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| 8-K - FORM 8-K - BOSTON PRIVATE FINANCIAL HOLDINGS INC | d8k.htm |
Exhibit 99.1
Boston Private Bank & Trust Company
Annual Report of Financial Condition
As Of December 31, 2010
Dear Friend,
Even the harshest winter in recent memory couldn’t thwart impressive growth in certain Boston area industry sectors, according to a recent Federal Reserve report. Although nationally the economic recovery remains sluggish overall, the Fed’s “Beige Book” findings are encouraging and outlooks are positive. We appear to be building on momentum generated toward the end of 2010, including a year-end rally that pushed the S&P 500 Index to its highest level since September 2008.
Boston Private Bank & Trust also closed 2010 on a high note, with double-digit earnings growth and strong asset quality, capital, and liquidity. The Bank finished the year with record earnings of $26.8 million, up 11% year over year. Total balance sheet assets of $3.4 billion rose 8% from the prior year, and our investment management and trust business managed $2.6 billion in client assets at year-end, up 7% on average from 2009.
Deposits grew significantly with average balances increasing 17%, which contributed to strong liquidity ratios and helped fund profitable new growth in both commercial and residential lending. Our commercial loan portfolio grew 14% and remained well diversified. Residential lending activity propelled the Bank to the number one position among jumbo mortgage originators in Boston for both dollar volume and number of purchase loans, as well as dollar volume for jumbo refinance transactions, as reported by The Warren Group.
Our credit quality remains very strong, and non-performing assets and net charge-offs compared favorably to our industry peers. The Bank’s positive operating leverage helped to fund an increase in the allowance for loan losses and generated a double-digit increase in net income. Over the last five years, the Bank’s earnings growth has averaged 7%.
Boston Private Bank & Trust invested over $125 million in the community during 2010 primarily through community development, small business and first-time homebuyer loans, equity investments, and charitable contributions. The Bank has maintained an “Outstanding” Community Reinvestment Act rating for over 10 years through its community investment efforts.
Since September, I’ve been working with Clay Deutsch, CEO and President of our parent company, Boston Private Financial Holdings (BPFH), along with our leadership team to further align and strengthen BPFH’s Private Banking Group with Boston Private Bank & Trust’s business model. I now serve as CEO of the Private Banking Group, which, in addition to Boston Private Bank & Trust, includes First Private Bank & Trust in Los Angeles, Borel Private Bank & Trust in San Francisco, and Charter Private Bank in Bellevue, Washington. In collaboration with the leaders of those banks, we are in the process of consolidating the charters of the four affiliated private banks into one integrated bank charter headquartered in Massachusetts. Consistent with our core values and client-focused philosophy, these changes will enable us to continue to offer and enhance our exceptional client service.
It is especially important to note that my role at Boston Private Bank & Trust has not changed, and I will continue to work with the Bank’s senior management team to ensure that we provide high-touch service and personalized advice to our clients. As always, I invite you to let us know how we can better serve you and address your unique financial needs. Thank you for the trust you have placed in us and for the opportunity to serve you.
Sincerely,
Mark D. Thompson
CEO & President
2010 Highlights:
| • | We landed the top position among jumbo mortgage originators in Boston for both dollar volume and number of purchase loans, and we also were number one in dollar volume for jumbo refinance transactions, as reported by The Warren Group. |
| • | In a survey conducted by the Luxury Institute, high net worth individuals rated Boston Private Bank the top wealth management brand in the United States, and we were the only company to rate above average in all metrics. |
| • | We were ranked among the area’s largest charitable contributors by Boston Business Journal, and ranked fourth in total volunteer hours by Bank employees. |
| • | Our community development loans included financing major developments in Cambridge and Boston that are slated to create approximately 1,250 new jobs, preserve or create about 300 affordable housing units, and construct a $37 million health center in Roxbury. |
Annual Report of Financial Condition:
Boston Private Bank & Trust Company
CONDENSED BALANCE SHEETS
(Unaudited)
| December 31, | ||||||||
| ($ In Thousands) |
2010 | 2009 | ||||||
| Assets |
||||||||
| Cash & Short-Term Investments |
$ | 194,526 | $ | 177,458 | ||||
| Investment Securities |
583,029 | 557,073 | ||||||
| Loans Held for Sale |
2,920 | 6,357 | ||||||
| Commercial Loans |
1,309,144 | 1,146,329 | ||||||
| Mortgage Loans |
1,181,399 | 1,113,842 | ||||||
| Home Equity & Other Loans |
96,001 | 95,020 | ||||||
| Total Loans |
2,586,544 | 2,355,191 | ||||||
| Less: Allowance for Loan Losses |
32,938 | 27,363 | ||||||
| Net Loans |
2,553,606 | 2,327,828 | ||||||
| Other Assets |
111,576 | 110,680 | ||||||
| Total Assets |
$ | 3,445,657 | $ | 3,179,396 | ||||
| Liabilities & Shareholder’s Equity | ||||||||
| Demand Deposits |
$ | 574,336 | $ | 477,283 | ||||
| NOW Accounts |
277,384 | 214,556 | ||||||
| Savings & Money Market |
1,341,304 | 1,004,811 | ||||||
| Certificates of Deposit |
329,321 | 544,463 | ||||||
| Total Deposits |
2,522,345 | 2,241,113 | ||||||
| Borrowings |
654,280 | 679,388 | ||||||
| Other Liabilities |
24,938 | 27,927 | ||||||
| Total Liabilities |
3,201,563 | 2,948,428 | ||||||
| Shareholder’s Equity |
244,094 | 230,968 | ||||||
| Total Liabilities & Shareholder’s Equity |
$ | 3,445,657 | $ | 3,179,396 | ||||
Boston Private Bank & Trust Company
CONDENSED STATEMENTS OF INCOME
(Unaudited)
| Year Ended December 31, | ||||||||
| ($ In Thousands) |
2010 | 2009 | ||||||
| Interest Income |
$ | 131,425 | $ | 135,677 | ||||
| Interest Expense |
40,881 | 54,573 | ||||||
| Net Interest Income |
90,544 | 81,104 | ||||||
| Provision for Loan Losses |
9,300 | 4,750 | ||||||
| Net Interest Income after Provision |
81,244 | 76,354 | ||||||
| Investment Management Fees |
15,942 | 15,002 | ||||||
| Banking Fees and Other Income |
6,367 | 6,302 | ||||||
| Operating Expenses |
66,730 | 64,765 | ||||||
| Income Before Income Taxes |
36,823 | 32,893 | ||||||
| Income Taxes |
10,034 | 8,725 | ||||||
| Net Income |
$ | 26,789 | $ | 24,168 | ||||
Boston Private Bank & Trust Company
SELECTED FINANCIAL DATA
(Unaudited)
| At and for the Year Ended December 31, | ||||||||
| ($ In Thousands) |
2010 | 2009 | ||||||
| Assets Under Management |
$ | 2,641,000 | $ | 2,553,000 | ||||
| Return on Average Equity |
11.20 | % | 10.75 | % | ||||
| Net Interest Margin (FTE) |
3.00 | % | 2.93 | % | ||||
| Allowance for Loan Losses/Total Loans |
1.27 | % | 1.16 | % | ||||
| Tier I Capital Ratio |
6.93 | % | 6.54 | % | ||||
Policy Group
Mark D. Thompson
Chief Executive Officer & President
James C. Brown
Executive Vice President
Chief Lending Officer
Robert C. Buffum, Jr.
Senior Vice President
Chief Risk Officer
Gary L. Garber
Senior Vice President
Chief Information Officer
James D. Henderson
Executive Vice President
Pilar Pueyo
Senior Vice President
Anne L. Randall
Executive Vice President
Chief Financial & Administrative Officer
George G. Schwartz
Executive Vice President
Chief Operating Officer & Treasurer
John J. Sullivan
Executive Vice President
Board of Directors
Herbert S. Alexander
Managing Partner
Alexander, Aronson, Finning & Company
John H. Clymer
Senior Counsel
Nixon Peabody LLP
Eugene S. Colangelo
Chairman of the Board
Julio Enterprises
Chairman of the Board
Boston Private Bank & Trust Company
James D. Dawson
Executive Vice President
Boston Private Financial Holdings, Inc.
Tracey E. Flaherty
Senior Vice President
Natixis Global Associates
Kathleen M. Graveline
Private Investor
Charles T. Grigsby
Consultant
Susan P. Haney
Private Investor
John D. Macomber
Founder & Chief Executive Officer
BuildingVision, Inc.
Patricia McGovern
General Counsel & Senior Vice President
Beth Israel Deaconess Medical Center
E. Christopher Palmer
President & Managing Shareholder
Palmer and Corbett, PC
Michael F. Schiavo
Consultant
James K. Schmidt
Private Investor
Mark D. Thompson
Chief Executive Officer & President
Boston Private Bank & Trust Company
Chief Executive Officer, Private Banking Group
Boston Private Financial Holdings, Inc.
Timothy L. Vaill
Former Chairman & Chief Executive Officer
Boston Private Financial Holdings, Inc.
Office Locations
Headquarters: Boston Office
Ten Post Office Square
Boston, Massachusetts
(617) 912-1900
Wellesley Office
336 Washington Street
Wellesley, Massachusetts
(781) 707-7700
Back Bay Office
500 Boylston Street
Boston, Massachusetts
(617) 912-4500
Jamaica Plain Loan Center
401c Centre Street
Jamaica Plain, Massachusetts
(617) 524-6050
Kendall Square Office
One Cambridge Center
Cambridge, Massachusetts
(617) 646-4800
Newton Centre Office
1223 Centre Street
Newton, Massachusetts
(617) 646-4850
Seaport Office
157 Seaport Boulevard
Boston, Massachusetts
(617) 646-4880
Lexington Office
1666 Massachusetts Avenue
Lexington, Massachusetts
(617) 912-3600
Hingham Office
7 Central Street
Hingham, Massachusetts
(781) 740-2405
Beverly Office
57 Enon Street, Route 1A
Beverly, Massachusetts
(978) 922-8000
Boston Private Bank & Trust Company
www.bostonprivatebank.com
Member FDIC
Equal Housing Lender