BOSTON PRIVATE FINANCIAL HOLDINGS INC - FORM 8-K - EX-99.1 - PRESS RELEASE DATED 10-25-2011 - Q3 EARNINGS

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8-K - BOSTON PRIVATE FINANCIAL HOLDINGS INC	a2011q38-kearnings.htm

Exhibit 99.1

Boston Private Financial Holdings, Inc. Reports Third Quarter 2011 Results

Third Quarter 2011 Highlights:


•	Continued profitability: Q3 2011 profitability of $0.14 per diluted share, following Q2 2011 diluted EPS of $0.17 and a per share loss of $0.10 in Q3 2010. Pre-tax, pre-provision earnings rose to $20.7 million in Q3 2011 from $16.6 million in Q2 2011 and $12.4 million in Q3 2010.


•	Improved balance sheet profile: Loan growth of 2% on a linked quarter basis. Non-Performing Loans down 8% vs. Q2 2011, and down 49% year-over-year. TCE/TA up 26 basis points vs. Q2 2011, and up 34 basis points year-over-year.


•	Stable revenue stream: Revenue down 2% on a linked quarter basis, up 4% year-over-year. Total Fees and Other Income, which was 41% of Total Revenue in Q3 2011, was down 3% on a linked quarter basis, up 15% year-over-year. Net Interest Margin of 3.26%, down 3 basis points linked quarter, and 16 basis points year-over-year.


•	Expense control: Operating Expenses (excluding restructuring charges) decreased 5% on a linked quarter basis, and declined 9% year-over-year.

Boston, MA - October 25, 2011 - Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the "Company" or "BPFH") today reported third quarter 2011 GAAP Net Income Attributable to the Common Stockholders of $11.5 million, compared to GAAP Net Income Attributable to the Common Stockholders of $14.3 million in the second quarter of 2011. BPFH reported third quarter diluted earnings per share of $0.14 compared to diluted earnings per share of $0.17 in the second quarter of 2011.

"In the third quarter we continued to see improvement in the overall health of our Company," said CEO and President Clayton G. Deutsch. "These results show continued evidence that our program to return the Company to sustainable and acceptable profitability is unfolding as planned. Since my arrival last August, we asserted a restructuring plan that returned the Company to profitability in the second quarter of 2011, and our third quarter results show ongoing progress. We continue to focus on improving our credit quality, accumulating capital, carefully managing growth while reducing risk and improving the core performance of our Wealth Management and Private Banking businesses."

"In a difficult environment, we witnessed loan growth across our commercial and residential lending businesses, relatively stable Net Interest Income and stable fee-based revenues," said Mr. Deutsch. "We reduced Operating Expenses and closely managed credit which resulted in a year-over-year reduction in the Provision for Loan Losses. We continue to believe that our NIM defense is strong and that our Wealth Management and Private Banking model has the intrinsics to outperform core banking in a prolonged low interest rate environment."

Diversified Revenue Stream Holds Steady

Net Interest Income in the third quarter was $45.1 million, down 2% from $46.0 million in the second quarter 2011 and down 3% from $46.4 million in the third quarter of 2010. Fees and Other Income decreased to $31.4 million, down 3% from $32.3 million in the second quarter of 2011 and up 15% from $27.3 million in the third quarter of 2010.

Total Assets Under Management/Advisory ("AUM") decreased to $18.2 billion in the third quarter, down 10% from $20.2 billion in the second quarter 2011 and down 2% from $18.6 billion in the third quarter of 2010, primarily due to market declines. The Company experienced third quarter 2011 net AUM outflows of $223 million, as compared to $150 million of net outflows in the prior quarter and $2 million of net inflows in the third quarter of 2010.

Operating Expenses Decline

Operating Expenses (excluding restructuring costs of $1.1 million) in the third quarter were $55.4 million, down 5% from $58.2 million (excluding restructuring costs of $4.3 million) on a linked quarter basis. On a year-over-year basis, Operating Expenses were down 9% from $61.0 million.

"I'm heartened by the progress we've made in taking cost out of the Company and improving operating efficiencies overall," said Mr. Deutsch. "However, we will not be satisfied until we meet our previously announced targeted reduction of $25 million in costs. Our Bank post-merger consolidations and conversions will roll through the fourth quarter of 2011, and the first and second quarters of 2012. We are on track with our consolidation plan and associated savings."

Asset Quality Continues to Improve

Provision for Loan Losses in the third quarter was $4.5 million, up from a recovery of ($2.2) million in the second quarter and down 86% from $32.1 million year-over-year.

Non-Performing Loans ("NPLs") declined for the second consecutive quarter. In the third quarter of 2011 NPLs were $73.4 million, down 8% from $79.9 million on a linked quarter basis and down 49% from $143.1 million year-over-year. As a percentage of Total Loans, NPLs were 1.64% in the third quarter of 2011, down 17 basis points from 1.81% in the second quarter of 2011.

Additional credit metrics are listed below on a linked quarter and year-over-year basis:



(In millions)	September 30, 2011			June 30, 2011			September 30, 2010
Total Criticized Loans	$	355.4		$	339.8		$	397.4
Total Loans 30-89 Days Past Due and Accruing	$	20.9		$	6.5		$	16.9
Total Net Loans Charged-off/ (Recovered)	$	4.5		$	(0.7	)	$	11.1
Allowance for Loan Losses/Total Loans	2.20		%	2.24		%	2.21		%

Capital Accumulation Continues

"Our Tangible Common Equity to Tangible Assets ratio increased 26 basis points to 7.14% on a linked quarter basis," said David J. Kaye, Chief Financial Officer. "We remain comfortable with our capital position and will continue to be in capital accumulation mode in the near term."

Additional capital ratios are listed below on a linked quarter and year-over-year basis:



	September 30, 2011		June 30, 2011		September 30, 2010
Total Risk-Based Capital *	15.47	%	15.18	%	14.92	%
Tier I Risk-Based Capital *	12.54	%	12.12	%	13.58	%
Tier I Leverage Capital *	8.43	%	8.14	%	9.70	%
TCE/TA	7.14	%	6.88	%	6.80	%
TCE/Risk Weighted Assets *	10.39	%	10.22	%	9.61	%

*September 30, 2011 data is shown on a pro-forma basis.

"Our third quarter results speak to continued progress with our overall program to deliver acceptable returns," said Mr. Deutsch. "Our third quarter annualized ROE of 8.6%, while a vast improvement, is still short of our declared goal of a consistent 12% ROE for our shareholders. We remain committed to attaining this threshold by 2013," he concluded.

Dividend Payments

Concurrent with the release of the third quarter 2011 earnings, the Board of Directors of the Company declared a cash dividend to stockholders of $0.01 per share. The record date for this dividend is November 16, 2011, and the payment date is November 30, 2011.

Non-GAAP Financial Measures

The Company uses certain non-GAAP financial measures, such as the TCE/TA and TCE/RWA ratios, 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 8:00 a.m. Eastern Time on Wednesday, October 26, to discuss the financial results in more detail. To access the call:

Dial In #: (866) 843-0890

International Dial In #: (412) 317-9250

Elite Entry Number: 2046460

Replay Information:

Available from October 26 at 12 noon until November 2

Dial In #: (877) 344-7529

International Dial In #: (412) 317-0088

Conference Number: 10005064

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 with Wealth Management and Private Banking affiliates in Boston, New York, Philadelphia, Los Angeles, San Francisco and Seattle. The Company has a $6 billion Private Banking balance sheet, and manages over $18 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.

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 locally operated and wholly-owned subsidiary of BPFH. The information reported in this press release is related to the performance and results of BPFH.

CONTACT:

Jeanne Hess

Assistant Vice President, Investor Relations

Boston Private Financial Holdings, Inc.

(617) 912-3798

jhess@bostonprivate.com

John Hartz

Sloane & Company

857-598-4779

jhartz@sloanepr.com

Statements in this press release that are not historical facts are 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, changes in assumptions or unanticipated factors adversely affecting the timing, among other matters, of expenses or cost savings relating to or resulting from the consolidation of the Company's banking subsidiaries; 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 a continuing deterioration in general economic conditions on a national basis or in the local markets in which the Company operates, including changes which adversely affect borrowers' ability to service and repay our loans; 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; increasing government regulation, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; 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; 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. 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 statements are made.

Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)



	September 30, 2011			June 30, 2011			September 30, 2010
	(In thousands, except share and per share data)
Assets:
Cash and cash equivalents	$	330,425		$	472,555		$	371,482
Investment securities:
Available for sale	848,855			793,622			736,777
Held to maturity	—			—			3,005
Total investment securities	848,855			793,622			739,782
Loans held for sale	13,275			4,625			22,290
Total loans	4,487,719			4,409,440			4,530,274
Less: Allowance for loan losses	98,759			98,742			100,010
Net loans	4,388,960			4,310,698			4,430,264
Other real estate owned (“OREO”)	9,161			14,485			13,069
Stock in Federal Home Loan Banks	44,248			44,785			46,393
Premises and equipment, net	28,812			27,279			26,781
Goodwill	115,038			115,038			108,696
Intangible assets, net	31,736			32,913			37,457
Fees receivable	7,998			8,481			7,338
Accrued interest receivable	16,492			16,881			18,783
Income tax receivable and deferred	77,886			83,163			81,414
Other assets	110,423			112,253			127,517
Total assets	$	6,023,309		$	6,036,778		$	6,031,266
Liabilities:
Deposits	$	4,534,076		$	4,551,319		$	4,492,516
Securities sold under agreements to repurchase	108,294			122,448			108,575
Federal Home Loan Bank borrowings	527,481			523,695			584,521
Junior subordinated debentures	188,645			188,645			193,645
Other liabilities	91,274			90,491			99,526
Total liabilities	5,449,770			5,476,598			5,478,783
Redeemable Noncontrolling Interests	21,885			21,210			18,721
The Company’s Stockholders’ Equity:
Preferred stock, $1.00 par value; authorized: 2,000,000 shares;
Series B, issued and outstanding (contingently convertible): 401 shares at September 30, 2011, June 30, 2011, and September 30, 2010; liquidation value: $100,000 per share	58,089			58,089			58,089
Common stock, $1.00 par value; authorized: 170,000,000 shares; issued and outstanding: 78,004,135 shares at September 30, 2011; 77,942,074 shares at June 30, 2011; and 76,592,233 shares at September 30, 2010	78,004			77,942			76,592
Additional paid-in capital	655,165			654,297			652,832
Accumulated deficit	(243,079		)	(254,758		)	(259,196		)
Accumulated other comprehensive income	3,475			3,400			5,445
Total stockholders’ equity	551,654			538,970			533,762
Total liabilities, redeemable noncontrolling interests and stockholders’ equity	$	6,023,309		$	6,036,778		$	6,031,266

Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)



	Three Months Ended									Nine Months Ended
	September 30, 2011			June 30, 2011			September 30, 2010			September 30, 2011		September 30, 2010
Interest and dividend income:	(In thousands, except share and per share data)
Loans	$	53,030		$	54,565		$	58,036		$	160,153	$	173,337
Taxable investment securities	1,493			1,391			1,613			4,263		4,742
Non-taxable investment securities	891			930			1,283			2,922		3,869
Mortgage-backed securities	1,873			1,841			1,902			5,521		6,228
Federal funds sold and other	245			283			223			849		943
Total interest and dividend income	57,532			59,010			63,057			173,708		189,119
Interest expense:
Deposits	5,921			6,301			8,710			18,871		28,721
Federal Home Loan Bank borrowings	4,203			4,261			4,870			12,856		15,358
Junior subordinated debentures	1,851			1,905			2,511			5,648		7,505
Repurchase agreements and other short-term borrowings	485			519			522			1,526		1,763
Total interest expense	12,460			12,986			16,613			38,901		53,347
Net interest income	45,072			46,024			46,444			134,807		135,772
Provision/ (credit) for loan losses	4,500			(2,190		)	32,050			15,660		54,627
Net interest income/(loss) after provision for loan losses	40,572			48,214			14,394			119,147		81,145
Fees and other income:
Investment management and trust fees	16,161			16,337			14,443			48,581		44,674
Wealth advisory fees	10,249			10,277			9,525			30,597		28,087
Other banking fee income	1,339			1,287			1,546			3,859		3,987
Gain on repurchase of debt	—			1,838			—			1,838		—
Gain on sale of investments, net	103			168			1,147			689		3,566
Gain on sale of loans, net	386			1,125			713			1,897		1,670
Gain/(loss) on OREO, net	3,156			844			(626		)	4,110		(2,645		)
Other	(44		)	437			551			2,186		1,021
Total fees and other income	31,350			32,313			27,299			93,757		80,360
Operating expense:
Salaries and employee benefits	34,900			35,867			38,662			107,539		107,164
Occupancy and equipment	7,627			7,431			7,036			22,401		20,519
Professional services	3,667			5,314			4,857			14,164		14,025
Marketing and business development	1,510			1,896			1,677			4,869		5,229
Contract services and data processing	1,306			1,388			1,290			4,017		4,052
Amortization of intangibles	1,177			1,450			1,299			3,839		3,968
FDIC insurance	1,356			1,294			2,137			4,887		6,490
Restructuring expense	1,116			4,304			—			7,402		—
Other	3,819			3,521			4,021			11,530		12,231
Total operating expense	56,478			62,465			60,979			180,648		173,678
Income/(loss) before income taxes	15,444			18,062			(19,286		)	32,256		(12,173		)
Income tax expense/(benefit)	4,570			4,229			(12,412		)	8,620		(11,278		)
Net income/(loss) from continuing operations	10,874			13,833			(6,874		)	23,636		(895		)
Net income/(loss) from discontinued operations (1)	1,567			1,516			267			4,752		1,812
Net income/(loss) before attribution to noncontrolling interests	12,441			15,349			(6,607		)	28,388		917
Less: Net income/ (loss) attributable to noncontrolling interests	762			804			629			2,313		1,929
Net income/(loss) attributable to the Company	$	11,679		$	14,545		$	(7,236	)	$	26,075	$	(1,012	)

Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)



	Three Months Ended									Nine Months Ended
PER SHARE DATA:	September 30, 2011			June 30, 2011			September 30, 2010			September 30, 2011			September 30, 2010
	(In thousands, except share and per share data)
Calculation of Income/(Loss) for EPS:
Net Income/(Loss) from Continuing Operations	$	10,874		$	13,833		$	(6,874	)	23,636			(895		)
Less: Net Income Attributable to Noncontrolling Interests	762			804			629			2,313			1,929
Net Income/(Loss) from Continuing Operations Attributable to the Company	$	10,112		$	13,029		$	(7,503	)	21,323			(2,824		)
Adjustments to Net Income/(Loss) Attributable to the Company to Arrive at Net Income/(Loss) Attributable to Common Stockholders (3)	(265		)	(199		)	163			(740		)	(9,466		)
Net Income/(Loss) from Continuing Operations Attributable to the Common Stockholders	$	9,847		$	12,830		$	(7,340	)	20,583			(12,290		)
Net Income/(Loss) from Discontinued Operations (1)	$	1,567		$	1,516		$	267		4,752			1,812
Net Income/(Loss) Attributable to the Common Stockholders	$	11,414		$	14,346		$	(7,073	)	25,335			(10,478		)

Dividends Paid on Series B Preferred Stock for Diluted EPS	$	73		$	73		$	—		$	218		$	—

End of Period Common Shares Outstanding	78,004,135			77,942,074			76,592,333			78,004,135			76,592,333

Average Shares Outstanding:
Weighted Average Basic Shares	75,378,923			75,194,687			74,153,623			75,083,976			70,293,324
Weighted Average Diluted Shares (4)	83,556,408			83,264,842			74,153,623			83,176,060			70,293,324

Earnings/(Loss) per Share - Basic
Earnings/(Loss) per Share from Continuing Operations	$	0.13		$	0.17		$	(0.10	)	$	0.28		$	(0.18	)
Income/(Loss) per Share from Discontinued Operations (1)	$	0.02		$	0.02		$	—		$	0.06		$	0.03
Earnings/(Loss) per Share	$	0.15		$	0.19		$	(0.10	)	$	0.34		$	(0.15	)

Earnings/(Loss) per Share - Diluted (6)
Earnings/(Loss) per Share from Continuing Operations	$	0.12		$	0.15		$	(0.10	)	$	0.25		$	(0.18	)
Income/(Loss) per Share from Discontinued Operations (1)	$	0.02		$	0.02		$	—		$	0.06		$	0.03
Earnings/(Loss) per Share	$	0.14		$	0.17		$	(0.10	)	$	0.31		$	(0.15	)

Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)



(In thousands, except per share data)	September 30, 2011			June 30, 2011			September 30, 2010
FINANCIAL DATA:	September 30, 2011			June 30, 2011			September 30, 2010
Book Value Per Common Share	$	6.33		$	6.17		$	6.21
Tangible Book Value Per Share (2)	$	4.92		$	4.76		$	4.77
Market Price Per Share	$	5.88		$	6.58		$	6.54


ASSETS UNDER MANAGEMENT AND ADVISORY:
Private Banking	$	3,427,000		$	3,739,000		$	3,561,000
Investment Managers	7,127,000			8,295,000			7,521,000
Wealth Advisory	7,673,000			8,184,000			7,553,000
Less: Inter-company Relationship	(18,000		)	(20,000		)	(18,000		)
Assets Under Management and Advisory	$	18,209,000		$	20,198,000		$	18,617,000

FINANCIAL RATIOS:
Total Equity/Total Assets	9.16		%	8.93		%	8.85		%
Tangible Common Equity/Tangible Assets (2)	7.14		%	6.88		%	6.80		%
Tangible Common Equity/Risk Weighted Assets (2)	10.39		%	10.22		%	9.61		%
Allowance for Loan Losses/Total Loans	2.20		%	2.24		%	2.21		%
Allowance for Loan Losses/Non-performing Loans	134		%	124		%	70		%
Return on Average Assets - Three Months Ended	0.76		%	0.96		%	(0.48		)%
Return on Average Equity - Three Months Ended	8.57		%	10.98		%	(5.36		)%
Efficiency Ratio (2)	72.31		%	77.92		%	80.67		%

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:	Sep 30, 2011		Jun 30, 2011		Sep 30, 2010		Sep 30, 2011		Jun 30, 2011		Sep 30, 2010		Sep 30, 2011		Jun 30, 2011		Sep 30, 2010
AVERAGE ASSETS
Earning Assets:
Cash and Investments:
Taxable investment securities	$	396,415	$	367,567	$	314,636	$	1,493	$	1,391	$	1,613	1.51	%	1.51	%	2.05	%
Non-taxable investment securities (5)	190,772		187,379		198,369		1,386		1,403		1,951		2.91	%	2.99	%	3.93	%
Mortgage-backed securities	236,105		228,578		219,651		1,873		1,841		1,902		3.17	%	3.22	%	3.46	%
Federal funds sold and other	400,785		462,350		351,850		245		283		223		0.24	%	0.25	%	0.25	%
Total Cash and Investments	1,224,077		1,245,874		1,084,506		4,997		4,918		5,689		1.63	%	1.58	%	2.10	%
Loans: (6)
Commercial and Construction (5)	2,346,169		2,400,681		2,587,847		32,204		33,819		36,481		5.39	%	5.49	%	5.56	%
Residential Mortgage	1,794,929		1,742,769		1,637,831		19,022		19,131		19,621		4.24	%	4.39	%	4.79	%
Home Equity and Other Consumer	318,003		316,268		295,395		2,993		2,971		3,116		3.71	%	3.75	%	4.16	%
Total Loans	4,459,101		4,459,718		4,521,073		54,219		55,921		59,218		4.81	%	4.94	%	5.19	%
Total Earning Assets	5,683,178		5,705,592		5,605,579		59,216		60,839		64,907		4.12	%	4.20	%	4.59	%
Less: Allowance for Loan Losses	99,387		103,233		81,543
Cash and due From Banks (Non-Interest Bearing)	53,582		31,690		27,983
Other Assets	543,271		456,139		443,124
TOTAL AVERAGE ASSETS	$	6,180,644	$	6,090,188	$	5,995,143
AVERAGE LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-Bearing Liabilities:
Deposits:
Savings and NOW	$	539,489	$	517,271	$	559,413	$	357	$	358	$	467	0.26	%	0.28	%	0.33	%
Money Market	1,857,755		1,910,004		1,698,381		2,506		2,787		3,821		0.54	%	0.59	%	0.89	%
Certificates of Deposit	1,006,639		1,029,713		1,277,670		3,058		3,156		4,422		1.21	%	1.23	%	1.37	%
Total Deposits	3,403,883		3,456,988		3,535,464		5,921		6,301		8,710		0.69	%	0.73	%	0.98	%
Junior Subordinated Debentures	188,645		192,416		193,645		1,851		1,905		2,511		3.92	%	3.96	%	5.19	%
FHLB Borrowings and Other	657,122		644,084		614,459		4,688		4,780		5,392		2.79	%	2.94	%	3.43	%
Total Interest-Bearing Liabilities	4,249,650		4,293,488		4,343,568		12,460		12,986		16,613		1.16	%	1.21	%	1.51	%
Non-interest Bearing Demand Deposits	1,139,457		1,128,330		986,892
Payables and Other Liabilities	224,717		117,707		104,806
Total Liabilities	5,613,824		5,539,525		5,435,266
Redeemable Noncontrolling Interests	21,516		20,613		19,542
Stockholders' Equity	545,304		530,050		540,335
TOTAL AVERAGE LIABILITIES & STOCKHOLDERS' EQUITY	$	6,180,644	$	6,090,188	$	5,995,143
Net Interest Income - on a Fully Taxable Equivalent Basis (FTE)							$	46,756	$	47,853	$	48,294
FTE Adjustment (5)							1,684		1,829		1,850
Net Interest Income (GAAP Basis)							$	45,072	$	46,024	$	46,444
Interest Rate Spread													2.96	%	2.99	%	3.08	%
Net Interest Margin													3.26	%	3.29	%	3.42	%

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:	Sep 30, 2011		Sep 30, 2010		Sep 30, 2011		Sep 30, 2010		Sep 30, 2011		Sep 30, 2010
AVERAGE ASSETS
Earning Assets:
Cash and Investments:
Taxable investment securities	$	375,172	$	293,883	$	4,263	$	4,742	1.51	%	2.15	%
Non-taxable investment securities (5)	193,435		189,991		4,443		5,928		3.06	%	4.16	%
Mortgage-backed securities	233,309		240,176		5,521		6,228		3.16	%	3.46	%
Federal funds sold and other	474,173		515,648		849		943		0.24	%	0.24	%
Total Cash and Investments	1,276,089		1,239,698		15,076		17,841		1.58	%	1.92	%
Loans: (6)
Commercial and Construction (5)	2,379,006		2,569,262		98,338		109,482		5.47	%	5.59	%
Residential Mortgage	1,741,302		1,572,909		56,882		57,758		4.36	%	4.90	%
Home Equity and Other Consumer	328,641		278,313		8,831		9,418		3.57	%	5.01	%
Total Loans	4,448,949		4,420,484		164,051		176,658		4.89	%	5.30	%
Total Earning Assets	5,725,038		5,660,182		179,127		194,499		4.15	%	4.56	%
Less: Allowance for Loan Losses	100,761		75,446
Cash and due From Banks (Non-Interest Bearing)	39,696		29,658
Other Assets	476,103		500,203
TOTAL AVERAGE ASSETS	$	6,140,076	$	6,114,597
AVERAGE LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-Bearing Liabilities:
Deposits:
Savings and NOW	$	532,340	$	537,323	$	1,090	$	1,575	0.27	%	0.39	%
Money Market	1,867,430		1,666,649		8,107		11,504		0.58	%	0.92	%
Certificates of Deposit	1,039,997		1,361,830		9,674		15,642		1.24	%	1.54	%
Total Deposits	3,439,767		3,565,802		18,871		28,721		0.73	%	1.08	%
Junior Subordinated Debentures	191,639		193,645		5,648		7,505		3.93	%	5.17	%
FHLB Borrowings and Other	666,263		635,764		14,382		17,121		2.85	%	3.55	%
Total Interest-Bearing Liabilities	4,297,669		4,395,211		38,901		53,347		1.20	%	1.62	%
Non-interest Bearing Demand Deposits	1,136,918		1,011,493
Payables and Other Liabilities	152,885		100,739
Total Liabilities	5,587,472		5,507,443
Redeemable Noncontrolling Interests	20,657		20,508
Stockholders' Equity	531,947		586,646
TOTAL AVERAGE LIABILITIES & STOCKHOLDERS' EQUITY	$	6,140,076	$	6,114,597
Net Interest Income - on a Fully Taxable Equivalent Basis (FTE)					$	140,226	$	141,152
FTE Adjustment (5)					5,419		5,380
Net Interest Income (GAAP Basis)					$	134,807	$	135,772
Interest Rate Spread									2.95	%	2.94	%
Net Interest Margin									3.25	%	3.31	%

Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)



(In Thousands)	September 30, 2011		June 30, 2011			September 30, 2010
LOAN DATA (7):	September 30, 2011		June 30, 2011			September 30, 2010
Commercial and Industrial Loans:
New England	$	502,382	$	480,452		$	435,695
San Francisco Bay	57,918		60,065			76,136
Southern California	42,770		45,001			49,025
Pacific Northwest	38,223		34,326			42,855
Eliminations and other, net	—		(116		)	(213		)
Total Commercial and Industrial Loans	$	641,293	$	619,728		$	603,498
Commercial Real Estate Loans:
New England	$	627,413	$	625,328		$	647,182
San Francisco Bay	662,436		670,469			859,858
Southern California	194,998		170,496			184,358
Pacific Northwest	109,983		102,295			91,482
Total Commercial Real Estate Loans	$	1,594,830	$	1,568,588		$	1,782,880
Construction and Land Loans:
New England	$	90,751	$	78,149		$	97,585
San Francisco Bay	41,157		42,286			97,791
Southern California	5,530		3,215			1,869
Pacific Northwest	7,279		6,920			13,670
Total Construction and Land Loans	$	144,717	$	130,570		$	210,915
Residential Mortgage Loans:
New England	$	1,237,389	$	1,217,654		$	1,154,671
San Francisco Bay	322,783		321,110			277,321
Southern California	177,647		177,320			159,321
Pacific Northwest	53,056		51,587			43,645
Total Residential Mortgage Loans	$	1,790,875	$	1,767,671		$	1,634,958
Home Equity Loans:
New England	$	90,082	$	91,041		$	102,321
San Francisco Bay	49,475		52,132			51,761
Southern California	5,756		4,910			5,085
Pacific Northwest	5,343		5,445			5,176
Total Home Equity Loans	$	150,656	$	153,528		$	164,343
Other Consumer Loans:
New England	$	137,692	$	140,006		$	99,248
San Francisco Bay	12,427		14,330			20,391
Southern California	11,970		12,199			10,444
Pacific Northwest	1,688		1,180			1,391
Eliminations and other, net	1,571		1,640			2,206
Total Other Consumer Loans	$	165,348	$	169,355		$	133,680
Total Loans
New England	$	2,685,709	$	2,632,630		$	2,536,702
San Francisco Bay	1,146,196		1,160,392			1,383,258
Southern California	438,671		413,141			410,102
Pacific Northwest	215,572		201,753			198,219
Eliminations and other, net	1,571		1,524			1,993
Total Loans	$	4,487,719	$	4,409,440		$	4,530,274

Boston Private Financial Holdings, Inc.

Selected Financial Data (Unaudited)



(In Thousands)	September 30, 2011			June 30, 2011			September 30, 2010
CREDIT QUALITY (7):	September 30, 2011			June 30, 2011			September 30, 2010
Special Mention Loans:
New England	$	60,383		$	55,051		$	54,375
San Francisco Bay	71,640			68,262			66,493
Southern California	32,189			16,158			7,872
Pacific Northwest	13,901			17,029			21,325
Total Special Mention Loans	$	178,113		$	156,500		$	150,065
Accruing Classified Loans (8):
New England	$	21,328		$	17,213		$	19,228
San Francisco Bay	55,426			57,420			66,061
Southern California	23,815			25,145			11,467
Pacific Northwest	3,310			3,697			9,308
Total Accruing Classified Loans	$	103,879		$	103,475		$	106,064
Non-performing Loans:
New England	$	33,413		$	29,095		$	20,872
San Francisco Bay	27,449			31,753			99,573
Southern California (9)	10,186			13,226			12,585
Pacific Northwest	2,397			5,868			10,060
Total Non-performing Loans	$	73,445		$	79,942		$	143,090
Other Real Estate Owned:
New England	$	1,301		$	1,498		$	892
San Francisco Bay	5,847			10,974			4,283
Southern California	345			345			4,141
Pacific Northwest	1,668			1,668			3,753
Total Other Real Estate Owned	$	9,161		$	14,485		$	13,069
Loans 30-89 Days Past Due and Accruing:
New England	$	348		$	3,060		$	5,515
San Francisco Bay	16,649			2,304			8,270
Southern California	3,947			1,137			2,860
Pacific Northwest	—			—			226
Total Loans 30-89 Days Past Due and Accruing	$	20,944		$	6,501		$	16,871
Loans Charged-off/ (Recovered), Net for the Three Months Ended:
New England	$	752		$	127		$	393
San Francisco Bay	3,266			2,036			11,896
Southern California	179			(3,552		)	(1,224		)
Pacific Northwest	286			739			48
Total Net Loans Charged-off/ (Recovered)	$	4,483		$	(650	)	$	11,113
Loans Charged-off/ (Recovered), Net for the Nine Months Ended:
New England	$	2,153					$	3,215
San Francisco Bay	16,591						20,901
Southern California	(4,460		)				(1,635		)
Pacific Northwest	1,019						580
Total Net Loans Charged-off/ (Recovered)	$	15,303					$	23,061

Boston Private Financial Holdings, Inc.

Selected Financial Data

(Unaudited)


(1)	In 2009, the Company completed the sale of its affiliates Boston Private Value Investors, Sand Hill Advisors, RINET, Gibraltar, and Westfield Capital Management. Accordingly, prior period and current financial information related to the divested companies are included with discontinued operations.

(2)

The Company uses certain non-GAAP financial measures, such as: Tangible Book Value; the Tangible Common Equity ("TCE") to Tangible Assets ("TA") ratio; the TCE to Risk Weighted Assets ratio; pre-tax, pre-provision earnings; and operating expenses excluding restructuring costs 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 the Non-GAAP TCE to Risk Weighted Assets 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 Goodwill and Intangible Assets, net and includes the difference between Redemption Value and value per ARB 51 for Redeemable Non-controlling Interests.



(In Thousands)	September 30, 2011			June 30, 2011			September 30, 2010
Total Balance Sheet Assets	$	6,023,309		$	6,036,778		$	6,031,266
LESS: Goodwill and Intangible Assets, net	(146,774		)	(147,951		)	(146,153		)
Tangible Assets (non-GAAP)	5,876,535			5,888,827			5,885,113
Total Equity	551,654			538,970			533,762
LESS: Goodwill and Intangible Assets, net	(146,774		)	(147,951		)	(146,153		)
ADD: Difference between Redemption Value of Non-controlling Interests and value under ARB 51	14,641			14,170			12,608
Total adjusting items	(132,133		)	(133,781		)	(133,545		)
Tangible Common Equity (non-GAAP)	419,521			405,189			400,217
Total Equity/Total Assets	9.16		%	8.93		%	8.85		%
Tangible Common Equity/Tangible Assets (non-GAAP)	7.14		%	6.88		%	6.80		%

Total Risk Weighted Assets *	4,037,336			3,965,672			4,165,485
Tangible Common Equity/Total Risk Weighted Assets (non-GAAP)	10.39		%	10.22		%	9.61		%

End of Period Shares Outstanding	78,004			77,942			76,592
EOP Carlyle Common Convertible Shares	7,261			7,261			7,261
Common Equivalent Shares	85,265			85,203			83,853

Book Value Per Common Share	$	6.33		$	6.17		$	6.21
Tangible Book Value Per Share	$	4.92		$	4.76		$	4.77

* Risk Weighted Assets for September 30, 2011 is shown on a pro-forma basis

Boston Private Financial Holdings, Inc.

Selected Financial Data

(Unaudited)

Reconciliations from the Company's GAAP net income attributable to the Company to Non-GAAP pre-tax, pre-provision earnings and from GAAP operating expenses to Non-GAAP operating expenses excluding restructuring costs are presented below:



(In Thousands)	September 30, 2011		June 30, 2011			September 30, 2010
Net income/(loss) attributable to the Company (GAAP)	$	11,679	$	14,545		$	(7,236	)
ADD BACK: Provision/ (credit) for loan losses	4,500		(2,190		)	32,050
ADD BACK: Income tax expense/(benefit)	4,570		4,229			(12,412		)
Pre-tax, pre-provision earnings (Non-GAAP)	$	20,749	$	16,584		$	12,402

Total operating expense (GAAP)	$	56,478	$	62,465		$	60,979
LESS: Restructuring expense	1,116		4,304			—
Total operating expenses (excluding restructuring costs) (Non-GAAP)	$	55,362	$	58,161		$	60,979


(3)	Adjustments to Net Income/(Loss) Attributable to the Company to arrive at Net Income/(Loss) Attributable to the Common Stockholders, as presented in these tables, include decrease/ (increase) in Noncontrolling Interests Redemption Value; Dividends on Preferred Securities; and Accretion of Discount on Series C Preferred Stock.

(4)

When the Company has positive Net Income from Continuing Operations Attributable to the Common Stockholders, 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 to 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 Earning Per Share calculation. The potential dilutive shares relate to: unexercised stock options, unvested restricted stock, unexercised stock warrants, contingently issuable shares, unconverted Convertible Preferred stock, and unconverted Convertible Trust Preferred securities. The amount of shares that were anti-dilutive for the three and nine months ended September 30, 2011 were 1.7 million for both periods. The amount of shares that were anti-dilutive for the three and nine months ended September 30, 2010 were 10.5 million, and 10.7 million respectively. The amount of shares that were anti-dilutive for the three months ended June 30, 2011 were 1.7 million. See Part II. Item 8. "Financial Statements and Supplementary Data - Note 1: Basis of Presentation and Summary of Significant Accounting Policies"in the Company's Annual Report on Form 10-K, as amended, for the year ended December 31, 2010 for additional information.


(5)	Interest Income on Non-taxable Investments and Loans are presented on an FTE basis using the federal statutory rate.


(6)	Includes Loans Held for Sale and Non-accrual Loans.


(7)	The concentration of the Private Banking loan data and credit quality is based on the location of the lender. Net loans from the Holding Company to certain principals of the Company's affiliate partners, loans at the Company's non-banking segments, and inter-company loan eliminations are identified as “Eliminations and other, net”.

(8)

Accruing classified loans include loans that are classified as substandard but are still accruing interest income. The Bank 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 nonperforming at some time in the future.


(9)	Includes the non-strategic loans held for sale of $2.9 million at September 30, 2010. There were no non-strategic loans held for sale at September 30, 2011 or June 30, 2011.

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BOSTON PRIVATE FINANCIAL HOLDINGS INC Reports