.0

 

1.4

 

2.3

 

44%

 

(11)%

Information systems

 

6.5

 

5.2

 

6.3

 

25%

 

3%

Amortization of intangibles

 

0.7

 

0.7

 

0.7

 

1%

 

(1)%

FDIC insurance

 

 

0.1

 

0.7

 

nm

 

nm

Restructuring

 

 

 

2.1

 

%

 

(100)%

Other

 

3.6

 

3.9

 

3.3

 

(6)%

 

10%

Total noninterest expense

 

$58.5

 

$55.5

 

$63.6

 

5 %

 

(8)%

 

 

 

 

 

 

 

 

 

 

 

Memo: Excluding Notable Items and BOS

 

 

 

 

 

 

 

 

 

 

Information systems 6

 

 

 

(0.4)

 

nm

 

(100)%

Restructuring

 

 

 

2.1

 

nm

 

(100)%

BOS noninterest expense

 

 

 

2.8

 

nm

 

(100)%

Total noninterest expense (non-GAAP)

 

$58.5

 

$55.5

 

$59.1

 

5 %

 

(1)%

6 $0.4 million of Information systems expense was reclassified to Restructuring expense in conjunction with a formal restructuring plan announced in 4Q18

Total noninterest expense increased 5% linked quarter primarily driven by higher salaries and employee benefits expense and Information systems expense related to technology investments placed in service during the fourth quarter of 2019, partially offset by lower occupancy and equipment and professional services.

Excluding Notable Items and BOS, Total noninterest expense (non-GAAP) for the fourth quarter of 2019 was $58.5 million, down 1% year-over-year, primarily driven by an FDIC insurance assessment credit received in the fourth quarter of 2019.

Income Tax Expense

The Company's effective tax rate for the fourth quarter of 2019 was 24.1%. This rate is higher than prior quarters of 2019 primarily as a result of a slight increase in the full year effective tax rate as compared to the estimated annual effective tax rate in prior quarters. The effective tax rate for the full year 2019 was 21.9%.

Loans and Deposits - QTD Averages

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Change

($ in millions)

 

4Q19

 

3Q19

 

4Q18

 

LQ

 

Y/Y

Commercial and industrial

 

$1,142

 

$1,102

 

$1,027

 

4%

 

11%

Commercial real estate

 

2,562

 

2,518

 

2,402

 

2%

 

7%

Construction and land

 

217

 

196

 

209

 

11%

 

3%

Residential

 

2,935

 

3,016

 

2,907

 

(3)%

 

1%

Home equity

 

85

 

89

 

94

 

(5)%

 

(10)%

Other consumer

 

132

 

128

 

141

 

3%

 

(6)%

Total loans

 

$7,073

 

$7,049

 

$6,781

 

%

 

4 %

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing deposits

 

2,002

 

1,953

 

2,092

 

2%

 

(4)%

Interest bearing deposits

 

4,957

 

4,705

 

4,826

 

5%

 

3%

Total deposits

 

$6,959

 

$6,658

 

$6,918

 

5 %

 

1 %

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing deposits as a % of Total deposits

 

29%

 

29%

 

30%

 

 

 

 

Average total loans in the fourth quarter of 2019 increased 4% year-over-year, while remaining flat linked quarter. Linked quarter averages were impacted by commercial real estate growth and increased line of credit borrowings (included in Commercial and industrial loans), partially offset by a residential loan sale of $100 million during the fourth quarter.

Average total deposits increased 1% year-over-year, primarily driven by an increase in money market accounts, partially offset by a decline in demand deposit accounts and certificates of deposits. The decline in certificates of deposit was driven by the run-off of brokered certificates of deposits, which declined $135 million year-over-year or 2% of fourth quarter 2018 total deposits.

The cost of total deposits was 0.86%, a decrease of 6 basis points linked quarter.

Provision and Asset Quality

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in millions)

 

4Q19

 

3Q19

 

2Q19

 

1Q19

 

4Q18

Provision/ (credit) for loan loss

 

$(3.7)

 

$0.2

 

$1.4

 

$(1.4)

 

$0.1

Total criticized and classified loans

 

126.0

 

139.0

 

141.7

 

141.3

 

146.6

Total nonaccrual loans

 

16.1

 

17.6

 

17.2

 

12.0

 

14.1

Total loans 30-89 days past due and accruing

 

25.9

 

4.2

 

2.4

 

17.7

 

22.3

Total net loans (charged-off)/ recovered

 

0.3

 

0.1

 

(0.1)

 

(0.1)

 

1.7

 

 

 

 

 

 

 

 

 

 

 

Ratios:

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses as a % of Total loans

 

1.03%

 

1.07%

 

1.06%

 

1.07%

 

1.09%

Nonaccrual loans as a % of Total loans

 

0.23%

 

0.25%

 

0.24%

 

0.17%

 

0.20%

The Company recorded a provision credit of $3.7 million for the fourth quarter of 2019, compared to a provision expense of $0.2 million for the third quarter of 2019 and a provision expense of $0.1 million in the fourth quarter of 2018. The provision credit in the fourth quarter of 2019 was primarily driven by a decrease in criticized and classified loans and a decrease in loss factors.

Total criticized and classified loans as of December 31, 2019 was $126.0 million, a decline of 10% linked quarter and 14% year-over-year. Total nonaccrual loans as of December 31, 2019 was $16.1 million, or 23 basis points of Total loans, compared to $17.6 million, or 25 basis points of Total loans, as of September 30, 2019, and $14.1 million, or 20 basis points of Total loans, as of December 31, 2018.

Capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in millions, except for per share data)

 

4Q19

 

3Q19

 

2Q19

 

1Q19

 

4Q18

Tangible common equity/ Tangible assets (non-GAAP)

 

8.6%

 

8.6%

 

8.4%

 

8.3%

 

8.1%

Tangible book value per share (non-GAAP)

 

$9.02

 

$8.90

 

$8.71

 

$8.47

 

$8.18

 

 

 

 

 

 

 

 

 

 

 

Regulatory Capital Ratios: 7

 

 

 

 

 

 

 

 

 

 

Tier 1 common equity

 

11.4%

 

11.2%

 

11.2%

 

11.4%

 

11.4%

Total risk-based capital

 

14.1%

 

13.9%

 

13.9%

 

14.2%

 

14.3%

Tier 1 risk-based capital

 

13.0%

 

12.8%

 

12.7%

 

13.0%

 

13.0%

Tier 1 leverage capital

 

9.8%

 

9.7%

 

9.6%

 

9.7%

 

9.5%

 

 

 

 

 

 

 

 

 

 

 

Common Equity Repurchase Program:

 

 

 

 

 

 

 

 

 

 

Total shares of common stock repurchased

 

 

678,165

 

 

 

1,505,521

Average price paid per share of common stock

 

 

$10.61

 

 

 

$12.02

Aggregate repurchases of common equity

 

 

$7.2

 

 

 

$18.1

7 Current quarter information is presented based on estimated data.

The Company did not repurchase any common stock during the fourth quarter of 2019. The current program has $12.8 million remaining available to be repurchased.

Tangible book value per share (non-GAAP) as of December 31, 2019 increased 1% linked quarter and 10% year-over-year to $9.02. The linked quarter increase in Tangible book value per share was primarily driven by increased retained earnings, partially offset by dividends to shareholders.

Dividend Payments

Concurrent with the release of fourth 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 February 7, 2020, and the payment date is February 21, 2020.

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 Companys GAAP to non-GAAP measures is included in the tables of this release and beginning on page 17 of the attached financial statements.

Conference Call

Management will hold a conference call at 8:00 a.m. Eastern Time on Thursday, January 23, 2020, to discuss the financial results, business highlights and outlook. To access the call:
Dial In #: (888) 317-6003
Elite Entry Number: 8476896

Replay Information:
Available from January 23, 2020 at 12:00 p.m Eastern Time until January 30, 2020
Dial In #: (877) 344-7529
Conference Number: 10137972

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

About Boston Private

Boston Private is a leading provider of integrated wealth management, trust and banking services to high-net-worth individuals, families, businesses and nonprofits.

For more than 30 years, Boston Private has delivered comprehensive advice coupled with deep technical expertise to help clients simplify their lives and achieve their goals. The firm offers the capabilities of a large institution with the superior service of a boutique firm to clients across the United States. The Company has total assets of greater than $8 billion, and manages over $16 billion of client assets.

Boston Private is the corporate brand of Boston Private Financial Holdings, Inc. (NASDAQ: BPFH).

For more information, visit 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 Companys control. Forward-looking statements are based on the current assumptions and beliefs of management and are only expectations of future results. The Companys 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 Companys 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 Companys financial statements will become impaired; the risk that the Companys 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 Companys Annual Report on Form 10-K and updated by the Companys 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.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

 

 

 

 

Consolidated Balance Sheets

 

 

 

Unaudited ($ in thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

4Q19

 

3Q19

 

2Q19

 

1Q19

 

4Q18

ASSETS:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

292,479

 

 

$

78,010

 

 

$

65,756

 

 

$

96,211

 

 

$

127,259

 

Investment securities available-for-sale

978,284

 

 

935,538

 

 

966,731

 

 

981,951

 

 

994,065

 

Investment securities held-to-maturity

48,212

 

 

51,379

 

 

54,482

 

 

67,548

 

 

70,438

 

Equity securities at fair value

18,810

 

 

21,780

 

 

19,092

 

 

7,491

 

 

14,228

 

Stock in Federal Home Loan Bank and Federal Reserve Bank

39,078

 

 

47,756

 

 

64,453

 

 

47,053

 

 

49,263

 

Loans held for sale

7,386

 

 

6,658

 

 

3,640

 

 

280

 

 

2,812

 

Loans

6,976,704

 

 

7,067,151

 

 

7,080,260

 

 

6,926,968

 

 

6,893,158

 

Less: Allowance for loan losses

71,982

 

 

75,359

 

 

75,067

 

 

73,814

 

 

75,312

 

Loans, net of allowance for loan losses

6,904,722

 

 

6,991,792

 

 

7,005,193

 

 

6,853,154

 

 

6,817,846

 

Other real estate owned ("OREO")

 

 

 

 

 

 

 

 

401

 

Premises and equipment, net

44,527

 

 

42,658

 

 

40,244

 

 

42,938

 

 

45,412

 

Goodwill

57,607

 

 

57,607

 

 

57,607

 

 

57,607

 

 

57,607

 

Intangible assets, net

10,352

 

 

10,622

 

 

10,884

 

 

11,555

 

 

12,227

 

Accrued interest receivable

24,175

 

 

24,851

 

 

26,411

 

 

25,935

 

 

24,366

 

Deferred income taxes, net

11,383

 

 

15,704

 

 

17,183

 

 

22,844

 

 

26,638

 

Right-of-use assets

102,075

 

 

107,045

 

 

110,880

 

 

104,644

 

 

 

Other assets

291,411

 

 

299,544

 

 

270,317

 

 

252,932

 

 

252,063

 

TOTAL ASSETS

$

8,830,501

 

 

$

8,690,944

 

 

$

8,712,873

 

 

$

8,572,143

 

 

$

8,494,625

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

 

 

Deposits

$

7,241,476

 

 

$

6,658,242

 

 

$

6,437,963

 

 

$

6,779,845

 

 

$

6,781,170

 

Securities sold under agreements to repurchase

53,398

 

 

48,860

 

 

62,372

 

 

58,329

 

 

36,928

 

Federal funds purchased

 

 

230,000

 

 

135,000

 

 

 

 

250,000

 

Federal Home Loan Bank borrowings

350,829

 

 

570,904

 

 

920,068

 

 

615,070

 

 

420,144

 

Junior subordinated debentures

106,363

 

 

106,363

 

 

106,363

 

 

106,363

 

 

106,363

 

Lease liabilities

117,214

 

 

122,799

 

 

126,740

 

 

120,162

 

 

 

Other liabilities

140,820

 

 

143,607

 

 

124,370

 

 

112,893

 

 

143,540

 

TOTAL LIABILITIES

8,010,100

 

 

7,880,775

 

 

7,912,876

 

 

7,792,662

 

 

7,738,145

 

 

 

 

 

 

 

 

 

 

 

REDEEMABLE NONCONTROLLING INTERESTS ("RNCI")

1,383

 

 

1,481

 

 

1,786

 

 

662

 

 

2,526

 

SHAREHOLDERS' EQUITY:

 

 

 

 

 

 

 

 

 

Common stock, $1.00 par value; authorized: 170,000,000 shares

83,266

 

 

83,242

 

 

83,774

 

 

83,774

 

 

83,656

 

Additional paid-in capital

600,708

 

 

599,877

 

 

603,869

 

 

604,288

 

 

600,196

 

Retained earnings

127,469

 

 

116,210

 

 

106,443

 

 

97,155

 

 

87,821

 

Accumulated other comprehensive income/(loss)

7,575

 

 

9,359

 

 

4,125

 

 

(6,398)

 

 

(17,719)

 

TOTAL SHAREHOLDERS' EQUITY

819,018

 

 

808,688

 

 

798,211

 

 

778,819

 

 

753,954

 

TOTAL LIABILITIES, RNCI, AND SHAREHOLDERS' EQUITY

$

8,830,501

 

 

$

8,690,944

 

 

$

8,712,873

 

 

$

8,572,143

 

 

$

8,494,625

 

 

 

 

 

 

 

 

 

 

 

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

 

 

 

 

 

 

 

 

 

Consolidated Income Statements

Unaudited ($ in thousands, except share and per share data)

 

 

4Q19

 

3Q19

 

2Q19

 

1Q19

 

4Q18

REVENUE:

 

Interest income

$

75,291

 

 

$

77,604

 

 

$

78,728

 

 

$

76,824

 

 

$

76,892

 

Interest expense

19,166

 

 

21,451

 

 

21,268

 

 

18,486

 

 

16,895

 

Net interest income

56,125

 

 

56,153

 

 

57,460

 

 

58,338

 

 

59,997

 

Provision/(credit) for loan losses

(3,668)

 

 

167

 

 

1,363

 

 

(1,426)

 

 

93

 

Net interest income after provision/(credit) for loan losses

59,793

 

 

55,986

 

 

56,097

 

 

59,764

 

 

59,904

 

 

 

 

 

 

 

 

 

 

 

Wealth management and trust fees 8

18,720

 

 

19,067

 

 

18,912

 

 

19,058

 

 

23,788

 

Investment management fees

2,554

 

 

2,496

 

 

2,455

 

 

2,650

 

 

2,831

 

Private banking fee income

2,924

 

 

2,658

 

 

2,867

 

 

2,499

 

 

2,033

 

Gain on sale of loans, net

557

 

 

934

 

 

58

 

 

73

 

 

39

 

Total core fees and income

24,755

 

 

25,155

 

 

24,292

 

 

24,280

 

 

28,691

 

Total other income

2,038

 

 

(29)

 

 

88

 

 

968

 

 

17,154

 

TOTAL REVENUE 9

82,918

 

 

81,279

 

 

81,840

 

 

83,586

 

 

105,842

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSE:

Salaries and employee benefits

34,186

31,684

32,706

35,726

36,007

Occupancy and equipment

7,578

8,260

7,852

8,348

7,975

Information systems

6,476

5,169

5,137

5,860

6,296

Professional services

3,920

4,435

3,313

3,560

4,229

Marketing and business development

2,017

1,403

1,934

1,085

2,275

Amortization of intangibles

676

671

672

672

680

FDIC insurance

(19)

59

585

660

739

Restructuring

1,646

2,065

Other

3,623

3,856

3,460

2,996

3,291

TOTAL NONINTEREST EXPENSE

58,457

55,537

55,659

60,553

63,557

INCOME BEFORE INCOME TAXES

28,129

25,575

24,818

24,459

42,192

Provision for income taxes

6,788

5,517

5,369

4,917

8,651

Net income from continuing operations

21,341

20,058

19,449

19,542

33,541

Net income from discontinued operations 10

306

Net income before attribution to noncontrolling interests

21,341

20,058

19,449

19,542

33,847

Less: Net income attributable to noncontrolling interests

97

96

69

100

545

NET INCOME ATTRIBUTABLE TO THE COMPANY

$

21,244

$

19,962

$

19,380

$

19,442

$

33,302

Adjustments, treasury stock method 11

98

304

(816)

1,557

2,694

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

21,342

$

20,266

$

18,564

$

20,999

$

35,996

COMMON SHARE DATA:

Weighted average basic shares outstanding

83,238,982

83,631,403

83,565,780

83,285,095

83,750,785

Weighted average diluted shares outstanding 12

83,637,786

83,956,708

84,048,972

84,010,450

84,863,779

Diluted total earnings per share

$

0.26

$

0.24

$

0.22

$

0.25

$

0.42

8 Wealth management and trust fees consists of revenue from Boston Private Wealth LLC ("BPW"), KLS Professional Advisors Group, LLC ("KLS") through the effective date of its merger with BPW, BOS (through the closing date), 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.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Consolidated Income Statements

Unaudited ($ in thousands, except share and per share data)

Year ended December 31,

2019

2018

REVENUE:

Interest income

$

308,447

$

292,904

Interest expense

80,371

58,338

Net interest income

228,076

234,566

Provision/(credit) for loan losses

(3,564)

(2,198)

Net interest income after provision/(credit) for loan losses

231,640

236,764

Wealth management and trust fees 8

75,757

99,818

Investment management fees 13

10,155

21,728

Private banking fee income

10,948

9,826

Gain on sale of loans, net

1,622

243

Total core fees and income

98,482

131,615

Total other income

3,065

18,382

TOTAL REVENUE 9

329,623

384,563

NONINTEREST EXPENSE:

Salaries and employee benefits

134,302

161,468

Occupancy and equipment

32,038

32,116

Information systems

22,642

25,185

Professional services

15,228

13,155

Marketing and business development

6,439

7,648

Amortization of intangibles

2,691

2,929

FDIC insurance 9

1,285

2,865

Restructuring

1,646

7,828

Other

13,935

14,161

TOTAL NONINTEREST EXPENSE

230,206

267,355

INCOME BEFORE INCOME TAXES

102,981

119,406

Income tax expense

22,591

37,537

Net income from continuing operations

80,390

81,869

Net income from discontinued operations 10

2,002

Net income before attribution to noncontrolling interests

80,390

83,871

Less: Net income attributable to noncontrolling interests

362

3,487

NET INCOME ATTRIBUTABLE TO THE COMPANY

$

80,028

$

80,384

Adjustments, treasury stock method 11

1,143

(1,682)

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

81,171

$

78,702

COMMON SHARE DATA

Weighted average basic shares outstanding

83,430,740

83,596,685

Weighted average diluted shares outstanding 12

83,920,792

85,331,314

Diluted total earnings per share

$

0.97

$

0.92

8 Wealth management and trust fees consists of revenue from BPW, KLS (through the effective date of its merger with BPW), Anchor Capital Advisors, LLC ("Anchor") and BOS (through the respective closing dates), 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.

13 Investment management fees consists of revenue from DGHM and Anchor (through the closing date).

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Consolidated Financial Highlights

Unaudited ($ in thousands, except share and per share data)

4Q19

3Q19

2Q19

1Q19

4Q18

KEY STATISTICS:

Return on average assets (non-GAAP) 14

0.96 %

0.91%

0.90%

0.93 %

1.56 %

ROACE (non-GAAP) 14

10.29 %

9.80%

9.83%

10.29 %

17.87 %

ROATCE (non-GAAP) 14

11.51 %

10.99%

11.06%

11.63 %

20.46 %

Efficiency ratio (non-GAAP) 14

69.7 %

67.5%

67.2%

69.7 %

57.1 %

Noninterest income to total revenue

32.3 %

30.9 %

29.8 %

30.2 %

43.3 %

Net interest margin

2.70 %

2.72 %

2.78 %

2.90 %

2.94 %

Average loan to average deposit ratio

101.6 %

105.9 %

106.6 %

101.6 %

98.0 %

Cost of total deposits

0.86 %

0.92 %

0.88 %

0.84 %

0.77 %

Cost of interest-bearing deposits

1.20 %

1.31 %

1.25 %

1.19 %

1.11 %

Cost of total funding

0.99 %

1.12 %

1.11 %

1.00 %

0.89 %

Allowance for Loan Loss / Total Loans

1.03 %

1.07 %

1.06 %

1.07 %

1.09 %

Nonperforming loans / Total Loans

0.23 %

0.25 %

0.24 %

0.17 %

0.20 %

Net (charge-offs)/recoveries / Total loans 14

0.02 %

0.01 %

(0.01) %

— %

0.10 %

CAPITAL HIGHLIGHTS:

Tier 1 common equity 15

$

745,887

$

732,980

$

726,872

$

717,138

$

702,728

Tier 1 capital 15

$

846,298

$

833,431

$

827,299

$

817,600

$

803,311

Total capital 15

$

919,534

$

910,076

$

903,675

$

892,764

$

879,927

Risk-weighted assets ("RWA") 15

$

6,529,626

$

6,533,884

$

6,491,184

$

6,304,444

$

6,161,677

Average assets for leverage 15

$

8,654,576

$

8,588,358

$

8,617,803

$

8,447,143

$

8,416,195

Tier 1 common equity ratio 15

11.42 %

11.22 %

11.20 %

11.38 %

11.40 %

Tier 1 risk-based capital ratio 15

12.96 %

12.76 %

12.74 %

12.97 %

13.04 %

Total risk-based capital ratio 15

14.08 %

13.93 %

13.92 %

14.16 %

14.28 %

Tier 1 leverage capital ratio 15

9.77 %

9.70 %

9.60 %

9.68 %

9.54 %

Total equity / Total assets

9.27 %

9.30 %

9.16 %

9.09 %

8.88 %

Tangible common equity / Tangible assets (non-GAAP)

8.57 %

8.59 %

8.44 %

8.35 %

8.12 %

Market price per share

$

12.03

$

11.66

$

12.07

$

10.96

$

10.57

End of period shares outstanding

83,265,674

83,241,952

83,774,335

83,773,650

83,655,651

Book value per common share

$

9.84

$

9.71

$

9.53

$

9.30

$

9.01

Tangible book value per share (non-GAAP)

$

9.02

$

8.90

$

8.71

$

8.47

$

8.18

Common Equity Repurchase Program:

Total shares of common stock repurchased

678,165

1,505,521

Average price paid per share of common stock

$

$

10.61

$

$

$

12.02

Aggregate repurchases of common equity ($ in millions)

$

$

7.2

$

$

$

18.1

14 Annualized.

15 Current quarter capital highlights are presented based on estimated data.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Consolidated AUM and Balance Sheet - End of Period Balances

Unaudited ($ in thousands)

4Q19

3Q19

2Q19

1Q19

4Q18

ASSETS UNDER MANAGEMENT AND ADVISORY ("AUM"):

Wealth Management and Trust

$

15,224,000

$

14,695,000

$

14,649,000

$

14,564,000

$

14,206,000

Other

1,544,000

1,533,000

1,550,000

1,558,000

1,715,000

Total AUM

16,768,000

16,228,000

16,199,000

16,122,000

15,921,000

AUM Rollforward:

Beginning balance 16

$

16,228,000

$

16,199,000

$

16,122,000

$

15,921,000

$

17,723,000

Net flows

(209,000)

(137,000)

(269,000)

(963,000)

(143,000)

Market

749,000

166,000

346,000

1,164,000

(1,659,000)

Ending balance

$

16,768,000

$

16,228,000

$

16,199,000

$

16,122,000

$

15,921,000

AUM Net Flows:

Wealth Management and Trust

$

(114,000)

$

(100,000)

$

(233,000)

$

(580,000)

$

(137,000)

Other

(95,000)

(37,000)

(36,000)

(383,000)

(6,000)

Total Net flows

$

(209,000)

$

(137,000)

$

(269,000)

$

(963,000)

$

(143,000)

DEPOSITS:

Demand deposits (non-interest bearing)

$

1,971,013

$

1,947,363

$

1,854,091

$

2,016,838

$

1,951,274

Savings and NOW

646,199

666,107

631,166

673,954

700,519

Money market

3,969,330

3,366,623

3,228,608

3,302,244

3,338,892

Certificates of deposit

654,934

678,149

724,098

786,809

790,485

TOTAL DEPOSITS

$

7,241,476

$

6,658,242

$

6,437,963

$

6,779,845

$

6,781,170

LOANS:

Commercial and industrial

$

694,034

$

695,029

$

656,186

$

615,370

$

623,037

Commercial tax exempt

447,927

448,488

450,307

449,492

451,671

Commercial real estate

2,551,274

2,533,346

2,530,556

2,439,048

2,395,692

Construction and land

225,983

209,741

200,378

210,618

240,306

Residential

2,839,155

2,964,042

3,025,758

2,993,132

2,948,973

Home equity

83,657

84,432

89,930

88,620

90,421

Consumer

134,674

132,073

127,145

130,688

143,058

TOTAL LOANS

$

6,976,704

$

7,067,151

$

7,080,260

$

6,926,968

$

6,893,158

16 AUM have been reduced to exclude those assets managed or advised by BOS for period when BOS was owned by the Company

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Asset Quality

Unaudited ($ in thousands)

4Q19

3Q19

2Q19

1Q19

4Q18

CHARGE-OFFS:

Loan charge-offs

$

(285)

$

(185)

$

(195)

$

(564)

$

(370)

Loan recoveries

576

310

85

492

2,089

NET (CHARGE-OFFS)/RECOVERIES

$

291

$

125

$

(110)

$

(72)

$

1,719

Net charge-offs to average loans (annualized)

0.02 %

0.01%

(0.01)%

—%

0.10%

Net (Charge-offs)/Recoveries by Loan Type:

Commercial and industrial

$

118

$

95

$

(155)

$

188

$

(77)

Commercial real estate

183

27

30

189

1,394

Construction and land

Residential

100

402

Home equity

4

6

(562)

Consumer

(14)

(3)

15

13

NET (CHARGE-OFFS)/ RECOVERIES

$

291

$

125

$

(110)

$

(72)

$

1,719

LOAN QUALITY DATA:

Special mention loans

$

52,026

$

58,133

$

70,677

$

86,787

$

78,528

Accruing classified loans 17

57,922

63,278

53,883

42,521

54,095

Nonaccrual loans

16,103

17,565

17,155

12,019

14,057

Total classified

74,025

80,843

71,038

54,540

68,152

Criticized and classified loans

$

126,051

$

138,976

$

141,715

$

141,327

$

146,680

Loans 30-89 days past due and accruing 18

$

25,945

$

4,179

$

2,434

$

17,715

$

22,299

17 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.

18 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 other loans outstanding more than 90 days past due but still on accrual status in comparative periods.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Average Balances, Yields, and Rates

Unaudited ($ in thousands)

Average Balance

Interest Income/Expense

Average Yield/Rate

4Q19

3Q19

4Q18

4Q19

3Q19

4Q18

4Q19

3Q19

4Q18

INTEREST-EARNING ASSETS

Cash and investments:

Taxable investment securities

$

201,535

$

198,655

$

317,230

$

869

$

938

$

1,486

1.72

%

1.95

%

1.87

%

Non-taxable investment securities

311,705

305,108

301,242

1,976

1,924

1,833

2.54

%

2.52

%

2.43

%

Mortgage-backed securities

489,927

492,514

536,264

2,568

2,622

2,923

2.10

%

2.13

%

2.18

%

Short-term investments and other

130,519

101,958

134,182

1,210

1,084

1,356

3.65

%

4.06

%

3.98

%

Total cash and investments

1,133,686

1,098,235

1,288,918

6,623

6,568

7,598

2.33

%

2.39

%

2.35

%

Loans: 19

Commercial and industrial

1,142,015

1,101,672

1,027,128

11,276

11,523

10,431

3.86

%

4.09

%

3.97

%

Commercial real estate

2,562,380

2,518,048

2,402,304

28,285

29,118

29,017

4.32

%

4.52

%

4.73

%

Construction and land

216,754

195,843

209,475

2,588

2,410

2,589

4.67

%

4.82

%

4.83

%

Residential

2,934,786

3,016,265

2,907,446

24,275

25,567

24,629

3.31

%

3.39

%

3.39

%

Home equity

84,632

89,068

93,656

965

1,121

1,148

4.53

%

4.99

%

4.86

%

Other consumer

132,143

127,987

140,591

1,279

1,297

1,480

3.84

%

4.02

%

4.18

%

Total loans

7,072,710

7,048,883

6,780,600

68,668

71,036

69,294

3.83

%

3.98

%

4.03

%

Total earning assets

8,206,396

8,147,118

8,069,518

75,291

77,604

76,892

3.62

%

3.76

%

3.76

%

LESS: Allowance for loan losses

75,283

75,199

75,006

Cash and due from banks

48,287

49,065

53,633

Other assets

559,350

544,368

397,153

TOTAL AVERAGE ASSETS

$

8,738,750

$

8,665,352

$

8,445,298

INTEREST-BEARING LIABILITIES

Interest-bearing deposits: 20

Savings and NOW

$

644,502

$

615,730

$

649,937

$

252

$

275

$

377

0.16

%

0.18

%

0.23

%

Money market

3,632,258

3,378,006

3,392,039

11,449

11,523

9,502

1.25

%

1.35

%

1.11

%

Certificates of deposit

680,466

711,299

784,184

3,322

3,689

3,591

1.94

%

2.06

%

1.82

%

Total interest-bearing deposits 20

4,957,226

4,705,035

4,826,160

15,023

15,487

13,470

1.20

%

1.31

%

1.11

%

Junior subordinated debentures

106,363

106,363

106,363

966

1,022

1,043

3.56

%

3.76

%

3.84

%

FHLB borrowings and other

591,682

833,535

515,734

3,177

4,942

2,382

2.10

%

2.32

%

1.81

%

Total interest-bearing liabilities 20

5,655,271

5,644,933

5,448,257

19,166

21,451

16,895

1.34

%

1.50

%

1.23

%

Non-interest bearing demand deposits 20

2,001,714

1,953,214

2,092,070

Payables and other liabilities

261,503

258,371

154,612

Total average liabilities

7,918,488

7,856,518

7,694,939

Redeemable noncontrolling interests

1,446

944

11,046

Average shareholders’ equity

818,816

807,890

739,313

TOTAL AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY

$

8,738,750

$

8,665,352

$

8,445,298

Net interest income

$

56,125

$

56,153

$

59,997

Interest rate spread

2.28

%

2.26

%

2.53

%

Net interest margin

2.70

%

2.72

%

2.94

%

Average total deposits 20

$

6,958,940

$

6,658,249

$

6,918,230

0.86

%

0.92

%

0.77

%

Average total deposits and borrowings 20

$

7,656,985

$

7,598,147

$

7,540,327

0.99

%

1.12

%

0.89

%

19 Average loans includes Loans held for sale and Nonaccrual loans

20 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.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Average Balances, Yields, and Rates

Unaudited ($ in thousands)

Average Balance

Interest Income/Expense

Average Yield/Rate

Year Ended

Year Ended

Year Ended

INTEREST-EARNING ASSETS

12/31/19

12/31/18

12/31/19

12/31/18

12/31/19

12/31/18

Cash and investments:

Taxable investment securities

$

217,653

$

325,159

$

4,113

$

6,007

1.89

%

1.85

%

Non-taxable investment securities

307,005

298,450

7,702

7,094

2.51

%

2.38

%

Mortgage-backed securities

502,949

561,929

10,793

12,091

2.15

%

2.15

%

Short-term investments and other

110,877

164,712

4,259

5,187

3.84

%

3.15

%

Total cash and investments

1,138,484

1,350,250

26,867

30,379

2.36

%

2.25

%

Loans: 19

Commercial and industrial

1,101,635

983,699

44,949

37,985

4.08

%

3.86

%

Commercial real estate

2,496,878

2,449,039

115,507

112,037

4.63

%

4.57

%

Construction and land

206,624

181,315

10,198

8,731

4.94

%

4.82

%

Residential

2,983,173

2,806,046

101,122

92,892

3.39

%

3.31

%

Home equity

88,917

94,823

4,353

4,320

4.90

%

4.56

%

Other consumer

129,701

167,139

5,451

6,560

4.20

%

3.92

%

Total loans

7,006,928

6,682,061

281,580

262,525

4.02

%

3.93

%

Total earning assets

8,145,412

8,032,311

308,447

292,904

3.79

%

3.65

%

LESS: Allowance for loan losses

74,969

74,174

Cash and due from banks

47,286

49,282

Other assets

527,269

402,821

TOTAL AVERAGE ASSETS

$

8,644,998

$

8,410,240

INTEREST-BEARING LIABILITIES

Interest-bearing deposits: 20

Savings and NOW

$

654,712

$

694,674

$

1,099

$

1,197

0.17

%

0.17

%

Money market

3,395,842

3,202,616

43,521

27,469

1.28

%

0.86

%

Certificates of deposit

730,693

714,827

14,463

11,180

1.98

%

1.56

%

Total interest-bearing deposits 20

4,781,247

4,612,117

59,083

39,846

1.24

%

0.86

%

Junior subordinated debentures

106,363

106,363

4,189

3,925

3.94

%

3.69

%

FHLB borrowings and other

748,628

795,050

17,099

14,567

2.28

%

1.83

%

Total interest-bearing liabilities 20

5,636,238

5,513,530

80,371

58,338

1.43

%

1.06

%

Non-interest bearing demand deposits 20

1,962,951

1,984,660

Payables and other liabilities

247,163

137,323

Total average liabilities

7,846,352

7,635,513

Redeemable noncontrolling interests

1,593

14,859

Average shareholders’ equity

797,053

759,868

TOTAL AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY

$

8,644,998

$

8,410,240

Net interest income

$

228,076

$

234,566

Interest rate spread

2.36

%

2.59

%

Net interest margin

2.80

%

2.92

%

Average total deposits 20

$

6,744,198

$

6,596,777

0.88

%

0.60

%

Average total deposits and borrowings 20

$

7,599,189

$

7,498,190

1.06

%

0.78

%

19 Average loans includes Loans held for sale and Nonaccrual loans

20 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.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Regional Loan Data

Unaudited ($ in thousands)

4Q19

3Q19

2Q19

1Q19

4Q18

New England

$

3,776,747

$

3,868,690

$

3,957,221

$

3,901,644

$

3,890,607

Northern California

1,532,786

1,559,569

1,538,441

1,499,626

1,488,017

Southern California

1,667,171

1,638,892

1,584,598

1,525,698

1,514,534

Total loans

$

6,976,704

$

7,067,151

$

7,080,260

$

6,926,968

$

6,893,158

Loans (charged-off)/recovered, net:

New England

$

414

$

275

$

31

$

222

$

(100)

Northern California

(10)

6

20

18

1,804

Southern California

(113)

(156)

(161)

(312)

15

Total net loans (charged-off)/recovered

$

291

$

125

$

(110)

$

(72)

$

1,719

Special mention loans:

New England

$

21,691

$

19,828

$

35,235

$

34,675

$

31,147

Northern California

5,227

4,821

10,360

23,486

18,585

Southern California

25,108

33,484

25,082

28,626

28,796

Total special mention loans

$

52,026

$

58,133

$

70,677

$

86,787

$

78,528

Accruing classified loans:

New England

$

20,428

$

21,830

$

13,012

$

15,830

$

10,392

Northern California

24,946

23,938

25,957

20,801

24,584

Southern California

12,548

17,510

14,914

5,890

19,119

Total accruing classified loans

$

57,922

$

63,278

$

53,883

$

42,521

$

54,095

Nonaccruing loans:

New England

$

9,764

$

8,999

$

8,837

$

6,161

$

6,728

Northern California

319

2,395

2,644

2,480

2,488

Southern California

6,020

6,171

5,674

3,378

4,841

Total nonaccruing loans

$

16,103

$

17,565

$

17,155

$

12,019

$

14,057

21 The concentration of the Private Banking loan data and credit quality is primarily based on the location of the lenders' regional offices.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Reconciliations of Non-GAAP Financial Measures

Unaudited ($ in thousands)

4Q19

3Q19

2Q19

1Q19

4Q18

ROACE AND ROATCE:

Net income attributable to the Company (GAAP) (A)

$

21,244

$

19,962

$

19,380

$

19,442

$

33,302

ADD: Amortization of intangibles, net of tax

534

530

531

531

537

Tangible common net income (non-GAAP) (B)

$

21,778

$

20,492

$

19,911

$

19,973

$

33,839

Total average shareholders’ equity (C)

$

818,816

$

807,890

$

790,844

$

766,283

$

739,313

LESS: Average goodwill and intangibles, net 22

(68,031)

(68,359)

(68,889)

(69,498)

(83,153)

Average tangible common equity (non-GAAP) (D)

$

750,785

$

739,531

$

721,955

$

696,785

$

656,160

ROACE (annualized) (A/C)

10.29

%

9.80

%

9.83

%

10.29

%

17.87

%

ROATCE (annualized) (B/D)

11.51

%

10.99

%

11.06

%

11.63

%

20.46

%

PRE-TAX, PRE-PROVISION INCOME:

Income before income taxes (GAAP)

$

28,129

$

25,575

$

24,818

$

24,459

$

42,192

ADD BACK: Provision/ (credit) for loan losses

(3,668)

167

1,363

(1,426)

93

Pre-tax, pre-provision income (non-GAAP)

$

24,461

$

25,742

$

26,181

$

23,033

$

42,285

CORE NET INTEREST INCOME AND MARGIN:

Net interest income (GAAP)

$

56,125

$

56,153

$

57,460

$

58,338

$

59,997

LESS: Interest recovered on previous nonaccrual loans

24

180

258

986

Net interest income, excluding interest recovered while loans on nonaccrual status ("Core net interest income") (non-GAAP)

$

56,101

$

55,973

$

57,460

$

58,080

$

59,011

Net interest margin, excluding interest recovered while loans on nonaccrual status ("Core net interest margin") (non-GAAP)

2.70

%

2.71

%

2.78

%

2.89

%

2.90

%

TANGIBLE COMMON EQUITY:

Total Shareholders’ Equity (GAAP)

$

819,018

$

808,688

$

798,211

$

778,819

$

753,954

LESS: Goodwill and intangibles, net

(67,959)

(68,229)

(68,491)

(69,162)

(69,834)

Tangible common equity (non-GAAP) (A)

$

751,059

$

740,459

$

729,720

$

709,657

$

684,120

Total Assets (GAAP)

$

8,830,501

$

8,690,944

$

8,712,873

$

8,572,143

$

8,494,625

LESS: Goodwill and intangibles, net

(67,959)

(68,229)

(68,491)

(69,162)

(69,834)

Tangible assets (non-GAAP) (B)

$