Boston Private Reports Fourth Quarter and Full Year 2020 Results

·9-min read

Fourth Quarter 2020 Highlights include:

  • Net income of $25.0 million, or $0.30 per diluted share

  • Return on average common equity (non-GAAP) of 11.5%

  • Return on average tangible common equity (non-GAAP) of 12.7%

  • Average total deposits of $8.4 billion, a 20% increase year-over-year

  • Average total loans of $7.2 billion, a 2% increase year-over-year

  • Total assets under management/advisory ("AUM") of $17.1 billion, a 2% increase year-over-year

  • Total net flows of negative $396 million driven by net flows of negative $268 million at Dalton, Greiner, Hartman, Maher & Co, LLC ("DGHM")

  • Total provision credit of $5.4 million

Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the "Company" or "Boston Private") today reported fourth quarter 2020 Net income attributable to the Company of $25.0 million, compared to $22.7 million for the third quarter of 2020 and $21.2 million for the fourth quarter of 2019. Fourth quarter 2020 Diluted earnings per share were $0.30, compared to $0.28 in the third quarter of 2020 and $0.26 in the fourth quarter of 2019.

"Fourth quarter 2020 results were positively impacted by a release from our allowance for loan losses and Paycheck Protection Program revenue, while strong deposit growth enhanced on-balance sheet liquidity," said Anthony DeChellis, CEO of Boston Private. "I am extremely proud of our team's accomplishments throughout 2020. We continued to deliver exceptional client service in a challenging environment, while improving our client experience and executing on our strategic plan. We are excited about the prospects of our pending merger with SVB Financial Group. Together, we will be well positioned to grow and scale our business, while enhancing shareholder value."

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 has been 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)

4Q20

3Q20

4Q19

LQ

Y/Y

Net income - GAAP

$25.0

$22.7

$21.2

10

%

18

%

Net income - Operating (Non-GAAP)

25.0

22.0

20.5

13

%

22

%

Diluted earnings per share - GAAP

$0.30

$0.28

$0.26

7

%

15

%

Diluted earnings per share - Operating (Non-GAAP)

$0.30

$0.27

$0.25

11

%

20

%

Non-GAAP Financial Measures:

Pre-tax, pre-provision income

$28.1

$19.9

$24.5

41

%

15

%

Return on average common equity ("ROACE")

11.5

%

10.7

%

10.3

%

Return on average tangible common equity ("ROATCE")

12.7

%

11.9

%

11.5

%

The Company's financial results improved linked quarter and year-over-year primarily as a result of a Total provision credit of $5.4 million, Paycheck Protection Program ("PPP") fees, and higher swap fees in the fourth quarter of 2020.

Net Interest Income and Margin

% Change

($ in millions)

4Q20

3Q20

4Q19

LQ

Y/Y

Net interest income

$59.4

$57.8

$56.1

3

%

6

%

Net interest margin

2.52

%

2.61

%

2.70

%

Net interest income for the fourth quarter of 2020 was $59.4 million, a 3% increase linked quarter and a 6% increase year-over-year. The linked quarter and year-over-year increases were primarily driven by $3.8 million of PPP loan-related income, and prepayment penalties, partially offset by lower asset yields. The Small Business Administration ("SBA") forgave approximately $60 million of PPP loans in the fourth quarter of 2020, which drove the accelerated recognition of PPP income. Excluding the impact of PPP loans, prepayment penalties and interest recoveries, Net interest income was flat linked quarter.

Net interest margin decreased 9 basis points on a linked quarter basis to 2.52%. The decline was primarily driven by lower asset yields and excess cash balances, partially offset by lower funding costs.

Noninterest Income

% Change

($ in millions)

4Q20

3Q20

4Q19

LQ

Y/Y

Wealth management and trust fees

$19.0

$18.2

$18.7

4

%

2

%

Investment management fees

1.2

1.4

2.6

(16)

%

(54)

%

Private banking fees 1

5.0

2.3

3.5

nm

44

%

Total core fees and income

$25.2

$22.0

$24.8

15

%

2

%

Total other income

1.4

1.1

2.0

33

%

(29)

%

Total noninterest income

$26.7

$23.0

$26.8

16

%

(1)

%

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 fourth quarter of 2020 was $25.2 million, a 15% increase linked quarter. The linked quarter increase was primarily driven by higher swap fees and higher BOLI income in the fourth quarter of 2020.

Assets Under Management/Advisory

% Change

($ in millions)

4Q20

3Q20

4Q19

LQ

Y/Y

Wealth Management and Trust

$16,574

$15,581

$15,224

6

%

9

%

Other 2

526

672

1,544

(22)

%

(66)

%

Total assets under management/advisory

$17,100

$16,253

$16,768

5

%

2

%

Net flows

Wealth Management and Trust

$(128)

$(12)

$(114)

Other 2

(268)

(395)

(95)

Total net flows

$(396)

$(407)

$(209)

2 Includes results from DGHM

Total AUM were $17.1 billion as of December 31, 2020, a 5% increase linked quarter. The linked quarter increase was primarily driven by the impact of favorable market action, partially offset by net outflows.

Total net flows were negative $396 million during the fourth quarter of 2020, driven by net flows of negative $268 million at DGHM and negative $128 million in the Wealth Management and Trust segment. Negative flows in the Wealth Management and Trust segment were driven by distributions to existing clients during the quarter. New business at Wealth Management & Trust remained strong at $297 million for the fourth quarter of 2020, compared to $299 million for the third quarter of 2020 and $1.1 billion for the year 2020.

Noninterest Expense

% Change

($ in millions)

4Q20

3Q20

4Q19

LQ

Y/Y

Salaries and employee benefits

$36.0

$34.7

$34.2

4

%

5

%

Occupancy and equipment

7.7

8.2

7.6

(5)

%

2

%

Information systems

8.6

7.1

6.5

22

%

33

%

Professional services

2.7

4.0

3.9

(32)

%

(30)

%

Marketing and business development

1.2

0.9

2.0

23

%

(43)

%

Amortization of intangibles

0.6

0.7

0.7

(21)

%

(16)

%

FDIC insurance

0.9

1.0

(9)

%

nm

Other

0.2

4.4

3.6

(94)

%

(93)

%

Total noninterest expense

$58.0

$60.9

$58.5

(5)

%

(1)

%

Memo: Excluding Off-Balance Sheet Provision

Reserve for unfunded loan commitments

$(2.4)

$1.8

nm

nm

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

$60.4

$59.2

$58.5

2

%

3

%

Total noninterest expense for the fourth quarter of 2020 was $58.0 million, a 5% decrease linked quarter. The improvement linked quarter was driven primarily by a provision credit for unfunded loan commitments of $2.4 million in the fourth quarter of 2020, compared to a $1.8 million expense in the third quarter of 2020, each of which are recognized in Other expense.

Excluding the Reserve for unfunded loan commitments, Total noninterest expense (non-GAAP) for the fourth quarter of 2020 was $60.4 million, an increase of 2% linked quarter and an increase of 3% year-over-year. The linked quarter and year-over-year increases are driven primarily by higher Information systems expense from technology initiatives placed in service and higher compensation expense.

Income Tax Expense

The Company's effective tax rate for the fourth quarter of 2020 was 19.7%. The increase in the effective tax rate linked quarter reflects the impact of higher pre-tax income.

Loans - QTD Averages & Yields

% Change

($ in millions)

4Q20

3Q20

4Q19

LQ

Y/Y

Commercial and industrial

$1,036

$1,033

$1,142

%

(9)

%

Paycheck Protection Program ("PPP")

349

373

(6)

%

nm

Commercial real estate

2,711

2,653

2,562

2

%

6

%

Construction and land

172

218

217

(21)

%

(21)

%

Residential

2,721

2,810

2,935

(3)

%

(7)

%

Home equity

79

84

85

(6)

%

(6)

%

Other consumer

121

112

132

8

%

(8)

%

Total loans

$7,189

$7,283

$7,073

(1)

%

2

%

Total loans, excluding PPP (non-GAAP)

$6,840

$6,910

$7,073

(1)

%

(3)

%

Total loan yields

3.31

%

3.23

%

3.83

%

Average total loans, excluding PPP (non-GAAP) in the fourth quarter of 2020 decreased 1% linked quarter and decreased 3% year-over-year.

  • Commercial and industrial loans decreased 9% year-over-year driven by lower revolving line of credit usage

  • PPP loans decreased 6% linked quarter driven by the SBA's forgiveness of approximately 200 loans totaling $60 million in the fourth quarter of 2020

  • Commercial real estate loans increased 2% linked quarter driven by the conversion of two loans from construction to permanent financing during the fourth quarter of 2020

  • Residential mortgage loans decreased 3% linked quarter and 7% year-over-year driven by the sale of $72 million of loans late in the third quarter of 2020

Deposits - QTD Averages & Costs

% Change

($ in millions)

4Q20

3Q20

4Q19

LQ

Y/Y

Non-interest bearing deposits

$2,483

$2,321

$2,002

7

%

24

%

Interest bearing deposits

5,868

5,378

4,957

9

%

18

%

Total deposits

$8,351

$7,700

$6,959

8

%

20

%

Cost of total deposits

0.26

%

0.33

%

0.86

%

Cost of total interest-bearing deposits

0.37

%

0.48

%

1.20

%

Average total deposits in the fourth quarter of 2020 increased 8% linked quarter and 20% year-over-year to $8.4 billion. The linked quarter and year-over-year increases were driven by a combination of existing and new client balances.

Provision and Asset Quality

($ in millions)

4Q20

3Q20

2Q20

1Q20

4Q19

Provision and Allowance

Provision/(credit) for loan losses

$(3.0)

$(4.6)

$22.6

$17.0

$(3.7)

Reserve for unfunded loan commitments

(2.4)

1.8

2.8

1.8

Total Provision/(credit) for credit losses

$(5.4)

$(2.8)

$25.4

$18.8

$(3.7)

Allowance for loan losses as a % of Total loans

1.14

%

1.17

%

1.22

%

0.97

%

...

1.03

%

Asset Quality

Total net loans (charged-off)/ recovered

$(0.3)

$(0.2)

$(1.5)

$(0.3)

$0.3

Total nonaccrual loans

$23.9

$41.3

$25.6

$24.3

$16.1

Nonaccrual loans as a % of Total loans

0.34

%

0.57

%

0.35

%

0.35

%

0.23

%

Special mention loans (criticized loans)

$187.2

$199.5

$191.9

$92.6

$52.0

Classified loans

130.7

123.1

114.2

112.3

74.0

Total criticized and classified loans

$318.0

$322.6

$306.1

$204.9

$126.1

The Company recorded a Total provision credit for credit losses of $5.4 million during the fourth quarter of 2020. The provision release was primarily driven by an improved economic forecast related to the current expected credit losses methodology, partially offset by increased qualitative reserves for Commercial real estate. The Allowance for loan losses as a percentage of Total loans, excluding PPP loans (non-GAAP), was 1.19% in the fourth quarter of 2020, compared to 1.23% in the third quarter of 2020.

Total nonaccrual loans as of December 31, 2020 was $23.9 million, a decrease of $17.4 million, or 42%, linked quarter primarily driven by the payoff of a Commercial and industrial relationship in Northern California.

Total criticized and classified loans as of December 31, 2020 was $318.0 million, a decrease of $4.6 million, or 1%, linked quarter. In the fourth quarter of 2020, there were:

  • $39 million of loan payoffs, paydowns and upgrades

  • $35 million of loan downgrades, including $31 million of Commercial real estate loans across 8 relationships, primarily with retail, office, and hospitality collateral

As of December 31, 2020:

  • Residential loans on deferral totaled approximately $15 million, or 0.6% of total residential loans, compared to a peak of approximately $220 million in the second quarter of 2020

  • Commercial and industrial loans on deferral totaled approximately $11 million, or 1.1% of total Commercial and industrial loans, compared to a peak of approximately $125 million in the second quarter of 2020

  • The majority of Commercial real estate clients that qualified for and accepted the debt service reserve program remain in the program, representing a total loan balance of approximately $72 million, or 2.6% of total Commercial real estate loans

Capital

4Q20

3Q20

2Q20

1Q20

4Q19

Tangible common equity/ Tangible assets (non-GAAP)

8.0

%

8.3

%

8.3

%

8.8

%

8.6

%

Tangible book value per share (non-GAAP)

$9.73

$9.48

$9.25

$9.31

$9.02

Regulatory Capital Ratios: 3

Tier 1 common equity

11.5

%

11.3

%

11.1

%

11.2

%

11.4

%

Tier 1 risk-based capital

13.0

%

12.8

%

12.6

%

12.7

%

13.0

%

Total risk-based capital

14.3

%

14.1

%

13.9

%

13.8

%

14.1

%

Tier 1 leverage capital

8.9

%

9.2

%

9.2

%

9.7

%

9.8

%

3 Current quarter information is presented based on estimated data.

The Company's tangible book value per share increased to $9.73 in the fourth quarter of 2020, a 8% increase year-over-year.

Dividend Payments

Concurrent with the release of fourth quarter 2020 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 February 5, 2021, and the payment date is February 19, 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 16 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 length and extent of the economic contraction as a result of the COVID-19 pandemic; continued deterioration in employment levels, general business and economic conditions on a national basis and in the local markets in which the Company operates; 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 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)

4Q20

3Q20

2Q20

1Q20

4Q19

ASSETS:

Cash and cash equivalents

$

1,055,588

$

546,263

$

179,027

$

61,714

$

292,479

Investment securities available-for-sale

1,243,693

1,011,327

1,002,970

993,166

978,284

Investment securities held-to-maturity

35,223

38,600

42,495

45,395

48,212

Equity securities at fair value

41,452

32,818

24,492

23,080

18,810

Stock in Federal Home Loan Bank and Federal Reserve Bank

28,663

36,618

42,407

45,273

39,078

Loans held for sale

17,421

15,074

9,786

7,671

7,386

Loans

7,104,309

7,222,569

7,332,954

7,043,338

6,976,704

Less: Allowance for loan losses

81,238

84,551

89,324

68,211

71,982

Loans, net of Allowance for loan losses

7,023,071

7,138,018

7,243,630

6,975,127

6,904,722

Premises and equipment, net

44,087

42,907

43,805

43,544

44,527

Goodwill

57,607

57,607

57,607

57,607

57,607

Intangible assets, net

9,056

8,898

8,935

9,637

10,352

Accrued interest receivable

26,191

25,935

24,918

24,054

24,175

Deferred income taxes, net

6,774

8,250

9,116

5,630

11,383

Right-of-use assets

97,859

94,879

94,143

98,896

102,075

Other assets

362,048

374,111

375,575

355,532

291,411

TOTAL ASSETS

$

10,048,733

$

9,431,305

$

9,158,906

$

8,746,326

$

8,830,501

LIABILITIES:

Deposits

$

8,595,366

$

7,827,719

$

7,427,397

$

6,835,572

$

7,241,476

Securities sold under agreements to repurchase

53,472

42,544

46,623

45,319

53,398

Federal funds purchased

145,000

Federal Home Loan Bank borrowings

114,659

296,236

426,313

491,254

350,829

Junior subordinated debentures

106,363

106,363

106,363

106,363

106,363

Lease liabilities

112,339

108,932

108,234

113,574

117,214

Other liabilities

198,526

203,342

218,771

180,452

140,820

TOTAL LIABILITIES

9,180,725

8,585,136

8,333,701

7,917,534

8,010,100

REDEEMABLE NONCONTROLLING INTERESTS ("RNCI")

1,383

SHAREHOLDERS' EQUITY:

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

82,334

82,255

82,058

81,800

83,266

Additional paid-in capital

597,558

597,113

594,463

593,167

600,708

Retained earnings

156,431

136,394

118,647

131,761

127,469

Accumulated other comprehensive income

31,685

30,407

30,037

22,064

7,575

TOTAL SHAREHOLDERS' EQUITY

868,008

846,169

825,205

828,792

819,018

TOTAL LIABILITIES, RNCI, AND SHAREHOLDERS' EQUITY

$

10,048,733

$

9,431,305

$

9,158,906

$

8,746,326

$

8,830,501

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Consolidated Income Statements

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

4Q20

3Q20

2Q20

1Q20

4Q19

REVENUE:

Interest income

$

66,351

$

65,453

$

68,819

$

73,082

$

75,291

Interest expense

6,944

7,629

9,881

15,825

19,166

Net interest income

59,407

57,824

58,938

57,257

56,125

Provision/(credit) for loan losses 4

(2,999

)

(4,569

)

22,604

16,962

(3,668

)

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

62,406

62,393

36,334

40,295

59,793

Wealth management and trust fees 5

19,016

18,240

17,261

18,371

18,720

Investment management fees

1,173

1,393

1,770

1,925

2,554

Private banking fee income

4,304

1,320

2,395

2,490

2,924

Gain on sale of loans, net

718

1,006

204

100

557

Total core fees and income

25,211

21,959

21,630

22,886

24,755

Total other income

1,445

1,086

1,032

(1,365

)

2,038

TOTAL REVENUE 6

86,063

80,869

81,600

78,778

82,918

NONINTEREST EXPENSE:

Salaries and employee benefits

36,022

34,671

33,937

35,096

34,186

Occupancy and equipment

7,723

8,150

7,560

7,646

7,578

Information systems

8,633

7,096

7,113

6,725

6,476

Professional services

2,744

4,025

3,446

3,601

3,920

Marketing and business development

1,154

935

2,313

1,890

2,017

Amortization of intangibles

566

714

702

715

676

FDIC insurance

876

960

767

(19

)

Other 4

249

4,386

5,615

5,235

3,623

TOTAL NONINTEREST EXPENSE

57,967

60,937

61,453

60,908

58,457

INCOME/(LOSS) BEFORE INCOME TAXES

31,095

24,501

(2,457

)

908

28,129

Income tax expense

6,124

1,821

841

102

6,788

Net income/(loss) before attribution to noncontrolling interests

24,971

22,680

(3,298

)

806

21,341

Less: Net income attributable to noncontrolling interests

6

97

NET INCOME/(LOSS) ATTRIBUTABLE TO THE COMPANY

$

24,971

$

22,680

$

(3,298

)

$

800

$

21,244

Adjustments, treasury stock method 7

414

98

NET INCOME/(LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

24,971

$

22,680

$

(3,298

)

$

1,214

$

21,342

COMMON SHARE DATA:

Weighted average basic shares outstanding

82,292,450

82,221,705

81,929,752

83,005,064

83,238,982

Weighted average diluted shares outstanding 8

82,764,339

82,362,338

81,929,752

83,318,041

83,637,786

Diluted earnings/(loss) per share

$

0.30

$

0.28

$

(0.04

)

$

0.01

$

0.26

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"), KLS Professional Advisors Group, LLC ("KLS"), 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, 2019.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Consolidated Income Statements

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

Year ended December 31,

2020

2019

REVENUE:

Interest income

$

273,705

$

308,447

Interest expense

40,279

80,371

Net interest income

233,426

228,076

Provision/(credit) for loan losses 4

31,998

(3,564

)

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

201,428

231,640

Wealth management and trust fees 5

72,888

75,757

Investment management fees

6,261

10,155

Private banking fee income

10,509

10,948

Gain on sale of loans, net

2,028

1,622

Total core fees and income

91,686

98,482

Total other income

2,198

3,065

TOTAL REVENUE 6

327,310

329,623

NONINTEREST EXPENSE:

Salaries and employee benefits

139,726

134,302

Occupancy and equipment

31,079

32,038

Information systems

29,567

22,642

Professional services

13,816

15,228

Marketing and business development

6,292

6,439

Amortization of intangibles

2,697

2,691

FDIC insurance

2,603

1,285

Restructuring

1,646

Other 4

15,485

13,935

TOTAL NONINTEREST EXPENSE

241,265

230,206

INCOME BEFORE INCOME TAXES

54,047

102,981

Income tax expense

8,888

22,591

Net income before attribution to noncontrolling interests

45,159

80,390

Less: Net income attributable to noncontrolling interests

6

362

NET INCOME ATTRIBUTABLE TO THE COMPANY

$

45,153

$

80,028

Adjustments, treasury stock method 7

414

1,143

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

45,567

$

81,171

COMMON SHARE DATA

Weighted average basic shares outstanding

82,359,528

83,430,740

Weighted average diluted shares outstanding 8

82,757,785

83,920,792

Diluted earnings per share

$

0.55

$

0.97

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"), KLS Professional Advisors Group, LLC ("KLS") through the effective date of its merger with 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 attributable to the Company to arrive at Net income 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, 2019.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Consolidated Financial Highlights

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

4Q20

3Q20

2Q20

1Q20

4Q19

KEY STATISTICS:

Return on average assets (non-GAAP) 9

1.00

%

0.96

%

(0.15)

%

0.04

%

0.96

%

ROACE (non-GAAP) 9

11.50

%

10.68

%

(1.58)

%

0.39

%

10.29

%

ROATCE (non-GAAP) 9

12.69

%

11.88

%

(1.43)

%

0.72

%

11.51

%

Efficiency ratio (non-GAAP) 9

66.7

%

74.5

%

74.4

%

76.4

%

69.7

%

Noninterest income to total revenue

31.0

%

28.5

%

27.8

%

27.3

%

32.3

%

Net interest margin

2.52

%

2.61

%

2.75

%

2.76

%

2.70

%

Average loan to average deposit ratio

86.1

%

94.6

%

100.5

%

99.0

%

101.6

%

Cost of total deposits

0.26

%

0.33

%

0.41

%

0.72

%

0.86

%

Cost of interest-bearing deposits

0.37

%

0.48

%

0.59

%

1.02

%

1.20

%

Cost of total funding

0.32

%

0.37

%

0.50

%

0.83

%

0.99

%

Allowance for loan losses / Total loans

1.14

%

1.17

%

1.22

%

0.97

%

1.03

%

Nonperforming loans / Total loans

0.34

%

0.57

%

0.35

%

0.35

%

0.23

%

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

(0.02)

%

(0.01)

%

(0.08)

%

(0.02)

%

0.02

%

CAPITAL HIGHLIGHTS:

Tier 1 common equity 3

$

773,017

$

752,492

$

731,316

$

742,044

$

745,926

Tier 1 capital 3

$

873,039

$

852,514

$

831,338

$

842,066

$

846,337

Total capital 3

$

956,789

$

935,887

$

913,936

$

914,572

$

919,573

Risk-weighted assets 3

$

6,696,025

$

6,659,752

$

6,593,957

$

6,627,339

$

6,530,804

Average assets for leverage 3

$

9,796,299

$

9,237,942

$

9,009,565

$

8,691,254

$

8,659,944

Tier 1 common equity ratio 3

11.54

%

11.30

%

11.09

%

11.20

%

11.42

%

Tier 1 risk-based capital ratio 3

13.04

%

12.80

%

12.61

%

12.71

%

12.96

%

Total risk-based capital ratio 3

14.29

%

14.05

%

13.86

%

13.80

%

14.08

%

Tier 1 leverage capital ratio 3

8.91

%

9.23

%

9.23

%

9.69

%

9.77

%

Total equity / Total assets

8.64

%

8.97

%

9.01

%

9.48

%

9.27

%

Tangible common equity / Tangible assets (non-GAAP)

8.03

%

8.33

%

8.34

%

8.77

%

8.57

%

End of period market price per share

$

8.45

$

5.52

$

6.88

$

7.15

$

12.03

End of period shares outstanding

82,334,257

82,254,594

82,058,483

81,800,486

83,265,674

Book value per common share

$

10.54

$

10.29

$

10.06

$

10.13

$

9.84

Tangible book value per share (non-GAAP)

$

9.73

$

9.48

$

9.25

$

9.31

$

9.02

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)

4Q20

3Q20

2Q20

1Q20

4Q19

ASSETS UNDER MANAGEMENT AND ADVISORY ("AUM"):

Wealth Management and Trust

$

16,574,000

$

15,581,000

$

14,889,000

$

13,497,000

$

15,224,000

Other 2

526,000

672,000

1,067,000

1,016,000

1,544,000

TOTAL AUM

$

17,100,000

$

16,253,000

$

15,956,000

$

14,513,000

$

16,768,000

AUM Rollforward:

Beginning balance

$

16,253,000

$

15,956,000

$

14,513,000

$

16,768,000

$

16,228,000

Net flows

(396,000

)

(407,000

)

(40,000

)

150,000

(209,000

)

Market returns

1,243,000

704,000

1,483,000

(2,405,000

)

749,000

Ending balance

$

17,100,000

$

16,253,000

$

15,956,000

$

14,513,000

$

16,768,000

AUM Net Flows:

Wealth Management and Trust

$

(128,000

)

$

(12,000

)

$

60,000

$

176,000

$

(114,000

)

Other 2

(268,000

)

(395,000

)

(100,000

)

(26,000

)

(95,000

)

TOTAL NET FLOWS

$

(396,000

)

$

(407,000

)

$

(40,000

)

$

150,000

$

(209,000

)

DEPOSITS:

Demand deposits (non-interest bearing)

$

2,481,676

$

2,346,126

$

2,293,864

$

2,020,440

$

1,971,013

Savings and NOW

905,692

756,797

758,656

653,006

646,199

Money market

4,699,882

4,187,657

3,753,228

3,468,701

3,969,330

Certificates of deposit

508,116

537,139

621,649

693,425

654,934

TOTAL DEPOSITS

$

8,595,366

$

7,827,719

$

7,427,397

$

6,835,572

$

7,241,476

LOANS:

Commercial and industrial

$

558,343

$

583,145

$

565,748

$

670,744

$

694,034

Paycheck Protection Program

312,356

371,496

370,034

Commercial tax-exempt

442,159

472,342

419,264

445,319

447,927

Commercial real estate

2,757,375

2,659,890

2,676,708

2,626,299

2,551,274

Construction and land

159,204

211,697

240,211

238,293

225,983

Residential

2,677,464

2,729,164

2,859,627

2,841,926

2,839,155

Home equity

77,364

81,797

84,588

89,350

83,657

Consumer

120,044

113,038

116,774

131,407

134,674

TOTAL LOANS

$

7,104,309

$

7,222,569

$

7,332,954

$

7,043,338

$

6,976,704

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

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Provision and Asset Quality

Unaudited ($ in thousands)

4Q20

3Q20

2Q20

1Q20

4Q19

PROVISION:

Provision/(credit) for loan losses

$

(2,999

)

$

(4,569

)

$

22,604

$

16,962

$

(3,668

)

Reserve for unfunded loan commitments 4

(2,386

)

1,750

2,829

1,827

(23

)

Total Provision/(credit) for credit losses

$

(5,385

)

$

(2,819

)

$

25,433

$

18,789

$

(3,691

)

CHARGE-OFFS:

Loan charge-offs

$

(511

)

$

(245

)

$

(1,546

)

$

(528

)

$

(285

)

Loan recoveries

197

41

55

180

576

NET (CHARGE-OFFS)/RECOVERIES

$

(314

)

$

(204

)

$

(1,491

)

$

(348

)

$

291

Net charge-offs to average loans (annualized)

(0.02

)%

(0.01

)%

(0.08

)%

(0.02

)%

0.02

%

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

Commercial and industrial

$

(474

)

$

(136

)

$

(337

)

$

(473

)

$

118

Commercial real estate

160

183

Home equity

(1,157

)

132

4

Consumer

(68

)

3

(7

)

(14

)

NET (CHARGE-OFFS)/RECOVERIES

$

(314

)

$

(204

)

$

(1,491

)

$

(348

)

$

291

LOAN QUALITY DATA:

Special mention loans

$

187,237

$

199,509

$

191,882

$

92,623

$

52,026

Accruing classified loans 10

106,883

81,827

88,586

87,948

57,922

Nonaccrual loans

23,851

41,263

25,604

24,314

16,103

Total classified

130,734

123,090

114,190

112,262

74,025

Criticized and classified loans

$

317,971

$

322,599

$

306,072

$

204,885

$

126,051

Loans 30-89 days past due and accruing 11

$

19,862

$

5,635

$

5,535

$

14,852

$

25,945

4 Total Provision 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

4Q20

3Q20

4Q19

4Q20

3Q20

4Q19

4Q20

3Q20

4Q19

INTEREST-EARNING ASSETS

Cash and investments:

Taxable investment securities

$

209,143

$

201,515

$

201,535

$

849

$

853

$

869

1.62

%

1.69

%

1.72

%

Non-taxable investment securities

318,291

313,130

311,705

1,973

1,974

1,976

2.48

%

2.52

%

2.54

%

Mortgage-backed securities

598,616

515,813

489,927

2,585

2,354

2,568

1.73

%

1.83

%

2.10

%

Short-term investments and other

976,344

432,117

130,519

687

654

1,210

0.28

%

0.59

%

3.65

%

Total cash and investments

2,102,394

1,462,575

1,133,686

6,094

5,835

6,623

1.16

%

1.59

%

2.33

%

Loans: 12

Commercial and industrial

1,035,783

1,032,816

1,142,015

8,504

8,314

11,276

3.21

%

3.15

%

3.86

%

Paycheck Protection Program

348,827

373,047

3,798

2,390

4.26

%

2.51

%

%

Commercial real estate

2,711,396

2,652,770

2,562,380

24,096

23,546

28,285

3.48

%

3.47

%

4.32

%

Construction and land

171,873

218,211

216,754

1,642

2,109

2,588

3.74

%

3.78

%

4.67

%

Residential

2,720,733

2,809,871

2,934,786

21,041

22,089

24,275

3.09

%

3.14

%

3.31

%

Home equity

79,485

84,226

84,632

676

623

965

3.38

%

2.94

%

4.53

%

Other consumer

121,139

111,657

132,143

500

547

1,279

1.64

%

1.95

%

3.84

%

Total loans

7,189,236

7,282,598

7,072,710

60,257

59,618

68,668

3.31

%

3.23

%

3.83

%

Total earning assets

9,291,630

8,745,173

8,206,396

66,351

65,453

75,291

2.82

%

2.96

%

3.62

%

LESS: Allowance for loan losses

84,679

89,370

75,283

Cash and due from banks

38,732

34,761

48,287

Other assets

651,008

655,999

559,350

TOTAL AVERAGE ASSETS

$

9,896,691

$

9,346,563

$

8,738,750

INTEREST-BEARING LIABILITIES

Interest-bearing deposits: 13

Savings and NOW

$

793,923

$

722,742

$

644,502

$

200

$

197

$

252

0.10

%

0.11

%

0.16

%

Money market

4,551,046

4,070,026

3,632,258

4,255

4,790

11,449

0.37

%

0.47

%

1.25

%

Certificates of deposit

522,567

585,729

680,466

981

1,447

3,322

0.75

%

0.98

%

1.94

%

Total interest-bearing deposits 13

5,867,536

5,378,497

4,957,226

5,436

6,434

15,023

0.37

%

0.48

%

1.20

%

Junior subordinated debentures

106,363

106,363

106,363

481

508

966

1.77

%

1.87

%

3.56

%

FHLB borrowings and other

267,865

388,412

591,682

1,027

687

3,177

1.50

%

0.69

%

2.10

%

Total interest-bearing liabilities 13

6,241,764

5,873,272

5,655,271

6,944

7,629

19,166

0.44

%

0.52

%

1.34

%

Non-interest bearing demand deposits 13

2,482,969

2,321,223

2,001,714

Payables and other liabilities

310,820

309,462

261,503

Total average liabilities

9,035,553

8,503,957

7,918,488

Redeemable noncontrolling interests

1,446

Average shareholders’ equity

861,138

842,606

818,816

TOTAL AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY

$

9,896,691

$

9,346,563

$

8,738,750

Net interest income

$

59,407

$

57,824

$

56,125

Interest rate spread

2.38

%

2.44

%

2.28

%

Net interest margin

2.52

%

2.61

%

2.70

%

Average total deposits 13

$

8,350,505

$

7,699,720

$

6,958,940

0.26

%

0.33

%

0.86

%

Average total deposits and borrowings 13

$

8,724,733

$

8,194,495

$

7,656,985

0.32

%

0.37

%

0.99

%

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 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.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Average Balances, Yields, and Rates

Unaudited ($ in thousands)

Average Balance

Interest Income/Expense

Average Yield/Rate

Year Ended

Year Ended

Year Ended

INTEREST-EARNING ASSETS

12/31/20

12/31/19

12/31/20

12/31/19

12/31/20

12/31/19

Cash and investments:

Taxable investment securities

$

202,557

$

217,653

$

3,429

$

4,113

1.69

%

1.89

%

Non-taxable investment securities

315,903

307,005

7,950

7,702

2.52

%

2.51

%

Mortgage-backed securities

535,302

502,949

10,292

10,793

1.92

%

2.15

%

Short-term investments and other

437,177

110,877

2,994

4,259

0.69

%

3.84

%

Total cash and investments

1,490,939

1,138,484

24,665

26,867

1.65

%

2.36

%

Loans: 12

Commercial and industrial

1,064,512

1,101,635

37,250

44,949

3.50

%

4.08

%

Paycheck Protection Program

251,016

7,761

3.11

%

%

Commercial real estate

2,651,554

2,496,878

99,726

115,507

3.76

%

4.63

%

Construction and land

214,074

206,624

8,574

10,198

4.00

%

4.94

%

Residential

2,810,786

2,983,173

89,677

101,122

3.19

%

3.39

%

Home equity

84,502

88,917

2,901

4,353

3.43

%

4.90

%

Other consumer

122,312

129,701

3,151

5,451

2.58

%

4.20

%

Total loans

7,198,756

7,006,928

249,040

281,580

3.46

%

4.02

%

Total earning assets

8,689,695

8,145,412

273,705

308,447

3.15

%

3.79

%

LESS: Allowance for loan losses

73,636

74,969

Cash and due from banks

40,800

47,286

Other assets

628,049

527,269

TOTAL AVERAGE ASSETS

$

9,284,908

$

8,644,998

INTEREST-BEARING LIABILITIES

Interest-bearing deposits: 13

Savings and NOW

$

709,357

$

654,712

$

816

$

1,099

0.12

%

0.17

%

Money market

4,014,481

3,395,842

23,550

43,521

0.59

%

1.28

%

Certificates of deposit

611,829

730,693

7,635

14,463

1.25

%

1.98

%

Total interest-bearing deposits 13

5,335,667

4,781,247

32,001

59,083

0.60

%

1.24

%

Junior subordinated debentures

106,363

106,363

2,670

4,189

2.50

%

3.94

%

FHLB borrowings and other

430,176

748,628

5,608

17,099

1.30

%

2.28

%

Total interest-bearing liabilities 13

5,872,206

5,636,238

40,279

80,371

0.69

%

1.43

%

Non-interest bearing demand deposits 13

2,266,801

1,962,951

Payables and other liabilities

299,301

247,163

Total average liabilities

8,438,308

7,846,352

Redeemable noncontrolling interests

308

1,593

Average shareholders’ equity

846,292

797,053

TOTAL AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY

$

9,284,908

$

8,644,998

Net interest income

$

233,426

$

228,076

Interest rate spread

2.46

%

2.36

%

Net interest margin

2.69

%

2.80

%

Average total deposits 13

$

7,602,468

$

6,744,198

0.42

%

0.88

%

Average total deposits and borrowings 13

$

8,139,007

$

7,599,189

0.49

%

1.06

%

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 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.

BOSTON PRIVATE FINANCIAL HOLDINGS, INC.

Regional Loan Data 14