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Section 1: 8-K (8-K)

bpfh-20200122
BOSTON PRIVATE FINANCIAL HOLDINGS INC0000821127false00008211272020-01-222020-01-22

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): January 22, 2020
Boston Private Financial Holdings, Inc.
(Exact Name of Registrant as Specified in its Charter)
Massachusetts001-3507004-2976299
(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:
 Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 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)
 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.   




Item 2.02. Results of Operations and Financial Condition.
On January 22, 2020, Boston Private Financial Holdings, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and year ended December 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 January 22, 2020.







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: January 22, 2020




EXHIBIT INDEX

 Exhibit
No.  Description
99.1  Earnings release dated January 22, 2020





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Section 2: EX-99.1 (EXHIBIT 99.1)

Document


402393132_bplogo011719a021.jpg

Boston Private Reports Fourth Quarter and Full Year 2019 Results

Fourth Quarter 2019 Highlights include:

GAAP Net income was $21.2 million, or $0.26 per diluted share, and operating net income was $20.5 million, or $0.25 per diluted share
Return on average common equity (non-GAAP) was 10.3%; operating return on average common equity was 9.9%
Return on average tangible common equity (non-GAAP) was 11.5%; operating return on average tangible common equity was 11.1%
Average total deposits were $7.0 billion, a 1% increase year-over-year
Average total loans were $7.1 billion, a 4% increase year-over-year
Total assets under management/advisory (“AUM”) were $16.8 billion, a 5% increase year-over-year
Total net flows were negative $209 million, of which negative $114 million were attributable to the Wealth Management and Trust segment

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

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

Full Year 2019 Highlights include:

GAAP Net income was $80.0 million, or $0.97 per diluted share, and operating net income was $80.5 million, or $0.97 per diluted share
Returned $47.6 million of capital to common shareholders through dividends and share repurchases
Tangible book value per share increased 10% year-over-year to $9.02

Boston, MA - January 22, 2020 - Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the “Company” or “BPFH”) today reported fourth quarter 2019 Net income attributable to the Company of $21.2 million, compared to $20.0 million for the third quarter of 2019 and $33.3 million for the fourth quarter of 2018. Fourth quarter 2019 Diluted earnings per share were $0.26, compared to $0.24 in the third quarter of 2019 and $0.42 in the fourth quarter of 2018.

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

Summary Financial Results - Reported
% Change
($ in millions, except for per share data)4Q193Q194Q18LQY/Y
Net income$21.2$20.0$33.3%(36)%
Diluted earnings per share$0.26$0.24$0.42%(38)%
Non-GAAP Financial Measures:
Pre-tax, pre-provision income$24.5$25.7$42.3(5)%(42)%
Return on average common equity ("ROACE")10.3 %9.8 %17.9 %
Return on average tangible common equity ("ROATCE")11.5 %11.0 %20.5 %

The Company's reported financial results decreased year-over-year primarily as a result of a gain on sale related to the divestiture of BOS in the fourth quarter of 2018.
1



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

Summary Financial Results - Operating Basis (non-GAAP)
% Change
($ in millions, except for per share data)
4Q191
3Q19
4Q182
LQY/Y
Net income$20.5$20.0$19.9%%
Diluted earnings per share$0.25$0.24$0.27%(8)%
Pre-tax, pre-provision income$23.4$25.7$25.8(9)%(9)%
Return on average common equity9.9 %9.8 %10.7 %
Return on average tangible common equity11.1 %11.0 %12.4 %
14Q19 results adjusted to exclude the net after-tax impact of $1.1 million gain related to the revaluation of a receivable from the divestiture of BOS and $0.3 million of tax expense
24Q18 results adjusted to exclude the net after-tax impact of $18.1 million gain on sale and $3.2 million tax expense related to the divestiture of BOS and $1.6 million restructuring expense

Divested Affiliates

The Company completed the sale of Bingham, Osborn & Scarborough LLC ("BOS") during 2018. Financial results from BOS remain consolidated in the Company's financial results through the closing date of December 3, 2018.
For presentation purposes, BOS's AUM is excluded from AUM amounts, but is included in the calculation of Core fees and income. The discussion below includes non-GAAP measures that exclude the contributions from BOS in order to enhance comparability of trends in the core business.

Net Interest Income and Margin
% Change
($ in millions)4Q193Q194Q18LQY/Y
Net interest income$56.1$56.2$60.0— %(6)%
Less: Interest recovered on previous nonaccrual loans0.2  1.0(87)%(98)%
Core net interest income (non-GAAP)$56.1$56.0$59.0— %(5)%
Net interest margin2.70 %2.72 %2.94 %
Core net interest margin (non-GAAP)2.70 %2.71 %2.90 %
nm = not meaningful

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

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

2



Noninterest Income
% Change
($ in millions)4Q193Q194Q18LQY/Y
Wealth management and trust fees$18.7$19.1$23.8(2)%(21)%
Investment management fees2.62.52.8%(10)%
Private banking fees 3
3.5  3.6  2.1  (3)%68 %
Total core fees and income$24.8$25.2$28.7(2)%(14)%
Total other income2.0  —  17.2  nm  (88)%
Total noninterest income$26.8$25.1$45.8%(42)%
Memo: Excluding BOS and Notable Items
Wealth management and trust fees (non-GAAP) 4
$18.7$19.1$20.0(2)%(6)%
Investment management fees2.62.52.8%(10)%
Private banking fees3.5  3.6  2.1  (3)%68 %
Total core fees and income (non-GAAP) 4
$24.8$25.2$24.9(2)%— %
Total other income (non-GAAP) 5
0.9(1.0)nm  nm  
Total noninterest income (non-GAAP) 4 5
$25.7$25.1$23.9%%
3 Private banking fees includes Other banking fee income and Gain/ (loss) on sale of loans, net
4 Excludes BOS revenue of $3.9 million in 4Q18
5 Excludes $18.1 million gain on sale related to BOS in 4Q18 and $1.1 gain related to revaluation of a receivable from the divestiture of BOS in 4Q19

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

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

Assets Under Management / Advisory
% Change
($ in millions)4Q193Q194Q18LQY/Y
Wealth Management and Trust$15,224$14,695$14,206%%
Other 6
1,5441,5331,715%(10)%
Total assets under management / advisory$16,768$16,228$15,921%%
6 Includes results from Dalton, Greiner, Hartman, Maher & Co, LLC ("DGHM")

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

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


3



Noninterest Expense
% Change
($ in millions)4Q193Q194Q18LQY/Y
Salaries and employee benefits$34.2$31.7$36.0%(5)%
Occupancy and equipment7.6  8.3  8.0  (8)%(5)%
Professional services3.9  4.4  4.2  (12)%(7)%
Marketing and business development2.0  1.4  2.3  44 %(11)%
Information systems6.5  5.2  6.3  25 %%
Amortization of intangibles0.7  0.7  0.7  %(1)%
FDIC insurance—  0.1  0.7  nm  nm  
Restructuring—  —  2.1  — %(100)%
Other3.6  3.9  3.3  (6)%10 %
Total noninterest expense$58.5$55.5$63.6%(8)%
Memo: Excluding Notable Items and BOS
Information systems 6
—  —  (0.4) nm  (100)%
Restructuring—  —  2.1  nm  (100)%
BOS noninterest expense—  —  2.8  nm  (100)%
Total noninterest expense (non-GAAP)$58.5$55.5$59.1%(1)%
6 $0.4 million of Information systems expense was reclassified to Restructuring expense in conjunction with a formal restructuring plan announced in 4Q18


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

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

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

Loans and Deposits - QTD Averages
% Change
($ in millions)4Q193Q194Q18LQY/Y
Commercial and industrial$1,142$1,102$1,027%11 %
Commercial real estate2,5622,5182,402%%
Construction and land21719620911 %%
Residential2,9353,0162,907(3)%%
Home equity858994(5)%(10)%
Other consumer132128141%(6)%
Total loans$7,073$7,049$6,781— %%
Non-interest bearing deposits2,0021,9532,092%(4)%
Interest bearing deposits4,9574,7054,826%%
Total deposits$6,959$6,658$6,918%%
Non-interest bearing deposits as a % of Total deposits29 %29 %30 %

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

4



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

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

Provision and Asset Quality
($ in millions)4Q193Q192Q191Q194Q18
Provision/ (credit) for loan loss$(3.7)$0.2$1.4$(1.4)$0.1
Total criticized and classified loans126.0139.0141.7141.3146.6
Total nonaccrual loans16.117.617.212.014.1
Total loans 30-89 days past due and accruing25.94.22.417.722.3
Total net loans (charged-off)/ recovered0.30.1(0.1)(0.1)1.7
Ratios:
Allowance for loan losses as a % of Total loans1.03 %1.07 %1.06 %1.07 %1.09 %
Nonaccrual loans as a % of Total loans0.23 %0.25 %0.24 %0.17 %0.20 %

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

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

5



Capital
($ in millions, except for per share data)4Q193Q192Q191Q194Q18
Tangible common equity/ Tangible assets (non-GAAP)8.6 %8.6 %8.4 %8.3 %8.1 %
Tangible book value per share (non-GAAP)$9.02$8.90$8.71$8.47$8.18
Regulatory Capital Ratios: 7
Tier 1 common equity11.4 %11.2 %11.2 %11.4 %11.4 %
Total risk-based capital14.1 %13.9 %13.9 %14.2 %14.3 %
Tier 1 risk-based capital13.0 %12.8 %12.7 %13.0 %13.0 %
Tier 1 leverage capital9.8 %9.7 %9.6 %9.7 %9.5 %
Common Equity Repurchase Program:
Total shares of common stock repurchased678,165—  —  1,505,521
Average price paid per share of common stock—  $10.61—  —  $12.02
Aggregate repurchases of common equity—  $7.2—  —  $18.1
7 Current quarter information is presented based on estimated data.

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

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

Dividend Payments

Concurrent with the release of fourth quarter 2019 earnings, the Board of Directors of the Company declared a cash dividend payable to common shareholders of $0.12 per share. The record date for this dividend is February 7, 2020, and the payment date is February 21, 2020.

Non-GAAP Financial Measures

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

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

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

6



Conference Call

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

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

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

7



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

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

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

For more information, visit www.bostonprivate.com.
Forward-Looking Statements
Certain statements in this press release that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties. These statements include, among others, statements regarding our strategy, evaluations of future interest rate trends and liquidity, prospects for growth in assets, and prospects for overall results over the long term. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Company’s control. Forward-looking statements are based on the current assumptions and beliefs of management and are only expectations of future results. The Company’s actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors; adverse conditions in the capital and debt markets and the impact of such conditions on the Company’s business activities; changes in interest rates; competitive pressures from other financial institutions; the effects of weakness in general economic conditions on a national basis or in the local markets in which the Company operates; changes in loan defaults and charge-off rates; changes in the value of securities and other assets, adequacy of loan loss reserves, or decreases in deposit levels necessitating increased borrowing to fund loans and investments; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; changes in government regulation; the risk that goodwill and intangibles recorded in the Company’s financial statements will become impaired; the risk that the Company’s deferred tax asset may not be realized; risks related to the identification and implementation of acquisitions, dispositions and restructurings; changes in assumptions used in making such forward-looking statements; and the other risks and uncertainties detailed in the Company’s Annual Report on Form 10-K and updated by the Company’s Quarterly Reports on Form 10-Q and other filings submitted to the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made. The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statement is made.
###
CONTACT:
Adam Bromley
(617) 912-4386
abromley@bostonprivate.com

8



BOSTON PRIVATE FINANCIAL HOLDINGS, INC.
Consolidated Balance Sheets
Unaudited ($ in thousands, except share and per share data)
 4Q193Q192Q191Q194Q18
ASSETS:
Cash and cash equivalents$292,479  $78,010  $65,756  $96,211  $127,259  
Investment securities available-for-sale978,284  935,538  966,731  981,951  994,065  
Investment securities held-to-maturity48,212  51,379  54,482  67,548  70,438  
Equity securities at fair value18,810  21,780  19,092  7,491  14,228  
Stock in Federal Home Loan Bank and Federal Reserve Bank39,078  47,756  64,453  47,053  49,263  
Loans held for sale7,386  6,658  3,640  280  2,812  
Loans6,976,704  7,067,151  7,080,260  6,926,968  6,893,158  
Less: Allowance for loan losses71,982  75,359  75,067  73,814  75,312  
Loans, net of allowance for loan losses6,904,722  6,991,792  7,005,193  6,853,154  6,817,846  
Other real estate owned (“OREO”)—  —  —  —  401  
Premises and equipment, net44,527  42,658  40,244  42,938  45,412  
Goodwill57,607  57,607  57,607  57,607  57,607  
Intangible assets, net10,352  10,622  10,884  11,555  12,227  
Accrued interest receivable24,175  24,851  26,411  25,935  24,366  
Deferred income taxes, net11,383  15,704  17,183  22,844  26,638  
Right-of-use assets102,075  107,045  110,880  104,644  —  
Other assets291,411  299,544  270,317  252,932  252,063  
TOTAL ASSETS$8,830,501  $8,690,944  $8,712,873  $8,572,143  $8,494,625  
LIABILITIES:
Deposits$7,241,476  $6,658,242  $6,437,963  $6,779,845  $6,781,170  
Securities sold under agreements to repurchase53,398  48,860  62,372  58,329  36,928  
Federal funds purchased—  230,000  135,000  —  250,000  
Federal Home Loan Bank borrowings350,829  570,904  920,068  615,070  420,144  
Junior subordinated debentures106,363  106,363  106,363  106,363  106,363  
Lease liabilities117,214  122,799  126,740  120,162  —  
Other liabilities140,820  143,607  124,370  112,893  143,540  
TOTAL LIABILITIES8,010,100  7,880,775  7,912,876  7,792,662  7,738,145  
REDEEMABLE NONCONTROLLING INTERESTS (“RNCI”)1,383  1,481  1,786  662  2,526  
SHAREHOLDERS' EQUITY:
Common stock, $1.00 par value; authorized: 170,000,000 shares83,266  83,242  83,774  83,774  83,656  
Additional paid-in capital600,708  599,877  603,869  604,288  600,196  
Retained earnings127,469  116,210  106,443  97,155  87,821  
Accumulated other comprehensive income/(loss)7,575  9,359  4,125  (6,398) (17,719) 
TOTAL SHAREHOLDERS' EQUITY819,018  808,688  798,211  778,819  753,954  
TOTAL LIABILITIES, RNCI, AND SHAREHOLDERS' EQUITY$8,830,501  $8,690,944  $8,712,873  $8,572,143  $8,494,625  


9



BOSTON PRIVATE FINANCIAL HOLDINGS, INC.
Consolidated Income Statements
Unaudited ($ in thousands, except share and per share data)
 4Q193Q192Q191Q194Q18
REVENUE:
Interest income$75,291  $77,604  $78,728  $76,824  $76,892  
Interest expense19,166  21,451  21,268  18,486  16,895  
Net interest income56,125  56,153  57,460  58,338  59,997  
Provision/(credit) for loan losses(3,668) 167  1,363  (1,426) 93  
Net interest income after provision/(credit) for loan losses59,793  55,986  56,097  59,764  59,904  
Wealth management and trust fees 8
18,720  19,067  18,912  19,058  23,788  
Investment management fees2,554  2,496  2,455  2,650  2,831  
Private banking fee income2,924  2,658  2,867  2,499  2,033  
Gain on sale of loans, net557  934  58  73  39  
Total core fees and income24,755  25,155  24,292  24,280  28,691  
Total other income2,038  (29) 88  968  17,154  
TOTAL REVENUE 9
82,918  81,279  81,840  83,586  105,842  
NONINTEREST EXPENSE:
Salaries and employee benefits34,186  31,684  32,706  35,726  36,007  
Occupancy and equipment7,578  8,260  7,852  8,348  7,975  
Information systems6,476  5,169  5,137  5,860  6,296  
Professional services3,920  4,435  3,313  3,560  4,229  
Marketing and business development2,017  1,403  1,934  1,085  2,275  
Amortization of intangibles676  671  672  672  680  
FDIC insurance(19) 59  585  660  739  
Restructuring—  —  —  1,646  2,065  
Other3,623  3,856  3,460  2,996  3,291  
TOTAL NONINTEREST EXPENSE58,457  55,537  55,659  60,553  63,557  
INCOME BEFORE INCOME TAXES28,129  25,575  24,818  24,459  42,192  
Provision for income taxes6,788  5,517  5,369  4,917  8,651  
Net income from continuing operations21,341  20,058  19,449  19,542  33,541  
Net income from discontinued operations 10
—  —  —  —  306  
Net income before attribution to noncontrolling interests21,341  20,058  19,449  19,542  33,847  
Less: Net income attributable to noncontrolling interests97  96  69  100  545  
NET INCOME ATTRIBUTABLE TO THE COMPANY$21,244  $19,962  $19,380  $19,442  $33,302  
Adjustments, treasury stock method 11
98  304  (816) 1,557  2,694  
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS$21,342  $20,266  $18,564  $20,999  $35,996  
COMMON SHARE DATA:
Weighted average basic shares outstanding83,238,982  83,631,403  83,565,780  83,285,095  83,750,785  
Weighted average diluted shares outstanding 12
83,637,786  83,956,708  84,048,972  84,010,450  84,863,779  
Diluted total earnings per share$0.26  $0.24  $0.22  $0.25  $0.42  
8 Wealth management and trust fees consists of revenue from Boston Private Wealth LLC ("BPW"), KLS Professional Advisors Group, LLC ("KLS") through the effective date of its merger with BPW, BOS (through the closing date), and the trust operations of Boston Private Bank & Trust Company.

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

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

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

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


10



BOSTON PRIVATE FINANCIAL HOLDINGS, INC.
Consolidated Income Statements
Unaudited ($ in thousands, except share and per share data)
 Year ended December 31,
 20192018
REVENUE:
Interest income$308,447  $292,904  
Interest expense80,371  58,338  
Net interest income228,076  234,566  
Provision/(credit) for loan losses(3,564) (2,198) 
Net interest income after provision/(credit) for loan losses231,640  236,764  
Wealth management and trust fees 8
75,757  99,818  
Investment management fees 13
10,155  21,728  
Private banking fee income10,948  9,826  
Gain on sale of loans, net1,622  243  
Total core fees and income98,482  131,615  
Total other income3,065  18,382  
TOTAL REVENUE 9
329,623  384,563  
NONINTEREST EXPENSE:
Salaries and employee benefits134,302  161,468  
Occupancy and equipment32,038  32,116  
Information systems22,642  25,185  
Professional services15,228  13,155  
Marketing and business development6,439  7,648  
Amortization of intangibles2,691  2,929  
FDIC insurance 9
1,285  2,865  
Restructuring1,646  7,828  
Other13,935  14,161  
TOTAL NONINTEREST EXPENSE230,206  267,355  
INCOME BEFORE INCOME TAXES102,981  119,406  
Income tax expense22,591  37,537  
Net income from continuing operations80,390  81,869  
Net income from discontinued operations 10
—  2,002  
Net income before attribution to noncontrolling interests80,390  83,871  
Less: Net income attributable to noncontrolling interests362  3,487  
NET INCOME ATTRIBUTABLE TO THE COMPANY$80,028  $80,384  
Adjustments, treasury stock method 11
1,143  (1,682) 
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS$81,171  $78,702  
COMMON SHARE DATA
Weighted average basic shares outstanding83,430,740  83,596,685  
Weighted average diluted shares outstanding 12
83,920,792  85,331,314  
Diluted total earnings per share$0.97  $0.92  
8 Wealth management and trust fees consists of revenue from BPW, KLS (through the effective date of its merger with BPW), Anchor Capital Advisors, LLC ("Anchor") and BOS (through the respective closing dates), and the trust operations of Boston Private Bank & Trust Company.

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

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

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

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

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



11



BOSTON PRIVATE FINANCIAL HOLDINGS, INC.
Consolidated Financial Highlights
Unaudited ($ in thousands, except share and per share data)
4Q193Q192Q191Q194Q18
KEY STATISTICS:
Return on average assets (non-GAAP) 14
0.96 %0.91 %0.90 %0.93 %1.56 %
ROACE (non-GAAP) 14
10.29 %9.80 %9.83 %10.29 %17.87 %
ROATCE (non-GAAP) 14
11.51 %10.99 %11.06 %11.63 %20.46 %
Efficiency ratio (non-GAAP) 14
69.7 %67.5 %67.2 %69.7 %57.1 %
Noninterest income to total revenue32.3 %30.9 %29.8 %30.2 %43.3 %
Net interest margin2.70 %2.72 %2.78 %2.90 %2.94 %
Average loan to average deposit ratio101.6 %105.9 %106.6 %101.6 %98.0 %
Cost of total deposits0.86 %0.92 %0.88 %0.84 %0.77 %
Cost of interest-bearing deposits1.20 %1.31 %1.25 %1.19 %1.11 %
Cost of total funding0.99 %1.12 %1.11 %1.00 %0.89 %
Allowance for Loan Loss / Total Loans1.03 %1.07 %1.06 %1.07 %1.09 %
Nonperforming loans / Total Loans0.23 %0.25 %0.24 %0.17 %0.20 %
Net (charge-offs)/recoveries / Total loans 14
0.02 %0.01 %(0.01)%— %0.10 %
CAPITAL HIGHLIGHTS:
Tier 1 common equity 15
$745,887  $732,980  $726,872  $717,138  $702,728  
Tier 1 capital 15
$846,298  $833,431  $827,299  $817,600  $803,311  
Total capital 15
$919,534  $910,076  $903,675  $892,764  $879,927  
Risk-weighted assets ("RWA") 15
$6,529,626  $6,533,884  $6,491,184  $6,304,444  $6,161,677  
Average assets for leverage 15
$8,654,576  $8,588,358  $8,617,803  $8,447,143  $8,416,195  
Tier 1 common equity ratio 15
11.42 %11.22 %11.20 %11.38 %11.40 %
Tier 1 risk-based capital ratio 15
12.96 %12.76 %12.74 %12.97 %13.04 %
Total risk-based capital ratio 15
14.08 %13.93 %13.92 %14.16 %14.28 %
Tier 1 leverage capital ratio 15
9.77 %9.70 %9.60 %9.68 %9.54 %
Total equity / Total assets9.27 %9.30 %9.16 %9.09 %8.88 %
Tangible common equity / Tangible assets (non-GAAP)8.57 %8.59 %8.44 %8.35 %8.12 %
Market price per share$12.03  $11.66  $12.07  $10.96  $10.57  
End of period shares outstanding83,265,67483,241,95283,774,33583,773,65083,655,651
Book value per common share$9.84  $9.71  $9.53  $9.30  $9.01  
Tangible book value per share (non-GAAP)$9.02  $8.90  $8.71  $8.47  $8.18  
Common Equity Repurchase Program:
Total shares of common stock repurchased—  678,165  —  —  1,505,521
Average price paid per share of common stock$—  $10.61  $—  $—  $12.02  
Aggregate repurchases of common equity ($ in millions)$—  $7.2  $—  $—  $18.1  
14 Annualized.
15 Current quarter capital highlights are presented based on estimated data.

12



BOSTON PRIVATE FINANCIAL HOLDINGS, INC.
Consolidated AUM and Balance Sheet - End of Period Balances
Unaudited ($ in thousands)
4Q193Q192Q191Q194Q18
ASSETS UNDER MANAGEMENT AND ADVISORY ("AUM"):
Wealth Management and Trust$15,224,000  $14,695,000  $14,649,000  $14,564,000  $14,206,000  
Other1,544,000  1,533,000  1,550,000