Toggle SGML Header (+)


Section 1: 8-K (8-K)

Document


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 17, 2019
Boston Private Financial Holdings, Inc.
(Exact Name of Registrant as Specified in its Charter)
Massachusetts
001-35070
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 17, 2019, Boston Private Financial Holdings, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter ended March 31, 2019. 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 release dated April 17, 2019.









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 17, 2019
 
 





EXHIBIT INDEX

    Exhibit
No.     Description
99.1     Earnings release dated April 17, 2019






(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit



397560530_bplogo011719.jpg

Boston Private Financial Holdings, Inc. Reports First Quarter 2019 Results


First Quarter 2019 Highlights include:

GAAP Net income was $19.4 million, or $0.25 per diluted share, and Operating Net income was $20.7 million or $0.27 per diluted share
Return on average common equity was 10.3%; Operating Return on average common equity was 11.0%
Return on average tangible common equity was 11.6%; Operating Return on average tangible common equity was 12.4%
Average total deposits were $6.8 billion, a 6% increase year-over-year
Average total loans were $6.9 billion, a 5% increase year-over-year
Total assets under management/advisory (“AUM”) were $16.1 billion, a decrease of 4% year-over-year
Total net flows were negative $963 million, of which $508 million were attributable to the Wealth Management & Trust segment and $455 million were attributable to Affiliate Partners

Notable Items impacting First Quarter 2019 results ("Notable Items"):

$1.6 million restructuring expense related to executive departures
Boston, MA - April 17, 2019 - Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the “Company” or “BPFH”) today reported first quarter 2019 GAAP Net income attributable to the Company of $19.4 million, compared to $33.3 million for the fourth quarter of 2018 and $22.7 million for the first quarter of 2018. First quarter 2019 GAAP Diluted earnings per share were $0.25, compared to $0.42 in the fourth quarter of 2018 and $0.27 in the first quarter of 2018.
Summary Financial Results - Reported
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Change
($ in millions, except for per share data)
 
1Q19

 
4Q18

 
1Q18

 
LQ
 
Y/Y
Net income
 
$19.4
 
$33.3
 
$22.7
 
(42
)%
 
(14
)%
Diluted earnings per share
 
$0.25
 
$0.42
 
$0.27
 
(40
)%
 
(7
)%
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Financial Measures:
 
 
 
 
 
 
 
 
 
 
Pre-tax, pre-provision income
 
$23.0
 
$42.3
 
$26.3
 
(46
)%
 
(12
)%
Return on average common equity ("ROACE")
 
10.3
%
 
17.9
%
 
12.0
%
 
 
 
 
Return on average tangible common equity ("ROATCE")
 
11.6
%
 
20.5
%
 
15.2
%
 
 
 
 
nm = not meaningful
 
 
 
 
 
 
 
 
 
 
The Company's reported financial results decreased linked quarter primarily as a result of the gain on sale related to the divestiture of Bingham, Osborn & Scarborough ("BOS") in the fourth 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 financial measures, see page 7. A full reconciliation of GAAP to non-GAAP results can be found in the footnotes beginning on page 15.

1




Summary Financial Results - Operating Basis (non-GAAP)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Change
($ in millions, except for per share data)
 
1Q191

 
4Q182

 
1Q18

 
LQ
 
Y/Y
Net income
 
$20.7
 
$19.9
 
$22.7
 
4
 %
 
(9
)%
Diluted earnings per share
 
$0.27
 
$0.27
 
$0.27
 
 %
 
 %
 
 
 
 
 
 
 
 
 
 
 
Pre-tax, pre-provision income
 
$24.7
 
$25.8
 
$26.3
 
(4
)%
 
(6
)%
Return on average common equity
 
11.0
%
 
10.7
%
 
12.0
%
 
 
 
 
Return on average tangible common equity
 
12.4
%
 
12.4
%
 
15.2
%
 
 
 
 
1 1Q19 results adjusted to exclude the net after-tax impact of $1.6 million restructuring expense
2 4Q18 results adjusted to exclude the net after-tax impact of $18.1 million gain on sale and $3.5 million tax expense related to the divestiture of Bingham, Osborn, & Scarborough, LLC and $1.6 million restructuring expense


"First quarter GAAP results include a restructuring charge related to executive departures during the quarter," said Anthony DeChellis, CEO of Boston Private. "This charge occurred as we assemble our management team and position for growth.
"I am pleased with our Company's performance in the core business, which excludes contributions from affiliates we divested in 2018 and Notable Items. During the first quarter, we generated positive operating leverage through disciplined management of expenses, which declined 2% year-over-year. The Commercial and Private Banking business maintained strong asset quality metrics, which contributed to a provision credit during the quarter, driving an overall increase to operating basis net income. At the same time, our AUM decreased 4% year-over-year driven by negative net flows, partially offset by positive market action."
Divested Affiliates
 
 
 
 
 
 
 
 
 
 
The Company completed the sale of Anchor Capital Advisors, LLC ("Anchor") and BOS (together, "the Divested Affiliates") during 2018. Financial results from the Divested Affiliates remain consolidated in the Company's financial results through the closing dates of the divestitures. The Anchor divestiture closing date was April 13, 2018, and the BOS divestiture closing date was December 3, 2018.
For presentation purposes, the Divested Affiliates' AUM are excluded from AUM amounts, but are included in the calculation of Core fees and income. The discussion below includes non-GAAP measures that exclude the contributions from these affiliates in order to enhance comparability of trends in the core business.
Net Interest Income and Margin
 
 
 
 
 
 
 
 
 
 
 
 
% Change
($ in millions)
 
1Q19

 
4Q18

 
1Q18

 
LQ
 
Y/Y
Net interest income
 

$58.3

 

$60.0

 

$57.4

 
(3
)%
 
2
%
Less: Interest recovered on previous nonaccrual loans
 
0.3

 
1.0

 
0.1

 
(74
)%
 
nm

Core net interest income (non-GAAP)
 
58.1

 
59.0

 
57.3

 
(2
)%
 
1
%
 
 
 
 
 
 
 
 
 
 

Net interest margin
 
2.90
%
 
2.94
%
 
2.90
%
 
 
 
 
Core net interest margin (non-GAAP)
 
2.89
%
 
2.90
%
 
2.90
%
 
 
 
 
Net interest income for the first quarter of 2019 was $58.3 million, a decrease of 3% linked quarter and an increase of 3% year-over-year. Core net interest income, which excludes interest recovered on previous nonaccrual loans, decreased 2% linked quarter and increased 1% year-over-year. The linked quarter decrease was primarily driven by higher funding costs and lower average interest-earning asset volumes. The year-over-year increase was primarily driven by higher yields on interest-earning assets and higher asset volumes, partially offset by higher funding costs.
The Company’s Core net interest margin, which excludes interest recovered on previous nonaccrual loans, decreased 1 basis point on a linked quarter basis to 2.89%, primarily driven by higher funding costs, partially offset by higher yields on interest-earning assets.

2




The current difference between Net interest margin ("NIM") and NIM on a fully taxable equivalent ("FTE") basis is immaterial, therefore the Company will only present NIM on a GAAP basis. The decline in the Federal tax rate in 2018 and the recent increases in interest expense have reduced the difference between NIM on a GAAP basis and NIM on a FTE basis.
Noninterest Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Change
($ in millions)
 
1Q19

 
4Q18

 
1Q18

 
LQ
 
Y/Y
Investment management fees
 
$2.7
 
$2.8
 
$11.4
 
(6
)%
 
(77
)%
Wealth advisory fees
 
8.2

 
12.1

 
13.5

 
(33
)%
 
(40
)%
Wealth management and trust fees
 
10.9

 
11.7

 
12.2

 
(7
)%
 
(10
)%
Private banking fees 3
 
2.6

 
2.1

 
2.3

 
24
 %
 
13
 %
Total core fees and income
 
$24.3
 
$28.7
 
$39.4
 
(15
)%
 
(38
)%
Total other income
 
1.0

 
17.2

 
0.3

 
(94
)%
 
nm

Total noninterest income
 
$25.2
 
$45.8
 
$39.7
 
(45
)%
 
(36
)%
 
 
 
 
 
 
 
 
 
 
 
Memo: Excluding Divested Affiliates and the gain on sale related to the divestiture of BOS
 
 
 
 
Investment management fees (non-GAAP) 4
 
2.7

 
2.8

 
3.0

 
(6
)%
 
(11
)%
Wealth advisory fees (non-GAAP) 6
 
8.2

 
8.3

 
7.8

 
(1
)%
 
5
 %
Total core fees and income (non-GAAP) 4 5
 
$24.3
 
$24.9
 
$25.3
 
(2
)%
 
(4
)%
Total other income (non-GAAP) 6
 
1.0

 
(1.0)

 
0.3

 
nm

 
nm

Total noninterest income (non-GAAP) 4 5
 
$25.2
 
$23.9
 
$25.6
 
5
 %
 
(2
)%
3 Private banking fees includes Other banking fee income and Gain/ (loss) on sale of loans, net
4 Excludes Anchor revenue of $8.4 million in 1Q18
5 Excludes BOS revenue of $3.9 million in 4Q18 and $5.7 million in 1Q18
6 Excludes $18.1 million gain on sale in 4Q18
Total core fees and income for the first quarter of 2019 was $24.3 million, a decline of 15% linked quarter primarily driven by the divestiture of BOS and 38% year-over-year primarily driven by the divestitures of Anchor and BOS. Total other income declined 94% linked quarter due to an $18.1 million gain on sale related to BOS during the fourth quarter of 2018.
Excluding Divested Affiliates and the gain on sale related to the divestiture of BOS, Total core fees and income decreased 4% year-over-year primarily driven by lower AUM in the Wealth Management and Trust segment, partially offset by higher Wealth advisory fees.
Assets Under Management / Advisory
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Change
($ in millions)
 
1Q19
 
4Q18
 
1Q18
 
LQ
 
Y/Y
Wealth Management and Trust
 
$7,593
 
$7,602
 
$7,831
 
 %
 
(3
)%
Affiliate Partners 7
 
8,529
 
8,319
 
8,878
 
3
 %
 
(4
)%
Total assets under management / advisory 8
 
$16,122
 
$15,921
 
$16,709
 
1
 %
 
(4
)%
Total net flows 8
 
$(963)
 
$(143)
 
$122
 
 
 
 
7 Segment includes Dalton, Greiner, Hartman, Maher & Co., LLC ("DGHM") and KLS Professional Advisors Group, LLC ("KLS")
8 Excludes Anchor and BOS
Total assets under management / advisory, were $16.1 billion at the end of the first quarter of 2019, an increase of 1% linked quarter and a decrease of 4% year-over-year. The linked quarter increase was primarily driven by positive market action exceeding negative net flows, while the year-over-year decrease was primarily driven by negative net flows exceeding positive market action.
Net flows in the Wealth Management and Trust segment during the first quarter of 2019 were negative $508 million driven by elevated current client outflows, partially offset by $172 million of new business. Net flows in the Affiliate Partners segment were negative $455 million driven by lost clients.

3




Operating Expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Change
($ in millions)
 
1Q19

 
4Q18

 
1Q18

 
LQ
 
Y/Y
Salaries and employee benefits
 
$35.7
 
$36.0
 
$47.1
 
(1
)%
 
(24
)%
Occupancy and equipment
 
8.3

 
8.0

 
7.7

 
5
 %
 
8
 %
Professional services
 
3.6

 
4.2

 
3.2

 
(16
)%
 
12
 %
Marketing and business development
 
1.1

 
2.3

 
1.6

 
(52
)%
 
(32
)%
Information systems
 
5.9

 
6.3

 
5.9

 
(7
)%
 
 %
Amortization of intangibles
 
0.7

 
0.7

 
0.8

 
(1
)%
 
(10
)%
FDIC insurance
 
0.7

 
0.7

 
0.7

 
(11
)%
 
(11
)%
Restructuring
 
1.6

 
2.1

 

 
(20
)%
 
nm

Other
 
3.0

 
3.3

 
3.9

 
(9
)%
 
(23
)%
Total operating expense
 
$60.6
 
$63.6
 
$70.9
 
(5
)%
 
(15
)%
 
 
 
 

 
 
 
 
 
 
Memo: Excluding Notable Items and Divested Affiliates
 
 
 
 
 
 
 
 
 
 
Information systems 9
 

 
(0.4
)
 

 
nm

 
nm

Restructuring
 
1.6

 
2.1

 

 
(20
)%
 
nm

Divested Affiliates operating expense
 

 
2.8

 
10.6

 
nm

 
nm

Total operating expense (non-GAAP)
 
$58.9
 
$59.1
 
$60.3
 
 %
 
(2
)%
9 $0.4 million of Information services expense was reclassified to Restructuring expense in conjunction with the Company's formal restructuring plan announced in 4Q18
Total operating expense decreased 5% linked quarter and 15% year-over-year, primarily driven by expenses associated with Divested Affiliates that are included in prior period results.
Excluding Notable Items and Divested Affiliates, Total operating expense for the first quarter of 2019 was $58.9 million, flat linked quarter and down 2% year-over-year. Expenses remained flat linked quarter as lower marketing expense and professional fees offset higher compensation expense associated seasonal payroll taxes during the first quarter. Year-over-year, compensation declined as a result of efficiency initiatives, partially offset by higher occupancy expense and information technology investments.
Income Tax Expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Company's effective tax rate, excluding Notable Items, for the first quarter of 2019 was 20.1%. The tax rate was lower than prior quarters as a result of lower disallowed executive compensation related to the recent departures of certain executives.

4




Loans and Deposits - QTD Averages
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Change
($ in millions)
 
1Q19

 
4Q18

 
1Q18

 
LQ
 
Y/Y
Commercial and industrial
 
$1,070
 
$1,027
 
$933
 
4
 %
 
15
 %
Commercial real estate
 
2,398
 
2,402
 
2,441
 
 %
 
(2
)%
Construction and land
 
211
 
209
 
169
 
1
 %
 
25
 %
Residential
 
2,973
 
2,907
 
2,702
 
2
 %
 
10
 %
Home equity
 
91
 
94
 
97
 
(3
)%
 
(7
)%
Other consumer
 
134
 
141
 
186
 
(5
)%
 
(28
)%
Total loans
 
$6,877
 
$6,781
 
$6,529
 
1
 %
 
5
 %
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing deposits
 
1,975
 
2,092
 
1,872
 
(6
)%
 
5
 %
Interest bearing deposits
 
4,792
 
4,826
 
4,516
 
(1
)%
 
6
 %
Total deposits
 
$6,767
 
$6,918
 
$6,388
 
(2
)%
 
6
 %
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing deposits as a % of Total deposits
 
29
%

30
%

29
%
 
 
 
 
Average total loans in the first quarter of 2019 increased 5% year-over-year, primarily driven by increases in Residential loans and C&I loans.
Average total deposits increased 6% year-over-year, primarily driven by growth in money market accounts, demand deposit accounts and certificates of deposits, partially offset by declines in savings and NOW accounts. The cost of total deposits, including DDA, was 0.84%, an increase of 7 basis points linked quarter and 43 basis points year-over-year.
Provision and Asset Quality
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
($ in millions)
 
1Q19

 
4Q18

 
3Q18

 
2Q18

 
1Q18

Provision/ (credit) for loan loss
 
$(1.4)
 
$0.1
 
$(0.9)
 
$0.5
 
$(1.8)
Total criticized loans
 
141.3
 
146.6
 
134.7
 
114.4
 
124.1
Total nonaccrual loans
 
12.0
 
14.1
 
12.1
 
15.7
 
16.4
Total loans 30-89 days past due and accruing
 
17.7
 
22.3
 
11.6
 
5.0
 
20.4
Total net loans (charged-off)/ recovered
 
(0.1)

 
1.7
 
1.0

 
0.1
 

 
 
 
 
 
 
 
 
 
 
 
Ratios:
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses as a % of Total loans
 
1.07
%
 
1.09
%
 
1.09
%
 
1.09
%
 
1.10
%
Nonaccrual loans as a % of Total loans
 
0.17
%
 
0.20
%
 
0.18
%
 
0.23
%
 
0.25
%
The Company recorded a provision credit of $1.4 million for the first quarter of 2019, compared to an expense of $0.1 million for the fourth quarter of 2018 and a credit of $1.8 million in the first quarter of 2018. The provision credit in the first quarter of 2019 was primarily driven by a decline in criticized loans, partially offset by net changes to loss factors.
Total criticized loans as of March 31, 2019 was $141.3 million, a decrease of 4% linked quarter and an increase of 14% year-over-year. Total nonaccrual loans as of March 31, 2019 was $12.0 million, or 17 basis points of total loans, compared to $14.1 million, or 20 basis points of total loans as of December 31, 2018, and $16.4 million, or 25 basis points of total loans as of March 31, 2018.

5




Capital
 
 
 
 
 
 
 
 
 
 
($ in millions, except for per share data)
 
1Q19

 
4Q18

 
3Q18

 
2Q18

 
1Q18

Tangible common equity/ Tangible assets 12
 
8.3
%
 
8.1
%
 
7.8
%
 
7.5
%
 
7.4
%
Tangible book value per share 12
 
$8.47
 
$8.18
 
$7.67
 
$7.62
 
$7.17
 
 
 
 
 
 
 
 
 
 
 
Regulatory Capital Ratios: 13
 
 
 
 
 
 
 

 

Tier 1 common equity
 
11.4
%
 
11.4
%
 
11.1
%
 
10.9
%
 
10.4
%
Total risk-based capital
 
14.2
%
 
14.3
%
 
14.1
%
 
13.8
%
 
14.2
%
Tier 1 risk-based capital
 
13.0
%
 
13.0
%
 
12.8
%
 
12.6
%
 
12.9
%
Tier 1 leverage capital
 
9.7
%
 
9.5
%
 
9.2
%
 
9.2
%
 
9.4
%
 
 
 
 
 
 
 
 
 
 
 
Common Equity Repurchase Program:
 
 
 
 
 
 
 
 
 
 
Total shares of common stock repurchased
 

 
1,505,521

 
137,144

 

 

Average price paid per share of common stock
 

 
$12.02
 
$13.89
 

 

Aggregate repurchases of common equity ($ in millions)
 

 
$18.1
 
$1.9
 

 

12 See footnote 6 for a GAAP to non-GAAP reconciliation.
13 Current quarter information is presented based on estimated data.
Tangible book value per share as of March 31, 2019 increased 4% linked quarter and 18% year-over-year to $8.47. The increase in Tangible book value per share from March 31, 2018 to March 31, 2019 was primarily driven by the divestitures of Anchor and BOS and increased retained earnings, partially offset by common share repurchases and lower Accumulated other comprehensive income.
EPS Calculation
 
 
 
 
 
 
 
 
 
 
For calculation of income for EPS, first quarter 2019 Net income attributable to the common shareholders benefited by $1.6 million, or $0.02 per share, related to the changes in value of Redeemable noncontrolling interests ("RNCI").


6




Dividend Payments
Concurrent with the release of first 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 May 3, 2019, and the payment date is May 17, 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 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, and restructuring, if any; the efficiency ratio; the efficiency ratio excluding amortization of intangibles, and restructuring, if any; 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; 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 operating expenses.
A detailed reconciliation table of the Company’s GAAP to non-GAAP measures is included in the footnotes of the attached financial statements.
Conference Call
Management will hold a conference call at 8:00 a.m. Eastern Time on Thursday, April 18, 2019, to discuss the financial results, business highlights and outlook. To access the call:
Dial In #: (888) 317-6003
Elite Entry Number: 1277765

Replay Information:
Available from April 18, 2019 at 12:00 p.m Eastern Time until April 25, 2019
Dial In #: (877) 344-7529
Conference Number: 10130183
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 Commercial and Private Banking affiliates with offices in Boston, New York, Los Angeles, San Francisco, San Jose, and Florida. The Company has total assets of greater than $8 billion, and manages over $16 billion of client assets.
The Company’s affiliates serve the high net worth marketplace with high quality products and services of unique appeal to private clients. The Company also provides strategic oversight and access to resources, both financial and intellectual, to support affiliate management, marketing, compliance and legal activities. (NASDAQ: BPFH)
For more information about BPFH, visit the Company’s website at www.bostonprivate.com.
Forward-Looking Statements
Certain statements in this press release that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties. These statements include, among others, statements regarding our strategy, evaluations of future interest rate trends and liquidity, prospects for growth in assets, and prospects for overall results over the long term. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Company’s control. Forward-looking statements are based on the current assumptions and beliefs of management and are only expectations of future results. The Company’s actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, adverse conditions in the capital and debt markets and the impact of such conditions on the Company’s commercial and 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
[email protected]


8




397560530_bplogo011719.jpg
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
(In thousands, except share and per share data)
Assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
96,211

 
$
127,259

 
$
92,634

 
$
364,539

 
$
77,085

Investment securities available-for-sale
981,951

 
994,065

 
1,056,261

 
1,069,025

 
1,101,588

Investment securities held-to-maturity
67,548

 
70,438

 
75,468

 
78,955

 
70,809

Equity securities at fair value
7,491

 
14,228

 
7,079

 
7,942

 
16,909

Stock in Federal Home Loan Bank and Federal Reserve Bank
47,053

 
49,263

 
48,727

 
70,127

 
54,455

Loans held for sale
280

 
2,812

 
3,344

 
4,622

 
3,918

Total loans
6,926,968

 
6,893,158

 
6,720,420

 
6,767,123

 
6,602,327

Less: Allowance for loan losses
73,814

 
75,312

 
73,500

 
73,464

 
72,898

Net loans
6,853,154

 
6,817,846

 
6,646,920

 
6,693,659

 
6,529,429

Other real estate owned (“OREO”)

 
401

 
108

 
108

 

Premises and equipment, net
42,938

 
45,412

 
47,399

 
46,421

 
43,627

Goodwill (1)
57,607

 
57,607

 
75,598

 
75,598

 
75,598

Intangible assets, net (1)
11,555

 
12,227

 
13,834

 
14,584

 
15,334

Fees receivable
3,982

 
5,101

 
10,445

 
10,405

 
10,640

Accrued interest receivable
25,935

 
24,366

 
24,641

 
23,732

 
22,614

Deferred income taxes, net
22,844

 
26,638

 
27,833

 
26,316

 
32,058

Right of use assets
104,644

 

 

 

 

Other assets (1)
248,950

 
246,962

 
245,549

 
230,170

 
264,295

Total assets
$
8,572,143

 
$
8,494,625

 
$
8,375,840

 
$
8,716,203

 
$
8,318,359

Liabilities:
 
 
 
 
 
 
 
 
 
Deposits
$
6,779,845

 
$
6,781,170

 
$
6,768,723

 
$
6,620,179

 
$
6,584,322

Securities sold under agreements to repurchase
58,329

 
36,928

 
39,453

 
58,824

 
85,257

Federal funds purchased

 
250,000

 
120,000

 

 

Federal Home Loan Bank borrowings
615,070

 
420,144

 
441,836

 
1,056,938

 
611,588

Junior subordinated debentures
106,363

 
106,363

 
106,363

 
106,363

 
106,363

Lease liabilities
120,162

 

 

 

 

Other liabilities (1)
112,893

 
143,540

 
149,770

 
129,175

 
125,004

Total liabilities
7,792,662

 
7,738,145

 
7,626,145

 
7,971,479

 
7,512,534

Redeemable noncontrolling interests (“RNCI”)
662

 
2,526

 
11,686

 
10,747

 
16,322

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

 

 

 

 
47,753

Common stock, $1.00 par value; authorized: 170,000,000 shares
83,774

 
83,656

 
84,603

 
84,479

 
84,194

Additional paid-in capital
604,288

 
600,196

 
614,157

 
613,918

 
612,526

Retained earnings
97,155

 
87,821

 
64,618

 
56,912

 
61,518

Accumulated other comprehensive income/ (loss)
(6,398
)
 
(17,719
)
 
(27,578
)
 
(23,328
)
 
(21,313
)
Total Company’s shareholders’ equity
778,819

 
753,954

 
735,800

 
731,981

 
784,678

Noncontrolling interests

 

 
2,209

 
1,996

 
4,825

Total shareholders’ equity
778,819

 
753,954

 
738,009

 
733,977

 
789,503

Total liabilities, RNCI and shareholders’ equity
$
8,572,143

 
$
8,494,625

 
$
8,375,840

 
$
8,716,203

 
$
8,318,359



9




Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
Three Months Ended
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
Interest and dividend income:
(In thousands, except share and per share data)
Loans
$
69,933

 
$
69,294

 
$
68,254

 
$
64,048

 
$
60,929

Investment securities
5,983

 
6,242

 
6,230

 
6,302

 
6,418

Short-term investments and other
908

 
1,356

 
1,617

 
1,205

 
1,009

Total interest and dividend income
76,824

 
76,892

 
76,101

 
71,555

 
68,356

Interest expense:
 
 
 
 
 
 
 
 
 
Deposits
14,058

 
13,470

 
11,487

 
8,365

 
6,524

Borrowings
4,428

 
3,425

 
4,973

 
5,645

 
4,449

Total interest expense
18,486

 
16,895

 
16,460

 
14,010

 
10,973

Net interest income
58,338

 
59,997

 
59,641

 
57,545

 
57,383

Provision/ (credit) for loan losses
(1,426
)
 
93

 
(949
)
 
453

 
(1,795
)
Net interest income after provision/ (credit) for loan losses
59,764

 
59,904

 
60,590

 
57,092

 
59,178

Noninterest income:
 
 
 
 
 
 
 
 
 
Investment management fees
2,650

 
2,831

 
3,245

 
4,227

 
11,425

Wealth advisory fees
8,165

 
12,111

 
13,995

 
13,693

 
13,512

Wealth management and trust fees
10,893

 
11,677

 
11,510

 
11,169

 
12,151

Other banking fee income
2,499

 
2,033

 
2,775

 
2,745

 
2,273

Gain on sale of loans, net
73

 
39

 
67

 
63

 
74

Total core fees and income
24,280

 
28,691

 
31,592

 
31,897

 
39,435

Gain/ (loss) on sale of investments, net

 
(596
)
 

 
7

 
(24
)
Gain/ (loss) on OREO, net
91

 

 

 

 

Gain on sale of affiliate

 
18,142

 

 

 

Other
877

 
(392
)
 
722

 
191

 
332

Total other income
968

 
17,154

 
722

 
198

 
308

Total revenue (2)
83,586

 
105,842

 
91,955

 
89,640

 
97,126

Operating expense:
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
35,726

 
36,007

 
38,944

 
39,433

 
47,084

Occupancy and equipment
8,348

 
7,975

 
8,164

 
8,229

 
7,748

Professional services
3,560

 
4,229

 
2,877

 
2,872

 
3,177

Marketing and business development
1,085

 
2,275

 
1,710

 
2,070

 
1,593

Information systems
5,860

 
6,296

 
6,233

 
6,770

 
5,886

Amortization of intangibles
672

 
680

 
750

 
749

 
750

FDIC insurance
660

 
739

 
674

 
708

 
744

Restructuring
1,646

 
2,065

 
5,763

 

 

Other
2,996

 
3,291

 
3,442

 
3,553

 
3,875

Total operating expense
60,553

 
63,557

 
68,557

 
64,384

 
70,857

Income before income taxes
24,459

 
42,192

 
24,347

 
24,803

 
28,064

Income tax expense
4,917

 
8,651

 
5,461

 
17,399

 
6,026

Net income from continuing operations
19,542

 
33,541

 
18,886

 
7,404

 
22,038

Net income/ (loss) from discontinued operations (3)

 
306

 

 
(2
)
 
1,698

Net income before attribution to noncontrolling interests
19,542

 
33,847

 
18,886

 
7,402

 
23,736

Less: Net income attributable to noncontrolling interests
100

 
545

 
924

 
968

 
1,050

Net income attributable to the Company
$
19,442

 
$
33,302

 
$
17,962

 
$
6,434

 
$
22,686

 
 
 
 
 
 
 
 
 
 
Adjustments, treasury stock method (4)
1,557

 
2,694

 
(829
)
 
(3,524
)
 
(23
)
Net income attributable to common shareholders, treasury stock method
$
20,999

 
$
35,996

 
$
17,133

 
$
2,910

 
$
22,663

 
 
 
 
 
 
 
 
 
 
Weighted average basic shares outstanding
83,285,095

 
83,750,785

 
84,017,284

 
83,509,115

 
83,097,758

Weighted average diluted shares outstanding (5)
84,010,450

 
84,863,779

 
85,498,568

 
85,413,575

 
85,271,650

Diluted total earnings per share
$
0.25

 
$
0.42

 
$
0.20

 
$
0.03

 
$
0.27


10




Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(In thousands, except per share data)
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
FINANCIAL DATA:
Book value per common share
$
9.30

 
$
9.01

 
$
8.72

 
$
8.69

 
$
8.81

Tangible book value per share (6)
$
8.47

 
$
8.18

 
$
7.67

 
$
7.62

 
$
7.17

Market price per share
$
10.96

 
$
10.57

 
$
13.65

 
$
15.90

 
$
15.05

 
 
 
 
 
 
 
 
 
 
ASSETS UNDER MANAGEMENT AND ADVISORY ("AUM"):
 
 
 
 
 
 
 
 
Wealth Management and Trust
$
7,593,000

 
$
7,602,000

 
$
8,335,000

 
$
7,789,000

 
$
7,831,000

Affiliate Partners, excluding Anchor and BOS
8,529,000

 
8,319,000

 
9,388,000

 
9,072,000

 
8,878,000

Total AUM, excluding Anchor and BOS (7)
16,122,000

 
15,921,000

 
17,723,000

 
16,861,000

 
16,709,000

AUM at Anchor and BOS

 

 
4,714,000

 
4,525,000

 
13,530,000

Less: Inter-company relationship

 

 
(7,000
)
 
(7,000
)
 
(11,000
)
Total AUM
$
16,122,000

 
$
15,921,000

 
$
22,430,000

 
$
21,379,000

 
$
30,228,000

 
 
 
 
 
 
 
 
 
 
FINANCIAL RATIOS:
 
 
 
 
 
 
 
 
 
Total equity/ Total assets
9.09
%
 
8.88
%
 
8.81
%
 
8.42
%
 
9.49
%
Tangible common equity/ Tangible assets (6)
8.35
%
 
8.12
%
 
7.83
%
 
7.46
%
 
7.38
%
Tier 1 common equity/ Risk weighted assets (6)
11.38
%
 
11.40
%
 
11.14
%
 
10.90
%
 
10.39
%
Allowance for loan losses/ Total loans
1.07
%
 
1.09
%
 
1.09
%
 
1.09
%
 
1.10
%
Allowance for loan losses/ Nonaccrual loans
614
%
 
536
%
 
608
%
 
469
%
 
445
%
Return on average assets (annualized)
0.93
%
 
1.56
%
 
0.84
%
 
0.31
%
 
1.11
%
ROACE (annualized) (non-GAAP) (8)
10.29
%
 
17.87
%
 
9.67
%
 
3.03
%
 
12.02
%
ROATCE (annualized) (non-GAAP) (8)
11.63
%
 
20.46
%
 
11.37
%
 
3.90
%
 
15.20
%
Efficiency ratio (annualized) (non-GAAP) (9)
69.67
%
 
57.14
%
 
67.04
%
 
70.29
%
 
71.46
%
 
 
 
 
 
 
 
 
 
 
DEPOSIT DETAIL:
 
 
 
 
 
 
 
 
 
Demand deposits (non-interest bearing)
$
2,016,838

 
$
1,951,274

 
$
2,001,275

 
$
2,089,373

 
$
1,932,732

NOW
605,852

 
626,685

 
568,148

 
635,841

 
689,526

Savings
68,102

 
73,834

 
72,967

 
73,675

 
73,580

Money market
3,302,244

 
3,338,892

 
3,363,062

 
3,128,211

 
3,177,692

Certificates of deposit
786,809

 
790,485

 
763,271

 
693,079

 
710,792

Total deposits
$
6,779,845

 
$
6,781,170

 
$
6,768,723

 
$
6,620,179

 
$
6,584,322



11




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:
03/31/19
12/31/18
03/31/18
 
03/31/19
12/31/18
03/31/18
 
03/31/19
12/31/18
03/31/18
AVERAGE ASSETS
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and investments (10):
 
 
 
 
 
 
 
 
 
 
 
Taxable investment securities
$
244,230

$
317,230

$
333,253

 
$
1,185

$
1,486

$
1,510

 
1.94
%
1.87
%
1.81
%
Non-taxable investment securities
306,868

301,242

296,958

 
1,901

1,833

1,730

 
2.48
%
2.43
%
2.33
%
Mortgage-backed securities
521,788

536,264

588,461

 
2,897

2,923

3,178

 
2.22
%
2.18
%
2.16
%
Short-term investments and other
79,603

134,182

161,573

 
908

1,356

1,009

 
4.58
%
3.98
%
2.51
%
Total cash and investments
1,152,489

1,288,918

1,380,245

 
6,891

7,598

7,427

 
2.39
%
2.35
%
2.15
%
Loans (10) (11):
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
1,070,161

1,027,128

933,209

 
10,979

10,431

8,460

 
4.10
%
3.97
%
3.63
%
Commercial real estate
2,398,413

2,402,304

2,441,215

 
28,151

29,016

26,151

 
4.69
%
4.73
%
4.28
%
Construction and land
211,351

209,475

169,384

 
2,641

2,588

1,937

 
5.00
%
4.83
%
4.57
%
Residential
2,972,945

2,907,446

2,702,317

 
25,545

24,630

21,766

 
3.44
%
3.39
%
3.22
%
Home equity
90,646

93,656

97,191

 
1,121

1,148

1,042

 
5.02
%
4.86
%
4.35
%
Other consumer
133,937

140,591

185,596

 
1,496

1,481

1,573

 
4.53
%
4.18
%
3.44
%
Total loans
6,877,453

6,780,600

6,528,912

 
69,933

69,294

60,929

 
4.07
%
4.03
%
3.74
%
Total earning assets
8,029,942

8,069,518

7,909,157

 
76,824

76,892

68,356

 
3.83
%
3.76
%
3.46
%
LESS: Allowance for loan losses
75,537

75,006

74,834

 
 
 
 
 
 
 
 
Cash and due from banks (non-interest bearing)
46,172

53,633

51,944

 
 
 
 
 
 
 
 
Other assets
493,148

397,153

425,617

 
 
 
 
 
 
 
 
TOTAL AVERAGE ASSETS
$
8,493,725

$
8,445,298

$
8,311,884

 
 
 
 
 
 
 
 
AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits (12):
 
 
 
 
 
 
 
 
 
 
 
Savings and NOW
$
674,872

$
649,937

$
716,930

 
$
296

$
377

$
215

 
0.18
%
0.23
%
0.12
%
Money market
3,341,397

3,392,039

3,141,564

 
10,072

9,502

4,314

 
1.22
%
1.11
%
0.56
%
Certificates of deposit
775,817

784,184

657,109

 
3,690

3,591

1,995

 
1.93
%
1.82
%
1.23
%
Total interest-bearing deposits (12)
4,792,086

4,826,160

4,515,603

 
14,058

13,470

6,524

 
1.19
%
1.11
%
0.59
%
Junior subordinated debentures
106,363

106,363

106,363

 
1,121

1,043

846

 
4.22
%
3.84
%
3.18
%
FHLB borrowings and other
615,985

515,734

878,093

 
3,307

2,382

3,603

 
2.15
%
1.81
%
1.64
%
Total interest-bearing liabilities (12)
5,514,434

5,448,257

5,500,059

 
18,486

16,895

10,973

 
1.36
%
1.23
%
0.80
%
Non-interest bearing demand deposits (12)
1,974,526

2,092,070

1,872,472

 
 
 
 
 
 
 
 
Other liabilities
236,426

154,612

133,243

 
 
 
 
 
 
 
 
Total average liabilities
7,725,386

7,694,939

7,505,774

 
 
 
 
 
 
 
 
Redeemable noncontrolling interests
2,056

11,046

22,085

 
 
 
 
 
 
 
 
Average shareholders’ equity
766,283

739,313

784,025

 
 
 
 
 
 
 
 
TOTAL AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY
$
8,493,725

$
8,445,298

$
8,311,884

 
 
 
 
 
 
 
 
Net interest income
 
 
 
 
$
58,338

$
59,997

$
57,383

 
 
 
 
Interest rate spread
 
 
 
 
 
 
 
 
2.47
%
2.53
%
2.66
%
Bank only net interest margin
 
 
 
 
 


 
2.96
%
3.02
%
3.00
%
Net interest margin
 
 
 
 
 
 
 
 
2.90
%
2.96
%
2.90
%
 
 
 
 
 
 
 
 
 
 
 
 
Average total deposits (12)
6,766,612

6,918,230

6,388,075

 
 
 
 
 
0.84
%
0.77
%
0.41
%
Average total deposits and borrowings (12)
7,488,960

7,540,327

7,372,531