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Boston Private Reports Third Quarter 2019 Results

BOSTON--(BUSINESS WIRE)--

Third Quarter 2019 Highlights include:

  • Net income was $20.0 million, or $0.24 per diluted share

  • Return on average common equity (non-GAAP) was 9.8%

  • Return on average tangible common equity (non-GAAP) was 11.0%

  • Average total loans were $7.0 billion, a 4% increase year-over-year

  • Average total deposits were $6.7 billion, a 1% decrease year-over-year

  • Total assets under management/advisory (“AUM”) were $16.2 billion, a decrease of 8% year-over-year

  • Total net flows were negative $137 million, of which negative $100 million were attributable to the Wealth Management & Trust segment

  • Completed the integration of wholly-owned affiliates Boston Private Wealth LLC and KLS Professional Advisors Group, LLC ("KLS")

Boston Private Financial Holdings, Inc. (BPFH) (the “Company” or “BPFH”) today reported third quarter 2019 Net income attributable to the Company of $20.0 million, compared to $19.4 million for the second quarter of 2019 and $18.0 million for the third quarter of 2018. Third quarter 2019 Diluted earnings per share were $0.24, compared to $0.22 in the second quarter of 2019 and $0.20 in the third quarter of 2018.

"Our team is making strong progress building a platform to support the growth initiatives we shared during our Investor Day," said Anthony DeChellis, CEO of Boston Private. "Our third quarter results reflect disciplined expense management in a challenging net interest income environment, as we position our businesses to be more cohesive and competitive.

"This quarter, we welcomed John Longley as the President of the Western Region and Pat Dwyer as the Head of Strategic Business Development to help drive growth across the company. We also completed the formal integration of Boston Private Wealth and KLS Professional Advisors, a key milestone towards simplifying the BPFH business model and scaling Boston Private's ability to compete at the highest levels of the financial services industry."

Summary Financial Results - Reported

% Change

($ in millions, except for per share data)

3Q19

2Q19

3Q18

LQ

Y/Y

Net income

$20.0

$19.4

$18.0

3%

11%

Diluted earnings per share

$0.24

$0.22

$0.20

9%

20%

Non-GAAP Financial Measures:

Pre-tax, pre-provision income

$25.7

$26.2

$23.4

(2)%

10%

Return on average common equity ("ROACE")

9.8%

9.8%

9.7%

Return on average tangible common equity ("ROATCE")

11.0%

11.1%

11.4%

The Company's reported financial results increased year-over-year primarily as a result of a $5.8 million restructuring expense during the third quarter of 2018.

In addition to presenting the Company’s results in conformity with GAAP, the Company uses certain non-GAAP financial measures to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector. For additional information on non-GAAP measures, see page 6. A reconciliation of GAAP to non-GAAP results can be found beginning on page 17.

Summary Financial Results - Operating Basis (non-GAAP)

% Change

($ in millions, except for per share data)

3Q19

2Q19

3Q181

LQ

Y/Y

Net income

$20.0

$19.4

$22.5

3%

(11)%

Diluted earnings per share

$0.24

$0.22

$0.25

9%

(5)%

Pre-tax, pre-provision income

$25.7

$26.2

$29.2

(2)%

(12)%

Return on average common equity

9.8%

9.8%

12.1%

Return on average tangible common equity

11.0%

11.1%

14.2%

1 3Q18 results adjusted to exclude the impact of $5.8 million restructuring expense, net of $1.2 million tax effect

Divested Affiliates

The Company completed the sale of Bingham, Osborn & Scarborough LLC ("BOS") during 2018. Financial results from BOS remain consolidated in the Company's financial results through the closing date of December 3, 2018.

For presentation purposes, BOS's AUM is excluded from AUM amounts, but is included in the calculation of Core fees and income. The discussion below includes non-GAAP measures that exclude the contributions from BOS in order to enhance comparability of trends in the core business.

Net Interest Income and Margin

% Change

($ in millions)

3Q19

2Q19

3Q18

LQ

Y/Y

Net interest income

$56.2

$57.5

$59.6

(2)%

(6)%

Less: Interest recovered on previous nonaccrual loans

0.2

1.0

nm

nm

Core net interest income (non-GAAP)

$56.0

$57.5

$58.7

(3)%

(5)%

Net interest margin

2.72

%

2.78

%

2.90

%

Core net interest margin (non-GAAP)

2.71

%

2.78

%

2.90

%

nm = not meaningful

Net interest income for the third quarter of 2019 was $56.2 million, a decrease of 2% linked quarter and 6% year-over-year. Core net interest income, which excludes interest recovered on previous nonaccrual loans, decreased 3% linked quarter and 5% year-over-year. The linked quarter decrease was primarily driven by the repricing of variable rate loans and lower interest-earning asset volumes, partially offset by lower borrowing volumes.

The Company’s Core net interest margin, which excludes interest recovered on previous nonaccrual loans, decreased 7 basis points on a linked quarter basis to 2.71%, primarily driven by lower interest-earning asset yields and higher deposit costs, partially offset by lower borrowing volumes.

Noninterest Income

% Change

($ in millions)

3Q19

2Q19

3Q18

LQ

Y/Y

Wealth management and trust fees

$19.1

$18.9

$25.5

1%

(25)%

Investment management fees

2.5

2.5

3.2

2%

(23)%

Private banking fees 2

3.6

2.9

2.8

23%

26%

Total core fees and income

$25.2

$24.3

$31.6

4%

(20)%

Total other income

0.1

0.7

(100)%

(100)%

Total noninterest income

$25.1

$24.4

$32.3

3%

(22)%

Memo: Excluding BOS

Wealth management and trust fees (non-GAAP) 3

$19.1

$18.9

$19.6

1%

(3)%

Investment management fees

2.5

2.5

3.2

2%

(23)%

Private banking fees

3.6

2.9

2.8

23%

26%

Total core fees and income (non-GAAP) 3

$25.2

$24.3

$25.7

4%

(2)%

Total other income

0.1

0.7

(100)%

(100)%

Total noninterest income (non-GAAP) 3

$25.1

$24.4

$26.4

3%

(5)%

2 Private banking fees includes Other banking fee income and Gain/ (loss) on sale of loans, net
3 Excludes BOS revenue of $5.9 million in 3Q18

As previously announced, KLS and Boston Private Wealth LLC now operate as a single registered investment advisor ("RIA"). Revenue from the RIA, the legacy affiliates, and the trust operations of Boston Private Bank & Trust Company is included as Wealth management and trust fees during the current period and all prior periods.

Total core fees and income for the third quarter of 2019 was $25.2 million, a 4% increase linked quarter, primarily driven by a gain on sale of loans associated with the sale of approximately $90 million of mortgage loans. The 20% decline year-over-year was primarily driven by the divestiture of BOS.

Excluding BOS, Total core fees and income (non-GAAP) decreased 2% year-over-year, primarily driven by lower Investment Management fees and Wealth management and trust fees as a result of negative net flows.

Assets Under Management / Advisory

% Change

($ in millions)

3Q19

2Q19

3Q18

LQ

Y/Y

Wealth Management and Trust

$14,695

$14,649

$15,598

—%

(6)%

Other 4

1,533

1,550

2,125

(1)%

(28)%

Total assets under management / advisory

$16,228

$16,199

$17,723

—%

(8)%

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

Total assets under management / advisory were $16.2 billion at the end of the third quarter of 2019, flat linked quarter and a decrease of 8% year-over-year. The linked quarter comparison was impacted by positive market action partially offset by negative net flows, while the year-over-year decrease was primarily driven by negative net flows in excess of positive market action.

Total net flows were negative $137 million during the third quarter of 2019, of which $100 million were attributable to the Wealth Management & Trust segment.

Noninterest Expense

% Change

($ in millions)

3Q19

2Q19

3Q18

LQ

Y/Y

Salaries and employee benefits

$31.7

$32.7

$38.9

(3)%

(19)%

Occupancy and equipment

8.3

7.9

8.2

5%

1%

Professional services

4.4

3.3

2.9

34%

54%

Marketing and business development

1.4

1.9

1.7

(27)%

(18)%

Information systems

5.2

5.1

6.2

1%

(17)%

Amortization of intangibles

0.7

0.7

0.8

—%

(11)%

FDIC insurance

0.1

0.6

0.7

(90)%

(91)%

Restructuring

5.8

—%

(100)%

Other

3.9

3.5

3.4

11%

12%

Total noninterest expense

$55.5

$55.7

$68.6

—%

(19)%

Memo: Excluding Notable Items5 and BOS

Restructuring

5.8

—%

(100)%

BOS noninterest expense

4.0

—%

(100)%

Total noninterest expense (non-GAAP)

$55.5

$55.7

$58.8

—%

(6)%

5 "Notable Items" include a $5.8 million restructuring expense in 3Q18

Total noninterest expense was flat linked quarter as lower salaries and employee benefits expense, marketing and business development expense, and an FDIC insurance assessment credit offset higher professional services expense and higher occupancy and equipment expense.

Excluding Notable Items and BOS, Total noninterest expense (non-GAAP) for the third quarter of 2019 was $55.5 million, flat linked quarter and down 6% year-over-year. The year-over-year decline was primarily attributable to efficiency initiatives primarily impacting compensation and technology.

Income Tax Expense

The Company's effective tax rate for the third quarter of 2019 was 21.6%.

Loans and Deposits - QTD Averages

% Change

($ in millions)

3Q19

2Q19

3Q18

LQ

Y/Y

Commercial and industrial

$1,102

$1,092

$999

1%

10%

Commercial real estate

2,518

2,507

2,475

—%

2%

Construction and land

196

203

179

(3)%

9%

Residential

3,016

3,009

2,837

—%

6%

Home equity

89

91

94

(3)%

(5)%

Other consumer

128

125

163

3%

(22)%

Total loans

$7,049

$7,026

$6,747

—%

4%

Non-interest bearing deposits

1,953

1,927

2,064

1%

(5)%

Interest bearing deposits

4,705

4,664

4,668

1%

1%

Total deposits

$6,658

$6,591

$6,732

1%

(1)%

Non-interest bearing deposits as a % of Total deposits

29%

29%

31%

Average total loans in the third quarter of 2019 increased 4% year-over-year, primarily driven by increases in Residential loans and Commercial and industrial loans. End of period residential loans declined $62 million linked quarter to $3.0 billion following a loan sale of approximately $90 million that was completed in September of 2019.

Average total deposits decreased 1% year-over-year, primarily driven by a decline in demand deposit accounts, partially offset by growth in money market accounts and certificates of deposits.

The cost of total deposits was 0.92%, an increase of 4 basis points linked quarter and 24 basis points year-over-year.

Provision and Asset Quality

($ in millions)

3Q19

2Q19

1Q19

4Q18

3Q18

Provision/ (credit) for loan loss

$0.2

$1.4

$(1.4)

$0.1

$(0.9)

Total criticized and classified loans

139.0

141.7

141.3

146.6

134.7

Total nonaccrual loans

17.6

17.2

12.0

14.1

12.1

Total loans 30-89 days past due and accruing

4.2

2.4

17.7

22.3

11.6

Total net loans (charged-off)/ recovered

0.1

(0.1)

(0.1)

1.7

1.0

Ratios:

Allowance for loan losses as a % of Total loans

1.07%

1.06%

1.07%

1.09%

1.09%

Nonaccrual loans as a % of Total loans

0.25%

0.24%

0.17%

0.20%

0.18%

The Company recorded a provision expense of $0.2 million for the third quarter of 2019, compared to a provision expense of $1.4 million for the second quarter of 2019 and a provision credit of $0.9 million in the third quarter of 2018. The provision expense in the third quarter of 2019 was primarily driven by required reserves for criticized and classified loans, partially offset by lower reserves for pass-rated loans.

Total criticized loans as of September 30, 2019 was $139.0 million, a 2% decline linked quarter and an increase of 3% year-over-year. Total nonaccrual loans as of September 30, 2019 was $17.6 million, or 25 basis points of Total loans, compared to $17.2 million, or 24 basis points of total loans as of June 30, 2019, and $12.1 million, or 18 basis points of Total loans as of September 30, 2018.

Capital

($ in millions, except for per share data)

3Q19

2Q19

1Q19

4Q18

3Q18

Tangible common equity/ Tangible assets (non-GAAP)

8.6%

8.4%

8.3%

8.1%

7.8%

Tangible book value per share (non-GAAP)

$8.90

$8.71

$8.47

$8.18

$7.67

Regulatory Capital Ratios: 6

Tier 1 common equity

11.2%

11.2%

11.4%

11.4%

11.1%

Total risk-based capital

13.9%

13.9%

14.2%

14.3%

14.1%

Tier 1 risk-based capital

12.8%

12.7%

13.0%

13.0%

12.8%

Tier 1 leverage capital

9.7%

9.6%

9.7%

9.5%

9.2%

Common Equity Repurchase Program:

Total shares of common stock repurchased

678,165

1,505,521

137,144

Average price paid per share of common stock

$10.61

$12.02

$13.89

Aggregate repurchases of common equity ($ in millions)

$7.2

$18.1

$1.9

6 Current quarter information is presented based on estimated data.

During the third quarter of 2019, the Company implemented a $20 million share repurchase program and repurchased 678,165 shares of common stock at an average cost of $10.61 per share. $12.8 million remains available to be repurchased under the current program.

Tangible book value per share as of September 30, 2019 increased 2% linked quarter and 16% year-over-year to $8.90. The linked quarter increase in Tangible book value per share was primarily driven by increased retained earnings and higher accumulated other comprehensive income related to unrealized securities gains, partially offset by common share repurchases.

EPS Calculation

For calculation of income for EPS, third quarter 2019 Net income attributable to the common shareholders was positively impacted by $0.3 million related to the change in value of Redeemable noncontrolling interests (“RNCI”).

Dividend Payments

Concurrent with the release of third quarter 2019 earnings, the Board of Directors of the Company declared a cash dividend payable to common shareholders of $0.12 per share. The record date for this dividend is November 8, 2019, and the payment date is November 22, 2019.

Non-GAAP Financial Measures

The Company uses certain non-GAAP financial measures to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector.

These non-GAAP financial measures include: return on average common equity; return on average tangible common equity; pre-tax, pre-provision income; net interest income and net interest margin excluding interest recovered on previous nonaccrual loans, also referred to as core net interest income, and core net interest margin, respectively; tangible common equity / tangible assets, total noninterest expense excluding intangibles and restructuring, if any; the efficiency ratio excluding amortization and intangibles, and restructuring, if any; net income attributable to the Company excluding notable items; net income attributable to the common shareholders, treasury stock method, excluding notable items; diluted earnings per share excluding notable items; operating basis total revenue; operating basis total noninterest expenses

A detailed reconciliation table of the Company’s GAAP to non-GAAP measures is included in the tables of this release and beginning on page 17 of the attached financial statements.

Conference Call

Management will hold a conference call at 8:00 a.m. Eastern Time on Friday, October 25, 2019, to discuss the financial results, business highlights and outlook. To access the call:

Dial In #: (888) 317-6003

Elite Entry Number: 9751347

Replay Information:

Available from October 25, 2019 at 12:00 p.m Eastern Time until November 1, 2019

Dial In #: (877) 344-7529

Conference Number: 10135524

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

About Boston Private

Boston Private Financial Holdings, Inc. is a national financial services organization that owns Wealth Management, Trust, and Commercial and Private Banking affiliates with offices in Boston, New York, Los Angeles, San Francisco, San Jose, and Florida. The Company has total assets of greater than $8 billion, and manages over $16 billion of client assets.

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

For more information about BPFH, visit the Company’s website at www.bostonprivate.com.

Forward-Looking Statements

Certain statements in this press release that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties. These statements include, among others, statements regarding our strategy, evaluations of future interest rate trends and liquidity, prospects for growth in assets, and prospects for overall results over the long term. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Company’s control. Forward-looking statements are based on the current assumptions and beliefs of management and are only expectations of future results. The Company’s actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, adverse conditions in the capital and debt markets and the impact of such conditions on the Company’s business activities; changes in interest rates; competitive pressures from other financial institutions; the effects of weakness in general economic conditions on a national basis or in the local markets in which the Company operates; changes in loan defaults and charge-off rates; changes in the value of securities and other assets, adequacy of loan loss reserves, or decreases in deposit levels necessitating increased borrowing to fund loans and investments; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; changes in government regulation; the risk that goodwill and intangibles recorded in the Company’s financial statements will become impaired; the risk that the Company’s deferred tax asset may not be realized; risks related to the identification and implementation of acquisitions, dispositions and restructurings; changes in assumptions used in making such forward-looking statements; and the other risks and uncertainties detailed in the Company’s Annual Report on Form 10-K and updated by the Company’s Quarterly Reports on Form 10-Q and other filings submitted to the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made. The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statement is made.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Consolidated Balance Sheet

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

3Q19

2Q19

1Q19

4Q18

3Q18

ASSETS:

Cash and cash equivalents

$

78,010

$

65,756

$

96,211

$

127,259

$

92,634

Investment securities available-for-sale

935,538

966,731

981,951

994,065

1,056,261

Investment securities held-to-maturity

51,379

54,482

67,548

70,438

75,468

Equity securities at fair value

21,780

19,092

7,491

14,228

7,079

Stock in Federal Home Loan Bank and Federal Reserve Bank

47,756

64,453

47,053

49,263

48,727

Loans held for sale

6,658

3,640

280

2,812

3,344

Loans

7,067,151

7,080,260

6,926,968

6,893,158

6,720,420

Less: Allowance for loan losses

75,359

75,067

73,814

75,312

73,500

Loans, net of allowance for loan losses

6,991,792

7,005,193

6,853,154

6,817,846

6,646,920

Other real estate owned (“OREO”)

401

108

Premises and equipment, net

42,658

40,244

42,938

45,412

47,399

Goodwill 7

57,607

57,607

57,607

57,607

75,598

Intangible assets, net 7

10,622

10,884

11,555

12,227

13,834

Accrued interest receivable

24,851

26,411

25,935

24,366

24,641

Deferred income taxes, net

15,704

17,183

22,844

26,638

27,833

Right-of-use assets

107,045

110,880

104,644

Other assets 7

299,544

270,317

252,932

252,063

255,994

TOTAL ASSETS

$

8,690,944

$

8,712,873

$

8,572,143

$

8,494,625

$

8,375,840

LIABILITIES:

Deposits

$

6,658,242

$

6,437,963

$

6,779,845

$

6,781,170

$

6,768,723

Securities sold under agreements to repurchase

48,860

62,372

58,329

36,928

39,453

Federal funds purchased

230,000

135,000

250,000

120,000

Federal Home Loan Bank borrowings

570,904

920,068

615,070

420,144

441,836

Junior subordinated debentures

106,363

106,363

106,363

106,363

106,363

Lease liabilities

122,799

126,740

120,162

Other liabilities 7

143,607

124,370

112,893

143,540

149,770

TOTAL LIABILITIES

7,880,775

7,912,876

7,792,662

7,738,145

7,626,145

REDEEMABLE NONCONTROLLING INTEREST (“RNCI”)

1,481

1,786

662

2,526

11,686

SHAREHOLDERS' EQUITY:

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

83,242

83,774

83,774

83,656

84,603

Additional paid-in capital

599,877

603,869

604,288

600,196

614,157

Retained earnings

116,210

106,443

97,155

87,821

64,618

Accumulated other comprehensive income/ (loss)

9,359

4,125

(6,398

)

(17,719

)

(27,578

)

TOTAL COMPANY'S SHAREHOLDERS' EQUITY

808,688

798,211

778,819

753,954

735,800

Noncontrolling interests

2,209

TOTAL SHAREHOLDERS' EQUITY

808,688

798,211

778,819

753,954

738,009

TOTAL LIABILITIES, RNCI, AND SHAREHOLDERS' EQUITY

$

8,690,944

$

8,712,873

$

8,572,143

$

8,494,625

$

8,375,840

7 On December 3, 2018, the Company completed the sale of its ownership interest in BOS to the management team of BOS for an upfront cash payment and an eight-year revenue sharing agreement with BOS. For regulatory purposes, the goodwill and intangible assets of BOS are included in consolidated calculations through the closing date.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Consolidated Income Statement

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

3Q19

2Q19

1Q19

4Q18

3Q18

REVENUE:

Interest income

$

77,604

$

78,728

$

76,824

$

76,892

$

76,101

Interest expense

21,451

21,268

18,486

16,895

16,460

Net interest income

56,153

57,460

58,338

59,997

59,641

Provision/ (credit) for loan losses...

167

1,363

(1,426

)

93

(949

)

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

55,986

56,097

59,764

59,904

60,590

Wealth management and trust fees 8

19,067

18,912

19,058

23,788

25,505

Investment management fees

2,496

2,455

2,650

2,831

3,245

Private banking fee income

2,658

2,867

2,499

2,033

2,775

Gain on sale of loans, net

934

58

73

39

67

Total core fees and income

25,155

24,292

24,280

28,691

31,592

Total other income

(29

)

88

968

17,154

722

TOTAL REVENUE 9

81,279

81,840

83,586

105,842

91,955

NONINTEREST EXPENSE:

Salaries and employee benefits

31,684

32,706

35,726

36,007

38,944

Occupancy and equipment

8,260

7,852

8,348

7,975

8,164

Professional services

4,435

3,313

3,560

4,229

2,877

Marketing and business development

1,403

1,934

1,085

2,275

1,710

Information systems

5,169

5,137

5,860

6,296

6,233

Amortization of intangibles

671

672

672

680

750

FDIC insurance

59

585

660

739

674

Restructuring

1,646

2,065

5,763

Other

3,856

3,460

2,996

3,291

3,442

TOTAL NONINTEREST EXPENSE

55,537

55,659

60,553

63,557

68,557

INCOME BEFORE INCOME TAXES

25,575

24,818

24,459

42,192

24,347

Provision for income taxes

5,517

5,369

4,917

8,651

5,461

Net income from continuing operations

20,058

19,449

19,542

33,541

18,886

Net income from discontinued operations 10

306

Net income before attribution to noncontrolling interests

20,058

19,449

19,542

33,847

18,886

Less: Net income attributable to noncontrolling interests

96

69

100

545

924

NET INCOME ATTRIBUTABLE TO THE COMPANY

$

19,962

$

19,380

$

19,442

$

33,302

$

17,962

Adjustments, treasury stock method 11

304

(816

)

1,557

2,694

(829

)

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

20,266

$

18,564

$

20,999

$

35,996

$

17,133

COMMON SHARE DATA:

Weighted average basic shares outstanding

83,631,403

83,565,780

83,285,095

83,750,785

84,017,284

Weighted average diluted shares outstanding 12

83,956,708

84,048,972

84,010,450

84,863,779

85,498,568

Diluted total earnings per share

$

0.24

$

0.22

$

0.25

$

0.42

$

0.20

8 Wealth management and trust fees consists of revenue from Boston Private Wealth LLC, KLS Professional Advisors, BOS, and the trust operations of Boston Private Bank & Trust Company

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

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

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

12 For a description of the Company's policies regarding Diluted earnings per share, please refer to Part II. Item 8. “Financial Statements and Supplementary Data - Note 16: Earnings Per Share” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Consolidated Income Statement

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

Nine months ended September 30,

2019

2018

REVENUE:

Interest income

$

233,156

$

216,012

Interest expense

61,205

41,443

Net interest income

171,951

174,569

Provision/ (credit) for loan losses

104

(2,291

)

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

171,847

176,860

Wealth management and trust fees 8

57,037

76,030

Investment management fees

7,601

18,897

Private banking fee income

8,024

7,793

Gain on sale of loans, net

1,065

204

Total core fees and income

73,727

102,924

Total other income

1,027

1,228

TOTAL REVENUE 9

246,705

278,721

NONINTEREST EXPENSE:

Salaries and employee benefits

100,116

125,461

Occupancy and equipment

24,460

24,141

Professional services

11,308

8,926

Marketing and business development

4,422

5,373

Information systems

16,166

18,889

Amortization of intangibles

2,015

2,249

FDIC insurance

1,304

2,126

Restructuring

1,646

5,763

Other

10,312

10,870

TOTAL NONINTEREST EXPENSE

171,749

203,798

INCOME BEFORE INCOME TAXES

74,852

77,214

Income tax expense

15,803

28,886

Net income from continuing operations

59,049

48,328

Net income from discontinued operations 10

1,696

Net income before attribution to noncontrolling interests

59,049

50,024

Less: Net income attributable to noncontrolling interests

265

2,942

NET INCOME ATTRIBUTABLE TO THE COMPANY

$

58,784

$

47,082

Adjustments, treasury stock method 11

1,045

(4,376

)

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

59,829

$

42,706

COMMON SHARE DATA

Weighted average basic shares outstanding

83,495,361

83,544,754

Weighted average diluted shares outstanding 12

84,003,281

85,254,295

Diluted total earnings per share

$

0.71

$

0.50

8 Wealth management and trust fees consists of revenue from Boston Private Wealth LLC, KLS Professional Advisors, BOS, and the trust operations of Boston Private Bank & Trust Company

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

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

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

12 For a description of the Company's policies regarding Diluted earnings per share, please refer to Part II. Item 8. “Financial Statements and Supplementary Data - Note 16: Earnings Per Share” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Consolidated Financial Highlights

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

3Q19

2Q19

1Q19

4Q18

3Q18

KEY STATISTICS:

Return on average assets (non-GAAP) 13

0.91

%

0.90

%

0.93

%

1.56

%

0.84

%

ROACE (non-GAAP) 13

9.80

%

9.83

%

10.29

%

17.87

%

9.67

%

ROATCE (non-GAAP) 13

10.99

%

11.06

%

11.63

%

20.46

%

11.37

%

Efficiency ratio (non-GAAP) 13

67.5

%

67.2

%

69.7

%

57.1

%

67.0

%

Noninterest income to total revenue

30.9

%

29.8

%

30.2

%

43.3

%

35.1

%

Net interest margin

2.72

%

2.78

%

2.90

%

2.94

%

2.90

%

Average loan to average deposit ratio

105.9

%

106.6

%

101.6

%

98.0

%

100.2

%

Cost of total deposits

0.92

%

0.88

%

0.84

%

0.77

%

0.68

%

Cost of interest-bearing deposits

1.31

%

1.25

%

1.19

%

1.11

%

0.98

%

Cost of total funding

1.12

%

1.11

%

1.00

%

0.89

%

0.86

%

Allowance for Loan Loss / Total Loans

1.07

%

1.06

%

1.07

%

1.09

%

1.09

%

Nonperforming loans / Total Loans

0.25

%

0.24

%

0.17

%

0.20

%

0.18

%

Net (charge-offs) / recoveries / Total loans 13

0.01

%

(0.01

)%

%

0.10

%

0.06

%

CAPITAL HIGHLIGHTS:

Tier 1 common equity 14

$

732,980

$

726,872

$

717,138

$

702,728

$

674,641

Tier 1 capital 14

$

833,431

$

827,299

$

817,600

$

803,311

$

776,328

Total capital 14

$

910,076

$

903,675

$

892,764

$

879,927

$

851,399

Risk-weighted assets ("RWA") 14

$

6,533,882

$

6,491,184

$

6,304,444

$

6,161,677

$

6,057,002

Average assets for leverage 14

$

8,588,358

$

8,617,803

$

8,447,143

$

8,416,195

$

8,436,411

TIer 1 common equity ratio 14

11.22

%

11.20

%

11.38

%

11.40

%

11.14

%

Tier 1 ratio 14

12.76

%

12.74

%

12.97

%

13.04

%

12.82

%

Total capital ratio 14

13.93

%

13.92

%

14.16

%

14.28

%

14.06

%

Leverage ratio 14

9.70

%

9.60

%

9.68

%

9.54

%

9.20

%

Total equity / Total assets

9.30

%

9.16

%

9.09

%

8.88

%

8.81

%

Tangible common equity / Tangible assets (non-GAAP)

8.59

%

8.44

%

8.35

%

8.12

%

7.83

%

Market price per share

$

11.66

$

12.07

$

10.96

$

10.57

$

13.65

End of period shares outstanding

83,241,952

83,774,335

83,773,650

83,655,651

84,602,519

Book value per common share

$

9.71

$

9.53

$

9.30

$

9.01

$

8.72

Tangible book value per share (non-GAAP)

$

8.90

$

8.71

$

8.47

$

8.18

$

7.67

Common Equity Repurchase Program:

Total shares of common stock repurchased

678,165

1,505,521

137,144

Average price paid per share of common stock

$

10.61

$

$

$

12.02

$

13.89

Aggregate repurchases of common equity ($ in millions)

$

7.2

$

$

$

18.1

$

1.9

13 Annualized

14 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)

3Q19

2Q19

1Q19

4Q18

3Q18

ASSETS UNDER MANAGEMENT AND ADVISORY ("AUM"):

Wealth Management and Trust

$

14,695,000

$

14,649,000

$

14,564,000

$

14,206,000

$

15,598,000

Other

1,533,000

1,550,000

1,558,000

1,715,000

2,125,000

Total AUM, excluding BOS 15

16,228,000

16,199,000

16,122,000

15,921,000

17,723,000

AUM at BOS

4,714,000

Less: Inter-company relationship

(7,000

)

Total AUM

$

16,228,000

$

16,199,000

$

16,122,000

$

15,921,000

$

22,430,000

AUM Reconciliation:

Beginning balance

$

16,199,000

$

16,122,000

$

15,921,000

$

17,723,000

$

16,861,000

Net flows

(137,000

)

(269,000

)

(963,000

)

(143,000

)

260,000

Market

166,000

346,000

1,164,000

(1,659,000

)

602,000

Ending balance

$

16,228,000

$

16,199,000

$

16,122,000

$

15,921,000

$

17,723,000

AUM Net Flows:

Wealth Management & Trust

$

(100,000

)

$

(233,000

)

$

(580,000

)

$

(137,000

)

$

215,000

Other

(37,000

)

(36,000

)

(383,000

)

(6,000

)

45,000

Total Net flows

$

(137,000

)

$

(269,000

)

$

(963,000

)

$

(143,000

)

$

260,000

DEPOSITS:

Demand deposits (non-interest bearing)

$

1,947,363

$

1,854,091

$

2,016,838

$

1,951,274

$

2,001,275

NOW

598,048

563,130

605,852

626,685

568,148

Savings

68,059

68,036

68,102

73,834

72,967

Money market

3,366,623

3,228,608

3,302,244

3,338,892

3,363,062

Certificates of deposit

678,149

724,098

786,809

790,485

763,271

TOTAL DEPOSITS

$

6,658,242

$

6,437,963

$

6,779,845

$

6,781,170

$

6,768,723

LOANS:

Commercial and Industrial

$

695,029

$

656,186

$

615,370

$

623,037

$

583,214

Commercial tax exempt

448,488

450,307

449,492

451,671

438,807

Commercial real estate

2,533,346

2,530,556

2,439,048

2,395,692

2,399,080

Construction and land

209,741

200,378

210,618

240,306

197,524

Residential

2,964,042

3,025,758

2,993,132

2,948,973

2,862,879

Home Equity

84,432

89,930

88,620

90,421

93,390

Consumer

132,073

127,145

130,688

143,058

145,526

TOTAL LOANS

$

7,067,151

$

7,080,260

$

6,926,968

$

6,893,158

$

6,720,420

15 Assets under management and advisory have been reduced to exclude those assets managed or advised by BOS for periods when BOS was owned by the Company

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Asset Quality

Unaudited ($ in thousands)

3Q19

2Q19

1Q19

4Q18

3Q18

CHARGE-OFFS:

Loan charge-offs

$

(185

)

$

(195

)

$

(564

)

$

(370

)

$

Loan recoveries

310

85

492

2,089

985

NET (CHARGE-OFFS) / RECOVERIES

$

125

$

(110

)

$

(72

)

$

1,719

$

985

Net charge-offs to average loans (annualized)

0.01

%

(0.01

)%

%

0.10

%

0.06

%

Net Charge-offs by Loan Type:

Commercial and industrial

$

95

$

(155

)

$

188

$

(77

)

$

153

Commercial real estate

27

30

189

1,394

820

Construction and land

Residential

100

402

Home Equity

6

(562

)

Consumer

(3

)

15

13

12

NET (CHARGE-OFFS) / RECOVERIES

$

125

$

(110

)

$

(72

)

$

1,719

$

985

NONPERFORMING LOAN DATA:

Special mention loans

$

58,133

$

70,677

$

86,787

$

78,528

$

67,406

Accruing classified loans 16

63,278

53,883

42,521

54,095

55,380

Nonaccrual loans

17,565

17,155

12,019

14,057

12,097

Total Classified

80,843

71,038

54,540

68,152

67,477

Criticized and Classified Loans

$

138,976

$

141,715

$

141,327

$

146,680

$

134,883

Loans 30-89 days past due and accruing 17

$

4,179

$

2,434

$

17,715

$

22,299

$

11,607

16 Accruing classified loans include loans that are classified as substandard but are still accruing interest income. Boston Private Bank & Trust Company may classify a loan as substandard where known information about possible credit problems of the related borrowers causes management to have doubts as to the ability of such borrowers to comply with the present repayment terms and which may result in disclosure of such loans as nonaccrual at some time in the future.

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

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Average Balances, Yields, and Rates

Unaudited ($ in thousands)

Average Balance

Interest Income/Expense

Average Yield/Rate

3Q19

2Q19

3Q18

3Q19

2Q19

3Q18

3Q19

2Q19

3Q18

INTEREST-EARNING ASSETS

Cash and investments:

Taxable investment securities

$

198,655

$

227,029

$

324,583

$

938

$

1,121

$

1,510

1.95

%

1.98

%

1.86

%

Non-taxable investment securities

305,108

304,309

297,710

1,924

1,901

1,779

2.52

%

2.50

%

2.39

%

Mortgage-backed securities

492,514

508,033

552,820

2,622

2,706

2,941

2.13

%

2.13

%

2.13

%

Short-term investments and other

101,958

130,363

204,814

1,084

1,057

1,617

4.06

%

3.23

%

3.11

%

Total cash and investments

1,098,235

1,169,734

1,379,927

6,568

6,785

7,847

2.39

%

2.32

%

2.27

%

Loans: 18

Commercial and industrial

1,101,672

1,091,903

998,817

11,523

11,170

9,894

4.09

%

4.05

%

3.88

%

Commercial real estate

2,518,048

2,506,637

2,475,143

29,118

29,953

29,482

4.52

%

4.73

%

4.66

%

Construction and land

195,843

202,609

179,248

2,410

2,559

2,193

4.82

%

5.00

%

4.79

%

Residential

3,016,265

3,008,753

2,836,593

25,567

25,735

23,907

3.39

%

3.42

%

3.37

%

Home equity

89,068

91,384

94,050

1,121

1,146

1,089

4.99

%

5.03

%

4.59

%

Other consumer

127,987

124,778

163,224

1,297

1,380

1,689

4.02

%

4.43

%

4.11

%

Total loans

7,048,883

7,026,064

6,747,075

71,036

71,943

68,254

3.98

%

4.07

%

3.99

%

Total earning assets

8,147,118

8,195,798

8,127,002

77,604

78,728

76,101

3.76

%

3.82

%

3.70

%

LESS: Allowance for loan losses

75,199

73,856

73,861

Cash and due from banks

49,065

45,705

46,056

Other assets

544,368

511,859

392,757

TOTAL AVERAGE ASSETS

$

8,665,352

$

8,679,506

$

8,491,954

INTEREST-BEARING LIABILITIES

Interest-bearing deposits: 19

Savings and NOW

$

615,730

$

684,507

$

693,419

$

275

$

276

$

301

0.18

%

0.16

%

0.17

%

Money market

3,378,006

3,226,569

3,244,628

11,523

10,476

8,110

1.35

%

1.30

%

0.99

%

Certificates of deposit

711,299

752,500

730,117

3,689

3,763

3,076

2.06

%

2.01

%

1.67

%

Total interest-bearing deposits 19

4,705,035

4,663,576

4,668,164

15,487

14,515

11,487

1.31

%

1.25

%

0.98

%

Junior subordinated debentures

106,363

106,363

106,363

1,022

1,080

1,028

3.76

%

4.02

%

3.78

%

FHLB borrowings and other

833,535

952,645

768,015

4,942

5,673

3,945

2.32

%

2.36

%

2.01

%

Total interest-bearing liabilities 19

5,644,933

5,722,584

5,542,542

21,451

21,268

16,460

1.50

%

1.48

%

1.17

%

Non-interest bearing demand deposits 19

1,953,214

1,926,591

2,063,642

Other liabilities

258,371

238,544

135,508

Total average liabilities

7,856,518

7,887,719

7,741,692

Redeemable noncontrolling interests

944

943

13,074

Average shareholders’ equity

807,890

790,844

737,188

TOTAL AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY

$

8,665,352

$

8,679,506

$

8,491,954

Net interest income

$

56,153

$

57,460

$

59,641

Interest rate spread

2.26

%

2.34

%

2.53

%

Net interest margin

2.72

%

2.78

%

2.90

%

Average total deposits 19

$

6,658,249

$

6,590,167

$

6,731,806

0.92

%

0.88

%

0.68

%

Average total deposits and borrowings 19

$

7,598,147

$

7,649,175

$

7,606,184

1.12

%

1.11

%

0.86

%

18 Average loans includes Loans held for sale and Nonaccrual loans

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

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Average Balances, Yields, and Rates

Unaudited ($ in thousands)

Average Balance

Interest Income/Expense

Average Yield/Rate

Nine Months Ended

Nine Months Ended

Nine Months Ended

INTEREST-EARNING ASSETS

9/30/19

9/30/18

9/30/19

9/30/18

9/30/19

9/30/18

Cash and investments:

Taxable investment securities

$

223,072

$

328,054

$

3,244

$

4,521

1.94

%

1.84

%

Non-taxable investment securities

305,422

297,509

5,726

5,261

2.50

%

2.36

%

Mortgage-backed securities

507,338

570,578

8,225

9,168

2.16

%

2.14

%

Short-term investments and other

104,225

174,736

3,049

3,831

3.78

%

2.91

%

Total cash and investments

1,140,057

1,370,877

20,244

22,781

2.36

%

2.21

%

Loans: 18

Commercial and industrial

1,088,027

969,063

33,673

27,554

4.08

%

3.75

%

Commercial real estate

2,474,804

2,464,788

87,222

83,020

4.65

%

4.44

%

Construction and land

203,211

171,825

7,610

6,142

4.94

%

4.71

%

Residential

2,999,480

2,771,875

76,847

68,263

3.42

%

3.28

%

Home equity

90,361

95,217

3,388

3,172

5.01

%

4.45

%

Other consumer

128,879

176,086

4,172

5,080

4.33

%

3.86

%

Total loans

6,984,762

6,648,854

212,912

193,231

4.04

%

3.85

%

Total earning assets

8,124,819

8,019,731

233,156

216,012

3.80

%

3.57

%

LESS: Allowance for loan losses

74,863

73,894

Cash and due from banks (non-interest bearing)

46,906

47,859

Other assets

516,642

404,375

TOTAL AVERAGE ASSETS

$

8,613,504

$

8,398,071

INTEREST-BEARING LIABILITIES

Interest-bearing deposits: 19

Savings and NOW

$

658,154

$

709,751

$

847

$

820

0.17

%

0.15

%

Money market

3,317,117

3,139,107

32,072

17,967

1.29

%

0.77

%

Certificates of deposit

746,453

691,670

11,141

7,589

2.00

%

1.47

%

Total interest-bearing deposits 19

4,721,724

4,540,528

44,060

26,376

1.25

%

0.78

%

Junior subordinated debentures

106,363

106,363

3,223

2,882

4.05

%

3.62

%

FHLB borrowings and other

801,519

889,178

13,922

12,185

2.29

%

1.81

%

Total interest-bearing liabilities 19

5,629,606

5,536,069

61,205

41,443

1.45

%

1.00

%

Non-interest bearing demand deposits 19

1,949,948

1,948,573

Payables and other liabilities

243,370

130,410

Total average liabilities

7,822,924

7,615,052

Redeemable noncontrolling interests

1,642

16,294

Average shareholders’ equity

788,938

766,725

TOTAL AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY

$

8,613,504

$

8,398,071

Net interest income

$

171,951

$

174,569

Interest rate spread

2.35

%

2.57

%

Net interest margin

2.80

%

2.88

%

Average total deposits 19

$

6,671,672

$

6,489,101

0.88

%

0.54

%

Average total deposits and borrowings 19

$

7,579,554

$

7,484,642

1.08

%

0.74

%

18 Average loans includes Loans held for sale and Nonaccrual loans

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

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Regional Loan Data

Unaudited ($ in thousands)

3Q19

2Q19

1Q19

4Q18

3Q18

LOANS: 20

New England

$

3,868,690

$

3,957,221

$

3,901,644

$

3,890,607

$

3,783,032

San Francisco Bay Area

1,559,569

1,538,441

1,499,626

1,488,017

1,491,528

Southern California

1,638,892

1,584,598

1,525,698

1,514,534

1,445,860

Total loans

$

7,067,151

$

7,080,260

$

6,926,968

$

6,893,158

$

6,720,420

Loans (charged-off) / recovered, net:

New England

$

275

$

31

$

222

$

(100

)

$

232

San Francisco Bay Area

6

20

18

1,804

706

Southern California

(156

)

(161

)

(312

)

15

47

Total net loans (charged-off) / recovered

$

125

$

(110

)

$

(72

)

$

1,719

$

985

Special mention loans:

New England

$

19,828

$

35,235

$

34,675

$

31,147

$

20,382

San Francisco Bay Area

4,821

10,360

23,486

18,585

18,359

Southern California

33,484

25,082

28,626

28,796

28,665

Total special mention loans

$

58,133

$

70,677

$

86,787

$

78,528

$

67,406

Accruing classified loans:

New England

$

21,830

$

13,012

$

15,830

$

10,392

$

10,083

San Francisco Bay Area

23,938

25,957

20,801

24,584

24,252

Southern California

17,510

14,914

5,890

19,119

21,045

Total accruing classified loans

$

63,278

$

53,883

$

42,521

$

54,095

$

55,380

Nonaccruing loans:

New England

$

8,999

$

8,837

$

6,161

$

6,728

$

5,131

San Francisco Bay Area

2,395

2,644

2,480

2,488

1,169

Southern California

6,171

5,674

3,378

4,841

5,797

Total nonaccruing loans

$

17,565

$

17,155

$

12,019

$

14,057

$

12,097

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

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Reconciliations of Non-GAAP Financial Measures

Unaudited ($ in thousands)

3Q19

2Q19

1Q19

4Q18

3Q18

ROACE AND ROATCE:

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

$

19,962

$

19,380

$

19,442

$

33,302

$

17,962

ADD: Amortization of intangibles, net of tax

530

531

531

537

593

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

$

20,492

$

19,911

$

19,973

$

33,839

$

18,555

Total average shareholders’ equity (C)

$

807,890

$

790,844

$

766,283

$

739,313

$

737,188

LESS: Average goodwill and intangible assets, net

(68,359

)

(68,889

)

(69,498

)

(83,153

)

(89,830

)

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

$

739,531

$

721,955

$

696,785

$

656,160

$

647,358

ROACE (annualized) (A / C)

9.80

%

9.83

%

10.29

%

17.87

%

9.67

%

ROATCE (annualized) (B / D)

10.99

%

11.06

%

11.63

%

20.46

%

11.37

%

PRE-TAX, PRE-PROVISION INCOME:

Income before income taxes (GAAP)

$

25,575

$

24,818

$

24,459

$

42,192

$

24,347

ADD BACK: Provision/ (credit) for loan losses

167

1,363

(1,426

)

93

(949

)

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

$

25,742

$

26,181

$

23,033

$

42,285

$

23,398

CORE NET INTEREST INCOME AND MARGIN:

Net interest income (GAAP)

$

56,153

$

57,460

$

58,338

$

59,997

$

59,641

LESS: Interest recovered on previous nonaccrual loans

180

258

986

986

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

$

55,973

$

57,460

$

58,080

$

59,011

$

58,655

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

2.71

%

2.78

%

2.89

%

2.90

%

2.90

%

TANGIBLE COMMON EQUITY:

Total Shareholders’ Equity (GAAP)

$

808,688

$

798,211

$

778,819

$

753,954

$

738,009

LESS: Goodwill and intangible assets, net

(68,229

)

(68,491

)

(69,162

)

(69,834

)

(89,432

)

Tangible common equity (non-GAAP) (A)

$

740,459

$

729,720

$

709,657

$

684,120

$

648,577

Total Assets (GAAP)

$

8,690,944

$

8,712,873

$

8,572,143

$

8,494,625

$

8,375,840

LESS: Goodwill and intangible assets, net

(68,229

)

(68,491

)

(69,162

)

(69,834

)

(89,432

)

Tangible assets (non-GAAP) (B)

$

8,622,715

$

8,644,382

$

8,502,981

$

8,424,791

$

8,286,408

End of Period Shares Outstanding (C)

83,241,952

83,774,335

83,773,650

83,655,651

84,602,519

Tangible common equity/ Tangible assets (non-GAAP) (A / B)

8.59

%

8.44

%

8.35

%

8.12

%

7.83

%

Tangible Book Value Per Share (non-GAAP) (A / C)

$

8.90

$

8.71

$

8.47

$

8.18

$

7.67

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Reconciliations of Non-GAAP Financial Measures

Unaudited ($ in thousands)

3Q19

2Q19

1Q19

4Q18

3Q18

RETURN ON AVERAGE ASSETS:

Net income (GAAP) (A)

$

19,962

$

19,380

$

19,442

$

33,302

$

17,962

Average Assets (non-GAAP) (B)

8,665,352

8,679,506

8,493,725

8,445,298

8,491,954

Return on average assets (non-GAAP) (A / B)

0.91

%

0.90

%

0.93

%

1.56

%

0.84

%

EFFICIENCY RATIO:

Total noninterest expense (GAAP) (A)

$

55,537

$

55,659

$

60,553

$

63,557

$

68,557

Less: Amortization of intangibles

671

672

672

680

750

Less: Restructuring

1,646

2,065

5,763

Total noninterest expense (non-GAAP) (B)

$

54,866

$

54,987

$

58,235

$

60,812

$

62,044

Net interest income (GAAP)

$

56,153

$

57,460

$

58,338

$

59,997

$

59,641

Total core fees and income (GAAP)

25,155

24,292

24,280

28,691

31,592

Gain on sale of affiliate (GAAP)

18,142

Total other income (GAAP)

(29

)

88

968

(988

)

722

Total revenue (C)

$

81,279

$

81,840

$

83,586

$

105,842

$

91,955

Efficiency ratio (GAAP) (A / C)

68.3

%

68.0

%

72.4

%

60.0

%

74.6

%

Efficiency ratio, excluding amortization of intangibles and restructuring, if any (non-GAAP) (B / C)

67.5

%

67.2

%

69.7

%

57.1

%

67.0

%

OTHER INCOME: (GAAP)

Gain/ (loss) on sale of investments, net

$

$

$

$

(596

)

$

Gain/ (loss) on OREO, net

91

Gain on sale of affiliate

18,142

Other

(29

)

88

877

(392

)

722

Total other income (GAAP)

$

(29

)

$

88

$

968

$

17,154

$

722

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Reconciliations of Non-GAAP measures: Operating Adjustments

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

3Q19

2Q19

1Q19

4Q18

3Q18

NET INCOME ATTRIBUTABLE TO THE COMPANY:

NET INCOME ATTRIBUTABLE TO THE COMPANY (GAAP)

$

19,962

$

19,380

$

19,442

$

33,302

$

17,962

LESS: Gain on sale of affiliate

18,142

ADD: Information services 21

(441

)

ADD: Restructuring

1,646

2,065

5,763

ADD: Tax adjustments 22

3,502

Tax effect at statutory rate

(346

)

(341

)

(1,210

)

NET INCOME ATTRIBUTABLE TO THE COMPANY (NON-GAAP)

$

19,962

$

19,380

$

20,742

$

19,945

$

22,515

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS:

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS (GAAP)

$

20,266

$

18,564

$

20,999

$

35,996

$

17,133

LESS: Gain on sale of affiliate

18,142

ADD: Information services 21

(441

)

ADD: Restructuring

1,646

2,065

5,763

ADD: Tax adjustments 22

3,502

Tax effect at statutory rate

(346

)

(341

)

(1,210

)

Net income attributable to the common shareholders, treasury stock method, excluding notable items (non-GAAP)

$

20,266

$

18,564

$

22,299

$

22,639

$

21,686

Weighted average diluted shares outstanding

83,956,708

84,048,972

84,010,450

84,863,779

85,498,568

Diluted total earnings per share (GAAP)

$

0.24

$

0.22

$

0.25

$

0.42

$

0.20

Diluted total earnings per share, excluding notable items (non-GAAP)

$

0.24

$

0.22

$

0.27

$

0.27

$

0.25

Average common equity (non-GAAP)

$

807,890

$

790,844

$

766,283

$

739,313

$

737,188

Average tangible common equity (non-GAAP)

$

739,531

$

721,955

$

696,785

$

656,160

$

647,358

Return on average common equity, excluding notable items (non-GAAP)

9.80

%

9.83

%

10.98

%

10.70

%

12.12

%

Return on average tangible common equity, excluding notable items (non-GAAP)

10.99

%

11.06

%

12.38

%

12.38

%

14.16

%

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

$

25,742

$

26,181

$

23,033

$

42,285

$

23,398

LESS: Gain on sale of affiliate

18,142

ADD: Information services 21

(441

)

ADD: Restructuring

1,646

2,065

5,763

Pre-tax, pre-provision income, excluding notable items (non-GAAP)

$

25,742

$

26,181

$

24,679

$

25,767

$

29,161

21 In the fourth quarter of 2018, $0.4 million of Information services expense was reclassified to Restructuring expense in conjunction with the announcement of the Company's formal restructuring plan.

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20191024005951/en/