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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Boston Private Financial Holdings Inc | NASDAQ:BPFH | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 14.75 | 7.79 | 14.97 | 0 | 01:00:00 |
Third Quarter Highlights:
Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the “Company” or “BPFH”) today reported third quarter 2015 GAAP Net Income Attributable to the Company of $13.5 million, compared to $17.6 million for the second quarter of 2015. Third quarter 2015 diluted earnings per share were $0.16, compared to $0.20 in the second quarter of 2015, and $0.22 in the third quarter of 2014.
“Performance was mixed across our business segments in the third quarter," said Clayton G. Deutsch, CEO. "The Private Bank continued to generate strong growth within our key client segments across all of our regions while AUM was lower linked quarter due to the impact of employee transitions at Boston Private Wealth, sector-based headwinds affecting the Investment Managers and heightened market volatility, which weighed on all segments of our Wealth Management business."
Core Fees and Income
Core Fees and Income increased 18% year-over-year to $39.4 million. The increase reflects revenue from Banyan Partners, which was acquired in October 2014. On a linked quarter basis, Core Fees and Income decreased 2% reflecting lower levels of Assets Under Management.
Total Assets Under Management decreased to $27.4 billion in the third quarter, down 8% from $29.6 billion in the second quarter of 2015. AUM increased 11% year-over-year. The year-over-year increase includes AUM related to the Banyan Partners acquisition, partially offset by negative market action and net outflows. The Company experienced third quarter 2015 AUM net outflows of $751 million, as compared to second quarter 2015 AUM net outflows of $193 million. AUM net outflows for the third quarter 2014 were $211 million. AUM net outflows for the year to date 2015 were $1.3 billion as compared to net outflows of $194 million for the same period of 2014.
Net Interest Income
Net Interest Income for the third quarter was $46.5 million, up 3% from $45.1 million for the second quarter of 2015. On a year-over-year basis, Net Interest Income increased 4% from $44.8 million. The current quarter includes $0.3 million of interest recovered on previous non-accrual loans while the second quarter of 2015 and the third quarter of 2014 include recoveries of $0.1 million and $0.8 million, respectively. Excluding interest recovered on previous non-accrual loans, Net Interest Income increased 3% linked quarter and 6% year-over-year.
Net Interest Margin was 2.84% for the third quarter, down six basis points from 2.90% for the second quarter of 2015. Net Interest Margin was down nine basis points from 2.93% in the third quarter of 2014. Excluding interest recovered on previous nonaccrual loans, Net Interest Margin was down eight basis points linked quarter and down six basis points year-over-year.
Other Income
Other income was a loss of $37,000 in the third quarter of 2015 compared to $2.3 million in the second quarter of 2015. The linked quarter decrease in other income reflects the impact of mark-to-market adjustments on loan swaps, a lower market value adjustment related to the earnout of the Banyan Partners acquisition, and lower gains on partnership investments.
Total Operating Expenses
Total Operating Expenses for the third quarter of 2015 were $61.9 million, down 1% from $62.4 million for the second quarter of 2015. On a year-over-year basis, Total Operating Expenses increased 15% from $54.0 million, primarily due to the impact of the Banyan Partners acquisition. The third and second quarters of 2015 include Restructuring Expense of $1.5 million and $0.2 million, respectively. Excluding Restructuring Expense, Total Operating Expenses decreased 3% linked quarter and increased 12% year-over-year.
Provision and Asset Quality
The Company recorded a provision expense of $2.6 million for the third quarter of 2015, compared to no provision for the second quarter of 2015. The provision expense was driven by strong commercial loan growth and $1.6 million of net charge-offs.
Criticized Loans decreased 4% on a linked quarter basis and 10% year-over-year. Nonaccrual Loans (“Nonaccruals”) increased 3% to $30.7 million on a linked quarter basis. On a year-over-year basis, Nonaccruals decreased 8% from $33.5 million. As a percentage of Total Loans, Nonaccruals were 55 basis points at September 30, 2015, flat from June 30, 2015, and down 9 basis points from September 30, 2014.
Additional credit metrics are listed below on a linked quarter and year-over-year basis:
(In millions) September 30, 2015 June 30, 2015 September 30, 2014 Total Criticized Loans $ 160.9 $ 167.3 $ 179.5Total Loans 30-89 Days Past Due and Accruing (12)
$ 7.0 $ 4.3 $ 3.6 Total Net Loans (Charged-off)/ Recovered $ (1.6 ) $ 1.0 $ 3.3 Allowance for Loan Losses/ Total Loans 1.41 % 1.43 % 1.44 %Capital Ratios
Capital ratios are listed below on a linked quarter and year-over-year basis:
September 30, 2015 June 30, 2015 September 30, 2014 BPFH Ratios: Total Risk-Based Capital * 13.8 % 13.9 % 14.8 % Tier I Risk-Based Capital * 12.6 % 12.7 % 13.5 % Tier I Leverage Capital * 9.6 % 9.9 % 10.3 % TCE/TA 7.2 % 7.2 % 7.6 % Tier I Common Equity/ Risk Weighted Assets * 9.7 % 9.8 % 10.1 %*September 30, 2015 information is presented based on estimated data.
Dividend PaymentsConcurrent with the release of third quarter 2015 earnings, the Board of Directors of the Company declared a cash dividend to common stock shareholders of $0.09 per share. The record date for this dividend is November 6, 2015, and the payment date is November 20, 2015.
The Board of Directors of the Company also declared a cash dividend to holders of the Non-Cumulative Perpetual Preferred Stock, Series D of $17.375 per share, which will result in a dividend of $0.434375 per depositary share. The record date for this dividend is November 16, 2015, and the payment date is December 15, 2015.
Non-GAAP Financial MeasuresThe 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 restructuring; the efficiency ratio (FTE basis); and Net Interest Income and Net Interest Margin excluding interest recovered on previous non-accrual 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 CallManagement will hold a conference call at 8 a.m. Eastern Time on Thursday, October 22, 2015, to discuss the financial results, business highlights and outlook. To access the call:
Dial In #: (888) 317-6003Elite Entry Number: 0566270
Replay Information:Available from October 22, 2015 at 12 noon until October 29, 2015Dial In #: (877) 344-7529Conference Number: 10073575
The call will be simultaneously webcast and may be accessed on www.bostonprivatefinancial.com
Boston Private Financial Holdings, Inc.Boston Private Financial Holdings, Inc. is a national financial services organization that owns Wealth Management and Private Banking affiliates with offices in Boston, New York, Los Angeles, San Francisco, San Jose, Atlanta, Florida, Wisconsin, and Texas. The Company has a $7 billion Private Banking balance sheet, and manages over $27 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.bostonprivatefinancial.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 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) (In thousands, except share and per share data) 9/30/2015 6/30/2015 9/30/2014 Assets: Cash and cash equivalents $ 43,640 $ 63,099 $ 308,912 Investment securities available for sale 1,023,255 992,007 724,638 Investment securities held to maturity 121,679 128,258 132,467 Stock in Federal Home Loan Banks 35,518 35,668 32,534 Loans held for sale 7,685 19,512 4,943 Total loans 5,607,472 5,463,250 5,213,491 Less: Allowance for loan losses 79,246 78,251 75,283 Net loans 5,528,226 5,384,999 5,138,208 Other real estate owned (“OREO”) 776 929 1,074 Premises and equipment, net 30,841 31,337 29,473 Goodwill 152,082 152,082 110,180 Intangible assets, net 34,806 36,461 17,475 Fees receivable 11,308 12,486 11,439 Accrued interest receivable 17,039 16,383 15,018 Deferred income taxes, net 45,438 47,388 48,443 Other assets 128,235 125,330 114,281 Total assets $ 7,180,528 $ 7,045,939 $ 6,689,085 Liabilities: Deposits $ 5,647,859 $ 5,429,028 $ 5,334,881 Securities sold under agreements to repurchase 35,698 26,660 73,422 Federal funds purchased 60,000 100,000 — Federal Home Loan Bank borrowings 461,899 541,529 371,367 Junior subordinated debentures 106,363 106,363 106,363 Other liabilities 109,695 95,074 106,024 Total liabilities 6,421,514 6,298,654 5,992,057 Redeemable Noncontrolling Interests 18,257 19,200 21,397 Shareholders’ Equity: Preferred stock, $1.00 par value; authorized: 2,000,000 shares 47,753 47,753 47,753 Common stock, $1.00 par value; authorized: 170,000,000 shares; issued and outstanding: 83,645,364 shares at September 30, 2015; 83,539,785 shares at June 30, 2015; 80,464,390 shares at September 30, 2014 83,645 83,540 80,464 Additional paid-in capital 598,968 597,424 598,036 Retained earnings/ (accumulated deficit) 5,960 (1,003 ) (49,573 ) Accumulated other comprehensive income/ (loss) 1,287 (2,525 ) (1,312 ) Total Company’s shareholders’ equity 737,613 725,189 675,368 Noncontrolling interests 3,144 2,896 263 Total shareholders’ equity 740,757 728,085 675,631 Total liabilities, redeemable noncontrolling interests and shareholders’ equity $ 7,180,528 $ 7,045,939 $ 6,689,085 Boston Private Financial Holdings, Inc. Selected Financial Data (Unaudited) Three Months Ended Nine Months Ended (In thousands, except share and per share data) 9/30/2015 6/30/2015 9/30/2014 9/30/2015 9/30/2014 Interest and dividend income: Loans $ 48,058 $ 46,663 $ 47,931 $ 142,721 $ 144,541 Taxable investment securities 1,094 1,075 876 3,164 2,242 Non-taxable investment securities 1,264 1,125 942 3,410 2,760 Mortgage-backed securities 2,681 2,775 1,605 8,070 5,230 Federal funds sold and other 425 282 379 941 978 Total interest and dividend income 53,522 51,920 51,733 158,306 155,751 Interest expense: Deposits 4,007 3,822 3,603 11,721 10,194 Federal Home Loan Bank borrowings 2,051 2,017 2,354 5,999 7,039 Junior subordinated debentures 979 967 976 2,902 2,896 Repurchase agreements and other short-term borrowings 12 29 17 54 49 Total interest expense 7,049 6,835 6,950 20,676 20,178 Net interest income 46,473 45,085 44,783 137,630 135,573 Provision/ (credit) for loan losses 2,600 — (2,600 ) 100 (8,800 ) Net interest income after provision/ (credit) for loan losses 43,873 45,085 47,383 137,530 144,373 Fees and other income: Investment management fees 11,360 11,731 12,011 34,805 35,226 Wealth advisory fees 12,515 12,678 12,278 37,868 35,730 Wealth management and trust fees 12,424 13,545 7,251 39,527 21,255 Other banking fee income 2,780 2,031 1,835 6,721 5,192 Gain on sale of loans, net 364 362 183 1,029 1,966Total core fees and income
39,443 40,347 33,558 119,950 99,369 Gain/ (loss) on sale of investments, net 5 8 8 21 9 Gain/ (loss) on OREO, net 35 — 150 124 988 Other (37 ) 2,305 53 3,356 510 Total other income 3 2,313 211 3,501 1,507 Operating expense: Salaries and employee benefits 37,938 39,816 35,855 119,881 106,767 Occupancy and equipment 9,064 9,095 7,346 27,194 22,492 Professional services 2,848 3,214 2,796 9,083 9,165 Marketing and business development 2,008 1,706 1,408 5,062 5,564 Contract services and data processing 1,600 1,495 1,404 4,532 4,289 Amortization of intangibles 1,655 1,655 1,031 4,912 3,129 FDIC insurance 916 963 857 2,890 2,607 Restructuring 1,504 220 — 1,724 — Other 4,396 4,254 3,302 12,496 9,356 Total operating expense 61,929 62,418 53,999 187,774 163,369 Income before income taxes 21,390 25,327 27,153 73,207 81,880 Income tax expense 8,182 8,000 8,993 24,754 26,464 Net income from continuing operations 13,208 17,327 18,160 48,453 55,416 Net income from discontinued operations (1) 1,316 1,546 1,272 4,956 4,650 Net income before attribution to noncontrolling interests 14,524 18,873 19,432 53,409 60,066 Less: Net income attributable to noncontrolling interests 994 1,263 1,167 3,486 3,428 Net income attributable to the Company $ 13,530 $ 17,610 $ 18,265 $ 49,923 $ 56,638 Boston Private Financial Holdings, Inc. Selected Financial Data (Unaudited) (In thousands, except share and per share data) Three Months Ended Nine Months Ended PER SHARE DATA: 9/30/2015 6/30/2015 9/30/2014 9/30/2015 9/30/2014 Calculation of Income for EPS: Net income attributable to the Company $ 13,530 $ 17,610 $ 18,265 $ 49,923 $ 56,638 Adjustments to Net Income Attributable to the Company to Arrive at Net Income Attributable to Common Shareholders (2) 154 (1,064 ) (796 ) (1,915 ) (3,052 ) Net Income Attributable to the Common Shareholders 13,684 16,546 17,469 48,008 53,586 LESS: Amount allocated to participating securities (8 ) (33 ) (75 ) (91 ) (328 ) Net Income Attributable to the Common Shareholders, after allocation to participating securities $ 13,676 $ 16,513 $ 17,394 $ 47,917 $ 53,258 End of Period Common Shares Outstanding 83,645,364 83,539,785 80,464,390 Weighted Average Shares Outstanding: Weighted average basic shares, including participating securities 81,204,808 81,074,380 79,222,590 81,088,511 79,175,634 LESS: Participating securities (100,870 ) (295,818 ) (535,528 ) (287,398 ) (750,021 ) PLUS: Dilutive potential common shares 2,265,257 2,259,919 1,923,896 2,216,808 1,899,015 Weighted Average Diluted Shares (3) 83,369,195 83,038,481 80,610,958 83,017,921 80,324,628 Diluted Total Earnings per Share $ 0.16 $ 0.20 $ 0.22 $ 0.58 $ 0.66 Boston Private Financial Holdings, Inc. Selected Financial Data (Unaudited) (In thousands, except per share data) FINANCIAL DATA: 9/30/2015 6/30/2015 9/30/2014 Book Value Per Common Share $ 8.29 $ 8.14 $ 7.80 Tangible Book Value Per Share (4) $ 6.05 $ 5.89 $ 6.22 Market Price Per Share $ 11.70 $ 13.41 $ 12.39 ASSETS UNDER MANAGEMENT AND ADVISORY: Wealth Management and Trust $ 8,060,000 $ 9,028,000 $ 4,701,000 Investment Managers 9,830,000 10,695,000 10,376,000 Wealth Advisory 9,537,000 9,941,000 9,731,000 Less: Inter-company Relationship (21,000 ) (22,000 ) (22,000 ) Total Assets Under Management and Advisory $ 27,406,000 $ 29,642,000 $ 24,786,000 BPFH FINANCIAL RATIOS: Total Equity/ Total Assets 10.32 % 10.33 % 10.10 % Tangible Common Equity/ Tangible Assets (4) 7.24 % 7.17 % 7.62 % Tier I Common Equity/ Risk Weighted Assets (4) 9.73 % 9.77 % 10.11 % Allowance for Loan Losses/ Total Loans 1.41 % 1.43 % 1.44 % Allowance for Loan Losses/ Nonaccrual Loans 258 % 262 % 224 % Return on Average Assets - Three Months Ended (Annualized) 0.75 % 1.02 % 1.10 % Return on Average Common Equity - Three Months Ended (Annualized) (5) 7.32 % 9.91 % 11.10 % Return on Average Tangible Common Equity - Three Months Ended (Annualized) (5) 10.93 % 14.63 % 14.53 % Efficiency Ratio - Three Months Ended (6) 66.18 % 66.99 % 65.47 % 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: 9/30/15 6/30/15 9/30/14 9/30/15 6/30/15 9/30/14 9/30/15 6/30/15 9/30/14 AVERAGE ASSETS Interest-Earning Assets: Cash and Investments: Taxable investment securities $ 340,170 $ 342,259 $ 295,395 $ 1,094 $ 1,075 $ 876 1.29 % 1.26 % 1.19 % Non-taxable investment securities (8) 249,854 242,387 223,499 1,945 1,731 1,449 3.12 % 2.86 % 2.59 % Mortgage-backed securities 526,408 538,688 325,913 2,681 2,775 1,605 2.04 % 2.06 % 1.97 % Federal funds sold and other 213,372 90,616 359,899 425 282 379 0.78 % 1.23 % 0.42 % Total Cash and Investments 1,329,804 1,213,950 1,204,706 6,145 5,863 4,309 1.85 % 1.93 % 1.43 % Loans (9): Commercial and Construction (8) 3,043,739 2,874,547 2,841,869 31,195 30,013 31,657 4.01 % 4.13 % 4.36 % Residential 2,208,004 2,160,987 2,071,326 17,083 16,637 16,384 3.09 % 3.08 % 3.16 % Home Equity and Other Consumer 287,102 290,029 244,690 1,982 2,038 1,733 2.74 % 2.82 % 2.81 % Total Loans 5,538,845 5,325,563 5,157,885 50,260 48,688 49,774 3.58 % 3.63 % 3.81 % Total Earning Assets 6,868,649 6,539,513 6,362,591 56,405 54,551 54,083 3.24 % 3.32 % 3.36 % LESS: Allowance for Loan Losses 78,263 77,938 76,099 Cash and due From Banks (Non-Interest Bearing) 38,631 41,596 42,080 Other Assets 404,945 410,296 341,953 TOTAL AVERAGE ASSETS $ 7,233,962 $ 6,913,467 $ 6,670,525 AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY Interest-Bearing Liabilities: Interest-Bearing Deposits: Savings and NOW $ 581,041 $ 589,123 $ 583,547 $ 103 $ 87 $ 110 0.07 % 0.06 % 0.07 % Money Market 2,944,893 2,754,817 2,640,762 2,731 2,551 2,273 0.37 % 0.37 % 0.34 % Certificates of Deposit 593,466 597,617 607,940 1,173 1,184 1,220 0.78 % 0.79 % 0.80 % Total Interest-Bearing Deposits 4,119,400 3,941,557 3,832,249 4,007 3,822 3,603 0.39 % 0.39 % 0.37 % Junior Subordinated Debentures 106,363 106,363 106,363 979 967 976 3.60 % 3.60 % 3.59 % FHLB Borrowings and Other 526,697 576,403 534,062 2,063 2,046 2,371 1.53 % 1.40 % 1.74 % Total Interest-Bearing Liabilities 4,752,460 4,624,323 4,472,674 7,049 6,835 6,950 0.59 % 0.59 % 0.61 % Noninterest Bearing Demand Deposits 1,623,524 1,443,228 1,404,875 Payables and Other Liabilities 102,076 97,641 100,106 Total Average Liabilities 6,478,060 6,165,192 5,977,655 Redeemable Noncontrolling Interests 22,020 22,760 23,584 Average Shareholders' Equity 733,882 725,515 669,286 TOTAL AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY $ 7,233,962 $ 6,913,467 $ 6,670,525 Net Interest Income - on a Fully Taxable Equivalent Basis (FTE) $ 49,356 $ 47,716 $ 47,133 LESS: FTE Adjustment (8) 2,883 2,631 2,350 Net Interest Income (GAAP Basis) $ 46,473 $ 45,085 $ 44,783 Interest Rate Spread 2.65 % 2.73 % 2.75 % Bank only Net Interest Margin 2.91 % 2.97 % 3.00 % Net Interest Margin 2.84 % 2.90 % 2.93 % Boston Private Financial Holdings, Inc. Selected Financial Data (Unaudited) Average Balance Interest Income/Expense Average Yield/Rate (In thousands) Nine Months Ended Nine Months Ended Nine Months Ended AVERAGE BALANCE SHEET: 9/30/15 9/30/14 9/30/15 9/30/14 9/30/15 9/30/14 AVERAGE ASSETS Interest-Earning Assets: Cash and Investments: Taxable investment securities $ 334,473 $ 270,914 $ 3,164 $ 2,242 1.27 % 1.10 % Non-taxable investment securities (8) 240,902 224,061 5,246 4,246 2.90 % 2.53 % Mortgage-backed securities 527,081 333,252 8,070 5,230 2.04 % 2.09 % Federal funds sold and other 150,611 250,942 941 978 0.90 % 0.52 % Total Cash and Investments 1,253,067 1,079,169 17,421 12,696 1.86 % 1.57 % Loans (9): Commercial and Construction (8) 2,924,065 2,844,013 92,575 95,975 4.17 % 4.45 % Residential 2,170,086 2,048,700 50,375 48,537 3.10 % 3.16 % Home Equity and Other Consumer 285,066 244,421 5,973 5,281 2.80 % 2.89 % Total Loans 5,379,217 5,137,134 148,923 149,793 3.67 % 3.86 % Total Earning Assets 6,632,284 6,216,303 166,344 162,489 3.33 % 3.46 % LESS: Allowance for Loan Losses 77,751 77,462 Cash and due From Banks (Non-Interest Bearing) 39,547 38,628 Other Assets 409,265 357,896 TOTAL AVERAGE ASSETS $ 7,003,345 $ 6,535,365 AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY Interest-Bearing Liabilities: Interest-Bearing Deposits: Savings and NOW $ 589,885 $ 577,012 $ 294 $ 319 0.07 % 0.07 % Money Market 2,837,614 2,547,039 7,877 6,112 0.37 % 0.32 % Certificates of Deposit 598,456 615,903 3,550 3,763 0.79 % 0.82 % Total Interest-Bearing Deposits 4,025,955 3,739,954 11,721 10,194 0.39 % 0.36 % Junior Subordinated Debentures 106,363 106,363 2,902 2,896 3.60 % 3.59 % FHLB Borrowings and Other 524,704 522,881 6,053 7,088 1.52 % 1.79 % Total Interest-Bearing Liabilities 4,657,022 4,369,198 20,676 20,178 0.59 % 0.61 % Noninterest Bearing Demand Deposits 1,498,105 1,385,966 Payables and Other Liabilities 101,222 104,556 Total Average Liabilities 6,256,349 5,859,720 Redeemable Noncontrolling Interests 22,157 20,795 Average Shareholders' Equity 724,839 654,850 TOTAL AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY $ 7,003,345 $ 6,535,365 Net Interest Income - on a Fully Taxable Equivalent Basis (FTE) $ 145,668 $ 142,311 LESS: FTE Adjustment (8) 8,038 6,738 Net Interest Income (GAAP Basis) $ 137,630 $ 135,573 Interest Rate Spread 2.74 % 2.85 % Bank only Net Interest Margin 2.98 % 3.10 % Net Interest Margin 2.91 % 3.03 % Boston Private Financial Holdings, Inc. Selected Financial Data (Unaudited) (In thousands) LOAN DATA (10): 9/30/2015 6/30/2015 9/30/2014 Commercial and Industrial Loans: New England $ 827,301 $ 793,897 $ 758,728 San Francisco Bay 125,093 121,477 124,993 Southern California 84,428 87,038 47,107 Total Commercial and Industrial Loans $ 1,036,822 $ 1,002,412 $ 930,828 Commercial Real Estate Loans: New England $ 766,253 $ 728,820 $ 712,464 San Francisco Bay 625,145 629,258 628,149 Southern California 512,250 469,337 467,428 Total Commercial Real Estate Loans $ 1,903,648 $ 1,827,415 $ 1,808,041 Construction and Land Loans: New England $ 111,280 $ 102,068 $ 82,492 San Francisco Bay 35,627 45,221 35,668 Southern California 23,504 13,637 12,385 Total Construction and Land Loans $ 170,411 $ 160,926 $ 130,545 Residential Loans: New England $ 1,356,057 $ 1,316,705 $ 1,273,544 San Francisco Bay 462,630 466,155 456,355 Southern California 393,199 392,648 367,628 Total Residential Loans $ 2,211,886 $ 2,175,508 $ 2,097,527 Home Equity Loans: New England $ 81,796 $ 85,057 $ 76,142 San Francisco Bay 27,076 30,013 30,060 Southern California 5,915 5,395 3,025 Total Home Equity Loans $ 114,787 $ 120,465 $ 109,227 Other Consumer Loans: New England $ 161,186 $ 164,522 $ 124,449 San Francisco Bay 5,782 6,793 6,738 Southern California 2,950 5,209 6,136 Total Other Consumer Loans $ 169,918 $ 176,524 $ 137,323 Total Loans: New England $ 3,303,873 $ 3,191,069 $ 3,027,819 San Francisco Bay 1,281,353 1,298,917 1,281,963 Southern California 1,022,246 973,264 903,709 Total Loans $ 5,607,472 $ 5,463,250 $ 5,213,491 Boston Private Financial Holdings, Inc. Selected Financial Data (Unaudited) (In thousands) CREDIT QUALITY (10):9/30/2015
6/30/2015 9/30/2014 Special Mention Loans: New England $ 46,924 $ 53,626 $ 45,788 San Francisco Bay 11,087 17,150 24,623 Southern California 12,718 5,659 32,614 Total Special Mention Loans $ 70,729 $ 76,435 $ 103,025 Accruing Substandard Loans (11): New England $ 16,996 $ 16,666 $ 13,589 San Francisco Bay 20,108 20,396 24,267 Southern California 22,405 24,554 5,331 Total Accruing Substandard Loans $ 59,509 $ 61,616 $ 43,187 Nonaccruing Loans: New England $ 22,815 $ 17,943 $ 16,205 San Francisco Bay 5,096 9,163 15,133 Southern California 2,816 2,785 2,203 Total Nonaccruing Loans $ 30,727 $ 29,891 $ 33,541 Other Real Estate Owned: New England $ 191 $ 344 $ 489 San Francisco Bay 585 585 585 Southern California — — — Total Other Real Estate Owned $ 776 $ 929 $ 1,074 Loans 30-89 Days Past Due and Accruing (12): New England $ 6,733 $ 3,873 $ 1,825 San Francisco Bay 14 110 653 Southern California 227 356 1,145 Total Loans 30-89 Days Past Due and Accruing $ 6,974 $ 4,339 $ 3,623 Loans (Charged-off)/ Recovered, Net for the Three Months Ended: New England $ (1,618 ) $ 106 $ 912 San Francisco Bay (57 ) 833 465 Southern California 70 49 1,959 Total Net Loans (Charged-off)/ Recovered $ (1,605 ) $ 988 $ 3,336 Loans (Charged-off)/ Recovered, Net for the Nine Months Ended: New England $ (622 ) $ 830 San Francisco Bay 3,514 3,064 Southern California 416 3,818 Total Net Loans (Charged-off)/ Recovered $ 3,308 $ 7,712 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 Davidson Trust Company; Boston Private Value Investors, Inc.; Sand Hill Advisors, LLC; RINET Company, LLC; Gibraltar Private Bank & Trust Company; and Westfield Capital Management Company, LLC. (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, dividends paid on preferred stock, and dividends on participating securities. (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 non-participating restricted stock, and unexercised stock warrants. See Part II. Item 8. "Financial Statements and Supplementary Data - Note 16: Earnings Per Share" in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 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)9/30/2015
6/30/2015
9/30/2014
Total Balance Sheet Assets $ 7,180,528 $ 7,045,939 $ 6,689,085 LESS: Goodwill and Intangible Assets, net (186,888 ) (188,543 ) (127,655 ) Tangible Assets (non-GAAP) $ 6,993,640 $ 6,857,396 $ 6,561,430 Total Shareholders' Equity $ 740,757 $ 728,085 $ 675,631 LESS: Series D Preferred Stock (non-convertible) (47,753 ) (47,753 ) (47,753 ) LESS: Goodwill and Intangible Assets, net (186,888 ) (188,543 ) (127,655 ) Total adjusting items (234,641 ) (236,296 ) (175,408 ) Tangible Common Equity (non-GAAP) $ 506,116 $ 491,789 $ 500,223 Total Equity/Total Assets 10.32 % 10.33 % 10.10 % Tangible Common Equity/Tangible Assets (non-GAAP) 7.24 % 7.17 % 7.62 % Total Risk Weighted Assets * $ 5,396,783 $ 5,278,908 $ 5,000,790 Tier I Common Equity * $ 525,004 $ 515,546 $ 505,474 Tier I Common Equity/ Risk Weighted Assets 9.73 % 9.77 % 10.11 % End of Period Shares Outstanding 83,645 83,540 80,464 Book Value Per Common Share $ 8.29 $ 8.14 $ 7.80 Tangible Book Value Per Share (non-GAAP) $ 6.05 $ 5.89 $ 6.22 * Risk Weighted Assets and Tier I Common Equity for September 30, 2015 are presented based on estimated data. (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 Nine months ended (In thousands)9/30/2015
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9/30/2014
9/30/2015
9/30/2014
Total average shareholders' equity $ 733,882 $ 725,515 $ 669,286 $ 724,839 $ 654,850 LESS: Average Series D preferred stock (non-convertible) (47,753 ) (47,753 ) (47,753 ) (47,753 ) (47,753 ) Average common equity (non-GAAP) 686,129 677,762 621,533 677,086 607,097 LESS: Average goodwill and intangible assets, net (187,728 ) (189,420 ) (128,178 ) (189,391 ) (129,217 ) Total adjusting items (187,728 ) (189,420 ) (128,178 ) (189,391 ) (129,217 ) Average Tangible Common Equity (non-GAAP) $ 498,401 $ 488,342 $ 493,355 $ 487,695 $ 477,880 Net income attributable to the Company $ 13,530 $ 17,610 $ 18,265 $ 49,923 $ 56,638 LESS: Dividends on Series D preferred stock (869 ) (869 ) (869 ) (2,606 ) (2,606 ) Common net income (non-GAAP) 12,661 16,741 17,396 47,317 54,032 ADD: Amortization of intangibles, net of tax (35%) 1,076 1,076 670 3,193 2,034 Tangible common net income (non-GAAP) $ 13,737 $ 17,817 $ 18,066 $ 50,510 $ 56,066 Return on Average Equity - (Annualized) 7.31 % 9.74 % 10.83 % 9.21 % 11.56 % Return on Average Common Equity - (Annualized) (non-GAAP) 7.32 % 9.91 % 11.10 % 9.34 % 11.90 % Return on Average Tangible Common Equity - (Annualized) (non-GAAP) 10.93 % 14.63 % 14.53 % 13.85 % 15.69 % (6 ) The Company uses certain non-GAAP financial measures, such as: pre-tax, pre-provision earnings, total operating expenses excluding 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 restructuring; and from GAAP efficiency ratio to Non-GAAP efficiency ratio (FTE basis), excluding restructuring, are presented below: Three Months Ended Nine months ended(In thousands)
9/30/2015
6/30/2015
9/30/2014
9/30/2015
9/30/2014
Income before income taxes (GAAP) $ 21,390 $ 25,327 $ 27,153 $ 73,207 $ 81,880 ADD BACK: Provision/ (credit) for loan losses 2,600 — (2,600 ) 100 (8,800 ) Pre-tax, pre-provision earnings (non-GAAP) $ 23,990 $ 25,327 $ 24,553 $ 73,307 $ 73,080 Total operating expense (GAAP) $ 61,929 $ 62,418 $ 53,999 $ 187,774 $ 163,369 Less: Amortization of intangibles 1,655 1,655 1,031 4,912 3,129 Less: Restructuring 1,504 220 — 1,724 — Total operating expense (excluding amortization of intangibles and restructuring) (non-GAAP) $ 58,770 $ 60,543 $ 52,968 $ 181,138 $ 160,240 Total operating expense (excluding restructuring) (non-GAAP) 60,425 62,198 53,999 186,050 163,369 Net interest income $ 46,473 $ 45,085 $ 44,783 $ 137,630 $ 135,573 Total core fees and income 39,443 40,347 33,558 119,950 99,369 Total other income 3 2,313 211 3,501 1,507 FTE income 2,883 2,631 2,350 8,038 6,738 Total revenue (FTE basis) $ 88,802 $ 90,376 $ 80,902 $ 269,119 $ 243,187 Efficiency Ratio, before deduction of intangible amortization (GAAP) 72.08 % 71.14 % 68.74 % 71.92 % 69.09 % Efficiency Ratio, FTE Basis excluding restructuring (non-GAAP) 66.18 % 66.99 % 65.47 % 67.31 % 65.89 % (7 ) The Company uses certain non-GAAP financial measures, such as: net interest income excluding interest recovered on previous non-accrual loans and net interest margin excluding interest recovered on previous non-accrual 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 non-accrual loans; and from GAAP net interest margin to non-GAAP net interest margin excluding interest recovered on previous non-accrual loans, are presented below: Three Months Ended(In thousands)
9/30/2015
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9/30/2014
Net interest income (GAAP basis) $ 46,473 $ 45,085 $ 44,783 ADD: FTE income 2,883 2,631 2,350 Net interest income, FTE basis 49,356 47,716 47,133 LESS: Interest recovered on previously non-accrual loans 298 69 789 Net interest income, FTE basis, excluding interest recovered on previously non-accrual loans (non-GAAP) 49,058 47,647 46,344 Net Interest Margin (FTE basis) 2.84 % 2.90 % 2.93 % Net Interest Margin, FTE basis, excluding interest recovered on previously non-accrual loans (non-GAAP) 2.82 % 2.90 % 2.88 % (8 ) Interest Income on Non-taxable Investments and Loans are presented on an FTE basis using the federal statutory rate of 35% for each period presented. (9 ) Includes Loans Held for Sale and Nonaccrual Loans. (10 ) The concentration of the Private Banking loan data and credit quality is primarily based on the location of the lender's regional offices. (11 ) 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. (12 ) In addition to loans 30-89 days past due and accruing, at September 30, 2015 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 New England region. At June 30, 2015 the Company had no loans that were more than 90 days past due but still on accrual status. At September 30, 2014, the Company had two loans totaling $0.5 million that were more than 90 days past due but still on accrual status. These loans originated in the New England region.
View source version on businesswire.com: http://www.businesswire.com/news/home/20151021006494/en/
Boston Private Financial Holdings, Inc.Steven Gaven, 617-912-3793Vice President Corporate Finance and Director of Investor Relationssgaven@bostonprivate.com
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