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Section 1: 8-K (2018 Q1 EARNINGS RELEASE 8-K 04-18-2018)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): April 18, 2018
Boston Private Financial Holdings, Inc.
(Exact Name of Registrant as Specified in its Charter)
Massachusetts
0-17089
04-2976299
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification Number)
Ten Post Office Square, Boston, Massachusetts 02109
(Address of principal executive offices)
(617) 912-1900
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter)
o    Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     o    







Item 2.02.
Results of Operations and Financial Condition.
On April 18, 2018, Boston Private Financial Holdings, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter ended March 31, 2018. The text of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.
The information in this Current Report on Form 8-K furnished under this Item 2.02, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. Furthermore, the information in this Current Report on Form 8-K furnished under this Item 2.02, including Exhibit 99.1 attached hereto, shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing.

Item 9.01    Financial Statements and Exhibits.
(d) Exhibits.
99.1    Earnings Press Release of the Company dated April 18, 2018.







SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunder duly authorized.
 
BOSTON PRIVATE FINANCIAL HOLDINGS, INC.
 
 
 
 
By:
/S/ STEVEN M. GAVEN
 
Name:
Steven M. Gaven
 
Title:
Executive Vice President, Chief
Financial Officer
Date: April 18, 2018
 
 





EXHIBIT INDEX

    Exhibit
No.     Description
99.1     Earnings Press Release of the Company dated January 17, 2018





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Section 2: EX-99.1 (04-18-2018 Q1-18 EARNINGS PRESS RELEASE)

Exhibit


393077957_bplogo121416a01.jpg

Boston Private Financial Holdings, Inc. Reports First Quarter 2018 Results
First Quarter Highlights:
First quarter 2018 Net income attributable to the Company was $22.7 million and Diluted earnings per share was $0.27.
Return on average common equity for the first quarter was 12.0% and Return on average tangible common equity was 15.2%.
Average total deposits increased 1% year-over-year to $6.4 billion, and Average total loans increased 6% year-over-year to $6.5 billion.
Total assets under management (“AUM”), excluding Anchor Capital Advisors LLC (“Anchor”), were $21.2 billion at the end of the first quarter, and Net flows during the first quarter were $198 million.
Boston, MA - April 18, 2018 - Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the “Company” or “BPFH”) today reported first quarter 2018 GAAP Net income attributable to the Company of $22.7 million, compared to a Net loss of $18.3 million for the fourth quarter of 2017 and Net income of $15.7 million for the first quarter of 2017. First quarter 2018 Diluted earnings / (loss) per share were $0.27, compared to $(0.24) in the fourth quarter of 2017, and $0.17 in the first quarter of 2017.
Summary Financial Results - Reported
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Change
($ in millions, except for per share data)
 
1Q18

 
4Q17

 
1Q17

 
Linked
Quarter
 
Year over
Year
Net income/ (loss) attributable to the Company
 
$22.7
 
$(18.3)
 
$15.7
 
nm
 
45
%
Diluted earnings/ (loss) per share
 
$0.27
 
$(0.24)
 
$0.17
 
nm
 
59
%
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Financial Measures:
 
 
 
 
 
 
 
 
 
 
Pre-tax, pre-provision income
 
$26.3
 
$2.5
 
$21.4
 
nm
 
23
%
Return on average common equity
 
12.0
%
 
(9.9
)%
 
8.3
%
 
 
 
 
Return on average tangible common equity
 
15.2
%
 
(11.9
)%
 
11.4
%
 
 
 
 
nm = not meaningful
 
 
 
 
 
 
 
 
 
 
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 financial measures, see page 6. A full reconciliation of GAAP to non-GAAP results can be found in the footnotes beginning on page 16.

1



Summary Financial Results - Operating Basis (non-GAAP)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Change
($ in millions, except for per share data)
 
1Q18

 
4Q171

 
1Q17

 
Linked
Quarter
 
Year over
Year
Net income/ (loss) attributable to the Company
 
$22.7
 
$20.6
 
$15.7
 
10
 %
 
45
%
Diluted earnings/ (loss) per share
 
$0.27
 
$0.22
 
$0.17
 
23
 %
 
59
%
 
 
 
 
 
 
 
 
 
 
 
Pre-tax, pre-provision income
 
$26.3
 
$29.0
 
$21.4
 
(9
)%
 
23
%
Return on average common equity
 
12.0
%
 
10.2
%
 
8.3
%
 
 
 
 
Return on average tangible common equity
 
15.2
%
 
13.4
%
 
11.4
%
 
 
 
 
1 4Q17 results have been adjusted to exclude the impact of items related to the divestiture of Anchor, impairment of goodwill and the Tax Cuts and Jobs Act
See footnote 16 for a GAAP to non-GAAP reconciliation
“Overall, we are pleased with this quarter's results. Our Company demonstrated 59% year-over-year growth in diluted earnings per share and achieved a 12.0% return on average common equity” said Clayton G. Deutsch, CEO. “This quarter's performance reflects year-over-year pre-tax, pre-provision income growth of 23% with positive operating leverage achieved through strong revenue growth and expense growth in line with our expectations. We have worked hard to return to a pattern of positive operating leverage following stepped up investments in staff and technology throughout 2017.”
“The bank continues to exhibit strong credit quality in the form of lower Criticized and Classified loans, and our market-linked fee businesses achieved positive net flows on a consolidated basis amid increasing market volatility. Additionally, we announced that on April 13 we successfully completed the sale of our ownership interest in Anchor.”
Net Interest Income and Margin (non-GAAP, except for Net Interest Income)
 
 
 
 
 
 
 
 
 
 
 
 
% Change
($ in millions)
 
1Q18

 
4Q17

 
1Q17

 
Linked
Quarter
 
Year over
Year
Net interest income
 
$57.4
 
$57.3
 
$53.6
 
 %
 
7
 %
Add: FTE adjustment
 
1.0
 
2.9
 
2.8
 
(66
)%
 
(65
)%
Net interest income, FTE basis
 
58.4
 
60.1
 
56.5
 
(3
)%
 
3
 %
Less: Interest recovered on previous nonaccrual loans
 
0.1
 
0.4
 
0.3
 
(81
)%
 
(73
)%
Core net interest income, FTE basis
 
$58.3
 
$59.7
 
$56.2
 
(2
)%
 
4
 %
 
 
 
 
 
 
 
 
 
 
 
Net interest margin (FTE basis)
 
2.95
%
 
3.04
%
 
2.94
%
 
 
 
 
Core net interest margin (FTE basis)
 
2.94
%
 
3.02
%
 
2.92
%
 
 
 
 
Core net interest margin (non-FTE basis)
 
2.90
%
 
2.87
%
 
2.78
%
 
 
 
 
Net interest income for the first quarter was $57.4 million, flat linked quarter, and an increase of 7% year-over-year. The year-over-year increase was primarily driven by higher yields on interest-earning assets, and higher asset volumes, partially offset by higher costs of deposits and borrowing volumes. The Company’s Core net interest margin (non-FTE basis) increased 3 basis points linked quarter to 2.90% driven primarily by higher asset yields and a mix shift from investments to loans, partially offset by increased deposit and borrowing costs.
Net interest margin (FTE basis) was 2.95% for the first quarter of 2018, a decrease of 9 basis points from the fourth quarter of 2017 and an increase of 1 basis point from the first quarter of 2017. The linked quarter decrease was driven primarily by a lower tax benefit on tax-exempt income.

2



Noninterest Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Change
($ in millions)
 
1Q18
 
4Q17
 
1Q17
 
Linked
Quarter
 
Year over
Year
Investment management fees
 
$11.4
 
$12.3
 
$10.8
 
(7
)%
 
5
%
Wealth advisory fees
 
13.5
 
13.5
 
12.8
 
 %
 
5
%
Wealth management and trust fees
 
12.2
 
11.8
 
10.8
 
3
 %
 
12
%
Private banking fees2
 
2.3
 
2.6
 
1.8
 
(10
)%
 
28
%
Total core fees and income
 
$39.4
 
$40.2
 
$36.3
 
(2
)%
 
9
%
Total other income
 
$0.3
 
$(1.0)
 
$0.2
 
nm

 
66
%
Total noninterest income
 
$39.7
 
$39.2
 
$36.5
 
1
 %
 
9
%
2 Private banking fees includes Other banking fee income and Gain/ (loss) on sale of loans, net
Total core fees and income for the first quarter were $39.4 million, a 2% decrease on a linked quarter basis and a 9% increase year-over-year. The year-over-year increase was primarily driven by higher levels of assets under management in the Investment Management, Wealth Advisory, and Wealth Management and Trust segments. Investment management fees declined on a linked quarter basis primarily driven by $0.9 million of performance fees received in the fourth quarter. Private banking fees increased on a year-over-year basis due to increases in BOLI income.
Assets Under Management
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Change
($ in millions)
 
1Q18
 
4Q17
 
1Q17
 
Linked
Quarter
 
Year over
Year
Wealth Management and Trust
 
$7,831
 
$7,865
 
$7,260
 
 %
 
8
%
Investment Management 3
 
1,920
 
2,004
 
1,849
 
(4
)%
 
4
%
Wealth Advisory
 
11,446
 
11,350
 
10,579
 
1
 %
 
8
%
Total assets under management 3 4
 
$21,186
 
$21,208
 
$19,677
 
 %
 
8
%
 
 
 
 
 
 
 
 
 
 
 
Net flows
 
1Q18
 
4Q17
 
1Q17
 
 
 
 
Wealth Management and Trust
 
$77
 
$79
 
$34
 
 
 
 
Investment Management 3
 
(15)
 
20
 
30
 
 
 
 
Wealth Advisory
 
136
 
29
 
263
 
 
 
 
Total net flows 3
 
$198
 
$128
 
$327
 
 
 
 
3 Information excludes Anchor
4 Segments do not sum to Total assets under management due to $11 million intercompany relationship
Total assets under management, excluding Anchor, were $21.2 billion at the end of the first quarter, flat linked quarter and an increase of 8% year-over-year. The year-over-year increase was driven primarily by positive market action and positive net flows.

3



Operating Expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Change
($ in millions)
 
1Q18
 
4Q17
 
1Q17
 
Linked
Quarter
 
Year over
Year
Salaries and employee benefits
 
$47.2
 
$43.9
 
$45.8
 
8
 %
 
3
 %
Occupancy and equipment
 
7.7
 
7.8
 
7.2
 
 %
 
8
 %
Professional services
 
3.2
 
4.0
 
3.3
 
(21
)%
 
(4
)%
Marketing and business development
 
1.6
 
1.9
 
1.7
 
(17
)%
 
(4
)%
Information systems
 
5.9
 
5.6
 
5.4
 
4
 %
 
9
 %
Amortization of intangibles
 
0.8
 
1.3
 
1.4
 
(43
)%
 
(47
)%
Impairment of goodwill
 
-
 
24.9
 
-
 
(100
)%
 
nm

FDIC insurance
 
0.7
 
0.7
 
0.8
 
10
 %
 
(3
)%
Other
 
3.7
 
3.8
 
3.2
 
(2
)%
 
16
 %
Total operating expense
 
$70.9
 
$94.0
 
$68.8
 
(25
)%
 
3
 %
Less: Impairment of goodwill
 
-
 
24.9
 
-
 
nm

 
nm

Less: Anchor divestiture legal expense
 
-
 
0.4
 
-
 
nm

 
nm

Adjusted operating expense (non-GAAP) 5
 
$70.9
 
$68.7
 
$68.8
 
3
 %
 
3
 %
 5 For information on non-GAAP financial measures, see page 7
Adjusted operating expense for the first quarter of 2018 was $70.9 million, up 3% linked quarter and 3% year-over-year. Salaries and employee benefits expense increased 8% linked quarter primarily driven by seasonal payroll expenses. The year-over-year increase in Salaries and employee benefits in the first quarter is primarily driven by incentive compensation and merit increases partially offset by a decrease in vacation accruals. Information systems expense increased 4% linked quarter and 9% year-over-year due to information technology investments. Amortization of intangible expense decreased 43% linked quarter primarily as a result of classifying Anchor as held for sale.
Income Tax Expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective tax rate for continuing operations (excluding non-GAAP adjustments) for the first quarter decreased to 21.5% from 30.5% in the fourth quarter of 2017 and 30.7% in the first quarter of 2017. The decrease was primarily driven by the decrease in the corporate federal income tax rate from 35% to 21% enacted as part of the Tax Cuts and Jobs Act on December 22, 2017.

4



Loans and Deposits - QTD Averages
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Change
($ in millions)
 
1Q18

 
4Q17

 
1Q17

 
Linked
Quarter
 
Year over
Year
Commercial and industrial
 
$933
 
$962
 
$984
 
(3
)%
 
(5
)%
Commercial real estate
 
2,441
 
2,370
 
2,324
 
3
 %
 
5
 %
Construction and land
 
169
 
131
 
114
 
29
 %
 
49
 %
Residential
 
2,702
 
2,650
 
2,425
 
2
 %
 
11
 %
Home equity
 
97
 
105
 
118
 
(7
)%
 
(17
)%
Other consumer
 
186
 
178
 
192
 
4
 %
 
(3
)%
Total loans
 
$6,529
 
$6,396
 
$6,157
 
2
 %
 
6
 %
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing deposits
 
1,872
 
1,895
 
1,844
 
(1
)%
 
2
 %
Interest bearing deposits
 
4,516
 
4,550
 
4,455
 
(1
)%
 
1
 %
Total deposits
 
$6,388
 
$6,445
 
$6,299
 
(1
)%
 
1
 %
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing deposits as a % of Total deposits
 
29
%

29
%

29
%
 
 
 
 
Average total loans in the first quarter increased 6% year-over-year driven primarily by increases in Residential and Commercial real estate loans partially offset by a decrease in Commercial and industrial loans.
Average total deposits increased 1% year-over-year. Average non-interest bearing deposits comprised 29% of Average total deposits in the first quarter of 2018 and the first quarter of 2017.
Provision and Asset Quality
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
($ in millions)
 
1Q18

 
4Q17

 
3Q17

 
2Q17

 
1Q17

Provision/ (credit) for loan loss
 
$(1.8)
 
$(0.9)
 
$(0.4)
 
$(6.1)
 
$(0.2)
Total criticized loans
 
124.1
 
154.8
 
146.0
 
129.5
 
135.1
Total nonaccrual loans
 
16.4
 
14.3
 
13.6
 
16.2
 
20.9
Total loans 30-89 days past due and accruing
 
20.4
 
25.0
 
5.3
 
3.2
 
28.7
Total net loans (charged-off)/ recovered
 
-

 
0.8
 
0.3
 
3.1
 
0.1
 
 
 
 
 
 
 
 
 
 
 
Ratios:
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses as a % of Total loans
 
1.10
%
 
1.15
%
 
1.17
%
 
1.19
%
 
1.25
%
Nonaccrual loans as a % of Total loans
 
0.25
%
 
0.22
%
 
0.21
%
 
0.26
%
 
0.34
%
The Company recorded a provision credit of $1.8 million for the first quarter of 2018, compared to a credit of $0.9 million for the fourth quarter of 2017 and a credit of $0.2 million for the first quarter of 2017. The provision credit in the first quarter of 2018 was primarily driven by a decline in Total criticized loans and improved loss rates, partially offset by loan growth.
Total criticized loans as of March 31, 2018 were $124.1 million, decreases of 20% linked quarter and 8% year-over-year.
Total nonaccrual loans (“Nonaccruals”) as of March 31, 2018 were $16.4 million, an increase of 15% linked quarter and a decrease of 22% year-over-year. As a percentage of Total loans, Nonaccruals were 25 basis points as of March 31, 2018, up 3 basis points compared to December 31, 2017, and down 9 basis points from March 31, 2017.

5



Capital
 
 
 
 
 
 
 
 
 
 
 
 
1Q18

 
4Q17

 
3Q17

 
2Q17

 
1Q17

Tangible common equity/ Total assets 7
 
7.4
%
 
7.3
%
 
7.4
%
 
7.4
%
 
7.0
%
Tangible book value per share 7
 
$7.17
 
$7.12
 
$7.16
 
$6.97
 
$6.73
 
 
 
 
 
 
 
 
 
 
 
Regulatory Capital Ratios: 8
 
 
 
 
 
 
 

 

Tier 1 common equity
 
10.4
%
 
10.3
%
 
10.4
%
 
10.3
%
 
10.0
%
Total risk-based capital
 
14.2
%
 
14.1
%
 
14.3
%
 
14.1
%
 
13.8
%
Tier 1 risk-based capital
 
12.9
%
 
12.9
%
 
13.0
%
 
12.9
%
 
12.6
%
Tier 1 leverage capital
 
9.4
%
 
9.3
%
 
9.4
%
 
9.3
%
 
9.2
%
7 See footnote 6 for a GAAP to non-GAAP reconciliation.
8 Current quarter information is presented based on estimated data.
Tangible book value per share as of March 31, 2018 increased 7% year-over-year to $7.17.
On March 28, 2018, the Company received a notice of non-objection from the Federal Reserve for a share repurchase program of up to $20 million of the Company’s outstanding shares. Shares may be repurchased from time to time in the open market for a two-year period.
Divestiture
 
 
 
 
 
 
 
 
 
 
On April 13, 2018, the Company completed the sale of its ownership interest in Anchor. Anchor’s results remain consolidated in the Company’s results during current and prior periods. For presentation purposes, Anchor’s AUM are excluded from current and prior period AUM amounts, but are included in the calculation of Core Fees and Income. The Company classified the assets and liabilities of Anchor as held for sale at March 31, 2018, which are included with Other assets and Other liabilities, respectively, on the Company’s consolidated balance sheet.
As a result of the transaction, Boston Private received approximately $32 million of cash and will receive future revenue share payments that have a net present value of approximately $15 million. During the second quarter, the Company will recognize a tax expense of approximately $11 million to $12 million attributable to the transaction. The net financial impact will increase the Company’s Tier 1 common equity by approximately $34 million to $35 million.



6



Dividend Payments
Concurrent with the release of first quarter 2018 earnings, the Board of Directors of the Company declared a cash dividend to common shareholders of $0.12 per share. The record date for this dividend is May 4, 2018, and the payment date is May 18, 2018.
The Board of Directors of the Company also declared a cash dividend to holders of the Non-Cumulative Perpetual Preferred Stock, Series D of $17.375 per share, which will result in a dividend of $0.434375 per depositary share. The record date for this dividend is May 15, 2018, and the payment date is June 15, 2018.
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 tangible book value per share; the TCE/TA ratio; return on average common equity; return on average tangible common equity; pre-tax, pre-provision income; total operating expense excluding intangibles, goodwill impairment, and restructuring; the efficiency ratio (FTE basis); the efficiency ratio (FTE basis) excluding amortization of intangibles, goodwill impairment, and restructuring; net interest income and net interest margin excluding interest recovered on previous nonaccrual loans, also referred to as core net interest margin; net income attributable to the Company excluding notable items; net income attributable to the common shareholders, treasury stock method, excluding notable items (non-GAAP); diluted earnings per share excluding notable items; operating basis total revenue; operating basis total operating expenses; operating basis pre-tax, pre-provision income; operating basis income before income taxes; operating basis income tax expense; operating basis net income/ (loss) attributable to the Company; operating basis net income/ (loss) attributable to the Common Shareholders; operating basis weighted average diluted shares outstanding; operating basis diluted total earnings/ (loss) per share; operating basis return on average common equity; operating basis return on average tangible common equity; and operating basis effective tax rate.
A detailed reconciliation table of the Company’s GAAP to non-GAAP measures is attached.
Conference Call
Management will hold a conference call at 8 a.m. Eastern Time on Thursday, April 19, 2018, to discuss the financial results, business highlights and outlook. To access the call:
Dial In #: (888) 317-6003
Elite Entry Number: 1736451

Replay Information:
Available from April 19, 2018 at 12 noon until April 26, 2018
Dial In #: (877) 344-7529
Conference Number: 10118831
The call will be simultaneously webcast and may be accessed on www.bostonprivate.com

7



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


8



393077957_bplogo121416a01.jpg
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
March 31,
2018
 
December 31,
2017
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
(In thousands, except share and per share data)
Assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
77,085

 
$
120,541

 
$
110,440

 
$
97,032

 
$
165,186

Investment securities available-for-sale
1,118,497

 
1,170,328

 
1,189,827

 
1,188,720

 
1,256,208

Investment securities held-to-maturity
70,809

 
74,576

 
84,090

 
99,024

 
98,424

Stock in Federal Home Loan Bank and Federal Reserve Bank
54,455

 
59,973

 
61,714

 
45,568

 
50,133

Loans held for sale
3,918

 
4,697

 
1,957

 
2,870

 
350

Total loans
6,602,327

 
6,505,028

 
6,413,201

 
6,279,928

 
6,250,217

Less: Allowance for loan losses
72,898

 
74,742

 
74,873

 
75,009

 
78,031

Net loans
6,529,429

 
6,430,286

 
6,338,328

 
6,204,919

 
6,172,186

Premises and equipment, net
43,627

 
37,640

 
36,546

 
34,135

 
32,974

Goodwill (1)
75,598

 
75,598

 
142,554

 
142,554

 
142,554

Intangible assets, net (1)
15,334

 
16,083

 
22,447

 
23,873

 
25,299

Fees receivable
10,640

 
11,154

 
12,560

 
12,639

 
12,230

Accrued interest receivable
22,614

 
22,322

 
21,823

 
20,680

 
20,790

Deferred income taxes, net
32,058

 
29,031

 
46,088

 
49,827

 
53,686

Other assets (1)
264,295

 
259,515

 
201,024

 
185,805

 
185,100

Total assets
$
8,318,359

 
$
8,311,744

 
$
8,269,398

 
$
8,107,646

 
$
8,215,120

Liabilities:
 
 
 
 
 
 
 
 
 
Deposits
$
6,584,322

 
$
6,510,246

 
$
6,262,347

 
$
6,381,339

 
$
6,246,620

Securities sold under agreements to repurchase
85,257

 
32,169

 
59,903

 
29,232

 
67,249

Federal funds purchased

 
30,000

 
70,000

 
40,000

 

Federal Home Loan Bank borrowings
611,588

 
693,681

 
812,773

 
618,989

 
885,445

Junior subordinated debentures
106,363

 
106,363

 
106,363

 
106,363

 
106,363

Other liabilities (1)
125,004

 
135,880

 
127,069

 
115,088

 
110,310

Total liabilities
7,512,534

 
7,508,339

 
7,438,455

 
7,291,011

 
7,415,987

Redeemable noncontrolling interests (“RNCI”)
16,322

 
17,461

 
15,882

 
17,216

 
17,232

Shareholders’ equity:
 
 
 
 
 
 
 
 
 
Preferred stock, $1.00 par value; authorized: 2,000,000 shares
47,753

 
47,753

 
47,753

 
47,753

 
47,753

Common stock, $1.00 par value; authorized: 170,000,000 shares
84,194

 
84,208

 
84,082

 
84,015

 
84,134

Additional paid-in capital
612,526

 
607,929

 
606,802

 
602,507

 
602,748

Retained earnings
61,518

 
49,526

 
76,455

 
66,807

 
53,510

Accumulated other comprehensive income/ (loss)
(21,313
)
 
(8,658
)
 
(4,823
)
 
(6,038
)
 
(10,237
)
Total Company’s shareholders’ equity
784,678

 
780,758

 
810,269

 
795,044

 
777,908

Noncontrolling interests
4,825

 
5,186

 
4,792

 
4,375

 
3,993

Total shareholders’ equity
789,503

 
785,944

 
815,061

 
799,419

 
781,901

Total liabilities, redeemable noncontrolling interests and shareholders’ equity
$
8,318,359

 
$
8,311,744

 
$
8,269,398

 
$
8,107,646

 
$
8,215,120



9



Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
Three Months Ended
 
March 31,
2018
 
December 31,
2017
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
Interest and dividend income:
(In thousands, except share and per share data)
Loans
$
60,929

 
$
59,496

 
$
58,096

 
$
57,736

 
$
53,636

Taxable investment securities
1,510

 
1,562

 
1,569

 
1,592

 
1,670

Non-taxable investment securities
1,730

 
1,697

 
1,664

 
1,655

 
1,606

Mortgage-backed securities
3,178

 
3,125

 
3,267

 
3,495

 
3,504

Federal funds sold and other
1,009

 
978

 
916

 
831

 
600

Total interest and dividend income
68,356

 
66,858

 
65,512

 
65,309

 
61,016

Interest expense:
 
 
 
 
 
 
 
 
 
Deposits
6,524

 
6,048

 
5,356

 
4,949

 
4,531

Federal Home Loan Bank borrowings
3,344

 
2,626

 
2,657

 
2,489

 
2,111

Junior subordinated debentures
846

 
771

 
761

 
716

 
671

Repurchase agreements and other short-term borrowings
259

 
141

 
111

 
10

 
61

Total interest expense
10,973

 
9,586

 
8,885

 
8,164

 
7,374

Net interest income
57,383

 
57,272

 
56,627

 
57,145

 
53,642

Provision/ (credit) for loan losses
(1,795
)
 
(942
)
 
(432
)
 
(6,114
)
 
(181
)
Net interest income after provision/ (credit) for loan losses
59,178

 
58,214

 
57,059

 
63,259

 
53,823

Fees and other income:
 
 
 
 
 
 
 
 
 
Investment management fees
11,425

 
12,321

 
11,274

 
11,081

 
10,839

Wealth advisory fees
13,512

 
13,496

 
13,279

 
12,961

 
12,823

Wealth management and trust fees
12,151

 
11,756

 
11,619

 
11,161

 
10,826

Other banking fee income
2,273

 
2,531

 
2,726

 
1,964

 
1,694

Gain on sale of loans, net
74

 
85

 
169

 
59

 
138

Total core fees and income
39,435

 
40,189

 
39,067

 
37,226

 
36,320

Gain/ (loss) on sale of investments, net
(24
)
 
(110
)
 
230

 
237

 
19

Gain/ (loss) on OREO, net

 

 

 

 
(46
)
Gain/ (loss) on sale of affiliates or offices

 
(1,264
)
 

 

 

Other
332

 
360

 
970

 
555

 
213

Total other income
308

 
(1,014
)
 
1,200

 
792

 
186

Total revenue (2)
97,126

 
96,447

 
96,894

 
95,163

 
90,148

Operating expense:
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
47,219

 
43,920

 
45,168

 
43,493

 
45,825

Occupancy and equipment
7,748

 
7,753

 
7,944

 
7,283

 
7,185

Professional services
3,177

 
4,035

 
3,308

 
3,106

 
3,314

Marketing and business development
1,593

 
1,919

 
2,216

 
1,971

 
1,660

Information systems
5,886

 
5,635

 
5,282

 
5,500

 
5,379

Amortization of intangibles
750

 
1,323

 
1,426

 
1,426

 
1,426

Impairment of goodwill

 
24,901

 

 

 

FDIC insurance
744

 
677

 
647

 
879

 
766

Other
3,740

 
3,826

 
3,355

 
4,163

 
3,225

Total operating expense
70,857

 
93,989

 
69,346

 
67,821

 
68,780

Income before income taxes
28,064

 
3,400

 
27,980

 
33,456

 
21,549

Income tax expense
6,026

 
21,391

 
8,289

 
9,963

 
6,553

Net income/ (loss) from continuing operations
22,038

 
(17,991
)
 
19,691

 
23,493

 
14,996

Net income from discontinued operations (3)
1,698

 
989

 
1,186

 
1,063

 
1,632

Net income/ (loss) before attribution to noncontrolling interests
23,736

 
(17,002
)
 
20,877

 
24,556

 
16,628

Less: Net income attributable to noncontrolling interests
1,050

 
1,278

 
1,074

 
1,150

 
966

Net income/ (loss) attributable to the Company
$
22,686

 
$
(18,280
)
 
$
19,803

 
$
23,406

 
$
15,662


10



Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
Three Months Ended
PER SHARE DATA:
March 31,
2018
 
December 31,
2017
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
(In thousands, except share and per share data)
Calculation of income for EPS:
 
 
 
 
 
 
 
 
 
Net income/ (loss) attributable to the Company
$
22,686

 
$
(18,280
)
 
$
19,803

 
$
23,406

 
$
15,662

Adjustments to Net income/ (loss) attributable to the Company to arrive at Net income/ (loss) attributable to common shareholders, treasury stock method (4)
(23
)
 
(1,998
)
 
(1,146
)
 
(577
)
 
(1,166
)
Net income/ (loss) attributable to the common shareholders, treasury stock method
$
22,663

 
$
(20,278
)
 
$
18,657

 
$
22,829

 
$
14,496

 
 
 
 
 
 
 
 
 
 
End of period common shares outstanding
84,194,267

 
84,208,538

 
84,082,250

 
84,015,141

 
84,134,104

 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
 
 
Weighted average basic shares outstanding
83,097,758

 
82,904,776

 
82,556,225

 
82,298,493

 
81,951,179

Weighted average diluted shares outstanding (5)
85,271,650

 
82,904,776

 
84,888,311

 
84,741,680

 
84,560,918

 
 
 
 
 
 
 
 
 
 
Diluted total earnings/ (loss) per share
$
0.27

 
$
(0.24
)
 
$
0.22

 
$
0.27

 
$
0.17


 
 
 
 




11



Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(In thousands, except per share data)
March 31,
2018
 
December 31,
2017
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
FINANCIAL DATA:
Book value per common share
$
8.81

 
$
8.77

 
$
9.13

 
$
8.95

 
$
8.73

Tangible book value per share (6)
$
7.17

 
$
7.12

 
$
7.16

 
$
6.97

 
$
6.73

Market price per share
$
15.05

 
$
15.45

 
$
16.55

 
$
15.35

 
$
16.40

 
 
 
 
 
 
 
 
 
 
ASSETS UNDER MANAGEMENT AND ADVISORY:
 
 
 
 
 
 
 
 
 
Wealth Management and Trust
$
7,831,000

 
$
7,865,000

 
$
7,703,000

 
$
7,429,000

 
$
7,260,000

Investment Management (7)
1,920,000

 
2,004,000

 
1,902,000

 
1,829,000

 
1,849,000

Wealth Advisory
11,446,000

 
11,350,000

 
10,992,000

 
10,744,000

 
10,579,000

Less: Inter-company relationship
(11,000
)
 
(11,000
)
 
(11,000
)
 
(11,000
)
 
(11,000
)
Total assets under management and advisory, excluding Anchor (7)
$
21,186,000

 
$
21,208,000

 
$
20,586,000

 
$
19,991,000

 
$
19,677,000

Assets under management and advisory at Anchor
9,042,000

 
9,277,000

 
9,181,000

 
9,072,000

 
9,058,000

Total assets under management and advisory, including Anchor
$
30,228,000

 
$
30,485,000

 
$
29,767,000

 
$
29,063,000

 
$
28,735,000

 
 
 
 
 
 
 
 
 
 
FINANCIAL RATIOS:
 
 
 
 
 
 
 
 
 
Total equity/ Total assets
9.49
%
 
9.46
 %
 
9.86
%
 
9.86
%
 
9.52
%
Tangible common equity/ Tangible assets (6)
7.38
%
 
7.33
 %
 
7.43
%
 
7.37
%
 
7.04
%
Tier 1 common equity/ Risk weighted assets (6)
10.39
%
 
10.32
 %
 
10.42
%
 
10.28
%
 
9.97
%
Allowance for loan losses/ Total loans
1.10
%
 
1.15
 %
 
1.17
%
 
1.19
%
 
1.25
%
Allowance for loan losses/ Nonaccrual loans
445
%
 
523
 %
 
550
%
 
464
%
 
373
%
Return on average assets - three months ended (annualized)
1.11
%
 
(0.88
)%
 
0.96
%
 
1.15
%
 
0.79
%
Return on average common equity - three months ended (annualized) (8)
12.02
%
 
(9.92
)%
 
9.87
%
 
12.12
%
 
8.26
%
Return on average tangible common equity - three months ended (annualized) (8)
15.20
%
 
(11.94
)%
 
13.24
%
 
16.27
%
 
11.43
%
Efficiency ratio - three months ended (9)
71.46
%
 
68.23
 %
 
68.06
%
 
67.69
%
 
72.45
%
 
 
 
 
 
 
 
 
 
 
DEPOSIT DETAIL:
 
 
 
 
 
 
 
 
 
Demand deposits (noninterest-bearing)
$
1,932,732

 
$
2,025,690

 
$
1,850,833

 
$
1,935,622

 
$
1,772,854

NOW
689,526

 
645,361

 
636,013

 
631,973

 
620,280

Savings
73,580

 
70,935

 
74,333

 
69,892

 
74,293

Money market
3,177,692

 
3,121,811

 
3,009,779

 
3,055,642

 
3,176,472

Certificates of deposit
710,792

 
646,449

 
691,389

 
688,210

 
602,721

Total deposits
$
6,584,322

 
$
6,510,246

 
$
6,262,347

 
$
6,381,339

 
$
6,246,620



12



Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
Average Balance
 
Interest Income/Expense
 
Average Yield/Rate
(In thousands)
Three Months Ended
 
Three Months Ended
 
Three Months Ended
AVERAGE BALANCE SHEET:
03/31/18
12/31/17
03/31/17
 
03/31/18
12/31/17
03/31/17
 
03/31/18
12/31/17
03/31/17
AVERAGE ASSETS
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and investments:
 
 
 
 
 
 
 
 
 
 
 
Taxable investment securities
$
333,253

$
345,743

$
395,728

 
$
1,510

$
1,562

$
1,670

 
1.81
%
1.81
%
1.69
%
Non-taxable investment securities (10)
296,958

298,851

295,015

 
2,190

2,611

2,471

 
2.95
%
3.50
%
3.35
%
Mortgage-backed securities
588,461

608,508

672,683

 
3,178

3,125

3,504

 
2.16
%
2.05
%
2.08
%
Federal funds sold and other
161,573

172,656

160,001

 
1,009

978

600

 
2.51
%
2.23
%
1.51
%
Total cash and investments
1,380,245

1,425,758

1,523,427

 
7,887

8,276

8,245

 
2.29
%
2.32
%
2.17
%
Loans (11):
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial (10)
933,209

962,159

983,697

 
8,756

9,603

9,303

 
3.75
%
3.91
%
3.78
%
Commercial real estate (10)
2,441,215

2,369,526

2,324,367

 
26,341

26,473

23,544

 
4.32
%
4.37
%
4.05
%
Construction and land (10)
169,384

131,107

113,963

 
1,965

1,568

1,244

 
4.64
%
4.68
%
4.36
%
Residential
2,702,317

2,650,014

2,424,772

 
21,766

21,248

18,991

 
3.22
%
3.21
%
3.13
%
Home equity
97,191

105,044

117,702

 
1,042

1,074

1,089

 
4.35
%
4.06
%
3.75
%
Other consumer
185,596

177,951

192,136

 
1,573

1,489

1,420

 
3.44
%
3.32
%
3.00
%
Total loans
6,528,912

6,395,801

6,156,637

 
61,443

61,455

55,591

 
3.77
%
3.79
%
3.61
%
Total earning assets
7,909,157

7,821,559

7,680,064

 
69,330

69,731

63,836

 
3.51
%
3.52
%
3.33
%
LESS: Allowance for loan losses
74,834

75,608

78,122

 
 
 
 
 
 
 
 
Cash and due from banks (non-interest bearing)
51,944

43,648

41,469

 
 
 
 
 
 
 
 
Other assets
425,617

452,744

398,751

 
 
 
 
 
 
 
 
TOTAL AVERAGE ASSETS
$
8,311,884

$
8,242,343

$
8,042,162

 
 
 
 
 
 
 
 
AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits (11):
 
 
 
 
 
 
 
 
 
 
 
Savings and NOW
$
716,930

$
687,172

$
652,038

 
$
215

$
148

$
128

 
0.12
%
0.09
%
0.08
%
Money market
3,141,564

3,177,687

3,213,092

 
4,314

3,998

3,122

 
0.56
%
0.50
%
0.39
%
Certificates of deposit
657,109

685,136

589,900

 
1,995

1,902

1,281

 
1.23
%
1.10
%
0.88
%
Total interest-bearing deposits (12)
4,515,603

4,549,995

4,455,030

 
6,524

6,048

4,531

 
0.59
%
0.53
%
0.41
%
Junior subordinated debentures
106,363

106,363

106,363

 
846

771

671

 
3.18
%
2.84
%
2.52
%
FHLB borrowings and other
878,093

728,374

726,978

 
3,603

2,767

2,172

 
1.64
%
1.49
%
1.19
%
Total interest-bearing liabilities
5,500,059

5,384,732

5,288,371

 
10,973

9,586

7,374

 
0.80
%
0.70
%
0.56
%
Non-interest bearing demand
deposits (11) (12)
1,872,472

1,894,924

1,843,830

 
 
 
 
 
 
 
 
Payables and other liabilities
133,243

128,075

117,132

 
 
 
 
 
 
 
 
Total average liabilities
7,505,774

7,407,731

7,249,333

 
 
 
 
 
 
 
 
Redeemable noncontrolling interests
22,085

21,094

18,578

 
 
 
 
 
 
 
 
Average shareholders’ equity
784,025

813,518

774,251

 
 
 
 
 
 
 
 
TOTAL AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY
$
8,311,884

$
8,242,343

$
8,042,162

 
 
 
 
 
 
 
 
Net interest income - on a fully taxable equivalent basis (FTE)
 
 
 
 
$
58,357

$
60,145

$
56,462

 
 
 
 
LESS: FTE adjustment (10)
 
 
 
 
974

2,873

2,820

 
 
 
 
Net interest income (GAAP basis)
 
 
 
 
$
57,383

$
57,272

$
53,642

 
 
 
 
Interest rate spread
 
 
 
 
 
 
 
 
2.71
%
2.82
%
2.77
%
Bank only net interest margin
 
 
 
 
 
 
 
 
3.00
%
3.08
%
2.98
%
Net interest margin
 
 
 
 
 
 
 
 
2.95
%
3.04
%
2.94
%

13



Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(In thousands)
March 31,
2018
 
December 31,
2017
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
LOAN DATA (13):
 
 
 
 
Other commercial and industrial loans:
 
 
 
 
 
 
 
 
 
New England
$
444,419

 
$
438,322

 
$
503,322

 
$
429,598

 
$
458,687

San Francisco Bay Area
23,491

 
23,311

 
50,686

 
49,163