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| 8-K - 8-K - BOSTON PRIVATE FINANCIAL HOLDINGS INC | a2018q48-kearnings01x30x20.htm |
Boston Private Financial Holdings, Inc. Reports Fourth Quarter and Full Year 2018 Results
Fourth Quarter 2018 Highlights include:
• | GAAP Net income was $33.3 million, or $0.42 per diluted share, and operating net income was $19.6 million or $0.26 per diluted share |
• | Return on average common equity was 17.9%; operating return on average common equity was 10.5% |
• | Return on average tangible common equity was 20.5%; operating return on average tangible common equity was 12.2% |
• | Average total deposits were $6.9 billion, a 7% increase year-over-year |
• | Average total loans were $6.8 billion, a 6% increase year-over-year |
• | Total assets under management/advisory (“AUM”) were $15.9 billion and total net flows were negative $143 million |
Notable Items impacting Fourth Quarter 2018 results ("Notable Items"):
• | $18.1 million gain on sale and $3.2 million tax expense related to the divestiture of Bingham, Osborn & Scarborough, LLC ("BOS") |
• | $1.6 million net restructuring expense related to personnel and technology efficiencies |
Full Year 2018 Highlights include:
• | GAAP Net income was $80.4 million, or $0.92 per diluted share, and operating net income was $84.2 million or $0.97 per diluted share |
• | Returned $62.4 million of capital to common shareholders through dividends and share repurchases |
• | Tangible book value per share increased 15% year-over-year to $8.18 and Tier 1 common equity ratio increased to 11.4% |
Boston, MA - January 30, 2019 - Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the “Company” or “BPFH”) today reported fourth quarter 2018 GAAP Net income/ (loss) attributable to the Company of $33.3 million, compared to $18.0 million for the third quarter of 2018 and ($18.3) million for the fourth quarter of 2017. Fourth quarter 2018 Diluted earnings/ (loss) per share were $0.42, compared to $0.20 in the third quarter of 2018 and ($0.24) in the fourth quarter of 2017.
Summary Financial Results - Reported | ||||||||||||||
% Change | ||||||||||||||
($ in millions, except for per share data) | 4Q18 | 3Q18 | 4Q17 | LQ | Y/Y | |||||||||
Net income/ (loss) | $33.3 | $18.0 | $(18.3) | 85 | % | nm | ||||||||
Diluted earnings/ (loss) per share | $0.42 | $0.20 | $(0.24) | nm | nm | |||||||||
Non-GAAP Financial Measures: | ||||||||||||||
Pre-tax, pre-provision income | $42.3 | $23.4 | $2.5 | 81 | % | nm | ||||||||
Return on average common equity ("ROACE") | 17.9 | % | 9.7 | % | (9.9 | )% | ||||||||
Return on average tangible common equity ("ROATCE") | 20.5 | % | 11.4 | % | (11.9 | )% | ||||||||
nm = not meaningful | ||||||||||||||
The Company's reported financial results increased linked quarter primarily as a result of the gain on sale related to the divestiture of BOS. Additional factors driving the year-over-year increase include impairment of goodwill related to the divestiture of Anchor Capital Advisors, LLC ("Anchor") and income tax expense related to the Tax Cuts and Jobs Act, each during the fourth quarter of 2017.
1
In addition to presenting the Company’s results in conformity with GAAP, the Company uses certain non-GAAP financial measures to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector. For additional information on non-GAAP financial measures, see page 7. A full reconciliation of GAAP to non-GAAP results can be found in the footnotes beginning on page 18.
Summary Financial Results - Operating Basis (non-GAAP) | |||||||||||||||
% Change | |||||||||||||||
($ in millions, except for per share data) | 4Q181 | 3Q182 | 4Q173 | LQ | Y/Y | ||||||||||
Net income | $19.6 | $22.5 | $20.6 | (13 | )% | (5 | )% | ||||||||
Diluted earnings per share | $0.26 | $0.25 | $0.22 | 4 | % | 20 | % | ||||||||
Pre-tax, pre-provision income | $25.8 | $29.2 | $29.0 | (12 | )% | (11 | )% | ||||||||
Return on average common equity | 10.5 | % | 12.1 | % | 10.2 | % | |||||||||
Return on average tangible common equity | 12.2 | % | 14.2 | % | 13.4 | % | |||||||||
1 4Q18 results adjusted to exclude the net after-tax impact of $18.1 million gain on sale and $3.2 million tax expense related to the divestiture of Bingham, Osborn, & Scarborough, LLC and $1.6 million restructuring expense 2 3Q18 results adjusted to exclude the net after-tax impact of $5.8 million restructuring expense 3 4Q17 results adjusted to exclude the net after-tax impact of $1.3 million loss on sale, $0.4 million legal expense, and $24.9 million goodwill impairment expense related to the divestiture of Anchor and $12.9 million tax expense related to the Tax Cuts and Jobs Act | |||||||||||||||
"Our Fourth Quarter and Full Year 2018 financial results reflect the successful divestiture of two affiliates," said Anthony DeChellis, CEO of Boston Private. "These transactions enabled the return of capital to shareholders during 2018 in the form of the completion of our $20 million share repurchase program."
"At the same time, we have additional capital to be used for the expansion of our Wealth Management, Trust, and Commercial and Private Banking businesses. My review of Boston Private's market positioning is well underway, and I look forward to sharing details about our vision to improve the Company's scale, efficiency, and productivity early in the second quarter of 2019."
Divested Affiliates | ||||||||||
The Company completed the sale of Anchor and BOS (together, "Divested Affiliates") during 2018. Financial results from Divested Affiliates remain consolidated in the Company's financial results through the closing dates of the divestitures. The Anchor divestiture announcement date was December 20, 2017, resulting in impairment of goodwill during fourth quarter 2017 results, and the closing date was April 13, 2018. The BOS announcement date was October 17, 2018, and the closing date was December 3, 2018.
For presentation purposes, Divested Affiliates' AUM are excluded from AUM amounts, but are included in the calculation of Core fees and income. The discussion below includes non-GAAP measures that exclude the contributions from these affiliates in order to enhance comparability of trends in the core business.
2
Net Interest Income and Margin (non-GAAP, except for Net Interest Income) | ||||||||||||||||||
% Change | ||||||||||||||||||
($ in millions) | 4Q18 | 3Q18 | 4Q17 | LQ | Y/Y | |||||||||||||
Net interest income | $60.0 | $59.6 | $57.3 | 1 | % | 5 | % | |||||||||||
Less: Interest recovered on previous nonaccrual loans | 1.0 | 1.0 | 0.4 | — | % | nm | ||||||||||||
Core net interest income, non-FTE basis | 59.0 | 58.7 | 56.8 | 1 | % | 4 | % | |||||||||||
Add: FTE adjustment | 0.6 | 0.6 | 2.9 | — | % | (79 | )% | |||||||||||
Core net interest income, FTE basis | 59.6 | 59.2 | 59.7 | 1 | % | — | % | |||||||||||
Net interest margin (FTE basis) | 2.96 | % | 2.93 | % | 3.04 | % | ||||||||||||
Core net interest margin (FTE basis) | 2.92 | % | 2.88 | % | 3.02 | % | ||||||||||||
Core net interest margin (non-FTE basis) | 2.90 | % | 2.85 | % | 2.87 | % | ||||||||||||
FTE = Fully Taxable Equivalent | ||||||||||||||||||
Net interest income for the fourth quarter of 2018 was $60.0 million, an increase of 1% linked quarter and 5% year-over-year. The year-over-year increase was primarily driven by higher yields on interest-earning assets and higher asset volumes, partially offset by higher funding costs. Core net interest income, non-FTE basis, which excludes interest recovered on previous nonaccrual loans, increased 1% linked quarter and 4% year-over-year.
The Company’s Core net interest margin (FTE basis) increased 4 basis points on a linked quarter basis to 2.92%, primarily driven by linked quarter deposit inflows that funded repayment of borrowings, the positive impact of higher asset yields, and lower levels of cash and investments as a percentage of interest-earning assets. The year-over-year decline was primarily driven by a lower tax benefit on tax-exempt income as a result of the Tax Cuts and Jobs Act.
Noninterest Income | |||||||||||||||
% Change | |||||||||||||||
($ in millions) | 4Q18 | 3Q18 | 4Q17 | LQ | Y/Y | ||||||||||
Investment management fees | $2.8 | $3.2 | $12.3 | (13 | )% | (77 | )% | ||||||||
Wealth advisory fees | 12.1 | 14.0 | 13.5 | (13 | )% | (10 | )% | ||||||||
Wealth management and trust fees | 11.7 | 11.5 | 11.8 | 1 | % | (1 | )% | ||||||||
Private banking fees4 | 2.1 | 2.8 | 2.6 | (27 | )% | (21 | )% | ||||||||
Total core fees and income | $28.7 | $31.6 | $40.2 | (9 | )% | (29 | )% | ||||||||
Total other income | 17.2 | 0.7 | (1.0 | ) | nm | nm | |||||||||
Total noninterest income | $45.8 | $32.3 | $39.2 | 42 | % | 17 | % | ||||||||
Memo: Excluding Notable Items and Divested Affiliates | |||||||||||||||
Investment management fees (non-GAAP) 5 | 2.8 | 3.2 | 3.9 | (13 | )% | (27 | )% | ||||||||
Wealth advisory fees (non-GAAP) 6 | 8.3 | 8.1 | 7.8 | 2 | % | 6 | % | ||||||||
Total core fees and income (non-GAAP) 5 6 | $24.9 | $25.7 | $26.0 | (3 | )% | (4 | )% | ||||||||
Total other income (non-GAAP) 7 | (1.0) | 0.7 | 0.3 | nm | nm | ||||||||||
Total noninterest income (non-GAAP) 5 6 | $23.9 | $26.4 | $26.3 | (10 | )% | (9 | )% | ||||||||
4 Private banking fees includes Other banking fee income and Gain/ (loss) on sale of loans, net 5 Excludes Anchor revenue of $8.4 million in 4Q17 6 Excludes BOS revenue of $3.9 million in 4Q18, $5.9 million in 3Q18, and $5.8 million in 4Q17 7 Excludes$18.1 million gain on sale in 4Q18 and $1.3 million loss on sale in 4Q17 | |||||||||||||||
Total core fees and income for the fourth quarter of 2018 was $28.7 million, a decline of 9% linked quarter and 29% year-over-year primarily driven by the divestitures of Anchor and BOS. Notable Items impacting Total other income include an $18.1 million gain on sale related to BOS in the fourth quarter of 2018 and a $1.3 million loss on sale related to Anchor in the fourth quarter of 2017.
Excluding Notable Items and Divested Affiliates, Total core fees and income decreased 4% year-over-year primarily driven by the absence of Investment management performance fees in the fourth quarter of 2018, partially offset by increased Wealth advisory fees. Performance fees in the fourth quarter of 2017 were $0.9 million.
3
During the fourth quarter of 2018, the securities in a rabbi trust, related to the Company's Deferred Compensation Plan, declined in value, which was recorded as $0.8 million of negative revenue in Total other income (Noninterest Income). This had a net zero impact to overall earnings because it had an equal and offsetting reduction in Salaries and employee benefits expense (Operating Expenses).
Assets Under Management / Advisory | ||||||||||||
% Change | ||||||||||||
($ in millions) | 4Q18 | 3Q18 | 4Q17 | LQ | Y/Y | |||||||
Wealth Management and Trust | $7,602 | $8,335 | $7,865 | (9 | )% | (3 | )% | |||||
Affiliate Partners 8 | 8,319 | 9,388 | 8,920 | (11 | )% | (7 | )% | |||||
Total assets under management / advisory 9 | $15,921 | $17,723 | $16,785 | (10 | )% | (5 | )% | |||||
Total net flows 9 | $(143) | $260 | $70 | |||||||||
8 Segment includes Dalton, Greiner, Hartman, Maher & Co., LLC and KLS Professional Advisors Group, LLC ("KLS") 9 Excludes Anchor and BOS | ||||||||||||
Total assets under management / advisory, were $15.9 billion at the end of the fourth quarter of 2018, a decrease of 10% linked quarter and 5% year-over-year. The linked quarter decrease was primarily driven by negative market action and negative net flows, while the year-over-year decrease was primarily driven by negative market action, partially offset by positive net flows.
Net flows in the Wealth Management & Trust segment during the fourth quarter of 2018 were negative $79 million driven by elevated current client outflows, partially offset by $194 million of new business and low client attrition.
Operating Expense | |||||||||||||||
% Change | |||||||||||||||
($ in millions) | 4Q18 | 3Q18 | 4Q17 | LQ | Y/Y | ||||||||||
Salaries and employee benefits | $36.0 | $38.9 | $44.6 | (8 | )% | (19 | )% | ||||||||
Occupancy and equipment | 8.0 | 8.2 | 7.8 | (2 | )% | 3 | % | ||||||||
Professional services | 4.2 | 2.9 | 4.0 | 47 | % | 5 | % | ||||||||
Marketing and business development | 2.3 | 1.7 | 1.9 | 33 | % | 19 | % | ||||||||
Information systems | 6.3 | 6.2 | 5.6 | 1 | % | 12 | % | ||||||||
Amortization of intangibles | 0.7 | 0.8 | 1.3 | (9 | )% | (49 | )% | ||||||||
Impairment of goodwill | — | — | 24.9 | nm | nm | ||||||||||
FDIC insurance | 0.7 | 0.7 | 0.7 | 10 | % | 9 | % | ||||||||
Restructuring | 2.1 | 5.8 | — | (64 | )% | nm | |||||||||
Other | 3.3 | 3.4 | 3.1 | (4 | )% | 5 | % | ||||||||
Total operating expense | $63.6 | $68.6 | $94.0 | (7 | )% | (32 | )% | ||||||||
Memo: Excluding Notable Items and Divested Affiliates | |||||||||||||||
Notable items related to Anchor Divestiture 10 | — | — | 25.3 | nm | nm | ||||||||||
Information systems 11 | (0.4 | ) | — | — | nm | nm | |||||||||
Restructuring | 2.1 | 5.8 | — | (64 | )% | nm | |||||||||
Divested Affiliates operating expense | 2.8 | 4.0 | 10.0 | (30 | )% | (72 | )% | ||||||||
Total operating expense (non-GAAP) | $59.1 | $58.8 | $58.7 | 1 | % | 1 | % | ||||||||
10 Includes $24.9 million of Impairment of goodwill and $0.4 million of legal expense 11 $0.4 million of Information services expense was reclassified to Restructuring expense in conjunction with the Company's formal restructuring plan announced in 4Q18 | |||||||||||||||
Total operating expense decreased 7% linked quarter primarily driven by lower restructuring expense, while decreasing 32% year-over-year, primarily driven by impairment of goodwill related to the divestiture of Anchor during the fourth quarter of 2017.
4
Excluding Notable Items and Divested Affiliates, Total operating expense for the fourth quarter of 2018 was $59.1 million, up 1% linked quarter and year-over-year. Year-over-year, compensation declined as a result of efficiency initiatives and the previously mentioned $0.8 million expense reversal related to the liability for the Company's Deferred Compensation Plan, partially offset by information technology investments.
The Company's Income tax expense for the fourth quarter of 2018 includes $3.2 million of expense related to the divestiture of BOS. Excluding Notable Items, the Company's effective tax rate for the fourth quarter of 2018 was 22.7%.
Income Tax Expense | ||||||||||
Loans and Deposits - QTD Averages | |||||||||||||||
% Change | |||||||||||||||
($ in millions) | 4Q18 | 3Q18 | 4Q17 | LQ | Y/Y | ||||||||||
Commercial and industrial | $1,027 | $999 | $962 | 3 | % | 7 | % | ||||||||
Commercial real estate | 2,402 | 2,475 | 2,370 | (3 | )% | 1 | % | ||||||||
Construction and land | 209 | 179 | 131 | 17 | % | 60 | % | ||||||||
Residential | 2,907 | 2,837 | 2,650 | 2 | % | 10 | % | ||||||||
Home equity | 94 | 94 | 105 | — | % | (11 | )% | ||||||||
Other consumer | 141 | 163 | 178 | (14 | )% | (21 | )% | ||||||||
Total loans | $6,781 | $6,747 | $6,396 | — | % | 6 | % | ||||||||
Non-interest bearing deposits | 2,092 | 2,064 | 1,895 | 1 | % | 10 | % | ||||||||
Interest bearing deposits | 4,826 | 4,668 | 4,550 | 3 | % | 6 | % | ||||||||
Total deposits | $6,918 | $6,732 | $6,445 | 3 | % | 7 | % | ||||||||
Non-interest bearing deposits as a % of Total deposits | 30 | % | 31 | % | 29 | % | |||||||||
Average total loans in the fourth quarter of 2018 increased 6% year-over-year primarily driven by increases in Residential loans in all geographic markets. Construction and land loans increased year-over-year and linked quarter primarily as a result of funding tax-exempt industrial revenue bonds associated with affordable housing projects.
Average total deposits increased 7% year-over-year, primarily driven by growth in money market accounts, demand deposit accounts and certificates of deposits, partially offset by net declines in savings and NOW accounts. The cost of total deposits, including DDA, was 0.77%, an increase of 9 basis points linked quarter and 40 basis points year-over-year.
Provision and Asset Quality | |||||||||||||||
($ in millions) | 4Q18 | 3Q18 | 2Q18 | 1Q18 | 4Q17 | ||||||||||
Provision/ (credit) for loan loss | $0.1 | $(0.9) | $0.5 | $(1.8) | $(0.9) | ||||||||||
Total criticized loans | 146.6 | 134.7 | 114.4 | 124.1 | 154.8 | ||||||||||
Total nonaccrual loans | 14.1 | 12.1 | 15.7 | 16.4 | 14.3 | ||||||||||
Total loans 30-89 days past due and accruing | 22.3 | 11.6 | 5.0 | 20.4 | 25.0 | ||||||||||
Total net loans (charged-off)/ recovered | 1.7 | 1.0 | 0.1 | — | 0.8 | ||||||||||
Ratios: | |||||||||||||||
Allowance for loan losses as a % of Total loans | 1.09 | % | 1.09 | % | 1.09 | % | 1.10 | % | 1.15 | % | |||||
Nonaccrual loans as a % of Total loans | 0.20 | % | 0.18 | % | 0.23 | % | 0.25 | % | 0.22 | % | |||||
5
The Company recorded a provision expense of $0.1 million for the fourth quarter of 2018, compared to credits of $0.9 million for the third quarter of 2018 and the fourth quarter of 2017. The provision expense in the fourth quarter of 2018 was primarily driven by loan growth and an increase in criticized loans, offset by net loan recoveries.
Total criticized loans as of December 31, 2018 was $146.6 million, an increase of 9% linked quarter and a decrease of 5% year-over-year. The $12.0 million linked quarter increase was driven by the downgrade of certain C&I and commercial real estate relationships in New England.
Total nonaccrual loans as of December 31, 2018 was $14.1 million, or 20 basis points of total loans, compared to $12.1 million, or 18 basis points as of September 30, 2018, and $14.3 million, or 22 basis points as of December 31, 2017.
Capital | |||||||||||||||
4Q18 | 3Q18 | 2Q18 | 1Q18 | 4Q17 | |||||||||||
Tangible common equity/ Tangible assets 12 | 8.1 | % | 7.8 | % | 7.5 | % | 7.4 | % | 7.3 | % | |||||
Tangible book value per share 12 | $8.18 | $7.67 | $7.62 | $7.17 | $7.12 | ||||||||||
Regulatory Capital Ratios: 13 | |||||||||||||||
Tier 1 common equity | 11.4 | % | 11.1 | % | 10.9 | % | 10.4 | % | 10.3 | % | |||||
Total risk-based capital | 14.3 | % | 14.1 | % | 13.8 | % | 14.2 | % | 14.1 | % | |||||
Tier 1 risk-based capital | 13.0 | % | 12.8 | % | 12.6 | % | 12.9 | % | 12.9 | % | |||||
Tier 1 leverage capital | 9.5 | % | 9.2 | % | 9.2 | % | 9.4 | % | 9.3 | % | |||||
Common Equity Repurchase Program: | |||||||||||||||
Total shares of common stock repurchased | 1,505,521 | 137,144 | — | — | — | ||||||||||
Average price paid per share of common stock | $12.02 | $13.89 | — | — | — | ||||||||||
Aggregate repurchases of common equity ($ in millions) | $18.1 | $1.9 | — | — | — | ||||||||||
12 See footnote 6 for a GAAP to non-GAAP reconciliation. 13 Current quarter information is presented based on estimated data. | |||||||||||||||
Tangible book value per share as of December 31, 2018 increased 7% linked quarter and 15% year-over-year to $8.18. The increase of Tangible book value per share from December 31, 2017 to December 31, 2018 was primarily driven by the divestitures of Anchor and BOS and increased retained earnings, partially offset by common share repurchases and lower Accumulated Other Comprehensive Income.
EPS Calculation | ||||||||||
For calculation of income for EPS, fourth quarter 2018 Net income attributable to the common shareholders benefited by $2.7 million, or $0.03 per share, related to the changes in value of Redeemable noncontrolling interests ("RNCI").
6
Dividend Payments
Concurrent with the release of fourth quarter 2018 earnings, the Board of Directors of the Company declared a cash dividend payable to common shareholders of $0.12 per share. The record date for this dividend is February 8, 2019, and the payment date is February 22, 2019.
Non-GAAP Financial Measures
The Company uses certain non-GAAP financial measures to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector.
These non-GAAP financial measures include tangible book value per share; the TCE/TA ratio; return on average common equity; return on average tangible common equity; pre-tax, pre-provision income; total operating expense excluding intangibles, goodwill impairment, and restructuring, if any; the efficiency ratio (FTE basis); the efficiency ratio (FTE basis) excluding amortization of intangibles, goodwill impairment, and restructuring, if any; net interest income and net interest margin excluding interest recovered on previous nonaccrual loans, also referred to as core net interest margin; net income attributable to the Company excluding notable items; net income attributable to the common shareholders, treasury stock method, excluding notable items (non-GAAP); diluted earnings per share excluding notable items; operating basis total revenue; operating basis total operating expenses; operating basis pre-tax, pre-provision income; operating basis income before income taxes; operating basis income tax expense; operating basis net income/ (loss) attributable to the Company; operating basis net income/ (loss) attributable to the Common Shareholders; operating basis weighted average diluted shares outstanding; operating basis diluted total earnings/ (loss) per share; operating basis return on average common equity; operating basis return on average tangible common equity; and operating basis effective tax rate.
A detailed reconciliation table of the Company’s GAAP to non-GAAP measures is included in the footnotes of the attached financial statements.
Conference Call
Management will hold a conference call at 8:00 a.m. Eastern Time on Thursday, January 31, 2019, to discuss the financial results, business highlights and outlook. To access the call:
Dial In #: (888) 317-6003
Elite Entry Number: 7238859
Replay Information:
Available from January 31, 2019 at 12:00 p.m Eastern Time until February 7, 2019
Dial In #: (877) 344-7529
Conference Number: 10127383
The call will be simultaneously webcast and may be accessed on www.bostonprivate.com
7
Boston Private Financial Holdings, Inc.
Boston Private Financial Holdings, Inc. is a national financial services organization that owns Wealth Management, Trust, and Commercial and Private Banking affiliates with offices in Boston, New York, Los Angeles, San Francisco, San Jose, and Florida. The Company has total assets of greater than $8 billion, and manages over $15 billion of client assets.
The Company’s affiliates serve the high net worth marketplace with high quality products and services of unique appeal to private clients. The Company also provides strategic oversight and access to resources, both financial and intellectual, to support affiliate management, marketing, compliance and legal activities. (NASDAQ: BPFH)
For more information about BPFH, visit the Company’s website at www.bostonprivate.com.
Forward-Looking 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, wealth advisory, and trust activities; changes in interest rates; competitive pressures from other financial institutions; the effects of weakness in general economic conditions on a national basis or in the local markets in which the Company operates; changes in loan defaults and charge-off rates; changes in the value of securities and other assets, adequacy of loan loss reserves, or decreases in deposit levels necessitating increased borrowing to fund loans and investments; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; changes in government regulation; the risk that goodwill and intangibles recorded in the Company’s financial statements will become impaired; the risk that the Company’s deferred tax asset may not be realized; risks related to the identification and implementation of acquisitions, dispositions and restructurings; changes in assumptions used in making such forward-looking statements; and the other risks and uncertainties detailed in the Company’s Annual Report on Form 10-K and updated by the Company’s Quarterly Reports on Form 10-Q and other filings submitted to the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made. The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statement is made.
Note to Editors:
Boston Private Financial Holdings, Inc. is not to be confused with Boston Private Bank & Trust Company. Boston Private Bank & Trust Company is a wholly-owned subsidiary of BPFH. The information reported in this press release is related to the performance and results of BPFH.
###
CONTACT:
Adam Bromley
(617) 912-4386
abromley@bostonprivate.com
8
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | |||||||||||||||
(In thousands, except share and per share data) | |||||||||||||||||||
Assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 127,259 | $ | 92,634 | $ | 364,539 | $ | 77,085 | $ | 120,541 | |||||||||
Investment securities available-for-sale | 1,008,293 | 1,063,340 | 1,076,967 | 1,118,497 | 1,170,328 | ||||||||||||||
Investment securities held-to-maturity | 70,438 | 75,468 | 78,955 | 70,809 | 74,576 | ||||||||||||||
Stock in Federal Home Loan Bank and Federal Reserve Bank | 49,263 | 48,727 | 70,127 | 54,455 | 59,973 | ||||||||||||||
Loans held for sale | 2,812 | 3,344 | 4,622 | 3,918 | 4,697 | ||||||||||||||
Total loans | 6,893,158 | 6,720,420 | 6,767,123 | 6,602,327 | 6,505,028 | ||||||||||||||
Less: Allowance for loan losses | 75,312 | 73,500 | 73,464 | 72,898 | 74,742 | ||||||||||||||
Net loans | 6,817,846 | 6,646,920 | 6,693,659 | 6,529,429 | 6,430,286 | ||||||||||||||
Other real estate owned (“OREO”) | 401 | 108 | 108 | — | — | ||||||||||||||
Premises and equipment, net | 45,412 | 47,399 | 46,421 | 43,627 | 37,640 | ||||||||||||||
Goodwill (1) | 57,607 | 75,598 | 75,598 | 75,598 | 75,598 | ||||||||||||||
Intangible assets, net (1) | 12,227 | 13,834 | 14,584 | 15,334 | 16,083 | ||||||||||||||
Fees receivable | 5,101 | 10,445 | 10,405 | 10,640 | 11,154 | ||||||||||||||
Accrued interest receivable | 24,366 | 24,641 | 23,732 | 22,614 | 22,322 | ||||||||||||||
Deferred income taxes, net | 26,638 | 27,833 | 26,316 | 32,058 | 29,031 | ||||||||||||||
Other assets (1) | 246,962 | 245,549 | 230,170 | 264,295 | 259,515 | ||||||||||||||
Total assets | $ | 8,494,625 | $ | 8,375,840 | $ | 8,716,203 | $ | 8,318,359 | $ | 8,311,744 | |||||||||
Liabilities: | |||||||||||||||||||
Deposits | $ | 6,781,170 | $ | 6,768,723 | $ | 6,620,179 | $ | 6,584,322 | $ | 6,510,246 | |||||||||
Securities sold under agreements to repurchase | 36,928 | 39,453 | 58,824 | 85,257 | 32,169 | ||||||||||||||
Federal funds purchased | 250,000 | 120,000 | — | — | 30,000 | ||||||||||||||
Federal Home Loan Bank borrowings | 420,144 | 441,836 | 1,056,938 | 611,588 | 693,681 | ||||||||||||||
Junior subordinated debentures | 106,363 | 106,363 | 106,363 | 106,363 | 106,363 | ||||||||||||||
Other liabilities (1) | 143,540 | 149,770 | 129,175 | 125,004 | 135,880 | ||||||||||||||
Total liabilities | 7,738,145 | 7,626,145 | 7,971,479 | 7,512,534 | 7,508,339 | ||||||||||||||
Redeemable noncontrolling interests (“RNCI”) | 2,526 | 11,686 | 10,747 | 16,322 | 17,461 | ||||||||||||||
Shareholders’ equity: | |||||||||||||||||||
Preferred stock, $1.00 par value; authorized: 2,000,000 shares | — | — | — | 47,753 | 47,753 | ||||||||||||||
Common stock, $1.00 par value; authorized: 170,000,000 shares | 83,656 | 84,603 | 84,479 | 84,194 | 84,208 | ||||||||||||||
Additional paid-in capital | 600,196 | 614,157 | 613,918 | 612,526 | 607,929 | ||||||||||||||
Retained earnings | 87,821 | 64,618 | 56,912 | 61,518 | 49,526 | ||||||||||||||
Accumulated other comprehensive income/ (loss) | (17,719 | ) | (27,578 | ) | (23,328 | ) | (21,313 | ) | (8,658 | ) | |||||||||
Total Company’s shareholders’ equity | 753,954 | 735,800 | 731,981 | 784,678 | 780,758 | ||||||||||||||
Noncontrolling interests | — | 2,209 | 1,996 | 4,825 | 5,186 | ||||||||||||||
Total shareholders’ equity | 753,954 | 738,009 | 733,977 | 789,503 | 785,944 | ||||||||||||||
Total liabilities, redeemable noncontrolling interests and shareholders’ equity | $ | 8,494,625 | $ | 8,375,840 | $ | 8,716,203 | $ | 8,318,359 | $ | 8,311,744 | |||||||||
9
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
Three Months Ended | |||||||||||||||||||
December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | |||||||||||||||
Interest and dividend income: | (In thousands, except share and per share data) | ||||||||||||||||||
Loans | $ | 69,294 | $ | 68,254 | $ | 64,048 | $ | 60,929 | $ | 59,496 | |||||||||
Taxable investment securities | 1,486 | 1,510 | 1,501 | 1,510 | 1,562 | ||||||||||||||
Non-taxable investment securities | 1,833 | 1,779 | 1,752 | 1,730 | 1,697 | ||||||||||||||
Mortgage-backed securities | 2,923 | 2,941 | 3,049 | 3,178 | 3,125 | ||||||||||||||
Short-term investments and other | 1,356 | 1,617 | 1,205 | 1,009 | 978 | ||||||||||||||
Total interest and dividend income | 76,892 | 76,101 | 71,555 | 68,356 | 66,858 | ||||||||||||||
Interest expense: | |||||||||||||||||||
Deposits | 13,470 | 11,487 | 8,365 | 6,524 | 6,048 | ||||||||||||||
Federal Home Loan Bank borrowings | 2,119 | 3,877 | 4,447 | 3,344 | 2,626 | ||||||||||||||
Junior subordinated debentures | 1,043 | 1,028 | 1,008 | 846 | 771 | ||||||||||||||
Repurchase agreements and other short-term borrowings | 263 | 68 | 190 | 259 | 141 | ||||||||||||||
Total interest expense | 16,895 | 16,460 | 14,010 | 10,973 | 9,586 | ||||||||||||||
Net interest income | 59,997 | 59,641 | 57,545 | 57,383 | 57,272 | ||||||||||||||
Provision/ (credit) for loan losses | 93 | (949 | ) | 453 | (1,795 | ) | (942 | ) | |||||||||||
Net interest income after provision/ (credit) for loan losses | 59,904 | 60,590 | 57,092 | 59,178 | 58,214 | ||||||||||||||
Fees and other income: | |||||||||||||||||||
Investment management fees | 2,831 | 3,245 | 4,227 | 11,425 | 12,321 | ||||||||||||||
Wealth advisory fees | 12,111 | 13,995 | 13,693 | 13,512 | 13,496 | ||||||||||||||
Wealth management and trust fees | 11,677 | 11,510 | 11,169 | 12,151 | 11,756 | ||||||||||||||
Other banking fee income | 2,033 | 2,775 | 2,745 | 2,273 | 2,531 | ||||||||||||||
Gain on sale of loans, net | 39 | 67 | 63 | 74 | 85 | ||||||||||||||
Total core fees and income | 28,691 | 31,592 | 31,897 | 39,435 | 40,189 | ||||||||||||||
Gain/ (loss) on sale of investments, net | (596 | ) | — | 7 | (24 | ) | (110 | ) | |||||||||||
Gain/ (loss) on sale of affiliates | 18,142 | — | — | — | (1,264 | ) | |||||||||||||
Other | (392 | ) | 722 | 191 | 332 | 360 | |||||||||||||
Total other income | 17,154 | 722 | 198 | 308 | (1,014 | ) | |||||||||||||
Total revenue (2) | 105,842 | 91,955 | 89,640 | 97,126 | 96,447 | ||||||||||||||
Operating expense: | |||||||||||||||||||
Salaries and employee benefits | 36,007 | 38,944 | 39,433 | 47,084 | 44,612 | ||||||||||||||
Occupancy and equipment | 7,975 | 8,164 | 8,229 | 7,748 | 7,753 | ||||||||||||||
Professional services | 4,229 | 2,877 | 2,872 | 3,177 | 4,035 | ||||||||||||||
Marketing and business development | 2,275 | 1,710 | 2,070 | 1,593 | 1,919 | ||||||||||||||
Information systems | 6,296 | 6,233 | 6,770 | 5,886 | 5,635 | ||||||||||||||
Amortization of intangibles | 680 | 750 | 749 | 750 | 1,323 | ||||||||||||||
Impairment of goodwill | — | — | — | — | 24,901 | ||||||||||||||
FDIC insurance | 739 | 674 | 708 | 744 | 677 | ||||||||||||||
Restructuring | 2,065 | 5,763 | — | — | — | ||||||||||||||
Other | 3,291 | 3,442 | 3,553 | 3,875 | 3,134 | ||||||||||||||
Total operating expense | 63,557 | 68,557 | 64,384 | 70,857 | 93,989 | ||||||||||||||
Income before income taxes | 42,192 | 24,347 | 24,803 | 28,064 | 3,400 | ||||||||||||||
Income tax expense | 8,651 | 5,461 | 17,399 | 6,026 | 21,391 | ||||||||||||||
Net income/ (loss) from continuing operations | 33,541 | 18,886 | 7,404 | 22,038 | (17,991 | ) | |||||||||||||
Net income/ (loss) from discontinued operations (3) | 306 | — | (2 | ) | 1,698 | 989 | |||||||||||||
Net income/ (loss) before attribution to noncontrolling interests | 33,847 | 18,886 | 7,402 | 23,736 | (17,002 | ) | |||||||||||||
Less: Net income attributable to noncontrolling interests | 545 | 924 | 968 | 1,050 | 1,278 | ||||||||||||||
Net income/ (loss) attributable to the Company | $ | 33,302 | $ | 17,962 | $ | 6,434 | $ | 22,686 | $ | (18,280 | ) | ||||||||
10
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
Year Ended | |||||||
December 31, 2018 | December 31, 2017 | ||||||
Interest and dividend income: | (In thousands, except share and per share data) | ||||||
Loans | $ | 262,525 | $ | 228,964 | |||
Taxable investment securities | 6,007 | 6,393 | |||||
Non-taxable investment securities | 7,094 | 6,622 | |||||
Mortgage-backed securities | 12,091 | 13,391 | |||||
Short-term investments and other | 5,187 | 3,325 | |||||
Total interest and dividend income | 292,904 | 258,695 | |||||
Interest expense: | |||||||
Deposits | 39,846 | 20,884 | |||||
Federal Home Loan Bank borrowings | 13,787 | 9,883 | |||||
Junior subordinated debentures | 3,925 | 2,919 | |||||
Repurchase agreements and other short-term borrowings | 780 | 323 | |||||
Total interest expense | 58,338 | 34,009 | |||||
Net interest income | 234,566 | 224,686 | |||||
Provision/ (credit) for loan losses | (2,198 | ) | (7,669 | ) | |||
Net interest income after provision/ (credit) for loan losses | 236,764 | 232,355 | |||||
Fees and other income: | |||||||
Investment management fees | 21,728 | 45,515 | |||||
Wealth advisory fees | 53,311 | 52,559 | |||||
Wealth management and trust fees | 46,507 | 45,362 | |||||
Other banking fee income | 9,826 | 8,915 | |||||
Gain on sale of loans, net | 243 | 451 | |||||
Total core fees and income | 131,615 | 152,802 | |||||
Gain/ (loss) on sale of investments, net | (613 | ) | 376 | ||||
Gain/ (loss) on OREO, net | — | (46 | ) | ||||
Gain/ (loss) on sale of affiliates | 18,142 | (1,264 | ) | ||||
Other | 853 | 2,098 | |||||
Total other income | 18,382 | 1,164 | |||||
Total revenue (2) | 384,563 | 378,652 | |||||
Operating expense: | |||||||
Salaries and employee benefits | 161,468 | 178,501 | |||||
Occupancy and equipment | 32,116 | 30,165 | |||||
Professional services | 13,155 | 13,763 | |||||
Marketing and business development | 7,648 | 7,766 | |||||
Information systems | 25,185 | 21,796 | |||||
Amortization of intangibles | 2,929 | 5,601 | |||||
Impairment of goodwill | — | 24,901 | |||||
FDIC insurance | 2,865 | 2,969 | |||||
Restructuring | 7,828 | — | |||||
Other | 14,161 | 14,474 | |||||
Total operating expense | 267,355 | 299,936 | |||||
Income before income taxes | 119,406 | 86,385 | |||||
Income tax expense | 37,537 | 46,196 | |||||
Net income from continuing operations | 81,869 | 40,189 | |||||
Net income from discontinued operations (3) | 2,002 | 4,870 | |||||
Net income before attribution to noncontrolling interests | 83,871 | 45,059 | |||||
Less: Net income attributable to noncontrolling interests | 3,487 | 4,468 | |||||
Net income attributable to the Company | $ | 80,384 | $ | 40,591 | |||
11
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
Three Months Ended | |||||||||||||||||||
PER SHARE DATA: | December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||
(In thousands, except share and per share data) | |||||||||||||||||||
Calculation of income for EPS: | |||||||||||||||||||
Net income/ (loss) attributable to the Company | $ | 33,302 | $ | 17,962 | $ | 6,434 | $ | 22,686 | $ | (18,280 | ) | ||||||||
Adjustments to Net income/ (loss) attributable to the Company to arrive at Net income/ (loss) attributable to common shareholders, treasury stock method (4) | 2,694 | (829 | ) | (3,524 | ) | (23 | ) | (1,998 | ) | ||||||||||
Net income/ (loss) attributable to the common shareholders, treasury stock method | $ | 35,996 | $ | 17,133 | $ | 2,910 | $ | 22,663 | $ | (20,278 | ) | ||||||||
End of period common shares outstanding | 83,655,651 | 84,602,519 | 84,478,858 | 84,194,267 | 84,208,538 | ||||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||
Weighted average basic shares outstanding | 83,750,785 | 84,017,284 | 83,509,115 | 83,097,758 | 82,904,776 | ||||||||||||||
Weighted average diluted shares outstanding (5) | 84,863,779 | 85,498,568 | 85,413,575 | 85,271,650 | 82,904,776 | ||||||||||||||
Diluted total earnings/ (loss) per share | $ | 0.42 | $ | 0.20 | $ | 0.03 | $ | 0.27 | $ | (0.24 | ) | ||||||||
Year Ended | |||||||
PER SHARE DATA: | December 31, 2018 | December 31, 2017 | |||||
(In thousands, except share and per share data) | |||||||
Calculation of income for EPS: | |||||||
Net income attributable to the Company | $ | 80,384 | $ | 40,591 | |||
Adjustments to Net income attributable to the Company to arrive at Net income attributable to common shareholders, treasury stock method (4) | (1,682 | ) | (4,887 | ) | |||
Net income attributable to the common shareholders, treasury stock method | $ | 78,702 | $ | 35,704 | |||
Weighted average shares outstanding: | |||||||
Weighted average basic shares outstanding | 83,596,685 | 82,430,633 | |||||
Weighted average diluted shares outstanding (5) | 85,331,314 | 84,802,565 | |||||
Diluted total earnings per share | $ | 0.92 | $ | 0.42 | |||
12
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(In thousands, except per share data) | December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||
FINANCIAL DATA: | |||||||||||||||||||
Book value per common share | $ | 9.01 | $ | 8.72 | $ | 8.69 | $ | 8.81 | $ | 8.77 | |||||||||
Tangible book value per share (6) | $ | 8.18 | $ | 7.67 | $ | 7.62 | $ | 7.17 | $ | 7.12 | |||||||||
Market price per share | $ | 10.57 | $ | 13.65 | $ | 15.90 | $ | 15.05 | $ | 15.45 | |||||||||
ASSETS UNDER MANAGEMENT AND ADVISORY: | |||||||||||||||||||
Wealth Management and Trust | $ | 7,602,000 | $ | 8,335,000 | $ | 7,789,000 | $ | 7,831,000 | $ | 7,865,000 | |||||||||
Affiliate Partners, excluding Anchor and BOS | $ | 8,319,000 | $ | 9,388,000 | $ | 9,072,000 | $ | 8,878,000 | $ | 8,920,000 | |||||||||
Total assets under management and advisory, excluding Anchor and BOS (7) | $ | 15,921,000 | $ | 17,723,000 | $ | 16,861,000 | $ | 16,709,000 | $ | 16,785,000 | |||||||||
Assets under management and advisory at Anchor through March 31, 2018 | $ | — | — | — | 9,042,000 | 9,277,000 | |||||||||||||
Assets under management and advisory at BOS through September 30, 2018 | $ | — | $ | 4,714,000 | $ | 4,525,000 | $ | 4,488,000 | $ | 4,434,000 | |||||||||
Less: Inter-company relationship | $ | — | $ | (7,000 | ) | $ | (7,000 | ) | $ | (11,000 | ) | $ | (11,000 | ) | |||||
Total assets under management and advisory, including Anchor and BOS through December 31, 2018 | $ | 15,921,000 | $ | 22,430,000 | $ | 21,379,000 | $ | 30,228,000 | $ | 30,485,000 | |||||||||
FINANCIAL RATIOS: | |||||||||||||||||||
Total equity/ Total assets | 8.88 | % | 8.81 | % | 8.42 | % | 9.49 | % | 9.46 | % | |||||||||
Tangible common equity/ Tangible assets (6) | 8.12 | % | 7.83 | % | 7.46 | % | 7.38 | % | 7.33 | % | |||||||||
Tier 1 common equity/ Risk weighted assets (6) | 11.40 | % | 11.14 | % | 10.90 | % | 10.39 | % | 10.32 | % | |||||||||
Allowance for loan losses/ Total loans | 1.09 | % | 1.09 | % | 1.09 | % | 1.10 | % | 1.15 | % | |||||||||
Allowance for loan losses/ Nonaccrual loans | 536 | % | 608 | % | 469 | % | 445 | % | 523 | % | |||||||||
Return on average assets - three months ended (annualized) | 1.56 | % | 0.84 | % | 0.31 | % | 1.11 | % | (0.88 | )% | |||||||||
Return on average common equity - three months ended (annualized) (8) | 17.87 | % | 9.67 | % | 3.03 | % | 12.02 | % | (9.92 | )% | |||||||||
Return on average tangible common equity - three months ended (annualized) (8) | 20.46 | % | 11.37 | % | 3.90 | % | 15.20 | % | (11.94 | )% | |||||||||
Efficiency ratio - three months ended (9) | 57.14 | % | 67.04 | % | 70.29 | % | 71.46 | % | 68.23 | % | |||||||||
DEPOSIT DETAIL: | |||||||||||||||||||
Demand deposits (non-interest bearing) | $ | 1,951,274 | $ | 2,001,275 | $ | 2,089,373 | $ | 1,932,732 | $ | 2,025,690 | |||||||||
NOW | 626,685 | 568,148 | 635,841 | 689,526 | 645,361 | ||||||||||||||
Savings | 73,834 | 72,967 | 73,675 | 73,580 | 70,935 | ||||||||||||||
Money market | 3,338,892 | 3,363,062 | 3,128,211 | 3,177,692 | 3,121,811 | ||||||||||||||
Certificates of deposit | 790,485 | 763,271 | 693,079 | 710,792 | 646,449 | ||||||||||||||
Total deposits | $ | 6,781,170 | $ | 6,768,723 | $ | 6,620,179 | $ | 6,584,322 | $ | 6,510,246 | |||||||||
13
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: | 12/31/18 | 09/30/18 | 12/31/17 | 12/31/18 | 09/30/18 | 12/31/17 | 12/31/18 | 09/30/18 | 12/31/17 | |||||||||||||||||
AVERAGE ASSETS | ||||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||
Cash and investments: | ||||||||||||||||||||||||||
Taxable investment securities | $ | 317,230 | $ | 324,583 | $ | 345,743 | $ | 1,486 | $ | 1,510 | $ | 1,562 | 1.87 | % | 1.86 | % | 1.81 | % | ||||||||
Non-taxable investment securities (10) | 301,242 | 297,710 | 298,851 | 2,321 | 2,256 | 2,611 | 3.08 | % | 3.03 | % | 3.50 | % | ||||||||||||||
Mortgage-backed securities | 536,264 | 552,820 | 608,508 | 2,923 | 2,941 | 3,125 | 2.18 | % | 2.13 | % | 2.05 | % | ||||||||||||||
Short-term investments and other | 134,182 | 204,814 | 172,656 | 1,356 | 1,617 | 978 | 3.98 | % | 3.11 | % | 2.23 | % | ||||||||||||||
Total cash and investments | 1,288,918 | 1,379,927 | 1,425,758 | 8,086 | 8,324 | 8,276 | 2.50 | % | 2.41 | % | 2.32 | % | ||||||||||||||
Loans (11): | ||||||||||||||||||||||||||
Commercial and industrial (10) | 1,027,128 | 998,817 | 962,159 | 10,472 | 9,940 | 9,603 | 3.99 | % | 3.89 | % | 3.91 | % | ||||||||||||||
Commercial real estate (10) | 2,402,304 | 2,475,143 | 2,369,526 | 29,078 | 29,547 | 26,473 | 4.74 | % | 4.67 | % | 4.37 | % | ||||||||||||||
Construction and land (10) | 209,475 | 179,248 | 131,107 | 2,590 | 2,196 | 1,568 | 4.84 | % | 4.80 | % | 4.68 | % | ||||||||||||||
Residential | 2,907,446 | 2,836,593 | 2,650,014 | 24,630 | 23,907 | 21,248 | 3.39 | % | 3.37 | % | 3.21 | % | ||||||||||||||
Home equity | 93,656 | 94,050 | 105,044 | 1,148 | 1,089 | 1,074 | 4.86 | % | 4.59 | % | 4.06 | % | ||||||||||||||
Other consumer | 140,591 | 163,224 | 177,951 | 1,481 | 1,689 | 1,489 | 4.18 | % | 4.11 | % | 3.32 | % | ||||||||||||||
Total loans | 6,780,600 | 6,747,075 | 6,395,801 | 69,399 | 68,368 | 61,455 | 4.04 | % | 4.00 | % | 3.79 | % | ||||||||||||||
Total earning assets | 8,069,518 | 8,127,002 | 7,821,559 | 77,485 | 76,692 | 69,731 | 3.79 | % | 3.73 | % | 3.52 | % | ||||||||||||||
LESS: Allowance for loan losses | 75,006 | 73,861 | 75,608 | |||||||||||||||||||||||
Cash and due from banks (non-interest bearing) | 53,633 | 46,056 | 43,648 | |||||||||||||||||||||||
Other assets | 397,153 | 392,757 | 452,744 | |||||||||||||||||||||||
TOTAL AVERAGE ASSETS | $ | 8,445,298 | $ | 8,491,954 | $ | 8,242,343 | ||||||||||||||||||||
AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||
Interest-bearing deposits (12): | ||||||||||||||||||||||||||
Savings and NOW | $ | 649,937 | $ | 693,419 | $ | 687,172 | $ | 377 | $ | 301 | $ | 148 | 0.23 | % | 0.17 | % | 0.09 | % | ||||||||
Money market | 3,392,039 | 3,244,628 | 3,177,687 | 9,502 | 8,110 | 3,998 | 1.11 | % | 0.99 | % | 0.50 | % | ||||||||||||||
Certificates of deposit | 784,184 | 730,117 | 685,136 | 3,591 | 3,076 | 1,902 | 1.82 | % | 1.67 | % | 1.10 | % | ||||||||||||||
Total interest-bearing deposits (12) | 4,826,160 | 4,668,164 | 4,549,995 | 13,470 | 11,487 | 6,048 | 1.11 | % | 0.98 | % | 0.53 | % | ||||||||||||||
Junior subordinated debentures | 106,363 | 106,363 | 106,363 | 1,043 | 1,028 | 771 | 3.84 | % | 3.78 | % | 2.84 | % | ||||||||||||||
FHLB borrowings and other | 515,734 | 768,015 | 728,374 | 2,382 | 3,945 | 2,767 | 1.81 | % | 2.01 | % | 1.49 | % | ||||||||||||||
Total interest-bearing liabilities (12) | 5,448,257 | 5,542,542 | 5,384,732 | 16,895 | 16,460 | 9,586 | 1.23 | % | 1.17 | % | 0.70 | % | ||||||||||||||
Non-interest bearing demand deposits (12) | 2,092,070 | 2,063,642 | 1,894,924 | |||||||||||||||||||||||
Payables and other liabilities | 154,612 | 135,508 | 128,075 | |||||||||||||||||||||||
Total average liabilities | 7,694,939 | 7,741,692 | 7,407,731 | |||||||||||||||||||||||
Redeemable noncontrolling interests | 11,046 | 13,074 | 21,094 | |||||||||||||||||||||||
Average shareholders’ equity | 739,313 | 737,188 | 813,518 | |||||||||||||||||||||||
TOTAL AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY | $ | 8,445,298 | $ | 8,491,954 | $ | 8,242,343 | ||||||||||||||||||||
Net interest income - on a fully taxable equivalent basis (FTE) | $ | 60,590 | $ | 60,232 | $ | 60,145 | ||||||||||||||||||||
LESS: FTE adjustment (10) | 593 | 591 | 2,873 | |||||||||||||||||||||||
Net interest income (GAAP basis) | $ | 59,997 | $ | 59,641 | $ | 57,272 | ||||||||||||||||||||
Interest rate spread | 2.56 | % | 2.56 | % | 2.82 | % | ||||||||||||||||||||
Bank only net interest margin | 3.02 | % | 2.98 | % | 3.08 | % | ||||||||||||||||||||
Net interest margin | 2.96 | % | 2.93 | % | 3.04 | % | ||||||||||||||||||||
Average total deposits (12) | 6,918,230 | 6,731,806 | 6,444,919 | 0.77 | % | 0.68 | % | 0.37 | % | |||||||||||||||||
Average total deposits and borrowings (12) | 7,540,327 | 7,606,184 | 7,279,656 | 0.89 | % | 0.86 | % | 0.52 | % | |||||||||||||||||
14
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
Average Balance | Interest Income/Expense | Average Yield/Rate | ||||||||||||||||
(In thousands) | Year Ended | Year Ended | Year Ended | |||||||||||||||
AVERAGE BALANCE SHEET: | 12/31/18 | 12/31/17 | 12/31/18 | 12/31/17 | 12/31/18 | 12/31/17 | ||||||||||||
AVERAGE ASSETS | ||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||
Cash and investments: | ||||||||||||||||||
Taxable investment securities | $ | 325,159 | $ | 363,760 | $ | 6,007 | $ | 6,393 | 1.85 | % | 1.76 | % | ||||||
Non-taxable investment securities (10) | 298,450 | 296,117 | 8,984 | 10,187 | 3.01 | % | 3.44 | % | ||||||||||
Mortgage-backed securities | 561,929 | 641,157 | 12,091 | 13,391 | 2.15 | % | 2.09 | % | ||||||||||
Short-term investments and other | 164,712 | 170,017 | 5,187 | 3,325 | 3.15 | % | 1.96 | % | ||||||||||
Total cash and investments | 1,350,250 | 1,471,051 | 32,269 | 33,296 | 2.39 | % | 2.26 | % | ||||||||||
Loans (11): | ||||||||||||||||||
Commercial and industrial (10) | 983,699 | 981,822 | 38,607 | 38,680 | 3.92 | % | 3.94 | % | ||||||||||
Commercial real estate (10) | 2,449,039 | 2,358,658 | 112,516 | 102,030 | 4.59 | % | 4.33 | % | ||||||||||
Construction and land (10) | 181,315 | 119,530 | 8,791 | 5,604 | 4.85 | % | 4.69 | % | ||||||||||
Residential | 2,806,046 | 2,533,437 | 92,893 | 80,236 | 3.31 | % | 3.17 | % | ||||||||||
Home equity | 94,823 | 109,815 | 4,320 | 4,376 | 4.56 | % | 3.99 | % | ||||||||||
Other consumer | 167,139 | 188,122 | 6,561 | 5,989 | 3.92 | % | 3.18 | % | ||||||||||
Total loans | 6,682,061 | 6,291,384 | 263,688 | 236,915 | 3.95 | % | 3.77 | % | ||||||||||
Total earning assets | 8,032,311 | 7,762,435 | 295,957 | 270,211 | 3.68 | % | 3.48 | % | ||||||||||
LESS: Allowance for loan losses | 74,174 | 77,365 | ||||||||||||||||
Cash and due from banks (non-interest bearing) | 49,282 | 42,420 | ||||||||||||||||
Other assets | 402,821 | 440,268 | ||||||||||||||||
TOTAL AVERAGE ASSETS | $ | 8,410,240 | $ | 8,167,758 | ||||||||||||||
AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||
Interest-bearing deposits (12): | ||||||||||||||||||
Savings and NOW | $ | 694,674 | $ | 688,453 | $ | 1,197 | $ | 669 | 0.17 | % | 0.10 | % | ||||||
Money market | 3,202,616 | 3,156,305 | 27,469 | 13,799 | 0.86 | % | 0.44 | % | ||||||||||
Certificates of deposit | 714,827 | 653,486 | 11,180 | 6,416 | 1.56 | % | 0.98 | % | ||||||||||
Total interest-bearing deposits (12) | 4,612,117 | 4,498,244 | 39,846 | 20,884 | 0.86 | % | 0.46 | % | ||||||||||
Junior subordinated debentures | 106,363 | 106,363 | 3,925 | 2,919 | 3.69 | % | 2.71 | % | ||||||||||
FHLB borrowings and other | 795,050 | 723,672 | 14,567 | 10,206 | 1.83 | % | 1.41 | % | ||||||||||
Total interest-bearing liabilities (12) | 5,513,530 | 5,328,279 | 58,338 | 34,009 | 1.06 | % | 0.64 | % | ||||||||||
Non-interest bearing demand deposits (12) | 1,984,660 | 1,901,510 | ||||||||||||||||
Payables and other liabilities | 137,323 | 118,904 | ||||||||||||||||
Total average liabilities | 7,635,513 | 7,348,693 | ||||||||||||||||
Redeemable noncontrolling interests | 14,859 | 21,309 | ||||||||||||||||
Average shareholders’ equity | 759,868 | 797,756 | ||||||||||||||||
TOTAL AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY | $ | 8,410,240 | $ | 8,167,758 | ||||||||||||||
Net interest income -on a fully taxable equivalent basis (FTE) | $ | 237,619 | $ | 236,202 | ||||||||||||||
LESS: FTE adjustment (10) | 3,053 | 11,515 | ||||||||||||||||
Net interest income (GAAP basis) | $ | 234,566 | $ | 224,687 | ||||||||||||||
Interest rate spread | 2.62 | % | 2.84 | % | ||||||||||||||
Bank only net interest margin | 2.98 | % | 3.09 | % | ||||||||||||||
Net interest margin | 2.96 | % | 3.04 | % | ||||||||||||||
Average total deposits (12) | 6,596,777 | 6,399,754 | 0.60 | % | 0.33 | % | ||||||||||||
Average total deposits and borrowings (12) | 7,498,190 | 7,229,789 | 0.78 | % | 0.47 | % | ||||||||||||
15
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(In thousands) | December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||
LOAN DATA (13): | |||||||||||||||||||
Other commercial and industrial loans: | |||||||||||||||||||
New England | $ | 503,201 | $ | 460,409 | $ | 481,081 | $ | 444,419 | $ | 438,322 | |||||||||
San Francisco Bay Area | 43,702 | 41,256 | 35,220 | 23,491 | 23,311 | ||||||||||||||
Southern California | 76,134 | 81,549 | 66,892 | 63,183 | 59,359 | ||||||||||||||
Total other commercial and industrial loans | $ | 623,037 | $ | 583,214 | $ | 583,193 | $ | 531,093 | $ | 520,992 | |||||||||
Commercial tax-exempt loans: | |||||||||||||||||||
New England | $ | 344,079 | $ | 330,753 | $ | 332,572 | $ | 313,955 | $ | 305,792 | |||||||||
San Francisco Bay Area | 96,387 | 96,775 | 94,959 | 95,380 | 101,340 | ||||||||||||||
Southern California | 11,205 | 11,279 | 11,351 | 11,422 | 11,566 | ||||||||||||||
Total commercial tax-exempt loans | $ | 451,671 | $ | 438,807 | $ | 438,882 | $ | 420,757 | $ | 418,698 | |||||||||
Total commercial and industrial loans | $ | 1,074,708 | $ | 1,022,021 | $ | 1,022,075 | $ | 951,850 | $ | 939,690 | |||||||||
Commercial real estate loans: | |||||||||||||||||||
New England | $ | 1,022,061 | $ | 1,043,494 | $ | 1,069,942 | $ | 1,046,178 | $ | 1,002,092 | |||||||||
San Francisco Bay Area | 714,449 | 724,243 | 739,769 | 721,871 | 725,454 | ||||||||||||||
Southern California | 659,182 | 631,343 | 694,810 | 696,954 | 712,674 | ||||||||||||||
Total commercial real estate loans | $ | 2,395,692 | $ | 2,399,080 | $ | 2,504,521 | $ | 2,465,003 | $ | 2,440,220 | |||||||||
Construction and land loans: | |||||||||||||||||||
New England | $ | 153,929 | $ | 114,411 | $ | 88,068 | $ | 79,563 | $ | 86,874 | |||||||||
San Francisco Bay Area | 41,516 | 40,755 | 37,783 | 34,050 | 27,891 | ||||||||||||||
Southern California | 44,861 | 42,358 | 46,173 | 51,627 | 50,225 | ||||||||||||||
Total construction and land loans | $ | 240,306 | $ | 197,524 | $ | 172,024 | $ | 165,240 | $ | 164,990 | |||||||||
Residential loans: | |||||||||||||||||||
New England | $ | 1,689,318 | $ | 1,650,989 | $ | 1,643,039 | $ | 1,619,856 | $ | 1,598,072 | |||||||||
San Francisco Bay Area | 559,578 | 554,502 | 533,394 | 511,903 | 512,189 | ||||||||||||||
Southern California | 700,077 | 657,388 | 631,773 | 605,610 | 572,272 | ||||||||||||||
Total residential loans | $ | 2,948,973 | $ | 2,862,879 | $ | 2,808,206 | $ | 2,737,369 | $ | 2,682,533 | |||||||||
Home equity loans: | |||||||||||||||||||
New England | $ | 57,617 | $ | 61,291 | $ | 61,125 | $ | 65,434 | $ | 67,435 | |||||||||
San Francisco Bay Area | 19,722 | 19,769 | 17,366 | 19,314 | 22,462 | ||||||||||||||
Southern California | 13,082 | 12,330 | 13,310 | 9,583 | 10,061 | ||||||||||||||
Total home equity loans | $ | 90,421 | $ | 93,390 | $ | 91,801 | $ | 94,331 | $ | 99,958 | |||||||||
Other consumer loans: | |||||||||||||||||||
New England | $ | 120,402 | $ | 121,685 | $ | 145,726 | $ | 166,413 | $ | 149,022 | |||||||||
San Francisco Bay Area | 12,663 | 14,228 | 14,659 | 13,569 | 14,707 | ||||||||||||||
Southern California | 9,993 | 9,613 | 8,111 | 8,552 | 13,908 | ||||||||||||||
Total other consumer loans | $ | 143,058 | $ | 145,526 | $ | 168,496 | $ | 188,534 | $ | 177,637 | |||||||||
Total loans: | |||||||||||||||||||
New England | $ | 3,890,607 | $ | 3,783,032 | $ | 3,821,553 | $ | 3,735,818 | $ | 3,647,609 | |||||||||
San Francisco Bay Area | 1,488,017 | 1,491,528 | 1,473,150 | 1,419,578 | 1,427,354 | ||||||||||||||
Southern California | 1,514,534 | 1,445,860 | 1,472,420 | 1,446,931 | 1,430,065 | ||||||||||||||
Total loans | $ | 6,893,158 | $ | 6,720,420 | $ | 6,767,123 | $ | 6,602,327 | $ | 6,505,028 | |||||||||
16
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(In thousands) | December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||
CREDIT QUALITY (13): | |||||||||||||||||||
Special mention loans: | |||||||||||||||||||
New England | $ | 31,147 | $ | 20,382 | $ | 18,515 | $ | 33,282 | $ | 45,640 | |||||||||
San Francisco Bay Area | 18,585 | 18,359 | 19,255 | 14,117 | 23,400 | ||||||||||||||
Southern California | 28,796 | 28,665 | 15,678 | 15,689 | 18,134 | ||||||||||||||
Total special mention loans | $ | 78,528 | $ | 67,406 | $ | 53,448 | $ | 63,088 | $ | 87,174 | |||||||||
Accruing classified loans (14): | |||||||||||||||||||
New England | $ | 10,392 | $ | 10,083 | $ | 11,493 | $ | 8,767 | $ | 10,911 | |||||||||
San Francisco Bay Area | 24,584 | 24,252 | 12,766 | 14,970 | 11,615 | ||||||||||||||
Southern California | 19,119 | 21,045 | 21,194 | 21,436 | 30,826 | ||||||||||||||
Total accruing substandard loans | $ | 54,095 | $ | 55,380 | $ | 45,453 | $ | 45,173 | $ | 53,352 | |||||||||
Nonaccruing loans: | |||||||||||||||||||
New England | $ | 6,728 | $ | 5,131 | $ | 7,282 | $ | 8,056 | $ | 6,061 | |||||||||
San Francisco Bay Area | 2,488 | 1,169 | 1,319 | 1,442 | 1,473 | ||||||||||||||
Southern California | 4,841 | 5,797 | 7,050 | 6,882 | 6,761 | ||||||||||||||
Total nonaccruing loans | $ | 14,057 | $ | 12,097 | $ | 15,651 | $ | 16,380 | $ | 14,295 | |||||||||
Loans 30-89 days past due and accruing: | |||||||||||||||||||
New England | $ | 15,961 | $ | 9,193 | $ | 4,653 | $ | 10,571 | $ | 19,725 | |||||||||
San Francisco Bay Area | 2,246 | 1,651 | — | 2,251 | 1,911 | ||||||||||||||
Southern California | 4,092 | 763 | 324 | 7,554 | 3,412 | ||||||||||||||
Total loans 30-89 days past due and accruing | $ | 22,299 | $ | 11,607 | $ | 4,977 | $ | 20,376 | $ | 25,048 | |||||||||
Loans (charged-off)/ recovered, net for the three months ended: | |||||||||||||||||||
New England | $ | (100 | ) | $ | 232 | $ | (73 | ) | $ | (285 | ) | $ | 1,020 | ||||||
San Francisco Bay Area | 1,804 | 706 | 91 | 67 | 64 | ||||||||||||||
Southern California | 15 | 47 | 95 | 169 | (273 | ) | |||||||||||||
Total net loans (charged-off)/ recovered | $ | 1,719 | $ | 985 | $ | 113 | $ | (49 | ) | $ | 811 | ||||||||
Loans (charged-off)/ recovered, net for the year ended: | |||||||||||||||||||
New England | $ | (226 | ) | $ | 1,839 | ||||||||||||||
San Francisco Bay Area | 2,668 | 3,161 | |||||||||||||||||
Southern California | 326 | (666 | ) | ||||||||||||||||
Total Net Loans (Charged-off)/ Recovered | $ | 2,768 | $ | 4,334 | |||||||||||||||
17
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
FOOTNOTES:
(1) | On December 20, 2017, Boston Private Financial Holdings, Inc. (the “Company”) announced an agreement, effective December 19, 2017, to sell all of its current equity interest in Anchor Capital Advisors LLC, an indirect, majority-owned subsidiary of the Company (“Anchor”), to the management team of Anchor for an upfront cash payment and a non-voting, revenue share participation interest in Anchor. On April 13, 2018, the Company completed the sale of its ownership interest in Anchor. Anchor’s results remain consolidated in the Company’s results during current and prior periods through the closing date. For presentation purposes, Anchor’s AUM are excluded from current and prior period AUM amounts, but are included in the calculation of Core Fees and Income. The Company classified the assets and liabilities of Anchor as held for sale at March 31, 2018 and December 31, 2017, which are included with Other assets and Other liabilities, respectively, on the Company’s consolidated balance sheet. For regulatory purposes, the goodwill and intangible assets of Anchor will be included in consolidated calculations. |
On December 3, 2018, the Company completed the closing of the sale of all of its equity interest in Bingham, Osborn & Scarborough, LLC (“BOS”) to the management team of BOS for an upfront cash payment and a non-voting, limited-duration revenue share participation in BOS. For presentation purposes, BOS' AUM are excluded from current and prior period AUM amounts, but are included in the calculation of Core Fees and Income. For regulatory purposes, the goodwill and intangible assets of BOS will be included in consolidated calculations.
See footnotes 6 and 8, below.
(2) | Total revenue is the sum of Net interest income, Total core fees and income, and Total other income. |
(3) | Net income from discontinued operations consists of contingent payments net of expenses related to our divested affiliate, Westfield Capital Management Company, LLC. The Company received its final contingent payment in the first quarter of 2018 related to this affiliate and a tax benefit related to deferred taxes in the fourth quarter of 2018 when annual tax returns were filed. |
(4) | Adjustments to Net income attributable to the Company to arrive at Net income attributable to the common shareholders, treasury stock method, as presented in these tables, include decrease/ (increase) in Noncontrolling interests redemption value and dividends paid on preferred stock, if any, including deemed dividends on redemption of the 6.95% Non-Cumulative Perpetual Preferred Stock, Series D (“the Series D preferred stock”). On June 15, 2018, the Company redeemed all $50 million of the outstanding Series D preferred stock. |
(5) | When the Company has positive Net income from continuing operations attributable to the common shareholders, the Company adds additional shares to basic Weighted average shares outstanding to arrive at Weighted average diluted shares outstanding for the Diluted earnings per share calculation. These additional shares reflect the assumed exercise, conversion, or contingent issuance of dilutive securities. If the additional shares would result in anti-dilution they would be excluded from the diluted earnings per share calculation. The potential dilutive shares relate to: unexercised stock options, unvested restricted stock and unexercised stock warrants. 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, 2017 for additional information. |
(6) | The Company uses certain non-GAAP financial measures, such as: Tangible book value per share and the Tangible common equity (“TCE”) to Tangible assets (“TA”) ratio to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector. |
Reconciliations from the Company’s GAAP Total equity to Total assets ratio to the Non-GAAP TCE to TA ratio, and from GAAP Book value to Non-GAAP Tangible book value are presented below:
The Company calculates 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. On June 15, 2018, the Company redeemed all $50 million of the outstanding Series D preferred stock.
18
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(In thousands, except share and per share data) | December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||
Total balance sheet assets | $ | 8,494,625 | $ | 8,375,840 | $ | 8,716,203 | $ | 8,318,359 | $ | 8,311,744 | |||||||||
LESS: Goodwill and intangible assets, net * | (69,834 | ) | (89,432 | ) | (90,182 | ) | (138,026 | ) | (138,775 | ) | |||||||||
Tangible assets (non-GAAP) | $ | 8,424,791 | $ | 8,286,408 | $ | 8,626,021 | $ | 8,180,333 | $ | 8,172,969 | |||||||||
Total shareholders’ equity | $ | 753,954 | $ | 738,009 | $ | 733,977 | $ | 789,503 | $ | 785,944 | |||||||||
LESS: Series D preferred stock (non-convertible) | — | — | — | (47,753 | ) | (47,753 | ) | ||||||||||||
LESS: Goodwill and intangible assets, net * | (69,834 | ) | (89,432 | ) | (90,182 | ) | (138,026 | ) | (138,775 | ) | |||||||||
Total adjusting items | (69,834 | ) | (89,432 | ) | (90,182 | ) | (185,779 | ) | (186,528 | ) | |||||||||
Tangible common equity (non-GAAP) | $ | 684,120 | $ | 648,577 | $ | 643,795 | $ | 603,724 | $ | 599,416 | |||||||||
Total equity/ Total assets | 8.88 | % | 8.81 | % | 8.42 | % | 9.49 | % | 9.46 | % | |||||||||
Tangible common equity/ Tangible assets (non-GAAP) | 8.12 | % | 7.83 | % | 7.46 | % | 7.38 | % | 7.33 | % | |||||||||
Total risk weighted assets ** | $ | 6,161,679 | $ | 6,057,002 | $ | 6,104,586 | $ | 5,974,866 | $ | 5,892,286 | |||||||||
Tier 1 common equity ** | $ | 702,728 | $ | 674,641 | $ | 665,628 | $ | 621,084 | $ | 607,800 | |||||||||
Tier 1 common equity/ Risk weighted assets ** | 11.40 | % | 11.14 | % | 10.90 | % | 10.39 | % | 10.32 | % | |||||||||
End of period shares outstanding | 83,655,651 | 84,602,519 | 84,478,858 | 84,194,267 | 84,208,538 | ||||||||||||||
Book value per common share | $ | 9.01 | $ | 8.72 | $ | 8.69 | $ | 8.81 | $ | 8.77 | |||||||||
Tangible book value per share (non-GAAP) | $ | 8.18 | $ | 7.67 | $ | 7.62 | $ | 7.17 | $ | 7.12 | |||||||||
* Includes goodwill and intangible assets at an affiliate held for sale at March 31, 2018 and December 31, 2017.
** Risk weighted assets and Tier 1 common equity for December 31, 2018 are presented based on estimated data.
(7) | Assets under management and advisory have been reduced to exclude those assets managed or advised by Anchor and BOS for periods when Anchor and BOS were owned by the Company. |
(8) | The Company uses certain non-GAAP financial measures, such as: 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.
19
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
Three Months Ended | |||||||||||||||||||
(In thousands) | December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||
Total average shareholders’ equity | $ | 739,313 | $ | 737,188 | $ | 775,949 | $ | 784,025 | $ | 813,518 | |||||||||
LESS: Average Series D preferred stock (non-convertible) | — | — | (39,881 | ) | (47,753 | ) | (47,753 | ) | |||||||||||
Average common equity (non-GAAP) | 739,313 | 737,188 | 736,068 | 736,272 | 765,765 | ||||||||||||||
LESS: Average goodwill and intangible assets, net * | (83,153 | ) | (89,830 | ) | (102,533 | ) | (138,451 | ) | (157,978 | ) | |||||||||
Average tangible common equity (non-GAAP) | $ | 656,160 | $ | 647,358 | $ | 633,535 | $ | 597,821 | $ | 607,787 | |||||||||
Net income/ (loss) attributable to the Company | $ | 33,302 | $ | 17,962 | $ | 6,434 | $ | 22,686 | $ | (18,280 | ) | ||||||||
LESS: Dividends on Series D preferred stock | — | — | (869 | ) | (869 | ) | (869 | ) | |||||||||||
Common net income/ (loss) (non-GAAP) | 33,302 | 17,962 | 5,565 | 21,817 | (19,149 | ) | |||||||||||||
ADD: Amortization of intangibles, net of tax (35% in 2017, 21% in 2018) | 537 | 593 | 592 | 593 | 860 | ||||||||||||||
Tangible common net income/ (loss) (non-GAAP) | $ | 33,839 | $ | 18,555 | $ | 6,157 | $ | 22,410 | $ | (18,289 | ) | ||||||||
Return on average equity - (annualized) | 17.87 | % | 9.67 | % | 3.33 | % | 11.73 | % | (8.91 | )% | |||||||||
Return on average common equity - (annualized) (non-GAAP) | 17.87 | % | 9.67 | % | 3.03 | % | 12.02 | % | (9.92 | )% | |||||||||
Return on average tangible common equity - (annualized) (non-GAAP) | 20.46 | % | 11.37 | % | 3.90 | % | 15.20 | % | (11.94 | )% | |||||||||
Year Ended | |||||||
(In thousands) | December 31, 2018 | December 31, 2017 | |||||
Total average shareholders’ equity | $ | 759,868 | $ | 797,756 | |||
LESS: Average Series D preferred stock (non-convertible) | (21,718 | ) | (47,753 | ) | |||
Average common equity (non-GAAP) | 738,150 | 750,003 | |||||
LESS: Average goodwill and intangible assets, net * | (88,631 | ) | (164,530 | ) | |||
Average tangible common equity (non-GAAP) | $ | 649,519 | $ | 585,473 | |||
Net income attributable to the Company | $ | 80,384 | $ | 40,591 | |||
LESS: Dividends on Series D preferred stock | (1,738 | ) | (3,475 | ) | |||
Common net income (non-GAAP) | 78,646 | 37,116 | |||||
ADD: Amortization of intangibles, net of tax (35% in 2017, 21% in 2018) | 2,314 | 3,641 | |||||
Tangible common net income (non-GAAP) | $ | 80,960 | $ | 40,757 | |||
Return on average equity | 10.58 | % | 5.09 | % | |||
Return on average common equity (non-GAAP) | 10.65 | % | 4.95 | % | |||
Return on average tangible common equity (non-GAAP) | 12.46 | % | 6.96 | % | |||
* Includes goodwill and intangible assets at an affiliate held for sale at March 31, 2018 and December 31, 2017.
(9) | The Company uses certain non-GAAP financial measures, such as: Pre-tax, pre-provision income, Total operating expenses excluding amortization of intangibles, goodwill impairment, and restructuring expense, if any, and the Efficiency ratio to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector. |
Reconciliations from the Company’s GAAP Income from continuing operations before income taxes to non-GAAP Pre-tax, pre-provision income; from GAAP Total operating expense to non-GAAP Total operating expense excluding amortization of intangibles, goodwill impairment, and restructuring, if any; and from GAAP Efficiency ratio to Non-GAAP Efficiency ratio (FTE basis), excluding amortization of intangibles, goodwill impairment, and restructuring, if any, are presented below:
20
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
Three Months Ended | |||||||||||||||||||
(In thousands) | December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||
Income before income taxes (GAAP) | $ | 42,192 | $ | 24,347 | $ | 24,803 | $ | 28,064 | $ | 3,400 | |||||||||
ADD BACK: Provision/ (credit) for loan losses | 93 | (949 | ) | 453 | (1,795 | ) | (942 | ) | |||||||||||
Pre-tax, pre-provision income (non-GAAP) | $ | 42,285 | $ | 23,398 | $ | 25,256 | $ | 26,269 | $ | 2,458 | |||||||||
Total operating expense (GAAP) | $ | 63,557 | $ | 68,557 | $ | 64,384 | $ | 70,857 | $ | 93,989 | |||||||||
Less: Amortization of intangibles | 680 | 750 | 749 | 750 | 1,323 | ||||||||||||||
Less: Goodwill impairment | — | — | — | — | 24,901 | ||||||||||||||
Less: Restructuring | 2,065 | 5,763 | — | — | — | ||||||||||||||
Total operating expense (excluding amortization of intangibles, restructuring, and goodwill impairment) (non-GAAP) | $ | 60,812 | $ | 62,044 | $ | 63,635 | $ | 70,107 | $ | 67,765 | |||||||||
Net interest income | $ | 59,997 | $ | 59,641 | $ | 57,545 | $ | 57,383 | $ | 57,272 | |||||||||
Total core fees and income | 28,691 | 31,592 | 31,897 | 39,435 | 40,189 | ||||||||||||||
Gain/ (loss) on sale of affiliates | 18,142 | — | — | — | (1,264 | ) | |||||||||||||
Total other income | (988 | ) | 722 | 198 | 308 | 250 | |||||||||||||
Total revenue | 105,842 | 91,955 | 89,640 | 97,126 | 96,447 | ||||||||||||||
FTE income | 593 | 591 | 895 | 974 | 2,873 | ||||||||||||||
Total revenue (FTE basis) | $ | 106,435 | $ | 92,546 | $ | 90,535 | $ | 98,100 | $ | 99,320 | |||||||||
Efficiency ratio (GAAP) | 60.05 | % | 74.55 | % | 71.83 | % | 72.95 | % | 97.45 | % | |||||||||
Efficiency ratio, FTE Basis excluding amortization of intangibles, restructuring, and goodwill impairment (non-GAAP) | 57.14 | % | 67.04 | % | 70.29 | % | 71.46 | % | 68.23 | % | |||||||||
Year Ended | |||||||
(In thousands) | December 31, 2018 | December 31, 2017 | |||||
Income before income taxes (GAAP) | $ | 119,406 | $ | 86,385 | |||
ADD BACK: Provision/ (credit) for loan losses | (2,198 | ) | (7,669 | ) | |||
Pre-tax, pre-provision income (non-GAAP) | $ | 117,208 | $ | 78,716 | |||
Total operating expense (GAAP) | $ | 267,355 | $ | 299,936 | |||
Less: Amortization of intangibles | 2,929 | 5,601 | |||||
Less: Goodwill impairment | — | 24,901 | |||||
Less: Restructuring | 7,828 | — | |||||
Total operating expense (excluding amortization of intangibles, restructuring, and goodwill impairment) (non-GAAP) | $ | 256,598 | $ | 269,434 | |||
Net interest income | $ | 234,566 | $ | 224,686 | |||
Total core fees and income | 131,615 | 152,802 | |||||
Gain/ (loss) on sale of affiliates | 18,142 | (1,264 | ) | ||||
Total other income | 240 | 2,428 | |||||
Total revenue | 384,563 | 378,652 | |||||
FTE income | 3,053 | 11,515 | |||||
Total revenue (FTE basis) | $ | 387,616 | $ | 390,167 | |||
Efficiency ratio (GAAP) | 69.52 | % | 79.21 | % | |||
Efficiency ratio, FTE Basis excluding amortization of intangibles, restructuring, and goodwill impairment (non-GAAP) | 66.20 | % | 69.06 | % | |||
(10) | Interest income on Non-taxable investments and loans are presented on an FTE basis using the federal statutory rate of 35% in 2017 and 21% in 2018 for each respective period presented. |
(11) | Average loans includes Loans held for sale and Nonaccrual loans. |
21
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(12) | Average total deposits is the sum of Average total interest-bearing deposits and Average non-interest bearing demand deposits. Average total deposits and borrowings is the sum of Average total interest-bearing liabilities and Average non-interest bearing demand deposits. |
(13) | The concentration of the Private Banking loan data and credit quality is primarily based on the location of the lender’s regional offices. |
(14) | Accruing classified loans include loans that are classified as substandard but are still accruing interest income. Boston Private Bank & Trust Company may classify a loan as substandard where known information about possible credit problems of the related borrowers causes management to have doubts as to the ability of such borrowers to comply with the present repayment terms and which may result in disclosure of such loans as nonaccrual at some time in the future. |
(15) | The Company uses certain non-GAAP financial measures, such as: Net interest income excluding interest recovered on previous nonaccrual loans and Net interest margin excluding interest recovered on previous nonaccrual loans, also referred to as Core net interest margin, to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector. |
Reconciliations from the Company’s GAAP Net interest income to non-GAAP Net interest income excluding interest recovered on previous nonaccrual loans; and from GAAP Net interest margin to non-GAAP Net interest margin excluding interest recovered on previous nonaccrual loans, are presented below:
Three Months Ended | |||||||||||||||||||
(In thousands) | December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||
Net interest income (GAAP basis) | $ | 59,997 | $ | 59,641 | $ | 57,545 | $ | 57,383 | $ | 57,272 | |||||||||
LESS: Interest recovered while loans on nonaccrual status | 986 | 986 | — | 80 | 429 | ||||||||||||||
Net interest income, excluding interest recovered while loans on nonaccrual status (non-GAAP) - also referred to as Core net interest income (non-GAAP) | 59,011 | 58,655 | 57,545 | 57,303 | 56,843 | ||||||||||||||
ADD: FTE income | 593 | 591 | 895 | 974 | 2,873 | ||||||||||||||
Net interest income, FTE basis, excluding interest recovered while loans on nonaccrual status(non-GAAP) - also referred to as Core net interest income, FTE basis (non-GAAP) | 59,604 | 59,246 | 58,440 | 58,277 | 59,716 | ||||||||||||||
Net interest margin (FTE basis) | 2.96 | % | 2.93 | % | 2.89 | % | 2.95 | % | 3.04 | % | |||||||||
Net interest margin, FTE basis, excluding interest recovered while loans on nonaccrual status (non-GAAP) - also referred to as Core net interest margin (FTE basis) | 2.92 | % | 2.88 | % | 2.89 | % | 2.94 | % | 3.02 | % | |||||||||
Net interest margin, non-FTE basis, excluding interest recovered while loans on nonaccrual status (non-GAAP) - also referred to as Core net interest margin (non-FTE basis) (non-GAAP) | 2.90 | % | 2.85 | % | 2.85 | % | 2.90 | % | 2.87 | % | |||||||||
22
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(16) | The Company uses certain non-GAAP financial measures, such as: Net income attributable to the Company excluding notable items and Diluted earnings per share excluding notable items to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector. |
Reconciliations from the Company’s GAAP Net income attributable to the Company to non-GAAP Net income attributable to the Company excluding notable items and from GAAP Diluted earnings per share to non-GAAP Diluted earnings per share excluding notable items are presented below:
Three Months Ended | |||||||||||||||||||
(In thousands, except share and per share data) | December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | ||||||||||||||
Net income/ (loss) attributable to the Company (GAAP) | $ | 33,302 | $ | 17,962 | $ | 6,434 | $ | 22,686 | $ | (18,280 | ) | ||||||||
LESS: Gain/ (loss) on sale of affiliates | 18,142 | — | — | — | (1,264 | ) | |||||||||||||
ADD BACK: Anchor divestiture legal expense | — | — | — | — | 400 | ||||||||||||||
ADD BACK: Impairment of goodwill | — | — | — | — | 24,901 | ||||||||||||||
ADD BACK: Information services * | (441 | ) | — | 441 | — | — | |||||||||||||
ADD BACK: Restructuring | 2,065 | 5,763 | — | — | — | ||||||||||||||
ADD BACK: Tax adjustments ** | 3,170 | — | 12,706 | — | 12,880 | ||||||||||||||
Tax effect at statutory rate (35% in '17, 21% in '18) *** | (341 | ) | (1,210 | ) | (93 | ) | — | (582 | ) | ||||||||||
Net income attributable to the Company excluding notable items (non-GAAP) | $ | 19,613 | $ | 22,515 | $ | 19,488 | $ | 22,686 | $ | 20,583 | |||||||||
Net income/ (loss) attributable to the common shareholders, treasury stock method (GAAP) | $ | 35,996 | $ | 17,133 | $ | 2,910 | $ | 22,663 | $ | (20,278 | ) | ||||||||
ADD BACK: Deemed dividend due to redemption of Series D preferred stock | — | — | 2,247 | — | — | ||||||||||||||
LESS: Gain/ (loss) on sale of affiliates | 18,142 | — | — | — | (1,264 | ) | |||||||||||||
ADD BACK: Anchor divestiture legal expense | — | — | — | — | 400 | ||||||||||||||
ADD BACK: Impairment of goodwill | — | — | — | — | 24,901 | ||||||||||||||
ADD BACK: Information services * | (441 | ) | — | 441 | — | — | |||||||||||||
ADD BACK: Restructuring | 2,065 | 5,763 | — | — | — | ||||||||||||||
ADD BACK: Tax adjustments ** | 3,170 | — | 12,706 | — | 12,880 | ||||||||||||||
Tax effect at statutory rate (35% in '17, 21% in '18) *** | (341 | ) | (1,210 | ) | (93 | ) | — | (582 | ) | ||||||||||
Net income attributable to the common shareholders, treasury stock method, excluding notable items (non-GAAP) | $ | 22,307 | $ | 21,686 | $ | 18,211 | $ | 22,663 | $ | 18,585 | |||||||||
Weighted average diluted shares outstanding (GAAP) | 84,863,779 | 85,498,568 | 85,413,575 | 85,271,650 | 82,904,776 | ||||||||||||||
Weighted average diluted shares outstanding, excluding notable items (non-GAAP) **** | 84,863,779 | 85,498,568 | 85,413,575 | 85,271,650 | 85,196,760 | ||||||||||||||
Diluted total earnings/ (loss) per share (GAAP) | $ | 0.42 | $ | 0.20 | $ | 0.03 | $ | 0.27 | $ | (0.24 | ) | ||||||||
Diluted total earnings per share, excluding notable items (non-GAAP) | $ | 0.26 | $ | 0.25 | $ | 0.21 | $ | 0.27 | $ | 0.22 | |||||||||
Average common equity (non-GAAP) | $ | 739,313 | $ | 737,188 | $ | 736,068 | $ | 736,272 | $ | 765,765 | |||||||||
Average tangible common equity (non-GAAP) | $ | 656,160 | $ | 647,358 | $ | 633,535 | $ | 597,821 | $ | 607,787 | |||||||||
Return on average common equity - (annualized), excluding notable items (non-GAAP) | 10.52 | % | 12.12 | % | 10.15 | % | 12.02 | % | 10.21 | % | |||||||||
Return on average tangible common equity - (annualized), excluding notable items (non-GAAP) | 12.18 | % | 14.16 | % | 12.16 | % | 15.20 | % | 13.43 | % | |||||||||
Pre-tax, pre-provision income (non-GAAP) | $ | 42,285 | $ | 23,398 | $ | 25,256 | $ | 26,269 | $ | 2,458 | |||||||||
LESS: Gain/ (loss) on sale of affiliates | 18,142 | — | — | — | (1,264 | ) | |||||||||||||
ADD BACK: Anchor divestiture legal expense | — | — | — | — | 400 | ||||||||||||||
ADD BACK: Impairment of goodwill | — | — | — | — | 24,901 | ||||||||||||||
ADD BACK: Information services * | (441 | ) | — | 441 | — | — | |||||||||||||
ADD BACK: Restructuring | 2,065 | 5,763 | — | — | — | ||||||||||||||
Pre-tax, pre-provision income, excluding notable items (non-GAAP) | $ | 25,767 | $ | 29,161 | $ | 25,697 | $ | 26,269 | $ | 29,023 | |||||||||
23
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
* | In the fourth quarter of 2018, $0.4 million of Information services expense was reclassified to Restructuring expense in conjunction with the Company's formal restructuring plan announced in the fourth quarter of 2018. |
** | Additional tax expense in the fourth quarter of 2017 relates to the revaluation of the Company’s deferred tax asset (“DTA”), deferred tax liability (“DTL”) and Low Income Housing Tax Credit (“LIHTC”) investments as a result of the Tax Cuts and Jobs Act, while additional expense in the second quarter of 2018 relates to the tax impact of the April 2018 completion of the sale of Anchor and additional expense in the fourth quarter of 2018 relates to the completion of the sale of BOS. |
*** Due to the nature of the goodwill related to Anchor, no tax effect is applied to the goodwill impairment in the fourth quarter of 2017.
**** | For the fourth quarter of 2017, Weighted average diluted shares outstanding include the dilutive effects when the excluded notable items move net income/ (loss) attributable to the common shareholders from a net loss to a net income position. |
(17) | The Company uses certain operating basis financial measures, which are non-GAAP financial measures to provide information for investors to effectively analyze trends of ongoing business activities and to enhance comparability with peers across the financial sector. Reconciliations from the Company’s GAAP financial measures to non-GAAP operating basis financial measures are presented below. |
Three Months Ended | Year Ended | ||||||||||||||||||||||
December 31, 2018 | December 31, 2018 | ||||||||||||||||||||||
(In thousands, except share and per share data) | GAAP or Reported Value | Notable Items | Operating Basis (Non-GAAP) | GAAP or Reported Value | Notable Items | Operating Basis (Non-GAAP) | |||||||||||||||||
Total revenue | $ | 105,842 | $ | (18,142 | ) | $ | 87,700 | $ | 384,563 | $ | (18,142 | ) | $ | 366,421 | |||||||||
Total operating expense | 63,557 | (1,624 | ) | 61,933 | 267,355 | (7,828 | ) | 259,527 | |||||||||||||||
Pre-tax, pre-provision income | 42,285 | (16,518 | ) | 25,767 | 117,208 | (10,314 | ) | 106,894 | |||||||||||||||
Income before income taxes | 42,192 | (16,518 | ) | 25,674 | 119,406 | (10,314 | ) | 109,092 | |||||||||||||||
Income tax expense | 8,651 | (2,829 | ) | 5,822 | 37,537 | (14,232 | ) | 23,305 | |||||||||||||||
Net income/ (loss) attributable to the Company | 33,302 | (13,689 | ) | 19,613 | 80,384 | 3,918 | 84,302 | ||||||||||||||||
Net income/ (loss) attributable to the Common Shareholders | 35,996 | (13,689 | ) | 22,307 | 78,702 | 3,918 | 82,620 | ||||||||||||||||
Weighted average diluted shares outstanding | 84,863,779 | 84,863,779 | 84,863,779 | 85,331,314 | 85,331,314 | 85,331,314 | |||||||||||||||||
Diluted total Earnings/ (Loss) Per Share | $ | 0.42 | $ | (0.16 | ) | $ | 0.26 | $ | 0.92 | $ | 0.05 | $ | 0.97 | ||||||||||
Average Common Equity | 739,313 | 739,313 | 738,150 | 738,150 | |||||||||||||||||||
Return on Average Common Equity | 17.87 | % | 10.52 | % | 10.65 | % | 11.19 | % | |||||||||||||||
Average Tangible Common Equity | 656,160 | 656,160 | 649,519 | 649,519 | |||||||||||||||||||
Return on Average Tangible Common Equity | 20.46 | % | 12.18 | % | 12.46 | % | 13.07 | % | |||||||||||||||
Effective Tax Rate on Continuing Operations | 20.5 | % | 22.7 | % | 31.4 | % | 21.4 | % | |||||||||||||||
nm not meaningful | |||||||||||||||||||||||
24