EX-99.1 2 a2017q3ex991profthecompany.htm 10-18-2017 Q3-2017 EARNINGS PRESS RELEASE Exhibit


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Boston Private Financial Holdings, Inc. Reports Third Quarter 2017 Results
Third Quarter Highlights:
•
Total Revenue increased 8% year-over-year driven by a 14% increase in Net Interest Income and a 3% increase in Total Core Fees and Income.
•
Average Total Deposits increased 8% year-over-year to $6.4 billion, and Average Total Loans increased 10% year-over-year to $6.4 billion.
•
Total Assets Under Management/Advisory (“AUM”) increased 8% year-over-year to $29.8 billion.
•
Annualized Return on Average Common Equity for the quarter was 9.9% and annualized Return on Average Tangible Common Equity for the quarter was 13.2%.
Boston, MA - October 18, 2017 - Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the “Company” or “BPFH”) today reported third quarter 2017 GAAP Net Income Attributable to the Company of $19.8 million, compared to $23.4 million for the second quarter of 2017 and $19.6 million for the third quarter of 2016. Third quarter 2017 diluted earnings per share were $0.22, compared to $0.27 in the second quarter of 2017, and $0.22 in the third quarter of 2016.
“Our Company demonstrated good underlying business performance during the third quarter,” said Clayton G. Deutsch, CEO. “Our Private Bank delivered strong year-over-year revenue growth driven by double-digit net interest income growth and core Net Interest Margin expansion. Our Wealth Management & Trust segment recorded a fourth consecutive quarter of improvement in net flows and a second consecutive quarter of positive EBITDA, while our Wealth Advisory and Investment Management segments delivered sequential earnings improvement and margins above our targets.”

Core Fees and Income/Assets Under Management
Total Core Fees and Income for the third quarter were $39.1 million, a 5% increase on a linked quarter basis and a 3% increase year-over-year. The increase reflects higher levels of AUM in the Wealth Management & Trust, Investment Management, and Wealth Advisory segments on both a linked quarter basis and year-over-year basis. Private Banking fees increased linked quarter, while decreasing year-over-year due to changes in swap fee income.
AUM was $29.8 billion at the end of the third quarter, an increase of 2% from the previous quarter and 8% year-over-year. AUM increased due to positive market action, partially offset by negative net flows. The Company experienced net flows of negative $109 million during the third quarter, compared to negative $180 million and negative $336 million in the second quarter of 2017 and third quarter of 2016, respectively. During the third quarter, net flows by segment were $114 million for Wealth Management & Trust, negative $152 million for Investment Management, and negative $71 million for Wealth Advisory.
Net Interest Income
Net Interest Income for the third quarter was $56.6 million, a decrease of 1% from $57.1 million for the second quarter of 2017 and an increase of 14% from $49.9 million for the third quarter of 2016.  The current quarter includes $0.1 million of interest recovered on previous nonaccrual loans compared to $2.0 million for the second quarter and $0.3 million for the third quarter of 2016. Excluding interest recovered on previous nonaccrual loans, Net Interest Income on an FTE basis increased 2% linked quarter and 14% year-over-year.
Net Interest Margin was 3.02% for the third quarter of 2017, a decrease of 5 basis points from the second quarter of 2017 and an increase of 14 basis points from the third quarter of 2016. Excluding interest recovered on previous

1


nonaccrual loans, Net Interest Margin for the third quarter was 3.02%, an increase of 5 basis points from the second quarter of 2017 and an increase of 16 basis points from the third quarter of 2016.
Total Operating Expense
Total Operating Expense for the third quarter of 2017 was $69.3 million, up 2% linked quarter from $67.8 million and 12% year-over-year primarily due to increased compensation expense and technology initiatives.
Provision and Asset Quality
The Company recorded a provision credit of $0.4 million for the third quarter of 2017, compared to a provision credit of $6.1 million for the second quarter of 2017 and $0.1 million for the third quarter of 2016. The provision credit in the third quarter of 2017 was due to net recoveries and improved loss factors, partially offset by an increase in Criticized Loans and loan growth.
Criticized Loans as of September 30, 2017 were $146.0 million, an increase of 13% linked quarter and a decrease of 8% year-over-year. Nonaccrual Loans (“Nonaccruals”) as of September 30, 2017 were $13.6 million, a decrease of 16% linked quarter and 17% year-over-year. As a percentage of Total Loans, Nonaccruals were 21 basis points as of September 30, 2017, down 5 basis points compared to June 30, 2017, and down 7 basis points from September 30, 2016.
Additional credit metrics are listed below:
(In millions)
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Total Criticized Loans
$
146.0

 
$
129.5

 
$
135.1

 
$
118.5

 
$
158.8

Total Loans 30-89 Days Past Due and Accruing (13)
$
5.3

 
$
3.2

 
$
28.7

 
$
15.1

 
$
4.6

Total Net Loans (Charged-off)/ Recovered
$
0.3

 
$
3.1

 
$
0.1

 
$
1.5

 
$
2.1

Allowance for Loan Losses/
Total Loans
1.17
%
 
1.19
%
 
1.25
%
 
1.28
%
 
1.32
%
Capital Ratios
The Company's capital ratios are listed below:
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
BPFH Ratios:
 
 
 
 
 
 
 
 
 
Total Risk-Based Capital *
14.3
%
 
14.1
%
 
13.8
%
 
13.9
%
 
14.0
%
Tier I Risk-Based Capital *
13.0
%
 
12.9
%
 
12.6
%
 
12.6
%
 
12.7
%
Tier I Leverage Capital *
9.4
%
 
9.3
%
 
9.2
%
 
9.4
%
 
9.5
%
TCE/TA (4)
7.4
%
 
7.4
%
 
7.0
%
 
7.1
%
 
7.4
%
Tier I Common Equity/
Risk Weighted Assets *
10.4
%
 
10.3
%
 
10.0
%
 
10.0
%
 
10.0
%
*September 30, 2017 information is presented based on estimated data.


2


Dividend Payments
Concurrent with the release of third quarter 2017 earnings, the Board of Directors of the Company declared a cash dividend to common shareholders of $0.11 per share. The record date for this dividend is November 3, 2017, and the payment date is November 17, 2017.
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 November 15, 2017, and the payment date is December 15, 2017.
Non-GAAP Financial Measures
The Company uses certain non-GAAP financial measures to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector. 
These non-GAAP financial measures include tangible book value per share; the TCE/TA ratio; return on average common equity; return on average tangible common equity; pre-tax, pre-provision income; total operating expense excluding intangibles, goodwill impairment, and restructuring; the efficiency ratio (FTE basis); the efficiency ratio (FTE basis) excluding amortization of intangibles, goodwill impairment, and restructuring; net income attributable to the Company excluding notable items; diluted earnings per share excluding notable items; and net interest income and net interest margin excluding interest recovered on previous nonaccrual loans, also referred to as core net interest margin.
A detailed reconciliation table of the Company's GAAP to non-GAAP measures is attached.
Conference Call
Management will hold a conference call at 8 a.m. Eastern Time on Thursday, October 19, 2017, to discuss the financial results, business highlights and outlook. To access the call:
Dial In #: (888) 317-6003
Elite Entry Number: 5396726

Replay Information:
Available from October 19, 2017 at 12 noon until October 26, 2017
Dial In #: (877) 344-7529
Conference Number: 10112880
The call will be simultaneously webcast and may be accessed on www.bostonprivate.com

3


Boston Private Financial Holdings, Inc.
Boston Private Financial Holdings, Inc. is a national financial services organization that owns Wealth Management, Trust, and Private Banking affiliates with offices in Boston, New York, Los Angeles, San Francisco, San Jose, Florida, and Wisconsin. The Company has total assets of approximately $8 billion, and manages over $29 billion of client assets.
The Company's affiliates serve the high net worth marketplace with high quality products and services of unique appeal to private clients. The Company also provides strategic oversight and access to resources, both financial and intellectual, to support affiliate management, marketing, compliance and legal activities. (NASDAQ: BPFH)
For more information about BPFH, visit the Company's website at www.bostonprivate.com.
Forward-Looking Statements
Certain statements in this press release that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties. These statements include, among others, statements regarding our strategy, evaluations of future interest rate trends and liquidity, prospects for growth in assets, and prospects for overall results over the long term. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Company's control. Forward-looking statements are based on the current assumptions and beliefs of management and are only expectations of future results. The Company's actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, adverse conditions in the capital and debt markets and the impact of such conditions on the Company's private banking, investment management, wealth advisory, and trust activities; changes in interest rates; competitive pressures from other financial institutions; the effects of weakness in general economic conditions on a national basis or in the local markets in which the Company operates; changes in loan defaults and charge-off rates; changes in the value of securities and other assets, adequacy of loan loss reserves, or decreases in deposit levels necessitating increased borrowing to fund loans and investments; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; changes in government regulation; the risk that goodwill and intangibles recorded in the Company's financial statements will become impaired; the risk that the Company's deferred tax asset may not be realized; risks related to the identification and implementation of acquisitions, dispositions and restructurings; changes in assumptions used in making such forward-looking statements; and the other risks and uncertainties detailed in the Company's Annual Report on Form 10-K and updated by the Company's Quarterly Reports on Form 10-Q and other filings submitted to the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made. The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statement is made.
Note to Editors:
Boston Private Financial Holdings, Inc. is not to be confused with Boston Private Bank & Trust Company. Boston Private Bank & Trust Company is a wholly-owned subsidiary of BPFH. The information reported in this press release is related to the performance and results of BPFH.
###
CONTACT:
Adam Bromley
(617) 912-4386
abromley@bostonprivate.com


4


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Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
 
(In thousands, except share and per share data)
Assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
110,440

 
$
97,032

 
$
165,186

 
$
106,557

 
$
67,631

Investment securities available-for-sale
1,189,827

 
1,188,720

 
1,256,208

 
1,264,132

 
1,249,578

Investment securities held-to-maturity
84,090

 
99,024

 
98,424

 
93,079

 
98,881

Stock in Federal Home Loan Bank and Federal Reserve Bank
61,714

 
45,568

 
50,133

 
44,077

 
36,084

Loans held for sale
1,957

 
2,870

 
350

 
3,464

 
5,316

Total loans
6,413,201

 
6,279,928

 
6,250,217

 
6,114,354

 
5,869,498

Less: Allowance for loan losses
74,873

 
75,009

 
78,031

 
78,077

 
77,669

Net loans
6,338,328

 
6,204,919

 
6,172,186

 
6,036,277

 
5,791,829

Other real estate owned (“OREO”)
—

 
—

 
—

 
1,690

 
1,800

Premises and equipment, net
36,546

 
34,135

 
32,974

 
31,827

 
32,089

Goodwill
142,554

 
142,554

 
142,554

 
142,554

 
152,082

Intangible assets, net
22,447

 
23,873

 
25,299

 
26,725

 
28,267

Fees receivable
12,560

 
12,639

 
12,230

 
13,400

 
11,185

Accrued interest receivable
21,823

 
20,680

 
20,790

 
20,479

 
18,062

Deferred income taxes, net
46,088

 
49,827

 
53,686

 
55,460

 
39,319

Other assets
201,024

 
185,805

 
185,100

 
130,753

 
149,427

Total assets
$
8,269,398

 
$
8,107,646

 
$
8,215,120

 
$
7,970,474

 
$
7,681,550

Liabilities:
 
 
 
 
 
 
 
 
 
Deposits
$
6,262,347

 
$
6,381,339

 
$
6,246,620

 
$
6,085,146

 
$
5,812,243

Deposits held for sale
—

 
—

 
—

 
—

 
105,788

Securities sold under agreements to repurchase
59,903

 
29,232

 
67,249

 
59,624

 
77,466

Federal funds purchased
70,000

 
40,000

 
—

 
80,000

 
125,000

Federal Home Loan Bank borrowings
812,773

 
618,989

 
885,445

 
734,205

 
522,681

Junior subordinated debentures
106,363

 
106,363

 
106,363

 
106,363

 
106,363

Other liabilities
127,069

 
115,088

 
110,310

 
119,683

 
134,322

Total liabilities
7,438,455

 
7,291,011

 
7,415,987

 
7,185,021

 
6,883,863

Redeemable Noncontrolling Interests (“RNCI”)
15,882

 
17,216

 
17,232

 
16,972

 
16,199

Shareholders’ Equity:
 
 
 
 
 
 
 
 
 
Preferred stock, $1.00 par value; authorized: 2,000,000 shares
47,753

 
47,753

 
47,753

 
47,753

 
47,753

Common stock, $1.00 par value; authorized: 170,000,000 shares
84,082

 
84,015

 
84,134

 
83,732

 
83,195

Additional paid-in capital
606,802

 
602,507

 
602,748

 
597,454

 
597,209

Retained earnings
76,455

 
66,807

 
53,510

 
47,929

 
39,415

Accumulated other comprehensive income/ (loss)
(4,823
)
 
(6,038
)
 
(10,237
)
 
(12,548
)
 
10,134

Total Company’s shareholders’ equity
810,269

 
795,044

 
777,908

 
764,320

 
777,706

Noncontrolling interests
4,792

 
4,375

 
3,993

 
4,161

 
3,782

Total shareholders’ equity
815,061

 
799,419

 
781,901

 
768,481

 
781,488

Total liabilities, redeemable noncontrolling interests and shareholders’ equity
$
8,269,398

 
$
8,107,646

 
$
8,215,120

 
$
7,970,474

 
$
7,681,550



5


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
Three Months Ended
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Interest and dividend income:
(In thousands, except share and per share data)
Loans
$
58,096

 
$
57,736

 
$
53,636

 
$
51,499

 
$
50,074

Taxable investment securities
1,569

 
1,592

 
1,670

 
1,592

 
1,537

Non-taxable investment securities
1,664

 
1,655

 
1,606

 
1,520

 
1,444

Mortgage-backed securities
3,267

 
3,495

 
3,504

 
3,290

 
3,079

Federal funds sold and other
916

 
831

 
600

 
508

 
469

Total interest and dividend income
65,512

 
65,309

 
61,016

 
58,409

 
56,603

Interest expense:
 
 
 
 
 
 
 
 
 
Deposits
5,356

 
4,949

 
4,531

 
4,152

 
4,163

Federal Home Loan Bank borrowings
2,657

 
2,489

 
2,111

 
1,987

 
1,929

Junior subordinated debentures
761

 
716

 
671

 
674

 
591

Repurchase agreements and other short-term borrowings
111

 
10

 
61

 
77

 
49

Total interest expense
8,885

 
8,164

 
7,374

 
6,890

 
6,732

Net interest income
56,627

 
57,145

 
53,642

 
51,519

 
49,871

Provision/ (credit) for loan losses
(432
)
 
(6,114
)
 
(181
)
 
(1,128
)
 
(138
)
Net interest income after provision/ (credit) for loan losses
57,059

 
63,259

 
53,823

 
52,647

 
50,009

Fees and other income:
 
 
 
 
 
 
 
 
 
Investment management fees
11,274

 
11,081

 
10,839

 
12,408

 
10,717

Wealth advisory fees
13,279

 
12,961

 
12,823

 
12,568

 
12,750

Wealth management and trust fees
11,619

 
11,161

 
10,826

 
11,031

 
10,826

Other banking fee income
2,726

 
1,964

 
1,694

 
2,387

 
3,447

Gain on sale of loans, net
169

 
59

 
138

 
105

 
156

Total core fees and income
39,067

 
37,226

 
36,320

 
38,499

 
37,896

Gain/ (loss) on sale of investments, net
230

 
237

 
19

 
2

 
273

Gain/ (loss) on OREO, net
—

 
—

 
(46
)
 
(110
)
 
137

Gain on sale of offices
—

 
—

 
—

 
2,862

 
—

Other
970

 
555

 
213

 
2,705

 
1,706

Total other income
1,200

 
792

 
186

 
5,459

 
2,116

Total revenue
96,894

 
95,163

 
90,148

 
95,477

 
89,883

Operating expense:
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
45,168

 
43,493

 
45,825

 
39,669

 
40,924

Occupancy and equipment
11,283

 
10,779

 
10,649

 
10,039

 
9,521

Professional services
3,308

 
3,106

 
3,314

 
2,756

 
2,290

Marketing and business development
2,216

 
1,971

 
1,660

 
2,022

 
1,623

Contract services and data processing
1,608

 
1,641

 
1,580

 
1,743

 
1,865

Amortization of intangibles
1,426

 
1,426

 
1,426

 
1,542

 
1,568

Impairment of goodwill
—

 
—

 
—

 
9,528

 
—

FDIC insurance
647

 
879

 
766

 
727

 
722

Restructuring
—

 
—

 
—

 
—

 
—

Other
3,690

 
4,526

 
3,560

 
3,817

 
3,157

Total operating expense
69,346

 
67,821

 
68,780

 
71,843

 
61,670

Income before income taxes
27,980

 
33,456

 
21,549

 
24,762

 
28,351

Income tax expense
8,289

 
9,963

 
6,553

 
7,247

 
8,652

Net income from continuing operations
19,691

 
23,493

 
14,996

 
17,515

 
19,699

Net income from discontinued operations (1)
1,186

 
1,063

 
1,632

 
1,184

 
1,047

Net income before attribution to noncontrolling interests
20,877

 
24,556

 
16,628

 
18,699

 
20,746

Less: Net income attributable to noncontrolling interests
1,074

 
1,150

 
966

 
1,147

 
1,110

Net income attributable to the Company
$
19,803

 
$
23,406

 
$
15,662

 
$
17,552

 
$
19,636


6


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
Nine Months Ended
 
September 30,
2017
 
September 30,
2016
Interest and dividend income:
(In thousands, except share and per share data)
Loans
$
169,468

 
$
149,851

Taxable investment securities
4,831

 
4,638

Non-taxable investment securities
4,925

 
4,234

Mortgage-backed securities
10,266

 
9,126

Federal funds sold and other
2,347

 
1,381

Total interest and dividend income
191,837

 
169,230

Interest expense:
 
 
 
Deposits
14,836

 
12,420

Federal Home Loan Bank borrowings
7,257

 
6,021

Junior subordinated debentures
2,148

 
1,753

Repurchase agreements and other short-term borrowings
182

 
117

Total interest expense
24,423

 
20,311

Net interest income
167,414

 
148,919

Provision/ (credit) for loan losses
(6,727
)
 
(5,806
)
Net interest income after provision/ (credit) for loan losses
174,141

 
154,725

Fees and other income:
 
 
 
Investment management fees
33,194

 
32,002

Wealth advisory fees
39,063

 
38,013

Wealth management and trust fees
33,606

 
32,950

Other banking fee income
6,384

 
9,662

Gain on sale of loans, net
366

 
562

Total core fees and income
112,613

 
113,189

Gain/ (loss) on sale of investments, net
486

 
519

Gain/ (loss) on OREO, net
(46
)
 
417

Other
1,738

 
704

Total other income
2,178

 
1,640

Total revenue
282,205

 
263,748

Operating expense:
 
 
 
Salaries and employee benefits
134,486

 
124,098

Occupancy and equipment
32,711

 
29,036

Professional services
9,728

 
8,820

Marketing and business development
5,847

 
5,604

Contract services and data processing
4,829

 
5,281

Amortization of intangibles
4,278

 
4,740

FDIC insurance
2,292

 
2,757

Restructuring
—

 
2,017

Other
11,776

 
10,757

Total operating expense
205,947

 
193,110

Income before income taxes
82,985

 
76,444

Income tax expense
24,805

 
23,716

Net income from continuing operations
58,180

 
52,728

Net income from discontinued operations (1)
3,881

 
4,357

Net income before attribution to noncontrolling interests
62,061

 
57,085

Less: Net income attributable to noncontrolling interests
3,190

 
3,010

Net income attributable to the Company
$
58,871

 
$
54,075



7


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
Three Months Ended
PER SHARE DATA:
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
 
(In thousands, except share and per share data)
Calculation of Income for EPS:
 
 
 
 
 
 
 
 
 
Net income attributable to the Company
$
19,803

 
$
23,406

 
$
15,662

 
$
17,552

 
$
19,636

Adjustments to Net Income Attributable to the Company to arrive at Net Income Attributable to Common Shareholders, treasury stock method (2)
(1,146
)
 
(577
)
 
(1,166
)
 
(1,798
)
 
(1,006
)
Net Income Attributable to the Common Shareholders, treasury stock method
$
18,657

 
$
22,829

 
$
14,496

 
$
15,755

 
$
18,630

 
 
 
 
 
 
 
 
 
 
End of Period Common Shares Outstanding
84,082,250

 
84,015,141

 
84,134,104

 
83,731,769

 
83,194,714

 
 
 
 
 
 
 
 
 
 
Weighted Average Shares Outstanding:
 
 
 
 
 
 
 
 
 
Weighted average basic shares outstanding
82,556,225

 
82,298,493

 
81,951,179

 
81,217,391

 
81,301,499

Weighted average diluted shares outstanding (3)
84,888,311

 
84,741,680

 
84,560,918

 
83,438,137

 
83,562,283

 
 
 
 
 
 
 
 
 
 
Diluted Total Earnings per Share
$
0.22

 
$
0.27

 
$
0.17

 
$
0.19

 
$
0.22


 
Nine Months Ended
PER SHARE DATA:
September 30,
2017
 
September 30,
2016
 
(In thousands, except share 
and per share data)
Calculation of Income for EPS:
 
 
 
Net income attributable to the Company
$
58,871

 
$
54,075

Adjustments to Net Income Attributable to the Company to arrive at Net Income Attributable to Common Shareholders, treasury stock method (2)
(2,889
)
 
(2,265
)
Net Income Attributable to the Common Shareholders, treasury stock method
$
55,982

 
$
51,810

 
 
 
 
Weighted Average Shares Outstanding:
 
 
 
Weighted average basic shares outstanding
82,270,849

 
81,280,014

Weighted average diluted shares outstanding (3)
84,741,172

 
83,430,480

 
 
 
 
Diluted Total Earnings per Share
$
0.66

 
$
0.62

 
 
 
 




8


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(In thousands, except per share data)
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
FINANCIAL DATA:
Book Value Per Common Share
$
9.13

 
$
8.95

 
$
8.73

 
$
8.61

 
$
8.82

Tangible Book Value Per Share (4)
$
7.16

 
$
6.97

 
$
6.73

 
$
6.59

 
$
6.65

Market Price Per Share
$
16.55

 
$
15.35

 
$
16.40

 
$
16.55

 
$
12.83

 
 
 
 
 
 
 
 
 
 
ASSETS UNDER MANAGEMENT AND ADVISORY:
 
 
 
 
 
 
 
 
 
Wealth Management and Trust
$
7,703,000

 
$
7,429,000

 
$
7,260,000

 
$
7,008,000

 
$
7,334,000

Investment Managers
11,083,000

 
10,901,000

 
10,907,000

 
10,571,000

 
10,176,000

Wealth Advisory
10,992,000

 
10,744,000

 
10,579,000

 
9,989,000

 
10,028,000

Less: Inter-company Relationship
(11,000
)
 
(11,000
)
 
(11,000
)
 
(11,000
)
 
(11,000
)
Total Assets Under Management and Advisory
$
29,767,000

 
$
29,063,000

 
$
28,735,000

 
$
27,557,000

 
$
27,527,000

 
 
 
 
 
 
 
 
 
 
FINANCIAL RATIOS:
 
 
 
 
 
 
 
 
 
Total Equity/ Total Assets
9.86
%
 
9.86
%
 
9.52
%
 
9.64
%
 
10.17
%
Tangible Common Equity/ Tangible Assets (4)
7.43
%
 
7.37
%
 
7.04
%
 
7.07
%
 
7.38
%
Tier I Common Equity/ Risk Weighted Assets (4)
10.42
%
 
10.28
%
 
9.97
%
 
10.00
%
 
10.02
%
Allowance for Loan Losses/ Total Loans
1.17
%
 
1.19
%
 
1.25
%
 
1.28
%
 
1.32
%
Allowance for Loan Losses/ Nonaccrual Loans
550
%
 
464
%
 
373
%
 
451
%
 
471
%
Return on Average Assets - Three Months Ended (Annualized)
0.96
%
 
1.15
%
 
0.79
%
 
0.89
%
 
1.03
%
Return on Average Common Equity - Three Months Ended (Annualized) (5)
9.87
%
 
12.12
%
 
8.26
%
 
9.07
%
 
10.20
%
Return on Average Tangible Common Equity - Three Months Ended (Annualized) (5)
13.24
%
 
16.27
%
 
11.43
%
 
12.75
%
 
14.30
%
Efficiency Ratio - Three Months Ended (6)
68.06
%
 
67.69
%
 
72.45
%
 
61.87
%
 
65.04
%
 
 
 
 
 
 
 
 
 
 
DEPOSIT DETAIL:
 
 
 
 
 
 
 
 
 
Demand deposits (noninterest-bearing)
$
1,850,833

 
$
1,935,622

 
$
1,772,854

 
$
1,753,648

 
$
1,770,631

NOW
636,013

 
631,973

 
620,280

 
578,657

 
557,482

Savings
74,333

 
69,892

 
74,293

 
74,162

 
73,480

Money market
3,009,779

 
3,055,642

 
3,176,472

 
3,102,048

 
2,879,952

Certificates of deposit
691,389

 
688,210

 
602,721

 
576,631

 
530,698

Total Deposits
$
6,262,347

 
$
6,381,339

 
$
6,246,620

 
$
6,085,146

 
$
5,812,243



9


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:
09/30/17
06/30/17
09/30/16
 
09/30/17
06/30/17
09/30/16
 
09/30/17
06/30/17
09/30/16
AVERAGE ASSETS
 
 
 
 
 
 
 
 
 
 
 
Interest-Earning Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and Investments:
 
 
 
 
 
 
 
 
 
 
 
Taxable investment securities
$
353,374

$
363,166

$
372,852

 
$
1,569

$
1,592

$
1,537

 
1.77
%
1.75
%
1.65
%
Non-taxable investment securities (9)
295,727

294,836

271,864

 
2,559

2,546

2,221

 
3.46
%
3.45
%
3.27
%
Mortgage-backed securities
631,052

653,201

629,748

 
3,267

3,495

3,079

 
2.07
%
2.14
%
1.96
%
Federal funds sold and other
146,285

199,230

152,892

 
916

831

469

 
2.47
%
1.66
%
1.20
%
Total Cash and Investments
1,426,438

1,510,433

1,427,356

 
8,311

8,464

7,306

 
2.33
%
2.24
%
2.05
%
Loans (10):
 
 
 
 
 
 
 
 
 
 
 
Commercial and Industrial (9)
994,388

987,144

1,065,787

 
10,001

9,773

10,626

 
3.94
%
3.92
%
3.90
%
Commercial Real Estate (9)
2,381,583

2,358,409

1,976,327

 
25,579

26,433

19,860

 
4.20
%
4.43
%
3.93
%
Construction and Land
113,562

119,366

117,183

 
1,415

1,377

1,263

 
4.88
%
4.56
%
4.22
%
Residential
2,567,044

2,489,072

2,300,392

 
20,423

19,574

17,812

 
3.18
%
3.15
%
3.10
%
Home Equity
106,744

109,942

122,505

 
1,128

1,085

1,105

 
4.19
%
3.96
%
3.59
%
Other Consumer
187,184

195,384

182,315

 
1,554

1,526

1,154

 
3.29
%
3.13
%
2.52
%
Total Loans
6,350,505

6,259,317

5,764,509

 
60,100

59,768

51,820

 
3.73
%
3.79
%
3.55
%
Total Earning Assets
7,776,943

7,769,750

7,191,865

 
68,411

68,232

59,126

 
3.48
%
3.49
%
3.25
%
LESS: Allowance for Loan Losses
75,166

80,614

76,424

 
 
 
 
 
 
 
 
Cash and due From Banks (Non-Interest Bearing)
42,031

42,166

39,301

 
 
 
 
 
 
 
 
Other Assets
455,820

450,703

445,517

 
 
 
 
 
 
 
 
TOTAL AVERAGE ASSETS
$
8,199,628

$
8,182,005

$
7,600,259

 
 
 
 
 
 
 
 
AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
 
Interest-Bearing Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Interest-Bearing Deposits (10):
 
 
 
 
 
 
 
 
 
 
 
NOW
$
630,282

$
640,378

$
551,085

 
$
189

$
172

$
120

 
0.12
%
0.11
%
0.09
%
Savings
71,900

71,505

76,999

 
16

15

25

 
0.09
%
0.08
%
0.13
%
Money Market
3,065,059

3,173,768

2,922,687

 
3,436

3,244

2,877

 
0.44
%
0.41
%
0.39
%
Certificates of Deposit
671,992

665,668

560,546

 
1,715

1,518

1,141

 
1.01
%
0.91
%
0.81
%
Total Interest-Bearing Deposits (14)
4,439,233

4,551,319

4,111,317

 
5,356

4,949

4,163

 
0.48
%
0.44
%
0.40
%
Junior Subordinated Debentures
106,363

106,363

106,363

 
761

716

591

 
2.80
%
2.67
%
2.17
%
FHLB Borrowings and Other
736,035

703,149

624,528

 
2,768

2,499

1,978

 
1.47
%
1.41
%
1.24
%
Total Interest-Bearing Liabilities
5,281,631

5,360,831

4,842,208

 
8,885

8,164

6,732

 
0.66
%
0.61
%
0.55
%
Non-interest Bearing Demand
Deposits (10) (14)
1,966,479

1,899,916

1,824,548

 
 
 
 
 
 
 
 
Payables and Other Liabilities
121,288

106,657

135,901

 
 
 
 
 
 
 
 
Total Average Liabilities
7,369,398

7,367,404

6,802,657

 
 
 
 
 
 
 
 
Redeemable Noncontrolling Interests
21,634

21,075

19,504

 
 
 
 
 
 
 
 
Average Shareholders' Equity
808,596

793,526

778,098

 
 
 
 
 
 
 
 
TOTAL AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS' EQUITY
$
8,199,628

$
8,182,005

$
7,600,259

 
 
 
 
 
 
 
 
Net Interest Income - on a Fully Taxable Equivalent Basis (FTE)
 
 
 
 
$
59,526

$
60,068

$
52,394

 
 
 
 
LESS: FTE Adjustment (9)
 
 
 
 
2,899

2,923

2,523

 
 
 
 
Net Interest Income (GAAP Basis)
 
 
 
 
$
56,627

$
57,145

$
49,871

 
 
 
 
Interest Rate Spread
 
 
 
 
 
 
 
 
2.82
%
2.88
%
2.70
%
Bank only Net Interest Margin
 
 
 
 
 
 
 
 
3.07
%
3.12
%
2.92
%
Net Interest Margin
 
 
 
 
 
 
 
 
3.02
%
3.07
%
2.88
%

10


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
Average Balance
 
Interest Income/Expense
 
Average Yield/Rate
(In thousands)
Nine Months Ended
 
Nine Months Ended
 
Nine Months Ended
AVERAGE BALANCE SHEET:
09/30/17
09/30/16
 
09/30/17
09/30/16
 
09/30/17
09/30/16
AVERAGE ASSETS
 
 
 
 
 
 
 
 
Interest-Earning Assets:
 
 
 
 
 
 
 
 
Cash and Investments:
 
 
 
 
 
 
 
 
Taxable investment securities
$
369,929

$
373,273

 
$
4,831

$
4,638

 
1.74
%
1.66
%
Non-taxable investment securities (9)
295,195

265,280

 
7,576

6,512

 
3.42
%
3.27
%
Mortgage-backed securities
652,159

594,461

 
10,266

9,126

 
2.10
%
2.05
%
Federal funds sold and other
169,114

160,114

 
2,347

1,381

 
1.55
%
1.14
%
Total Cash and Investments
1,486,397

1,393,128

 
25,020

21,657

 
2.21
%
2.07
%
Loans (10):
 
 
 
 
 
 
 
 
Commercial and Industrial (9)
988,449

1,072,051

 
29,077

32,358

 
3.88
%
3.97
%
Commercial Real Estate (9)
2,354,996

1,915,839

 
75,556

59,216

 
4.23
%
4.06
%
Construction and Land
115,629

147,548

 
4,036

4,367

 
4.60
%
3.89
%
Residential
2,494,151

2,262,262

 
58,988

52,555

 
3.15
%
3.10
%
Home Equity
111,423

121,849

 
3,302

3,260

 
3.96
%
3.57
%
Other Consumer
191,550

172,578

 
4,500

3,193

 
3.14
%
2.47
%
Total Loans
6,256,198

5,692,127

 
175,459

154,949

 
3.71
%
3.60
%
Total Earning Assets
7,742,595

7,085,255

 
200,479

176,606

 
3.43
%
3.30
%
LESS: Allowance for Loan Losses
77,957

78,008

 
 
 
 
 
 
Cash and due From Banks (Non-Interest Bearing)
42,006

39,869

 
 
 
 
 
 
Other Assets
436,373

432,005

 
 
 
 
 
 
TOTAL AVERAGE ASSETS
$
8,143,017

$
7,479,121

 
 
 
 
 
 
AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
Interest-Bearing Liabilities:
 
 
 
 
 
 
 
 
Interest-Bearing Deposits (10):
 
 
 
 
 
 
 
 
NOW
$
616,054

$
549,429

 
$
472

$
311

 
0.10
%
0.08
%
Savings
72,831

75,958

 
49

71

 
0.09
%
0.13
%
Money Market
3,149,545

2,958,051

 
9,801

8,615

 
0.42
%
0.39
%
Certificates of Deposit
642,820

566,022

 
4,514

3,423

 
0.94
%
0.81
%
Total Interest-Bearing Deposits (14)
4,481,250

4,149,460

 
14,836

12,420

 
0.44
%
0.40
%
Junior Subordinated Debentures
106,363

106,363

 
2,148

1,753

 
2.66
%
2.17
%
FHLB Borrowings and Other
722,087

623,030

 
7,439

6,138

 
1.36
%
1.29
%
Total Interest-Bearing Liabilities
5,309,700

4,878,853

 
24,423

20,311

 
0.61
%
0.55
%
Non-interest Bearing Demand
Deposits (10) (14)
1,903,709

1,691,872

 
 
 
 
 
 
Payables and Other Liabilities
115,622

121,601

 
 
 
 
 
 
Total Average Liabilities
7,329,031

6,692,326

 
 
 
 
 
 
Redeemable Noncontrolling Interests
21,341

20,225

 
 
 
 
 
 
Average Shareholders' Equity
792,645

766,570

 
 
 
 
 
 
TOTAL AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS' EQUITY
$
8,143,017

$
7,479,121

 
 
 
 
 
 
Net Interest Income - on a Fully Taxable Equivalent Basis (FTE)
 
 
 
$
176,056

$
156,295

 
 
 
LESS: FTE Adjustment (9)
 
 
 
8,642

7,376

 
 
 
Net Interest Income (GAAP Basis)
 
 
 
$
167,414

$
148,919

 
 
 
Interest Rate Spread
 
 
 
 
 
 
2.82
%
2.75
%
Bank only Net Interest Margin
 
 
 
 
 
 
3.06
%
2.96
%
Net Interest Margin
 
 
 
 
 
 
3.01
%
2.92
%


11


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(In thousands)
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
LOAN DATA (11):
 
 
 
 
Other Commercial and Industrial Loans:
 
 
 
 
 
 
 
 
 
New England
$
503,322

 
$
429,598

 
$
458,687

 
$
493,451

 
$
461,201

San Francisco Bay Area
50,686

 
49,163

 
55,289

 
50,578

 
59,936

Southern California
64,248

 
62,995

 
66,378

 
67,341

 
67,583

Total Other Commercial and Industrial Loans
$
618,256

 
$
541,756

 
$
580,354

 
$
611,370

 
$
588,720

Commercial Tax Exempt Loans:
 
 
 
 
 
 
 
 
 
New England
$
320,172

 
$
312,783

 
$
318,137

 
$
317,691

 
$
263,418

San Francisco Bay Area
99,540

 
91,666

 
79,517

 
69,064

 
69,366

Southern California
11,638

 
11,708

 
11,778

 
11,849

 
11,918

Total Commercial Tax Exempt Loans
$
431,350

 
$
416,157

 
$
409,432

 
$
398,604

 
$
344,702

Total Commercial and Industrial Loans
$
1,049,606

 
957,913

 
989,786

 
1,009,974

 
933,422

Commercial Real Estate Loans:
 
 
 
 
 
 
 
 
 
New England
$
988,788

 
$
993,426

 
$
1,017,565

 
$
1,012,284

 
$
987,758

San Francisco Bay Area
698,148

 
688,751

 
686,019

 
637,042

 
611,224

Southern California
676,223

 
674,168

 
665,043

 
652,918

 
621,336

Total Commercial Real Estate Loans
$
2,363,159

 
$
2,356,345

 
$
2,368,627

 
$
2,302,244

 
$
2,220,318

Construction and Land Loans:
 
 
 
 
 
 
 
 
 
New England
$
61,635

 
$
74,919

 
$
58,737

 
$
47,434

 
$
56,268

San Francisco Bay Area
20,893

 
22,177

 
28,148

 
29,629

 
26,400

Southern California
35,763

 
33,808

 
30,122

 
27,776

 
16,028

Total Construction and Land Loans
$
118,291

 
$
130,904

 
$
117,007

 
$
104,839

 
$
98,696

Residential Loans:
 
 
 
 
 
 
 
 
 
New England
$
1,558,587

 
$
1,540,393

 
$
1,508,138

 
$
1,456,592

 
$
1,409,385

San Francisco Bay Area
510,956

 
488,854

 
474,294

 
473,102

 
476,986

Southern California
531,245

 
495,978

 
481,184

 
450,167

 
429,719

Total Residential Loans
$
2,600,788

 
$
2,525,225

 
$
2,463,616

 
$
2,379,861

 
$
2,316,090

Home Equity Loans:
 
 
 
 
 
 
 
 
 
New England
$
72,149

 
$
71,953

 
$
80,904

 
$
87,280

 
$
90,592

San Francisco Bay Area
26,052

 
28,400

 
26,006

 
25,129

 
23,826

Southern California
9,026

 
8,196

 
7,626

 
6,408

 
6,851

Total Home Equity Loans
$
107,227

 
$
108,549

 
$
114,536

 
$
118,817

 
$
121,269

Other Consumer Loans:
 
 
 
 
 
 
 
 
 
New England
$
150,309

 
$
175,644

 
$
175,096

 
$
186,680

 
$
167,140

San Francisco Bay Area
15,302

 
17,909

 
17,163

 
7,517

 
6,764

Southern California
8,519

 
7,439

 
4,386

 
4,422

 
5,799

Total Other Consumer Loans
$
174,130

 
$
200,992

 
$
196,645

 
$
198,619

 
$
179,703

Total Loans:
 
 
 
 
 
 
 
 
 
New England
$
3,654,962

 
$
3,598,716

 
$
3,617,264

 
$
3,601,412

 
$
3,435,762

San Francisco Bay Area
1,421,577

 
1,386,920

 
1,366,436

 
1,292,061

 
1,274,502

Southern California
1,336,662

 
1,294,292

 
1,266,517

 
1,220,881

 
1,159,234

Total Loans
$
6,413,201

 
$
6,279,928

 
$
6,250,217

 
$
6,114,354

 
$
5,869,498


12


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(In thousands)
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
CREDIT QUALITY (11):
 
 
 
 
Special Mention Loans:
 
 
 
 
 
 
 
 
 
New England
$
37,569

 
$
34,538

 
$
21,596

 
$
14,750

 
$
25,248

San Francisco Bay Area
23,898

 
23,399

 
23,850

 
21,901

 
22,786

Southern California
17,207

 
4,327

 
4,350

 
884

 
6,278

Total Special Mention Loans
$
78,674

 
$
62,264

 
$
49,796

 
$
37,535

 
$
54,312

Accruing Substandard Loans (12):
 
 
 
 
 
 
 
 
 
New England
$
8,196

 
$
10,185

 
$
12,157

 
$
10,972

 
$
19,748

San Francisco Bay Area
11,622

 
6,574

 
15,824

 
15,890

 
19,157

Southern California
33,923

 
34,339

 
36,398

 
36,809

 
49,148

Total Accruing Substandard Loans
$
53,741

 
$
51,098

 
$
64,379

 
$
63,671

 
$
88,053

Nonaccruing Loans:
 
 
 
 
 
 
 
 
 
New England
$
7,380

 
$
9,880

 
$
14,407

 
$
10,081

 
$
11,020

San Francisco Bay Area
1,494

 
1,857

 
2,312

 
2,989

 
3,543

Southern California
4,749

 
4,439

 
4,226

 
4,245

 
1,928

Total Nonaccruing Loans
$
13,623

 
$
16,176

 
$
20,945

 
$
17,315

 
$
16,491

Other Real Estate Owned:
 
 
 
 
 
 
 
 
 
New England
$
—

 
$
—

 
$
—

 
$
1,690

 
$
1,800

San Francisco Bay Area
—

 
—

 
—

 
—

 
—

Southern California
—

 
—

 
—

 
—

 
—

Total Other Real Estate Owned
$
—

 
$
—

 
$
—

 
$
1,690

 
$
1,800

Loans 30-89 Days Past Due and Accruing (13):
 
 
 
 
 
 
 
 
 
New England
$
4,664

 
$
3,182

 
$
9,843

 
$
10,311

 
$
2,735

San Francisco Bay Area
430

 
12

 
10,111

 
591

 
1,018

Southern California
198

 
—

 
8,771

 
4,235

 
836

Total Loans 30-89 Days Past Due and Accruing
$
5,292

 
$
3,194

 
$
28,725

 
$
15,137

 
$
4,589

Loans (Charged-off)/ Recovered, Net for the Three Months Ended:
 
 
 
 
 
 
 
 
 
New England
$
73

 
$
667

 
$
79

 
$
1,120

 
$
1,704

San Francisco Bay Area
206

 
2,856

 
35

 
384

 
318

Southern California
17

 
(431
)
 
21

 
33

 
32

Total Net Loans (Charged-off)/ Recovered
$
296

 
$
3,092

 
$
135

 
$
1,537

 
$
2,054

Loans (Charged-off)/ Recovered, Net for the Nine Months Ended:
 
 
 
 
 
 
 
 
 
New England
$
819

 
 
 
 
 
 
 
$
834

San Francisco Bay Area
3,097

 
 
 
 
 
 
 
4,309

Southern California
(393
)
 
 
 
 
 
 
 
(168
)
Total Net Loans (Charged-off)/ Recovered
$
3,523

 
 
 
 
 
 
 
$
4,975




13


Boston Private Financial Holdings, Inc.
Selected Financial Data
(Unaudited)

FOOTNOTES:
(1)
Net income from discontinued operations consists of contingent payments or expenses related to our divested affiliates, including Westfield Capital Management Company, LLC.

(2)
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 and dividends paid on preferred stock.

(3)
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 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, 2016 for additional information.

(4)
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 share and per share data)
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Total Balance Sheet Assets
$
8,269,398

 
$
8,107,646

 
$
8,215,120

 
$
7,970,474

 
$
7,681,550

LESS: Goodwill and Intangible Assets, net
(165,001
)
 
(166,427
)
 
(167,853
)
 
(169,279
)
 
(180,349
)
Tangible Assets (non-GAAP)
$
8,104,397

 
$
7,941,219

 
$
8,047,267

 
$
7,801,195

 
$
7,501,201

Total Shareholders' Equity
$
815,061

 
$
799,419

 
$
781,901

 
$
768,481

 
$
781,488

LESS: Series D Preferred Stock (non-convertible)
(47,753
)
 
(47,753
)
 
(47,753
)
 
(47,753
)
 
(47,753
)
LESS: Goodwill and Intangible Assets, net
(165,001
)
 
(166,427
)
 
(167,853
)
 
(169,279
)
 
(180,349
)
Total adjusting items
(212,754
)
 
(214,180
)
 
(215,606
)
 
(217,032
)
 
(228,102
)
Tangible Common Equity (non-GAAP)
$
602,307

 
$
585,239

 
$
566,295

 
$
551,449

 
$
553,386

Total Equity/Total Assets
9.86
%
 
9.86
%
 
9.52
%
 
9.64
%
 
10.17
%
Tangible Common Equity/Tangible Assets (non-GAAP)
7.43
%
 
7.37
%
 
7.04
%
 
7.07
%
 
7.38
%
 
 
 
 
 
 
 
 
 
 
Total Risk Weighted Assets *
$
5,831,558

 
$
5,765,471

 
$
5,806,853

 
$
5,716,037

 
$
5,534,711

Tier I Common Equity *
$
607,822

 
$
592,845

 
$
578,941

 
$
571,663

 
$
554,368

Tier I Common Equity/ Risk Weighted Assets
10.42
%
 
10.28
%
 
9.97
%
 
10.00
%
 
10.02
%
 
 
 
 
 
 
 
 
 
 
End of Period Shares Outstanding
84,082,250

 
84,015,141

 
84,134,104

 
83,731,769

 
83,194,714

 
 
 
 
 
 
 
 
 
 
Book Value Per Common Share
$
9.13

 
$
8.95

 
$
8.73

 
$
8.61

 
$
8.82

Tangible Book Value Per Share (non-GAAP)
$
7.16

 
$
6.97

 
$
6.73

 
$
6.59

 
$
6.65

*     Risk Weighted Assets and Tier I Common Equity for September 30, 2017 are presented based on estimated data.


14


Boston Private Financial Holdings, Inc.
Selected Financial Data
(Unaudited)

(5)
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 annualizes income data based on the number of days in the period presented and a 365 day year. 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
(In thousands)
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Total average shareholders' equity
$
808,596

 
$
793,526

 
$
774,251

 
$
777,466

 
$
778,098

LESS: Average Series D preferred stock (non-convertible)
(47,753
)
 
(47,753
)
 
(47,753
)
 
(47,753
)
 
(47,753
)
Average common equity (non-GAAP)
760,843

 
745,773

 
726,498

 
729,713

 
730,345

LESS: Average goodwill and intangible assets, net
(165,766
)
 
(167,204
)
 
(168,681
)
 
(179,535
)
 
(181,191
)
Average Tangible Common Equity (non-GAAP)
$
595,077

 
$
578,569

 
$
557,817

 
$
550,178

 
$
549,154

 


 

 
 
 
 
 

Net income attributable to the Company
$
19,803

 
$
23,406

 
$
15,662

 
$
17,552

 
$
19,636

LESS: Dividends on Series D preferred stock
(868
)
 
(869
)
 
(869
)
 
(869
)
 
(868
)
Common net income (non-GAAP)
18,935

 
22,537

 
14,793

 
16,683

 
18,768

ADD: Amortization of intangibles, net of tax (35%)
927

 
927

 
927

 
1,002

 
1,019

Tangible common net income (non-GAAP)
$
19,862

 
$
23,464

 
$
15,720

 
$
17,685

 
$
19,787

 
 
 
 
 
 
 
 
 
 
Return on Average Equity - (Annualized)
9.72
%
 
11.83
%
 
8.20
%
 
8.96
%
 
10.01
%
Return on Average Common Equity - (Annualized) (non-GAAP)
9.87
%
 
12.12
%
 
8.26
%
 
9.07
%
 
10.20
%
Return on Average Tangible Common Equity - (Annualized) (non-GAAP)
13.24
%
 
16.27
%
 
11.43
%
 
12.75
%
 
14.30
%

 
Nine Months Ended
(In thousands)
September 30,
2017
 
September 30,
2016
Total average shareholders' equity
$
792,645

 
$
766,570

LESS: Average Series D preferred stock (non-convertible)
(47,753
)
 
(47,753
)
Average common equity (non-GAAP)
744,892

 
718,817

LESS: Average goodwill and intangible assets, net
(167,209
)
 
(182,794
)
Average Tangible Common Equity (non-GAAP)
$
577,683

 
$
536,023

 
 
 
 
Net income attributable to the Company
$
58,871

 
$
54,075

LESS: Dividends on Series D preferred stock
(2,606
)
 
(2,606
)
Common net income (non-GAAP)
56,265

 
51,469

ADD: Amortization of intangibles, net of tax (35%)
2,781

 
3,081

Tangible common net income (non-GAAP)
$
59,046

 
$
54,550

 
 
 
 
Return on Average Equity - (Annualized)
9.93
%
 
9.43
%
Return on Average Common Equity - (Annualized) (non-GAAP)
10.10
%
 
9.57
%
Return on Average Tangible Common Equity - (Annualized) (non-GAAP)
13.67
%
 
13.61
%
 
 
 
 


15


Boston Private Financial Holdings, Inc.
Selected Financial Data
(Unaudited)

(6)
The Company uses certain non-GAAP financial measures, such as: pre-tax, pre-provision income, total operating expenses excluding amortization of intangibles, goodwill impairment, and restructuring expense, 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 income; from GAAP total operating expense to non-GAAP total operating expense excluding amortization of intangibles, goodwill impairment, and restructuring; and from GAAP efficiency ratio to Non-GAAP efficiency ratio (FTE basis), excluding amortization of intangibles, goodwill impairment, and restructuring, are presented below:
 
Three Months Ended
(In thousands)
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Income before income taxes (GAAP)
$
27,980

 
$
33,456

 
$
21,549

 
$
24,762

 
$
28,351

ADD BACK: Provision/ (credit) for loan losses
(432
)
 
(6,114
)
 
(181
)
 
(1,128
)
 
(138
)
Pre-tax, pre-provision income (non-GAAP)
$
27,548

 
$
27,342

 
$
21,368

 
$
23,634

 
$
28,213

 
 
 
 
 
 
 
 
 
 
Total operating expense (GAAP)
$
69,346

 
$
67,821

 
$
68,780

 
$
71,843

 
$
61,670

Less: Amortization of intangibles
1,426

 
1,426

 
1,426

 
1,542

 
1,568

Less: Goodwill impairment
—

 
—

 
—

 
9,528

 
—

Total operating expense (excluding amortization of intangibles, goodwill impairment, and restructuring) (non-GAAP)
$
67,920

 
$
66,395

 
$
67,354

 
$
60,773

 
$
60,102

 
 
 
 
 
 
 
 
 
 
Net interest income
$
56,627

 
$
57,145

 
$
53,642

 
$
51,519

 
$
49,871

Total core fees and income
39,067

 
37,226

 
36,320

 
38,499

 
37,896

Total other income
1,200

 
792

 
186

 
5,459

 
2,116

FTE income
2,899

 
2,923

 
2,820

 
2,754

 
2,523

Total revenue (FTE basis)
$
99,793

 
$
98,086

 
$
92,968

 
$
98,231

 
$
92,406

Efficiency Ratio (GAAP)
71.57
%
 
71.27
%
 
76.30
%
 
75.25
%
 
68.61
%
Efficiency Ratio, FTE Basis excluding amortization of intangibles, goodwill impairment, and restructuring (non-GAAP)
68.06
%
 
67.69
%
 
72.45
%
 
61.87
%
 
65.04
%
 
Nine Months Ended
(In thousands)
September 30,
2017
 
September 30,
2016
Income before income taxes (GAAP)
$
82,985

 
$
76,444

ADD BACK: Provision/ (credit) for loan losses
(6,727
)
 
(5,806
)
Pre-tax, pre-provision income (non-GAAP)
$
76,258

 
$
70,638

 
 
 
 
Total operating expense (GAAP)
$
205,947

 
$
193,110

Less: Amortization of intangibles
4,278

 
4,740

Less: Restructuring
—

 
2,017

Total operating expense (excluding amortization of intangibles, goodwill impairment, and restructuring) (non-GAAP)
$
201,669

 
$
186,353

 
 
 
 
Net interest income
$
167,414

 
$
148,919

Total core fees and income
112,613

 
113,189

Total other income
2,178

 
1,640

FTE income
8,642

 
7,376

Total revenue (FTE basis)
$
290,847

 
$
271,124

Efficiency Ratio (GAAP)
72.98
%
 
73.22
%
Efficiency Ratio, FTE Basis excluding amortization of intangibles, goodwill impairment, and restructuring (non-GAAP)
69.34
%
 
68.73
%
 
 
 
 



16


(7)
The Company uses certain non-GAAP financial measures, such as: net income attributable to the Company excluding notable items and diluted earnings per share excluding notable items 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 net income attributable to the Company to non-GAAP net income attributable to the Company excluding notable items and from GAAP diluted earnings per share to non-GAAP diluted earnings per share excluding notable items are presented below:
 
Three Months Ended
(In thousands, except share and per share data)
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Net income attributable to the Company (GAAP)
$
19,803

 
$
23,406

 
$
15,662

 
$
17,552

 
$
19,636

LESS: Gain on sale of offices
—

 
—

 
—

 
2,862

 
—

ADD BACK: Impairment of goodwill
—

 
—

 
—

 
9,528

 
—

Tax effect at 35% statutory rate
—

 
—

 
—

 
(2,333
)
 
—

Net income attributable to the Company
excluding notable items (non-GAAP)
$
19,803

 
$
23,406

 
$
15,662

 
$
21,885

 
$
19,636

 
 
 
 
 
 
 
 
 
 
Net Income Attributable to the Common Shareholders, treasury stock method (GAAP)
$
18,657

 
$
22,829

 
$
14,496

 
$
15,755

 
$
18,630

LESS: Gain on sale of offices
—

 
—

 
—

 
2,862

 
—

ADD BACK: Impairment of goodwill
—

 
—

 
—

 
9,528

 
—

Tax effect at 35% statutory rate
—

 
—

 
—

 
(2,333
)
 
—

Net Income Attributable to the Common Shareholders, treasury stock method, excluding notable items (non-GAAP)
$
18,657

 
$
22,829

 
$
14,496

 
$
20,088

 
$
18,630

 
 
 
 
 
 
 
 
 
 
Weighted average diluted shares outstanding (3)
84,888,311

 
84,741,680

 
84,560,918

 
83,438,137

 
83,562,283

 
 
 
 
 
 
 
 
 
 
Diluted Total Earnings per Share (GAAP)
$
0.22

 
$
0.27

 
$
0.17

 
$
0.19

 
$
0.22

Diluted Total Earnings per Share, excluding notable items (non-GAAP)
$
0.22

 
$
0.27

 
$
0.17

 
$
0.24

 
$
0.22



(8)
The Company uses certain non-GAAP financial measures, such as: net interest income excluding interest recovered on previous nonaccrual loans and net interest margin excluding interest recovered on previous nonaccrual loans, also referred to as core net interest margin, 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 net interest income to non-GAAP net interest income excluding interest recovered on previous nonaccrual loans; and from GAAP net interest margin to non-GAAP net interest margin excluding interest recovered on previous nonaccrual loans, are presented below:
 
Three Months Ended
(In thousands)
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
September 30,
2016
Net interest income (GAAP basis)
$
56,627

 
$
57,145

 
$
53,642

 
$
51,519

 
$
49,871

ADD: FTE income
2,899

 
2,923

 
2,820

 
2,754

 
2,523

Net interest income, FTE basis
59,526

 
60,068

 
56,462

 
54,273

 
52,394

LESS: Interest recovered on previously nonaccrual loans
133

 
1,971

 
299

 
365

 
343

Net interest income, FTE basis, excluding interest recovered on previously nonaccrual loans (non-GAAP)
59,393

 
58,097

 
56,163

 
53,908

 
52,051

 
 
 


 
 
 
 
 


Net Interest Margin (FTE basis)
3.02
%
 
3.07
%
 
2.94
%
 
2.88
%
 
2.88
%
Net Interest Margin, FTE basis, excluding interest recovered on previously nonaccrual loans (non-GAAP) - also referred to as core Net Interest Margin
3.02
%
 
2.97
%
 
2.92
%
 
2.86
%
 
2.86
%

(9)
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.
    
(10)
Average Loans includes Loans Held for Sale and Nonaccrual Loans. Average Deposits includes Deposits Held for Sale, if any.

(11)
The concentration of the Private Banking loan data and credit quality is primarily based on the location of the lender's regional offices.

(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

17


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)
At September 30, 2017 June 30, 2017, March 31, 2017, December 31, 2016, and September 30, 2016, the Company had no loans outstanding more than 90 days past due but still on accrual status.

(14)
Average Total Deposits is the sum of Average Total Interest-Bearing Deposits and Average Noninterest Bearing Demand Deposits.

18