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Boston Private Reports First Quarter 2021 Results

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First Quarter 2021 Highlights include:

  • Net income of $10.7 million, or $0.13 per diluted share

  • Return on average common equity (non-GAAP) of 4.9%

  • Return on average tangible common equity (non-GAAP) of 5.6%

  • Average total deposits of $8.8 billion, a 24% increase year-over-year

  • Average total loans of $7.1 billion, a 1% increase year-over-year

  • Total assets under management/advisory ("AUM") of $17.2 billion, a 19% increase year-over-year driven by favorable market action

  • Total provision credit of $9.0 million

Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the "Company" or "Boston Private") today reported first quarter 2021 Net income attributable to the Company of $10.7 million, compared to $25.0 million for the fourth quarter of 2020 and $0.8 million for the first quarter of 2020. First quarter 2021 Diluted earnings per share were $0.13, compared to $0.30 in the fourth quarter of 2021 and $0.01 in the first quarter of 2020.

"I am proud of the dedication and commitment shown by the Boston Private employees who continue to deliver exceptional client service and execute on our strategic objectives, while also preparing for our pending merger with SVB Financial Group," said Anthony DeChellis, CEO of Boston Private. "This quarter's financial results include transaction costs related to the pending merger with SVB Financial Group, a release from our allowance for loan losses, and continued strong deposit growth."

Announced Merger

As previously announced, the Company entered into a definitive merger agreement with SVB Financial Group ("SVB") pursuant to which SVB will acquire Boston Private. The transaction was unanimously approved by both companies' Boards of Directors and is expected to close in mid-2021, subject to the satisfaction of customary closing conditions, including receipt of customary regulatory approvals and approval by the shareholders of Boston Private.

Summary Financial Results

% Change

($ in millions, except for per share data)

1Q21

4Q20

1Q20

LQ

Y/Y

Net income - GAAP

$10.7

$25.0

$0.8

(57)

%

nm

Diluted earnings per share - GAAP

$0.13

$0.30

$0.01

(57)

%

nm

Non-GAAP Financial Measures:

Pre-tax, pre-provision income

$9.7

$28.1

$17.9

(65)

%

(46)

%

Return on average common equity ("ROACE")

4.9

%

11.5

%

0.4

%

Return on average tangible common equity ("ROATCE")

5.6

%

12.7

%

0.7

%

nm = not meaningful

The Company's financial results in the first quarter of 2021 were impacted by:

  • Transaction costs of $10.7 million related to the proposed merger with SVB, or ($0.09) per diluted share on a tax-effected basis

  • Gain of $2.4 million related to the revaluation of a receivable from the divestiture of former affiliate, Bingham, Osborn & Scarborough, LLC ("BOS"), or $0.02 per diluted share on a tax-effected basis

  • Total provision credit of $9.0 million, including a provision credit for loan losses of $7.0 million and a credit for unfunded loan commitments of $2.0 million, or $0.08 per diluted share on a tax-effected basis

Net Interest Income and Margin

% Change

($ in millions)

1Q21

4Q20

1Q20

LQ

Y/Y

Net interest income

$59.5

$59.4

$57.3

%

4

%

Net interest margin

2.45

%

2.52

%

2.76

%

Net interest income for the first quarter of 2021 was $59.5 million, flat linked quarter and a 4% increase year-over-year. The year-over-year increase was primarily driven by $3.6 million of Paycheck Protection Program ("PPP") loan-related income recognized in the first quarter of 2021. The Small Business Administration ("SBA") forgave $75 million of PPP loans in the first quarter of 2021, which drove the accelerated recognition of PPP income.

Net interest margin decreased 7 basis points on a linked quarter basis to 2.45%. The decline was primarily driven by excess cash and investments balances and lower asset yields, partially offset by lower funding costs.

Noninterest Income

% Change

($ in millions)

1Q21

4Q20

1Q20

LQ

Y/Y

Wealth management and trust fees

$19.1

$19.0

$18.4

1

%

4

%

Investment management fees

0.5

1.2

1.9

(58)

%

(75)

%

Private banking fees 1

3.2

5.0

2.6

nm

22

%

Total core fees and income

$22.8

$25.2

$22.9

(10)

%

%

Total other income

3.4

1.4

(1.4)

nm

nm

Total noninterest income

$26.2

$26.7

$21.5

(2)

%

22

%

nm = not meaningful

1 Private banking fees includes Other banking fee income and Gain/(loss) on sale of loans, net

Total core fees and income for the first quarter of 2021 were $22.8 million, a 10% decrease linked quarter. The linked quarter decrease was primarily driven by lower swap fee income within Private banking fees and lower Investment management fees in the first quarter of 2021.

Total other income includes a gain of $2.4 million for the first quarter of 2021 related to the revaluation of the BOS receivable.

Assets Under Management/Advisory

% Change

($ in millions)

1Q21

4Q20

1Q20

LQ

Y/Y

Wealth Management and Trust

$17,002

$16,574

$13,497

3

%

26

%

Other 2

196

526

1,016

(63)

%

(81)

%

Total assets under management/advisory

$17,198

$17,100

$14,513

1

%

19

%

Net flows

Wealth Management and Trust

$(20)

$(128)

$176

Other 2

(388)

(268)

(26)

Total net flows

$(408)

$(396)

$150

2 Includes results from DGHM

Total AUM was $17.2 billion as of March 31, 2021, a 1% increase linked quarter. The linked quarter increase was primarily driven by the impact of higher equity market values, partially offset by net outflows.

Total net flows were negative $408 million during the first quarter of 2021, driven by net flows of negative $388 million at DGHM and negative $20 million in the Wealth Management and Trust segment. New business into the Wealth Management & Trust segment was $231 million for the first quarter of 2021, compared to $297 million for the fourth quarter of 2020.

Noninterest Expense

% Change

($ in millions)

1Q21

4Q20

1Q20

LQ

Y/Y

Salaries and employee benefits

$40.9

$36.0

$35.1

14

%

17

%

Occupancy and equipment

8.2

7.7

7.6

6

%

7

%

Information systems

9.7

8.6

6.7

13

%

45

%

Professional services

3.3

2.7

3.6

20

%

(8)

%

Merger costs

10.7

nm

nm

Marketing and business development

0.6

1.2

1.9

(46)

%

(67)

%

Amortization of intangibles

0.7

0.6

0.7

18

%

(7)

%

FDIC insurance

1.0

0.9

10

%

n/a

Other

0.9

0.2

5.2

nm

(83)

%

Total noninterest expense

$75.9

$58.0

$60.9

31

%

25

%

Memo: Excluding Off-Balance Sheet Provision

Reserve for unfunded loan commitments

$(2.0)

$(2.4)

$1.8

(16)

%

nm

Total noninterest expense, excluding Reserve for unfunded loan commitments (non-GAAP)

$77.9

$60.4

$59.1

29

%

32

%

Total noninterest expense for the first quarter of 2021 was $75.9 million, a 31% increase linked quarter and a 25% increase year-over-year. The increase was primarily driven by $10.7 million of transaction costs within Merger costs expense related to the proposed merger with SVB. The linked quarter increase was also driven by seasonal compensation expense for bonuses and payroll taxes, and both the linked quarter and year-over-year increases were also driven by higher Information systems expense from technology initiatives placed in service.

Income Tax Expense

The Company's effective tax rate for the first quarter of 2021 was 36.3%. The effective tax rate is higher primarily due to the expected non-deductibility of certain transaction costs related to the proposed merger with SVB.

Loans - QTD Averages & Yields

% Change

($ in millions)

1Q21

4Q20

1Q20

LQ

Y/Y

Commercial and industrial

$1,034

$1,036

$1,149

%

(10)

%

Paycheck Protection Program

327

349

(6)

%

nm

Commercial real estate

2,723

2,711

2,582

%

5

%

Construction and land

165

172

233

(4)

%

(29)

%

Residential

2,667

2,721

2,851

(2)

%

(6)

%

Home equity

76

79

86

(4)

%

(11)

%

Consumer and other

122

121

132

1

%

(8)

%

Total loans

$7,115

$7,189

$7,034

(1)

%

1

%

Total loans, excluding PPP (non-GAAP)

$6,789

$6,840

$7,034

(1)

%

(3)

%

Total loan yields

3.26

%

3.31

%

3.75

%

Average total loans, excluding PPP (non-GAAP) in the first quarter of 2021 decreased 1% linked quarter and decreased 3% year-over-year.

  • Average Commercial and industrial loans decreased 10% year-over-year driven by lower revolving line usage

  • Average Residential mortgage loans decreased 6% year-over-year, driven by the sale of $72 million of loans late in the third quarter of 2020 and slowed originations throughout 2020

  • Average Commercial real estate loans increased 5% year-over-year, driven by increased loan balances attributable to the debt service reserve program and the conversion of two loans from construction to permanent financing during the fourth quarter of 2020

  • Average PPP loans decreased 6% linked quarter. End-of-period PPP loans increased 12% linked quarter as $130 million of originations late in the quarter were partially offset by the SBA's forgiveness of $75 million of loans early in the first quarter of 2021

Deposits - QTD Averages & Costs

% Change

($ in millions)

1Q21

4Q20

1Q20

LQ

Y/Y

Noninterest bearing deposits

$2,552

$2,483

$2,046

3

%

25

%

Interest bearing deposits

6,277

5,868

5,061

7

%

24

%

Total deposits

$8,829

$8,351

$7,107

6

%

24

%

Cost of total deposits

0.22

%

0.26

%

0.72

%

Cost of total interest-bearing deposits

0.30

%

0.37

%

1.02

%

Average total deposits in the first quarter of 2021 increased 6% linked quarter and 24% year-over-year to $8.8 billion, driven by a combination of existing and new client balances.

Provision and Asset Quality

($ in millions)

1Q21

4Q20

3Q20

2Q20

1Q20

Provision and Allowance

Provision/(credit) for loan losses

$(7.0)

$(3.0)

$(4.6)

$22.6

$17.0

Reserve for unfunded loan commitments

(2.0)

(2.4)

1.8

2.8

1.8

Total Provision/(credit) for credit losses

$(9.0)

$(5.4)

$(2.8)

$25.4

$18.8

Allowance for loan losses as a % of Total loans

1.03

%

1.14

%

1.17

%

1.22

%

0.97

%

Asset Quality

Total net loans (charged-off)/ recovered

$(0.2)

$(0.3)

$(0.2)

$(1.5)

$(0.3)

Total nonaccrual loans

$25.8

$23.9

$41.3

$25.6

$24.3

Nonaccrual loans as a % of Total loans

0.36

%

0.34

%

0.57

%

0.35

%

0.35

%

Special mention loans (criticized loans)

$152.5

$187.2

$199.5

$191.9

$92.6

Classified loans

161.9

130.7

123.1

114.2

112.3

Total criticized and classified loans

$314.4

$318.0

$322.6

$306.1

$204.9

The Company recorded a Total provision credit for credit losses of $9.0 million during the first quarter of 2021. The provision release was primarily driven by an improved economic forecast related to the current expected credit losses methodology and a change in the weighting of forecast scenarios used. The Allowance for loan losses as a percentage of Total loans, excluding PPP loans (non-GAAP), was 1.08% in the first quarter of 2021, compared to 1.19% in the fourth quarter of 2020.

Total nonaccrual loans as of March 31, 2021 were $25.8 million, an increase of $1.9 million, or 8%, on a linked quarter basis, primarily driven by one Commercial real estate relationship in New England and one Commercial and industrial relationship in Northern California.

Total criticized and classified loans as of March 31, 2021 were $314.4 million, a decrease of $3.6 million, or 1%, linked quarter. Classified loans increased 24% to $161.9 million in the first quarter of 2021, primarily driven by the downgrade of three Commercial real estate loans in New England and Northern California.

As of March 31, 2021:

  • Residential loans on deferral totaled approximately $20 million, or 2.7% of total residential loans, compared to a peak of approximately $220 million, or 7% of total Residential loans, in the second quarter of 2020. This represents a decrease of 91% from the peak in the second quarter of 2020

  • Commercial and industrial loans on deferral totaled approximately $6 million, or 0.5% of total Commercial and industrial loans, compared to a peak of approximately $125 million, or 13% of total Commercial and industrial loans, in the second quarter of 2020. This represents a decrease of 95% from the peak in the second quarter of 2020

  • Borrowers with loans totaling $1.3 billion that qualified for and accepted the Commercial real estate debt service reserve program remain in the program, representing a total loan balance of approximately $70 million, or 2.7% of total Commercial real estate loans. The twelve month coverage period for debt service reserve balances will elapse in the second quarter of 2021

Capital

1Q21

4Q20

3Q20

2Q20

1Q20

Tangible common equity/ Tangible assets (non-GAAP)

7.6

%

8.0

%

8.3

%

8.3

%

8.8

%

Tangible book value per share (non-GAAP)

$9.61

$9.73

$9.48

$9.25

$9.31

Regulatory Capital Ratios: 3

Tier 1 common equity

11.4

%

11.5

%

11.3

%

11.1

%

11.2

%

Tier 1 risk-based capital

12.8

%

13.0

%

12.8

%

12.6

%

12.7

%

Total risk-based capital

14.0

%

14.3

%

14.1

%

13.9

%

13.8

%

Tier 1 leverage capital

8.7

%

8.9

%

9.2

%

9.2

%

9.7

%

3 Current quarter information is presented based on estimated data.

The Company's tangible book value per share increased 3% year-over-year to $9.61 in the first quarter of 2021.

Dividend Payments

Concurrent with the release of first quarter 2021 earnings, the Board of Directors of the Company declared a cash dividend payable to common shareholders of $0.06 per share. The record date for this dividend is May 7, 2021, and the payment date is May 21, 2021.

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: return on average common equity; return on average tangible common equity; return on average assets; tangible book value per share; pre-tax, pre-provision income; tangible common equity / tangible assets; the efficiency ratio, excluding amortization of intangibles; net income/(loss) attributable to the Company, excluding notable items; total noninterest expense, excluding reserve for unfunded loan commitments; net income/(loss) attributable to the common shareholders, treasury stock method, excluding notable items; diluted earnings/(loss) per share, excluding notable items; average total loans, excluding PPP; and total loans, excluding PPP.

A detailed reconciliation table of the Company’s GAAP to non-GAAP measures is included in the tables of this release and beginning on page 14 of the attached financial statements.

About Boston Private

Boston Private is a leading provider of integrated wealth management, trust and banking services to individuals, families, businesses and nonprofits.

For more than 30 years, Boston Private has delivered comprehensive advice coupled with deep technical expertise to help clients simplify their lives and achieve their goals. The firm offers the capabilities of a large institution with the superior service of a boutique firm to clients across the United States.

Boston Private is the corporate brand of Boston Private Financial Holdings, Inc. (NASDAQ: BPFH).

For more information, visit 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 interest rate trends and future liquidity; expectations as to changes in assets, deposits and results of operations; the impact of the COVID-19 pandemic; future operations; market position and financial position; and prospects, plans and objectives of management. 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, the negative impacts and disruptions of the COVID-19 pandemic and measures taken to contain its spread on our employees, customers, business operations, credit quality, financial position, liquidity and results of operations; the failure to obtain our shareholder’s approval to our proposed merger with SVB; the risk that a condition to closing of the proposed merger may not be satisfied; the risk that a regulatory approval that may be required for the proposed merger is not obtained or is obtained subject to conditions that are not anticipated; the effect of the announcement of the proposed merger on our ability to maintain relationships with our key partners, customers and employees, and on our operating results and business generally; changes in customer behavior; the possibility that future credits losses are higher than currently expected due to changes in economic assumptions, customer behavior or adverse economic developments; turbulence in the capital and debt markets; changes in interest rates; increases in loan defaults and charge-off rates; decreases in the value of securities and other assets; changes in loan loss reserves; decreases in deposit levels necessitating increased borrowing to fund loans and investments; competitive pressures from other financial institutions; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics; changes in regulation; reputational risk relating to the Company’s participation in the Paycheck Protection Program and other pandemic-related legislative and regulatory initiatives and programs; risks 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 2020 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 statements are made.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Consolidated Balance Sheets

Unaudited ($ in thousands, except share and per share data)

1Q21

4Q20

3Q20

2Q20

1Q20

ASSETS:

Cash and cash equivalents

$

1,389,943

$

1,055,588

$

546,263

$

179,027

$

61,714

Investment securities available-for-sale

1,339,408

1,243,693

1,011,327

1,002,970

993,166

Investment securities held-to-maturity

31,943

35,223

38,600

42,495

45,395

Equity securities at fair value

39,708

41,452

32,818

24,492

23,080

Stock in Federal Home Loan Bank and Federal Reserve Bank

28,651

28,663

36,618

42,407

45,273

Loans held for sale

8,434

17,421

15,074

9,786

7,671

Loans

7,216,325

7,104,309

7,222,569

7,332,954

7,043,338

Less: Allowance for loan losses

74,010

81,238

84,551

89,324

68,211

Loans, net of Allowance for loan losses

7,142,315

7,023,071

7,138,018

7,243,630

6,975,127

Premises and equipment, net

41,637

44,087

42,907

43,805

43,544

Goodwill

57,607

57,607

57,607

57,607

57,607

Intangible assets, net

8,389

9,056

8,898

8,935

9,637

Accrued interest receivable

26,029

26,191

25,935

24,918

24,054

Deferred income taxes, net

11,353

6,774

8,250

9,116

5,630

Right-of-use assets

93,224

97,859

94,879

94,143

98,896

Other assets

319,851

362,048

374,111

375,575

355,532

TOTAL ASSETS

$

10,538,492

$

10,048,733

$

9,431,305

$

9,158,906

$

8,746,326

LIABILITIES:

Deposits

$

9,147,618

$

8,595,366

$

7,827,719

$

7,427,397

$

6,835,572

Securities sold under agreements to repurchase

46,262

53,472

42,544

...

45,319

Federal funds purchased

145,000

Federal Home Loan Bank borrowings

115,019

114,659

296,236

426,313

491,254

Junior subordinated debentures

106,363

106,363

106,363

...

106,363

106,363

Lease liabilities

107,143

112,339

108,932

108,234

113,574

Other liabilities

157,664

198,526

203,342

218,771

180,452

TOTAL LIABILITIES

9,680,069

9,180,725

8,585,136

8,333,701

7,917,534

SHAREHOLDERS' EQUITY:

Common stock, $1.00 par value; authorized: 170,000,000 shares

82,455

82,334

82,255

82,058

81,800

Additional paid-in capital

600,089

597,558

597,113

594,463

593,167

Retained earnings

162,137

156,431

136,394

118,647

131,761

Accumulated other comprehensive income

13,742

31,685

30,407

30,037

22,064

TOTAL SHAREHOLDERS' EQUITY

858,423

868,008

846,169

825,205

828,792

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

10,538,492

$

10,048,733

$

9,431,305

$

9,158,906

$

8,746,326

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Consolidated Income Statements

Unaudited ($ in thousands, except share and per share data)

1Q21

4Q20

3Q20

2Q20

1Q20

REVENUE:

Interest income

$

64,893

$

66,351

$

65,453

$

68,819

$

73,082

Interest expense

5,416

6,944

7,629

9,881

15,825

Net interest income

59,477

59,407

57,824

58,938

57,257

Provision/(credit) for loan losses 4

(7,004)

(2,999)

(4,569)

22,604

16,962

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

66,481

62,406

62,393

36,334

40,295

Wealth management and trust fees 5

19,136

19,016

18,240

17,261

18,371

Investment management fees

489

1,173

1,393

1,770

1,925

Private banking fee income

2,411

4,304

1,320

2,395

2,490

Gain on sale of loans, net

747

718

1,006

204

100

Total core fees and income

22,783

25,211

21,959

21,630

22,886

Total other income

3,387

1,445

1,086

1,032

(1,365)

TOTAL REVENUE 6

85,647

86,063

80,869

81,600

78,778

NONINTEREST EXPENSE:

Salaries and employee benefits

40,904

36,022

34,671

33,937

35,096

Occupancy and equipment

8,205

7,723

8,150

7,560

7,646

Information systems

9,719

8,633

7,096

7,113

6,725

Professional services

3,302

2,744

4,025

3,446

3,601

Merger costs

10,665

Marketing and business development

624

1,154

935

2,313

1,890

Amortization of intangibles

667

566

714

702

715

FDIC insurance

967

876

960

767

Other 4

870

249

4,386

5,615

5,235

TOTAL NONINTEREST EXPENSE

75,923

57,967

60,937

61,453

60,908

INCOME/(LOSS) BEFORE INCOME TAXES

16,728

31,095

24,501

(2,457)

908

Income tax expense

6,076

6,124

1,821

841

102

Net income/(loss) before attribution to noncontrolling interests

10,652

24,971

22,680

(3,298)

806

Less: Net income attributable to noncontrolling interests

6

NET INCOME/(LOSS) ATTRIBUTABLE TO THE COMPANY

$

10,652

$

24,971

$

22,680

$

(3,298)

$

800

Adjustments, treasury stock method 7

414

NET INCOME/(LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

10,652

$

24,971

$

22,680

$

(3,298)

$

1,214

COMMON SHARE DATA:

Weighted average basic shares outstanding

82,429,162

82,292,450

82,221,705

81,929,752

83,005,064

Weighted average diluted shares outstanding 8

83,934,107

82,764,339

82,362,338

81,929,752

83,318,041

Diluted earnings/(loss) per share

$

0.13

$

0.30

$

0.28

$

(0.04)

$

0.01

4 Total Provision for credit losses includes the Provision/(credit) for loan losses and the Reserve for unfunded loan commitments within Other expense.
5 Wealth management and trust fees consists of revenue from Boston Private Wealth LLC ("BPW") and the trust operations of Boston Private Bank & Trust Company.
6 Total revenue is the sum of Net interest income, Total core fees and income, and Total other income.
7 Adjustments to Net income/(loss) attributable to the Company to arrive at Net income/(loss) attributable to common shareholders, treasury stock method, as presented in these tables, include decreases/(increases) in Noncontrolling interests redemption value, if any.
8 For a description of the Company's policies regarding Diluted earnings per share, please refer to 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, 2020.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Consolidated Financial Highlights

Unaudited ($ in thousands, except share and per share data)

1Q21

4Q20

3Q20

2Q20

1Q20

KEY STATISTICS:

Return on average assets (non-GAAP) 9

0.42

%

1.00

%

0.96

%

(0.15)

%

0.04

%

ROACE (non-GAAP) 9

4.91

%

11.50

%

10.68

%

(1.58)

%

0.39

%

ROATCE (non-GAAP) 9

5.58

%

12.69

%

11.88

%

(1.43)

%

0.72

%

Efficiency ratio (non-GAAP) 9

87.9

%

66.7

%

74.5

%

74.4

%

76.4

%

Noninterest income to total revenue

30.6

%

31.0

%

28.5

%

27.8

%

27.3

%

Net interest margin

2.45

%

2.52

%

2.61

%

2.75

%

2.76

%

Average loan to average deposit ratio

80.6

%

86.1

%

94.6

%

100.5

%

99.0

%

Cost of total deposits

0.22

%

0.26

%

0.33

%

0.41

%

0.72

%

Cost of interest-bearing deposits

0.30

%

0.37

%

0.48

%

0.59

%

1.02

%

Cost of total funding

0.24

%

0.32

%

0.37

%

0.50

%

0.83

%

Allowance for loan losses / Total loans

1.03

%

1.14

%

1.17

%

1.22

%

0.97

%

Nonperforming loans / Total loans

0.36

%

0.34

%

0.57

%

0.35

%

0.35

%

Net (charge-offs)/recoveries / Total loans 9

(0.01)

%

(0.02)

%

(0.01)

%

(0.08)

%

(0.02)

%

CAPITAL HIGHLIGHTS:

Tier 1 common equity 3

$

782,687

$

773,017

$

752,492

$

731,316

$

742,044

Tier 1 capital 3

$

882,709

$

873,039

$

852,514

$

831,338

$

842,066

Total capital 3

$

961,191

$

956,919

$

935,887

$

913,936

$

914,572

Risk-weighted assets 3

$

6,877,450

$

6,706,524

$

6,659,752

$

6,593,957

$

6,627,339

Average assets for leverage 3

$

10,180,856

$

9,790,852

$

9,237,942

$

9,009,565

$

8,691,254

Tier 1 common equity ratio 3

11.38

%

11.53

%

11.30

%

11.09

%

11.20

%

Tier 1 risk-based capital ratio 3

12.83

%

13.02

%

12.80

%

12.61

%

12.71

%

Total risk-based capital ratio 3

13.98

%

14.27

%

14.05

%

13.86

%

13.80

%

Tier 1 leverage capital ratio 3

8.67

%

8.92

%

9.23

%

9.23

%

9.69

%

Total equity / Total assets

8.15

%

8.64

%

8.97

%

9.01

%

9.48

%

Tangible common equity / Tangible assets (non-GAAP)

7.57

%

8.03

%

8.33

%

8.34

%

8.77

%

End of period market price per share

$

13.32

$

8.45

$

5.52

$

6.88

$

7.15

End of period shares outstanding

82,455,432

82,334,257

82,254,594

82,058,483

81,800,486

Book value per common share

$

10.41

$

10.54

$

10.29

$

10.06

$

10.13

Tangible book value per share (non-GAAP)

$

9.61

$

9.73

$

9.48

$

9.25

$

9.31

Common Equity Repurchase Program:

Total shares of common stock repurchased

1,565,060

Average price paid per share of common stock

$

$

$

$

$

8.18

Aggregate repurchases of common stock ($ in millions)

$

$

$

$

$

12.8

3 Current quarter information is presented based on estimated data.

9 Annualized.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Consolidated AUM and Balance Sheet - End of Period Balances

Unaudited ($ in thousands)

1Q21

4Q20

3Q20

2Q20

1Q20

ASSETS UNDER MANAGEMENT AND ADVISORY ("AUM"):

Wealth Management and Trust

$

17,002,000

$

16,574,000

$

15,581,000

$

14,889,000

$

13,497,000

Other 2

196,000

526,000

672,000

1,067,000

1,016,000

TOTAL AUM

$

17,198,000

$

17,100,000

$

16,253,000

$

15,956,000

$

14,513,000

AUM Rollforward:

Beginning balance

$

17,100,000

$

16,253,000

$

15,956,000

$

14,513,000

$

16,768,000

Net flows

(408,000)

(396,000)

(407,000)

(40,000)

150,000

Market returns

506,000

1,243,000

704,000

1,483,000

(2,405,000)

Ending balance

$

17,198,000

$

17,100,000

$

16,253,000

$

15,956,000

$

14,513,000

AUM Net Flows:

Wealth Management and Trust

$

(20,000)

$

(128,000)

$

(12,000)

$

60,000

$

176,000

Other 2

(388,000)

(268,000)

(395,000)

(100,000)

(26,000)

TOTAL NET FLOWS

$

(408,000)

$

(396,000)

$

(407,000)

$

(40,000)

$

150,000

DEPOSITS:

Demand deposits (noninterest bearing)

$

2,651,733

$

2,481,676

$

2,346,126

$

2,293,864

$

2,020,440

Savings and NOW

906,892

905,692

756,797

758,656

653,006

Money market

5,106,911

4,699,882

4,187,657

3,753,228

3,468,701

Certificates of deposit

482,082

508,116

537,139

621,649

693,425

TOTAL DEPOSITS

$

9,147,618

$

8,595,366

$

7,827,719

$

7,427,397

$

6,835,572

LOANS:

Commercial and industrial

$

668,217

$

558,343

$

583,145

$

565,748

$

670,744

Paycheck Protection Program

351,170

312,356

371,496

370,034

Commercial tax-exempt

488,507

442,159

472,342

419,264

445,319

Commercial real estate

2,697,677

2,757,375

2,659,890

2,676,708

2,626,299

Construction and land

181,482

159,204

211,697

240,211

238,293

Residential

2,632,554

2,677,464

2,729,164

2,859,627

2,841,926

Home equity

71,752

77,364

81,797

84,588

89,350

Consumer and other

124,966

120,044

113,038

116,774

131,407

TOTAL LOANS

$

7,216,325

$

7,104,309

$

7,222,569

$

7,332,954

$

7,043,338

2 Includes results from Dalton, Greiner, Hartman, Maher & Co, LLC ("DGHM")

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Provision and Asset Quality

Unaudited ($ in thousands)

1Q21

4Q20

3Q20

2Q20

1Q20

PROVISION:

Provision/(credit) for loan losses

$

(7,004)

$

(2,999)

$

(4,569)

$

22,604

$

16,962

Reserve for unfunded loan commitments 4

(2,016)

(2,386)

1,750

2,829

1,827

TOTAL PROVISION/(CREDIT) FOR CREDIT LOSSES

$

(9,020)

$

(5,385)

$

(2,819)

$

25,433

$

18,789

CHARGE-OFFS:

Loan charge-offs

$

(297)

$

(511)

$

(245)

$

(1,546)

$

(528)

Loan recoveries

73

197

41

55

180

NET (CHARGE-OFFS)/RECOVERIES

$

(224)

$

(314)

$

(204)

$

(1,491)

$

(348)

Net charge-offs to average loans (annualized)

(0.01)

%

(0.02)

%

(0.01)

%

(0.08)

%

(0.02)

%

Net (Charge-offs)/Recoveries by Loan Type:

Commercial and industrial

$

(258)

$

(474)

$

(136)

$

(337)

$

(473)

Commercial real estate

160

Residential

3

Home equity

(1,157)

132

Consumer and other

31

(68)

3

(7)

NET (CHARGE-OFFS)/RECOVERIES

$

(224)

$

(314)

$

(204)

$

(1,491)

$

(348)

LOAN QUALITY DATA:

Special mention loans

$

152,472

$

187,237

$

199,509

$

191,882

$

92,623

Accruing classified loans 10

136,130

106,883

81,827

88,586

87,948

Nonaccrual loans

25,764

23,851

41,263

25,604

24,314

Total classified

161,894

130,734

123,090

114,190

112,262

Criticized and classified loans

$

314,366

$

317,971

$

322,599

$

306,072

$

204,885

Loans 30-89 days past due and accruing 11

$

7,249

$

19,862

$

5,635

$

5,535

$

14,852

4 Total Provision/(credit) for credit losses includes the Provision/(credit) for loan losses and the Reserve for unfunded loan commitments within Other expense.
10 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.
11 At June 30, 2020, the Company had one loan totaling less than $0.1 million that was more than 90 days past due but still on accrual status. This loan originated in the New England region. The Company had no other loans outstanding more than 90 days past due but still on accrual status in comparative periods.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Average Balances, Yields, and Rates

Unaudited ($ in thousands)

Average Balance

Interest Income/Expense

Average Yield/Rate

1Q21

4Q20

1Q20

1Q21

4Q20

1Q20

1Q21

4Q20

1Q20

INTEREST-EARNING ASSETS

Cash and investments:

Taxable investment securities

$

203,856

$

209,143

$

201,174

$

782

$

849

$

868

1.54

%

1.62

%

1.73

%

Non-taxable investment securities

322,057

318,291

315,681

2,045

1,973

1,998

2.54

%

2.48

%

2.53

%

Mortgage-backed securities

810,754

598,616

520,629

3,437

2,585

2,787

1.70

%

1.73

%

2.14

%

Short-term investments and other

1,238,677

976,344

147,482

593

687

1,071

0.19

%

0.28

%

2.89

%

Total cash and investments

2,575,344

2,102,394

1,184,966

6,857

6,094

6,724

1.07

%

1.16

%

2.27

%

Loans: 12

Commercial and industrial

1,034,369

1,035,783

1,148,986

8,352

8,504

10,724

3.23

%

3.21

%

3.69

%

Paycheck Protection Program

326,695

348,827

3,629

3,798

4.44

%

4.26

%

%

Commercial real estate

2,723,249

2,711,396

2,582,305

23,187

24,096

27,482

3.41

%

3.48

%

4.21

%

Construction and land

165,350

171,873

233,324

1,605

1,642

2,572

3.88

%

3.74

%

4.36

%

Residential

2,667,440

2,720,733

2,850,833

20,226

21,041

23,468

3.03

%

3.09

%

3.29

%

Home equity

76,336

79,485

86,048

551

676

952

2.93

%

3.38

%

4.45

%

Consumer and other

121,900

121,139

132,237

486

500

1,160

1.62

%

1.64

%

3.53

%

Total loans

7,115,339

7,189,236

7,033,733

58,036

60,257

66,358

3.26

%

3.31

%

3.75

%

Total earning assets

9,690,683

9,291,630

8,218,699

64,893

66,351

73,082

2.68

%

2.82

%

3.54

%

LESS: Allowance for loan losses

81,125

84,679

51,730

Cash and due from banks

38,897

38,732

49,571

Other assets

631,970

651,008

562,851

TOTAL AVERAGE ASSETS

$

10,280,425

$

9,896,691

$

8,779,391

INTEREST-BEARING LIABILITIES

Interest-bearing deposits: 13

Savings and NOW

$

877,100

$

793,923

$

638,926

$

180

$

200

$

232

0.08

%

0.10

%

0.15

%

Money market

4,911,146

4,551,046

3,753,045

3,831

4,255

9,657

0.32

%

0.37

%

1.03

%

Certificates of deposit

489,037

522,567

668,818

680

981

2,907

0.56

%

0.75

%

1.75

%

Total interest-bearing deposits 13

6,277,283

5,867,536

5,060,789

4,691

5,436

12,796

0.30

%

0.37

%

1.02

%

Junior subordinated debentures

106,363

106,363

106,363

481

481

917

1.81

%

1.77

%

3.41

%

FHLB borrowings and other

180,234

267,865

455,813

244

1,027

2,112

0.54

%

1.50

%

1.83

%

Total interest-bearing liabilities 13

6,563,880

6,241,764

5,622,965

5,416

6,944

15,825

0.33

%

0.44

%

1.13

%

Noninterest bearing demand deposits 13

2,551,651

2,482,969

2,046,102

Payables and other liabilities

285,453

310,820

270,371

Total average liabilities

9,400,984

9,035,553

7,939,438

Redeemable noncontrolling interests

1,018

Average shareholders’ equity

879,441

861,138

838,935

TOTAL AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY

$

10,280,425

$

9,896,691

$

8,779,391

Net interest income

$

59,477

$

59,407

$

57,257

Interest rate spread

2.35

%

2.38

%

2.41

%

Net interest margin

2.45

%

2.52

%

2.76

%

Average total deposits 13

$

8,828,934

$

8,350,505

$

7,106,891

0.22

%

0.26

%

0.72

%

Average total deposits and borrowings 13

$

9,115,531

$

8,724,733

$

7,669,067

0.24

%

0.32

%

0.83

%

12 Average loans includes Loans held for sale and Nonaccrual loans
13 Average total deposits is the sum of Average total interest-bearing deposits and Average noninterest bearing demand deposits. Average total deposits and borrowings is the sum of Average total interest-bearing liabilities and Average non-interest bearing demand deposits.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Regional Loan Data 14

Unaudited ($ in thousands)

1Q21

4Q20

3Q20

2Q20

1Q20

New England

$

3,735,757

$

3,593,925

$

3,669,746

$

3,781,603

$

3,724,959

Northern California

1,759,812

1,776,682

1,763,556

1,741,255

1,618,668

Southern California

1,720,756

1,733,702

1,789,267

1,810,096

1,699,711

Total loans

$

7,216,325

$

7,104,309

$

7,222,569

$

7,332,954

$

7,043,338

Loans (charged-off)/recovered, net:

New England

$

20

$

162

$

(111)

$

7

$

15

Northern California

9

(147)

3

122

Southern California

(253)

(329)

(93)

(1,501)

(485)

Total net loans (charged-off)/recovered

$

(224)

$

(314)

$

(204)

$

(1,491)

$

(348)

Special mention loans:

New England

$

72,359

$

94,235

$

103,060

$

83,026

$

61,741

Northern California

57,751

64,361

63,192

75,609

5,947

Southern California

22,362

28,641

33,257

33,247

24,935

Total special mention loans

$

152,472

$

187,237

$

199,509

$

191,882

$

92,623

Accruing classified loans:

New England

$

106,375

$

89,582

$

74,682

$

53,124

$

50,483

Northern California

13,147

340

4,589

21,712

24,843

Southern California

16,608

16,961

2,556

13,750

12,622

Total accruing classified loans

$

136,130

$

106,883

$

81,827

$

88,586

$

87,948

Nonaccruing loans:

New England

$

14,197

$

12,643

$

11,807

$

11,630

$

11,965

Northern California

6,791

6,331

25,133

9,459

6,575

Southern California

4,776

4,877

4,323

4,515

5,774

Total nonaccruing loans

$

25,764

$

23,851

$

41,263

$

25,604

$

24,314

14 The concentration of the Private Banking loan data and credit quality is primarily based on the location of the lenders' regional offices.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Reconciliations of Non-GAAP Financial Measures

Unaudited ($ in thousands, except share and per share data)

1Q21

4Q20

3Q20

2Q20

1Q20

ROACE AND ROATCE:

Net income/(loss) attributable to the Company (GAAP) (A)

$

10,652

$

24,971

$

22,680

$

(3,298)

$

800

ADD: Amortization of intangibles, net of tax

527

447

564

555

565

Tangible common net income/(loss) (non-GAAP) (B)

$

11,179

$

25,418

$

23,244

$

(2,743)

$

1,365

Total average shareholders’ equity (C)

$

879,441

$

861,138

$

842,606

$

834,882

$

838,935

LESS: Average goodwill and intangibles, net

(66,351)

(66,253)

(66,246)

(66,877)

(67,586)

Average tangible common equity (non-GAAP) (D)

$

813,090

$

794,885

$

776,360

$

768,005

$

771,349

ROACE (annualized) (A/C)

4.91 %

11.50%

10.68%

(1.58)%

0.39%

ROATCE (annualized) (B/D)

5.58 %

12.69%

11.88%

(1.43)%

0.72%

PRE-TAX, PRE-PROVISION INCOME:

Income/(loss) before income taxes (GAAP)

$

16,728

$

31,095

$

24,501

$

(2,457)

$

908

ADD BACK: Provision/(credit) for loan losses

(7,004)

(2,999)

(4,569)

22,604

16,962

Pre-tax, pre-provision income (non-GAAP)

$

9,724

$

28,096

$

19,932

$

20,147

$

17,870

TANGIBLE COMMON EQUITY:

Total shareholders’ equity (GAAP)

$

858,423

$

868,008

$

846,169

$

825,205

$

828,792

LESS: Goodwill and intangibles, net

(65,996)

(66,663)

(66,505)

(66,542)

(67,244)

Tangible common equity (non-GAAP) (A)

$

792,427

$

801,345

$

779,664

$

758,663

$

761,548

Total assets (GAAP)

$

10,538,492

$

10,048,733

$

9,431,305

$

9,158,906

$

8,746,326

LESS: Goodwill and intangibles, net

(65,996)

(66,663)

(66,505)

(66,542)

(67,244)

Tangible assets (non-GAAP) (B)

$

10,472,496

$

9,982,070

$

9,364,800

$

9,092,364

$

8,679,082

End of period shares outstanding (C)

82,455,432

82,334,257

82,254,594

82,058,483

81,800,486

Tangible common equity/ Tangible assets (non-GAAP) (A/B)

7.57 %

8.03%

8.33%

8.34%

8.77%

Tangible book value per share (non-GAAP) (A/C)

$9.61

$9.73

$9.48

$9.25

$9.31

AVERAGE LOANS:

Total loans

$

7,115,339

$

7,189,236

$

7,282,598

$

7,288,644

$

7,033,733

LESS: PPP

(326,695)

(348,827)

(373,047)

(283,619)

Total loans, excluding PPP (non-GAAP)

$

6,788,644

$

6,840,409

$

6,909,551

$

7,005,025

$

7,033,733

Total loan yields, excluding PPP (non-GAAP)

3.21 %

3.26%

3.27%

3.47%

3.75%

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Reconciliations of Non-GAAP Financial Measures

Unaudited ($ in thousands, except share and per share data)

1Q21

4Q20

3Q20

2Q20

1Q20

RETURN ON AVERAGE ASSETS:

Net income/(loss) attributable to the Company (GAAP) (A)

$

10,652

$

24,971

$

22,680

$

(3,298)

$

800

Average assets (non-GAAP) (B)

10,280,425

9,896,691

9,346,563

9,109,201

8,779,391

Return on average assets (annualized) (non-GAAP) (A/B)

0.42 %

1.00%

0.96%

(0.15)%

0.04%

EFFICIENCY RATIO:

Total noninterest expense (GAAP) (A)

$

75,923

$

57,967

$

60,937

$

61,453

$

60,908

LESS: Amortization of intangibles

667

566

714

702

715

Total noninterest expense, excluding Amortization of intangibles (non-GAAP) (B)

$

75,256

$

57,401

$

60,223

$

60,751

$

60,193

Net interest income (GAAP)

$

59,477

$

59,407

$

57,824

$

58,938

$

57,257

Total core fees and income (GAAP)

22,783

25,211

21,959

21,630

22,886

Total other income (GAAP)

3,387

1,445

1,086

1,032

(1,365)

Total revenue (GAAP) (C)

$

85,647

$

86,063

$

80,869

$

81,600

$

78,778

Efficiency ratio (GAAP) (A/C)

88.6 %

67.4%

75.4%

75.3%

77.3%

Efficiency ratio, excluding Amortization of intangibles (non-GAAP) (B/C)

87.9 %

66.7%

74.5%

74.4%

76.4%

NET INCOME/(LOSS) ATTRIBUTABLE TO THE COMPANY:

Net income/(loss) attributable to the Company (GAAP)

$

10,652

$

24,971

$

22,680

$

(3,298)

$

800

LESS: Gain on fair value of contingent considerations receivable 15

891

Tax effect at statutory rate

258

Net income/(loss) attributable to the Company (non-GAAP)

$

10,652

$

24,971

$

22,047

$

(3,298)

$

800

NET INCOME/(LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS:

Net income/(loss) attributable to common shareholders (GAAP)

$

10,652

$

24,971

$

22,680

$

(3,298)

$

1,214

LESS: Gain on fair value of contingent considerations receivable 15

891

Tax effect at statutory rate

258

Net income/(loss) attributable to the common shareholders, treasury stock method, excluding notable items (non-GAAP)

$

10,652

$

24,971

$

22,047

$

(3,298)

$

1,214

Weighted average diluted shares outstanding

83,934,107

82,764,339

82,362,338

81,929,752

83,318,041

Diluted earnings/(loss) per share (GAAP)

$

0.13

$

0.30

$

0.28

$

(0.04)

$

0.01

Diluted earnings/(loss) per share, excluding notable items (non-GAAP)

$

0.13

$

0.30

$

0.27

$

(0.04)

$

0.01

Average common equity (non-GAAP)

$

879,441

$

861,138

$

842,606

$

834,882

$

838,935

Average tangible common equity (non-GAAP)

$

813,090

$

794,885

$

776,360

$

768,005

$

771,349

ROACE, excluding notable items (non-GAAP)

4.91 %

11.50%

10.38%

(1.58)%

0.39%

ROATCE, excluding notable items (non-GAAP)

5.58 %

12.69%

11.55%

(1.43)%

0.72%

Pre-tax, pre-provision income (non-GAAP)

$

9,724

$

28,096

$

19,932

$

20,147

$

17,870

LESS: Gain on fair value of contingent considerations receivable 15

891

Pre-tax, pre-provision income, excluding notable items (non-GAAP)

$

9,724

$

28,096

$

19,041

$

20,147

$

17,870

15 In the third quarter of 2020, there was a gain of $0.9 million related to the revaluation of a receivable from the divestiture of a former affiliate, Bingham, Osborn & Scarborough, LLC ("BOS").

View source version on businesswire.com: https://www.businesswire.com/news/home/20210422006045/en/

Contacts

Adam Bromley
(617) 912-4386
abromley@bostonprivate.com