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Section 1: 8-K (8-K)

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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): July 24, 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 July 24, 2019, Boston Private Financial Holdings, Inc. (the “Company”) issued a press release announcing its financial results for the second quarter ended June 30, 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 July 24, 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: July 24, 2019
 
 





EXHIBIT INDEX

    Exhibit
No.     Description
99.1     Earnings release dated July 24, 2019






(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit



398869282_bplogo011719a01.jpg

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


Second Quarter 2019 Highlights include:

GAAP Net income was $19.4 million, or $0.22 per diluted share
Return on average common equity was 9.8%
Return on average tangible common equity was 11.1%
Average total loans were $7.0 billion, a 4% increase year-over-year
Average total deposits were $6.6 billion, a 5% increase year-over-year
Total assets under management/advisory (“AUM”) were $16.2 billion, a decrease of 4% year-over-year
Total net flows were negative $269 million, of which $127 million were attributable to the Wealth Management & Trust segment and $142 million were attributable to Affiliate Partners

Boston, MA - July 24, 2019 - Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the “Company” or “BPFH”) today reported second quarter 2019 GAAP Net income attributable to the Company of $19.4 million, compared to $19.4 million for the first quarter of 2019 and $6.4 million for the second quarter of 2018. Second quarter 2019 GAAP Diluted earnings per share were $0.22, compared to $0.25 in the first quarter of 2019 and $0.03 in the second quarter of 2018.
Summary Financial Results - Reported
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Change
($ in millions, except for per share data)
 
2Q19

 
1Q19

 
2Q18

 
LQ
 
Y/Y
Net income
 
$19.4
 
$19.4
 
$6.4
 
 %
 
nm

Diluted earnings per share
 
$0.22
 
$0.25
 
$0.03
 
(12
)%
 
nm

 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Financial Measures:
 
 
 
 
 
 
 
 
 
 
Pre-tax, pre-provision income
 
$26.2
 
$23.0
 
$25.3
 
14
 %
 
4
%
Return on average common equity (ROACE)
 
9.8
%
 
10.3
%
 
3.0
%
 
 
 
 
Return on average tangible common equity (ROATCE)
 
11.1
%
 
11.6
%
 
3.9
%
 
 
 
 
nm = not meaningful
 
 
 
 
 
 
 
 
 
 
The Company's reported financial results increased year-over-year primarily as a result of a $12.7 million income tax expense related to the divestiture of Anchor Capital Advisors LLC in the second 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 17.

1




Summary Financial Results - Operating Basis (non-GAAP)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Change
($ in millions, except for per share data)
 
2Q19

 
1Q191


 
2Q182

 
LQ
 
Y/Y
Net income
 
$19.4
 
$20.7
 
$19.5
 
(7
)%
 
(1
)%
Diluted earnings per share
 
$0.22
 
$0.27
 
$0.21
 
(17
)%
 
4
 %
 
 
 
 
 
 
 
 
 
 
 
Pre-tax, pre-provision income
 
$26.2
 
$24.7
 
$25.7
 
6
 %
 
2
 %
Return on average common equity
 
9.8
%
 
11.0
%
 
10.1
%
 
 
 
 
Return on average tangible common equity
 
11.1
%
 
12.4
%
 
12.2
%
 
 
 
 
1 1Q19 results adjusted to exclude the net after-tax impact of $1.6 million restructuring expense
2 2Q18 results adjusted to exclude $12.7 million income tax expense related to the divestiture of Anchor and net after-tax impact of $0.4 million information services expense related to efficiency initiatives
"During the first half of 2019, we have been focused on beginning the process of implementing our strategic vision for growth," said Anthony DeChellis, CEO of Boston Private. "Our second quarter results reflect improvement in pre-tax, pre-provision profitability measures as we exercise expense discipline and realize the benefits from efficiency initiatives. Looking ahead, we will continue to improve our efficiency as we transition our company to achieve the growth objectives we discussed during our Investor Day."
Divested Affiliates
 
 
 
 
 
 
 
 
 
 
The Company completed the sale of Anchor Capital Advisors LLC ("Anchor") and Bingham, Osborn & Scarborough LLC ("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)
 
2Q19

 
1Q19

 
2Q18

 
LQ
 
Y/Y
Net interest income
 

$57.5

 

$58.3

 

$57.5

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

 
0.3

 

 
nm

 
nm

Core net interest income (non-GAAP)
 

$57.5

 

$58.1

 

$57.5

 
(1
)%
 
%
 
 
 
 
 
 
 
 
 
 

Net interest margin
 
2.78
%
 
2.90
%
 
2.85
%
 
 
 
 
Core net interest margin (non-GAAP)
 
2.78
%
 
2.89
%
 
2.85
%
 
 
 
 
Net interest income for the second quarter of 2019 was $57.5 million, a decrease of 2% linked quarter while remaining flat year-over-year. Core net interest income, which excludes interest recovered on previous nonaccrual loans, decreased 1% linked quarter and while remaining flat year-over-year. The linked quarter decrease was primarily driven by higher funding costs and higher borrowing volumes, partially offset by higher average interest-earning asset volumes.
The Company’s Core net interest margin, which excludes interest recovered on previous nonaccrual loans, decreased 11 basis points on a linked quarter basis to 2.78%, primarily driven by higher funding costs and higher borrowing volumes, while interest earning asset yields remained stable.

2




Noninterest Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Change
($ in millions)
 
2Q19

 
1Q19

 
2Q18

 
LQ
 
Y/Y
Investment management fees
 
$2.5
 
$2.7
 
$4.2
 
(7
)%
 
(42
)%
Wealth advisory fees
 
8.1

 
8.2

 
13.7

 
 %
 
(41
)%
Wealth management and trust fees
 
10.8

 
10.9

 
11.2

 
(1
)%
 
(4
)%
Private banking fees 3
 
2.9

 
2.6

 
2.8

 
14
 %
 
4
 %
Total core fees and income
 
$24.3
 
$24.3
 
$31.9
 
 %
 
(24
)%
Total other income
 
0.1

 
1.0

 
0.2

 
(91
)%
 
(56
)%
Total noninterest income
 
$24.4
 
$25.2
 
$32.1
 
(3
)%
 
(24
)%
 
 
 
 
 
 
 
 
 
 
 
Memo: Excluding Divested Affiliates
 
 
 
 
Investment management fees (non-GAAP) 4
 
2.5

 
2.7

 
3.1

 
(7
)%
 
(20
)%
Wealth advisory fees (non-GAAP) 5
 
8.1

 
8.2

 
8.0

 
 %
 
2
 %
Wealth management and trust fees
 
10.8

10.9

11.2

(1
)%

(4
)%
Private banking fees3
 
2.9

2.6

2.8

14
 %

4
 %
Total core fees and income (non-GAAP) 4 5
 
$24.3
 
$24.3
 
$25.0
 
 %
 
(3
)%
Total other income (non-GAAP)
 
0.1

 
1.0

 
0.2

 
(91
)%
 
(48
)%
Total noninterest income (non-GAAP) 4 5
 
$24.4
 
$25.2
 
$25.2
 
(3
)%
 
(3
)%
3 Private banking fees includes Other banking fee income and Gain/ (loss) on sale of loans, net
4 Excludes Anchor revenue of $1.2 million in 2Q18
5 Excludes BOS revenue of $5.8 million in 2Q18
Total core fees and income for the second quarter of 2019 was $24.3 million, flat linked quarter and a decline of 24% year-over-year. The year-over-year decline was primarily driven by the divestitures of Anchor and BOS.
Excluding Divested Affiliates, Total core fees and income decreased 3% year-over-year, primarily driven by lower Investment management fees and Wealth management and trust fees.
Assets Under Management / Advisory
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Change
($ in millions)
 
2Q19
 
1Q19
 
2Q18
 
LQ
 
Y/Y
Wealth Management and Trust
 
$7,595
 
$7,593
 
$7,789
 
%
 
(2
)%
Affiliate Partners 6
 
8,604
 
8,529
 
9,072
 
1
%
 
(5
)%
Total assets under management / advisory 7
 
$16,199
 
$16,122
 
$16,861
 
%
 
(4
)%
Total net flows 7
 
$(269)
 
$(963)
 
$(97)
 
 
 
 
6 Segment includes Dalton, Greiner, Hartman, Maher & Co., LLC ("DGHM") and KLS Professional Advisors Group, LLC ("KLS")
7 Excludes Divested Affiliates
Total assets under management / advisory were $16.2 billion at the end of the second quarter of 2019, flat linked quarter and a decrease of 4% year-over-year. The linked quarter comparison was impacted by positive market action offset by negative net flows, while the year-over-year decrease was primarily driven by negative net flows in excess of positive market action.
Net flows during the second quarter of 2019 in the Wealth Management and Trust segment were negative $127 million, while net flows in the Affiliate Partners segment were negative $142 million.

3




Operating Expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Change
($ in millions)
 
2Q19

 
1Q19

 
2Q18

 
LQ
 
Y/Y
Salaries and employee benefits
 
$32.7
 
$35.7
 
$39.4
 
(8
)%
 
(17
)%
Occupancy and equipment
 
7.9

 
8.3

 
8.2

 
(6
)%
 
(5
)%
Professional services
 
3.3

 
3.6

 
2.9

 
(7
)%
 
15
 %
Marketing and business development
 
1.9

 
1.1

 
2.1

 
78
 %
 
(7
)%
Information systems
 
5.1

 
5.9

 
6.8

 
(12
)%
 
(24
)%
Amortization of intangibles
 
0.7

 
0.7

 
0.7

 
 %
 
(10
)%
FDIC insurance
 
0.6

 
0.7

 
0.7

 
(11
)%
 
(17
)%
Restructuring
 

 
1.6

 

 
nm

 
nm

Other
 
3.5

 
3.0

 
3.6

 
15
 %
 
(3
)%
Total operating expense
 
$55.7
 
$60.6
 
$64.4
 
(8
)%
 
(14
)%
 
 
 
 

 
 
 
 
 
 
Memo: Excluding Notable Items8 and Divested Affiliates
 
 
 
 
 
 
 
 
 
 
Information systems 9
 

 

 
0.4

 
nm

 
nm

Restructuring
 

 
1.6

 

 
nm

 
nm

Divested Affiliates operating expense
 

 

 
4.7

 
nm

 
nm

Total operating expense (non-GAAP)
 
$55.7
 
$59.0
 
$59.2
 
(6
)%
 
(6
)%
8 "Notable Items" include adjustments made to GAAP results in prior periods
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 8% linked quarter, primarily driven by lower salaries and employee benefits expense, restructuring expense, information systems expense, and occupancy and equipment expense, partially offset by higher marketing and business development expense. Salaries and employee benefits expense declined linked quarter primarily as a result of seasonal payroll tax expense incurred during the first quarter of 2019. Restructuring expense incurred during the first quarter of 2019 was related to executive departures. Information systems expense declined linked quarter primarily as a result of savings attributable to information technology infrastructure consolidation. The year-over-year decline in Total operating expense of 14% was primarily driven by expenses associated with Divested Affiliates that are included in the second quarter of 2018 results.
Excluding Notable Items and Divested Affiliates, Total operating expense for the second quarter of 2019 was $55.7 million, down 6% linked quarter and 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 second quarter of 2019 was 21.6%.

4




Loans and Deposits - QTD Averages
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Change
($ in millions)
 
2Q19

 
1Q19

 
2Q18

 
LQ
 
Y/Y
Commercial and industrial
 
$1,092
 
$1,070
 
$974
 
2
 %
 
12
 %
Commercial real estate
 
2,507
 
2,398
 
2,478
 
5
 %
 
1
 %
Construction and land
 
203
 
211
 
167
 
(4
)%
 
22
 %
Residential
 
3,009
 
2,973
 
2,775
 
1
 %
 
8
 %
Home equity
 
91
 
91
 
94
 
1
 %
 
(3
)%
Other consumer
 
125
 
134
 
180
 
(7
)%
 
(31
)%
Total loans
 
$7,026
 
$6,877
 
$6,668
 
2
 %
 
5
 %
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing deposits
 
1,927
 
1,975
 
1,908
 
(2
)%
 
1
 %
Interest bearing deposits
 
4,664
 
4,792
 
4,441
 
(3
)%
 
5
 %
Total deposits
 
$6,590
 
$6,767
 
$6,349
 
(3
)%
 
4
 %
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing deposits as a % of Total deposits
 
29
%

29
%

30
%
 
 
 
 
Average total loans in the second quarter of 2019 increased 5% year-over-year, primarily driven by increases in Residential loans and Commercial and industrial loans.
Average total deposits increased 4% year-over-year, primarily driven by growth in money market accounts, certificates of deposits, and demand deposit accounts, partially offset by declines in savings and NOW accounts. Deposits declined 3% linked quarter
The cost of total deposits was 0.88%, an increase of 4 basis points linked quarter and 35 basis points year-over-year.
Provision and Asset Quality
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
($ in millions)
 
2Q19

 
1Q19

 
4Q18

 
3Q18

 
2Q18

Provision/ (credit) for loan loss
 
$1.4
 
$(1.4)
 
$0.1
 
$(0.9)
 
$0.5
Total criticized loans
 
141.7
 
141.3
 
146.6
 
134.7
 
114.4
Total nonaccrual loans
 
17.2
 
12.0
 
14.1
 
12.1
 
15.7
Total loans 30-89 days past due and accruing
 
2.4
 
17.7
 
22.3
 
11.6
 
5.0
Total net loans (charged-off)/ recovered
 
(0.1)

 
(0.1)
 
1.7

 
1.0
 
0.1
 
 
 
 
 
 
 
 
 
 
 
Ratios:
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses as a % of Total loans
 
1.06
%
 
1.07
%
 
1.09
%
 
1.09
%
 
1.09
%
Nonaccrual loans as a % of Total loans
 
0.24
%
 
0.17
%
 
0.20
%
 
0.18
%
 
0.23
%
The Company recorded a provision expense of $1.4 million for the second quarter of 2019, compared to a provision credit of $1.4 million for the first quarter of 2019 and an expense of $0.5 million in the second quarter of 2018. The provision expense in the second quarter of 2019 was primarily driven by loan growth.
Total criticized loans as of June 30, 2019 was $141.7 million, flat linked quarter and an increase of 24% year-over-year. Total nonaccrual loans as of June 30, 2019 was $17.2 million, or 24 basis points of total loans, compared to $12.0 million, or 17 basis points of total loans as of March 31, 2019, and $15.7 million, or 23 basis points of total loans as of June 30, 2018.

5




Capital
 
 
 
 
 
 
 
 
 
 
($ in millions, except for per share data)
 
2Q19

 
1Q19

 
4Q18

 
3Q18

 
2Q18

Tangible common equity/ Tangible assets 10
 
8.4
%
 
8.3
%
 
8.1
%
 
7.8
%
 
7.5
%
Tangible book value per share 10
 
$8.71
 
$8.47
 
$8.18
 
$7.67
 
$7.62
 
 
 
 
 
 
 
 
 
 
 
Regulatory Capital Ratios: 11
 
 
 
 
 
 
 

 

Tier 1 common equity
 
11.2
%
 
11.4
%
 
11.4
%
 
11.1
%
 
10.9
%
Total risk-based capital
 
13.9
%
 
14.2
%
 
14.3
%
 
14.1
%
 
13.8
%
Tier 1 risk-based capital
 
12.7
%
 
13.0
%
 
13.0
%
 
12.8
%
 
12.6
%
Tier 1 leverage capital
 
9.6
%
 
9.7
%
 
9.5
%
 
9.2
%
 
9.2
%
 
 
 
 
 
 
 
 
 
 
 
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
 

10 See footnote 6 for a GAAP to non-GAAP reconciliation.
11 Current quarter information is presented based on estimated data.
Tangible book value per share as of June 30, 2019 increased 3% linked quarter and 14% year-over-year to $8.71. 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, while the year-over-year increase was primarily driven by the divestiture of BOS, higher Accumulated other comprehensive income and increased retained earnings, partially offset by common share repurchases.
EPS Calculation
 
 
 
 
 
 
 
 
 
 
For calculation of income for EPS, second quarter 2019 Net income attributable to the common shareholders was negatively impacted by $0.8 million, or $0.01 per share, related to the changes in value of Redeemable noncontrolling interests (“RNCI”).


6




Dividend Payments
Concurrent with the release of second 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 August 9, 2019, and the payment date is August 23, 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 schedules.
Conference Call
Management will hold a conference call at 8:00 a.m. Eastern Time on Thursday, July 25, 2019, to discuss the financial results, business highlights and outlook. To access the call:
Dial In #: (888) 317-6003
Elite Entry Number: 5871776

Replay Information:
Available from July 25, 2019 at 12:00 p.m Eastern Time until August 1, 2019
Dial In #: (877) 344-7529
Conference Number: 10132971
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




398869282_bplogo011719a01.jpg
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
(In thousands, except share and per share data)
Assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
65,756

 
$
96,211

 
$
127,259

 
$
92,634

 
$
364,539

Investment securities available-for-sale
966,731

 
981,951

 
994,065

 
1,056,261

 
1,069,025

Investment securities held-to-maturity
54,482

 
67,548

 
70,438

 
75,468

 
78,955

Equity securities at fair value
19,092

 
7,491

 
14,228

 
7,079

 
7,942

Stock in Federal Home Loan Bank and Federal Reserve Bank
64,453

 
47,053

 
49,263

 
48,727

 
70,127

Loans held for sale
3,640

 
280

 
2,812

 
3,344

 
4,622

Total loans
7,080,260

 
6,926,968

 
6,893,158

 
6,720,420

 
6,767,123

Less: Allowance for loan losses
75,067

 
73,814

 
75,312

 
73,500

 
73,464

Net loans
7,005,193

 
6,853,154

 
6,817,846

 
6,646,920

 
6,693,659

Other real estate owned (“OREO”)

 

 
401

 
108

 
108

Premises and equipment, net
40,244

 
42,938

 
45,412

 
47,399

 
46,421

Goodwill (1)
57,607

 
57,607

 
57,607

 
75,598

 
75,598

Intangible assets, net
10,884

 
11,555

 
12,227

 
13,834

 
14,584

Fees receivable
3,611

 
3,982

 
5,101

 
10,445

 
10,405

Accrued interest receivable
26,411

 
25,935

 
24,366

 
24,641

 
23,732

Deferred income taxes, net
17,183

 
22,844

 
26,638

 
27,833

 
26,316

Right-of-use assets
110,880

 
104,644

 

 

 

Other assets
266,706

 
248,950

 
246,962

 
245,549

 
230,170

Total assets
$
8,712,873

 
$
8,572,143

 
$
8,494,625

 
$
8,375,840

 
$
8,716,203

Liabilities:
 
 
 
 
 
 
 
 
 
Deposits
$
6,437,963

 
$
6,779,845

 
$
6,781,170

 
$
6,768,723

 
$
6,620,179

Securities sold under agreements to repurchase
62,372

 
58,329

 
36,928

 
39,453

 
58,824

Federal funds purchased
135,000

 

 
250,000

 
120,000

 

Federal Home Loan Bank borrowings
920,068

 
615,070

 
420,144

 
441,836

 
1,056,938

Junior subordinated debentures
106,363

 
106,363

 
106,363

 
106,363

 
106,363

Lease liabilities
126,740

 
120,162

 

 

 

Other liabilities
124,370

 
112,893

 
143,540

 
149,770

 
129,175

Total liabilities
7,912,876

 
7,792,662

 
7,738,145

 
7,626,145

 
7,971,479

Redeemable noncontrolling interests (“RNCI”)
1,786

 
662

 
2,526

 
11,686

 
10,747

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

 
83,774

 
83,656

 
84,603

 
84,479

Additional paid-in capital
603,869

 
604,288

 
600,196

 
614,157

 
613,918

Retained earnings
106,443

 
97,155

 
87,821

 
64,618

 
56,912

Accumulated other comprehensive income/ (loss)
4,125

 
(6,398
)
 
(17,719
)
 
(27,578
)
 
(23,328
)
Total Company’s shareholders’ equity
798,211

 
778,819

 
753,954

 
735,800

 
731,981

Noncontrolling interests

 

 

 
2,209

 
1,996

Total shareholders’ equity
798,211

 
778,819

 
753,954

 
738,009

 
733,977

Total liabilities, RNCI and shareholders’ equity
$
8,712,873

 
$
8,572,143

 
$
8,494,625

 
$
8,375,840

 
$
8,716,203



9




Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
Three Months Ended
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
Interest and dividend income:
(In thousands, except share and per share data)
Loans
$
71,943

 
$
69,933

 
$
69,294

 
$
68,254

 
$
64,048

Investment securities
5,728

 
5,983

 
6,242

 
6,230

 
6,302

Short-term investments and other
1,057

 
908

 
1,356

 
1,617

 
1,205

Total interest and dividend income
78,728

 
76,824

 
76,892

 
76,101

 
71,555

Interest expense:
 
 
 
 
 
 
 
 
 
Deposits
14,515

 
14,058

 
13,470

 
11,487

 
8,365

Borrowings
6,753

 
4,428

 
3,425

 
4,973

 
5,645

Total interest expense
21,268

 
18,486

 
16,895

 
16,460

 
14,010

Net interest income
57,460

 
58,338

 
59,997

 
59,641

 
57,545

Provision/ (credit) for loan losses
1,363

 
(1,426
)
 
93

 
(949
)
 
453

Net interest income after provision/ (credit) for loan losses
56,097

 
59,764

 
59,904

 
60,590

 
57,092

Noninterest income:
 
 
 
 
 
 
 
 
 
Investment management fees
2,455

 
2,650

 
2,831

 
3,245

 
4,227

Wealth advisory fees
8,141

 
8,165

 
12,111

 
13,995

 
13,693

Wealth management and trust fees
10,771

 
10,893

 
11,677

 
11,510

 
11,169

Other banking fee income
2,867

 
2,499

 
2,033

 
2,775

 
2,745

Gain on sale of loans, net
58

 
73

 
39

 
67

 
63

Total core fees and income
24,292

 
24,280

 
28,691

 
31,592

 
31,897

Gain/ (loss) on sale of investments, net

 

 
(596
)
 

 
7

Gain/ (loss) on OREO, net

 
91

 

 

 

Gain on sale of affiliate

 

 
18,142

 

 

Other
88

 
877

 
(392
)
 
722

 
191

Total other income
88

 
968

 
17,154

 
722

 
198

Total revenue (2)
81,840

 
83,586

 
105,842

 
91,955

 
89,640

Operating expense:
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
32,706

 
35,726

 
36,007

 
38,944

 
39,433

Occupancy and equipment
7,852

 
8,348

 
7,975

 
8,164

 
8,229

Professional services
3,313

 
3,560

 
4,229

 
2,877

 
2,872

Marketing and business development
1,934

 
1,085

 
2,275

 
1,710

 
2,070

Information systems
5,137

 
5,860

 
6,296

 
6,233

 
6,770

Amortization of intangibles
672

 
672

 
680

 
750

 
749

FDIC insurance
585

 
660

 
739

 
674

 
708

Restructuring

 
1,646

 
2,065

 
5,763

 

Other
3,460

 
2,996

 
3,291

 
3,442

 
3,553

Total operating expense
55,659

 
60,553

 
63,557

 
68,557

 
64,384

Income before income taxes
24,818

 
24,459

 
42,192

 
24,347

 
24,803

Income tax expense
5,369

 
4,917

 
8,651

 
5,461

 
17,399

Net income from continuing operations
19,449

 
19,542

 
33,541

 
18,886

 
7,404

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

 

 
306

 

 
(2
)
Net income before attribution to noncontrolling interests
19,449

 
19,542

 
33,847

 
18,886

 
7,402

Less: Net income attributable to noncontrolling interests
69

 
100

 
545

 
924

 
968

Net income attributable to the Company
$
19,380

 
$
19,442

 
$
33,302

 
$
17,962

 
$
6,434

 
 
 
 
 
 
 
 
 
 
Adjustments, treasury stock method (4)
(816
)
 
1,557

 
2,694

 
(829
)
 
(3,524
)
Net income attributable to common shareholders, treasury stock method
$
18,564

 
$
20,999

 
$
35,996

 
$
17,133

 
$
2,910

 
 
 
 
 
 
 
 
 
 
Weighted average basic shares outstanding
83,565,780

 
83,285,095

 
83,750,785

 
84,017,284

 
83,509,115

Weighted average diluted shares outstanding (5)
84,048,972

 
84,010,450

 
84,863,779

 
85,498,568

 
85,413,575

Diluted total earnings per share
$
0.22

 
$
0.25

 
$
0.42

 
$
0.20

 
$
0.03


10




Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
Six Months Ended
 
June 30,
2019
 
June 30,
2018
Interest and dividend income:
(In thousands, except share and per share data)
Loans
$
141,876

 
$
124,977

Investment securities
11,711

 
12,720

Short-term investments and other
1,965

 
2,214

Total interest and dividend income
155,552

 
139,911

Interest expense:
 
 
 
Deposits
28,573

 
14,889

Borrowings
11,181

 
10,094

Total interest expense
39,754

 
24,983

Net interest income
115,798

 
114,928

Provision/ (credit) for loan losses
(63
)
 
(1,342
)
Net interest income after provision/ (credit) for loan losses
115,861

 
116,270

Fees and other income:
 
 
 
Investment management fees
5,105

 
15,652

Wealth advisory fees
16,306

 
27,205

Wealth management and trust fees
21,664

 
23,320

Other banking fee income
5,366

 
5,018

Gain on sale of loans, net
131

 
137

Total core fees and income
48,572

 
71,332

Gain/ (loss) on sale of investments, net

 
(17
)
Gain/ (loss) on OREO, net
91

 

Other
965

 
523

Total other income
1,056

 
506

Total revenue (2)
165,426

 
186,766

Operating expense:
 
 
 
Salaries and employee benefits
68,432

 
86,517

Occupancy and equipment
16,200

 
15,977

Professional services
6,873

 
6,049

Marketing and business development
3,019

 
3,663

Information systems
10,997

 
12,656

Amortization of intangibles
1,344

 
1,499

FDIC insurance
1,245

 
1,452

Restructuring
1,646

 

Other
6,456

 
7,428

Total operating expense
116,212

 
135,241

Income before income taxes
49,277

 
52,867

Income tax expense
10,286

 
23,425

Net income from continuing operations
38,991

 
29,442

Net income from discontinued operations (3)

 
1,696

Net income before attribution to noncontrolling interests
38,991

 
31,138

Less: Net income attributable to noncontrolling interests
169

 
2,018

Net income attributable to the Company
$
38,822

 
$
29,120

 
 
 
 
Adjustments, treasury stock method (4)
741

 
(3,547
)
Net income attributable to common shareholders, treasury stock method
$
39,563

 
$
25,573

 
 
 
 
Weighted average basic shares outstanding
83,426,213

 
83,304,573

Weighted average diluted shares outstanding (5)
84,036,050

 
85,221,974

Diluted total earnings per share
$
0.47

 
$
0.30


11




Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(In thousands, except per share data)
June 30,
2019
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
FINANCIAL DATA:
Book value per common share
$
9.53

 
$
9.30

 
$
9.01

 
$
8.72

 
$
8.69

Tangible book value per share (6)
$
8.71

 
$
8.47

 
$
8.18

 
$
7.67

 
$
7.62

Market price per share
$
12.07

 
$
10.96

 
$
10.57

 
$
13.65

 
$
15.90

 
 
 
 
 
 
 
 
 
 
ASSETS UNDER MANAGEMENT AND ADVISORY ("AUM"):
 
 
 
 
 
 
 
 
Wealth Management and Trust
$
7,595,000

 
$
7,593,000

 
$
7,602,000

 
$
8,335,000

 
$
7,789,000

Affiliate Partners, excluding BOS
8,604,000

 
8,529,000

 
8,319,000

 
9,388,000

 
9,072,000

Total AUM, excluding BOS (7)
16,199,000

 
16,122,000

 
15,921,000

 
17,723,000

 
16,861,000

AUM at BOS

 

 

 
4,714,000

 
4,525,000

Less: Inter-company relationship

 

 

 
(7,000
)
 
(7,000
)
Total AUM
$
16,199,000

 
$
16,122,000

 
$
15,921,000

 
$
22,430,000

 
$
21,379,000

 
 
 
 
 
 
 
 
 
 
FINANCIAL RATIOS:
 
 
 
 
 
 
 
 
 
Total equity/ Total assets
9.16
%
 
9.09
%
 
8.88
%
 
8.81
%
 
8.42
%
Tangible common equity/ Tangible assets (6)
8.44
%
 
8.35
%
 
8.12
%
 
7.83
%
 
7.46
%
Tier 1 common equity/ Risk weighted assets (6)
11.19
%
 
11.38
%
 
11.40
%
 
11.14
%
 
10.90
%
Allowance for loan losses/ Total loans
1.06
%
 
1.07
%
 
1.09
%
 
1.09
%
 
1.09
%
Allowance for loan losses/ Nonaccrual loans
438
%
 
614
%
 
536
%
 
608
%
 
469
%
Return on average assets (annualized)
0.90
%
 
0.93
%
 
1.56
%
 
0.84
%
 
0.31
%
ROACE (annualized) (non-GAAP) (8)
9.83
%
 
10.29
%
 
17.87
%
 
9.67
%
 
3.03
%
ROATCE (annualized) (non-GAAP) (8)
11.06
%
 
11.63
%
 
20.46
%
 
11.37
%
 
3.90
%
Efficiency ratio (annualized) (non-GAAP) (9)
67.19
%
 
69.67
%
 
57.14
%
 
67.04
%
 
70.29
%
 
 
 
 
 
 
 
 
 
 
DEPOSIT DETAIL:
 
 
 
 
 
 
 
 
 
Demand deposits (non-interest bearing)
$
1,854,091

 
$
2,016,838

 
$
1,951,274

 
$
2,001,275

 
$
2,089,373

NOW
563,130

 
605,852

 
626,685

 
568,148

 
635,841

Savings
68,036

 
68,102

 
73,834

 
72,967

 
73,675

Money market
3,228,608

 
3,302,244

 
3,338,892

 
3,363,062

 
3,128,211

Certificates of deposit
724,098

 
786,809

 
790,485

 
763,271

 
693,079

Total deposits
$
6,437,963

 
$
6,779,845

 
$
6,781,170

 
$
6,768,723

 
$
6,620,179



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:
06/30/19
03/31/19
06/30/18
 
06/30/19
03/31/19
06/30/18
 
06/30/19
03/31/19
06/30/18
AVERAGE ASSETS
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and investments (10):
 
 
 
 
 
 
 
 
 
 
 
Taxable investment securities
$
227,029

$
244,230

$
326,482

 
$
1,121

$
1,185

$
1,501

 
1.98
%
1.94
%
1.84
%
Non-taxable investment securities
304,309

306,868

297,852

 
1,901

1,901

1,752

 
2.50
%
2.48
%
2.35
%
Mortgage-backed securities
508,033

521,788

570,845

 
2,706

2,897

3,049

 
2.13
%
2.22
%
2.14
%
Short-term investments and other
130,363

79,603

157,878

 
1,057

908

1,205

 
3.23
%
4.58
%
3.03
%
Total cash and investments
1,169,734

1,152,489

1,353,057

 
6,785

6,891

7,507

 
2.32
%
2.39
%
2.22
%
Loans (10) (11):
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
1,091,903

1,070,161

974,443

 
11,170

10,979

9,201

 
4.05
%
4.10
%
3.74
%
Commercial real estate
2,506,637

2,398,413

2,477,634

 
29,953

28,151

27,387

 
4.73
%
4.69
%
4.37
%
Construction and land
202,609

211,351

166,736

 
2,559

2,641

2,011

 
5.00
%
5.00
%
4.77
%
Residential
3,008,753

2,972,945

2,775,239

 
25,735

25,545

22,590

 
3.42
%
3.44
%
3.26
%
Home equity
91,384

90,646

94,445

 
1,146

1,121

1,041

 
5.03
%
5.02
%
4.42
%
Other consumer
124,778

133,937

179,684

 
1,380

1,496

1,818

 
4.43
%
4.53
%
4.06
%
Total loans
7,026,064

6,877,453

6,668,181

 
71,943

69,933

64,048

 
4.07
%
4.07
%
3.82
%
Total earning assets
8,195,798

8,029,942

8,021,238

 
78,728

76,824

71,555

 
3.82
%
3.83
%
3.55
%
LESS: Allowance for loan losses
73,856

75,537

72,998

 
 
 
 
 
 
 
 
Cash and due from banks (non-interest bearing)
45,705

46,172

45,337

 
 
 
 
 
 
 
 
Other assets
511,859

493,148

396,744

 
 
 
 
 
 
 
 
TOTAL AVERAGE ASSETS
$
8,679,506

$
8,493,725

$
8,390,321

 
 
 
 
 
 
 
 
AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits (12):
 
 
 
 
 
 
 
 
 
 
 
Savings and NOW
$
684,507

$
674,872

$
719,159

 
$
276

$
296

$
304

 
0.16
%
0.18