First Quarter 2019 Highlights include:
- GAAP Net income was $19.4 million, or
$0.25 per diluted share, and Operating Net income was $20.7 million
or $0.27 per diluted share
- Return on average common equity was
10.3%; Operating Return on average common equity was 11.0%
- Return on average tangible common
equity was 11.6%; Operating Return on average tangible common
equity was 12.4%
- Average total deposits were $6.8
billion, a 6% increase year-over-year
- Average total loans were $6.9 billion,
a 5% increase year-over-year
- Total assets under management/advisory
(“AUM”) were $16.1 billion, a decrease of 4% year-over-year
- Total net flows were negative $963
million, of which $508 million were attributable to the Wealth
Management & Trust segment and $455 million were attributable
to Affiliate Partners
Notable Items impacting First Quarter 2019 results ("Notable
Items"):
- $1.6 million restructuring expense
related to executive departures
Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the
“Company” or “BPFH”) today reported first quarter 2019 GAAP Net
income attributable to the Company of $19.4 million, compared to
$33.3 million for the fourth quarter of 2018 and $22.7 million for
the first quarter of 2018. First quarter 2019 GAAP Diluted earnings
per share were $0.25, compared to $0.42 in the fourth quarter of
2018 and $0.27 in the first quarter of 2018.
Summary Financial Results -
Reported % Change ($ in millions, except for per share
data)
1Q19 4Q18 1Q18 LQ Y/Y Net
income $19.4 $33.3 $22.7 (42 )% (14 )% Diluted earnings per share
$0.25 $0.42 $0.27 (40 )% (7 )%
Non-GAAP Financial
Measures:
Pre-tax, pre-provision income $23.0 $42.3 $26.3 (46 )% (12 )%
Return on average common equity ("ROACE") 10.3 % 17.9 % 12.0 %
Return on average tangible common equity ("ROATCE") 11.6 % 20.5 %
15.2 % nm = not meaningful
The Company's reported financial results decreased linked
quarter primarily as a result of the gain on sale related to the
divestiture of Bingham, Osborn & Scarborough ("BOS") in the
fourth quarter of 2018.
In addition to presenting the Company’s results in conformity
with GAAP, the Company uses certain non-GAAP financial measures to
provide information for investors to effectively analyze financial
trends of ongoing business activities, and to enhance comparability
with peers across the financial sector. For
additional information on non-GAAP financial measures, see
page 7. A full reconciliation of GAAP to non-GAAP results can be
found in the footnotes beginning on page 15.
Summary Financial Results - Operating Basis
(non-GAAP) % Change ($ in millions, except
for per share data)
1Q191 4Q182
1Q18 LQ Y/Y Net income $20.7 $19.9 $22.7 4 %
(9 )% Diluted earnings per share $0.27 $0.27 $0.27 — % — %
Pre-tax, pre-provision income $24.7 $25.8 $26.3 (4 )% (6 )% Return
on average common equity 11.0 % 10.7 % 12.0 % Return on average
tangible common equity 12.4 % 12.4 % 15.2 %
1 1Q19 results adjusted to exclude the net after-tax impact of
$1.6 million restructuring expense2 4Q18 results adjusted to
exclude the net after-tax impact of $18.1 million gain on sale and
$3.5 million tax expense related to the divestiture of Bingham,
Osborn, & Scarborough, LLC and $1.6 million restructuring
expense
"First quarter GAAP results include a restructuring charge
related to executive departures during the quarter," said Anthony
DeChellis, CEO of Boston Private. "This charge occurred as we
assemble our management team and position for growth.
"I am pleased with our Company's performance in the core
business, which excludes contributions from affiliates we divested
in 2018 and Notable Items. During the first quarter, we generated
positive operating leverage through disciplined management of
expenses, which declined 2% year-over-year. The Commercial and
Private Banking business maintained strong asset quality metrics,
which contributed to a provision credit during the quarter, driving
an overall increase to operating basis net income. At the same
time, our AUM decreased 4% year-over-year driven by negative net
flows, partially offset by positive market action."
Divested Affiliates
The Company completed the sale of Anchor Capital Advisors, LLC
("Anchor") and BOS (together, "the Divested Affiliates") during
2018. Financial results from the Divested Affiliates remain
consolidated in the Company's financial results through the closing
dates of the divestitures. The Anchor divestiture closing date was
April 13, 2018, and the BOS divestiture closing date was December
3, 2018.
For presentation purposes, the Divested Affiliates' AUM are
excluded from AUM amounts, but are included in the calculation of
Core fees and income. The discussion below includes non-GAAP
measures that exclude the contributions from these affiliates in
order to enhance comparability of trends in the core business.
Net Interest Income and Margin
% Change ($ in millions)
1Q19 4Q18
1Q18 LQ Y/Y Net interest income
$58.3 $60.0 $57.4 (3 )% 2
% Less: Interest recovered on previous nonaccrual loans 0.3
1.0 0.1 (74 )% nm
Core net interest income
(non-GAAP) 58.1 59.0 57.3
(2
)% 1 % Net interest margin 2.90 % 2.94
% 2.90 % Core net interest margin (non-GAAP) 2.89 % 2.90 % 2.90 %
Net interest income for the first quarter of 2019 was $58.3
million, a decrease of 3% linked quarter and an increase of 2%
year-over-year. Core net interest income, which excludes interest
recovered on previous nonaccrual loans, decreased 2% linked quarter
and increased 1% year-over-year. The linked quarter decrease was
primarily driven by higher funding costs and lower average
interest-earning asset volumes. The year-over-year increase was
primarily driven by higher yields on interest-earning assets and
higher asset volumes, partially offset by higher funding costs.
The Company’s Core net interest margin, which excludes interest
recovered on previous nonaccrual loans, decreased 1 basis point on
a linked quarter basis to 2.89%, primarily driven by higher funding
costs, partially offset by higher yields on interest-earning
assets.
The current difference between Net interest margin ("NIM") and
NIM on a fully taxable equivalent ("FTE") basis is immaterial,
therefore the Company will only present NIM on a GAAP basis. The
decline in the Federal tax rate in 2018 and the recent increases in
interest expense have reduced the difference between NIM on a GAAP
basis and NIM on a FTE basis.
Noninterest Income %
Change ($ in millions)
1Q19 4Q18 1Q18
LQ Y/Y Investment management fees $2.7 $2.8 $11.4 (6
)% (77 )% Wealth advisory fees 8.2 12.1 13.5 (33 )% (40 )% Wealth
management and trust fees 10.9 11.7 12.2 (7 )% (10 )% Private
banking fees 3 2.6 2.1 2.3 24 % 13 %
Total
core fees and income $24.3 $28.7 $39.4
(15 )% (38 )% Total other income 1.0
17.2 0.3 (94 )% nm
Total noninterest
income $25.2 $45.8 $39.7 (45
)% (36 )% Memo: Excluding Divested
Affiliates and the gain on sale related to the divestiture of BOS
Investment management fees (non-GAAP) 4 2.7 2.8 3.0 (6 )% (11 )%
Wealth advisory fees (non-GAAP) 6 8.2 8.3 7.8 (1 )% 5 %
Total
core fees and income (non-GAAP) 4 5 $24.3
$24.9 $25.3 (2 )% (4 )%
Total other income (non-GAAP) 6 1.0 (1.0) 0.3 nm nm
Total
noninterest income (non-GAAP) 4 5 $25.2
$23.9 $25.6 5 % (2 )%
3 Private banking fees includes Other banking fee income and
Gain/ (loss) on sale of loans, net4 Excludes Anchor revenue of $8.4
million in 1Q185 Excludes BOS revenue of $3.9 million in 4Q18 and
$5.7 million in 1Q186 Excludes $18.1 million gain on sale in
4Q18
Total core fees and income for the first quarter of 2019 was
$24.3 million, a decline of 15% linked quarter primarily driven by
the divestiture of BOS and 38% year-over-year primarily driven by
the divestitures of Anchor and BOS. Total other income declined 94%
linked quarter due to an $18.1 million gain on sale related to BOS
during the fourth quarter of 2018.
Excluding Divested Affiliates and the gain on sale related to
the divestiture of BOS, Total core fees and income decreased 4%
year-over-year primarily driven by lower AUM in the Wealth
Management and Trust segment, partially offset by higher Wealth
advisory fees.
Assets Under Management /
Advisory % Change ($ in millions)
1Q19
4Q18 1Q18 LQ Y/Y Wealth Management and
Trust $7,593 $7,602 $7,831 — % (3 )% Affiliate Partners 7 8,529
8,319 8,878 3 % (4 )%
Total assets under management /
advisory 8 $16,122 $15,921 $16,709
1 % (4 )% Total net flows
8 $(963) $(143) $122
7 Segment includes Dalton, Greiner, Hartman, Maher & Co.,
LLC ("DGHM") and KLS Professional Advisors Group, LLC ("KLS")8
Excludes Anchor and BOS
Total assets under management / advisory, were $16.1 billion at
the end of the first quarter of 2019, an increase of 1% linked
quarter and a decrease of 4% year-over-year. The linked quarter
increase was primarily driven by positive market action exceeding
negative net flows, while the year-over-year decrease was primarily
driven by negative net flows exceeding positive market action.
Net flows in the Wealth Management and Trust segment during the
first quarter of 2019 were negative $508 million driven by elevated
current client outflows, partially offset by $172 million of new
business. Net flows in the Affiliate Partners segment were negative
$455 million driven by lost clients.
Operating
Expense % Change ($ in millions)
1Q19
4Q18 1Q18 LQ Y/Y Salaries
and employee benefits $35.7 $36.0 $47.1 (1 )% (24 )% Occupancy and
equipment 8.3 8.0 7.7 5 % 8 % Professional services 3.6 4.2 3.2 (16
)% 12 % Marketing and business development 1.1 2.3 1.6 (52 )% (32
)% Information systems 5.9 6.3 5.9 (7 )% — % Amortization of
intangibles 0.7 0.7 0.8 (1 )% (10 )% FDIC insurance 0.7 0.7 0.7 (11
)% (11 )% Restructuring 1.6 2.1 — (20 )% nm Other 3.0 3.3 3.9 (9 )%
(23 )%
Total operating expense $60.6 $63.6
$70.9 (5 )% (15 )% Memo:
Excluding Notable Items and Divested Affiliates Information systems
9 — (0.4 ) — nm nm Restructuring 1.6 2.1 — (20 )% nm Divested
Affiliates operating expense — 2.8 10.6 nm nm
Total operating
expense (non-GAAP) $58.9 $59.1 $60.3
— % (2 )%
9 $0.4 million of Information services expense was reclassified
to Restructuring expense in conjunction with the Company's formal
restructuring plan announced in 4Q18
Total operating expense decreased 5% linked quarter and 15%
year-over-year, primarily driven by expenses associated with
Divested Affiliates that are included in prior period results.
Excluding Notable Items and Divested Affiliates, Total operating
expense for the first quarter of 2019 was $58.9 million, flat
linked quarter and down 2% year-over-year. Expenses remained flat
linked quarter as lower marketing expense and professional fees
offset higher compensation expense associated seasonal payroll
taxes during the first quarter. Year-over-year, compensation
declined as a result of efficiency initiatives, partially offset by
higher occupancy expense and information technology
investments.
Income Tax Expense
The Company's effective tax rate, excluding Notable Items, for
the first quarter of 2019 was 20.1%. The tax rate was lower than
prior quarters as a result of lower disallowed executive
compensation related to the recent departures of certain
executives.
Loans and Deposits - QTD
Averages % Change ($ in millions)
1Q19
4Q18 1Q18 LQ Y/Y Commercial and
industrial $1,070 $1,027 $933 4 % 15 % Commercial real estate 2,398
2,402 2,441 — % (2 )% Construction and land 211 209 169 1 % 25 %
Residential 2,973 2,907 2,702 2 % 10 % Home equity 91 94 97 (3 )%
(7 )% Other consumer 134 141 186 (5 )% (28 )%
Total loans
$6,877 $6,781 $6,529 1 %
5 % Non-interest bearing deposits 1,975 2,092
1,872 (6 )% 5 % Interest bearing deposits 4,792 4,826 4,516 (1 )% 6
%
Total deposits $6,767 $6,918 $6,388
(2 )% 6 % Non-interest bearing
deposits as a % of Total deposits 29 % 30 % 29 %
Average total loans in the first quarter of 2019 increased 5%
year-over-year, primarily driven by increases in Residential loans
and C&I loans.
Average total deposits increased 6% year-over-year, primarily
driven by growth in money market accounts, demand deposit accounts
and certificates of deposits, partially offset by declines in
savings and NOW accounts. The cost of total deposits, including
DDA, was 0.84%, an increase of 7 basis points linked quarter and 43
basis points year-over-year.
Provision and Asset
Quality ($ in millions)
1Q19 4Q18
3Q18 2Q18 1Q18 Provision/ (credit) for loan
loss $(1.4) $0.1 $(0.9) $0.5 $(1.8) Total criticized loans 141.3
146.6 134.7 114.4 124.1 Total nonaccrual loans 12.0 14.1 12.1 15.7
16.4 Total loans 30-89 days past due and accruing 17.7 22.3 11.6
5.0 20.4 Total net loans (charged-off)/ recovered (0.1) 1.7 1.0 0.1
—
Ratios:
Allowance for loan losses as a % of Total loans 1.07 % 1.09 % 1.09
% 1.09 % 1.10 % Nonaccrual loans as a % of Total loans 0.17 % 0.20
% 0.18 % 0.23 % 0.25 %
The Company recorded a provision credit of $1.4 million for the
first quarter of 2019, compared to an expense of $0.1 million for
the fourth quarter of 2018 and a credit of $1.8 million in the
first quarter of 2018. The provision credit in the first quarter of
2019 was primarily driven by a decline in criticized loans,
partially offset by net changes to loss factors.
Total criticized loans as of March 31, 2019 was $141.3 million,
a decrease of 4% linked quarter and an increase of 14%
year-over-year. Total nonaccrual loans as of March 31, 2019 was
$12.0 million, or 17 basis points of total loans, compared to $14.1
million, or 20 basis points of total loans as of December 31, 2018,
and $16.4 million, or 25 basis points of total loans as of March
31, 2018.
Capital ($ in millions,
except for per share data)
1Q19 4Q18 3Q18
2Q18 1Q18 Tangible common equity/ Tangible assets 12
8.3 % 8.1% 7.8% 7.5 % 7.4 % Tangible book value per share 12 $8.47
$8.18 $7.67 $7.62 $7.17
Regulatory Capital
Ratios: 13
Tier 1 common equity 11.4 % 11.4% 11.1% 10.9 % 10.4 % Total
risk-based capital 14.2 % 14.3% 14.1% 13.8 % 14.2 % Tier 1
risk-based capital 13.0 % 13.0% 12.8% 12.6 % 12.9 % Tier 1 leverage
capital 9.7 % 9.5% 9.2% 9.2 % 9.4 %
Common Equity
Repurchase Program:
Total shares of common stock repurchased — 1,505,521 137,144 — —
Average price paid per share of common stock — $12.02 $13.89 — —
Aggregate repurchases of common equity ($ in millions) — $18.1 $1.9
— —
12 See footnote 6 for a GAAP to non-GAAP reconciliation.13
Current quarter information is presented based on estimated
data.
Tangible book value per share as of March 31, 2019 increased 4%
linked quarter and 18% year-over-year to $8.47. The increase in
Tangible book value per share from March 31, 2018 to March 31, 2019
was primarily driven by the divestitures of Anchor and BOS and
increased retained earnings, partially offset by common share
repurchases and lower Accumulated other comprehensive income.
EPS Calculation
For calculation of income for EPS, first quarter 2019 Net income
attributable to the common shareholders benefited by $1.6 million,
or $0.02 per share, related to the changes in value of Redeemable
noncontrolling interests ("RNCI").
Dividend PaymentsConcurrent with
the release of first quarter 2019 earnings, the Board of Directors
of the Company declared a cash dividend payable to common
shareholders of $0.12 per share. The record date for this dividend
is May 3, 2019, and the payment date is May 17, 2019.
Non-GAAP Financial MeasuresThe
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, and
restructuring, if any; the efficiency ratio; the efficiency ratio
excluding amortization of intangibles, and restructuring, if any;
net interest income and net interest margin excluding interest
recovered on previous nonaccrual loans, also referred to as core
net interest income, and core net interest margin, respectively;
net income attributable to the Company excluding notable items; net
income attributable to the common shareholders, treasury stock
method, excluding notable items; diluted earnings per share
excluding notable items; operating basis total revenue; operating
basis total operating expenses.
A detailed reconciliation table of the Company’s GAAP to
non-GAAP measures is included in the footnotes of the attached
financial statements.
Conference CallManagement will hold
a conference call at 8:00 a.m. Eastern Time on Thursday, April 18,
2019, to discuss the financial results, business highlights and
outlook. To access the call:
Dial In #: (888) 317-6003Elite Entry Number: 1277765
Replay Information:Available from April 18, 2019 at 12:00 p.m
Eastern Time until April 25, 2019Dial In #: (877)
344-7529Conference Number: 10130183
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 Commercial and Private Banking affiliates with offices in
Boston, New York, Los Angeles, San Francisco, San Jose, and
Florida. The Company has total assets of greater than $8 billion,
and manages over $16 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 StatementsCertain
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 commercial and
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.
Boston Private Financial Holdings,
Inc.Selected Financial Data (Unaudited)
March 31, 2019 December 31, 2018
September 30, 2018 June 30, 2018
March 31, 2018 (In thousands, except share and per
share data) Assets: Cash and cash equivalents
$
96,211 $ 127,259 $ 92,634 $ 364,539 $ 77,085 Investment
securities available-for-sale
981,951 994,065 1,056,261
1,069,025 1,101,588 Investment securities held-to-maturity
67,548 70,438 75,468 78,955 70,809 Equity securities at fair
value
7,491 14,228 7,079 7,942 16,909 Stock in Federal Home
Loan Bank and Federal Reserve Bank
47,053 49,263 48,727
70,127 54,455 Loans held for sale
280 2,812 3,344 4,622
3,918 Total loans
6,926,968 6,893,158 6,720,420 6,767,123
6,602,327 Less: Allowance for loan losses
73,814
75,312 73,500 73,464 72,898 Net loans
6,853,154 6,817,846 6,646,920 6,693,659 6,529,429 Other real
estate owned (“OREO”)
— 401 108 108 — Premises and
equipment, net
42,938 45,412 47,399 46,421 43,627 Goodwill
(1)
57,607 57,607 75,598 75,598 75,598 Intangible assets,
net (1)
11,555 12,227 13,834 14,584 15,334 Fees receivable
3,982 5,101 10,445 10,405 10,640 Accrued interest receivable
25,935 24,366 24,641 23,732 22,614 Deferred income taxes,
net
22,844 26,638 27,833 26,316 32,058 Right of use assets
104,644 — — — — Other assets (1)
248,950
246,962 245,549 230,170 264,295 Total
assets
$ 8,572,143 $ 8,494,625 $
8,375,840 $ 8,716,203 $ 8,318,359
Liabilities: Deposits
$ 6,779,845 $ 6,781,170
$ 6,768,723 $ 6,620,179 $ 6,584,322 Securities sold under
agreements to repurchase
58,329 36,928 39,453 58,824 85,257
Federal funds purchased
— 250,000 120,000 — — Federal Home
Loan Bank borrowings
615,070 420,144 441,836 1,056,938
611,588 Junior subordinated debentures
106,363 106,363
106,363 106,363 106,363 Lease liabilities
120,162 — — — —
Other liabilities (1)
112,893 143,540 149,770
129,175 125,004 Total liabilities
7,792,662 7,738,145 7,626,145 7,971,479
7,512,534
Redeemable noncontrolling interests
(“RNCI”) 662 2,526 11,686 10,747 16,322
Shareholders’
equity: Preferred stock, $1.00 par value; authorized: 2,000,000
shares
— — — — 47,753 Common stock, $1.00 par value;
authorized: 170,000,000 shares
83,774 83,656 84,603 84,479
84,194 Additional paid-in capital
604,288 600,196 614,157
613,918 612,526 Retained earnings
97,155 87,821 64,618
56,912 61,518 Accumulated other comprehensive income/ (loss)
(6,398 ) (17,719 ) (27,578 ) (23,328 ) (21,313 )
Total Company’s shareholders’ equity
778,819 753,954
735,800 731,981 784,678 Noncontrolling
interests
— — 2,209 1,996 4,825
Total shareholders’ equity
778,819 753,954
738,009 733,977 789,503 Total
liabilities, RNCI and shareholders’ equity
$
8,572,143 $ 8,494,625 $ 8,375,840 $
8,716,203 $ 8,318,359
Boston Private Financial Holdings,
Inc.Selected Financial Data (Unaudited)
Three Months Ended March 31, 2019
December 31, 2018 September 30,
2018 June 30, 2018 March
31, 2018 Interest and dividend income: (In
thousands, except share and per share data) Loans
$
69,933 $ 69,294 $ 68,254 $ 64,048 $ 60,929 Investment
securities
5,983 6,242 6,230 6,302 6,418 Short-term
investments and other
908 1,356 1,617
1,205 1,009 Total interest and dividend income
76,824 76,892 76,101 71,555
68,356
Interest expense: Deposits
14,058
13,470 11,487 8,365 6,524 Borrowings
4,428 3,425
4,973 5,645 4,449 Total interest
expense
18,486 16,895 16,460 14,010
10,973 Net interest income
58,338 59,997
59,641 57,545 57,383 Provision/ (credit) for loan losses
(1,426 ) 93 (949 ) 453 (1,795 ) Net
interest income after provision/ (credit) for loan losses
59,764 59,904 60,590 57,092
59,178
Noninterest income: Investment management fees
2,650 2,831 3,245 4,227 11,425 Wealth advisory fees
8,165 12,111 13,995 13,693 13,512 Wealth management and
trust fees
10,893 11,677 11,510 11,169 12,151 Other banking
fee income
2,499 2,033 2,775 2,745 2,273 Gain on sale of
loans, net
73 39 67 63 74
Total core fees and income
24,280 28,691
31,592 31,897 39,435 Gain/ (loss) on sale of
investments, net
— (596 ) — 7 (24 ) Gain/ (loss) on OREO,
net
91 — — — — Gain on sale of affiliate
— 18,142 — —
— Other
877 (392 ) 722 191 332
Total other income
968 17,154 722 198
308
Total revenue (2) 83,586 105,842
91,955 89,640 97,126
Operating expense: Salaries and
employee benefits
35,726 36,007 38,944 39,433 47,084
Occupancy and equipment
8,348 7,975 8,164 8,229 7,748
Professional services
3,560 4,229 2,877 2,872 3,177
Marketing and business development
1,085 2,275 1,710 2,070
1,593 Information systems
5,860 6,296 6,233 6,770 5,886
Amortization of intangibles
672 680 750 749 750 FDIC
insurance
660 739 674 708 744 Restructuring
1,646
2,065 5,763 — — Other
2,996 3,291 3,442
3,553 3,875 Total operating expense
60,553
63,557 68,557 64,384 70,857
Income before income taxes
24,459 42,192 24,347 24,803
28,064 Income tax expense
4,917 8,651 5,461
17,399 6,026 Net income from continuing
operations
19,542 33,541 18,886 7,404 22,038 Net income/
(loss) from discontinued operations (3)
— 306
— (2 ) 1,698 Net income before attribution to
noncontrolling interests
19,542 33,847 18,886 7,402 23,736
Less: Net income attributable to noncontrolling interests
100 545 924 968 1,050
Net income attributable to the Company $
19,442 $ 33,302 $ 17,962 $ 6,434
$ 22,686 Adjustments, treasury stock method (4)
1,557 2,694 (829 ) (3,524 ) (23 ) Net income
attributable to common shareholders, treasury stock method
$
20,999 $ 35,996 $ 17,133 $ 2,910
$ 22,663 Weighted average basic shares outstanding
83,285,095 83,750,785 84,017,284 83,509,115 83,097,758
Weighted average diluted shares outstanding (5)
84,010,450
84,863,779 85,498,568 85,413,575 85,271,650 Diluted total earnings
per share
$ 0.25 $ 0.42 $ 0.20 $ 0.03 $ 0.27
Boston Private Financial Holdings,
Inc.Selected Financial Data (Unaudited)
(In thousands, except per share data)
March 31,
2019 December 31, 2018 September 30,
2018 June 30, 2018 March 31,
2018 FINANCIAL DATA: Book value per common share
$ 9.30 $ 9.01 $ 8.72 $ 8.69 $ 8.81 Tangible book
value per share (6)
$ 8.47 $ 8.18 $ 7.67 $ 7.62 $
7.17 Market price per share
$ 10.96 $ 10.57 $ 13.65 $
15.90 $ 15.05
ASSETS UNDER MANAGEMENT AND ADVISORY
("AUM"): Wealth Management and Trust
$ 7,593,000
$ 7,602,000 $ 8,335,000 $ 7,789,000 $ 7,831,000 Affiliate Partners,
excluding Anchor and BOS
8,529,000 8,319,000
9,388,000 9,072,000 8,878,000 Total AUM,
excluding Anchor and BOS (7)
16,122,000 15,921,000
17,723,000 16,861,000 16,709,000 AUM at
Anchor and BOS
— — 4,714,000 4,525,000
13,530,000 Less: Inter-company relationship
—
— (7,000 ) (7,000 ) (11,000 ) Total AUM
$
16,122,000 $ 15,921,000 $ 22,430,000 $
21,379,000 $ 30,228,000
FINANCIAL
RATIOS: Total equity/ Total assets
9.09 % 8.88 %
8.81 % 8.42 % 9.49 % Tangible common equity/ Tangible assets (6)
8.35 % 8.12 % 7.83 % 7.46 % 7.38 % Tier 1 common
equity/ Risk weighted assets (6)
11.38 % 11.40 %
11.14 % 10.90 % 10.39 % Allowance for loan losses/ Total loans
1.07 % 1.09 % 1.09 % 1.09 % 1.10 % Allowance for loan
losses/ Nonaccrual loans
614 % 536 % 608 % 469 % 445
% Return on average assets (annualized)
0.93 % 1.56 %
0.84 % 0.31 % 1.11 % ROACE (annualized) (non-GAAP) (8)
10.29
% 17.87 % 9.67 % 3.03 % 12.02 % ROATCE (annualized)
(non-GAAP) (8)
11.63 % 20.46 % 11.37 % 3.90 % 15.20 %
Efficiency ratio (annualized) (non-GAAP) (9)
69.67 %
57.14 % 67.04 % 70.29 % 71.46 %
DEPOSIT DETAIL:
Demand deposits (non-interest bearing)
$ 2,016,838 $
1,951,274 $ 2,001,275 $ 2,089,373 $ 1,932,732 NOW
605,852
626,685 568,148 635,841 689,526 Savings
68,102 73,834 72,967
73,675 73,580 Money market
3,302,244 3,338,892 3,363,062
3,128,211 3,177,692 Certificates of deposit
786,809
790,485 763,271 693,079 710,792 Total
deposits
$ 6,779,845 $ 6,781,170 $
6,768,723 $ 6,620,179 $ 6,584,322
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: 03/31/19 12/31/18
03/31/18 03/31/19 12/31/18
03/31/18 03/31/19 12/31/18
03/31/18 AVERAGE ASSETS
Interest-earning assets: Cash and investments (10):
Taxable investment securities
$ 244,230 $ 317,230 $
333,253
$ 1,185 $ 1,486 $ 1,510
1.94 %
1.87 % 1.81 % Non-taxable investment securities
306,868
301,242 296,958
1,901 1,833 1,730
2.48 % 2.43
% 2.33 % Mortgage-backed securities
521,788 536,264 588,461
2,897 2,923 3,178
2.22 % 2.18 % 2.16 %
Short-term investments and other
79,603
134,182 161,573
908 1,356
1,009
4.58 % 3.98 %
2.51 % Total cash and investments
1,152,489
1,288,918 1,380,245
6,891
7,598 7,427
2.39 %
2.35 % 2.15 % Loans (10) (11): Commercial and industrial
1,070,161 1,027,128 933,209
10,979 10,431 8,460
4.10 % 3.97 % 3.63 % Commercial real estate
2,398,413 2,402,304 2,441,215
28,151 29,016 26,151
4.69 % 4.73 % 4.28 % Construction and land
211,351 209,475 169,384
2,641 2,588 1,937
5.00
% 4.83 % 4.57 % Residential
2,972,945 2,907,446
2,702,317
25,545 24,630 21,766
3.44 % 3.39 %
3.22 % Home equity
90,646 93,656 97,191
1,121 1,148
1,042
5.02 % 4.86 % 4.35 % Other consumer
133,937 140,591 185,596
1,496 1,481 1,573
4.53 % 4.18 % 3.44 % Total loans
6,877,453 6,780,600 6,528,912
69,933 69,294 60,929
4.07 % 4.03 % 3.74 % Total
earning assets
8,029,942 8,069,518
7,909,157
76,824 76,892
68,356
3.83 % 3.76 % 3.46
% LESS: Allowance for loan losses
75,537 75,006 74,834 Cash
and due from banks (non-interest bearing)
46,172 53,633
51,944 Other assets
493,148 397,153
425,617
TOTAL AVERAGE ASSETS $
8,493,725 $ 8,445,298 $
8,311,884
AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS’
EQUITY Interest-bearing liabilities: Interest-bearing deposits
(12): Savings and NOW
$ 674,872 $ 649,937 $ 716,930
$ 296 $ 377 $ 215
0.18 % 0.23 % 0.12 %
Money market
3,341,397 3,392,039 3,141,564
10,072
9,502 4,314
1.22 % 1.11 % 0.56 % Certificates of
deposit
775,817 784,184 657,109
3,690 3,591 1,995
1.93 % 1.82 % 1.23 % Total
interest-bearing deposits (12)
4,792,086 4,826,160 4,515,603
14,058 13,470 6,524
1.19 % 1.11 % 0.59 %
Junior subordinated debentures
106,363 106,363 106,363
1,121 1,043 846
4.22 % 3.84 % 3.18 % FHLB
borrowings and other
615,985 515,734
878,093
3,307 2,382
3,603
2.15 % 1.81 % 1.64
% Total interest-bearing liabilities (12)
5,514,434
5,448,257 5,500,059
18,486
16,895 10,973
1.36
% 1.23 % 0.80 % Non-interest bearing demand
deposits (12)
1,974,526 2,092,070 1,872,472 Other
liabilities
236,426 154,612
133,243 Total average liabilities
7,725,386 7,694,939
7,505,774 Redeemable noncontrolling interests
2,056 11,046
22,085 Average shareholders’ equity
766,283
739,313 784,025
TOTAL AVERAGE LIABILITIES,
RNCI, AND SHAREHOLDERS’ EQUITY $ 8,493,725
$ 8,445,298 $ 8,311,884 Net interest
income
$ 58,338 $ 59,997
$ 57,383 Interest rate spread
2.47 % 2.53 %
2.66 % Bank only net interest margin
2.96 % 3.02 %
3.00 % Net interest margin
2.90 % 2.96 % 2.95 %
Average total deposits (12)
6,766,612 6,918,230
6,388,075
0.84 % 0.77 % 0.41 % Average total deposits
and borrowings (12)
7,488,960 7,540,327 7,372,531
1.00 % 0.89 % 0.60 %
Boston Private Financial Holdings,
Inc.Selected Financial Data (Unaudited)
(In thousands)
March 31, 2019 December
31, 2018 September 30, 2018 June
30, 2018 March 31, 2018 LOAN DATA
(13): Other commercial and industrial loans: New England
$ 492,800 $ 503,201 $ 460,409 $ 481,081 $ 444,419 San
Francisco Bay Area
39,829 43,702 41,256 35,220 23,491
Southern California
82,741 76,134 81,549
66,892 63,183 Total other commercial and industrial
loans
$ 615,370 $ 623,037 $ 583,214
$ 583,193 $ 531,093 New England
$
342,270 $ 344,079 $ 330,753 $ 332,572 $ 313,955 San
Francisco Bay Area
96,024 96,387 96,775 94,959 95,380
Southern California
11,198 11,205 11,279
11,351 11,422 Total commercial tax-exempt loans
$ 449,492 $ 451,671 $ 438,807 $
438,882 $ 420,757 Total commercial and industrial loans
$ 1,064,862 $ 1,074,708 $ 1,022,021
$ 1,022,075 $ 951,850 Commercial real estate loans:
New England
$ 1,068,619 $ 1,022,061 $ 1,043,494 $
1,069,942 $ 1,046,178 San Francisco Bay Area
720,276 714,449
724,243 739,769 721,871 Southern California
650,153
659,182 631,343 694,810 696,954 Total
commercial real estate loans
$ 2,439,048 $
2,395,692 $ 2,399,080 $ 2,504,521 $ 2,465,003
Construction and land loans: New England
$ 136,097 $
153,929 $ 114,411 $ 88,068 $ 79,563 San Francisco Bay Area
43,130 41,516 40,755 37,783 34,050 Southern California
31,391 44,861 42,358 46,173
51,627 Total construction and land loans
$ 210,618
$ 240,306 $ 197,524 $ 172,024 $ 165,240
Residential loans: New England
$ 1,692,421 $
1,689,318 $ 1,650,989 $ 1,643,039 $ 1,619,856 San Francisco Bay
Area
570,132 559,578 554,502 533,394 511,903 Southern
California
730,579 700,077 657,388
631,773 605,610 Total residential loans
$
2,993,132 $ 2,948,973 $ 2,862,879 $
2,808,206 $ 2,737,369 Home equity loans: New England
$ 59,074 $ 57,617 $ 61,291 $ 61,125 $ 65,434 San
Francisco Bay Area
18,279 19,722 19,769 17,366 19,314
Southern California
11,267 13,082 12,330
13,310 9,583 Total home equity loans
$
88,620 $ 90,421 $ 93,390 $ 91,801
$ 94,331 Other consumer loans: New England
$
110,363 $ 120,402 $ 121,685 $ 145,726 $ 166,413 San
Francisco Bay Area
11,956 12,663 14,228 14,659 13,569
Southern California
8,369 9,993 9,613
8,111 8,552 Total other consumer loans
$
130,688 $ 143,058 $ 145,526 $ 168,496
$ 188,534 Total loans: New England
$ 3,901,644
$ 3,890,607 $ 3,783,032 $ 3,821,553 $ 3,735,818 San Francisco Bay
Area
1,499,626 1,488,017 1,491,528 1,473,150 1,419,578
Southern California
1,525,698 1,514,534
1,445,860 1,472,420 1,446,931 Total loans
$
6,926,968 $ 6,893,158 $ 6,720,420 $
6,767,123 $ 6,602,327
Boston Private Financial Holdings,
Inc.Selected Financial Data (Unaudited)
(In thousands)
March 31, 2019 December
31, 2018 September 30, 2018 June
30, 2018 March 31, 2018 CREDIT QUALITY
(13): Special mention loans: New England
$ 34,675
$ 31,147 $ 20,382 $ 18,515 $ 33,282 San Francisco Bay Area
23,486 18,585 18,359 19,255 14,117 Southern California
28,626 28,796 28,665 15,678
15,689 Total special mention loans
$ 86,787
$ 78,528 $ 67,406 $ 53,448 $ 63,088
Accruing classified loans (14): New England
$
15,830 $ 10,392 $ 10,083 $ 11,493 $ 8,767 San Francisco Bay
Area
20,801 24,584 24,252 12,766 14,970 Southern California
5,890 19,119 21,045 21,194
21,436 Total accruing classified loans
$
42,521 $ 54,095 $ 55,380 $ 45,453
$ 45,173 Nonaccruing loans: New England
$
6,161 $ 6,728 $ 5,131 $ 7,282 $ 8,056 San Francisco Bay Area
2,480 2,488 1,169 1,319 1,442 Southern California
3,378 4,841 5,797 7,050 6,882
Total nonaccruing loans
$ 12,019 $
14,057 $ 12,097 $ 15,651 $ 16,380 Loans
30-89 days past due and accruing: New England
$ 7,232
$ 15,961 $ 9,193 $ 4,653 $ 10,571 San Francisco Bay Area
2,021 2,246 1,651 — 2,251 Southern California
8,462
4,092 763 324 7,554 Total loans
30-89 days past due and accruing
$ 17,715 $
22,299 $ 11,607 $ 4,977 $ 20,376 Loans
(charged-off)/ recovered, net: New England
$ 222 $
(100 ) $ 232 $ (73 ) $ (285 ) San Francisco Bay Area
18
1,804 706 91 67 Southern California
(312 ) 15
47 95 169 Total net loans (charged-off)/
recovered
$ (72 ) $ 1,719 $ 985
$ 113 $ (49 )
Boston Private Financial Holdings,
Inc.Selected Financial Data (Unaudited)
FOOTNOTES:
(1) On April 13, 2018, the Company completed the sale of its
ownership interest in Anchor to the management team of Anchor for
an upfront cash payment and future payments. Anchor’s results
remain consolidated in the Company’s results through the closing
date. For presentation purposes, Anchor’s AUM is excluded from
prior period AUM amounts, whereas it is included in the calculation
of Core fees and income through the closing date. The Company
classified the assets and liabilities of Anchor as held for sale at
March 31, 2018, which are included with Other assets and Other
liabilities, respectively, on the Company’s consolidated balance
sheet. For regulatory purposes, the goodwill and intangible assets
of Anchor are included in consolidated calculations through the
closing date. On December 3, 2018, the Company completed the
sale of its ownership interest in BOS to the management team of BOS
for an upfront cash payment and an eight-year revenue sharing
agreement with BOS. For presentation purposes, BOS' AUM is excluded
from prior period AUM amounts, whereas it is included in the
calculation of Core fees and income through the closing date. For
regulatory purposes, the goodwill and intangible assets of BOS are
included in consolidated calculations through the closing date.
See footnotes 6 and 8, below. (2) Total revenue is
the sum of Net interest income, Total core fees and income, and
Total other income. (3) Net income from discontinued
operations consists of contingent payments, net of expenses,
related to our divested affiliate, Westfield Capital Management
Company, LLC. The Company received its final contingent payment in
the first quarter of 2018 related to this affiliate and a tax
benefit related to deferred taxes in the fourth quarter of 2018
when annual tax returns were filed. (4) Adjustments to Net
income attributable to the Company to arrive at Net income
attributable to the common shareholders, treasury stock method, as
presented in these tables, include decrease/ (increase) in
Noncontrolling interests redemption value and dividends paid on
preferred stock, if any, including deemed dividends on redemption
of the 6.95% Non-Cumulative Perpetual Preferred Stock, Series D
(“the Series D preferred stock”), if any. On June 15, 2018, the
Company redeemed all $50 million of the outstanding Series D
preferred stock. (5) 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 Weighted average diluted
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, if any. 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, 2018 for additional information. (6) 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 TA by adjusting
Total assets to exclude Goodwill and intangible assets. The
Company calculates TCE by adjusting Total equity to exclude
non-convertible Series D preferred stock, if any, and exclude
Goodwill and intangible assets, net. On June 15, 2018, the Company
redeemed all $50 million of the outstanding Series D preferred
stock.
Boston Private Financial Holdings,
Inc.Selected Financial Data (Unaudited)
(In thousands, except share and per share data)
March
31, 2019 December 31, 2018 September
30, 2018 June 30, 2018 March 31,
2018 Total balance sheet assets
$ 8,572,143 $
8,494,625 $ 8,375,840 $ 8,716,203 $ 8,318,359 LESS: Goodwill and
intangible assets, net *
(69,162 ) (69,834 ) (89,432
) (90,182 ) (138,026 ) Tangible assets (non-GAAP)
$
8,502,981 $ 8,424,791 $ 8,286,408 $ 8,626,021 $ 8,180,333
Total shareholders’ equity
$ 778,819 $ 753,954 $
738,009 $ 733,977 $ 789,503 LESS: Series D preferred stock
(non-convertible)
— — — — (47,753 ) LESS: Goodwill and
intangible assets, net *
(69,162 ) (69,834 ) (89,432
) (90,182 ) (138,026 ) Total adjusting items
(69,162
) (69,834 ) (89,432 ) (90,182 ) (185,779 ) Tangible common
equity (non-GAAP)
$ 709,657 $ 684,120 $
648,577 $ 643,795 $ 603,724 Total equity/
Total assets
9.09 % 8.88 % 8.81 % 8.42 % 9.49 %
Tangible common equity/ Tangible assets (non-GAAP)
8.35
% 8.12 % 7.83 % 7.46 % 7.38 % Total risk weighted
assets **
$ 6,301,912 $ 6,161,677 $ 6,057,002 $
6,104,586 $ 5,974,866 Tier 1 common equity **
$
717,138 $ 702,728 $ 674,641 $ 665,628 $ 621,084 Tier 1
common equity/ Risk weighted assets **
11.38 % 11.40
% 11.14 % 10.90 % 10.39 % End of period shares outstanding
83,773,650 83,655,651 84,602,519 84,478,858 84,194,267
Book value per common share
$ 9.30 $ 9.01 $
8.72 $ 8.69 $ 8.81 Tangible book value per share (non-GAAP)
$ 8.47 $ 8.18 $ 7.67 $ 7.62 $ 7.17 * Includes
goodwill and intangible assets at an affiliate held for sale at
March 31, 2018. ** Risk weighted assets and Tier 1 common equity
for March 31, 2019 are presented based on estimated data.
(7) Assets under management and advisory have been reduced to
exclude those assets managed or advised by Anchor and BOS for
periods when Anchor and BOS were owned by the Company. (8)
The Company uses certain non-GAAP financial measures, such as:
ROACE and ROATCE 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 ROACE and the
non-GAAP ROATCE ratios 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, if any. The Company calculates Average tangible common
equity by adjusting Average equity to exclude Average goodwill and
intangible assets, net and Average preferred equity, if any.
Boston Private Financial Holdings,
Inc.Selected Financial Data (Unaudited)
Three Months Ended (In thousands)
March 31,
2019 December 31, 2018
September 30, 2018 June 30, 2018
March 31, 2018 Total average shareholders’
equity
$ 766,283 $ 739,313 $ 737,188 $ 775,949 $
784,025 LESS: Average Series D preferred stock
— —
— (39,881 ) (47,753 ) Average common equity
(non-GAAP)
766,283 739,313 737,188
736,068 736,272 LESS: Average goodwill and intangible
assets, net *
(69,498 ) (83,153 ) (89,830 ) (102,533
) (138,451 ) Average tangible common equity (non-GAAP)
$
696,785 $ 656,160 $ 647,358 $ 633,535
$ 597,821 Net income attributable to the
Company
$ 19,442 $ 33,302 $ 17,962 $ 6,434 $ 22,686
LESS: Dividends on Series D preferred stock
— —
— (869 ) (869 ) Common net income (non-GAAP)
19,442 33,302 17,962 5,565 21,817 ADD: Amortization of
intangibles, net of tax
531 537 593 592
593 Tangible common net income (non-GAAP)
$
19,973 $ 33,839 $ 18,555 $ 6,157
$ 22,410 Return on average equity - (annualized)
10.29 % 17.87 % 9.67 % 3.33 % 11.73 % ROACE -
(annualized) (non-GAAP)
10.29 % 17.87 % 9.67 % 3.03 %
12.02 % ROATCE - (annualized) (non-GAAP)
11.63 %
20.46 % 11.37 % 3.90 % 15.20 % * Includes goodwill and intangible
assets at an affiliate held for sale at March 31, 2018. (9)
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, if any; 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, impairment of goodwill, and restructuring, if any;
and from GAAP Efficiency ratio to non-GAAP Efficiency ratio,
excluding amortization of intangibles, impairment of goodwill, and
restructuring, if any, are presented below:
Boston Private Financial Holdings,
Inc.Selected Financial Data (Unaudited)
Three Months Ended (In thousands)
March 31,
2019 December 31, 2018
September 30, 2018 June 30, 2018
March 31, 2018 Income before income taxes
(GAAP)
$ 24,459 $ 42,192 $ 24,347 $ 24,803 $ 28,064
ADD BACK: Provision/ (credit) for loan losses
(1,426
) 93 (949 ) 453 (1,795 ) Pre-tax,
pre-provision income (non-GAAP)
$ 23,033 $ 42,285 $
23,398 $ 25,256 $ 26,269 Total operating expense (GAAP)
$ 60,553 $ 63,557 $ 68,557 $ 64,384 $ 70,857 Less:
Amortization of intangibles
672 680 750 749 750 Less:
Restructuring
1,646 2,065 5,763 —
— Total operating expense (non-GAAP)
$
58,235 $ 60,812 $ 62,044 $ 63,635 $ 70,107 Net
interest income
$ 58,338 $ 59,997 $ 59,641 $ 57,545 $
57,383 Total core fees and income
24,280 28,691 31,592
31,897 39,435 Gain on sale of affiliate
— 18,142 — — — Total
other income
968 (988 ) 722 198
308 Total revenue
$ 83,586 $ 105,842 $ 91,955
$ 89,640 $ 97,126 Efficiency ratio (GAAP)
72.44 %
60.05 % 74.55 % 71.83 % 72.95 % Efficiency ratio, excluding
amortization of intangibles and restructuring, if any (non-GAAP)
69.67 % 57.14 % 67.04 % 70.29 % 71.46 % (10)
Currently, the FTE adjustment for interest income on Non-taxable
investments and loans is immaterial and therefore has not been
applied. For comparison purposes, GAAP amounts are shown for all
periods presented. (11) Average loans includes Loans held
for sale and Nonaccrual loans.
Boston Private Financial Holdings,
Inc.Selected Financial Data (Unaudited)
(12) Average total deposits is the sum of Average total
interest-bearing deposits and Average non-interest bearing demand
deposits. Average total deposits and borrowings is the sum of
Average total interest-bearing liabilities and Average non-interest
bearing demand deposits. (13) The concentration of the
Private Banking loan data and credit quality is primarily based on
the location of the lenders' regional offices. (14) Accruing
classified 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. (15) 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)
March 31,
2019 December 31, 2018
September 30, 2018 June 30, 2018
March 31, 2018 Net interest income (GAAP
basis)
$ 58,338 $ 59,997 $ 59,641 $ 57,545 $ 57,383
LESS: Interest recovered on previous nonaccrual loans
258
986 986 — 80 Net interest
income, excluding interest recovered while loans on nonaccrual
status (non-GAAP) - also referred to as Core net interest income
(non-GAAP)
58,080 59,011 58,064 56,649 57,303 Net
interest margin, excluding interest recovered while loans on
nonaccrual status (non-GAAP) - also referred to as Core net
interest margin (non-GAAP)
2.89 % 2.90 % 2.85 % 2.85
% 2.90 %
Boston Private Financial Holdings,
Inc.Selected Financial Data (Unaudited)
(16) 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)
March 31, 2019 December
31, 2018 September 30, 2018
June 30, 2018 March 31, 2018 Net
income attributable to the Company (GAAP)
$ 19,442 $
33,302 $ 17,962 $ 6,434 $ 22,686 LESS: Gain on sale of affiliate
— 18,142 — — — ADD BACK: Information services *
—
(441 ) — 441 — ADD BACK: Restructuring
1,646 2,065 5,763 — —
ADD BACK: Tax adjustments **
— 3,502 — 12,706 — Tax effect
at statutory rate
(346 ) (341 ) (1,210 ) (93 ) —
Net income attributable to the Company
excluding notable items (non-GAAP)
$ 20,742 $ 19,945 $ 22,515 $ 19,488 $ 22,686
Net income attributable to the common shareholders, treasury stock
method (GAAP)
$ 20,999 $ 35,996 $ 17,133 $ 2,910 $
22,663 ADD BACK: Deemed dividend due to redemption of Series D
preferred stock
— — — 2,247 — LESS: Gain on sale of
affiliate
— 18,142 — — — ADD BACK: Information services *
— (441 ) — 441 — ADD BACK: Restructuring
1,646 2,065
5,763 — — ADD BACK: Tax adjustments **
— 3,502 — 12,706 —
Tax effect at statutory rate
(346 ) (341 ) (1,210 )
(93 ) — Net income attributable to the common shareholders,
treasury stock method, excluding notable items (non-GAAP)
$
22,299 $ 22,639 $ 21,686 $ 18,211 $ 22,663 Weighted
average diluted shares outstanding
84,010,450 84,863,779
85,498,568 85,413,575 85,271,650 Diluted total earnings per
share (GAAP)
$ 0.25 $ 0.42 $ 0.20 $ 0.03 $ 0.27
Diluted total earnings per share, excluding notable items
(non-GAAP)
$ 0.27 $ 0.27 $ 0.25 $ 0.21 $ 0.27
Average common equity (non-GAAP)
$ 766,283 $ 739,313
$ 737,188 $ 736,068 $ 736,272 Average tangible common equity
(non-GAAP)
$ 696,785 $ 656,160 $ 647,358 $ 633,535 $
597,821 Return on average common equity - (annualized), excluding
notable items (non-GAAP)
10.98 % 10.70 % 12.12 %
10.15 % 12.02 % Return on average tangible common equity -
(annualized), excluding notable items (non-GAAP)
12.38
% 12.38 % 14.16 % 12.16 % 15.20 % Pre-tax,
pre-provision income (non-GAAP)
$ 23,033 $ 42,285 $
23,398 $ 25,256 $ 26,269 LESS: Gain on sale of affiliate
—
18,142 — — — ADD BACK: Information services *
— (441 ) — 441
— ADD BACK: Restructuring
1,646 2,065 5,763
— — Pre-tax, pre-provision income, excluding
notable items (non-GAAP)
$ 24,679 $ 25,767 $ 29,161 $
25,697 $ 26,269 * In the fourth quarter of 2018, $0.4
million of Information services expense was reclassified to
Restructuring expense in conjunction with the Company's formal
restructuring plan announced in the fourth quarter of 2018. **
Additional tax expense in the second quarter of 2018 relates to the
tax impact of the April 2018 completion of the sale of Anchor and
additional expense in the fourth quarter of 2018 relates to the
completion of the sale of BOS.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190417005907/en/
Adam Bromley(617) 912-4386abromley@bostonprivate.com
Boston Private Financial (NASDAQ:BPFH)
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