2013 Q1 8-K FILED under 8.01 Earnings 04-16-2013



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): April 16, 2013
Boston Private Financial Holdings, Inc.
(Exact Name of Registrant as Specified in its Charter)
Massachusetts
0-17089
04-2976299
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification Number)
Ten Post Office Square, Boston, Massachusetts 02109
(Address of principal executive offices)
(617) 912-1900
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


1



Item 8.01.
Other Events.
First Quarter Highlights:
•
Earnings increase 39% year-over-year: GAAP Net Income increased to $13.2 million from $9.5 million in the first quarter of 2012. First quarter diluted EPS increased to $0.15 from $0.11 year-over-year.
•
Core Fees and Income increase for the fifth straight quarter: Core Fees and Income increased 14% year-over-year and 3% on a linked quarter basis.
•
Strong AUM Build: AUM increased 7% to $21.9 billion in the quarter and 7% year-over-year. First quarter AUM net inflows were $181 million, up from $84 million on a year-over-year basis.
•
No Provision for Loan Losses: The Company recorded no provision in the quarter due to a reduction in Classified Loans and continued improvement in credit quality.
•
Capital builds: Tangible Common Equity/Tangible Assets ratio increased by 100 basis points to 8.2% on a year-over-year basis, and increased 50 basis points on a linked quarter basis.
Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the "Company" or "BPFH") today reported first quarter 2013 GAAP Net Income Attributable to the Company of $13.2 million, compared to $13.1 million in the fourth quarter of 2012. BPFH reported first quarter diluted earnings per share of $0.15 compared to $0.15 in the fourth quarter of 2012.
On a year-over-year basis, GAAP Net Income Attributable to the Company increased 39% from $9.5 million in the first quarter of 2012. Diluted earnings per share increased 36% from $0.11 in the same period.
Core Fees Increase 3% Linked Quarter
Core Fees and Income (Investment Management and Trust Fees, Private Bank Investment Management and Trust Fees, Wealth Advisory Fees, Other Banking Fee Income and Gain on Sale of Loans) for the first quarter increased 3% to $29.9 million from $29.1 million in the fourth quarter of 2012. Core Fees and Income increased 14% from $26.3 million on a year-over-year basis.
Total Assets Under Management/Advisory ("AUM") increased to $21.9 billion, up 7% from $20.4 billion in the fourth quarter of 2012. AUM also increased 7% from $20.4 billion in the first quarter of 2012. The Company experienced first quarter 2013 AUM net inflows of $181 million, as compared to AUM net inflows of $298 million in the fourth quarter of 2012. AUM net inflows for the first quarter of 2012 were $84 million.
Net Interest Income Declines
Net Interest Income in the first quarter was $44.3 million, down 3% from $45.5 million in the fourth quarter of 2012 due to lower asset yields. On a year-over-year basis, Net Interest Income declined 1% from $44.8 million in the first quarter of 2012.
Net Interest Margin was 3.13% in the first quarter, down six basis points from 3.19% in the fourth quarter. On a year-over-year basis, Net Interest Margin decreased 14 basis points from 3.27% in the first quarter of 2012.
Total Expenses Decrease Linked Quarter
Total Expenses for the first quarter of 2013 were $56.6 million, a 10% decrease from $62.7 million (including restructuring costs of $1.6 million) in the fourth quarter of 2012. On a year-over-year basis, Total Expenses increased 2% from $55.6 million (including restructuring costs of $0.1 million) in the first quarter of 2012.
Provision
The Company recorded no Provision for Loan Losses in the first quarter, compared to a fourth quarter credit of ($5.0) million. The lack of provision was driven by a reduction in Classified Loans and continued improvement in credit quality. In the first quarter of 2012, there was a provision of $4.0 million.
Criticized Loans decreased 5% to $223.5 million on a linked quarter basis, and decreased 27% year-over-year. Nonaccrual Loans ("Nonaccruals") increased 20% to $73.0 million, up from $60.7 million on a linked quarter basis. On a year-over-year basis, Nonaccruals were flat. As a percentage of Total Loans, Nonaccruals were 1.53% in the first quarter of 2013, up 27 basis points from 1.26% in the fourth quarter of 2012. On a year-over-year basis, Nonaccruals as a percentage of Total Loans increased 3 basis points from 1.50%.

1


Additional credit metrics are listed below on a linked quarter and year-over-year basis:
(In millions)
March 31,
2013
 
December 31,
2012
 
March 31,
2012
Total Criticized Loans
$
223.5

 
$
235.0

 
$
306.2

Total Loans 30-89 Days Past Due and Accruing (11)
$
17.3

 
$
46.4

 
$
21.4

Total Net Loans (Charged-off)/ Recovered
$
(1.8
)
 
$
(2.1
)
 
$
(2.2
)
Allowance for Loan Losses/ Total Loans
1.72
%
 
1.75
%
 
2.02
%

Capital Ratios Strengthen in Q1
All regulatory risk-based capital ratios and tangible common equity ratios increased on a linked quarter basis and year-over-year.
Capital ratios are listed below on a linked quarter and year-over-year basis:
 
March 31,
2013
 
December 31,
2012
 
March 31,
2012
Total Risk-Based Capital *
14.9
%
 
14.6
%
 
14.4
%
Tier I Risk-Based Capital *
13.6
%
 
13.4
%
 
12.0
%
Tier I Leverage Capital *
10.1
%
 
9.9
%
 
8.8
%
*March 31, 2013 data is presented based on estimated data.

Dividend Payments
Concurrent with the release of the first quarter 2013 earnings, the Board of Directors of the Company declared a cash dividend to shareholders of $0.05 per share. The record date for this dividend is May 4, 2013, and the payment date is May 17, 2013.

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 and wealth advisory activities; changes in interest rates; competitive pressures from other financial institutions; the effects of continued weakness in general economic conditions on a national basis or in the local markets in which the Company operates, including changes which adversely affect borrowers' ability to service and repay our loans; changes in loan defaults and charge-off rates; changes in the value of securities and other assets, adequacy of loan loss reserves, or decreases in deposit levels necessitating increased borrowing to fund loans and investments; increasing government regulation; 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 statements are made.



2


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
March 31, 2013
 
December 31, 2012
 
March 31, 2012
 
(In thousands, except share and per share data)
Assets:
 
 
 
 
 
Cash and cash equivalents
$
54,136

 
$
308,744

 
$
131,136

Investment securities available for sale
736,610

 
699,300

 
825,614

Loans held for sale (1)
289,180

 
308,390

 
3,727

Total loans
4,783,467

 
4,814,136

 
4,849,048

Less: Allowance for loan losses
82,286

 
84,057

 
97,902

Net loans
4,701,181

 
4,730,079

 
4,751,146

Other real estate owned (“OREO”)
2,329

 
3,616

 
3,886

Stock in Federal Home Loan Banks
40,436

 
41,981

 
42,639

Premises and equipment, net
29,014

 
27,081

 
29,432

Goodwill
110,180

 
110,180

 
110,180

Intangible assets, net
23,813

 
24,874

 
27,479

Fees receivable
10,452

 
8,836

 
9,042

Accrued interest receivable
14,774

 
14,723

 
16,968

Deferred income taxes, net
60,634

 
62,245

 
66,105

Other assets
123,682

 
124,956

 
120,318

Assets of discontinued operations (2)
—

 
—

 
10,890

Total assets
$
6,196,421

 
$
6,465,005

 
$
6,148,562

Liabilities:
 
 
 
 
 
Deposits
$
4,517,351

 
$
4,885,059

 
$
4,602,451

Deposits held for sale (1)
188,252

 
194,084

 
—

Securities sold under agreements to repurchase
122,187

 
116,319

 
108,551

Federal funds purchased
50,000

 
—

 
—

Federal Home Loan Bank borrowings
461,411

 
408,121

 
582,551

Junior subordinated debentures
133,835

 
143,647

 
178,645

Other liabilities
88,869

 
95,386

 
91,827

Liabilities of discontinued operations (2)
—

 
—

 
1,392

Total liabilities
5,561,905

 
5,842,616

 
5,565,417

Redeemable Noncontrolling Interests
17,438

 
19,287

 
21,604

The Company’s Shareholders’ Equity:
 
 
 
 
 
Preferred stock, $1.00 par value; authorized: 2,000,000 shares;
 
 
 
 
 
Series B, issued and outstanding (contingently convertible): 401 shares at March 31, 2013, December 31, 2012, and March 31, 2012; liquidation value: $100,000 per share
58,089

 
58,089

 
58,089

Common stock, $1.00 par value; authorized: 170,000,000 shares; issued and outstanding: 79,053,668 shares at March 31, 2013; 78,743,518 shares at December 31, 2012; and 78,151,609 shares at March 31, 2012
79,054

 
78,744

 
78,152

Additional paid-in capital
641,918

 
640,891

 
642,276

Accumulated deficit
(163,543
)
 
(176,746
)
 
(220,512
)
Accumulated other comprehensive income
1,560

 
2,124

 
3,536

Total shareholders’ equity
617,078

 
603,102

 
561,541

Total liabilities, redeemable noncontrolling interests and shareholders’ equity
$
6,196,421

 
$
6,465,005

 
$
6,148,562


3


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
Three Months Ended
 
March 31,
2013
 
December 31,
2012
 
March 31,
2012
Interest and dividend income:
(In thousands, except share and per share data)
Loans
$
49,350

 
$
51,398

 
$
51,946

Taxable investment securities
514

 
650

 
1,256

Non-taxable investment securities
839

 
846

 
848

Mortgage-backed securities
1,402

 
1,443

 
1,603

Federal funds sold and other short-term borrowings
176

 
208

 
149

Total interest and dividend income
52,281

 
54,545

 
55,802

Interest expense:
 
 
 
 
 
Deposits
3,786

 
4,096

 
4,903

Federal Home Loan Bank borrowings
2,831

 
3,295

 
3,945

Junior subordinated debentures
1,154

 
1,308

 
1,752

Repurchase agreements and other borrowings
234

 
300

 
434

Total interest expense
8,005

 
8,999

 
11,034

Net interest income
44,276

 
45,546

 
44,768

Provision/ (credit) for loan losses
—

 
(5,000
)
 
4,000

Net interest income after provision for loan losses
44,276

 
50,546

 
40,768

Fees and other income:
 
 
 
 
 
Investment management and trust fees - Investment Managers
10,086

 
10,094

 
9,471

Investment management and trust fees - Bank
6,782

 
6,086

 
5,767

Wealth advisory fees
10,068

 
9,745

 
9,236

Other banking fee income
1,798

 
1,455

 
1,367

Gain on sale of loans, net
1,187

 
1,726

 
421

Total core fees and income
29,921

 
29,106

 
26,262

Gain on repurchase of debt
574

 
874

 
879

Gain/(loss) on sale of investments, net
10

 
(7
)
 
13

Gain/(loss) on OREO, net
34

 
624

 
(41
)
Other
57

 
(302
)
 
341

Total other income
675

 
1,189

 
1,192

Operating expense:
 
 
 
 
 
Salaries and employee benefits
37,449

 
37,781

 
36,912

Occupancy and equipment
7,503

 
7,516

 
7,265

Professional services
2,661

 
3,698

 
2,939

Marketing and business development
1,457

 
2,968

 
1,329

Contract services and data processing
1,568

 
1,391

 
1,188

Amortization of intangibles
1,118

 
1,106

 
1,090

FDIC insurance
1,040

 
1,003

 
849

Restructuring expense
—

 
1,631

 
135

Other
3,768

 
5,644

 
3,920

Total operating expense
56,564

 
62,738

 
55,627

Income before income taxes
18,308

 
18,103

 
12,595

Income tax expense
5,897

 
6,115

 
3,851

Net income from continuing operations
12,411

 
11,988

 
8,744

Net income from discontinued operations (2)
1,722

 
1,819

 
1,554

Net income before attribution to noncontrolling interests
14,133

 
13,807

 
10,298

Less: Net income attributable to noncontrolling interests
930

 
715

 
793

Net income attributable to the Company
$
13,203

 
$
13,092

 
$
9,505


4


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
Three Months Ended
PER SHARE DATA:
March 31,
2013
 
December 31,
2012
 
March 31,
2012
 
(In thousands, except share and per share data)
Calculation of Income for EPS:
 
 
 
 
 
Net income attributable to the Company
$
13,203

 
$
13,092

 
$
9,505

Adjustments to Net Income Attributable to the Company to Arrive at Net Income Attributable to Common Shareholders (3)
(457
)
 
(239
)
 
(178
)
Net Income Attributable to the Common Shareholders
12,746

 
12,853

 
9,327

LESS: Amount allocated to participating securities
(908
)
 
(1,281
)
 
(932
)
Net Income Attributable to the Common Shareholders, after allocation to participating securities
$
11,838

 
$
11,572

 
$
8,395

 
 
 
 
 
 
End of Period Common Shares Outstanding
79,053,668

 
78,743,518

 
78,151,609

 
 
 
 
 
 
Weighted Average Shares Outstanding:
 
 
 
 
 
Weighted average basic shares, including participating securities
85,635,265

 
85,386,014

 
84,859,038

LESS: Participating securities
(8,816,655
)
 
(9,047,609
)
 
(9,226,058
)
PLUS: Dilutive potential common shares
1,006,820

 
1,066,155

 
799,871

Weighted Average Diluted Shares (4)
77,825,430

 
77,404,560

 
76,432,851

 
 
 
 
 
 
Diluted Total Earnings per Share
$
0.15

 
$
0.15

 
$
0.11


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(In thousands, except per share data)
March 31,
2013
 
December 31,
2012
 
March 31,
2012
FINANCIAL DATA:
Book Value Per Common Share
$
7.07

 
$
6.92

 
$
6.44

Market Price Per Share
$
9.88

 
$
9.01

 
$
9.91

 
 
 
 
 
 
ASSETS UNDER MANAGEMENT AND ADVISORY:
 
 
 
 
 
Private Banking
$
4,167,000

 
$
3,941,000

 
$
3,696,000

Investment Managers
9,314,000

 
8,444,000

 
8,047,000

Wealth Advisory
8,487,000

 
8,052,000

 
7,579,000

Less: Inter-company Relationship
(21,000
)
 
(20,000
)
 
(20,000
)
Assets Under Management and Advisory of Continuing Operations
21,947,000

 
20,417,000

 
19,302,000

Assets Under Management and Advisory of Discontinued Operations (2)
—

 
—

 
1,137,000

Total Assets Under Management and Advisory
$
21,947,000

 
$
20,417,000

 
$
20,439,000

 
 
 
 
 
 
FINANCIAL RATIOS:
 
 
 
 
 
Total Equity/Total Assets
9.96
%
 
9.33
%
 
9.13
%
Allowance for Loan Losses/Total Loans
1.72
%
 
1.75
%
 
2.02
%
Allowance for Loan Losses/Nonaccrual Loans
113
%
 
138
%
 
135
%
Return on Average Assets - Three Months Ended (Annualized)
0.84
%
 
0.82
%
 
0.62
%
Return on Average Equity - Three Months Ended (Annualized)
8.66
%
 
8.72
%
 
6.74
%
Efficiency Ratio - Three Months Ended (Annualized)
73.58
%
 
80.12
%
 
75.14
%

5


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:
03/31/2013
12/31/2012
03/31/2012
 
03/31/2013
12/31/2012
03/31/2012
 
03/31/2013
12/31/2012
03/31/2012
AVERAGE ASSETS
 
 
 
 
 
 
 
 
 
 
 
Interest-Earning Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and Investments:
 
 
 
 
 
 
 
 
 
 
 
Taxable investment securities
$
198,833

$
202,970

$
376,206

 
$
514

$
650

$
1,256

 
1.03
%
1.28
%
1.34
%
Non-taxable investment securities (5)
205,255

202,971

194,410

 
1,291

1,320

1,323

 
2.52
%
2.60
%
2.72
%
Mortgage-backed securities
317,686

309,359

251,989

 
1,402

1,443

1,603

 
1.76
%
1.87
%
2.54
%
Federal funds sold and other
168,004

221,457

130,771

 
176

208

149

 
0.43
%
0.37
%
0.46
%
Total Cash and Investments
889,778

936,757

953,376

 
3,383

3,621

4,331

 
1.52
%
1.54
%
1.82
%
Loans: (6)
 
 
 
 
 
 
 
 
 
 
 
Commercial and Construction (5)
2,805,685

2,773,478

2,591,377

 
31,990

33,660

32,693

 
4.62
%
4.83
%
5.07
%
Residential
2,003,845

2,024,279

1,857,838

 
16,928

17,626

17,826

 
3.38
%
3.48
%
3.84
%
Home Equity and Other Consumer
268,156

269,954

320,160

 
1,987

2,104

2,760

 
3.01
%
3.10
%
3.45
%
Total Loans
5,077,686

5,067,711

4,769,375

 
50,905

53,390

53,279

 
4.05
%
4.20
%
4.48
%
Total Earning Assets
5,967,464

6,004,468

5,722,751

 
54,288

57,011

57,610

 
3.67
%
3.78
%
4.04
%
LESS: Allowance for Loan Losses
84,330

90,931

97,471

 
 
 
 
 
 
 
 
Cash and due From Banks (Non-Interest Bearing)
41,897

46,916

112,844

 
 
 
 
 
 
 
 
Other Assets (7)
391,909

395,646

427,083

 
 
 
 
 
 
 
 
TOTAL AVERAGE ASSETS
$
6,316,940

$
6,356,099

$
6,165,207

 
 
 
 
 
 
 
 
AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
 
Interest-Bearing Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Deposits (8):
 
 
 
 
 
 
 
 
 
 
 
Savings and NOW
$
576,814

$
494,960

$
533,075

 
$
132

$
168

$
331

 
0.09
%
0.13
%
0.25
%
Money Market
2,387,363

2,377,447

1,983,558

 
2,086

2,287

2,136

 
0.35
%
0.38
%
0.43
%
Certificates of Deposit
678,788

712,358

898,458

 
1,568

1,641

2,436

 
0.94
%
0.92
%
1.09
%
Total Deposits
3,642,965

3,584,765

3,415,091

 
3,786

4,096

4,903

 
0.42
%
0.45
%
0.58
%
Junior Subordinated Debentures
137,016

150,089

180,817

 
1,154

1,308

1,752

 
3.37
%
3.41
%
3.83
%
FHLB Borrowings and Other
537,468

599,248

709,611

 
3,065

3,595

4,379

 
2.28
%
2.35
%
2.44
%
Total Interest-Bearing Liabilities
4,317,449

4,334,102

4,305,519

 
8,005

8,999

11,034

 
0.75
%
0.82
%
1.02
%
Noninterest Bearing Demand Deposits
1,264,803

1,304,276

1,167,623

 
 
 
 
 
 
 
 
Other Liabilities (7)
107,645

98,279

106,536

 
 
 
 
 
 
 
 
Total Average Liabilities
5,689,897

5,736,657

5,579,678

 
 
 
 
 
 
 
 
Redeemable Noncontrolling Interests
17,184

18,780

21,701

 
 
 
 
 
 
 
 
Average Shareholders' Equity
609,859

600,662

563,828

 
 
 
 
 
 
 
 
TOTAL AVERAGE LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' EQUITY
$
6,316,940

$
6,356,099

$
6,165,207

 
 
 
 
 
 
 
 
Net Interest Income - on a Fully Taxable Equivalent Basis (FTE)
 
 
 
 
$
46,283

$
48,012

$
46,576

 
 
 
 
LESS: FTE Adjustment (5)
 
 
 
 
2,007

2,466

1,808

 
 
 
 
Net Interest Income (GAAP Basis)
 
 
 
 
$
44,276

$
45,546

$
44,768

 
 
 
 
Interest Rate Spread
 
 
 
 
 
 
 
 
2.92
%
2.96
%
3.02
%
Net Interest Margin
 
 
 
 
 
 
 
 
3.13
%
3.19
%
3.27
%

6


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(In Thousands)
March 31,
2013
 
December 31,
2012
 
March 31,
2012
LOAN DATA (9):
 
 
Commercial and Industrial Loans:
 
 
 
 
 
New England
$
672,895

 
$
691,519

 
$
572,091

San Francisco Bay
61,806

 
61,535

 
74,100

Southern California
53,811

 
53,272

 
30,485

Pacific Northwest
—

 
—

 
41,462

Total Commercial and Industrial Loans
$
788,512

 
$
806,326

 
$
718,138

Commercial Real Estate Loans:
 
 
 
 
 
New England
$
643,756

 
$
662,964

 
$
667,014

San Francisco Bay
642,170

 
648,137

 
691,644

Southern California
402,515

 
380,249

 
291,430

Pacific Northwest
—

 
—

 
136,105

Total Commercial Real Estate Loans
$
1,688,441

 
$
1,691,350

 
$
1,786,193

Construction and Land Loans:
 
 
 
 
 
New England
$
99,989

 
$
92,766

 
$
99,387

San Francisco Bay
37,923

 
33,655

 
40,390

Southern California
11,005

 
11,149

 
5,899

Pacific Northwest
—

 
—

 
3,979

Total Construction and Land Loans
$
148,917

 
$
137,570

 
$
149,655

Residential Loans:
 
 
 
 
 
New England
$
1,163,647

 
$
1,173,741

 
$
1,246,700

San Francisco Bay
436,577

 
431,550

 
335,753

Southern California
298,189

 
300,798

 
231,284

Pacific Northwest
—

 
—

 
65,411

Total Residential Loans
$
1,898,413

 
$
1,906,089

 
$
1,879,148

Home Equity Loans:
 
 
 
 
 
New England
$
78,154

 
$
79,947

 
$
85,388

San Francisco Bay
34,745

 
36,730

 
43,064

Southern California
5,283

 
6,874

 
6,500

Pacific Northwest
—

 
—

 
4,006

Total Home Equity Loans
$
118,182

 
$
123,551

 
$
138,958

Other Consumer Loans:
 
 
 
 
 
New England
$
126,409

 
$
131,999

 
$
152,190

San Francisco Bay
7,792

 
9,581

 
11,787

Southern California
6,606

 
7,148

 
9,376

Pacific Northwest
—

 
—

 
1,472

Eliminations and other, net
195

 
522

 
2,131

Total Other Consumer Loans
$
141,002

 
$
149,250

 
$
176,956

Total Loans
 
 
 
 
 
New England
$
2,784,850

 
$
2,832,936

 
$
2,822,770

San Francisco Bay
1,221,013

 
1,221,188

 
1,196,738

Southern California
777,409

 
759,490

 
574,974

Pacific Northwest
—

 
—

 
252,435

Eliminations and other, net
195

 
522

 
2,131

Total Loans
$
4,783,467

 
$
4,814,136

 
$
4,849,048


7


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(In Thousands)
March 31,
2013
 
December 31,
2012
 
March 31,
2012
CREDIT QUALITY (9):
 
 
Special Mention Loans:
 
 
 
 
 
New England
$
31,132

 
$
40,389

 
$
53,929

San Francisco Bay
24,130

 
24,566

 
40,655

Southern California
19,917

 
19,784

 
24,784

Pacific Northwest
—

 
—

 
8,925

Total Special Mention Loans
$
75,179

 
$
84,739

 
$
128,293

Accruing Substandard Loans (10):
 
 
 
 
 
New England
$
17,372

 
$
27,551

 
$
25,002

San Francisco Bay
49,306

 
49,854

 
57,629

Southern California
8,680

 
12,724

 
19,374

Pacific Northwest
—

 
—

 
3,317

Total Accruing Substandard Loans
$
75,358

 
$
90,129

 
$
105,322

Nonaccruing Loans:
 
 
 
 
 
New England
$
39,853

 
$
28,307

 
$
34,629

San Francisco Bay
25,626

 
25,105

 
28,721

Southern California
7,547

 
7,333

 
7,572

Pacific Northwest
—

 
—

 
1,744

Total Nonaccruing Loans
$
73,026

 
$
60,745

 
$
72,666

Other Real Estate Owned:
 
 
 
 
 
New England
$
1,744

 
$
1,744

 
$
98

San Francisco Bay
585

 
1,395

 
2,194

Southern California
—

 
—

 
1,114

Pacific Northwest
477

 
477

 
480

Total Other Real Estate Owned
$
2,806

 
$
3,616

 
$
3,886

Loans 30-89 Days Past Due and Accruing (11):
 
 
 
 
 
New England
$
10,609

 
$
20,751

 
$
5,304

San Francisco Bay
5,862

 
11,771

 
10,824

Southern California
833

 
13,854

 
5,130

Pacific Northwest
—

 
—

 
99

Total Loans 30-89 Days Past Due and Accruing
$
17,304

 
$
46,376

 
$
21,357

Loans (Charged-off)/ Recovered, Net for the Three Months Ended:
 
 
 
 
 
New England
$
(1,236
)
 
$
(1,148
)
 
$
(341
)
San Francisco Bay
(1,508
)
 
(1,094
)
 
(1,980
)
Southern California
973

 
168

 
(72
)
Pacific Northwest
—

 
2

 
181

Total Net Loans (Charged-off)/ Recovered
$
(1,771
)
 
$
(2,072
)
 
$
(2,212
)

8


Boston Private Financial Holdings, Inc.
Selected Financial Data
(Unaudited)

FOOTNOTES:
(1)
On December 17, 2012, Boston Private Bank & Trust Company announced that it had entered into an agreement to sell its three offices in the Pacific Northwest region. Accordingly, the assets and liabilities to be sold as part of this transaction have been classified as held for sale at March 31, 2013 and December 31, 2012. Within loans held for sale on the consolidated balance sheet, $273.6 million and $276.7 million of the balance at March 31, 2013 and December 31, 2012, respectively, relate to the Pacific Northwest transaction. All of the deposits held for sale at March 31, 2013 and December 31, 2012 relate to the Pacific Northwest transaction. All other assets and liabilities that will be included in the Pacific Northwest transaction have been classified as other assets held for sale or other liabilities held for sale and are included within other assets or other liabilities on the consolidated balance sheet at March 31, 2013 and December 31, 2012.

(2)
In the second quarter of 2012, the Company completed the sale of its affiliate Davidson Trust Company. In 2009, the Company completed the sale of its affiliates Boston Private Value Investors, Inc.; Sand Hill Advisors, LLC; RINET Company, LLC; Gibraltar Private Bank & Trust Company; and Westfield Capital Management Company, LLC. Accordingly, prior period and current financial information related to the divested companies are included with discontinued operations.

(3)
Adjustments to Net Income Attributable to the Company to arrive at Net Income Attributable to the Common Shareholders, as presented in these tables, include decrease/ (increase) in Noncontrolling Interests Redemption Value and Dividends on Participating Securities.

(4)
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 Diluted Weighted Average Shares Outstanding for the Diluted Earnings Per Share calculation to reflect the assumed exercise, conversion, or contingent issuance of dilutive securities. If the additional shares would result in anti-dilution they would be excluded from the Diluted Earning Per Share calculation. The potential dilutive shares relate to: unexercised stock options, unvested non-participating restricted stock, unexercised stock warrants, and unconverted Convertible Trust Preferred securities. The amount of shares that were anti-dilutive for the three months ended March 31, 2013 was less than 0.1 million. The amount of shares that were anti-dilutive for the three months ended December 31, 2012 was 0.3 million. The amount of shares that were anti-dilutive for the three months ended March 31, 2012 was 1.4 million. 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, 2012 for additional information.

(5)
Interest Income on Non-taxable Investments and Loans are presented on an FTE basis using the federal statutory rate of 35% for each period presented.
    
(6)
Includes Loans Held for Sale and Nonaccrual Loans.
    
(7)
Assets and liabilities of discontinued operations are included in other assets and other liabilities in the average balance sheet presentation.

(8)
Includes Deposits Held for Sale.

(9)
The concentration of the Private Banking loan data and credit quality is primarily based on the location of the lender's regional offices. Loans in the Pacific Northwest region not expected to be included the sale of that region's offices at March 31, 2013 and December 31, 2012, have been included with the offices from which they will be managed after the sale. Net loans from the Holding Company to certain principals of the Company's affiliate partners, loans at the Company's non-banking segments, and inter-company loan eliminations are identified as “Eliminations and other, net”.

(10)
Accruing substandard loans include loans that are classified as substandard but are still accruing interest income. The Bank may classify a loan as substandard where known information about possible credit problems of the related borrowers causes management to have doubts as to the ability of such borrowers to comply with the present repayment terms and which may result in disclosure of such loans as nonaccrual at some time in the future.

(11)
In addition to loans 30-89 days past due and accruing, at March 31, 2013, the Company had one loan totaling $0.1 million that was more than 90 days past due but still on accrual status. At December 31, 2012, the Company had three loans totaling $3.6 million that were more than 90 days past due but still on accrual status. At March 31, 2012, there were two loans totaling less than $0.1 million that were more than 90 days past due but still on accrual status. At all periods presented, these loans originated in the New England region.


9




SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunder duly authorized.
    
 
BOSTON PRIVATE FINANCIAL HOLDINGS, INC.
 
 
 
 
By:
/S/ DAVID J. KAYE
 
Name:
David J. Kaye
 
Title:
Chief Financial Officer
Date: April 16, 2013
 
 



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