Fourth Quarter and Full Year Highlights:
- Acquisition of Banyan Partners,
LLC: The acquisition of Banyan Partners, a leading wealth
management firm with over $4 billion of AUM, closed on October 2,
2014, bringing the Company's total AUM to just under $30
billion.
- Deposit and Loan growth: Average
Total Deposits increased 10% year-over-year and 5% linked quarter
to $5.5 billion, while Average Total Loans increased 5%
year-over-year to $5.2 billion. On a linked quarter basis, Average
Total Loans were up 1%. The average Loan-to-Deposit ratio was 95%
at the end of the fourth quarter, down from 98% in the third
quarter of 2014 and 100% in the fourth quarter of 2013.
- Core Fees and Income growth:
Core Fees and Income increased 21% year-over-year and 18% linked
quarter to $39.6 million. In the fourth quarter of 2014, the
acquisition of Banyan Partners contributed $6.1 million to Private
Banking Wealth Management and Trust Fees.
- Core Fees and Income Rise to 47% of
Total Revenue: In the fourth quarter of 2014, Core Fees and
Income increased to 47% of total revenue, up from 43% in the third
quarter of 2014 and 42% in the fourth quarter of 2013.
- Dividend Increase: The Board of
Directors today approved a quarterly cash dividend to common stock
shareholders of $0.09 per share, up from $0.08 per share. This
marks the fourth cash dividend increase in the past 8
quarters.
Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the
“Company” or “BPFH”) today reported fourth quarter 2014 GAAP Net
Income Attributable to the Company of $12.2 million, compared to
$18.3 million for the third quarter of 2014 and $17.7 million for
the fourth quarter of 2013. Fourth quarter 2014 diluted earnings
per share were $0.13, a $0.09 decrease from the third quarter of
2014 and a $0.07 decrease from the fourth quarter of 2013. Included
in the fourth quarter of 2014 is $1.4 million of one-time pre-tax
costs associated with the Banyan acquisition and an $800 thousand
pre-tax expense for liability restructuring. Excluding the one-time
costs, fourth quarter 2014 diluted earnings per share were
$0.15.
For the full year of 2014, BPFH reported GAAP Net Income
Attributable to the Company of $68.8 million, compared to $70.5
million for the full year of 2013. BPFH reported diluted earnings
per share of $0.79 per share compared to $0.68 per share for the
full years of 2014 and 2013, respectively.
“2014 was a pivotal year for Boston Private,” said Clayton G.
Deutsch, CEO and President. "In October, we completed the
acquisition of Banyan Partners, which accelerated the evolution of
our Private Bank Wealth Management offering closer to our desired
model. The Private Banking strategy continues to gain momentum on
the West Coast, helping to drive strong deposit growth. As we enter
2015, Boston Private remains focused on expanding and deepening our
private client base across all markets.”
Core Fees and Income Increased 21% 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 21% to $39.6 million. On a linked quarter
basis, Core Fees and Income increased 18% from $33.6 million in the
third quarter of 2014. In the fourth quarter of 2014, the
acquisition of Banyan Partners contributed $6.1 million to Private
Banking Wealth Management and Trust Fees. Excluding the impact of
the Banyan acquisition, Core Fees and Income increased 2%
year-over-year and were flat on a linked quarter basis. For the
full year 2014, Core Fees and Income increased 13% to $139.0
million. Excluding Banyan, full year Core Fees and Income increased
8% from 2013.
Total Assets Under Management/Advisory (“AUM”) were $29.9
billion at the end of the fourth quarter, up 21% linked quarter and
23% year-over-year. The acquisition of Banyan Partners contributed
$4.4 billion of AUM. Excluding the impact of Banyan, AUM increased
3% linked quarter and 5% year-over-year.
Net Interest Income
Net Interest Income for the fourth quarter was $44.1 million,
down 1% from $44.8 million for the third quarter of 2014. On a
year-over-year basis, Net Interest Income increased 1% from $43.5
million. For the full year, Net Interest Income increased 3% to
$179.7 million.
Net Interest Margin was 2.83% for the fourth quarter, down 10
basis points from 2.93% for the third quarter. Net Interest Margin
was down 15 basis points from 2.98% for the fourth quarter of
2013.
Total Operating Expenses
Total Operating Expenses for the fourth quarter of 2014 were
$63.8 million, up 18% from $54.0 million for the third quarter of
2014. On a year-over-year basis, Total Operating Expenses increased
15% from $55.5 million. In the fourth quarter of 2014, Banyan
accounted for $6.7 million of operating expenses. Excluding the
impact of Banyan, the one-time acquisition related expenses of $1.4
million and the $800 thousand pre-tax expense for liability
restructuring, fourth quarter 2014 operating expenses were $54.9
million, up 2% linked quarter and down 1% year-over-year.
For the full year 2014, Total Operating Expenses were $227.1
million, up 3% from 2013.
Provision and Asset Quality
The Company recorded a provision expense of $2.4 million for the
fourth quarter of 2014, compared to a provision credit of $2.6
million for the third quarter. The provision expense was driven by
net charge-offs of $1.8 million, loan growth and loan downgrades.
The Company recorded a provision credit of $2.0 million for the
fourth quarter of 2013.
Criticized Loans decreased 11% on a linked quarter basis and 8%
year-over-year. The downgrade of three separate relationships drove
Nonaccrual Loans (“Nonaccruals”) to increase 32% to $44.2 million
on a linked quarter basis. On a year-over-year basis, Nonaccruals
decreased 1% from $44.8 million. As a percentage of Total Loans,
Nonaccruals were 84 basis points at December 31, 2014, up 20 basis
points from 64 basis points at September 30, 2014, and down 4 basis
points from 88 basis points at December 31, 2013.
Additional credit metrics are listed below on a linked quarter
and year-over-year basis:
(In millions)
December 31, 2014
September 30, 2014 December 31,
2013 Total Criticized Loans $ 159.6 $ 179.5 $ 173.6
Total Loans 30-89 Days Past Due and
Accruing (13)
$ 7.0 $ 3.6 $ 13.7 Total Net Loans (Charged-off)/ Recovered $ (1.8
) $ 3.3 $ 1.2 Allowance for Loan Losses/ Total Loans 1.44 % 1.44 %
1.49 %
Capital Ratios
The Company's capital ratios decreased due to the Banyan
acquisition, as 68% of the upfront consideration was paid in
cash.
Capital ratios are listed below on a linked quarter and
year-over-year basis:
December 31, 2014 September 30,
2014 December 31, 2013 Total Risk-Based
Capital * 14.5 % 15.5 % 14.8 % Tier I Risk-Based Capital * 13.3 %
14.2 % 13.5 % Tier I Leverage Capital * 9.5 % 10.3 % 10.1 % TCE/TA
7.0 % 7.6 % 7.2 % Tier I Common Equity/ Risk Weighted Assets * 9.8
% 10.6 % 9.9 %
*December 31, 2014 data is presented based
on estimated data.
Dividend Payments
Concurrent with the release of fourth quarter 2014 earnings, the
Board of Directors of the Company declared a cash dividend to
common stock shareholders of $0.09 per share. The record date for
this dividend is February 6, 2015, and the payment date is February
20, 2015.
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 February 13, 2015, and the payment date is March
16, 2015.
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
Thursday, January 22, 2015, to discuss the financial results,
business highlights and outlook. To access the call:
Dial In #: (888) 317-6003Elite Entry Number: 7875780
Replay Information:Available from January 22, 2015 at 12 noon
until January 29, 2015Dial In #: (877) 344-7529Conference Number:
10058435
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 with offices in Boston, New York, Los Angeles,
San Francisco, San Jose, Atlanta, Florida, Wisconsin, and Texas.
The Company has a $7 billion Private Banking balance sheet, and
manages approximately $30 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 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 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.
Boston Private Financial Holdings,
Inc. Selected Financial Data (Unaudited)
(In thousands, except share and per share data)
12/31/14 9/30/14
12/31/13 Assets: Cash and cash equivalents
$ 172,609 $ 308,912 $ 191,881 Investment securities
available for sale
829,993 724,638 691,729 Investment
securities held to maturity
140,727 132,467 112,014 Stock in
Federal Home Loan Banks
32,281 32,534 38,612 Loans held for
sale
7,099 4,943 6,123 Total loans
5,269,936
5,213,491 5,112,459 Less: Allowance for loan losses
75,838 75,283 76,371 Net
loans
5,194,098 5,138,208 5,036,088 Other real estate owned
(“OREO”)
929 1,074 776 Premises and equipment, net
32,199 29,473 29,158 Goodwill
150,103 110,180 110,180
Intangible assets, net
41,697 17,475 20,604 Fees receivable
12,517
11,439 12,119 Accrued interest receivable
16,071
15,018 14,416 Deferred income taxes, net
47,576 48,443
55,364 Other assets
119,975
114,281 118,045 Total assets
$ 6,797,874 $ 6,689,085 $ 6,437,109
Liabilities: Deposits
$ 5,453,879 $
5,334,881 $ 5,110,370 Securities sold under agreements to
repurchase
30,496 73,422 102,353 Federal Home Loan Bank
borrowings
370,150 371,367 367,254 Junior subordinated
debentures
106,363 106,363 106,363 Other liabilities
112,170 106,024 97,613
Total liabilities
6,073,058 5,992,057
5,783,953
Redeemable Noncontrolling
Interests 20,905 21,397 19,468
Shareholders’
Equity: Preferred stock, $1.00 par value; authorized: 2,000,000
shares
47,753 47,753 47,753
Common stock, $1.00 par value; authorized:
170,000,000 shares; issuedand outstanding: 82,961,855 shares at
December 31, 2014; 80,464,390shares at September 30, 2014;
79,837,612 shares at December 31, 2013
82,962 80,464 79,838 Additional paid-in capital
610,903 598,036 616,334 Accumulated deficit
(37,396
) (49,573 ) (106,211 ) Accumulated other comprehensive
income/ (loss)
(697 ) (1,312 )
(4,197 ) Total Company’s shareholders’ equity
703,525
675,368 633,517 Noncontrolling
interests
386 263 171
Total shareholders’ equity
703,911
675,631 633,688
Total liabilities, redeemable
noncontrolling interests andshareholders’ equity
$ 6,797,874 $ 6,689,085 $ 6,437,109
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited) Three Months
Ended Year Ended (In thousands, except share and per
share data)
12/31/14 9/30/14
12/31/13 12/31/14
12/31/13 Interest and dividend income:
Loans
$ 47,117 $ 47,931 $ 47,421
$
191,658 $ 191,594 Taxable investment securities
920
876 512
3,162 2,056 Non-taxable investment securities
978 942 750
3,738 3,113 Mortgage-backed securities
1,695 1,605 1,361
6,925 5,441 Federal funds sold and
other
381 379 335
1,359 970 Total interest and
dividend income
51,091 51,733
50,379
206,842 203,174
Interest expense: Deposits
3,908 3,603 3,283
14,102 13,395 Federal Home Loan Bank borrowings
2,069
2,354 2,564
9,108 10,963 Junior subordinated debentures
976 976 979
3,872 4,408 Repurchase agreements and
other short-term borrowings
10 17
12
59 390
Total interest expense
6,963 6,950
6,838
27,141
29,156 Net interest income
44,128 44,783 43,541
179,701 174,018 Provision/ (credit) for loan losses
2,400 (2,600 ) (2,000 )
(6,400 ) (10,000 ) Net interest income after
provision/ (credit) for loan losses
41,728
47,383 45,541
186,101
184,018
Fees and other income:
Investment management fees
11,897 12,011 12,371
47,123 43,816 Wealth advisory fees
12,352 12,278
11,269
48,082 42,352 Wealth management and trust fees
13,327 7,251 6,767
34,582 26,547 Other banking fee
income
1,841 1,835 2,280
7,033 7,463 Gain on sale of
loans, net
192 183 156
2,158 2,519 Total core
fees and income
39,609 33,558
32,843
138,978 122,697
Gain on repurchase of debt
— — —
— 620 Gain/
(loss) on sale of investments, net
(16 ) 8 14
(7 ) 49 Gain/ (loss) on OREO, net
(31 )
150 —
957 (13 ) Gain on sale of Pacific Northwest offices
(1)
— — —
— 10,574 Other
360
53 1,488
870
2,414 Total other income
313
211 1,502
1,820
13,644
Operating expense: Salaries and
employee benefits
39,881 35,855 36,156
146,648
140,761 Occupancy and equipment
8,549 7,346 7,411
31,041 29,822 Professional services
3,308 2,796 3,412
12,473 12,109 Marketing and business development
2,425 1,408 1,764
7,989 7,094 Contract services and
data processing
1,527 1,404 1,313
5,816 5,827
Amortization of intangibles
1,707 1,031 1,052
4,836
4,327 FDIC insurance
852 857 883
3,459 3,700
Restructuring
739 — —
739 — Other
4,772
3,302 3,509
14,128
17,065 Total operating expense
63,760 53,999 55,500
227,129 220,705 Income before
income taxes
17,890 27,153 24,386
99,770 99,654
Income tax expense
5,901 8,993
7,508
32,365 32,963
Net income from continuing operations
11,989 18,160
16,878
67,405 66,691 Net income from discontinued operations
(2)
1,510 1,272 1,968
6,160 7,792 Net income
before attribution to noncontrolling interests
13,499 19,432
18,846
73,565 74,483 Less: Net income attributable to
noncontrolling interests
1,322 1,167
1,178
4,750 3,948
Net income attributable to the Company $
12,177 $ 18,265 $ 17,668
$
68,815 $ 70,535
Boston Private
Financial Holdings, Inc. Selected Financial Data
(Unaudited) (In thousands, except share and per share data)
Three Months Ended Year Ended PER SHARE DATA:
12/31/14 9/30/14
12/31/13 12/31/14
12/31/13 Calculation of Income for EPS: Net
income attributable to the Company
$ 12,177 $ 18,265
$ 17,668
$ 68,815 $ 70,535
Adjustments to Net Income Attributable to
the Company to Arriveat Net Income Attributable to Common
Shareholders (3)
(1,176 ) (796 ) (1,467 )
(4,228 ) (15,057 )
Net Income Attributable
to the Common Shareholders 11,001 17,469 16,201
64,587 55,478 LESS: Amount allocated to participating
securities
(27 ) (75 ) (133 )
(335 ) (1,579 )
Net Income Attributable to the Common
Shareholders, afterallocation to participating
securities
$ 10,974 $ 17,394 $ 16,068
$ 64,252 $ 53,899
End of
Period Common Shares Outstanding 82,961,855 80,464,390
79,837,612
Weighted Average Shares Outstanding:
Weighted average basic shares, including participating securities
80,880,508
79,222,590 78,719,000
79,605,355
80,859,229 LESS: Participating securities
(487,596)
(535,528 ) (976,760 )
(683,875)
(3,485,412 ) PLUS: Dilutive potential common shares
2,096,172 1,923,896 1,758,720
1,957,751 1,379,707
Weighted Average Diluted Shares (4) 82,489,084
80,610,958 79,500,960
80,879,231 78,753,524
Diluted
Total Earnings per Share $ 0.13 $ 0.22 $ 0.20
$ 0.79 $ 0.68
Boston Private
Financial Holdings, Inc.
Selected
Financial Data (Unaudited) (In thousands, except per
share data)
FINANCIAL DATA: 12/31/14
9/30/14 12/31/13 Book
Value Per Common Share
$ 7.91 $ 7.80 $ 7.34 Tangible
Book Value Per Share (5)
$ 5.60 $ 6.22 $ 5.70 Market
Price Per Share
$ 13.47 $ 12.39 $ 12.62
ASSETS UNDER MANAGEMENT AND ADVISORY: Wealth Management and
Trust
$ 9,274,000 $ 4,701,000 $ 4,565,000 Investment
Managers
10,772,000 10,376,000 10,401,000 Wealth Advisory
9,883,000 9,731,000 9,336,000 Less: Inter-company
Relationship
(22,000 ) (22,000 )
(22,000 ) Total Assets Under Management and Advisory
$
29,907,000 $ 24,786,000 $ 24,280,000
FINANCIAL RATIOS:
Total Equity/ Total Assets
10.35 % 10.10 % 9.84 %
Tangible Common Equity/ Tangible Assets
(5)
7.03 % 7.62 % 7.22 %
Tier I Common Equity/ Risk Weighted Assets
(5)
9.76 % 10.63 % 9.93 %
Allowance for Loan Losses/ Total Loans
1.44 % 1.44 % 1.49 %
Allowance for Loan Losses/ Nonaccrual
Loans
172 % 224 % 171 % Return on Average Assets - Three
Months Ended (Annualized)
0.71 % 1.10 % 1.11 % Return
on Average Common Equity - Three Months Ended (Annualized) (6)
6.97 % 11.20 % 11.56 % Return on Average Tangible
Common Equity - Three Months Ended (Annualized) (6)
9.74
% 14.10 % 14.93 % Efficiency Ratio - Three Months Ended (7)
70.83 % 65.47 % 68.02 %
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: 12/31/14
9/30/14 12/31/13
12/31/14 9/30/14
12/31/13 12/31/14
9/30/14 12/31/13
AVERAGE ASSETS Interest-Earning Assets: Cash and
Investments: Taxable investment securities
$ 305,118
$ 295,395 $ 237,342
$ 920 $ 876 $ 512
1.21
% 1.19 % 0.87 % Non-taxable investment securities (8)
229,157 223,499 215,083
1,504 1,449 1,154
2.63
% 2.59 % 2.15 % Mortgage-backed securities
350,312
325,913 267,463
1,695 1,605 1,361
1.93 % 1.97
% 2.04 % Federal funds sold and other
389,833
359,899 352,285
381 379 335
0.39 % 0.42 % 0.37 %
Total Cash and Investments
1,274,420
1,204,706 1,072,173
4,500 4,309
3,362
1.41 % 1.43 % 1.25
% Loans: (9) Commercial and Construction (8)
2,852,064
2,841,869 2,707,370
30,855 31,657 31,150
4.23
% 4.36 % 4.50 % Residential
2,120,416 2,071,326
2,022,698
16,447 16,384 16,159
3.10 % 3.16 %
3.20 % Home Equity and Other Consumer
254,387
244,690 250,212
1,799 1,733
1,874
2.80 % 2.81 % 2.97
% Total Loans
5,226,867
5,157,885 4,980,280
49,101 49,774
49,183
3.71 % 3.81 % 3.89
% Total Earning Assets
6,501,287
6,362,591 6,052,453
53,601 54,083
52,545
3.26 % 3.36 % 3.43
% LESS: Allowance for Loan Losses
75,590 76,099 78,463 Cash
and due From Banks (Non-Interest Bearing)
41,595 42,080
40,332 Other Assets
411,546
341,953 364,130
TOTAL AVERAGE
ASSETS $ 6,878,838 $
6,670,525 $ 6,378,452
AVERAGE LIABILITIES,
REDEEMABLENONCONTROLLING INTERESTS, ANDSHAREHOLDERS'
EQUITY
Interest-Bearing Liabilities: Interest-Bearing Deposits: Savings
and NOW
$ 584,210 $ 583,547 $ 490,408
$
112 $ 110 $ 94
0.08 % 0.07 % 0.08 % Money
Market
2,836,731 2,640,762 2,500,191
2,589 2,273
1,871
0.36 % 0.34 % 0.30 % Certificates of Deposit
597,460 607,940
620,161
1,207
1,220 1,318
0.80 %
0.80 % 0.84 % Total Interest-Bearing Deposits
4,018,401 3,832,249 3,610,760
3,908 3,603 3,283
0.39 % 0.37 % 0.36 % Junior Subordinated Debentures
106,363 106,363 106,673
976 976 979
3.59
% 3.59 % 3.59 % FHLB Borrowings and Other
447,955 534,062
487,584
2,079
2,371 2,576
1.82 %
1.74 % 2.07 % Total Interest-Bearing Liabilities
4,572,719 4,472,674
4,205,017
6,963
6,950 6,838
0.60 %
0.61 % 0.64 % Noninterest Bearing
Demand Deposits
1,465,145 1,404,875 1,391,809 Other
Liabilities
121,318
100,106 134,429 Total Average
Liabilities
6,159,182 5,977,655 5,731,255 Redeemable
Noncontrolling Interests
22,802 23,584 17,929 Average
Shareholders' Equity
696,854
669,286 629,268
TOTAL AVERAGE LIABILITIES,
REDEEMABLENONCONTROLLING INTERESTS, ANDSHAREHOLDERS'
EQUITY
$ 6,878,838 $ 6,670,525
$ 6,378,452 Net Interest Income - on a Fully Taxable
Equivalent Basis (FTE)
$ 46,638 $ 47,133 $ 45,707
LESS: FTE Adjustment (8)
2,510
2,350 2,166 Net Interest Income (GAAP Basis)
$ 44,128 $ 44,783 $
43,541 Interest Rate Spread
2.66 % 2.75 % 2.79 % Bank
only Net Interest Margin
2.90 % 3.00 % 3.05 % Net
Interest Margin
2.83 % 2.93 % 2.98 %
Boston Private Financial Holdings, Inc.
Selected Financial
Data (Unaudited) Average Balance Interest
Income/Expense Average Yield/Rate (In Thousands)
Year
Ended Year Ended Year Ended AVERAGE BALANCE
SHEET: 12/31/14
12/31/13 12/31/14 12/31/13
12/31/14 12/31/13
AVERAGE ASSETS Interest-Earning Assets: Cash and
Investments: Taxable investment securities
$ 279,438
$ 221,677
$ 3,162 $ 2,056
1.13 % 0.93 %
Non-taxable investment securities (8)
225,346 208,547
5,751 4,790
2.55 % 2.30 % Mortgage-backed
securities
337,552 285,677
6,925 5,441
2.05
% 1.90 % Federal funds sold and other
285,783
230,542
1,359
970
0.47 %
0.41 % Total Cash and Investments
1,128,119
946,443
17,197
13,257
1.52 % 1.40
%
Loans (9):
Commercial and Construction (8)
2,846,042 2,717,707
126,830 125,427
4.40 % 4.55 % Residential
2,066,776 1,993,729
64,984 64,968
3.14
% 3.26 % Home Equity and Other Consumer
246,934 261,958
7,080 7,848
2.87 %
3.00 % Total Loans
5,159,752
4,973,394
198,894
198,243
3.82 %
3.95 % Total Earning Assets
6,287,871
5,919,837
216,091
211,500
3.41 %
3.54 % LESS: Allowance for Loan Losses
76,990 81,924 Cash
and due From Banks (Non-Interest Bearing)
39,381 41,402
Other Assets
374,782
383,833
TOTAL AVERAGE ASSETS $ 6,625,044
$ 6,263,148
AVERAGE LIABILITIES,
REDEEMABLENONCONTROLLING INTERESTS, ANDSHAREHOLDERS'
EQUITY
Interest-Bearing Liabilities:
Interest-Bearing Deposits (10):
Savings and NOW
$ 578,827 $ 520,546
$
431 $ 430
0.07 % 0.08 % Money Market
2,619,930 2,401,622
8,701 7,366
0.33 %
0.31 % Certificates of Deposit
611,285
633,759
4,970
5,599
0.81 % 0.88 % Total
Interest-Bearing Deposits
3,810,042 3,555,927
14,102
13,395
0.37 % 0.38 % Junior Subordinated Debentures
106,363 125,756
3,872 4,408
3.59 % 3.46
% FHLB Borrowings and Other
503,995
527,377
9,167
11,353
1.79 % 2.12 %
Total Interest-Bearing Liabilities
4,420,400
4,209,060
27,141
29,156
0.61 % 0.69
% Noninterest Bearing Demand Deposits
1,406,007 1,286,539
Other Liabilities
111,664
133,592 Total Average Liabilities
5,938,071 5,629,191
Redeemable Noncontrolling Interests
20,757 18,162 Average
Shareholders' Equity
666,216
615,795
TOTAL AVERAGE LIABILITIES,
REDEEMABLENONCONTROLLING INTERESTS, ANDSHAREHOLDERS'
EQUITY
$ 6,625,044 $ 6,263,148 Net
Interest Income - on a Fully Taxable Equivalent Basis (FTE)
$ 188,950 $ 182,344 LESS: FTE Adjustment (8)
9,249 8,326 Net Interest Income
(GAAP Basis)
$ 179,701 $ 174,018
Interest Rate Spread
2.80 % 2.85 % Bank only Net
Interest Margin
3.05 % 3.13 % Net Interest Margin
2.98 % 3.05 %
Boston Private
Financial Holdings, Inc. Selected Financial Data
(Unaudited) (In Thousands)
LOAN DATA (11):
12/31/14 9/30/14 12/31/13
Commercial and Industrial Loans: New England
$
781,646 $ 758,728 $ 713,484 San Francisco Bay
117,105
124,993 107,154 Southern California
54,334
47,107 45,415 Total Commercial and Industrial Loans
$
953,085 $ 930,828 $ 866,053 Commercial Real Estate Loans:
New England
$ 690,965 $ 712,464 $ 721,924 San
Francisco Bay
619,222 628,149 641,746 Southern California
478,216 467,428 449,724 Total
Commercial Real Estate Loans
$ 1,788,403 $ 1,808,041
$ 1,813,394 Construction and Land Loans: New England
$
85,272 $ 82,492 $ 92,456 San Francisco Bay
31,329
35,668 45,941 Southern California
8,748 12,385
15,520 Total Construction and Land Loans
$
125,349 $ 130,545 $ 153,917 Residential Loans: New England
$ 1,299,568 $ 1,273,544 $ 1,228,623 San Francisco Bay
462,497 456,355 459,667 Southern California
370,030 367,628 344,004 Total Residential
Loans
$ 2,132,095 $ 2,097,527 $ 2,032,294 Home Equity
Loans: New England
$ 82,877 $ 76,142 $ 81,010 San
Francisco Bay
27,575 30,060 30,002 Southern California
4,407 3,025 2,648 Total Home Equity
Loans
$ 114,859 $ 109,227 $ 113,660 Other Consumer
Loans: New England
$ 143,166 $ 124,449 $ 117,079 San
Francisco Bay
6,505 6,738 8,854 Southern California
6,474 6,136 7,069 Eliminations and other, net
— — 139 Total Other Consumer Loans
$
156,145 $ 137,323 $ 133,141 Total Loans: New England
$ 3,083,494 $ 3,027,819 $ 2,954,576 San Francisco Bay
1,264,233 1,281,963 1,293,364 Southern California
922,209 903,709 864,380 Eliminations and other, net
— — 139 Total Loans
$ 5,269,936
$ 5,213,491 $ 5,112,459
Boston Private Financial Holdings, Inc. Selected
Financial Data (Unaudited) (In Thousands)
CREDIT
QUALITY (11): 12/31/14
9/30/14 12/31/13 Special Mention Loans:
New England
$ 32,254 $ 45,788 $ 41,759 San Francisco
Bay
18,161 24,623 25,912 Southern California
26,325 32,614 19,642 Total
Special Mention Loans
$ 76,740 $ 103,025 $
87,313 Accruing Substandard Loans (12): New England
$
11,126 $ 13,589 $ 13,304 San Francisco Bay
23,403
24,267 25,171 Southern California
4,331
5,331 3,540 Total Accruing Substandard Loans
$
38,860 $ 43,187 $ 42,015 Nonaccruing Loans:
New England
$ 26,205 $ 16,205 $ 24,838 San Francisco
Bay
13,430 15,133 14,016 Southern California
4,547 2,203 5,908 Total
Nonaccruing Loans
$ 44,182 $ 33,541 $ 44,762
Other Real Estate Owned: New England
$ 344 $
489 $ 191 San Francisco Bay
585 585 585 Southern California
— — — Total Other Real
Estate Owned
$ 929 $ 1,074 $ 776 Loans
30-89 Days Past Due and Accruing (13): New England
$
6,572 $ 1,825 $ 5,029 San Francisco Bay
375 653 3,029
Southern California
13 1,145
5,684 Total Loans 30-89 Days Past Due and Accruing
$
6,960 $ 3,623 $ 13,742 Loans (Charged-off)/
Recovered, Net for the Three Months Ended: New England
$
(2,516 ) $ 912 $ (344 ) San Francisco Bay
607
465 1,798 Southern California
64 1,959
(260 ) Total Net Loans (Charged-off)/ Recovered
$
(1,845 ) $ 3,336 $ 1,194 Loans (Charged-off)/
Recovered, Net for the Twelve Months Ended: New England
$
(1,686 ) $ (2,422 ) San Francisco Bay
3,671
2,576 Southern California
3,882 2,160
Total Net Loans (Charged-off)/ Recovered
$
5,867 $ 2,314
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)
12/31/14
9/30/14
12/31/13 Total Balance Sheet
Assets
$ 6,797,874 $ 6,689,085 $ 6,437,109 LESS:
Goodwill and Intangible Assets, net
(191,800 )
(127,655 ) (130,784 ) Tangible Assets (non-GAAP)
$ 6,606,074 $ 6,561,430 $ 6,306,325 Total
Shareholders' Equity
$ 703,911 $ 675,631 $ 633,688
LESS: Series D Preferred Stock (non-convertible)
(47,753
) (47,753 ) (47,753 ) LESS: Goodwill and Intangible Assets,
net
(191,800 ) (127,655 )
(130,784 ) Total adjusting items
(239,553 )
(175,408 ) (178,537 ) Tangible Common Equity
(non-GAAP)
$ 464,358 $ 500,223 $
455,151 Total Equity/Total Assets
10.35 %
10.10 % 9.84 % Tangible Common Equity/Tangible Assets (non-GAAP)
7.03 % 7.62 % 7.22 % Total Risk Weighted
Assets *
$ 4,799,329 $ 4,754,417 $ 4,668,531 Tier I
Common Equity *
$ 468,612 $ 505,474 $ 463,627 Tier I
Common Equity/ Risk Weighted Assets
9.76 % 10.63 %
9.93 % End of Period Shares Outstanding
82,962 80,464
79,838 Book Value Per Common Share
$ 7.91 $
7.80 $ 7.34 Tangible Book Value Per Share (non-GAAP)
$
5.60
$ 6.22 $
5.70
* Risk Weighted Assets and Tier I Common Equity for December 31,
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.
Three Months Ended
Year ended (In thousands, except per
share data)
12/31/14
9/30/14
12/31/13 12/31/14
12/31/13 Total average shareholders'
equity
$ 696,854 $ 669,286 $ 629,268 $ 666,216 $
615,795 LESS: Average Series D preferred stock (non-convertible)
(47,753 ) (47,753 ) (47,753 )
(47,753 ) (33,921 ) Average common equity (non-GAAP)
649,101 621,533 581,515
618,463 581,874 LESS: Average
goodwill and intangible assets, net
(184,473 )
(128,178 ) (131,375 ) (144,658 )
(132,908 ) Total adjusting items
(184,473 )
(128,178 ) (131,375 ) (144,658 )
(132,908 ) Average Tangible Common Equity (non-GAAP)
$
464,628 $ 493,355 $ 450,140 $ 473,805
$ 448,966 Net income attributable to the
Company
$ 12,177 $ 18,265 $ 17,668 $ 68,815 $ 70,535
Less: Dividends on Series D preferred stock
(869
) (869 ) (869 ) (3,475 ) (2,297
) Net income, after dividends on Series D preferred stock
(non-GAAP)
$ 11,308 $ 17,396 $ 16,799
$ 65,340 $ 68,238 Return on Average
Equity - (Annualized)
6.99 % 10.92 % 10.68 % 10.33 %
11.45 % Return on Average Common Equity - (Annualized) (non-GAAP)
6.97 % 11.20 % 11.56 % 10.56 % 11.73 % Return on
Average Tangible Common Equity - (Annualized) (non-GAAP)
9.74 % 14.10 % 14.93 % 13.79 % 15.20 % (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), excluding restructuring,
are presented below:
Three Months
Ended Year ended (In
thousands, except per share data)
12/31/14
9/30/14
12/31/13
12/31/14
12/31/13 Income before income taxes (GAAP)
$
17,890 $ 27,153 $ 24,386
$ 99,770 $ 99,654 ADD
BACK: Provision/ (credit) for loan losses
2,400
(2,600 ) (2,000 )
(6,400
) (10,000 ) Pre-tax, pre-provision earnings
(non-GAAP)
$ 20,290 $ 24,553 $ 22,386
$
93,370 $ 89,654 Net income attributable to the
Company (GAAP)
$ 12,177 $ 18,265 $ 17,668
$
68,815 $ 70,535 LESS: Gain on sale of Pacific Northwest
offices, net of tax
— — —
— 6,267 Net income
attributable to the Company, excluding the effect of significant
transactions (Non-GAAP)
$ 12,177 $ 18,265 $ 17,668
$ 68,815 $ 64,268 Net income attributable to
the Common Shareholders, after allocation to participating
securities (GAAP)
$ 10,974 $ 17,394 $ 16,068
$
64,252 $ 53,899 ADD BACK: Deemed dividend due to repurchase
of Series B Preferred
— — —
— 11,738 LESS: Gain on
sale of Pacific Northwest offices, net of tax
—
— —
—
(6,267 ) Net income attributable to the Common Shareholders,
after allocation to participating securities, excluding the effect
of significant transactions (Non-GAAP)
$ 10,974
$
17,394
$
16,068
$ 64,252
$
59,370
Diluted Total Earnings Per Share (GAAP)
$ 0.13
$ 0.22 $ 0.20
$ 0.79 $ 0.68 Diluted Total Earnings
Per Share, excluding the effect of significant transactions
(Non-GAAP)
$ 0.13 $ 0.22 $
0.20
$ 0.79 $
0.75
Total operating expense (GAAP)
$ 63,760 $
53,999 $ 55,500
$ 227,129 $ 220,705 Less:
Amortization of intangibles
1,707 1,031 1,052
4,836
4,327 Less: Restructuring
739 —
—
739 — Total
operating expense (excluding amortization of intangibles)
(non-GAAP)
$ 61,314 $ 52,968 $ 54,448
$
221,554 $ 216,378 Net interest income
$
44,128 $ 44,783 $ 43,541
$ 179,701 $ 174,018
Total core fees and income
39,609 33,558 32,843
138,978 122,697 Total other income
313 211 1,502
1,820 13,644 FTE income
2,510
2,350 2,166
9,249
8,326 Total revenue (FTE basis)
$ 86,560 $
80,902 $ 80,052
$ 329,748 $ 318,685 Efficiency Ratio,
before deduction of intangible amortization (GAAP)
75.86
% 68.74 % 71.26 %
70.87 % 71.11 %
Efficiency Ratio, FTE Basis (non-GAAP)
70.83 % 65.47 % 68.02 %
67.19 % 67.90 %
(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 December 31, 2014 the
Company had no loans were more than 90 days past due but still on
accrual status. At September 30, 2014, the Company had two loans
totaling $0.5 million that were more than 90 days past due but
still on accrual status. These loans originated in the New England
region. At December 31, 2013, 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.
Boston Private Financial Holdings, Inc.Steven Gaven,
617-912-3793Vice President Corporate Finance and Director of
Investor Relationssgaven@bostonprivate.com
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