Second Quarter Highlights:
- Earnings increased 25% linked
quarter: Second quarter 2014 GAAP Net Income Attributable to
the Company increased to $21.3 million, or $0.25 per share, from
$17.0 million, or $0.20 per share, for the first quarter of
2014.
- Loan sale: In the second quarter
of 2014, the Company sold $57 million of commercial loans from the
loan portfolio for a gain on sale of $1.6 million.
- Deposit and loan growth: Average
Total Deposits increased 8% year-over-year to $5.0 billion. On a
linked quarter basis, Average Total Deposits were flat. Average
Total Loans increased 4% year-over-year to $5.1 billion although
were flat for the second quarter of 2014 as a result of the
portfolio loan sale.
- Core Fees and Income increased 13%
year-over-year: Fees from Wealth Management businesses
increased 3% linked quarter and 11% year-over-year to $30.8
million.
- Net Interest Income growth: Net
Interest Income grew 4% linked quarter and 5% year-over-year to
$46.3 million. Included in the quarter's Net Interest Income was
$1.9 million of interest recovered on previous nonaccrual
loans.
- Total Operating Expenses
decreased: Total Operating Expenses decreased 1% to $54.4
million on a linked quarter basis and decreased 4% on a
year-over-year basis.
- Provision credit: The Company
recorded a provision credit of $5.0 million in the quarter due to
net recoveries of $2.9 million and $1.2 million as result of the
commercial loan sale.
Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the
“Company” or “BPFH”) today reported second quarter 2014 GAAP Net
Income Attributable to the Company of $21.3 million, compared to
$17.0 million for the first quarter of 2014. GAAP Net Income
Attributable to the Company was flat on a year-over-year basis
relative to the second quarter of 2013. Second quarter diluted
earnings per share were $0.25, a $0.05 increase over the first
quarter of 2014. Diluted earnings per share increased by $0.14 on a
year-over-year basis from $0.11 for the second quarter of 2013.
Excluding the impact of significant transactions in the second
quarter of 2013, diluted earnings per share was $0.18.
“The second quarter demonstrated continued strength in our
Wealth Management businesses and our Private Bank,” said Clayton G.
Deutsch, CEO and President. “For the Private Bank, average loan and
deposit growth year-over-year was 4% and 8%, respectively. Our
Wealth Advisors had another strong quarter, with fees increasing 4%
linked quarter and 16% year-over-year. Especially gratifying, given
our long-standing focus on target ROE attainment, is seeing second
quarter ROE come in at 13.5% and first half of 2014 ROE coming in
at 12.2%.”
Core Fees and Income Increased 13% Year-Over-Year
On a year-over-year basis, Core Fees and Income (Investment
Management Fees, Wealth Advisory Fees, Private Banking Wealth
Management and Trust Fees, Other Banking Fee Income and Gain on
Sale of Loans) increased 13% to $34.1 million due to double-digit
growth in Wealth Advisory Fees. On a linked quarter basis, Core
Fees and Income increased 8% from $31.7 million for the first
quarter of 2014, due largely to higher AUM across our Wealth
Management business as well as higher gain on sale of loans.
Total Assets Under Management/Advisory (“AUM”) increased to
$25.4 billion at the end of the second quarter, up 3% from $24.7
billion at the end of the first quarter of 2014. AUM increased 17%
from $21.8 billion at the end of the second quarter of 2013.
Net Interest Income Increased 4% Linked Quarter
Net Interest Income for the second quarter was $46.3 million, up
4% from $44.5 million for the first quarter of 2014. On a
year-over-year basis, Net Interest Income increased 5% from $43.9
million. Included in the second quarter of 2014 Net Interest Income
was $1.9 million of interest recovered on previous nonaccrual
loans. Excluding the interest recovered, Net Interest Income was
flat compared to the first quarter of 2014 and up 1% from the
second quarter of 2013.
Net Interest Margin was 3.14% at the end of the second quarter,
up ten basis points from 3.04% at the end of the first quarter. Net
Interest Margin was unchanged from June 30, 2013. Excluding the
impact from interest recovered, June 30, 2014 Net Interest Margin
was 3.01%, down three basis points from March 31, 2014.
Total Operating Expenses Decreased 1% Linked Quarter, 4%
Year-Over-Year
Total Operating Expenses for the second quarter of 2014 were
$54.4 million, down 1% from $55.0 million for the first quarter of
2014. First quarter expenses were elevated by seasonal compensation
expenses such as increased 401(k) employee contribution matches and
FICA. On a year-over-year basis, Total Operating Expenses decreased
4% from $56.7 million. The second quarter of 2013 included $2.4
million of one-time charges related to liability restructuring and
tax reserves.
Provision Credit of $5.0M Driven By Net Recoveries
The Company recorded a $5.0 million credit for its Provision for
Loan Losses for the second quarter of 2014, compared to a provision
credit of $1.2 million for the first quarter. The provision credit
was driven by net recoveries of $2.9 million and $1.2 million from
the commercial loan sale. The Company recorded a provision credit
of $2.0 million for the second quarter of 2013.
Criticized Loans were flat on a linked quarter basis, and
decreased 2% year-over-year. Nonaccrual Loans (“Nonaccruals”)
decreased 1% to $41.6 million, down from $42.1 million on a linked
quarter basis. On a year-over-year basis, Nonaccruals decreased 20%
from $52.3 million. As a percentage of Total Loans, Nonaccruals
were 82 basis points at June 30, 2014, up 1 basis point from 81
basis points at March 31, 2014, and down 26 basis points from 1.08%
at June 30, 2013.
Additional credit metrics are listed below on a linked quarter
and year-over-year basis:
(In millions)
June 30, 2014 March
31, 2014 June 30, 2013 Total
Criticized Loans $ 188.2 $ 187.3 $ 191.4
Total Loans 30-89 Days Past Due and
Accruing (13)
$ 6.0 $ 10.6 $ 11.5 Total Net Loans (Charged-off)/ Recovered $ 2.9
$ 1.4 $ 0.5 Allowance for Loan Losses/ Total Loans 1.46 % 1.48 %
1.67 %
Capital Ratios Increase
The Company built upon its capital position in the second
quarter of 2014. David J. Kaye, Chief Financial Officer, stated,
“Strong earnings and proactive balance sheet management pushed the
Tier 1 Common Equity Ratio up to 10.6%, providing the Company with
additional flexibility going forward.”
Capital ratios are listed below on a linked quarter and
year-over-year basis:
June 30, 2014 March 31,
2014 June 30, 2013 Total Risk-Based
Capital * 15.5 % 15.0 % 15.6 % Tier I Risk-Based Capital * 14.3 %
13.7 % 14.3 % Tier I Leverage Capital * 10.4 % 10.2 % 10.4 % TCE/TA
7.8 % 7.1 % 7.3 % Tier I Common Equity/ Risk Weighted Assets * 10.6
% 10.1 % 9.9 %
*June 30, 2014 data is presented based on
estimated data.
Dividend Payments
Concurrent with the release of second quarter 2014 earnings, the
Board of Directors of the Company declared a cash dividend to
common shareholders of $0.08 per share. The record date for this
dividend is August 8, 2014, and the payment date is August 22,
2014.
The Board of Directors of the Company also declared a cash
dividend to holders of the Non-Cumulative Perpetual Preferred
Stock, Series D of $17.375 per share, which will result in a
dividend of $0.434375 per depositary share. The record date for
this dividend is August 15, 2014, and the payment date is September
15, 2014.
Non-GAAP Financial Measures
The Company uses certain non-GAAP financial measures, such as
tangible book value per share; the TCE/TA ratio; return on average
common equity; return on average tangible common equity; pre-tax,
pre-provision earnings; and the efficiency ratio (FTE basis), to
provide information for investors to effectively analyze financial
trends of ongoing business activities, and to enhance comparability
with peers across the financial sector. A detailed reconciliation
table of the Company's GAAP to the non-GAAP measures is
attached.
Conference Call
Management will hold a conference call at 8 a.m. Eastern Time on
Wednesday, July 16, to discuss the financial results, business
highlights and outlook. To access the call:
Dial In #: (888) 317-6003Elite Entry Number: 2512612
Replay Information:Available from July 16 at 12 noon until July
23Dial In #: (877) 344-7529Conference Number: 10048703
The call will be simultaneously webcast and may be accessed on
www.bostonprivate.com.
Boston Private Financial Holdings,
Inc.
Boston Private Financial Holdings, Inc. is a national financial
services organization that owns Wealth Management and Private
Banking affiliates in Boston, New York, Los Angeles and the San
Francisco Bay Area. The Company has a $6 billion Private Banking
balance sheet, and manages over $25 billion of client assets.
The Company positions its affiliates to serve the high net worth
marketplace with high quality products and services of unique
appeal to private clients. The Company also provides strategic
oversight and access to resources, both financial and intellectual,
to support affiliate management, marketing, compliance and legal
activities. (NASDAQ: BPFH)
For more information about BPFH, visit the Company's website
at www.bostonprivate.com.
Forward-Looking Statements
Certain statements in this press release that are not historical
facts may constitute forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as
amended, and are intended to be covered by the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve risks and uncertainties. These
statements include, among others, statements regarding our
strategy, evaluations of future interest rate trends and liquidity,
prospects for growth in assets, and prospects for overall results
over the long term. You should not place undue reliance on our
forward-looking statements. You should exercise caution in
interpreting and relying on forward-looking statements because they
are subject to significant risks, uncertainties and other factors
which are, in some cases, beyond the Company's control.
Forward-looking statements are based on the current assumptions and
beliefs of management and are only expectations of future results.
The Company's actual results could differ materially from those
projected in the forward-looking statements as a result of, among
other factors, adverse conditions in the capital and debt markets
and the impact of such conditions on the Company's private banking,
investment management and wealth advisory activities; changes in
interest rates; competitive pressures from other financial
institutions; the effects of continued 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; increasing
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 statements are 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.
Boston Private Financial Holdings,
Inc.
Selected Financial Data (Unaudited)
(In thousands, except share and per share
data)
6/30/14 3/31/14
6/30/13 Assets: Cash and cash
equivalents
$ 139,181 $ 398,687 $ 67,654 Investment
securities available for sale
683,590 700,531 724,153
Investment securities held to maturity
138,380 127,938 —
Stock in Federal Home Loan Banks
35,276 37,450 40,622
Loans held for sale
2,841 2,297 12,414 Total loans
5,106,051 5,162,470
4,838,713 Less: Allowance for loan losses
74,547
76,605 80,800 Net loans
5,031,504 5,085,865 4,757,913 Other real estate owned
(“OREO”)
921 921 776 Premises and equipment, net
28,410 29,045 29,093 Goodwill
110,180 110,180 110,180
Intangible assets, net
18,506 19,551 22,712 Fees receivable
11,957 11,039 9,950 Accrued interest receivable
14,337 15,057 14,831 Deferred income taxes, net
50,516 53,716 60,019 Other assets
123,224
113,143 116,613 Total assets
$ 6,388,823 $ 6,705,420 $ 5,966,930
Liabilities:
Deposits
$ 4,951,852 $ 5,341,644 $ 4,576,383 Securities sold
under agreements to repurchase
137,334 93,550 26,700 Federal
funds purchased
— 15,000 65,000 Federal Home Loan Bank
borrowings
416,579 394,458 448,706 Junior subordinated
debentures
106,363 106,363 133,168 Other liabilities
93,149 87,652 90,035
Total liabilities
5,705,277 6,038,667
5,339,992
Redeemable Noncontrolling
Interests 20,895 20,774 17,661
Shareholders’
Equity: Preferred stock, $1.00 par value; authorized: 2,000,000
shares
47,753 47,753 47,754 Common stock, $1.00 par value;
authorized: 170,000,000 shares; issued and outstanding: 80,394,009
shares at June 30, 2014; 80,001,139 shares at March 31, 2014;
79,734,389 shares at June 30, 2013
80,394 80,001 79,734
Additional paid-in capital
603,652 610,590 626,950
Accumulated deficit
(67,838 ) (89,170 ) (142,215 )
Accumulated other comprehensive income/ (loss)
(1,542
) (3,305 ) (3,081 ) Total Company’s
shareholders’ equity
662,419 645,869
609,142 Noncontrolling interests
232 110 135 Total
shareholders’ equity
662,651 645,979
609,277 Total liabilities, redeemable
noncontrolling interests and shareholders’ equity
$
6,388,823 $ 6,705,420 $ 5,966,930
Boston Private
Financial Holdings, Inc. Selected Financial Data
(Unaudited) Three Months Ended Six Months
Ended (In thousands, except share and per share data)
6/30/14 3/31/14
6/30/13 6/30/14
6/30/13 Interest and dividend income: Loans
$ 49,396 $ 47,214 $ 48,339
$ 96,610 $
97,689 Taxable investment securities
730 636 489
1,366 1,000 Non-taxable investment securities
914 904
778
1,818 1,617 Mortgage-backed securities
1,689
1,936 1,340
3,625 2,742 Federal funds sold and other
253 346 179
599 358 Total interest and dividend
income
52,982 51,036
51,125
104,018 103,406
Interest expense: Deposits
3,375 3,216 3,120
6,591 6,906 Federal Home Loan Bank borrowings
2,359
2,326 2,818
4,685 5,649 Junior subordinated debentures
965 955 1,156
1,920 2,310 Repurchase agreements and
other short-term borrowings
15 17
132
32 366
Total interest expense
6,714 6,514
7,226
13,228
15,231 Net interest income
46,268 44,522 43,899
90,790 88,175 Provision/ (credit) for loan losses
(5,000 ) (1,200 ) (2,000 )
(6,200 ) (2,000 ) Net interest income after
provision for loan losses
51,268 45,722
45,899
96,990
90,175
Fees and other income: Investment management
fees
11,754 11,461 10,848
23,215 20,934 Wealth
advisory fees
11,979 11,473 10,317
23,452 20,385
Private banking wealth management and trust fees
7,043 6,961
6,490
14,004 13,272 Other banking fee income
1,677
1,680 1,706
3,357 3,504 Gain on sale of loans, net
1,694 89 746
1,783 1,933 Total core fees and income
34,147 31,664 30,107
65,811 60,028 Gain on
repurchase of debt
— — 46
— 620 Gain on sale of
investments, net
— 1 18
1 28 Gain/(loss) on OREO, net
19 819 (47 )
838 (13 ) Gain on sale of Pacific
Northwest offices (1)
— — 10,574
— 10,574 Other
208 249 286
457 508 Total other income
227 1,069 10,877
1,296 11,717
Operating expense:
Salaries and employee benefits
34,338 36,574 34,054
70,912 71,503 Occupancy and equipment
7,349 7,797
7,597
15,146 15,104 Professional services
3,526 2,843
2,585
6,369 5,246 Marketing and business development
2,730 1,426 2,726
4,156 4,162 Contract services and
data processing
1,447 1,438 1,484
2,885 3,052
Amortization of intangibles
1,045 1,053 1,101
2,098
2,219 FDIC insurance
854 896 954
1,750 1,994 Other
3,113 2,941 6,165
6,054 9,972 Total operating
expense
54,402 54,968
56,666
109,370 113,252
Income before income taxes
31,240 23,487 30,217
54,727 48,668 Income tax expense
10,333
7,138 10,701
17,471
16,741 Net income from continuing operations
20,907 16,349 19,516
37,256 31,927 Net income from
discontinued operations (2)
1,450 1,928
2,781
3,378 4,503
Net income before attribution to noncontrolling interests
22,357 18,277 22,297
40,634 36,430 Less: Net income
attributable to noncontrolling interests
1,025
1,236 969
2,261
1,899
Net income attributable to the Company
$ 21,332 $ 17,041 $ 21,328
$ 38,373 $ 34,531
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited) (In thousands,
except share and per share data)
Three Months Ended Six
Months Ended PER SHARE DATA: 6/30/14
3/31/14 6/30/13
6/30/14 6/30/13
Calculation of Income for EPS: Net income attributable to
the Company
$ 21,332 $ 17,041 $ 21,328
$
38,373 $ 34,531 Adjustments to Net Income Attributable to
the Company to Arrive at Net Income Attributable to Common
Shareholders (3)
(1,195 ) (1,061 )
(12,468 )
(2,256 ) (12,925 )
Net Income Attributable to the Common Shareholders
20,137 15,980 8,860
36,117 21,606 LESS: Amount
allocated to participating securities
(132 )
(117 ) (199 )
(255 ) (998
)
Net Income Attributable to the Common Shareholders, after
allocation to participating securities $ 20,005
$ 15,863 $ 8,661
$ 35,862
$ 20,608
End of Period Common Shares
Outstanding 80,394,009 80,001,139 79,734,389
Weighted Average Shares Outstanding: Weighted average basic
shares, including participating securities
79,195,082
79,107,968 80,472,013
79,151,765 83,039,376 LESS:
Participating securities
(756,446 ) (962,783 )
(3,221,015 )
(859,044 ) (6,003,378 ) PLUS: Dilutive
potential common shares
1,859,789
1,865,705 1,127,880
1,866,121
1,069,292
Weighted Average Diluted Shares
(4) 80,298,425 80,010,890
78,378,878
80,158,842
78,105,290
Diluted Total Earnings per Share
$ 0.25 $ 0.20 $ 0.11
$ 0.45 $ 0.26
Boston Private Financial Holdings,
Inc. Selected Financial Data (Unaudited) (In
thousands, except per share data)
FINANCIAL DATA:
6/30/14 3/31/14
6/30/13 Book Value Per Common Share
$
7.65 $ 7.48 $ 7.04 Tangible Book Value Per Share (5)
$ 6.05 $ 5.86 $ 5.38 Market Price Per Share
$
13.44 $ 13.53 $ 10.64
ASSETS UNDER MANAGEMENT AND
ADVISORY: Private Banking
$ 4,716,000 $ 4,612,000
$ 4,126,000 Investment Managers
10,917,000 10,505,000
9,149,000 Wealth Advisory
9,760,000 9,641,000 8,516,000
Less: Inter-company Relationship
(23,000 )
(22,000 ) (20,000 ) Total Assets Under Management and
Advisory
$ 25,370,000 $ 24,736,000 $
21,771,000
FINANCIAL RATIOS: Total
Equity/Total Assets
10.37 % 9.63 % 10.21 % Tangible
Common Equity/Tangible Assets (5)
7.77 % 7.12 % 7.35
% Tier I Common Equity/ Risk Weighted Assets (5)
10.63
% 10.11 % 9.95 % Allowance for Loan Losses/Total Loans
1.46 % 1.48 % 1.67 % Allowance for Loan
Losses/Nonaccrual Loans
179 % 182 % 155 % Return on
Average Assets - Three Months Ended (Annualized)
1.32
% 1.06 % 1.39 % Return on Average Common Equity - Three
Months Ended (Annualized) (6)
13.50 % 10.91 % 14.59 %
Return on Average Tangible Common Equity - Three Months Ended
(Annualized) (6)
17.15 % 13.99 % 19.05 % Efficiency
Ratio - Three Months Ended (7)
64.39 % 67.88 % 63.94
%
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:
6/30/14 3/31/14
6/30/13 6/30/14 3/31/14
6/30/13 6/30/14
3/31/14 6/30/13 AVERAGE
ASSETS Interest-Earning Assets: Cash and Investments: Taxable
investment securities
$ 262,253 $ 254,407 $ 208,717
$ 730 $ 636 $ 489
1.12 % 1.00 % 0.94 %
Non-taxable investment securities (8)
224,634 224,054
204,219
1,406 1,391 1,197
2.50 % 2.48 % 2.34 %
Mortgage-backed securities
332,928 341,082 294,976
1,689 1,936 1,340
2.03 % 2.27 % 1.82 % Federal
funds sold and other
187,722 204,157
152,037
253 346
179
0.62 % 0.68 % 0.46 % Total
Cash and Investments
1,007,537
1,023,700 859,949
4,078
4,309 3,205
1.64 % 1.68 %
1.49 % Loans: (9) Commercial and Construction (8)
2,856,603
2,833,475 2,702,401
33,397 30,921 31,854
4.62
% 4.37 % 4.66 % Residential
2,039,146 2,035,232
1,963,701
15,984 16,169 16,097
3.14 % 3.18 %
3.28 % Home Equity and Other Consumer
242,988
245,596 271,063
1,744
1,805 1,984
2.88 % 2.98 %
2.94 % Total Loans
5,138,737
5,114,303 4,937,165
51,125
48,895 49,935
3.95 % 3.83
% 4.02 % Total Earning Assets
6,146,274
6,138,003 5,797,114
55,203
53,204 53,140
3.57 %
3.47 % 3.64 % LESS: Allowance for Loan Losses
79,071 77,228 83,711 Cash and due From Banks (Non-Interest
Bearing)
32,016 41,559 43,143 Other Assets
366,833 347,721 380,462
TOTAL
AVERAGE ASSETS $ 6,466,052 $ 6,450,055
$ 6,137,008
AVERAGE LIABILITIES, REDEEMABLE
NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY
Interest-Bearing Liabilities: Interest-Bearing Deposits: (10)
Savings and NOW
$ 601,104 $ 545,973 $ 523,229
$ 111 $ 98 $ 107
0.07 % 0.07 % 0.08 %
Money Market
2,509,400 2,490,836 2,272,302
1,994
1,845 1,627
0.32 % 0.30 % 0.29 % Certificates of
Deposit
615,325 624,547
669,996
1,270 1,273 1,386
0.83 % 0.83 % 0.85 % Total
Interest-Bearing Deposits
3,725,829 3,661,356 3,465,527
3,375 3,216 3,120
0.36 % 0.36 % 0.37 % Junior
Subordinated Debentures
106,363 106,363 133,605
965
955 1,156
3.59 % 3.59 % 3.42 % FHLB Borrowings and
Other
527,418 506,864
584,030
2,374 2,343 2,950
1.78 % 1.85 % 2.00 % Total
Interest-Bearing Liabilities
4,359,610
4,274,583 4,183,162
6,714
6,514 7,226
0.61 % 0.61 %
0.69 % Noninterest Bearing Demand Deposits
1,334,791
1,422,928 1,212,127 Other Liabilities
93,539
91,863 116,744 Total Average Liabilities
5,787,940 5,789,374 5,512,033 Redeemable Noncontrolling
Interests
23,850 20,132 15,966 Average Shareholders' Equity
654,262 640,549 609,009
TOTAL AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS,
AND SHAREHOLDERS' EQUITY $ 6,466,052 $
6,450,055 $ 6,137,008 Net Interest Income - on a Fully
Taxable Equivalent Basis (FTE)
$ 48,489 $ 46,690 $
45,914 LESS: FTE Adjustment (8)
2,221
2,168 2,015 Net Interest Income (GAAP Basis)
$
46,268 $ 44,522 $ 43,899 Interest Rate Spread
2.96 % 2.86 % 2.95 % Bank only Net Interest Margin
3.21 % 3.11 % 3.23 % Net Interest Margin
3.14
% 3.04 % 3.14 %
Boston Private Financial Holdings, Inc. Selected
Financial Data (Unaudited) Average Balance
Interest Income/Expense Average Yield/Rate (In
Thousands)
Six Months Ended Six Months Ended
Six Months Ended AVERAGE BALANCE SHEET:
6/30/14 6/30/13 6/30/14
6/30/13 6/30/14
6/30/13 AVERAGE ASSETS Interest-Earning
Assets: Cash and Investments: Taxable investment securities
$ 258,470 $ 203,873
$ 1,366 $ 1,000
1.06 % 0.99 % Non-taxable investment securities (8)
224,346 204,734
2,797 2,487
2.49 % 2.43
% Mortgage-backed securities
336,982 306,268
3,625
2,742
2.15 % 1.79 % Federal funds sold and other
195,632 159,976
599
358
0.62 % 0.44 % Total Cash and
Investments
1,015,430 874,851
8,387 6,587
1.66 % 1.51 %
Loans: (9) Commercial and Construction (8)
2,845,103
2,753,758
64,317 63,844
4.50 % 4.61 %
Residential
2,037,200 1,983,662
32,153 33,025
3.16 % 3.33 % Home Equity and Other Consumer
244,285 269,635
3,548
3,971
2.93 % 2.97 % Total Loans
5,126,588 5,007,055
100,018
100,840
3.89 % 4.02 % Total
Earning Assets
6,142,018 5,881,906
108,405 107,427
3.52 %
3.64 % LESS: Allowance for Loan Losses
78,155 84,019
Cash and due From Banks (Non-Interest Bearing)
36,835 42,579
Other Assets
367,856 385,142
TOTAL
AVERAGE ASSETS $ 6,468,554 $ 6,225,608
AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND
SHAREHOLDERS' EQUITY Interest-Bearing Liabilities:
Interest-Bearing Deposits: (10) Savings and NOW
$
573,691 $ 549,873
$ 209 $ 239
0.07
% 0.09 % Money Market
2,499,981 2,329,515
3,839 3,713
0.31 % 0.32 % Certificates of
Deposit
619,884 674,367
2,543 2,954
0.83 % 0.91 %
Total Interest-Bearing Deposits
3,693,556 3,553,755
6,591 6,906
0.36 % 0.40 % Junior Subordinated
Debentures
106,363 135,311
1,920 2,310
3.59
% 3.39 % FHLB Borrowings and Other
517,198
560,878
4,716 6,015
1.81 % 2.13 % Total Interest-Bearing
Liabilities
4,317,117 4,249,944
13,227 15,231
0.61 % 0.72
% Noninterest Bearing Demand Deposits
1,380,285 1,238,320
Other Liabilities
100,221 112,333 Total
Average Liabilities
5,797,623 5,600,597 Redeemable
Noncontrolling Interests
23,285 16,697 Average Shareholders'
Equity
647,646 608,314
TOTAL AVERAGE
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS'
EQUITY $ 6,468,554 $ 6,225,608 Net
Interest Income - on a Fully Taxable Equivalent Basis (FTE)
$ 95,178 $ 92,196 LESS: FTE Adjustment (8)
4,389 4,021 Net Interest Income (GAAP Basis)
$ 90,789 $ 88,175 Interest Rate Spread
2.91 % 2.92 % Bank only Net Interest Margin
3.16 % 3.21 % Net Interest Margin
3.09
% 3.12 %
Boston Private
Financial Holdings, Inc. Selected Financial Data
(Unaudited) (In Thousands)
LOAN DATA (11):
6/30/14 3/31/14 6/30/13
Commercial and Industrial Loans: New England
$
715,814 $ 704,056 $ 670,377 San Francisco Bay
119,554
108,365 72,511 Southern California
47,095
39,780 53,745 Total Commercial and Industrial Loans
$
882,463 $ 852,201 $ 796,633 Commercial Real Estate Loans:
New England
$ 717,166 $ 730,709 $ 622,529 San
Francisco Bay
626,744 644,108 622,743 Southern California
436,991 483,817 433,396 Total
Commercial Real Estate Loans
$ 1,780,901 $ 1,858,634
$ 1,678,668 Construction and Land Loans: New England
$
81,453 $ 94,966 $ 104,451 San Francisco Bay
58,042
62,879 34,073 Southern California
10,927
16,871 11,721 Total Construction and Land Loans
$
150,422 $ 174,716 $ 150,245 Residential Loans: New England
$ 1,231,902 $ 1,227,114 $ 1,172,993 San Francisco Bay
452,864 456,372 452,344 Southern California
354,306 352,369 313,031 Total Residential
Loans
$ 2,039,072 $ 2,035,855 $ 1,938,368 Home Equity
Loans: New England
$ 81,465 $ 77,470 $ 81,588 San
Francisco Bay
27,804 28,159 32,705 Southern California
3,235 3,334 6,301 Total Home Equity
Loans
$ 112,504 $ 108,963 $ 120,594 Other Consumer
Loans: New England
$ 128,698 $ 119,500 $ 139,533 San
Francisco Bay
6,917 7,311 8,024 Southern California
5,074 5,246 6,463 Eliminations and other, net
— 44 185 Total Other Consumer Loans
$
140,689 $ 132,101 $ 154,205 Total Loans New England
$
2,956,498 $ 2,953,815 $ 2,791,471 San Francisco Bay
1,291,925 1,307,194 1,222,400 Southern California
857,628 901,417 824,657 Eliminations and other, net
— 44 185 Total Loans
$ 5,106,051
$ 5,162,470 $ 4,838,713
Boston
Private Financial Holdings, Inc. Selected Financial Data
(Unaudited) (In Thousands)
CREDIT QUALITY (11):
6/30/14 3/31/14
6/30/13 Special Mention Loans: New England
$
55,882 $ 41,920 $ 28,644 San Francisco Bay
24,264
25,055 21,617 Southern California
26,455
36,452 19,077 Total Special Mention Loans
$ 106,601 $ 103,427 $ 69,338 Accruing
Substandard Loans (12): New England
$ 12,849 $ 12,319
$ 17,657 San Francisco Bay
25,838 26,294 43,460 Southern
California
1,306 3,507 8,656
Total Accruing Substandard Loans
$ 39,993
$ 42,120 $ 69,773 Nonaccruing Loans: New England
$ 19,818 $ 21,569 $ 25,361 San Francisco Bay
16,487 12,541 19,379 Southern California
5,315
7,944 7,549 Total Nonaccruing Loans
$ 41,620 $ 42,054 $ 52,289 Other Real
Estate Owned: New England
$ 336 $ 336 $ 191 San
Francisco Bay
585 585 585 Southern California
— — — Total Other Real Estate
Owned
$ 921 $ 921 $ 776 Loans 30-89
Days Past Due and Accruing (13): New England
$ 3,547
$ 4,472 $ 7,433 San Francisco Bay
487 2,577 3,504 Southern
California
1,950 3,528 605
Total Loans 30-89 Days Past Due and Accruing
$
5,984 $ 10,577 $ 11,542 Loans (Charged-off)/
Recovered, Net for the Three Months Ended: New England
$
(622 ) $ 540 $ (864 ) San Francisco Bay
1,959
640 175 Southern California
1,605 254
1,203 Total Net Loans (Charged-off)/ Recovered
$ 2,942 $ 1,434 $ 514 Loans
(Charged-off)/ Recovered, Net for the Six Months Ended: New England
$ (82 ) $ (2,100 ) San Francisco Bay
2,599 (1,333 ) Southern California
1,859
2,176 Total Net Loans (Charged-off)/ Recovered
$ 4,376 $ (1,257 )
Boston
Private Financial Holdings, Inc. Selected Financial Data
(Unaudited)
FOOTNOTES: (1) On December 17, 2012, Boston
Private Bank & Trust Company announced that it had entered into
an agreement to sell its three offices in the Pacific Northwest
region. The sale closed on May 10, 2013, at which time the Company
recorded a gain on sale of $10.6 million. (2) Net income
from discontinued operations consists of contingent payments or
expenses related to our divested affiliates, including Davidson
Trust Company; Boston Private Value Investors, Inc.; Sand Hill
Advisors, LLC; RINET Company, LLC; Gibraltar Private Bank &
Trust Company; and Westfield Capital Management Company, LLC.
(3) Adjustments to net income attributable to the Company to
arrive at net income attributable to the common shareholders, as
presented in these tables, include decrease/ (increase) in
noncontrolling interests redemption value, dividends paid on
preferred stock, and dividends on participating securities.
(4)
When the Company has positive net income
from continuing operations attributable to the common shareholders,
the Company adds additional shares to basic weighted average shares
outstanding to arrive at diluted weighted average shares
outstanding for the diluted earnings per share calculation. These
additional shares reflect the assumed exercise, conversion, or
contingent issuance of dilutive securities. If the additional
shares would result in anti-dilution they would be excluded from
the diluted earnings per share calculation. The potential dilutive
shares relate to: unexercised stock options, unvested
non-participating restricted stock, and unexercised stock warrants.
See 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, 2013 for additional
information.
(5) The Company uses certain non-GAAP financial measures,
such as: Tangible Book Value Per Share and the Tangible Common
Equity ("TCE") to Tangible Assets ("TA") ratio to provide
information for investors to effectively analyze financial trends
of ongoing business activities, and to enhance comparability with
peers across the financial sector. Reconciliations from the
Company's GAAP Total Equity to Total Assets ratio to the Non-GAAP
TCE to TA ratio, and from GAAP Book Value to Non-GAAP Tangible Book
Value are presented below: The Company calculates Tangible Assets
by adjusting Total Assets to exclude Goodwill and Intangible
Assets. The Company calculates Tangible Common Equity by adjusting
Total Equity to exclude non-convertible Series D Preferred stock
and exclude Goodwill and Intangible Assets, net. (In thousands,
except per share data)
6/30/14
3/31/14 6/30/13 Total Balance
Sheet Assets
$ 6,388,823 $ 6,705,420 $ 5,966,930
LESS: Goodwill and Intangible Assets, net
(128,686
) (129,731 ) (132,892 ) Tangible Assets
(non-GAAP)
$ 6,260,137 $ 6,575,689 $ 5,834,038 Total
Shareholders' Equity
$ 662,651 $ 645,979 $ 609,277
LESS: Series D Preferred Stock (non-convertible)
(47,753
) (47,753 ) (47,754 ) LESS: Goodwill and Intangible Assets,
net
(128,686 ) (129,731 )
(132,892 ) Total adjusting items
(176,439 )
(177,484 ) (180,646 ) Tangible Common Equity
(non-GAAP)
$ 486,212 $ 468,495 $
428,631 Total Equity/Total Assets
10.37 % 9.63
% 10.21 % Tangible Common Equity/Tangible Assets (non-GAAP)
7.77 % 7.12 % 7.35 % Total Risk Weighted
Assets *
$ 4,629,247 $ 4,707,604 $ 4,379,436 Tier I
Common Equity *
$ 491,982 $ 475,930 $ 435,630 Tier I
Common Equity/ Risk Weighted Assets
10.63 % 10.11 %
9.95 % End of Period Shares Outstanding
80,394 80,001
79,734 Book Value Per Common Share
$ 7.65 $
7.48 $ 7.04 Tangible Book Value Per Share (non-GAAP)
$
6.05 $ 5.86 $ 5.38 * Risk Weighted Assets and Tier I Common
Equity for June 30, 2014 are presented based on estimated data.
(6) The Company uses certain non-GAAP financial measures,
such as: Return on Average Common Equity and Return on Average
Tangible Common Equity to provide information for investors to
effectively analyze financial trends of ongoing business
activities, and to enhance comparability with peers across the
financial sector. Reconciliations from the Company's GAAP Return on
Average Equity ratio to the Non-GAAP Return on Average Common
Equity ratio, and the Non-GAAP Return on Average Tangible Common
Equity ratio are presented below: The Company calculates Average
Common Equity by adjusting Average Equity to exclude Average
Preferred Equity. The Company calculates Average Tangible Common
Equity by adjusting Average Equity to exclude Average Goodwill and
Intangible Assets, net and Average Preferred Equity. (In thousands,
except per share data)
6/30/14
3/31/14 6/30/13 Total average
shareholders' equity
$ 654,262 $ 640,549 $ 609,009
LESS: Average Series D preferred stock (non-convertible)
(47,753 ) (47,753 ) (39,501 ) Average
common equity (non-GAAP)
606,509
592,796 569,508 LESS: Average goodwill and
intangible assets, net
(129,216 )
(130,272 ) (133,451 ) Total adjusting items
(129,216 ) (130,272 ) (133,451 )
Average Tangible Common Equity (non-GAAP)
$ 477,293
$ 462,524 $ 436,057 Net income
attributable to the Company
$ 21,332 $ 17,041 $
21,328 Less: Dividends on Series D preferred stock
(869 ) (869 ) (560 ) Net income, after
dividends on Series D preferred stock (non-GAAP)
$
20,463 $ 16,172 $ 20,768 Return
on Average Equity - Three Months Ended (Annualized)
13.04
% 10.64 % 14.01 % Return on Average Common Equity - Three
Months Ended (Annualized) (non-GAAP)
13.50 % 10.91 %
14.59 % Return on Average Tangible Common Equity - Three Months
Ended (Annualized) (non-GAAP)
17.15 % 13.99 % 19.05 %
(7) The Company uses certain non-GAAP financial measures,
such as: pre-tax, pre-provision earnings and the efficiency ratio
to provide information for investors to effectively analyze
financial trends of ongoing business activities, and to enhance
comparability with peers across the financial sector.
Reconciliations from the Company's GAAP
income from continuing operations before income taxes to non-GAAP
pre-tax, pre-provision earnings; from GAAP net income attributable
to the Company to Non-GAAP net income attributable to the Company,
excluding the sale of the Pacific Northwest offices; from GAAP
diluted total EPS to Non-GAAP diluted total EPS, excluding the
effect of significant transactions; and from GAAP efficiency ratio
to Non-GAAP efficiency ratio (FTE basis) are presented below:
Three Months Ended Six months ended (In thousands,
except per share data)
6/30/14
3/31/14 6/30/13
6/30/14 6/30/13 Income before
income taxes (GAAP)
$ 31,240 $ 23,487 $ 30,217
$ 54,727 $ 48,668 ADD BACK: Provision/ (credit) for
loan losses
(5,000 ) (1,200 )
(2,000 )
(6,200 ) (2,000 ) Pre-tax,
pre-provision earnings (non-GAAP)
$ 26,240 $ 22,287 $
28,217
$ 48,527 $ 46,668 Net income
attributable to the Company (GAAP)
$ 21,332 $ 17,041
$ 21,328
$ 38,373 $ 34,531 LESS: Gain on sale of
Pacific Northwest offices, net of tax
—
—
6,267
—
6,267
Net income attributable to the Company, excluding the effect
of significant transactions (Non-GAAP)
$
21,332
$
17,041
$
15,061
$
38,373
$
28,264
Net income attributable to the Common
Shareholders, after allocation to participating securities
(GAAP)
$
20,005
$
15,863
$
8,661
$
35,862
$
20,608
ADD BACK: Deemed dividend due to repurchase of Series B Preferred
—
—
11,738
—
11,738
LESS: Gain on sale of Pacific Northwest offices, net of tax
—
—
(6,267
)
—
(6,267
)
Net income attributable to the Common
Shareholders, after allocation to participating securities,
excluding the effect of significant transactions (Non-GAAP)
$
20,005
$
15,863
$
14,132
$
35,862
$
26,079
Diluted Total Earnings Per Share
(GAAP)
$
0.25
$
0.20
$
0.11
$
0.45
$
0.26
Diluted Total Earnings Per Share, excluding the effect of
significant transactions (Non-GAAP)
$
0.25
$
0.20
$
0.18
$
0.45
$
0.33
Total operating expense (GAAP)
$
54,402
$
54,968
$
56,666
$
109,370
$
113,252
Less: Amortization of intangibles
1,045
1,053
1,101
2,098
2,219
Total operating expense (excluding amortization of
intangibles) (non-GAAP)
$ 53,357 $ 53,915 $ 55,565
$ 107,272 $ 111,033 Net interest income
$ 46,268 $ 44,522 $ 43,899
$ 90,790 $
88,175 Total core fees and income
34,147 31,664 30,107
65,811 60,028 Total other income
227 1,069 10,877
1,296 11,717 FTE income
2,221
2,168 2,015
4,389
4,021 Total revenue (FTE basis)
$ 82,863 $
79,423 $ 86,898
$ 162,286 $ 163,941 Efficiency Ratio,
before deduction of intangible amortization (GAAP)
67.46
% 71.15 % 66.76 %
69.27 % 70.82 % Efficiency
Ratio, FTE Basis (non-GAAP)
64.39 % 67.88 % 63.94 %
66.10 % 67.73 % (8) Interest Income on
Non-taxable Investments and Loans are presented on an FTE basis
using the federal statutory rate of 35% for each period presented.
(9) Includes Loans Held for Sale and Nonaccrual Loans.
(10) Includes Deposits Held for Sale. (11) The
concentration of the Private Banking loan data and credit quality
is primarily based on the location of the lender's regional
offices. Loans in the Pacific Northwest region that were not
included the sale of that region's offices are included with the
offices from which they are being managed after the sale. Net loans
from the Company to certain principals of the Company's affiliate
partners, loans at the Company's non-banking segments, and
inter-company loan eliminations are identified as “Eliminations and
other, net”.
(12)
Accruing substandard loans include loans that are classified as
substandard but are still accruing interest income. Boston Private
Bank & Trust Company may classify a loan as substandard where
known information about possible credit problems of the related
borrowers causes management to have doubts as to the ability of
such borrowers to comply with the present repayment terms and which
may result in disclosure of such loans as nonaccrual at some time
in the future.
(13)
In addition to loans 30-89 days past due
and accruing, at June 30, 2014, the Company had two loans totaling
$0.1 million that were more than 90 days past due but still on
accrual status. These loans originated in the New England region.
At March 31, 2014, the Company had three loans totaling $0.6
million that were more than 90 days past due but still on accrual
status. These loans originated in the New England region. At June
30, 2013, the Company had one loan totaling $0.1 million that was
more than 90 days past due but still on accrual status. This loan
originated in the New England region.
Boston Private Financial Holdings, Inc.Steve Gaven,
617-912-3793Vice President, Investor
Relationssgaven@bostonprivate.com
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