Boston Private Financial Holdings, Inc. Reports Second Quarter 2017 Results

Second Quarter Highlights:

Profitability Improvement: Net Income Attributable to the Company increased 43% year-over-year and 49% linked quarter to $23.4 million, while Return on Average Common Equity increased to 12.12% from 8.26% in the previous quarter.
Net Interest Income Growth: Net Interest Income increased 16% year-over-year and 7% linked quarter to $57.1 million, while the Net Interest Margin expanded to 3.07% from 2.94% in the previous quarter.
Deposit and Loan Growth: Average Total Deposits increased 13% year-over-year to $6.5 billion, and Average Total Loans increased 10% year-over-year to $6.3 billion.
Assets Under Management: Total Assets Under Management/Advisory (“AUM”) increased 7% year-over-year to $29.1 billion.
Provision Credit: The Company recorded a provision credit of $6.1 million during the second quarter.

July 26, 2017 04:05 PM Eastern Daylight Time

BOSTON--(BUSINESS WIRE)--Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the “Company” or “BPFH”) today reported second quarter 2017 GAAP Net Income Attributable to the Company of $23.4 million, compared to $15.7 million for the first quarter of 2017 and $16.4 million for the second quarter of 2016. Second quarter 2017 diluted earnings per share were $0.27, compared to $0.17 in the first quarter of 2017, and $0.18 in the second quarter of 2016.

"Our Company delivered strong earnings during the second quarter," said Clayton G. Deutsch, CEO. "The Private Bank showed robust Net Interest Income growth as our balance sheet positioning, overall loan growth, and core deposit strength drove expansion of Net Interest Margin and Pre-Tax Pre-Provision Income, with recoveries also assisting earnings. At the same time, our Wealth Advisory and Investment Management segments demonstrated operating leverage translating into revenue growth and improved profitability."

"We are pleased with the AUM development, revenue build, and improving financial performance of our Boston Private Wealth business. We remain focused on increasing shareholder value by positioning all of our businesses for long-term success and attractive returns while maintaining strong credit quality and a favorable risk profile," he concluded.

Core Fees and Income/Assets Under Management

Core Fees and Income for the second quarter were $37.2 million, a 3% increase on a linked quarter basis and a 1% decline year-over-year. Core Fees and Income increased linked quarter with contributions from all business segments, while the year-over-year decrease was primarily due to lower swap fee income.

AUM was $29.1 billion at the end of the second quarter, an increase of 1% from the previous quarter and 7% year-over-year. The Company experienced net flows of negative $180 million during the second quarter, compared to $267 million and negative $199 million in the first quarter of 2017 and second quarter of 2016, respectively. During the second quarter, net flows by segment were $63 million for Wealth Management & Trust, negative $176 million for Investment Management, and negative $67 million for Wealth Advisory.

Net Interest Income

Net Interest Income for the second quarter was $57.1 million, an increase of 7% from $53.6 million for the first quarter of 2017 and an increase of 16% from $49.2 million for the second quarter of 2016. The current quarter includes $2.0 million of interest recovered on previous nonaccrual loans compared to $0.3 million for the first quarter and $0.6 million for the second quarter of 2016. Excluding interest recovered on previous nonaccrual loans, Net Interest Income on an FTE basis increased 3% linked quarter and 14% year-over-year.

Net Interest Margin was 3.07% for the second quarter of 2017, an increase of 13 basis points from the first quarter of 2017 and 16 basis points from the second quarter of 2016. Excluding interest recovered on previous nonaccrual loans, Net Interest Margin for the second quarter was 2.97%, an increase of 5 basis points from the first quarter of 2017 and an increase of 9 basis points from the second quarter of 2016.

Total Operating Expense

Total Operating Expense for the second quarter of 2017 was $67.8 million, down 1% linked quarter from $68.8 million primarily due to seasonal compensation expense in the first quarter. On a year-over-year basis, Total Operating Expense increased 5% from $64.7 million due to increased compensation expense and technology initiatives.

Provision and Asset Quality

The Company recorded a provision credit of $6.1 million for the second quarter of 2017, compared to a provision credit of $0.2 million for the first quarter and $2.5 million for the second quarter of 2016. The provision credit in the second quarter of 2017 was due to net recoveries, declines in quantitative loss factors, a decrease in Criticized loans, and a decline in commercial loans, partially offset by residential loan growth.

Criticized Loans decreased 4% linked quarter and 14% year-over-year to $130 million. Nonaccrual Loans (“Nonaccruals”) decreased 22% to $16.2 million on a linked quarter basis. On a year-over-year basis, Nonaccruals decreased 16% from $19.2 million. As a percentage of Total Loans, Nonaccruals were 26 basis points at June 30, 2017, down 8 basis points compared to March 31, 2017, and down 7 basis points from June 30, 2016.

Additional credit metrics are listed below:


(In millions)	June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
Total Criticized Loans	$	129.5		$	135.1		$	118.5		$	158.8		$	150.7
Total Loans 30-89 Days Past Due and Accruing⁽¹³⁾	$	3.2		$	28.7		$	15.1		$	4.6		$	7.6
Total Net Loans (Charged-off)/ Recovered	$	3.1		$	0.1		$	1.5		$	2.1		$	1.9
Allowance for Loan Losses/ Total Loans		1.19	%		1.25	%		1.28	%		1.32	%		1.32	%

Capital Ratios

Capital ratios are listed below:


	June 30, 2017		March 31, 2017		December 31, 2016		September 30, 2016		June 30, 2016
BPFH Ratios:
Total Risk-Based Capital *	14.1	%	13.8	%	13.9	%	14.0	%	14.0	%
Tier I Risk-Based Capital *	12.9	%	12.6	%	12.6	%	12.7	%	12.7	%
Tier I Leverage Capital *	9.3	%	9.2	%	9.4	%	9.5	%	9.6	%
TCE/TA ⁽⁴⁾	7.4	%	7.0	%	7.1	%	7.4	%	7.4	%
Tier I Common Equity/ Risk Weighted Assets *	10.3	%	10.0	%	10.0	%	10.0	%	10.0	%

*June 30, 2017 information is presented based on estimated data.

Dividend Payments
Concurrent with the release of second 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 August 9, 2017, and the payment date is August 18, 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 August 15, 2017, and the payment date is September 15, 2017.

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 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; 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, July 27, 2017, to discuss the financial results, business highlights and outlook. To access the call:

Dial In #: (888) 317-6003
Elite Entry Number: 7163444

Replay Information:
Available from July 27, 2017 at 12 noon until August 3, 2017
Dial In #: (877) 344-7529
Conference Number: 10110081

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, 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 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; 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.


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

	June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016		June 30, 2016
	(In thousands, except share and per share data)
Assets:
Cash and cash equivalents	$	97,032		$	165,186		$	106,557		$	67,631	$	126,167
Investment securities available-for-sale		1,188,720			1,256,208			1,264,132			1,249,578		1,191,523
Investment securities held-to-maturity		99,024			98,424			93,079			98,881		105,297
Stock in Federal Home Loan Banks		45,568			50,133			44,077			36,084		44,374
Loans held for sale		2,870			350			3,464			5,316		4,677
Total loans		6,279,928			6,250,217			6,114,354			5,869,498		5,751,497
Less: Allowance for loan losses		75,009			78,031			78,077			77,669		75,753
Net loans		6,204,919			6,172,186			6,036,277			5,791,829		5,675,744
Other real estate owned (“OREO”)		—			—			1,690			1,800		2,042
Premises and equipment, net		34,135			32,974			31,827			32,089		31,752
Goodwill		142,554			142,554			142,554			152,082		152,082
Intangible assets, net		23,873			25,299			26,725			28,267		29,836
Fees receivable		12,639			12,230			13,400			11,185		11,129
Accrued interest receivable		20,680			20,790			20,479			18,062		18,061
Deferred income taxes, net		49,827			53,686			55,460			39,319		36,942
Other assets		185,805			185,100			130,753			149,427		149,975
Total assets	$	8,107,646		$	8,215,120		$	7,970,474		$	7,681,550	$	7,579,601
Liabilities:
Deposits	$	6,381,339		$	6,246,620		$	6,085,146		$	5,812,243	$	5,536,092
Deposits held for sale		—			—			—			105,788		110,558
Securities sold under agreements to repurchase		29,232			67,249			59,624			77,466		43,304
Federal funds purchased		40,000			—			80,000			125,000		180,000
Federal Home Loan Bank borrowings		618,989			885,445			734,205			522,681		678,012
Junior subordinated debentures		106,363			106,363			106,363			106,363		106,363
Other liabilities		115,088			110,310			119,683			134,322		135,289
Total liabilities		7,291,011			7,415,987			7,185,021			6,883,863		6,789,618
Redeemable Noncontrolling Interests (“RNCI”)		17,216			17,232			16,972			16,199		15,843
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		84,015			84,134			83,732			83,195		83,380
Additional paid-in capital		602,507			602,748			597,454			597,209		597,989
Retained earnings		66,807			53,510			47,929			39,415		28,985
Accumulated other comprehensive income/ (loss)		(6,038	)		(10,237	)		(12,548	)		10,134		12,654
Total Company’s shareholders’ equity		795,044			777,908			764,320			777,706		770,761
Noncontrolling interests		4,375			3,993			4,161			3,782		3,379
Total shareholders’ equity		799,419			781,901			768,481			781,488		774,140
Total liabilities, redeemable noncontrolling interests and shareholders’ equity	$	8,107,646		$	8,215,120		$	7,970,474		$	7,681,550	$	7,579,601


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

	Three Months Ended
	June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
Interest and dividend income:	(In thousands, except share and per share data)
Loans	$	57,736		$	53,636		$	51,499		$	50,074		$	49,731
Taxable investment securities		1,592			1,670			1,592			1,537			1,507
Non-taxable investment securities		1,655			1,606			1,520			1,444			1,400
Mortgage-backed securities		3,495			3,504			3,290			3,079			2,982
Federal funds sold and other		831			600			508			469			405
Total interest and dividend income		65,309			61,016			58,409			56,603			56,025
Interest expense:
Deposits		4,949			4,531			4,152			4,163			4,075
Federal Home Loan Bank borrowings		2,489			2,111			1,987			1,929			2,139
Junior subordinated debentures		716			671			674			591			584
Repurchase agreements and other short-term borrowings		10			61			77			49			58
Total interest expense		8,164			7,374			6,890			6,732			6,856
Net interest income		57,145			53,642			51,519			49,871			49,169
Provision/ (credit) for loan losses		(6,114	)		(181	)		(1,128	)		(138	)		(2,535	)
Net interest income after provision/ (credit) for loan losses		63,259			53,823			52,647			50,009			51,704
Fees and other income:
Investment management fees		11,081			10,839			12,408			10,717			10,627
Wealth advisory fees		12,961			12,823			12,568			12,750			12,551
Wealth management and trust fees		11,161			10,826			11,031			10,826			11,208
Other banking fee income		1,964			1,694			2,387			3,447			2,982
Gain on sale of loans, net		59			138			105			156			197
Total core fees and income		37,226			36,320			38,499			37,896			37,565
Gain/ (loss) on sale of investments, net		237			19			2			273			245
Gain/ (loss) on OREO, net		—			(46	)		(110	)		137			—
Gain on sale of offices		—			—			2,862			—			—
Other		555			213			2,705			1,706			(1,015	)
Total other income		792			186			5,459			2,116			(770	)
Operating expense:
Salaries and employee benefits		43,493			45,825			39,669			40,924			40,614
Occupancy and equipment		10,779			10,649			10,039			9,521			9,928
Professional services		3,106			3,314			2,756			2,290			3,015
Marketing and business development		1,971			1,660			2,022			1,623			1,811
Contract services and data processing		1,641			1,580			1,743			1,865			1,737
Amortization of intangibles		1,426			1,426			1,542			1,568			1,586
Impairment of goodwill		—			—			9,528			—			—
FDIC insurance		879			766			727			722			1,015
Restructuring		—			—			—			—			905
Other		4,526			3,560			3,817			3,157			4,120
Total operating expense		67,821			68,780			71,843			61,670			64,731
Income before income taxes		33,456			21,549			24,762			28,351			23,768
Income tax expense		9,963			6,553			7,247			8,652			7,626
Net income from continuing operations		23,493			14,996			17,515			19,699			16,142
Net income from discontinued operations (1)		1,063			1,632			1,184			1,047			1,245
Net income before attribution to noncontrolling interests		24,556			16,628			18,699			20,746			17,387
Less: Net income attributable to noncontrolling interests		1,150			966			1,147			1,110			989
Net income attributable to the Company	$	23,406		$	15,662		$	17,552		$	19,636		$	16,398


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

	Six Months Ended
	June 30, 2017			June 30, 2016
Interest and dividend income:	(In thousands, except share and per share data)
Loans	$	111,372		$	99,777
Taxable investment securities		3,262			3,101
Non-taxable investment securities		3,261			2,790
Mortgage-backed securities		6,999			6,047
Federal funds sold and other		1,431			912
Total interest and dividend income		126,325			112,627
Interest expense:
Deposits		9,480			8,257
Federal Home Loan Bank borrowings		4,600			4,092
Junior subordinated debentures		1,387			1,162
Repurchase agreements and other short-term borrowings		71			68
Total interest expense		15,538			13,579
Net interest income		110,787			99,048
Provision/ (credit) for loan losses		(6,295	)		(5,668	)
Net interest income after provision/ (credit) for loan losses		117,082			104,716
Fees and other income:
Investment management fees		21,920			21,285
Wealth advisory fees		25,784			25,263
Wealth management and trust fees		21,987			22,124
Other banking fee income		3,658			6,215
Gain on sale of loans, net		197			406
Total core fees and income		73,546			75,293
Gain/ (loss) on sale of investments, net		256			246
Gain/ (loss) on OREO, net		(46	)		280
Other		768			(1,002	)
Total other income		978			(476	)
Operating expense:
Salaries and employee benefits		89,318			83,174
Occupancy and equipment		21,428			19,515
Professional services		6,420			6,530
Marketing and business development		3,631			3,981
Contract services and data processing		3,221			3,416
Amortization of intangibles		2,852			3,172
FDIC insurance		1,645			2,035
Restructuring		—			2,017
Other		8,086			7,600
Total operating expense		136,601			131,440
Income before income taxes		55,005			48,093
Income tax expense		16,516			15,064
Net income from continuing operations		38,489			33,029
Net income from discontinued operations (1)		2,695			3,310
Net income before attribution to noncontrolling interests		41,184			36,339
Less: Net income attributable to noncontrolling interests		2,116			1,900
Net income attributable to the Company	$	39,068		$	34,439


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

	Three Months Ended
PER SHARE DATA:	June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
	(In thousands, except share and per share data)
Calculation of Income for EPS:
Net income attributable to the Company	$	23,406		$	15,662		$	17,552		$	19,636		$	16,398
Adjustments to Net Income Attributable to the Company to arrive at Net Income Attributable to Common Shareholders, treasury stock method (2)		(577	)		(1,166	)		(1,798	)		(1,006	)		(970	)
Net Income Attributable to the Common Shareholders, treasury stock method	$	22,829		$	14,496		$	15,755		$	18,630		$	15,428

End of Period Common Shares Outstanding		84,015,141			84,134,104			83,731,769			83,194,714			83,380,426

Weighted Average Shares Outstanding:
Weighted average basic shares outstanding		82,298,493			81,951,179			81,217,391			81,301,499			81,236,809
Weighted average diluted shares outstanding (3)		84,741,680			84,560,918			83,438,137			83,562,283			83,519,939

Diluted Total Earnings per Share	$	0.27		$	0.17		$	0.19		$	0.22		$	0.18


	Six Months Ended
PER SHARE DATA:	June 30, 2017			June 30, 2016
	(In thousands, except share and per share data)
Calculation of Income for EPS:
Net income attributable to the Company	$	39,068		$	34,439
Adjustments to Net Income Attributable to the Company to arrive at Net Income Attributable to Common Shareholders, treasury stock method (2)		(1,743	)		(1,259	)
Net Income Attributable to the Common Shareholders, treasury stock method	$	37,325		$	33,180

Weighted Average Shares Outstanding:
Weighted average basic shares outstanding		82,125,795			81,269,154
Weighted average diluted shares outstanding (3)		84,658,309			83,391,057

Diluted Total Earnings per Share	$	0.44		$	0.40


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

(In thousands, except per share data)	June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
FINANCIAL DATA:	June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
Book Value Per Common Share	$	8.95		$	8.73		$	8.61		$	8.82		$	8.71
Tangible Book Value Per Share (4)	$	6.97		$	6.73		$	6.59		$	6.65		$	6.53
Market Price Per Share	$	15.35		$	16.40		$	16.55		$	12.83		$	11.78

ASSETS UNDER MANAGEMENT AND ADVISORY:
Wealth Management and Trust	$	7,429,000		$	7,260,000		$	7,008,000		$	7,334,000		$	7,313,000
Investment Managers		10,901,000			10,907,000			10,571,000			10,176,000			10,006,000
Wealth Advisory		10,744,000			10,579,000			9,989,000			10,028,000			9,974,000
Less: Inter-company Relationship		(11,000	)		(11,000	)		(11,000	)		(11,000	)		(17,000	)
Total Assets Under Management and Advisory	$	29,063,000		$	28,735,000		$	27,557,000		$	27,527,000		$	27,276,000

FINANCIAL RATIOS:
Total Equity/ Total Assets		9.86	%		9.52	%		9.64	%		10.17	%		10.21	%
Tangible Common Equity/ Tangible Assets (4)		7.37	%		7.04	%		7.07	%		7.38	%		7.36	%
Tier I Common Equity/ Risk Weighted Assets (4)		10.28	%		9.97	%		10.00	%		10.02	%		9.95	%
Allowance for Loan Losses/ Total Loans		1.19	%		1.25	%		1.28	%		1.32	%		1.32	%
Allowance for Loan Losses/ Nonaccrual Loans		464	%		373	%		451	%		471	%		395	%
Return on Average Assets - Three Months Ended (Annualized)		1.15	%		0.79	%		0.89	%		1.03	%		0.88	%
Return on Average Common Equity - Three Months Ended (Annualized) (5)		12.12	%		8.26	%		9.07	%		10.20	%		8.68	%
Return on Average Tangible Common Equity - Three Months Ended (Annualized) (5)		16.27	%		11.43	%		12.75	%		14.30	%		12.43	%
Efficiency Ratio - Three Months Ended (6)		67.69	%		72.45	%		61.87	%		65.04	%		70.41	%

DEPOSIT DETAIL:
Demand deposits (noninterest-bearing)	$	1,935,622		$	1,772,854		$	1,753,648		$	1,770,631		$	1,636,273
NOW		631,973			620,280			578,657			557,482			547,777
Savings		69,892			74,293			74,162			73,480			70,553
Money market		3,055,642			3,176,472			3,102,048			2,879,952			2,771,080
Certificates of deposit		688,210			602,721			576,631			530,698			510,409
Total Deposits	$	6,381,339		$	6,246,620		$	6,085,146		$	5,812,243		$	5,536,092


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

(In thousands)	Average Balance Three Months Ended						Interest Income/Expense Three Months Ended						Average Yield/Rate Three Months Ended
AVERAGE BALANCE SHEET:	06/30/17		03/31/17		06/30/16		06/30/17		03/31/17		06/30/16		06/30/17		03/31/17		06/30/16
AVERAGE ASSETS
Interest-Earning Assets:
Cash and Investments:
Taxable investment securities	$	363,166	$	395,728	$	372,413	$	1,592	$	1,670	$	1,507	1.75	%	1.69	%	1.62	%
Non-taxable investment securities (9)	294,836		295,015		261,678		2,546		2,471		2,153		3.45	%	3.35	%	3.29	%
Mortgage-backed securities	653,201		672,683		588,419		3,495		3,504		2,982		2.14	%	2.08	%	2.03	%
Federal funds sold and other	199,230		160,001		124,790		831		600		405		1.66	%	1.51	%	1.29	%
Total Cash and Investments	1,510,433		1,523,427		1,347,300		8,464		8,245		7,047		2.24	%	2.17	%	2.09	%
Loans (10):
Commercial and Industrial (9)	987,144		983,697		1,084,821		9,773		9,303		10,813		3.92	%	3.78	%	3.94	%
Commercial Real Estate (9)	2,358,409		2,324,367		1,910,968		26,433		23,544		19,559		4.43	%	4.05	%	4.05	%
Construction and Land	119,366		113,963		150,927		1,377		1,244		1,456		4.56	%	4.36	%	3.82	%
Residential	2,489,072		2,424,772		2,256,296		19,574		18,991		17,441		3.15	%	3.13	%	3.09	%
Home Equity	109,942		117,702		123,687		1,085		1,089		1,073		3.96	%	3.75	%	3.49	%
Other Consumer	195,384		192,136		177,805		1,526		1,420		1,073		3.13	%	3.00	%	2.43	%
Total Loans	6,259,317		6,156,637		5,704,504		59,768		55,591		51,415		3.79	%	3.61	%	3.58	%
Total Earning Assets	7,769,750		7,680,064		7,051,804		68,232		63,836		58,462		3.49	%	3.33	%	3.30	%
LESS: Allowance for Loan Losses	80,614		78,122		77,345
Cash and due From Banks (Non-Interest Bearing)	42,166		41,469		40,253
Other Assets	450,703		398,751		427,013
TOTAL AVERAGE ASSETS	$	8,182,005	$	8,042,162	$	7,441,725
AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS' EQUITY
Interest-Bearing Liabilities:
Interest-Bearing Deposits (10):
NOW	$	640,378	$	576,915	$	554,565	$	172	$	110	$	104	0.11	%	0.08	%	0.08	%
Savings	71,505		75,123		75,431		15		18		23		0.08	%	0.10	%	0.12	%
Money Market	3,173,768		3,213,092		2,897,151		3,244		3,122		2,836		0.41	%	0.39	%	0.39	%
Certificates of Deposit	665,668		589,900		559,271		1,518		1,281		1,112		0.91	%	0.88	%	0.80	%
Total Interest-Bearing Deposits (14)	4,551,319		4,455,030		4,086,418		4,949		4,531		4,075		0.44	%	0.41	%	0.40	%
Junior Subordinated Debentures	106,363		106,363		106,363		716		671		584		2.67	%	2.52	%	2.17	%
FHLB Borrowings and Other	703,149		726,978		719,655		2,499		2,172		2,197		1.41	%	1.19	%	1.21	%
Total Interest-Bearing Liabilities	5,360,831		5,288,371		4,912,436		8,164		7,374		6,856		0.61	%	0.56	%	0.56	%
Non-interest Bearing Demand Deposits (10) (14)	1,899,916		1,843,830		1,628,057
Payables and Other Liabilities	106,657		117,132		116,444
Total Average Liabilities	7,367,404		7,249,333		6,656,937
Redeemable Noncontrolling Interests	21,075		18,578		19,725
Average Shareholders' Equity	793,526		774,251		765,063
TOTAL AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS' EQUITY	$	8,182,005	$	8,042,162	$	7,441,725
Net Interest Income - on a Fully Taxable Equivalent Basis (FTE)							$	60,068	$	56,462	$	51,606
LESS: FTE Adjustment (9)							2,923		2,820		2,437
Net Interest Income (GAAP Basis)							$	57,145	$	53,642	$	49,169
Interest Rate Spread													2.88	%	2.77	%	2.74	%
Bank only Net Interest Margin													3.12	%	2.98	%	2.95	%
Net Interest Margin													3.07	%	2.94	%	2.91	%


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

(In thousands)	Average Balance Six Months Ended				Interest Income/Expense Six Months Ended				Average Yield/Rate Six Months Ended
AVERAGE BALANCE SHEET:	06/30/17		06/30/16		06/30/17		06/30/16		06/30/17		06/30/16
AVERAGE ASSETS
Interest-Earning Assets:
Cash and Investments:
Taxable investment securities	$	379,164	$	373,486	$	3,262	$	3,101	1.72	%	1.66	%
Non-taxable investment securities (9)	294,925		261,952		5,017		4,291		3.40	%	3.28	%
Mortgage-backed securities	662,888		576,623		6,999		6,047		2.11	%	2.10	%
Federal funds sold and other	179,901		163,965		1,431		912		1.10	%	1.11	%
Total Cash and Investments	1,516,878		1,376,026		16,709		14,351		2.15	%	2.09	%
Loans (10):
Commercial and Industrial (9)	985,430		1,075,217		19,076		21,732		3.85	%	4.00	%
Commercial Real Estate (9)	2,341,482		1,885,263		49,977		39,356		4.25	%	4.13	%
Construction and Land	116,679		162,897		2,621		3,104		4.47	%	3.77	%
Residential	2,457,100		2,242,988		38,565		34,743		3.14	%	3.10	%
Home Equity	113,801		121,518		2,174		2,155		3.85	%	3.57	%
Other Consumer	193,769		167,657		2,946		2,039		3.07	%	2.45	%
Total Loans	6,208,261		5,655,540		115,359		103,129		3.70	%	3.62	%
Total Earning Assets	7,725,139		7,031,566		132,068		117,480		3.40	%	3.32	%
LESS: Allowance for Loan Losses	79,375		78,809
Cash and due From Banks (Non-Interest Bearing)	41,929		40,136
Other Assets	426,349		424,402
TOTAL AVERAGE ASSETS	$	8,114,042	$	7,417,295
AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS' EQUITY
Interest-Bearing Liabilities:
Interest-Bearing Deposits (10):
NOW	$	608,822	$	548,591	$	283	$	191	0.09	%	0.07	%
Savings	73,304		75,432		33		47		0.09	%	0.12	%
Money Market	3,193,336		2,976,057		6,365		5,737		0.40	%	0.39	%
Certificates of Deposit	627,993		568,791		2,799		2,282		0.90	%	0.81	%
Total Interest-Bearing Deposits (14)	4,503,455		4,168,871		9,480		8,257		0.42	%	0.40	%
Junior Subordinated Debentures	106,363		106,363		1,387		1,162		2.59	%	2.16	%
FHLB Borrowings and Other	714,998		622,273		4,671		4,160		1.30	%	1.32	%
Total Interest-Bearing Liabilities	5,324,816		4,897,507		15,538		13,579		0.59	%	0.55	%
Non-interest Bearing Demand Deposits (10) (14)	1,871,924		1,624,928
Payables and Other Liabilities	112,157		113,747
Total Average Liabilities	7,308,897		6,636,182
Redeemable Noncontrolling Interests	21,208		20,497
Average Shareholders' Equity	783,937		760,616
TOTAL AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS' EQUITY	$	8,114,042	$	7,417,295
Net Interest Income - on a Fully Taxable Equivalent Basis (FTE)					$	116,530	$	103,901
LESS: FTE Adjustment (9)					5,743		4,853
Net Interest Income (GAAP Basis)					$	110,787	$	99,048
Interest Rate Spread									2.81	%	2.77	%
Bank only Net Interest Margin									3.05	%	2.98	%
Net Interest Margin									3.00	%	2.94	%


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

(In thousands)	June 30, 2017		March 31, 2017		December 31, 2016		September 30, 2016		June 30, 2016
LOAN DATA (11):	June 30, 2017		March 31, 2017		December 31, 2016		September 30, 2016		June 30, 2016
Other Commercial and Industrial Loans:
New England	$	429,598	$	458,687	$	493,451	$	461,201	$	428,515
San Francisco Bay Area	49,163		55,289		50,578		59,936		64,762
Southern California	62,995		66,378		67,341		67,583		66,379
Total Other Commercial and Industrial Loans	$	541,756	$	580,354	$	611,370	$	588,720	$	559,656
Commercial Tax Exempt Loans:
New England	$	312,783	$	318,137	$	317,691	$	263,418	$	260,739
San Francisco Bay Area	91,666		79,517		69,064		69,366		51,462
Southern California	11,708		11,778		11,849		11,918		11,986
Total Commercial Tax Exempt Loans	$	416,157	$	409,432	$	398,604	$	344,702	$	324,187
Total Commercial and Industrial Loans	$	957,913	989,786		1,009,974		933,422		883,843
Commercial Real Estate Loans:
New England	$	993,426	$	1,017,565	$	1,012,284	$	987,758	$	923,035
San Francisco Bay Area	688,751		686,019		637,042		611,224		633,735
Southern California	674,168		665,043		652,918		621,336		579,616
Total Commercial Real Estate Loans	$	2,356,345	$	2,368,627	$	2,302,244	$	2,220,318	$	2,136,386
Construction and Land Loans:
New England	$	74,919	$	58,737	$	47,434	$	56,268	$	90,408
San Francisco Bay Area	22,177		28,148		29,629		26,400		36,808
Southern California	33,808		30,122		27,776		16,028		15,333
Total Construction and Land Loans	$	130,904	$	117,007	$	104,839	$	98,696	$	142,549
Residential Loans:
New England	$	1,540,393	$	1,508,138	$	1,456,592	$	1,409,385	$	1,385,102
San Francisco Bay Area	488,854		474,294		473,102		476,986		470,694
Southern California	495,978		481,184		450,167		429,719		424,320
Total Residential Loans	$	2,525,225	$	2,463,616	$	2,379,861	$	2,316,090	$	2,280,116
Home Equity Loans:
New England	$	71,953	$	80,904	$	87,280	$	90,592	$	91,728
San Francisco Bay Area	28,400		26,006		25,129		23,826		26,714
Southern California	8,196		7,626		6,408		6,851		7,044
Total Home Equity Loans	$	108,549	$	114,536	$	118,817	$	121,269	$	125,486
Other Consumer Loans:
New England	$	175,644	$	175,096	$	186,680	$	167,140	$	166,998
San Francisco Bay Area	17,909		17,163		7,517		6,764		8,299
Southern California	7,439		4,386		4,422		5,799		7,820
Total Other Consumer Loans	$	200,992	$	196,645	$	198,619	$	179,703	$	183,117
Total Loans:
New England	$	3,598,716	$	3,617,264	$	3,601,412	$	3,435,762	$	3,346,525
San Francisco Bay Area	1,386,920		1,366,436		1,292,061		1,274,502		1,292,474
Southern California	1,294,292		1,266,517		1,220,881		1,159,234		1,112,498
Total Loans	$	6,279,928	$	6,250,217	$	6,114,354	$	5,869,498	$	5,751,497


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

(In thousands)	June 30, 2017			March 31, 2017		December 31, 2016		September 30, 2016		June 30, 2016
CREDIT QUALITY (11):	June 30, 2017			March 31, 2017		December 31, 2016		September 30, 2016		June 30, 2016
Special Mention Loans:
New England	$	34,538		$	21,596	$	14,750	$	25,248	$	27,903
San Francisco Bay Area	23,399			23,850		21,901		22,786		24,381
Southern California	4,327			4,350		884		6,278		15,044
Total Special Mention Loans	$	62,264		$	49,796	$	37,535	$	54,312	$	67,328
Accruing Substandard Loans (12):
New England	$	10,185		$	12,157	$	10,972	$	19,748	$	17,447
San Francisco Bay Area	6,574			15,824		15,890		19,157		19,750
Southern California	34,339			36,398		36,809		49,148		27,027
Total Accruing Substandard Loans	$	51,098		$	64,379	$	63,671	$	88,053	$	64,224
Nonaccruing Loans:
New England	$	9,880		$	14,407	$	10,081	$	11,020	$	13,028
San Francisco Bay Area	1,857			2,312		2,989		3,543		4,196
Southern California	4,439			4,226		4,245		1,928		1,964
Total Nonaccruing Loans	$	16,176		$	20,945	$	17,315	$	16,491	$	19,188
Other Real Estate Owned:
New England	$	—		$	—	$	1,690	$	1,800	$	2,042
San Francisco Bay Area	—			—		—		—		—
Southern California	—			—		—		—		—
Total Other Real Estate Owned	$	—		$	—	$	1,690	$	1,800	$	2,042
Loans 30-89 Days Past Due and Accruing (13):
New England	$	3,182		$	9,843	$	10,311	$	2,735	$	5,213
San Francisco Bay Area	12			10,111		591		1,018		70
Southern California	—			8,771		4,235		836		2,343
Total Loans 30-89 Days Past Due and Accruing	$	3,194		$	28,725	$	15,137	$	4,589	$	7,626
Loans (Charged-off)/ Recovered, Net for the Three Months Ended:
New England	$	667		$	79	$	1,120	$	1,704	$	1,276
San Francisco Bay Area	2,856			35		384		318		537
Southern California	(431		)	21		33		32		48
Total Net Loans (Charged-off)/ Recovered	$	3,092		$	135	$	1,537	$	2,054	$	1,861
Loans (Charged-off)/ Recovered, Net for the Six Months Ended:
New England	$	746								$	(870	)
San Francisco Bay Area	2,891									3,991
Southern California	(410		)							(200		)
Total Net Loans (Charged-off)/ Recovered	$	3,227								$	2,921


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)	June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
	Total Balance Sheet Assets	$	8,107,646		$	8,215,120		$	7,970,474		$	7,681,550		$	7,579,601
	LESS: Goodwill and Intangible Assets, net		(166,427	)		(167,853	)		(169,279	)		(180,349	)		(181,918	)
	Tangible Assets (non-GAAP)	$	7,941,219		$	8,047,267		$	7,801,195		$	7,501,201		$	7,397,683
	Total Shareholders' Equity	$	799,419		$	781,901		$	768,481		$	781,488		$	774,140
	LESS: Series D Preferred Stock (non-convertible)		(47,753	)		(47,753	)		(47,753	)		(47,753	)		(47,753	)
	LESS: Goodwill and Intangible Assets, net		(166,427	)		(167,853	)		(169,279	)		(180,349	)		(181,918	)
	Total adjusting items		(214,180	)		(215,606	)		(217,032	)		(228,102	)		(229,671	)
	Tangible Common Equity (non-GAAP)	$	585,239		$	566,295		$	551,449		$	553,386		$	544,469
	Total Equity/Total Assets		9.86	%		9.52	%		9.64	%		10.17	%		10.21	%
	Tangible Common Equity/Tangible Assets (non-GAAP)		7.37	%		7.04	%		7.07	%		7.38	%		7.36	%

	Total Risk Weighted Assets *	$	5,765,470		$	5,806,853		$	5,716,037		$	5,534,711		$	5,464,529
	Tier I Common Equity *	$	592,845		$	578,941		$	571,663		$	554,368		$	543,801
	Tier I Common Equity/ Risk Weighted Assets		10.28	%		9.97	%		10.00	%		10.02	%		9.95	%

	End of Period Shares Outstanding		84,015,141			84,134,104			83,731,769			83,194,714			83,380,426

	Book Value Per Common Share	$	8.95		$	8.73		$	8.61		$	8.82		$	8.71
	Tangible Book Value Per Share (non-GAAP)	$	6.97		$	6.73		$	6.59		$	6.65		$	6.53

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


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)	June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
	Total average shareholders' equity	$	793,526		$	774,251		$	777,466		$	778,098		$	765,063
	LESS: Average Series D preferred stock (non-convertible)		(47,753	)		(47,753	)		(47,753	)		(47,753	)		(47,753	)
	Average common equity (non-GAAP)		745,773			726,498			729,713			730,345			717,310
	LESS: Average goodwill and intangible assets, net		(167,204	)		(168,681	)		(179,535	)		(181,191	)		(182,787	)
	Average Tangible Common Equity (non-GAAP)	$	578,569		$	557,817		$	550,178		$	549,154		$	534,523

	Net income attributable to the Company	$	23,406		$	15,662		$	17,552		$	19,636		$	16,398
	LESS: Dividends on Series D preferred stock		(869	)		(869	)		(869	)		(868	)		(869	)
	Common net income (non-GAAP)		22,536			14,793			16,683			18,768			15,529
	ADD: Amortization of intangibles, net of tax (35%)		927			927			1,002			1,019			1,031
	Tangible common net income (non-GAAP)	$	23,463		$	15,720		$	17,685		$	19,787		$	16,560

	Return on Average Equity - (Annualized)		11.83	%		8.20	%		8.96	%		10.01	%		8.60	%
	Return on Average Common Equity - (Annualized) (non-GAAP)		12.12	%		8.26	%		9.07	%		10.20	%		8.68	%
	Return on Average Tangible Common Equity - (Annualized) (non-GAAP)		16.27	%		11.43	%		12.75	%		14.30	%		12.43	%
											Six Months Ended
	(In thousands)										June 30, 2017			June 30, 2016
	Total average shareholders' equity										$	783,937		$	760,616
	LESS: Average Series D preferred stock (non-convertible)											(47,753	)		(47,753	)
	Average common equity (non-GAAP)											736,184			712,863
	LESS: Average goodwill and intangible assets, net											(167,939	)		(183,601	)
	Average Tangible Common Equity (non-GAAP)										$	568,245		$	529,262

	Net income attributable to the Company										$	39,068		$	34,439
	LESS: Dividends on Series D preferred stock											(1,738	)		(1,738	)
	Common net income (non-GAAP)											37,330			32,701
	ADD: Amortization of intangibles, net of tax (35%)											1,854			2,062
	Tangible common net income (non-GAAP)										$	39,184		$	34,763

	Return on Average Equity - (Annualized)											10.05	%		9.13	%
	Return on Average Common Equity - (Annualized) (non-GAAP)											10.23	%		9.25	%
	Return on Average Tangible Common Equity - (Annualized) (non-GAAP)											13.91	%		13.25	%


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)	June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
	Income before income taxes (GAAP)	$	33,456		$	21,549		$	24,762		$	28,351		$	23,768
	ADD BACK: Provision/ (credit) for loan losses		(6,114	)		(181	)		(1,128	)		(138	)		(2,535	)
	Pre-tax, pre-provision income (non-GAAP)	$	27,342		$	21,368		$	23,634		$	28,213		$	21,233

	Total operating expense (GAAP)	$	67,821		$	68,780		$	71,843		$	61,670		$	64,731
	Less: Amortization of intangibles		1,426			1,426			1,542			1,568			1,586
	Less: Goodwill impairment		—			—			9,528			—			—
	Less: Restructuring		—			—			—			—			905
	Total operating expense (excluding amortization of intangibles, goodwill impairment, and restructuring) (non-GAAP)	$	66,395		$	67,354		$	60,773		$	60,102		$	62,240

	Net interest income	$	57,145		$	53,642		$	51,519		$	49,871		$	49,169
	Total core fees and income		37,226			36,320			38,499			37,896			37,565
	Total other income		792			186			5,459			2,116			(770	)
	FTE income		2,923			2,820			2,754			2,523			2,437
	Total revenue (FTE basis)	$	98,086		$	92,968		$	98,231		$	92,406		$	88,401
	Efficiency Ratio (GAAP)		71.27	%		76.30	%		75.25	%		68.61	%		75.30	%
	Efficiency Ratio, FTE Basis excluding amortization of intangibles, goodwill impairment, and restructuring (non-GAAP)		67.69	%		72.45	%		61.87	%		65.04	%		70.41	%

											Six Months Ended
	(In thousands)										June 30, 2017			June 30, 2016
	Income before income taxes (GAAP)										$	55,005		$	48,093
	ADD BACK: Provision/ (credit) for loan losses											(6,295	)		(5,668	)
	Pre-tax, pre-provision income (non-GAAP)										$	48,710		$	42,425

	Total operating expense (GAAP)										$	136,601		$	131,440
	Less: Amortization of intangibles											2,852			3,172
	Less: Restructuring											—			2,017
	Total operating expense (excluding amortization of intangibles, goodwill impairment, and restructuring) (non-GAAP)										$	133,749		$	126,251

	Net interest income										$	110,787		$	99,048
	Total core fees and income											73,546			75,293
	Total other income											978			(476	)
	FTE income											5,743			4,853
	Total revenue (FTE basis)										$	191,054		$	178,718
	Efficiency Ratio (GAAP)											73.71	%		75.60	%
	Efficiency Ratio, FTE Basis excluding amortization of intangibles, goodwill impairment, and restructuring (non-GAAP)											70.01	%		70.64	%


(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)	June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
	Net income attributable to the Company (GAAP)	$	23,406		$	15,662		$	17,552		$	19,636		$	16,398
	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	$	23,406		$	15,662		$	21,885		$	19,636		$	16,398

	excluding notable items (non-GAAP)

	Net Income Attributable to the Common Shareholders, treasury stock method (GAAP)	$	22,829		$	14,496		$	15,755		$	18,630		$	15,428
	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)	$	22,829		$	14,496		$	20,088		$	18,630		$	15,428

	Weighted average diluted shares outstanding (3)		84,741,680			84,560,918			83,438,137			83,562,283			83,519,939

	Diluted Total Earnings per Share (GAAP)	$	0.27		$	0.17		$	0.19		$	0.22		$	0.18
	Diluted Total Earnings per Share, excluding notable items (non-GAAP)	$	0.27		$	0.17		$	0.24		$	0.22		$	0.18

(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 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)	June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
	Net interest income (GAAP basis)	$	57,145		$	53,642		$	51,519		$	49,871		$	49,169
	ADD: FTE income		2,923			2,820			2,754			2,523			2,437
	Net interest income, FTE basis		60,068			56,462			54,273			52,394			51,606
	LESS: Interest recovered on previously nonaccrual loans		1,971			299			365			343			565
	Net interest income, FTE basis, excluding interest recovered on previously nonaccrual loans (non-GAAP)		58,097			56,163			53,908			52,051			51,041

	Net Interest Margin (FTE basis)		3.07	%		2.94	%		2.88	%		2.88	%		2.91	%
	Net Interest Margin, FTE basis, excluding interest recovered on previously nonaccrual loans (non-GAAP)		2.97	%		2.92	%		2.86	%		2.86	%		2.88	%

(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 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 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. In addition to loans 30-89 days past due and accruing, at June 30, 2016, the Company had one loan totaling $0.1 million that was more than 90 days past due but still on accrual status. This loan originated in the San Francisco Bay Area region.

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

Contacts

Adam Bromley
(617) 912-4386
abromley@bostonprivate.com

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