BOSTON, July 26 /PRNewswire-FirstCall/ -- Boston Private Financial Holdings, Inc. ("Boston Private" or the "Company") today reported second quarter 2006 non-GAAP cash earnings of $0.42 per diluted share as compared to $0.43 in the second quarter of 2005. GAAP earnings for the second quarter 2006 decreased to $0.33 per diluted share versus $0.35 per diluted share for the second quarter of 2005.
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Included in the financial performance are the results from Gibraltar Private Bank & Trust Company ("Gibraltar"), which Boston Private acquired on October 1, 2005, and of Anchor Capital Holdings LLC ("Anchor"), which Boston Private acquired on June 1, 2006. More detailed financial information regarding Gibraltar's and Anchor's financial results is outlined later in this press release. The Company also announced the continuation of its quarterly cash dividend to shareholders of $0.08 per share.
Highlights
* Total Revenues for the second quarter were up 37.7% to $83.5 million,
compared to revenue of $60.7 million a year ago. Adjusted for the $16.0
million of revenues related to the Gibraltar and Anchor acquisitions
including interest on the new trust preferred issued in connection with
the Gibraltar transaction, revenues were $67.6 million, or an 11.4%
increase, on a same affiliate basis. (Gibraltar and Anchor had revenues
of $15.6 million and $2.3 million, respectively, in the second quarter
of 2006).
* Total Operating Expenses for the second quarter were up 43.7% to $62.0
million, compared to $43.2 million a year ago. Adjusted for the $12.8
million related to the acquisitions of Gibraltar and Anchor, operating
expenses were $49.3 million on a same affiliate basis, an increase of
14.1%. (Gibraltar and Anchor had operating expenses of $11.0 million
and $1.8 million, respectively, in the second quarter of 2006).
Included in operating expenses were severance expenses totaling
approximately $600 thousand.
* Net Income for the second quarter was $12.3 million, compared to $10.3
million a year ago. Adjusted for the $1.5 million of net income related
to Gibraltar and Anchor and the relating financing, net income was $10.8
million, or an increase of 5.6%, on a same affiliate basis. (Gibraltar
and Anchor had net income of $2.3 million and $244 thousand,
respectively, and the trust preferred related to the Gibraltar
acquisition resulted in interest expense of $1.1 million, net of tax, in
the second quarter of 2006).
* Total Assets Under Management/Advisory, including the Company's
unconsolidated affiliates, increased 37.5%, or $8.2 billion, over the
prior year to $30.2 billion. Adjusted for the $798 million and $5.4
billion in Assets Under Management at June 30, 2006 held by Gibraltar
and Anchor, respectively, AUM was up $2.0 billion, or 9.3%.
* Net Interest Income increased 53.4% or $15.1 million over the second
quarter 2005, to $43.4 million. Adjusted for the $11.5 million in net
interest income at Gibraltar and the related trust preferred interest
expense, same affiliate net interest income would have been up $3.4
million, or 12.1%, to $31.7 million in the second quarter of 2006.
* Net interest margin, including the impact of trust preferred interest
expense, was 3.92%, 15 basis points higher than the 2005 level of
3.77%, and 10 basis points lower than 4.02% from the first quarter of
2006.
* Core net interest margin increased 25 basis points to 4.20% from the
second quarter of 2005, and decreased 11 basis points from 4.31% in
the first quarter 2006.
* Increased volume contributed $16.6 million to the increase in net
interest income.
* Increased interest rates caused a $1.5 million reduction in net
interest income.
Timothy L. Vaill, Chairman and Chief Executive Officer, said, "In previous quarters, our financial results have benefited from the diversification of our business across our three disciplines -- private banking, wealth advisory and investment management. During the second quarter, challenges in the banking environment occurred simultaneously with a difficult equity market. While we experienced robust loan growth, competition heightened for deposits, the yield curve was relatively flat, and equity markets underperformed, all of which impacted our financial results. In addition, we continued to make investments to further the strategic positioning of our growth company. Our talented, experienced team is managing our business through the trends in both our private banking and investment management disciplines, focusing on maintaining our enduring relationships with customers, our pristine credit quality, and our comprehensive, proven investment process."
"The fundamentals of the wealth management market remain strong and we believe we have the right strategy to capitalize on those significant opportunities. We are building a company that sustains long-term organic growth augmented by selective acquisitions to further diversify our business across revenue, product, distribution channel and geography. The investments we are making today to enhance our marketing efforts at the investment managers, roll out new products and services, and open new private banking offices in demographically rich markets are critical to our strong organic growth. While we value operating leverage, we believe these initiatives are in the long term best interest of our Company and our shareholders," stated Walter Pressey, President.
Jay Cromarty, Eastern Region President added, "We were pleased to close the acquisition of Anchor during the quarter. Anchor further diversifies our business by entering the growing SMA market and expanding our distribution channel. The Separately Managed Account (SMA) market is one of the fastest growing segments of asset management with growth rates between 16-18% annually. Anchor enjoys strong relationships with approximately 20 program sponsors including industry leaders AG Edwards, Morgan Stanley, Wells Fargo, Bank of America and Smith Barney."
"As we have discussed previously, as an acquisition oriented Company, there is a meaningful difference between cash and GAAP earnings per share. With the addition of Anchor, we expect that difference to be approximately $0.38 per share for the full year," stated Robert J. Whelan, Chief Financial Officer.
Vaill concluded, "While we face near-term challenges with the yield curve and the market, we are executing our long term strategy to build a wealth management organization broadly recognized by discriminating individuals and their businesses as the financial service provider of choice."
Second Quarter 2006 Results
Boston Private's revenues were $83.5 million for the second quarter 2006, up $22.8 million compared to revenues of $60.7 million for the second quarter 2005. Excluding the Gibraltar and Anchor acquisitions and the related trust preferred interest expense, revenues for the second quarter of 2006 would have been $67.6 million as compared to $60.7 million for the second quarter of 2005, an increase of $6.9 million or 11.4%.
The Company's net interest income increased 53.4% or $15.1 million for second quarter 2006 compared to second quarter 2005. The increase in net interest income in the second quarter of 2006 was due to an increased volume of earning assets, which contributed $16.6 million, offset by rate increases which reduced net interest income by $1.5 million. Excluding the impact of trust preferred interest expense, the core net interest margin was 4.20% in the second quarter 2006, as compared to 4.31% in the first quarter of 2006. Boston Private's net interest margin, including the trust preferred, declined 10 basis points to 3.92% in the second quarter 2006 compared to 4.02% in the first quarter 2006.
Boston Private's loan portfolio achieved strong growth year over year with commercial loans, including construction loans, up 49.6% and residential loans up 71.4% over the prior year. Commercial loans totaled $2.2 billion and represented 55.6% of the combined loan portfolio. Residential loans totaled $1.5 billion and represented 37.5% of the total portfolio. Combined, the loan portfolio grew 62.8% over the past twelve months. Deposits increased $1.1 billion, or 43.3%, to $3.7 billion over the June 30, 2005 balance of $2.6 billion. With the acquisition of Gibraltar, Boston Private's loan mix shifted to more residential loans, which generally have a lower interest rate than commercial loans. Gibraltar had $1.4 billion, $936 million and $1.1 billion in assets, loans and deposits, respectively, at June 30, 2006.
In Boston Private's wealth advisory business, fee income increased $440 thousand to $5.1 million for the second quarter of 2006, an increase of 9.4%. Investment management fee income for the second quarter 2006 totaled $32.6 million, up 29.2% over second quarter 2005. The increase was due predominantly to the additions of Gibraltar and Anchor and strong investment performance at certain affiliates.
Assets under management and advisory increased by approximately $7.7 billion, or 38.2%, to $27.7 billion at June 30, 2006 from $20.0 billion at June 30, 2005. The increase was driven predominantly by the acquisition of Anchor (AUM of $5.4 billion) as well as Gibraltar (AUM of $798 million). Including the Company's unconsolidated affiliates, total assets under management and advisory increased 37.5% to $30.2 billion. Market action resulted in a decrease of $594 million in assets under management for banks and investment management firms during the second quarter of 2006 on a linked quarter basis. Assets under management for the banks and the investment management firms had net outflows of $120.0 million for the second quarter.
Operating expenses were $62.0 million for the second quarter 2006, up 43.7% over the second quarter 2005. The main drivers of operating expense growth were the addition of $12.8 million in operating expenses of recently acquired affiliates, including compensation. Operating expenses were also impacted by investments in new business initiatives such as opening new offices at existing affiliates and the delivering of new services. On a same affiliate basis, operating expenses increased 14.1%.
Dividend Payment Continues
Concurrent with the release of the second quarter 2006 earnings, the Board of Directors of Boston Private Financial Holdings declared a cash dividend to shareholders of $0.08 per share, reflecting the quarterly earnings performance. The record date for this dividend is August 1, 2006 and the payment date is August 15, 2006.
Cash Earnings
Boston Private calculates its cash earnings by adjusting net income to exclude net amortization of intangibles, and related tax benefits that result from purchase accounting, as well as the impact of certain non-cash share based compensation plans. Over and above GAAP earnings, the Company believes its cash earnings reports the additional value to shareholders generated by purchase accounting adjustments and the non-cash share based compensation plans.
A detailed reconciliation is attached.
Conference Call
Management will host a conference call to review the Company's financial performance and business developments on July 27, 2006 at 9 a.m. Eastern time. Interested parties may join the call by dialing 800-867-0731 and the password required is "Boston." The call will be simultaneously web cast and may be accessed on the Internet by linking through http://www.bostonprivate.com/, http://www.prnewswire.com/, or Yahoo! Finance. A continuous telephone replay will be available beginning at 11:30 a.m. Eastern time on July 27, 2006. The replay telephone number is 800-388-9064.
Boston Private Wealth Management Group
Boston Private Financial Holdings, Inc. is a wealth management firm that owns twelve independently-operated affiliate partners across the U.S. These partners comprise the Boston Private Wealth Management Group which provides private banking, financial planning/wealth advisory and investment management services to the high net worth marketplace, selected businesses and institutions. Through strategic acquisitions in demographically attractive geographic areas, the Company forms wealth management "clusters" that together deliver lifetime financial solutions on a local basis. The Company makes capital resources available to its affiliate partners and works with them on growth strategies, marketing, leadership development, compliance and technology.
This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Company's management uses these non- GAAP measures in its analysis of the Company's performance. These measures typically adjust GAAP performance measures to exclude the effects of charges and expenses related to the consummation of mergers and acquisitions, as well as excluding other significant gains or losses that are unusual in nature. Also included in these non-GAAP measures are net amortization of intangibles, tax benefits related to purchase accounting, stock options and ESPP expense. Because these items and their impact on the Company's performance are difficult to predict, management believes that presentations of financial measures excluding the impact of these items provide useful supplemental information that is essential to a proper understanding of the operating results of the Company's businesses. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies.
Statements in this press release that are not historical facts are forward-looking statements as defined by United States securities laws. Forward-looking statements involve risks and uncertainties. These statements include, but are not limited to, prospects for long term financial performance, the impact on the Company's results of changing market conditions and prevailing and future interest rates, prospects for growth in balance sheet assets and assets under management and advisory 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 Boston Private's control and could cause actual results to differ materially from those set forth in the forward-looking statements. Factors that could cause actual results to differ materially from those set forth in the forward-looking statements include, among others, adverse conditions in the capital markets and the impact of such conditions on Boston Private's investment advisory activities; interest rate compression which may adversely impact net interest income; competitive pressures from other financial institutions which, together with other factors, may affect the Company's growth and financial performance; the effects of national and local economic conditions; and the risk that goodwill and intangibles recorded in the Company's financial statements will become impaired; as well as the other risks and uncertainties detailed in Boston Private's Annual Report on Form 10- K and other filings submitted to the Securities and Exchange Commission. Boston Private 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.
June 30, June 30, December 31,
FINANCIAL DATA (1): 2006 2005 2005
Total Balance Sheet Assets $5,279,086 $3,534,065 $5,118,568
Stockholders' Equity 600,347 350,521 539,348
Tangible Capital:
Boston Private Bank & Trust 147,098 127,798 137,887
Borel Private Bank & Trust 83,600 68,778 76,570
First Private Bank & Trust 44,017 35,540 39,514
Gibraltar Private Bank & Trust 71,296 - 63,762
Investment Securities 563,513 557,649 584,860
Goodwill 318,118 132,246 286,751
Intangible Assets 129,338 49,963 97,656
Commercial and Construction Loans 2,197,682 1,468,680 2,039,443
Residential Mortgage Loans 1,482,629 864,846 1,338,607
Home Equity and Other Consumer
Loans 270,633 93,805 246,190
Total Loans 3,950,944 2,427,331 3,624,240
Loans Held for Sale 8,131 46,390 12,883
Allowance for Loan Losses and
Off-Balance Sheet Risk 45,383 30,205 42,354
Non-performing Loans 5,775 4,438 7,900
Other Real Estate Owned - - -
Total Non-performing Assets 5,775 4,438 7,900
Deposits 3,661,419 2,555,668 3,748,141
Borrowings 887,612 537,158 703,379
Book Value Per Share $16.52 $12.48 $15.50
Market Price Per Share $27.90 $25.20 $30.42
ASSETS UNDER MANAGEMENT AND ADVISORY:
Westfield Capital Management $8,890,000 $8,104,000 $8,325,000
Boston Private Bank & Trust 2,279,000 2,283,000 2,310,000
Sand Hill Advisors 1,120,000 1,044,000 1,094,000
Boston Private Value Investors 891,000 827,000 867,000
RINET Company 1,180,000 1,038,000 1,129,000
Borel Private Bank & Trust 692,000 649,000 661,000
Dalton, Greiner, Hartman, Maher &
Co. 3,199,000 3,326,000 3,259,000
KLS Professional Advisors Group 3,399,000 2,956,000 3,140,000
Gibraltar Private Bank & Trust 798,000 - 757,000
Anchor Capital Holdings 5,430,000 - -
Less: Inter-company Relationship (201,000) (206,000) (203,000)
Consolidated Affiliate Assets
Under Management and Advisory $27,677,000 $20,021,000 $21,339,000
Coldstream Capital Management 975,000 650,000 900,000
Bingham, Osborn, & Scarborough 1,545,000 1,284,000 1,415,000
Total Assets Under Management
and Advisory $30,197,000 $21,955,000 $23,654,000
FINANCIAL RATIOS:
Stockholders' Equity/Total Assets 11.37% 9.92% 10.54%
Non-performing Loans/Total Loans 0.15% 0.18% 0.22%
Allowance for Loan Losses and
Off-Balance Sheet Risk/Total Loans 1.15% 1.24% 1.17%
Allowance for Loan Losses and
Off-Balance Sheet Risk/
Non-performing Assets 785.85% 680.60% 536.13%
Tangible Capital/Tangible Assets 3.16% 5.02% 3.27%
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
OPERATING RESULTS (1): 2006 2005 2006 2005
Net Interest Income - on a Fully
Taxable Equivalent Basis (FTE) $44,766 $29,470 $89,670 $57,095
FTE Adjustment 1,364 1,176 2,700 2,324
Net Interest Income 43,402 28,294 86,970 54,771
Investment Management Fees:
Westfield Capital Management 13,900 11,637 27,639 22,983
Boston Private Bank & Trust 3,472 3,208 6,889 6,298
Sand Hill Advisors 1,562 1,560 3,104 3,126
Boston Private Value Investors 1,724 1,567 3,356 3,160
Borel Private Bank & Trust 1,061 824 2,047 1,643
Gibraltar Private Bank & Trust 1,580 - 3,075 -
Dalton, Greiner, Hartman, Maher &
Co. 7,036 6,437 14,580 13,159
Anchor Capital Holdings 2,263 - 2,263 -
Total Investment Management Fees 32,598 25,233 62,953 50,369
Wealth Advisory Fees:
RINET Company 2,078 2,031 4,018 4,025
KLS Professional Advisors Group 3,005 2,635 5,884 5,191
Other 47 24 98 53
Total Wealth Advisory Fees 5,130 4,690 10,000 9,269
Other Fees 1,664 1,653 3,492 3,332
Total Fees 39,392 31,576 76,445 62,970
Earnings in Equity Investments 220 289 991 505
Gain on Sale of Loans, Net 525 464 982 770
Gain on Sale of Investments, Net - 37 - 41
Total Fees and Other Income 40,137 32,366 78,418 64,286
Total Revenue 83,539 60,660 165,388 119,057
Provision for Loan Losses 1,704 778 2,867 1,640
Salaries and Employee Benefits 40,208 28,261 79,583 57,170
Occupancy and Equipment 6,995 4,836 13,553 9,547
Professional Services 3,727 2,410 6,535 5,155
Marketing and Business Development 2,361 1,782 4,697 3,312
Contract Services and Processing 1,273 1,123 2,503 1,885
Amortization of Intangibles 3,164 1,539 6,038 3,077
Other 4,302 3,218 8,820 6,369
Total Operating Expense 62,030 43,169 121,729 86,515
Minority Interest 745 382 1,559 955
Income Before Income Taxes 19,060 16,331 39,233 29,947
Income Tax Expense 6,772 6,075 14,118 10,976
Net Income $12,288 $10,256 $25,115 $18,971
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
RECONCILIATION OF GAAP EARNINGS 2006 2005 2006 2005
TO CASH EARNINGS (1):
Net Income (GAAP Basis) $12,288 $10,256 $25,115 $18,971
Cash Basis Earnings (2)
Book Amortization of Purchased
Intangibles, Net of Tax 1,763 780 3,390 1,561
Cash Benefit of Tax Deductions from
Purchased Intangibles & Goodwill 1,023 1,032 2,046 2,065
Stock options and ESPP, Net of Tax 1,062 758 1,963 1,344
Total Cash Basis Adjustment 3,848 2,570 7,399 4,970
Cash Basis Earnings $16,136 $12,826 $32,514 $23,941
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
PER SHARE DATA:
(In thousands, except per share data) (1)
Calculation of Net Income for EPS:
Net Income as reported and
for basic EPS $12,288 $10,256 $25,115 $18,971
Interest on convertible trust
preferred securities, net of tax 765 765 1,530 1,529
Net Income for diluted EPS $13,053 $11,021 $26,645 $20,500
Calculation of average shares outstanding:
Weighted average basic shares 35,199 27,680 34,910 27,601
Dilutive effect of:
Stock Options, Stock Grants and
Other 1,518 814 1,551 904
Forward Agreement - 87 - 161
Convertible trust preferred
securities 3,182 3,183 3,182 3,182
Dilutive potential common shares 4,700 4,084 4,733 4,247
Weighted average diluted shares 39,899 31,764 39,643 31,848
Earnings per Share:
Basic $0.35 $0.37 $0.72 $0.69
Diluted $0.33 $0.35 $0.67 $0.64
RECONCILIATION OF GAAP EPS
TO CASH EPS:
(on a Diluted Basis)
Earnings Per Share (GAAP Basis) $0.33 $0.35 $0.67 $0.64
Cash Basis Adjustment $0.09 $0.08 $0.19 $0.16
Cash Basis Earnings Per Diluted Share $0.42 $0.43 $0.86 $0.80
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
OPERATING RATIOS & STATISTICS (1):
Return on Average Equity 8.62% 12.06% 9.03% 11.35%
Return on Average Assets 0.95% 1.18% 0.98% 1.11%
Net Interest Margin 3.92% 3.77% 3.96% 3.73%
Core Net Interest Margin(3) 4.20% 3.95% 4.26% 3.91%
Total Fees and Other Income/Total
Revenue 48.05% 53.36% 47.41% 54.00%
Efficiency Ratio 69.95% 68.19% 69.65% 69.49%
Loans Charged-off, Net of (Recoveries) $12 $4 $539 $77
CASH OPERATING RATIOS (1):
Return on Average Equity (4) 11.32% 15.08% 11.69% 14.33%
Return on Average Assets (5) 1.25% 1.48% 1.27% 1.41%
AVERAGE BALANCE SHEET: Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
AVERAGE ASSETS: 2006 2005 2006 2005
Interest-Bearing Cash $9,167 $4,058 $10,473 $3,312
Federal Funds Sold
and other 99,247 137,194 138,333 145,257
U.S. Treasuries and
Agencies 226,275 229,199 232,735 221,559
Municipal Securities 225,533 229,290 225,506 228,849
Corporate Bonds 38,579 32,114 41,488 32,341
Mortgage-Backed
Securities 41,318 41,974 41,828 43,602
Stock in Federal
Home Loan Banks 33,888 22,196 31,631 21,395
Commercial and
Construction Loans 2,143,288 1,430,941 2,095,738 1,399,838
Residential Mortgage
Loans 1,456,485 877,503 1,421,231 852,714
Home Equity and Other
Consumer Loans 259,739 92,934 252,041 92,044
Total Earning Assets 4,533,519 3,097,403 4,491,004 3,040,911
Allowance for
Loan Losses (38,817) (26,717) (38,511) (27,560)
Goodwill 291,775 134,766 288,901 133,833
Intangible Assets 104,922 50,530 100,607 51,934
Other Assets 269,110 211,646 272,124 208,704
TOTAL AVERAGE ASSETS $5,160,509 $3,467,628 $5,114,125 $3,407,822
AVERAGE LIABILITIES AND STOCKHOLDERS' EQUITY:
Savings Accounts $112,200 $39,330 $108,866 $39,309
NOW Accounts 346,779 237,551 345,286 234,477
Money Market Accounts 1,696,037 1,181,996 1,720,329 1,170,397
Certificates of Deposit 726,806 528,866 712,952 520,070
Total Interest-
Bearing Deposits 2,881,822 1,987,743 2,887,433 1,964,253
Repurchase Agreements 111,817 102,449 115,075 102,634
FHLB Borrowings 471,620 297,428 435,361 291,231
Junior Subordinated
Debentures 234,021 114,434 234,021 114,434
Other Borrowings 6,891 5,698 8,822 5,168
Total Interest-
Bearing Liabilities 3,706,171 2,507,752 3,680,712 2,477,720
Non-interest Bearing
Deposits 758,002 527,997 743,767 507,938
Other Liabilities 125,981 91,630 133,231 87,940
Total Liabilities 4,590,154 3,127,379 4,557,710 3,073,598
Stockholders' Equity 570,355 340,249 556,415 334,224
TOTAL AVERAGE
LIABILITIES &
STOCKHOLDERS' EQUITY $5,160,509 $3,467,628 $5,114,125 $3,407,822
June 30, March 31,
2006 2006
FINANCIAL DATA (1):
Total Balance Sheet Assets $5,279,086 $5,231,264
Stockholders' Equity 600,347 555,690
Tangible Capital:
Boston Private Bank & Trust 147,098 141,979
Borel Private Bank & Trust 83,600 80,211
First Private Bank & Trust 44,017 41,694
Gibraltar Private Bank & Trust 71,296 68,233
Investment Securities 563,513 585,679
Goodwill 318,118 286,595
Intangible Assets 129,338 94,681
Commercial and Construction Loans 2,197,682 2,109,229
Residential Mortgage Loans 1,482,629 1,405,984
Home Equity and Other Consumer Loans 270,633 243,565
Total Loans 3,950,944 3,758,778
Loans Held for Sale 8,131 2,842
Allowance for Loan Losses and
Off-Balance Sheet Risk 45,383 43,511
Non-performing Loans 5,775 4,901
Other Real Estate Owned - -
Total Non-performing Assets 5,775 4,901
Deposits 3,661,419 3,804,122
Borrowings 887,612 762,436
Book Value Per Share $16.52 $15.80
Market Price Per Share $27.90 $33.79
ASSETS UNDER MANAGEMENT AND ADVISORY:
Westfield Capital Management $8,890,000 $9,200,000
Boston Private Bank & Trust 2,279,000 2,352,000
Sand Hill Advisors 1,120,000 1,143,000
Boston Private Value Investors 891,000 904,000
RINET Company 1,180,000 1,203,000
Borel Private Bank & Trust 692,000 693,000
Dalton, Greiner, Hartman, Maher & Co. 3,199,000 3,489,000
KLS Professional Advisors Group 3,399,000 3,335,000
Gibraltar Private Bank & Trust 798,000 802,000
Anchor Capital Holdings 5,430,000 -
Less: Inter-company Relationship (201,000) (222,000)
Consolidated Affiliate Assets
Under Management and Advisory $27,677,000 $22,899,000
Coldstream Capital Management 975,000 935,000
Bingham, Osborn, & Scarborough 1,545,000 1,535,000
Total Unconsolidated Assets Under
Management and Advisory $30,197,000 $25,369,000
FINANCIAL RATIOS (1):
Stockholders' Equity/Total Assets 11.37% 10.62%
Nonperforming Loans/Total Loans 0.15% 0.13%
Allowance for Loan Losses and
Off-Balance Sheet Risk/Total Loans 1.15% 1.16%
Allowance for Loan Losses and Off-Balance
Sheet Risk/Non-performing Assets 785.85% 887.80%
Tangible Capital/Tangible Assets 3.16% 3.60%
Three Months Ended
June 30, March 31,
OPERATING RESULTS (1): 2006 2006
Net Interest Income - on a Fully
Taxable Equivalent Basis (FTE) $44,766 $44,903
FTE Adjustment 1,364 1,335
Net Interest Income 43,402 43,568
Investment Management Fees:
Westfield Capital Management 13,900 13,739
Boston Private Bank & Trust 3,472 3,417
Sand Hill Advisors 1,562 1,542
Boston Private Value Investors 1,724 1,632
Borel Private Bank & Trust 1,061 986
Gibraltar Private Bank & Trust 1,580 1,495
Dalton, Greiner, Hartman, Maher & Co. 7,036 7,544
Anchor Capital Holdings 2,263 -
Total Investment Management Fees 32,598 30,355
Wealth Advisory Fees
RINET Company 2,078 1,940
KLS Professional Advisors Group 3,005 2,878
Other 47 51
Total Wealth Advisory Fees 5,130 4,869
Other Fees 1,664 1,829
Total Fees 39,392 37,053
Earnings in Equity Investments 220 772
Gain on Sale of Loans, Net 525 457
Gain on Sale of Investments, Net - -
Total Fees and Other Income 40,137 38,282
Total Revenue 83,539 81,850
Provision for Loan Losses 1,704 1,163
Salaries and Benefits 40,208 39,375
Occupancy and Equipment 6,995 6,558
Professional Services 3,727 2,808
Marketing and Business Development 2,361 2,336
Contract Services and Processing 1,273 1,230
Amortization of Intangibles 3,164 2,875
Other 4,302 4,517
Total Operating Expense 62,030 59,699
Minority Interest 745 814
Income Before Income Taxes 19,060 20,174
Income Tax Expense 6,772 7,346
Net Income $12,288 $12,828
Three Months Ended
June 30, March 31,
RECONCILIATION OF GAAP EARNINGS 2006 2005
TO CASH EARNINGS (1):
Net Income (GAAP Basis) $12,288 $12,828
Cash Basis Earnings(2)
Book Amortization of Purchased
Intangibles, Net of Tax 1,763 1,627
Cash Benefit of Tax Deductions from
Purchased Intangibles & Goodwill 1,023 1,023
Stock options and ESPP, Net of Tax 1,062 900
Total Cash Basis Adjustment 3,848 3,550
Cash Basis Earnings $16,136 $16,378
Three Months Ended
June 30, March 31,
2006 2006
PER SHARE DATA:
(In thousands, except per share data) (1)
Calculation of Net Income for EPS:
Net Income as reported and for basic EPS $12,288 $12,828
Interest on convertible trust preferred
securities, net of tax 765 765
Net Income for diluted EPS $13,053 $13,593
Calculation of Average Shares Outstanding:
Weighted average basic shares 35,199 34,621
Dilutive effect of:
Stock Options and Stock Grants, and Other 1,518 1,425
Forward Agreement - -
Convertible trust preferred securities 3,182 3,182
Dilutive potential common shares 4,700 4,607
Weighted average diluted shares 39,899 39,228
Earnings per Share:
Basic $0.35 $0.37
Diluted $0.33 $0.35
RECONCILIATION OF GAAP EPS TO CASH EPS:
(on a Diluted Basis)
Earnings Per Share (GAAP Basis) $0.33 $0.35
Cash Basis Adjustment $0.09 $0.09
Cash Basis Earnings Per Diluted Share $0.42 $0.44
OPERATING RATIOS & STATISTICS:
Return on Average Equity 8.62% 9.34%
Return on Average Assets 0.95% 1.01%
Net Interest Margin 3.92% 4.02%
Core Net Interest Margin (3) 4.20% 4.31%
Total Fees and Other Income/Total Revenue 48.05% 46.77%
Efficiency Ratio 69.95% 69.33%
Loans Charged-off, Net of (Recoveries) $12 $527
SAME AFFILIATES
Growth Excluding Acquisitions
Same
As Reported Acquisitions Affiliates
June 30, June 30, June 30, June 30,
FINANCIAL DATA (1): 2006 2005 2006 2006
Total Balance Sheet
Assets $5,279,086 $3,534,065 $1,635,593 $3,643,493
Stockholders' Equity 600,347 350,521 167,018 433,329
Tangible Capital:
Boston Private Bank
& Trust 147,098 127,798 147,098
Borel Private Bank &
Trust 83,600 68,778 83,600
First Private Bank
& Trust 44,017 35,540 44,017
Gibraltar Private
Bank & Trust 71,296 71,296 -
Investment Securities 563,513 571,139 27,174 536,339
Goodwill 318,118 132,246 186,460 131,658
Intangible Assets 129,338 49,963 85,253 44,085
Commercial and
Construction Loans 2,197,682 1,468,680 442,620 1,755,062
Residential Mortgage
Loans 1,482,629 864,846 510,160 972,469
Home Equity and Other
Consumer Loans 270,633 93,805 176,376 94,257
Total Loans 3,950,944 2,427,331 1,129,156 2,821,788
Loans Held for Sale 8,131 46,390 3,610 4,521
Allowance for Loan Losses
and Off-Balance Sheet
Risk 45,383 30,205 10,516 34,867
Non-performing Loans 5,775 4,438 1,999 3,776
Other Real Estate Owned - -
Total Non-performing
Assets 5,775 4,438 1,999 3,776
Deposits 3,661,419 2,555,668 935,531 2,725,888
Borrowings 887,612 537,158 282,071 605,541
ASSETS UNDER MANAGEMENT AND ADVISORY:
Westfield Capital
Management $8,890,000 $8,104,000 $8,890,000
Boston Private Bank &
Trust 2,279,000 2,283,000 2,279,000
Sand Hill Advisors 1,120,000 1,044,000 1,120,000
Boston Private Value
Investors 891,000 827,000 891,000
RINET Company 1,180,000 1,038,000 1,180,000
Borel Private Bank &
Trust 692,000 649,000 692,000
Dalton, Greiner,
Hartman, Maher & Co. 3,199,000 3,326,000 3,199,000
KLS Professional
Advisors Group 3,399,000 2,956,000 3,399,000
Gibraltar Private
Bank & Trust 798,000 - 798,000 -
Anchor Capital
Holdings 5,430,000 - 5,430,000 -
Less: Inter-company
Relationship (201,000) (206,000) (201,000)
Consolidated
Affiliate Assets
Under Management
and Advisory $27,677,000 $20,021,000 $6,228,000 $21,449,000
Coldstream Capital
Management 975,000 650,000 975,000
Bingham, Osborn, &
Scarborough 1,545,000 1,284,000 1,545,000
Total Assets Under
Management and
Advisory $30,197,000 $21,955,000 $6,228,000 $23,969,000
Three Months Ended
Same
As Reported Acquisitions Affiliates
June 30, June 30, June 30, June 30,
OPERATING RESULTS (1): 2006 2005 2006 2006
Net Interest Income -
on a Fully Taxable
Equivalent Basis (FTE) $44,766 $29,470 $11,678 $33,088
FTE Adjustment 1,364 1,176 1,364
Net Interest Income 43,402 28,294 11,678 31,724
Investment Management Fees:
Westfield Capital
Management 13,900 11,637 13,900
Boston Private Bank
& Trust 3,472 3,208 3,472
Sand Hill Advisors 1,562 1,560 1,562
Boston Private Value
Investors 1,724 1,567 1,724
Borel Private Bank
& Trust 1,061 824 1,061
Gibraltar Private Bank
& Trust 1,580 - 1,580 -
Dalton, Greiner,
Hartman, Maher & Co. 7,036 6,437 7,036
Anchor Capital Holdings 2,263 - 2,263 -
Total Investment
Management Fees 32,598 25,233 3,843 28,755
Wealth Advisory Fees:
RINET Company 2,078 2,031 2,078
KLS Professional
Advisors Group 3,005 2,635 3,005
Other 47 24 47
Total Wealth Advisory
Fees 5,130 4,690 5,130
Other Fees 1,664 1,653 216 1,448
Total Fees 39,392 31,576 4,059 35,333
Earnings in Equity
Investments 220 289 220
Gain on Sale of Loans, Net 525 464 226 299
Gain on Sale of Investments,
Net - 37 -
Total Fees and Other
Income 40,137 32,366 4,285 35,852
Total Revenue 83,539 60,660 15,963 67,576
Provision for Loan Losses 1,704 778 660 1,044
Salaries and Employee
Benefits 40,208 28,261 7,022 33,186
Occupancy and Equipment 6,995 4,836 1,353 5,642
Professional Services 3,727 2,410 814 2,913
Marketing and Business
Development 2,361 1,782 467 1,894
Contract Services and
Processing 1,273 1,123 317 956
Amortization of Intangibles 3,164 1,539 1,763 1,401
Other 4,302 3,218 1,023 3,279
Total Operating Expense 62,030 43,169 12,759 49,271
Minority Interest 745 382 104 641
Income Before Income
Taxes 19,060 16,331 2,440 16,620
Income Tax Expense 6,772 6,075 986 5,786
Net Income $12,288 $10,256 $1,454 $10,834
Six Months Ended
Same
As Reported Acquisitions Affiliates
June 30, June 30, June 30, June 30,
OPERATING RESULTS (1): 2006 2005 2006 2006
Net Interest Income -
on a Fully Taxable
Equivalent Basis(FTE) $89,670 $57,095 $23,802 $65,868
FTE Adjustment 2,700 2,324 2,700
Net Interest Income 86,970 54,771 23,802 63,168
Investment Management
Fees:
Westfield Capital
Management 27,639 22,983 27,639
Boston Private Bank
& Trust 6,889 6,298 6,889
Sand Hill Advisors 3,104 3,126 3,104
Boston Private Value
Investors 3,356 3,160 3,356
Borel Private Bank
& Trust 2,047 1,643 2,047
Gibraltar Private
Bank & Trust 3,075 - 3,076 (1)
Dalton, Greiner,
Hartman, Maher & Co. 14,580 13,159 14,580
Anchor Capital Holdings 2,263 - 2,263 -
Total Investment
Management Fees 62,953 50,369 5,339 57,614
Wealth Advisory Fees:
RINET Company 4,018 4,025 4,018
KLS Professional
Advisors Group 5,884 5,191 5,884
Other 98 53 98
Total Wealth Advisory
Fees 10,000 9,269 10,000
Other Fees 3,492 3,332 483 3,009
Total Fees 76,445 62,970 5,822 70,623
Earnings in Equity
Investments 991 505 991
Gain on Sale of Loans, Net 982 770 425 557
Gain on Sale of Investments,
Net - 41 -
Total Fees and Other
Income 78,418 64,286 6,247 72,171
Total Revenue 165,388 119,057 30,049 135,339
Provision for Loan Losses 2,867 1,640 1,327 1,540
Salaries and Employee
Benefits 79,583 57,170 13,117 66,466
Occupancy and Equipment 13,553 9,547 2,562 10,991
Professional Services 6,535 5,155 1,340 5,195
Marketing and Business
Development 4,697 3,312 970 3,727
Contract Services and
Processing 2,503 1,885 594 1,909
Amortization of
Intangibles 6,038 3,077 3,237 2,801
Other 8,820 6,369 2,070 6,750
Total Operating Expense 121,729 86,515 23,890 97,839
Minority Interest 1,559 955 104 1,455
Income Before Income
Taxes 39,233 29,947 4,728 34,505
Income Tax Expense 14,118 10,976 1,916 12,202
Net Income $25,115 $18,971 $2,812 $22,303
(1) The Company adopted FAS 123(R) on January 1, 2006 and elected the
modified retrospective application. Under the modified retrospective
application method, all prior quarters have been restated.
(2) The Company calculates its cash earnings by adjusting net income to
exclude the amortization of the purchased intangibles (net of tax),
the tax benefit on the portion of the purchase price which is
deductible over a 15 year life, and certain non-cash share based
compensation plans (net of tax). The tax savings are deferred under
GAAP accounting but are included in cash earnings since the tax
savings (lower tax payment) will be retained unless the acquired
company is sold. The Company uses certain non-GAAP financial measures,
such as Cash Earnings, to provide information for investors to
effectively analyze financial trends of ongoing business activities.
(3) The Company defines Core Net Interest Margin as Net Interest Margin
excluding the interest expense on the Junior Subordinated Debentures.
The Company utilizes Trust Preferred Securities to assist in the
funding of acquisitions and believes it is useful to compare Net
Interest Margin excluding the impact of this acquisition funding
vehicle.
(4) The Company calculates Return on Average Equity on a cash basis as
Cash Basis Earnings divided by Average Equity.
(5) The Company calculates Return on Average Assets on a cash basis as
Cash Basis Earnings divided by Average Assets.
CONTACT: Robert J. Whelan
Chief Financial Officer
(617) 912-4220
Erica E. Smith
Investor Relations
(617) 912-3766
http://www.bostonprivate.com/
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