Market Overview

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

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Boston Private Financial Holdings, Inc. (NASDAQ:BPFH) (the "Company" or
"BPFH") today reported first quarter 2017 GAAP Net Income Attributable
to the Company of $15.7 million, compared to $17.6 million for the
fourth quarter of 2016 and $18.0 million for the first quarter of 2016.
First quarter 2017 diluted earnings per share were $0.17, compared to
$0.19 in the fourth quarter of 2016, and $0.21 in the first quarter of
2016.

"We are encouraged by the Company's stronger growth to start 2017," said
Clayton G. Deutsch, CEO. "The Private Bank generated strong deposit and
loan growth that translated into meaningful Net Interest Income growth
and Net Interest Margin expansion, while our market-linked fee
businesses all experienced AUM growth. We also front-loaded the year
with stepped up business development hiring and technology investment.
At the same time, we are focused on taking action to improve long-term
earnings performance and increase shareholder value."

Core Fees and Income/Assets Under Management

Core Fees and Income for the first quarter were $36.3 million, a 6%
decrease linked quarter primarily due to Investment Management
performance fees received in the fourth quarter. It also represents a 4%
decrease year-over-year, primarily reflecting lower Other Banking Fee
Income as a result of decreased swap fee income.

AUM was $28.7 billion at the end of the first quarter, an increase of 4%
from the previous quarter and 7% year-over-year. The Company experienced
net flows of $267 million during the first quarter, compared to negative
$176 million and negative $761 million in the fourth quarter of 2016 and
first quarter of 2016, respectively. During the first quarter, net flows
by segment were $34 million for Wealth Management & Trust, negative $30
million for Investment Management, and $263 million for Wealth Advisory.

Net Interest Income

Net Interest Income for the first quarter was $53.6 million, an increase
of 4% from $51.5 million for the fourth quarter of 2016 and an increase
of 8% from $49.9 million for the first quarter of 2016. The current
quarter includes $0.3 million of interest recovered on previous
nonaccrual loans compared to $0.4 million for the fourth quarter of 2016
and $1.1 million for the first quarter of 2016. Excluding interest
recovered on previous nonaccrual loans, Net Interest Income on an FTE
basis increased 4% linked quarter and 10% year-over-year.

Net Interest Margin was 2.94% for the first quarter of 2017, an increase
of 6 basis points from the fourth quarter of 2016 and a decrease of 2
basis points from the first quarter of 2016. Excluding interest
recovered on previous nonaccrual loans, Net Interest Margin for the
first quarter was 2.92%, an increase of 6 basis points from the fourth
quarter of 2016 and an increase of 2 basis points from the first quarter
of 2016.

Total Operating Expense

Total Operating Expense for the first quarter of 2017 was $68.8 million,
down 4% from $71.8 million for the fourth quarter of 2016, which was
elevated primarily due to a goodwill impairment charge. On a
year-over-year basis, Total Operating Expense increased 3% from $66.7
million. Increased expenses during the quarter reflect seasonal
compensation expense and staff additions, in addition to a vacation
policy change intended to reduce future expenses.

Provision and Asset Quality

The Company recorded a provision credit of $0.2 million for the first
quarter of 2017, compared to a provision credit of $1.1 million for the
fourth quarter of 2016 and $3.1 million for the first quarter of 2016.
The provision credit in the first quarter of 2017 was due to net
recoveries and declining loss factors, partially offset by an increase
in loan volume and an increase in Criticized loans.

Criticized Loans increased 14% linked quarter but declined 19%
year-over-year to $135 million. Nonaccrual Loans ("Nonaccruals")
increased 21% to $20.9 million on a linked quarter basis. On a
year-over-year basis, Nonaccruals decreased 14% from $24.4 million. As a
percentage of Total Loans, Nonaccruals were 34 basis points at March 31,
2017, up 6 basis points compared to December 31, 2016, and down 9 basis
points from March 31, 2016.

Additional credit metrics are listed below:

                     
(In millions) March 31,
2017
December 31,
2016
September 30,
2016
June 30,
2016
March 31,
2016
Total Criticized Loans $ 135.1 $ 118.5 $ 158.8 $ 150.7 $ 166.9

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

$ 28.7 $ 15.1 $ 4.6 $ 7.6 $ 8.3

Total Net Loans (Charged-off)/
Recovered

$ 0.1 $ 1.5 $ 2.1 $ 1.9 $ 1.1

Allowance for Loan Losses/
Total Loans

1.25 % 1.28 % 1.32 % 1.32 % 1.35 %
 

Capital Ratios

Capital ratios are listed below:

                     
March 31,
2017
December 31,
2016
September 30,
2016
June 30,
2016
March 31,
2016
BPFH Ratios:
Total Risk-Based Capital * 13.8 % 13.9 % 14.0 % 14.0 % 14.0 %
Tier I Risk-Based Capital * 12.6 % 12.6 % 12.7 % 12.7 % 12.7 %
Tier I Leverage Capital * 9.2 % 9.4 % 9.5 % 9.6 % 9.5 %
TCE/TA (4) 7.0 % 7.1 % 7.4 % 7.4 % 7.3 %

Tier I Common Equity/
Risk Weighted Assets *

 

10.0 % 10.0 % 10.0 % 10.0 % 9.9 %

*March 31, 2017 information is presented based on estimated data.

 

Dividend Payments
Concurrent with the
release of first 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 May 10, 2017, and the
payment date is May 19, 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 May 15, 2017, and
the payment date is June 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
earnings; 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, April 27, 2017, to
discuss the financial results, business highlights and outlook. To
access the call:

Dial In #: (888) 317-6003
Elite Entry Number: 1881216

Replay Information:
Available from April 27, 2017 at 12 noon until
May 4, 2017
Dial In #: (877) 344-7529
Conference Number:
10104405

The call will be simultaneously webcast and may be accessed on www.bostonprivate.com.

Boston Private Financial Holdings, Inc.
Boston
Private Financial Holdings, Inc. is a national financial services
organization that owns Wealth Management and Private Banking affiliates
with offices in Boston, New York, Los Angeles, San Francisco, San Jose,
Florida, and Wisconsin. The Company has total assets of approximately $8
billion, and manages over $28 billion of client assets.

The Company positions its affiliates to serve the high net worth
marketplace with high quality products and services of unique appeal to
private clients. The Company also provides strategic oversight and
access to resources, both financial and intellectual, to support
affiliate management, marketing, compliance and legal activities.
(NASDAQ:BPFH)

For more information about BPFH, visit the Company's website at www.bostonprivate.com.

Forward-Looking Statements
Certain
statements in this press release that are not historical facts may
constitute forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and are intended to be
covered by the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements involve risks
and uncertainties. These statements include, among others, statements
regarding our strategy, evaluations of future interest rate trends and
liquidity, prospects for growth in assets, and prospects for overall
results over the long term. You should not place undue reliance on our
forward-looking statements. You should exercise caution in interpreting
and relying on forward-looking statements because they are subject to
significant risks, uncertainties and other factors which are, in some
cases, beyond the Company's control. Forward-looking statements are
based on the current assumptions and beliefs of management and are only
expectations of future results. The Company's actual results could
differ materially from those projected in the forward-looking statements
as a result of, among other factors, adverse conditions in the capital
and debt markets and the impact of such conditions on the Company's
private banking, investment management and wealth advisory activities;
changes in interest rates; competitive pressures from other financial
institutions; the effects of weakness in general economic conditions on
a national basis or in the local markets in which the Company operates;
changes in loan defaults and charge-off rates; changes in the value of
securities and other assets, adequacy of loan loss reserves, or
decreases in deposit levels necessitating increased borrowing to fund
loans and investments; 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,
2017
December 31,
2016
September 30,
2016
June 30,
2016
March 31,
2016
(In thousands, except share and per share data)
Assets:
Cash and cash equivalents $ 165,186 $ 106,557 $ 67,631 $ 126,167 $ 113,946
Investment securities available-for-sale 1,256,208 1,264,132 1,249,578 1,191,523 1,151,529
Investment securities held-to-maturity 98,424 93,079 98,881 105,297 111,337
Stock in Federal Home Loan Banks 50,133 44,077 36,084 44,374 34,202
Loans held for sale 350 3,464 5,316 4,677 5,383
Total loans 6,250,217 6,114,354 5,869,498 5,751,497 5,658,181
Less: Allowance for loan losses 78,031   78,077   77,669   75,753   76,427
Net loans 6,172,186 6,036,277 5,791,829 5,675,744 5,581,754
Other real estate owned ("OREO") 1,690 1,800 2,042 98
Premises and equipment, net 32,974 31,827 32,089 31,752 31,575
Goodwill 142,554 142,554 152,082 152,082 152,082
Intangible assets, net 25,299 26,725 28,267 29,836 31,422
Fees receivable 12,230 13,400 11,185 11,129 11,041
Accrued interest receivable 20,790 20,479 18,062 18,061 17,590
Deferred income taxes, net 53,686 55,460 39,319 36,942 43,164
Other assets 185,100   130,753   149,427   149,975   128,540
Total assets $ 8,215,120   $ 7,970,474   $ 7,681,550   $ 7,579,601   $ 7,413,663
Liabilities:
Deposits $ 6,246,620 $ 6,085,146 $ 5,812,243 $ 5,536,092 $ 5,786,860
Deposits held for sale 105,788 110,558
Securities sold under agreements to repurchase 67,249 59,624 77,466 43,304 63,182
Federal funds purchased 80,000 125,000 180,000 40,000
Federal Home Loan Bank borrowings 885,445 734,205 522,681 678,012 523,953
Junior subordinated debentures 106,363 106,363 106,363 106,363 106,363
Other liabilities 110,310   119,683   134,322   135,289   114,222
Total liabilities 7,415,987   7,185,021   6,883,863   6,789,618   6,634,580
Redeemable Noncontrolling Interests ("RNCI") 17,232 16,972 16,199 15,843 16,938
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

84,134 83,732 83,195 83,380 83,024
Additional paid-in capital 602,748 597,454 597,209 597,989 599,825
Retained earnings 53,510 47,929 39,415 28,985 21,740
Accumulated other comprehensive income/ (loss) (10,237 ) (12,548 ) 10,134   12,654   6,687
Total Company's shareholders' equity 777,908   764,320   777,706   770,761   759,029
Noncontrolling interests 3,993   4,161   3,782   3,379   3,116
Total shareholders' equity 781,901   768,481   781,488   774,140   762,145

Total liabilities, redeemable noncontrolling
interests and
shareholders' equity

$ 8,215,120   $ 7,970,474   $ 7,681,550   $ 7,579,601   $ 7,413,663
 
     

Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)

 
Three Months Ended
March 31,
2017
    December 31,
2016
    September 30,
2016
    June 30,
2016
    March 31,
2016
Interest and dividend income: (In thousands, except share and per share data)
Loans $ 53,636 $ 51,499 $ 50,074 $ 49,731 $ 50,046
Taxable investment securities 1,670 1,592 1,537 1,507 1,594
Non-taxable investment securities 1,606 1,520 1,444 1,400 1,390
Mortgage-backed securities 3,504 3,290 3,079 2,982 3,065
Federal funds sold and other 600   508   469   405   507  
Total interest and dividend income 61,016   58,409   56,603   56,025   56,602  
Interest expense:
Deposits 4,531 4,152 4,163 4,075 4,182
Federal Home Loan Bank borrowings 2,111 1,987 1,929 2,139 1,953
Junior subordinated debentures 671 674 591 584 578
Repurchase agreements and other short-term borrowings 61   77   49   58   10  
Total interest expense 7,374   6,890   6,732   6,856   6,723  
Net interest income 53,642 51,519 49,871 49,169 49,879
Provision/ (credit) for loan losses (181 ) (1,128 ) (138 ) (2,535 ) (3,133 )

Net interest income after provision/ (credit) for loan
losses

53,823   52,647   50,009   51,704   53,012  
Fees and other income:
Investment management fees 10,839 12,408 10,717 10,627 10,658
Wealth advisory fees 12,823 12,568 12,750 12,551 12,712
Wealth management and trust fees 10,826 11,031 10,826 11,208 10,916
Other banking fee income 1,694 2,387 3,447 2,982 3,233
Gain on sale of loans, net 138   105   156   197   209  
Total core fees and income 36,320   38,499   37,896   37,565   37,728  
Gain/ (loss) on sale of investments, net 19 2 273 245 1
Gain/ (loss) on OREO, net (46 ) (110 ) 137 280
Gain on sale of offices 2,862
Other 213   2,705   1,706   (1,015 ) 13  
Total other income 186   5,459   2,116   (770 ) 294  
Operating expense:
Salaries and employee benefits 45,825 39,669 40,924 40,614 42,560
Occupancy and equipment 10,649 10,039 9,521 9,928 9,587
Professional services 3,314 2,756 2,290 3,015 3,515
Marketing and business development 1,660 2,022 1,623 1,811 2,170
Contract services and data processing 1,580 1,743 1,865 1,737 1,679
Amortization of intangibles 1,426 1,542 1,568 1,586 1,586
Impairment of goodwill 9,528
FDIC insurance 766 727 722 1,015 1,020
Restructuring 905 1,112
Other 3,560   3,817   3,157   4,120   3,480  
Total operating expense 68,780   71,843   61,670   64,731   66,709  
Income before income taxes 21,549 24,762 28,351 23,768 24,325
Income tax expense 6,553   7,247   8,652   7,626   7,438  
Net income from continuing operations 14,996 17,515 19,699 16,142 16,887
Net income from discontinued operations (1) 1,632   1,184   1,047   1,245   2,065  

Net income before attribution to noncontrolling
interests

16,628 18,699 20,746 17,387 18,952
Less: Net income attributable to noncontrolling interests 966   1,147   1,110   989   911  
Net income attributable to the Company $ 15,662   $ 17,552   $ 19,636   $ 16,398   $ 18,041  
 
     

Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)

 
Three Months Ended
PER SHARE DATA: March 31,
2017
    December 31,
2016
    September 30,
2016
    June 30,
2016
    March 31,
2016
(In thousands, except share and per share data)
Calculation of Income for EPS:
Net income attributable to the Company $ 15,662 $ 17,552 $ 19,636 $ 16,398 $ 18,041

Adjustments to Net Income Attributable to the Company to
arrive
at Net Income Attributable to Common
Shareholders, treasury
stock method (2)

(1,166 ) (1,798 ) (1,006 ) (970 ) (289 )

Net Income Attributable to the Common Shareholders,
treasury
stock method

$ 14,496   $ 15,755   $ 18,630   $ 15,428   $ 17,752  
 
End of Period Common Shares Outstanding 84,134,104 83,731,769 83,194,714 83,380,426 83,023,755
 
Weighted Average Shares Outstanding:
Weighted average basic shares outstanding 81,951,179 81,217,391 81,301,499 81,236,809 81,301,499
Weighted average diluted shares outstanding (3) 84,560,918 83,438,137 83,562,283 83,519,939 83,279,866
 
Diluted Total Earnings per Share $ 0.17 $ 0.19 $ 0.22 $ 0.18 $ 0.21
 
                     

Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)

 
(In thousands, except per share data) March 31,
2017
December 31,
2016
September 30,
2016
June 30,
2016
March 31,
2016
FINANCIAL DATA:
Book Value Per Common Share $ 8.73 $ 8.61 $ 8.82 $ 8.71 $ 8.60
Tangible Book Value Per Share (4) $ 6.73 $ 6.59 $ 6.65 $ 6.53 $ 6.39
Market Price Per Share $ 16.40 $ 16.55 $ 12.83 $ 11.78 $ 11.45
 
ASSETS UNDER MANAGEMENT AND ADVISORY:
Wealth Management and Trust $ 7,260,000 $ 7,008,000 $ 7,334,000 $ 7,313,000 $ 7,137,000
Investment Managers 10,907,000 10,571,000 10,176,000 10,006,000 9,838,000
Wealth Advisory 10,579,000 9,989,000 10,028,000 9,974,000 9,857,000
Less: Inter-company Relationship (11,000 ) (11,000 ) (11,000 ) (17,000 ) (21,000 )
Total Assets Under Management and Advisory $ 28,735,000   $ 27,557,000   $ 27,527,000   $ 27,276,000   $ 26,811,000  
 
FINANCIAL RATIOS:
Total Equity/ Total Assets 9.52 % 9.64 % 10.17 % 10.21 % 10.28 %
Tangible Common Equity/ Tangible Assets (4) 7.04 % 7.07 % 7.38 % 7.36 % 7.34 %
Tier I Common Equity/ Risk Weighted Assets (4) 9.97 % 10.00 % 10.02 % 9.95 % 9.92 %
Allowance for Loan Losses/ Total Loans 1.25 % 1.28 % 1.32 % 1.32 % 1.35 %
Allowance for Loan Losses/ Nonaccrual Loans 373 % 451 % 471 % 395 % 314 %

Return on Average Assets - Three Months Ended
(Annualized)

0.79 % 0.89 % 1.03 % 0.88 % 0.99 %

Return on Average Common Equity - Three Months Ended
(Annualized)
(5)

8.26 % 9.07 % 10.20 % 8.68 % 9.84 %

Return on Average Tangible Common Equity - Three
Months Ended
(Annualized) (5)

11.43 % 12.75 % 14.30 % 12.43 % 14.11 %
Efficiency Ratio - Three Months Ended (6) 72.45 % 61.87 % 65.04 % 70.41 % 70.87 %
 
DEPOSIT DETAIL:
Demand deposits (noninterest-bearing) $ 1,772,854 $ 1,753,648 $ 1,770,631 $ 1,636,273 $ 1,609,668
NOW 620,280 578,657 557,482 547,777 565,395
Savings 74,293 74,162 73,480 70,553 76,019
Money market 3,176,472 3,102,048 2,879,952 2,771,080 2,959,328
Certificates of deposit 602,721   576,631   530,698   510,409   576,450  
Total Deposits $ 6,246,620   $ 6,085,146   $ 5,812,243   $ 5,536,092   $ 5,786,860  
 
             

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: 03/31/17     12/31/16     03/31/16 03/31/17     12/31/16     03/31/16 03/31/17     12/31/16     03/31/16
AVERAGE ASSETS
Interest-Earning Assets:
Cash and Investments:
Taxable investment securities $ 395,728 $ 375,913 $ 392,579 $ 1,670 $ 1,592 $ 1,594 1.69 % 1.69 % 1.63 %

Non-taxable investment securities (9)

295,015 285,330 262,227 2,471 2,338 2,138 3.35 % 3.28 % 3.26 %
Mortgage-backed securities 672,683 679,644 564,826 3,504 3,290 3,065 2.08 % 1.94 % 2.17 %
Federal funds sold and other 160,001       130,740       185,253   600       508       507   1.51 %     1.53 %     1.08 %
Total Cash and Investments 1,523,427       1,471,627       1,404,885   8,245       7,728       7,304   2.17 %     2.10 %     2.08 %
Loans (10):
Commercial and Industrial (9) 983,697 1,110,268 1,065,614 9,303 10,892 10,920 3.78 % 3.84 % 4.05 %
Commercial Real Estate (9) 2,324,367 2,109,601 1,859,557 23,544 21,153 19,797 4.05 % 3.92 % 4.21 %
Construction and Land 113,963 96,242 174,867 1,244 1,018 1,648 4.36 % 4.14 % 3.73 %
Residential 2,424,772 2,350,644 2,229,680 18,991 17,999 17,302 3.13 % 3.06 % 3.10 %
Home Equity 117,702 117,985 119,349 1,089 1,050 1,082 3.75 % 3.54 % 3.65 %
Other Consumer 192,136       188,908       157,508   1,420       1,323       965   3.00 %     2.79 %     2.47 %
Total Loans 6,156,637       5,973,648       5,606,575   55,591       53,435       51,714   3.61 %     3.53 %     3.66 %
Total Earning Assets 7,680,064       7,445,275       7,011,460   63,836       61,163       59,018   3.33 %     3.25 %     3.35 %
LESS: Allowance for Loan Losses 78,122 79,440 80,273

Cash and due From Banks (Non-Interest
Bearing)

41,469 39,133 39,943
Other Assets 398,751       427,545       420,909  
TOTAL AVERAGE ASSETS $ 8,042,162       $ 7,832,513       $ 7,392,039  

AVERAGE LIABILITIES, RNCI,
AND SHAREHOLDERS' EQUITY

Interest-Bearing Liabilities:
Interest-Bearing Deposits (10):
NOW $ 576,915 $ 567,538 $ 542,617 $ 110 $ 126 $ 87 0.08 % 0.09 % 0.06 %
Savings 75,123 76,033 75,433 18 18 23 0.10 % 0.09 % 0.12 %
Money Market 3,213,092 2,969,292 3,055,242 3,122 2,807 2,902 0.39 % 0.38 % 0.38 %
Certificates of Deposit 589,900       563,045       578,310   1,281       1,201       1,170   0.88 %     0.85 %     0.81 %
Total Interest-Bearing Deposits (14) 4,455,030 4,175,908 4,251,602 4,531 4,152 4,182 0.41 % 0.40 % 0.40 %
Junior Subordinated Debentures 106,363 106,363 106,363 671 674 578 2.52 % 2.48 % 2.15 %
FHLB Borrowings and Other 726,978       742,247       524,892   2,172       2,064       1,963   1.19 %     1.09 %     1.48 %
Total Interest-Bearing Liabilities 5,288,371       5,024,518       4,882,857   7,374       6,890       6,723   0.56 %     0.54 %     0.55 %

Noninterest Bearing Demand
Deposits (10) (14)

1,843,830 1,870,130 1,621,666
Payables and Other Liabilities 117,132       140,006       110,959  
Total Average Liabilities 7,249,333 7,034,654 6,615,482
Redeemable Noncontrolling Interests 18,578 20,393 21,157
Average Shareholders' Equity 774,251       777,466       755,400  

TOTAL AVERAGE LIABILITIES,
RNCI, AND SHAREHOLDERS'
EQUITY

$ 8,042,162       $ 7,832,513       $ 7,392,039  

Net Interest Income - on a Fully Taxable
Equivalent Basis
(FTE)

$ 56,462 $ 54,273 $ 52,295
LESS: FTE Adjustment (9) 2,820       2,754       2,416  
Net Interest Income (GAAP Basis) $ 53,642       $ 51,519       $ 49,879  
Interest Rate Spread 2.77 % 2.71 % 2.80 %
Bank only Net Interest Margin 2.98 % 2.91 % 3.01 %
Net Interest Margin 2.94 % 2.88 % 2.96 %
 
                     

Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)

 
(In thousands) March 31,
2017
December 31,
2016
September 30,
2016
June 30,
2016
March 31,
2016
LOAN DATA (11):
Other Commercial and Industrial Loans:
New England $ 458,687 $ 493,451 $ 461,201 $ 428,515 $ 457,520
San Francisco Bay Area 55,289 50,578 59,936 64,762 66,629
Southern California 66,378   67,341   67,583   66,379   68,640
Total Other Commercial and Industrial Loans $ 580,354   $ 611,370   $ 588,720   $ 559,656   $ 592,789
Commercial Tax Exempt Loans:
New England $ 318,137 $ 317,691 $ 263,418 $ 260,739 $ 268,270
San Francisco Bay Area 79,517 69,064 69,366 51,462 51,756
Southern California 11,778   11,849   11,918   11,986   12,053
Total Commercial Tax Exempt Loans $ 409,432   $ 398,604   $ 344,702   $ 324,187   $ 332,079
Total Commercial and Industrial Loans $ 989,786   1,009,974   933,422   883,843   924,868
Commercial Real Estate Loans:
New England $ 1,017,565 $ 1,012,284 $ 987,758 $ 923,035 $ 940,149
San Francisco Bay Area 686,019 637,042 611,224 633,735 611,461
Southern California 665,043   652,918   621,336   579,616   519,012
Total Commercial Real Estate Loans $ 2,368,627   $ 2,302,244   $ 2,220,318   $ 2,136,386   $ 2,070,622
Construction and Land Loans:
New England $ 58,737 $ 47,434 $ 56,268 $ 90,408 $ 106,258
San Francisco Bay Area 28,148 29,629 26,400 36,808 35,281
Southern California 30,122   27,776   16,028   15,333   25,135
Total Construction and Land Loans $ 117,007   $ 104,839   $ 98,696   $ 142,549   $ 166,674
Residential Loans:
New England $ 1,508,138 $ 1,456,592 $ 1,409,385 $ 1,385,102 $ 1,361,547
San Francisco Bay Area 474,294 473,102 476,986 470,694 463,645
Southern California 481,184   450,167   429,719   424,320   391,683
Total Residential Loans $ 2,463,616   $ 2,379,861   $ 2,316,090   $ 2,280,116   $ 2,216,875
Home Equity Loans:
New England $ 80,904 $ 87,280 $ 90,592 $ 91,728 $ 84,693
San Francisco Bay Area 26,006 25,129 23,826 26,714 26,134
Southern California 7,626   6,408   6,851   7,044   7,980
Total Home Equity Loans $ 114,536   $ 118,817   $ 121,269   $ 125,486   $ 118,807
Other Consumer Loans:
New England $ 175,096 $ 186,680 $ 167,140 $ 166,998 $ 145,450
San Francisco Bay Area 17,163 7,517 6,764 8,299 8,347
Southern California 4,386   4,422   5,799   7,820   6,538
Total Other Consumer Loans $ 196,645   $ 198,619   $ 179,703   $ 183,117   $ 160,335
Total Loans:
New England $ 3,617,264 $ 3,601,412 $ 3,435,762 $ 3,346,525 $ 3,363,887
San Francisco Bay Area 1,366,436 1,292,061 1,274,502 1,292,474 1,263,253
Southern California 1,266,517   1,220,881   1,159,234   1,112,498   1,031,041
Total Loans $ 6,250,217   $ 6,114,354   $ 5,869,498   $ 5,751,497   $ 5,658,181
 
                     

Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)

 
(In thousands) March 31,
2017
December 31,
2016
September 30,
2016
June 30,
2016
March 31,
2016
CREDIT QUALITY (11):
Special Mention Loans:
New England $ 21,596 $ 14,750 $ 25,248 $ 27,903 $ 38,927
San Francisco Bay Area 23,850 21,901 22,786 24,381 23,288
Southern California 4,350   884   6,278   15,044   24,710  
Total Special Mention Loans $ 49,796   $ 37,535   $ 54,312   $ 67,328   $ 86,925  
Accruing Substandard Loans (12):
New England $ 12,157 $ 10,972 $ 19,748 $ 17,447 $ 19,157
San Francisco Bay Area 15,824 15,890 19,157 19,750 20,235
Southern California 36,398   36,809   49,148   27,027   16,299  
Total Accruing Substandard Loans $ 64,379   $ 63,671   $ 88,053   $ 64,224   $ 55,691  
Nonaccruing Loans:
New England $ 14,407 $ 10,081 $ 11,020 $ 13,028 $ 17,988
San Francisco Bay Area 2,312 2,989 3,543 4,196 4,369
Southern California 4,226   4,245   1,928   1,964   1,999  
Total Nonaccruing Loans $ 20,945   $ 17,315   $ 16,491   $ 19,188   $ 24,356  
Other Real Estate Owned:
New England $ $ 1,690 $ 1,800 $ 2,042 $ 98
San Francisco Bay Area
Southern California          
Total Other Real Estate Owned $   $ 1,690   $ 1,800   $ 2,042   $ 98  
Loans 30-89 Days Past Due and Accruing (13):
New England $ 9,843 $ 10,311 $ 2,735 $ 5,213 $ 4,723
San Francisco Bay Area 10,111 591 1,018 70 986
Southern California 8,771   4,235   836   2,343   2,598  
Total Loans 30-89 Days Past Due and Accruing $ 28,725   $ 15,137   $ 4,589   $ 7,626   $ 8,307  

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

New England $ 79 $ 1,120 $ 1,704 $ 1,276 $ (2,146 )
San Francisco Bay Area 35 384 318 537 3,454
Southern California 21   33   32   48   (248 )
Total Net Loans (Charged-off)/ Recovered $ 135   $ 1,537   $ 2,054   $ 1,861   $ 1,060  
                       

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 per share data) March 31,
2017
December 31,
2016
September 30,
2016
June 30,
2016
March 31,
2016
Total Balance Sheet Assets $ 8,215,120 $ 7,970,474 $ 7,681,550 $ 7,579,601 $ 7,413,663
LESS: Goodwill and Intangible Assets, net (167,853 ) (169,279 ) (180,349 ) (181,918 ) (183,504 )
Tangible Assets (non-GAAP) $ 8,047,267 $ 7,801,195 $ 7,501,201 $ 7,397,683 $ 7,230,159
Total Shareholders' Equity $ 781,901 $ 768,481 $ 781,488 $ 774,140 $ 762,145
LESS: Series D Preferred Stock (non-convertible) (47,753 ) (47,753 ) (47,753 ) (47,753 ) (47,753 )
LESS: Goodwill and Intangible Assets, net (167,853 ) (169,279 ) (180,349 ) (181,918 ) (183,504 )
Total adjusting items (215,606 ) (217,032 ) (228,102 ) (229,671 ) (231,257 )
Tangible Common Equity (non-GAAP) $ 566,295   $ 551,449   $ 553,386   $ 544,469   $ 530,888  
Total Equity/Total Assets 9.52 % 9.64 % 10.17 % 10.21 % 10.28 %
Tangible Common Equity/Tangible Assets (non-GAAP) 7.04 % 7.07 % 7.38 % 7.36 % 7.34 %
 
Total Risk Weighted Assets * $

5,806,853

$ 5,716,037 $ 5,534,711 $ 5,464,529 $ 5,412,514
Tier I Common Equity * $ 578,941 $ 571,663 $ 554,368 $ 543,801 $ 536,925
Tier I Common Equity/ Risk Weighted Assets 9.97 % 10.00 % 10.02 % 9.95 % 9.92 %
 
End of Period Shares Outstanding 84,134,104 83,731,769 83,194,714 83,380,426 83,023,755
 
Book Value Per Common Share $ 8.73 $ 8.61 $ 8.82 $ 8.71 $ 8.60
Tangible Book Value Per Share (non-GAAP) $ 6.73 $ 6.59 $ 6.65 $ 6.53 $ 6.39

* Risk Weighted Assets and Tier I Common Equity for March 31, 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) March 31,
2017
    December 31,
2016
   

September 30,
2016

    June 30,
2016
    March 31,
2016
Total average shareholders' equity $ 774,251 $ 777,466 $ 778,098 $ 765,063 $ 755,400

LESS: Average Series D preferred stock
(non-convertible)

(47,753 ) (47,753 ) (47,753 ) (47,753 ) (47,753 )
Average common equity (non-GAAP) 726,498   729,713   730,345   717,310   707,647  
LESS: Average goodwill and intangible assets, net (168,681 ) (179,535 ) (181,191 ) (182,787 ) (184,415 )

Average Tangible Common Equity (non-GAAP)

$ 557,817   $ 550,178   $ 549,154   $ 534,523   $ 523,232  
 
Net income attributable to the Company $ 15,662 $ 17,552 $ 19,636 $ 16,398 $ 18,041
LESS: Dividends on Series D preferred stock (869 ) (869 ) (868 ) (869 ) (869 )
Common net income (non-GAAP) 14,793 16,683 18,768 15,529 17,172

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

927   1,002   1,019   1,031   1,031  
Tangible common net income (non-GAAP) $ 15,720   $ 17,685   $ 19,787   $ 16,560   $ 18,203  
 
Return on Average Equity - (Annualized) 8.20 % 8.96 % 10.01 % 8.60 % 9.69 %

Return on Average Common Equity -
(Annualized) (non-GAAP)

8.26 % 9.07 % 10.20 % 8.68 % 9.84 %

Return on Average Tangible Common Equity -
(Annualized)
(non-GAAP)

11.43 % 12.75 % 14.30 % 12.43 % 14.11 %
 
       

Boston Private Financial Holdings, Inc.

Selected Financial Data

(Unaudited)

 

(6)

The Company uses certain non-GAAP financial measures, such as:
pre-tax, pre-provision earnings, 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
earnings; 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) March 31,
2017
    December 31,
2016
    September 30,
2016
    June 30,
2016
    March 31,
2016
Income before income taxes (GAAP) $ 21,549 $ 24,762 $ 28,351 $ 23,768 $ 24,325
ADD BACK: Provision/ (credit) for loan losses (181 ) (1,128 ) (138 ) (2,535 ) (3,133 )
Pre-tax, pre-provision earnings (non-GAAP) $ 21,368 $ 23,634 $ 28,213 $ 21,233 $ 21,192
 
Total operating expense (GAAP) $ 68,780 $ 71,843 $ 61,670 $ 64,731 $ 66,709
Less: Amortization of intangibles 1,426 1,542 1,568 1,586 1,586
Less: Goodwill impairment 9,528
Less: Restructuring       905   1,112  

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

$ 67,354 $ 60,773 $ 60,102 $ 62,240 $ 64,011
 
Net interest income $ 53,642 $ 51,519 $ 49,871 $ 49,169 $ 49,879
Total core fees and income 36,320 38,499 37,896 37,565 37,728
Total other income 186 5,459 2,116 (770 ) 294
FTE income 2,820   2,754   2,523   2,437   2,416  
Total revenue (FTE basis) $ 92,968 $ 98,231 $ 92,406 $ 88,401 $ 90,317
Efficiency Ratio (GAAP) 76.30 % 75.25 % 68.61 % 75.30 % 75.89 %

Efficiency Ratio, FTE Basis excluding
amortization of
intangibles, goodwill
impairment, and restructuring (non-GAAP)

72.45 % 61.87 % 65.04 % 70.41 % 70.87 %
 
       

(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) March 31,
2017
    December 31,
2016
    September 30,
2016
    June 30,
2016
    March 31,
2016
Net income attributable to the Company (GAAP) $ 15,662 $ 17,552 $ 19,636 $ 16,398 $ 18,041
LESS: Gain on sale of offices 2,862
ADD BACK: Impairment of goodwill 9,528
Tax effect at 35% statutory rate   (2,333 )    

Net income attributable to the Company
excluding notable
items (non-GAAP)

 

$ 15,662 $ 21,885 $ 19,636 $ 16,398 $ 18,041
 

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

$ 14,496 $ 15,755 $ 18,630 $ 15,428 $ 17,752
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)

$ 14,496 $ 20,088 $ 18,630 $ 15,428 $ 17,752
 
Weighted average diluted shares outstanding (3) 84,560,918 83,438,137 83,562,283 83,519,939 83,279,866
 
Diluted Total Earnings per Share (GAAP) $ 0.17 $ 0.19 $ 0.22 $ 0.18 $ 0.21

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

$ 0.17 $ 0.24 $ 0.22 $ 0.18 $ 0.21
       

(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) March 31,
2017
    December 31,
2016
   

September 30,
2016

    June 30,
2016
    March 31,
2016
Net interest income (GAAP basis) $ 53,642 $ 51,519 $ 49,871 $ 49,169 $ 49,879
ADD: FTE income 2,820   2,754   2,523   2,437   2,416  
Net interest income, FTE basis 56,462 54,273 52,394 51,606 52,295
LESS: Interest recovered on previously nonaccrual loans 299   365   343   565   1,089  

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

56,163   53,908   52,051   51,041   51,206  
 
Net Interest Margin (FTE basis) 2.94 % 2.88 % 2.88 % 2.91 % 2.96 %

Net Interest Margin, FTE basis, excluding interest
recovered
on previously nonaccrual loans (non-GAAP)

2.92 % 2.86 % 2.86 % 2.88 % 2.90 %
 

(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)

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

 

(14)

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

 

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