Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the ?Company? or ?BPFH?) today reported a fourth quarter 2010 GAAP Net Loss Attributable to the Company of $10 million, compared to a $7.2 million net loss in the third quarter of 2010. The net loss for the fourth quarter was primarily driven by $32.6 million in Provision for Loan Losses, largely attributable to continued credit-related stress in the commercial real estate (?CRE?) portfolio at the Company's Northern California banking affiliate.

After accounting for non-cash equity adjustments and preferred dividends, BPFH reported a fourth quarter 2010 GAAP net loss per share of $0.14 compared to a $0.10 GAAP net loss per share in the third quarter of 2010.

For the full year 2010, the Company reported a GAAP net loss of $11 million, compared to GAAP net income of $5.2 million for 2009. After accounting for non-cash equity adjustments and preferred dividends, BPFH reported a 2010 GAAP net loss per share of $0.29, compared to a $0.52 GAAP net loss per share for 2009.

?Managing credit has been our top priority for the past several quarters, with a particular focus on Northern California,? said CEO and President Clay Deutsch. ?Working out our problem assets continues to be the primary factor influencing our results. Further degradation of previously criticized loans, primarily in the Northern California CRE portfolio, was the main driver of our elevated provision in the fourth quarter of 2010.?

?We do see encouraging signs of balance sheet improvement,? continued Mr. Deutsch. ?Our overall levels of classified and non-accrual loans were reduced substantially during the fourth quarter and we continue to see substantial paydowns in January. We continue to reduce construction exposure as evidenced by the 50% decline in construction loans outstanding year-over-year. This mix shift may sacrifice nominal yield, but it also lowers our risk profile substantially and reflects our commitment to focus on high performance private banking.?

?We also see a number of positive indicators that speak to the client attraction and development strengths of our core private banking and wealth management businesses,? continued Mr. Deutsch. ?Year-over-year, our residential mortgage portfolio has increased 12%, our deposit base grew 5% at attractive funding costs and fee-based revenues have grown 10%.?

In addition to reporting fourth quarter results, the Company made two additional restructuring announcements.

The BPFH board of directors has approved a plan to merge the Company's four private banks into one consolidated banking entity. While subject to regulatory and related approvals, the Company intends to begin immediately working on a 12-month integration program.

?We are very committed to integrating our banks into one high-performing private bank,? said Mr. Deutsch. ?Our primary motive is superior client service and client growth as we consistently deliver the full power of our Company's product set and skill set across all our markets. In addition, we will realize substantial gains in productivity and profitability.?

?We have developed a comprehensive transition plan to guide the next 12 months. Detailed analysis suggests an estimated cost savings of 8-9% of our current banking cost base when fully implemented, and a substantial improvement in building margins and overall profitability. Of the 8-9% in estimated savings, two-thirds is employment related, which translates into an 11% reduction in force in the Private Banking Group.?

In a separate announcement, BPFH's wealth advisory affiliate Coldstream Holdings, Inc. announced today that it has repurchased all of BPFH's stock holdings in the firm. BPFH had been a minority shareholder of Coldstream since 2002. Coldstream contributed less than $0.1 million to the Company's total revenue in 2010. This transaction is expected to result in a pre-tax gain of $0.5 million in the first quarter of 2011.

Key Financials (Note: All comparisons relate only to continuing operations).

  • Revenue for the fourth quarter was $76.4 million, an increase of $2.6 million, or 4%, from $73.7 million on a linked quarter basis. On a year to date basis, Revenue was up 2% to $292.5 million.

    • Net Interest Income for the fourth quarter was $45 million, a decrease of $1.5 million, or 3%, from $46.4 million on a linked quarter basis. On a year to date basis, Net Interest Income was up 13% to $180.7 million.
    • Fee Income (Investment Management, Wealth Advisory and Other Private Banking Fees) for the fourth quarter was $26.7 million, an increase of $1.2 million, or 5%, from $25.5 million on linked quarter basis. On a year to date basis, Fee Income was up 10%, to $103.5 million.
  • Net Interest Margin for the fourth quarter was 3.18%, down 24 basis points from 3.42% on a linked quarter basis. Net Interest Margin for the year was 3.30%, up 21 basis points from the prior year.
  • Operating Expenses for the fourth quarter were $63.2 million, an increase of $2.2 million, or 4%, from $61 million on a linked quarter basis. On a year to date basis, Operating Expenses were up 6% to $236.9 million.
  • Tangible Common Equity/Tangible Assets (?TCE/TA?) as of the end of the fourth quarter was 6.34%, down 46 basis points from 6.80% as of the end of the third quarter, and down 32 basis points from 6.66% as of the end of 2009.
  • Total Balance Sheet Assets as of the end of the fourth quarter were $6.2 billion, an increase of $121.6 million, or 2%, from $6.0 billion as of the end of the third quarter and were up 2% from $6.0 billion as of the end of 2009.
  • Provision for Loan Losses for the fourth quarter was $32.6 million, an increase of $0.5 million, or 2%, from $32.1 million on a linked quarter basis. On a year to date basis, Provision for Loan Losses was $87.2 million, up 94% from $45 million as of the end of 2009.
  • Allowance for Loan Losses as a percentage of Total Loans as of the end of the fourth quarter was 2.20%, down 1 basis point from 2.21%, as of the end of the third quarter and up 61 basis points from 1.59% as of the end of 2009.

?Our pro forma Tier 1 Risk-Based Capital Ratio remained solid in the fourth quarter at 13.1%, partially due to a continued mix shift away from higher risk construction loans and into residential mortgage,? said David Kaye, Chief Financial Officer. ?Our Allowance for Loan Losses remains strong and now covers 93% of non-accrual loans compared to 71% in the third quarter.?

Total Deposits were flat on a linked quarter basis at $4.5 billion and were up 5% from $4.3 billion as of the end of 2009. Total Loans decreased 1% as of the end of the fourth quarter to $4.5 billion from the end of the third quarter, and were up 4% from $4.3 billion as of the end of 2009.

Non-Performing Loans as a percentage of Total Loans were 2.39% as of the end of the fourth quarter, down from 3.16% as of the end of the third quarter of 2010. Net Charge-offs for the fourth quarter 2010 were $34.2 million, which represented approximately 76 basis points of Total Loans, compared to $11.1 million of Net Charge-offs during the third quarter 2010, or 25 basis points of Total Loans. Past Due Loans (30-89 days) as a percentage of Total Loans increased 18 basis points on a linked quarter basis to 0.55%.

Total Assets Under Management/Advisory (?AUM?) increased 5%, or $932 million, to $19.5 billion in the fourth quarter. Total AUM was up 11% on a year-over-year basis. The Company experienced fourth quarter AUM inflows of $69 million, as compared to $2 million of inflows in the prior quarter. AUM inflows for the year were $151 million.

Dividend Payments

Concurrent with the release of the fourth quarter 2010 earnings, the Board of Directors of the Company declared a cash dividend to shareholders of $0.01 per share. The record date for this dividend is February 14, 2011 and the payment date is February 28, 2011.

Non-GAAP Financial Measures

The Company uses certain non-GAAP financial measures, such as the TCE/TA ratio and pre-tax, pre-provision income, to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector. A detailed reconciliation table of the Company's GAAP to the non-GAAP measures is attached.

Conference Call

Management will hold a conference call at 8:00 a.m. Eastern Time on Friday, January 28, to discuss the financial results in more detail. To access the call:

Dial In #: 866-843-0890
International Dial In #: 412-317-9250
Elite Entry Number: 7112827
Replay Information:
Available from Jan. 28 at 10 a.m. to Feb. 9
Dial In #: 877-344-7529
International Dial In #: 412-317-0088
Conference Number: 447229

Boston Private Financial Holdings, Inc.

Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) is a national financial services organization comprised of affiliates located in key regions of the U.S. that offer private banking, wealth advisory and investment management services to the high net worth marketplace, selected businesses and institutions. The Company enters demographically attractive markets through selective acquisitions and then expands by way of organic growth. Its business strategy is to empower its affiliates to serve their clients at the local level, while at the same time providing strategic oversight and access to resources, both financial and intellectual, to support management, compliance and risk management, legal, marketing, and operations.

For more information about BPFH, visit the Company's website at www.bostonprivate.com.

Note to Editors:

Boston Private Financial Holdings, Inc. is not to be confused with Boston Private Bank & Trust Company. Boston Private Bank & Trust Company is a locally operated and wholly-owned subsidiary of BPFH. The information reported in this press release is related to the performance and results of BPFH.

Statements in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties. These statements include, among others, statements regarding our strategy, evaluations of future interest rate trends and liquidity, prospects for growth in assets, and prospects for overall results over the long term. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Company's control. Forward-looking statements are based on the current assumptions and beliefs of management and are only expectations of future results. The Company's actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, changes in assumptions or unanticipated factors adversely affecting the timing, among other matters, of expenses or cost savings relating to or resulting from the consolidation of the Company's banking subsidiaries; adverse conditions in the capital and debt markets and the impact of such conditions on the Company's private banking, investment management and wealth advisory activities; changes in interest rates; competitive pressures from other financial institutions; the effects of a continuing deterioration in general economic conditions on a national basis or in the local markets in which the Company operates, including changes which adversely affect borrowers' ability to service and repay our loans; changes in loan defaults and charge-off rates; changes in the value of securities and other assets, adequacy of loan loss reserves, or deposit levels necessitating increased borrowing to fund loans and investments; increasing government regulation, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; the risk that goodwill and intangibles recorded in the Company's financial statements will become impaired; risks related to the identification and implementation of acquisitions; changes in assumptions used in making such forward-looking statements; and the other risks and uncertainties detailed in the Company's Annual Report on Form 10-K and updated by the Company's Quarterly Reports on Form 10-Q; and other filings submitted to the Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.

Boston Private Financial Holdings, Inc.
 Selected Financial Data (1)
(In Thousands, except share data)
(Unaudited)

           
(In thousands, except per share data) Dec 31,   Dec 31, Sept 30,
FINANCIAL DATA: 2010 2009 2010
 
Total Balance Sheet Assets $ 6,152,901 $ 6,049,265 $ 6,031,266
Total Equity 518,878 651,154 533,762
Cash and Investment Securities 1,338,238 1,387,483 1,157,657
 
Commercial Loans 2,356,233 2,213,020 2,386,378
Construction and Land Loans 150,702 315,661 210,915
Residential Mortgage Loans 1,673,934 1,494,703 1,634,958
Home Equity and Other Consumer Loans   299,478     283,656     298,023  
Total Loans 4,480,347 4,307,040 4,530,274
 
Loans Held for Sale 9,145 12,714 22,290
Other Real Estate Owned ("OREO") 12,925 16,600 13,069
 
Deposits 4,486,726 4,255,219 4,492,516
Borrowings 1,027,925 992,034 886,741
 
Book Value Per Common Share $ 6.04 $

6.51

$ 6.21
Market Price Per Share $ 6.55 $ 5.77 $ 6.54
 
ASSETS UNDER MANAGEMENT AND ADVISORY:
 
Private Banking $ 3,592,000 $ 3,479,000 $ 3,561,000
Investment Managers 8,140,000 7,048,000 7,521,000
Wealth Advisory 7,836,000 7,161,000 7,553,000
Less: Inter-company Relationship   (19,000 )   (18,000 )   (18,000 )
Assets Under Management and Advisory $ 19,549,000 $ 17,670,000 $ 18,617,000
 
FINANCIAL RATIOS:
 
Total Equity/Total Assets 8.43 % 10.76 % 8.85 %
Tangible Common Equity/Tangible Assets (2) 6.34 % 6.66 % 6.80 %
Allowance for Loan Losses/Total Loans 2.20 % 1.59 % 2.21 %
Allowance for Loan Losses/Non-Accrual Loans 93 % 79 % 71 %
 
                     

Three Months Ended

Twelve Months Ended
Dec 31,   Dec 31,   Sept 30, Dec 31,   Dec 31,
OPERATING RESULTS: 2010 2009 2010 2010     2009
Net Interest Income $ 44,953 $ 41,057 $ 46,444 $ 180,725 $ 159,485
Investment Management and Trust Fees:
Private Banking 5,744 5,482 5,599 22,826 20,810
Investment Managers   9,682     9,029     8,712     36,941     33,189  
Total Investment Management and Trust Fees 15,426 14,511 14,311 59,767 53,999
Total Wealth Advisory Fees 9,787 9,138 9,525 37,874 34,834
Other Private Banking Fees   1,513     1,249     1,678     5,832     5,652  
Total Fees 26,726 24,898 25,514 103,473 94,485
Gain on Repurchase of Debt - 18,332

-

-

18,739
Gain/(Loss) on Sale of Loans and OREO, net 3,385 (2,120 ) 713 2,410 4,302
Other Revenue, Gains and (Losses), net (3)   1,301     1,254     1,072     5,889     8,923  
Total Fees and Other Income   31,412     42,364     27,299     111,772     126,449  
Total Revenue   76,365     83,421     73,743     292,497     285,934  
 
Provision for Loan Losses 32,551 13,804 32,050 87,178 44,959
 
Salaries and Employee Benefits 36,084 32,434 38,662 143,248 127,707
Occupancy and Equipment 7,254 6,981 7,036 27,773 26,818
Professional Services 5,470 5,479 4,857 19,495 19,841
FDIC Insurance 2,113 2,012 2,137 8,603

9,746

Other Operating Expenses (4)   12,256     10,833     8,287     37,736    

38,846

 
Total Operating Expense   63,177     57,739     60,979     236,855     222,958  
 
Income/(Loss) from Continuing Operations, before Tax (19,363 ) 11,878 (19,286 ) (31,536 ) 18,017
Income Tax Expense/(Benefit)   (8,172 )   2     (12,412 )   (19,451 )   1,632  
Net Income/(Loss) from Continuing Operations (11,191 ) 11,876 (6,874 ) (12,085 ) 16,385
Discontinued Operations, Net of Tax (1)   1,917     31,501     267     3,729     (7,505 )
Net Income/(Loss) before Attribution to Noncontrolling Interest   (9,274 )   43,377     (6,607 )   (8,356 )   8,880  
Less: Net Income Attributable to the Noncontrolling Interest   684     1,169     629     2,614     3,649  
Net Income/(Loss) Attributable to the Company $ (9,958 ) $ 42,208   $ (7,236 ) $ (10,970 )   $ 5,231  
 
 
 
                 

Three Months Ended

Twelve Months Ended

Dec 31, Dec 31, Sept 30, Dec 31, Dec 31,
2010   2009   2010 2010     2009
PER SHARE DATA:
 
Calculation of Income/(Loss) for EPS:
 
Net Income/(Loss) from Continuing Operations $ (11,191 ) $ 11,876 $ (6,874 ) $ (12,085 ) $ 16,385
Less: Net Income Attributable to Noncontrolling Interests   684     1,169     629     2,614     3,649  
Net Income/(Loss) from Continuing Operations Attributable to the Company $ (11,875 ) $ 10,707 $ (7,503 ) $ (14,699 ) $ 12,736
Adjustments to Net Income/(Loss) Attributable to the Company to Arrive at Net
Income/(Loss) Attributable to Common Shareholders (5)   (300 )   (13,873 )   163     (9,766 )   (40,231 )
Net Income/(Loss) from Continuing Operations
Attributable to the Common Shareholders $ (12,175 ) $ (3,166 ) $ (7,340 ) $ (24,465 ) $ (27,495 )
Net Income/(Loss) from Discontinued Operations $ 1,917   $ 31,501   $ 267   $ 3,729   $ (7,505 )
Net Income/(Loss) Attributable to the Common Shareholder $ (10,258 ) $ 28,335 $ (7,073 ) $ (20,736 ) $ (35,000 )
 
Calculation of Average Shares Outstanding:

Weighted Average Basic and Diluted Shares

74,371 67,637 74,154 71,321 66,697
 
 
Earnings/(Loss) per Share - Basic and Diluted
Earnings/(Loss) per Share from Continuing Operations $ (0.16 ) $ (0.05 ) $ (0.10 ) $ (0.34 ) $ (0.41 )
Income/(Loss) per Share from Discontinued Operations $ 0.02 $ 0.47 $ 0.00 $ 0.05 $ (0.11 )
Earnings/(Loss) per Share $ (0.14 ) $ 0.42 $ (0.10 ) $ (0.29 ) $ (0.52 )
 
                                   
AVERAGE BALANCE SHEET: Average Balance Interest Income/Expense Average Yield/Rate

Three Months Ended

Three Months Ended

Three Months Ended

Dec 31,

  

Sept 30,

Dec 31,  

Sept 30,

Dec 31,   Sept 30,
AVERAGE ASSETS

2010

   2009 2010 2010   2009 2010 2010   2009 2010
Earning Assets
Cash and Investments (6) $ 1,303,356 $ 1,412,415 $ 1,084,506 $ 5,518 $ 6,684 $ 5,689 1.69 % 1.89 % 2.10 %
Loans (7)
Commercial and Construction (6) 2,568,964 2,637,992 2,587,847 34,920 37,395 36,481 5.35 % 5.62 % 5.56 %
Residential Mortgage 1,660,775 1,478,772 1,637,831 19,183 18,883 19,621 4.61 % 5.11 % 4.79 %
Home Equity and Other Consumer   300,273     214,088     295,395     3,064   2,500   3,116 4.02 % 4.59 % 4.16 %
Total Earning Assets   5,833,368     5,743,267     5,605,579     62,685   65,462   64,907 4.25 % 4.53 % 4.59 %
Allowance for Loan Losses (99,025 ) (73,613 ) (81,543 )
Cash and due From Banks (Non-Interest Bearing) 32,516 27,113 27,983
Other Assets   441,632     580,466     443,124  
TOTAL AVERAGE ASSETS $ 6,208,491   $ 6,277,233   $ 5,995,143  
 
AVERAGE LIABILITIES AND STOCKHOLDERS' EQUITY
 
Interest-Bearing Liabilities:
Deposits:
Savings and NOW $ 608,474 $ 492,295 $ 559,413 $ 454 $ 728 $ 467 0.30 % 0.59 % 0.33 %
Money Market 1,814,159 1,576,760 1,698,381 3,718 4,521 3,821 0.81 % 1.14 % 0.89 %
Certificates of Deposits   1,183,250     1,569,426     1,277,670     3,877   7,622   4,422 1.30 % 1.93 % 1.37 %
Total Deposits 3,605,883 3,638,481 3,535,464 8,049 12,871 8,710 0.89 % 1.40 % 0.98 %

Junior Subordinated Debentures and
Other Long-term Debt

193,645 215,895 193,645 2,523 2,851 2,511 5.21 % 5.28 % 5.19 %
FHLB Borrowings and Other   685,208     721,999     614,459     5,293   6,916   5,392 3.02 % 3.75 % 3.43 %
Total Interest-Bearing Liabilities   4,484,736     4,576,375     4,343,568     15,865   22,638   16,613 1.40 % 1.96 % 1.51 %
Non-interest Bearing Demand Deposits 1,063,592 906,351 986,892
Payables and Other Liabilities   112,406     98,229     104,806  
Total Liabilities 5,660,734 5,580,955 5,435,266
Redeemable Non-Controlling Interest 19,070 53,177 19,542
Stockholders' Equity   528,687     643,101     540,335  

TOTAL AVERAGE LIABILITIES &
STOCKHOLDERS' EQUITY

$ 6,208,491   $ 6,277,233   $ 5,995,143  
 

Net Interest Income - on a Fully Taxable
Equivalent Basis (FTE)

$ 46,820 $ 42,824 $ 48,294
FTE Adjustment (6)   1,867   1,767   1,850
Net Interest Income (GAAP Basis) $ 44,953 $ 41,057 $ 46,444
Interest Rate Spread 2.85 % 2.57 % 3.08 %
Net Interest Margin                     3.18 %   2.97 %   3.42 %
 
                       
AVERAGE BALANCE SHEET: Average Balance Interest Income/Expense Average Yield/Rate
Twelve Months Ended Twelve Months Ended Twelve Months Ended
Dec 31, Dec 31, Dec 31,
AVERAGE ASSETS 2010   2009 2010   2009 2010   2009
Earning Assets      
Cash and Investments (6) $ 1,255,767 $ 1,127,045 $ 23,360 $ 30,530 1.86 % 2.71 %
Loans (7)
Commercial and Construction (6) 2,567,009 2,679,722 144,402 154,358

5.63

% 5.76 %
Residential Mortgage 1,595,056 1,377,159 76,940 72,214 4.82 % 5.24 %
Home Equity and Other Consumer   286,044     206,894     12,482     9,321   4.36 % 4.51 %
Total Earning Assets   5,703,876     5,390,820     257,184     266,423   4.51 % 4.94 %
Allowance for Loan Losses (81,393 ) (70,771 )
Cash and due From Banks (Non-Interest Bearing) 30,375 25,677
Other Assets   485,170     610,657  
TOTAL AVERAGE ASSETS $ 6,138,028   $ 5,956,383  
 
AVERAGE LIABILITIES AND STOCKHOLDERS' EQUITY
 
Interest-Bearing Liabilities:
Deposits:
Savings and NOW $ 555,244 $ 457,280 $ 2,029 $ 3,240 0.37 % 0.71 %
Money Market 1,701,772 1,315,082 15,223 19,518 0.89 % 1.48 %
Certificates of Deposits   1,316,818     1,525,844     19,518     36,114   1.48 % 2.37 %
Total Deposits 3,573,834 3,298,206 36,770 58,872 1.03 %

1.78

%
Junior Subordinated Debentures and Other Long-term Debt 193,645 240,419 10,028

12,324

5.18 % 5.13 %
FHLB Borrowings and Other   648,226     817,830     22,414     28,633  

3.46

% 3.50 %
Total Interest-Bearing Liabilities   4,415,705     4,356,455     69,212     99,829   1.57 % 2.29 %
Non-interest Bearing Demand Deposits 1,025,431 846,916
Payables and Other Liabilities   103,836     62,599  
Total Liabilities 5,544,972 5,265,970
Redeemable Non-Controlling Interest 20,175 42,119
Stockholders' Equity   572,881     648,294  
TOTAL AVERAGE LIABILITIES & STOCKHOLDERS' EQUITY $ 6,138,028   $ 5,956,383  
 
Net Interest Income - on a FTE Basis $ 187,972 $ 166,594
FTE Adjustment (6)   7,247     7,109  
Net Interest Income (GAAP Basis) $ 180,725 $ 159,485
Interest Rate Spread 2.94 % 2.65 %
Net Interest Margin             3.30 %   3.09 %
 
             
Three Months Ended Three Months Ended Twelve Months Ended
Dec 31, Dec 31, Sept 30, Dec 31,
2010   2009 2010 2010   2009
OPERATING RATIOS:
 
Return on Average Equity (7.53 %) 26.25 % (5.36 %) (1.91 %) 0.81 %
Return on Average Assets (0.64 %) 2.69 % (0.48 %) (0.18 %) 0.09 %
             
 
     
LOAN DATA AND CREDIT QUALITY (8): Dec 31, Dec 31, Sept 30,
2010 2009 2010
Commercial Loans:
New England $ 1,125,669 $ 943,740 $ 1,082,877
Northern California 859,073 927,074 935,994
Southern California 234,926 231,684 233,383
Pacific Northwest 136,745 111,039 134,337
Eliminations and other, net   (180 )   (517 )   (213 )
Total Commercial Loans $ 2,356,233   $ 2,213,020   $ 2,386,378  
 
Construction and Land Loans:
New England $ 80,021 $ 117,817 $ 97,585
Northern California 55,284 161,839 97,791
Southern California 1,840 7,719 1,869
Pacific Northwest   13,557     28,286     13,670  
Total Construction and Land Loans $ 150,702   $ 315,661   $ 210,915  
 
Residential Mortgage Loans:
New England $ 1,181,399 $ 1,113,842 $ 1,154,671
Northern California 293,622 219,394 277,321
Southern California 153,102 124,212 159,321
Pacific Northwest   45,811     37,255     43,645  
Total Residential Mortgage Loans $ 1,673,934   $ 1,494,703   $ 1,634,958  
 
Home Equity and Other Consumer Loans:
New England $ 199,454 $ 179,792 $ 201,569
Northern California 73,172 74,192 72,152
Southern California 17,654 20,947 15,529
Pacific Northwest 7,098 5,278 6,567
Eliminations and other, net   2,100     3,447     2,206  
Total Home Equity and Other Consumer Loans $ 299,478   $ 283,656   $ 298,023  
 
Total Loans
New England $ 2,586,543 $ 2,355,191 $ 2,536,702
Northern California 1,281,151 1,382,499 1,383,258
Southern California 407,522 384,562 410,102
Pacific Northwest 203,211 181,858 198,219
Eliminations and other, net   1,920     2,930     1,993  
Total Loans $ 4,480,347   $ 4,307,040   $ 4,530,274  
           

 

Dec 31,   Dec 31, Sept 30,

 

2010 2009 2010
 
Allowance for Loan Losses:
New England $ 32,938 $ 27,363 $ 30,948
Northern California 46,117 19,950 49,824
Southern California 12,375 11,659 12,346
Pacific Northwest   6,973     9,472   6,892  
Total Allowance for Loan Losses $ 98,403   $ 68,444 $ 100,010  
 
Special Mention Loans:
New England $ 70,114 $ 41,421 $ 54,375
Northern California 74,991 20,577 66,493
Southern California 22,691 8,900 7,872
Pacific Northwest   19,819     18,255   21,325  
Total Special Mention Loans $ 187,615   $ 89,153 $ 150,065  
 
Accruing Classified Loans (9):
New England $ 19,745 $ 14,534 $ 19,228
Northern California 62,518 14,768 66,061
Southern California 6,802 8,117 11,467
Pacific Northwest   8,373     15,118   9,308  
Total Accruing Classified Loans $ 97,438   $ 52,537 $ 106,064  
 
Non-performing Loans:
New England $ 25,172 $ 8,346 $ 20,872
Northern California 60,373 37,584 99,573
Southern California (10) 10,663 21,953 12,585
Pacific Northwest   10,783     22,455   10,060  
Total Non-performing Loans $ 106,991   $ 90,338 $ 143,090  
 
Other Real Estate Owned:
New England $ - $ 870 $ 892
Northern California 10,207 9,025 4,283
Southern California 1,128 4,382 4,141
Pacific Northwest   1,590     2,323   3,753  
Total Other Real Estate Owned $ 12,925   $ 16,600 $ 13,069  
 
Loans 30-89 Days Past Due:
New England $ 12,844 $ 6,658 $ 5,515
Northern California 11,219 6,799 8,270
Southern California 682 4,259 2,860
Pacific Northwest   -     3,478   226  
Total Loans 30-89 Days Past Due $ 24,745   $ 21,194 $ 16,871  
 
Loans Charged-off/(Recovered), Net for the Three Months Ended:
New England $ 510 $ 555 $ 393
Northern California 33,957 6,937 11,896
Southern California (118 ) 5,065 (1,224 )
Pacific Northwest   (191 )   5,813   48  
Total Net Loans Charged-off $ 34,158   $ 18,370 $ 11,113  
 
Loans Charged-off/(Recovered), Net for the Twelve Months Ended:
New England $ 3,725 $ 2,495
Northern California 54,858 8,387
Southern California (1,753 ) 13,017
Pacific Northwest   389     16,707
Total Net Loans Charged-off $ 57,219     $ 40,606
 
 

(1)

 

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

           

(2)

 

The Company uses certain non-GAAP financial measures, such as the Tangible Common Equity to Tangible Assets ratio, and Pre-tax Pre-provision Income to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector.

 

A reconciliation from the Company's GAAP Total Equity to Total Assets ratio to the Non-GAAP Tangible Common Equity to Tangible Assets ratio is presented below:

 
The Company calculates Tangible Assets by adjusting Total Assets to exclude Goodwill and Intangible Assets.
 

The Company calculates Tangible Common Equity by adjusting Total Equity to exclude: the equity from the TARP funding, Goodwill and Intangible Assets, net and includes the difference between Redemption Value and value per ARB 51 for Redeemable Non-controlling Interests.

 
     
Dec 31, Dec 31, Sept 30,
  2010     2009     2010  
 
Total Balance Sheet Assets(1) $ 6,152,901 $ 6,049,265 $ 6,031,266
LESS: Goodwill and Intangible Assets, net   (151,212 )   (150,117 )   (146,153 )
Tangible Assets (non-GAAP) 6,001,689 5,899,148 5,885,113
 
Total Equity 518,878 651,154 533,762
 
LESS: Goodwill and Intangible Assets, net (151,212 ) (150,117 ) (146,153 )
TARP Funding - (154,000 ) -
 

ADD:

Difference between Redemption Value of Non-controlling Interests and value under ARB 51

  12,578     46,016     12,608  
Total adjusting items (138,634 ) (258,101 ) (133,545 )
 
Tangible Common Equity (non-GAAP) 380,244 393,053 400,217
 
Total Equity/Total Assets 8.43 % 10.76 % 8.85 %
Tangible Common Equity/Tangible Assets (non-GAAP)   6.34 %   6.66 %   6.80 %
 

A reconciliation from the Company's GAAP Income/(Loss) from Continuing Operations, before tax to the Non-GAAP Income/(Loss) Pre-tax, Pre-provision is presented below:

 
The Company calculates Pre-tax Pre-provision income by adding the Provision for Loan Losses to Income/(Loss) from Continuing Operations, before Tax.
               

Three Months Ended

Twelve Months Ended
Dec 31, Dec 31, Sept 30,

Dec 31,

Dec 31,

  2010       2009       2010   2010     2009
Income/(Loss) from Continuing Operations, before Tax (19,363 ) 11,878 (19,286 ) (31,536 ) 18,017
Provision for Loan Losses   32,551       13,804     32,050   87,178     44,959
Income/(Loss) Pre-tax, Pre-provision   13,188       25,682     12,764   55,642     62,976
 

(3)

 

Other Revenue, Gains and (Losses), net, as presented in these tables include Gain on Sale of Investments, net; and Other Miscellaneous Revenue.

 

(4)

 

Other Operating Expenses, as presented in these tables, include expenses related to Marketing and Business Development, Contract Services and Processing, Impairment Expense and Amortization of Intangibles.

 

(5)

 

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

 

(6)

 

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

(7)

 

Includes Loans Held for Sale and Non-accrual Loans.
 

(8)

 

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

 

(9)

 

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

 

(10)

 

Includes the non-strategic loans held for sale of $1.5 million, $3.6 million, and $2.9 million, at Dec 31, 2010, Dec 31, 2009 and Sept 30, 2010, respectively.

Boston Private Financial Holdings, Inc.
Jeanne Hess, 617-912-3798
Assistant Vice President, Investor Relations
jhess@bostonprivate.com
or
Sloane & Company
John Hartz, 857-598-4779
jhartz@sloanepr.com