0000821127-11-000032.txt : 20111025 0000821127-11-000032.hdr.sgml : 20111025 20111025160837 ACCESSION NUMBER: 0000821127-11-000032 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20111025 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20111025 DATE AS OF CHANGE: 20111025 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOSTON PRIVATE FINANCIAL HOLDINGS INC CENTRAL INDEX KEY: 0000821127 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 042976299 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-35070 FILM NUMBER: 111156830 BUSINESS ADDRESS: STREET 1: 10 POST OFFICE SQ CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6175561900 MAIL ADDRESS: STREET 1: 10 POST OFFICE SQUARE CITY: BOSTON STATE: MA ZIP: 02109 FORMER COMPANY: FORMER CONFORMED NAME: BOSTON PRIVATE BANCORP INC DATE OF NAME CHANGE: 19920703 8-K 1 a2011q38-kearnings.htm 2011 Q3 8-K Earnings


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): October 25, 2011
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))





Item 2.02.
Results of Operations and Financial Condition.
The information in this Current Report on Form 8-K furnished under this Item 2.02, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Current Report on Form 8-K shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing.
On October 25, 2011, Boston Private Financial Holdings, Inc. (the “Company”) issued a press release announcing its financial results for the third quarter ended September 30, 2011. The text of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.
Item 9.01.    Financial Statements and Exhibits.
(d) Exhibits.
99.1    Press Release of the Company dated October 25, 2011





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: October 25, 2011
 
 
 






EXHIBIT INDEX
Exhibit No.
 
Description
99.1

 
Press Release of the Company dated October 25, 2011






 EX-99.1 2 ex991pressreleaseofthecomp.htm PRESS RELEASE DATED 10-25-2011 - Q3 EARNINGS Ex. 99.1 Press Release of the Company dated October 25, 2011


Exhibit 99.1
Boston Private Financial Holdings, Inc. Reports Third Quarter 2011 Results
Third Quarter 2011 Highlights:
•
Continued profitability: Q3 2011 profitability of $0.14 per diluted share, following Q2 2011 diluted EPS of $0.17 and a per share loss of $0.10 in Q3 2010. Pre-tax, pre-provision earnings rose to $20.7 million in Q3 2011 from $16.6 million in Q2 2011 and $12.4 million in Q3 2010.
•
Improved balance sheet profile: Loan growth of 2% on a linked quarter basis. Non-Performing Loans down 8% vs. Q2 2011, and down 49% year-over-year. TCE/TA up 26 basis points vs. Q2 2011, and up 34 basis points year-over-year.
•
Stable revenue stream: Revenue down 2% on a linked quarter basis, up 4% year-over-year. Total Fees and Other Income, which was 41% of Total Revenue in Q3 2011, was down 3% on a linked quarter basis, up 15% year-over-year. Net Interest Margin of 3.26%, down 3 basis points linked quarter, and 16 basis points year-over-year.
•
Expense control: Operating Expenses (excluding restructuring charges) decreased 5% on a linked quarter basis, and declined 9% year-over-year.
Boston, MA - October 25, 2011 - Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the "Company" or "BPFH") today reported third quarter 2011 GAAP Net Income Attributable to the Common Stockholders of $11.5 million, compared to GAAP Net Income Attributable to the Common Stockholders of $14.3 million in the second quarter of 2011. BPFH reported third quarter diluted earnings per share of $0.14 compared to diluted earnings per share of $0.17 in the second quarter of 2011.
"In the third quarter we continued to see improvement in the overall health of our Company," said CEO and President Clayton G. Deutsch.  "These results show continued evidence that our program to return the Company to sustainable and acceptable profitability is unfolding as planned. Since my arrival last August, we asserted a restructuring plan that returned the Company to profitability in the second quarter of 2011, and our third quarter results show ongoing progress. We continue to focus on improving our credit quality, accumulating capital, carefully managing growth while reducing risk and improving the core performance of our Wealth Management and Private Banking businesses."
"In a difficult environment, we witnessed loan growth across our commercial and residential lending businesses, relatively stable Net Interest Income and stable fee-based revenues," said Mr. Deutsch. "We reduced Operating Expenses and closely managed credit which resulted in a year-over-year reduction in the Provision for Loan Losses. We continue to believe that our NIM defense is strong and that our Wealth Management and Private Banking model has the intrinsics to outperform core banking in a prolonged low interest rate environment."
Diversified Revenue Stream Holds Steady
Net Interest Income in the third quarter was $45.1 million, down 2% from $46.0 million in the second quarter 2011 and down 3% from $46.4 million in the third quarter of 2010. Fees and Other Income decreased to $31.4 million, down 3% from $32.3 million in the second quarter of 2011 and up 15% from $27.3 million in the third quarter of 2010.
Total Assets Under Management/Advisory ("AUM") decreased to $18.2 billion in the third quarter, down 10% from $20.2 billion in the second quarter 2011 and down 2% from $18.6 billion in the third quarter of 2010, primarily due to market declines. The Company experienced third quarter 2011 net AUM outflows of $223 million, as compared to $150 million of net outflows in the prior quarter and $2 million of net inflows in the third quarter of 2010.
Operating Expenses Decline
Operating Expenses (excluding restructuring costs of $1.1 million) in the third quarter were $55.4 million, down 5% from $58.2 million (excluding restructuring costs of $4.3 million) on a linked quarter basis. On a year-over-year basis, Operating Expenses were down 9% from $61.0 million.
"I'm heartened by the progress we've made in taking cost out of the Company and improving operating efficiencies overall," said Mr. Deutsch. "However, we will not be satisfied until we meet our previously announced targeted reduction of $25 million in costs. Our Bank post-merger consolidations and conversions will roll through the fourth quarter of 2011, and the first and second quarters of 2012. We are on track with our consolidation plan and associated savings."

1


Asset Quality Continues to Improve
Provision for Loan Losses in the third quarter was $4.5 million, up from a recovery of ($2.2) million in the second quarter and down 86% from $32.1 million year-over-year.
Non-Performing Loans ("NPLs") declined for the second consecutive quarter. In the third quarter of 2011 NPLs were $73.4 million, down 8% from $79.9 million on a linked quarter basis and down 49% from $143.1 million year-over-year. As a percentage of Total Loans, NPLs were 1.64% in the third quarter of 2011, down 17 basis points from 1.81% in the second quarter of 2011.
Additional credit metrics are listed below on a linked quarter and year-over-year basis:
(In millions)
September 30,
2011
 
June 30,
2011
 
September 30,
2010
Total Criticized Loans
$
355.4

 
$
339.8

 
$
397.4

Total Loans 30-89 Days Past Due and Accruing
$
20.9

 
$
6.5

 
$
16.9

Total Net Loans Charged-off/ (Recovered)
$
4.5

 
$
(0.7
)
 
$
11.1

Allowance for Loan Losses/Total Loans
2.20
%
 
2.24
%
 
2.21
%
Capital Accumulation Continues
"Our Tangible Common Equity to Tangible Assets ratio increased 26 basis points to 7.14% on a linked quarter basis," said David J. Kaye, Chief Financial Officer. "We remain comfortable with our capital position and will continue to be in capital accumulation mode in the near term."
Additional capital ratios are listed below on a linked quarter and year-over-year basis:
 
September 30,
2011
 
June 30,
2011
 
September 30,
2010
Total Risk-Based Capital *
15.47
%
 
15.18
%
 
14.92
%
Tier I Risk-Based Capital *
12.54
%
 
12.12
%
 
13.58
%
Tier I Leverage Capital *
8.43
%
 
8.14
%
 
9.70
%
TCE/TA
7.14
%
 
6.88
%
 
6.80
%
TCE/Risk Weighted Assets *
10.39
%
 
10.22
%
 
9.61
%
*September 30, 2011 data is shown on a pro-forma basis.
"Our third quarter results speak to continued progress with our overall program to deliver acceptable returns," said Mr. Deutsch. "Our third quarter annualized ROE of 8.6%, while a vast improvement, is still short of our declared goal of a consistent 12% ROE for our shareholders. We remain committed to attaining this threshold by 2013," he concluded.


2


Dividend Payments
Concurrent with the release of the third quarter 2011 earnings, the Board of Directors of the Company declared a cash dividend to stockholders of $0.01 per share. The record date for this dividend is November 16, 2011, and the payment date is November 30, 2011.
Non-GAAP Financial Measures
The Company uses certain non-GAAP financial measures, such as the TCE/TA and TCE/RWA ratios, 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 Wednesday, October 26, 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: 2046460
Replay Information:
Available from October 26 at 12 noon until November 2
Dial In #: (877) 344-7529
International Dial In #: (412) 317-0088
Conference Number: 10005064
The call will be simultaneously webcast and may be accessed on www.bostonprivate.com.
Boston Private Financial Holdings, Inc.
Boston Private Financial Holdings, Inc. is a national financial services organization with Wealth Management and Private Banking affiliates in Boston, New York, Philadelphia, Los Angeles, San Francisco and Seattle. The Company has a $6 billion Private Banking balance sheet, and manages over $18 billion of client assets.
The Company positions its affiliates to serve the high net worth marketplace with high quality products and services of unique appeal to private clients. The Company also provides strategic oversight and access to resources, both financial and intellectual, to support affiliate management, marketing, compliance and legal activities. (NASDAQ: BPFH)
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.

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

3


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 decreases in 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; the risk that the Company's deferred tax asset may not be realized; 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.

4


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
September 30, 2011
 
June 30, 2011
 
September 30, 2010
 
(In thousands, except share and per share data)
Assets:
 
 
 
 
 
Cash and cash equivalents
$
330,425

 
$
472,555

 
$
371,482

Investment securities:
 
 
 
 
 
Available for sale
848,855

 
793,622

 
736,777

Held to maturity
—

 
—

 
3,005

Total investment securities
848,855

 
793,622

 
739,782

Loans held for sale
13,275

 
4,625

 
22,290

Total loans
4,487,719

 
4,409,440

 
4,530,274

Less: Allowance for loan losses
98,759

 
98,742

 
100,010

Net loans
4,388,960

 
4,310,698

 
4,430,264

Other real estate owned (“OREO”)
9,161

 
14,485

 
13,069

Stock in Federal Home Loan Banks
44,248

 
44,785

 
46,393

Premises and equipment, net
28,812

 
27,279

 
26,781

Goodwill
115,038

 
115,038

 
108,696

Intangible assets, net
31,736

 
32,913

 
37,457

Fees receivable
7,998

 
8,481

 
7,338

Accrued interest receivable
16,492

 
16,881

 
18,783

Income tax receivable and deferred
77,886

 
83,163

 
81,414

Other assets
110,423

 
112,253

 
127,517

Total assets
$
6,023,309

 
$
6,036,778

 
$
6,031,266

Liabilities:
 
 
 
 
 
Deposits
$
4,534,076

 
$
4,551,319

 
$
4,492,516

Securities sold under agreements to repurchase
108,294

 
122,448

 
108,575

Federal Home Loan Bank borrowings
527,481

 
523,695

 
584,521

Junior subordinated debentures
188,645

 
188,645

 
193,645

Other liabilities
91,274

 
90,491

 
99,526

Total liabilities
5,449,770

 
5,476,598

 
5,478,783

Redeemable Noncontrolling Interests
21,885

 
21,210

 
18,721

The Company’s Stockholders’ Equity:
 
 
 
 
 
Preferred stock, $1.00 par value; authorized: 2,000,000 shares;
 
 
 
 
 
Series B, issued and outstanding (contingently convertible): 401 shares at September 30, 2011, June 30, 2011, and September 30, 2010; 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: 78,004,135 shares at September 30, 2011; 77,942,074 shares at June 30, 2011; and 76,592,233 shares at September 30, 2010
78,004

 
77,942

 
76,592

Additional paid-in capital
655,165

 
654,297

 
652,832

Accumulated deficit
(243,079
)
 
(254,758
)
 
(259,196
)
Accumulated other comprehensive income
3,475

 
3,400

 
5,445

Total stockholders’ equity
551,654

 
538,970

 
533,762

Total liabilities, redeemable noncontrolling interests and stockholders’ equity
$
6,023,309

 
$
6,036,778

 
$
6,031,266



5


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
Three Months Ended
 
Nine Months Ended
 
September 30,
2011
 
June 30,
2011
 
September 30,
2010
 
September 30,
2011
 
September 30,
2010
Interest and dividend income:
(In thousands, except share and per share data)
Loans
$
53,030

 
$
54,565

 
$
58,036

 
$
160,153

 
$
173,337

Taxable investment securities
1,493

 
1,391

 
1,613

 
4,263

 
4,742

Non-taxable investment securities
891

 
930

 
1,283

 
2,922

 
3,869

Mortgage-backed securities
1,873

 
1,841

 
1,902

 
5,521

 
6,228

Federal funds sold and other
245

 
283

 
223

 
849

 
943

Total interest and dividend income
57,532

 
59,010

 
63,057

 
173,708

 
189,119

Interest expense:
 
 
 
 
 
 
 
 
 
Deposits
5,921

 
6,301

 
8,710

 
18,871

 
28,721

Federal Home Loan Bank borrowings
4,203

 
4,261

 
4,870

 
12,856

 
15,358

Junior subordinated debentures
1,851

 
1,905

 
2,511

 
5,648

 
7,505

Repurchase agreements and other short-term borrowings
485

 
519

 
522

 
1,526

 
1,763

Total interest expense
12,460

 
12,986

 
16,613

 
38,901

 
53,347

Net interest income
45,072

 
46,024

 
46,444

 
134,807

 
135,772

Provision/ (credit) for loan losses
4,500

 
(2,190
)
 
32,050

 
15,660

 
54,627

Net interest income/(loss) after provision for loan losses
40,572

 
48,214

 
14,394

 
119,147

 
81,145

Fees and other income:
 
 
 
 
 
 
 
 
 
Investment management and trust fees
16,161

 
16,337

 
14,443

 
48,581

 
44,674

Wealth advisory fees
10,249

 
10,277

 
9,525

 
30,597

 
28,087

Other banking fee income
1,339

 
1,287

 
1,546

 
3,859

 
3,987

Gain on repurchase of debt
—

 
1,838

 
—

 
1,838

 
—

Gain on sale of investments, net
103

 
168

 
1,147

 
689

 
3,566

Gain on sale of loans, net
386

 
1,125

 
713

 
1,897

 
1,670

Gain/(loss) on OREO, net
3,156

 
844

 
(626
)
 
4,110

 
(2,645
)
Other
(44
)
 
437

 
551

 
2,186

 
1,021

Total fees and other income
31,350

 
32,313

 
27,299

 
93,757

 
80,360

Operating expense:
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
34,900

 
35,867

 
38,662

 
107,539

 
107,164

Occupancy and equipment
7,627

 
7,431

 
7,036

 
22,401

 
20,519

Professional services
3,667

 
5,314

 
4,857

 
14,164

 
14,025

Marketing and business development
1,510

 
1,896

 
1,677

 
4,869

 
5,229

Contract services and data processing
1,306

 
1,388

 
1,290

 
4,017

 
4,052

Amortization of intangibles
1,177

 
1,450

 
1,299

 
3,839

 
3,968

FDIC insurance
1,356

 
1,294

 
2,137

 
4,887

 
6,490

Restructuring expense
1,116

 
4,304

 
—

 
7,402

 
—

Other
3,819

 
3,521

 
4,021

 
11,530

 
12,231

Total operating expense
56,478

 
62,465

 
60,979

 
180,648

 
173,678

Income/(loss) before income taxes
15,444

 
18,062

 
(19,286
)
 
32,256

 
(12,173
)
Income tax expense/(benefit)
4,570

 
4,229

 
(12,412
)
 
8,620

 
(11,278
)
Net income/(loss) from continuing operations
10,874

 
13,833

 
(6,874
)
 
23,636

 
(895
)
Net income/(loss) from discontinued operations (1)
1,567

 
1,516

 
267

 
4,752

 
1,812

Net income/(loss) before attribution to noncontrolling interests
12,441

 
15,349

 
(6,607
)
 
28,388

 
917

Less: Net income/ (loss) attributable to noncontrolling interests
762

 
804

 
629

 
2,313

 
1,929

Net income/(loss) attributable to the Company
$
11,679

 
$
14,545

 
$
(7,236
)
 
$
26,075

 
$
(1,012
)

6


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
Three Months Ended
 
Nine Months Ended
PER SHARE DATA:
September 30,
2011
 
June 30,
2011
 
September 30,
2010
 
September 30,
2011
 
September 30,
2010
 
(In thousands, except share and per share data)
Calculation of Income/(Loss) for EPS:
 
 
 
 
 
 
 
 
 
Net Income/(Loss) from Continuing Operations
$
10,874

 
$
13,833

 
$
(6,874
)
 
23,636

 
(895
)
Less: Net Income Attributable to Noncontrolling Interests
762

 
804

 
629

 
2,313

 
1,929

Net Income/(Loss) from Continuing Operations Attributable to the Company
$
10,112

 
$
13,029

 
$
(7,503
)
 
21,323

 
(2,824
)
Adjustments to Net Income/(Loss) Attributable to the Company to Arrive at Net Income/(Loss) Attributable to Common Stockholders (3)
(265
)
 
(199
)
 
163

 
(740
)
 
(9,466
)
Net Income/(Loss) from Continuing Operations Attributable to the Common Stockholders
$
9,847

 
$
12,830

 
$
(7,340
)
 
20,583

 
(12,290
)
Net Income/(Loss) from Discontinued Operations (1)
$
1,567

 
$
1,516

 
$
267

 
4,752

 
1,812

Net Income/(Loss) Attributable to the Common Stockholders
$
11,414

 
$
14,346

 
$
(7,073
)
 
25,335

 
(10,478
)
 
 
 
 
 
 
 
 
 
 
Dividends Paid on Series B Preferred Stock for Diluted EPS
$
73

 
$
73

 
$
—

 
$
218

 
$
—

 
 
 
 
 
 
 
 
 
 
End of Period Common Shares Outstanding
78,004,135

 
77,942,074

 
76,592,333

 
78,004,135

 
76,592,333

 
 
 
 
 
 
 
 
 
 
Average Shares Outstanding:
 
 
 
 
 
 
 
 
 
Weighted Average Basic Shares
75,378,923

 
75,194,687

 
74,153,623

 
75,083,976

 
70,293,324

Weighted Average Diluted Shares (4)
83,556,408

 
83,264,842

 
74,153,623

 
83,176,060

 
70,293,324

 
 
 
 
 
 
 
 
 
 
Earnings/(Loss) per Share - Basic
 
 
 
 
 
 
 
 
 
Earnings/(Loss) per Share from Continuing Operations
$
0.13

 
$
0.17

 
$
(0.10
)
 
$
0.28

 
$
(0.18
)
Income/(Loss) per Share from Discontinued Operations (1)
$
0.02

 
$
0.02

 
$
—

 
$
0.06

 
$
0.03

Earnings/(Loss) per Share
$
0.15

 
$
0.19

 
$
(0.10
)
 
$
0.34

 
$
(0.15
)
 
 
 
 
 
 
 
 
 
 
Earnings/(Loss) per Share - Diluted (6)
 
 
 
 
 
 
 
 
 
Earnings/(Loss) per Share from Continuing Operations
$
0.12

 
$
0.15

 
$
(0.10
)
 
$
0.25

 
$
(0.18
)
Income/(Loss) per Share from Discontinued Operations (1)
$
0.02

 
$
0.02

 
$
—

 
$
0.06

 
$
0.03

Earnings/(Loss) per Share
$
0.14

 
$
0.17

 
$
(0.10
)
 
$
0.31

 
$
(0.15
)



7


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(In thousands, except per share data)
September 30,
2011
 
June 30,
2011
 
September 30,
2010
FINANCIAL DATA:
Book Value Per Common Share
$
6.33

 
$
6.17

 
$
6.21

Tangible Book Value Per Share (2)
$
4.92

 
$
4.76

 
$
4.77

Market Price Per Share
$
5.88

 
$
6.58

 
$
6.54

 
 
 
 
 
 
 
 
 
 
 
 
ASSETS UNDER MANAGEMENT AND ADVISORY:
 
 
 
 
 
Private Banking
$
3,427,000

 
$
3,739,000

 
$
3,561,000

Investment Managers
7,127,000

 
8,295,000

 
7,521,000

Wealth Advisory
7,673,000

 
8,184,000

 
7,553,000

Less: Inter-company Relationship
(18,000
)
 
(20,000
)
 
(18,000
)
Assets Under Management and Advisory
$
18,209,000

 
$
20,198,000

 
$
18,617,000

 
 
 
 
 
 
FINANCIAL RATIOS:
 
 
 
 
 
Total Equity/Total Assets
9.16
%
 
8.93
%
 
8.85
 %
Tangible Common Equity/Tangible Assets (2)
7.14
%
 
6.88
%
 
6.80
 %
Tangible Common Equity/Risk Weighted Assets (2)
10.39
%
 
10.22
%
 
9.61
 %
Allowance for Loan Losses/Total Loans
2.20
%
 
2.24
%
 
2.21
 %
Allowance for Loan Losses/Non-performing Loans
134
%
 
124
%
 
70
 %
Return on Average Assets - Three Months Ended
0.76
%
 
0.96
%
 
(0.48
)%
Return on Average Equity - Three Months Ended
8.57
%
 
10.98
%
 
(5.36
)%
Efficiency Ratio (2)
72.31
%
 
77.92
%
 
80.67
 %


8


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:
Sep 30,
2011
Jun 30,
2011
Sep 30,
2010
 
Sep 30,
2011
Jun 30,
2011
Sep 30,
2010
 
Sep 30,
2011
Jun 30,
2011
Sep 30,
2010
AVERAGE ASSETS
 
 
 
 
 
 
 
 
 
 
 
Earning Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and Investments:
 
 
 
 
 
 
 
 
 
 
 
Taxable investment securities
$
396,415

$
367,567

$
314,636

 
$
1,493

$
1,391

$
1,613

 
1.51
%
1.51
%
2.05
%
Non-taxable investment securities (5)
190,772

187,379

198,369

 
1,386

1,403

1,951

 
2.91
%
2.99
%
3.93
%
Mortgage-backed securities
236,105

228,578

219,651

 
1,873

1,841

1,902

 
3.17
%
3.22
%
3.46
%
Federal funds sold and other
400,785

462,350

351,850

 
245

283

223

 
0.24
%
0.25
%
0.25
%
Total Cash and Investments
1,224,077

1,245,874

1,084,506

 
4,997

4,918

5,689

 
1.63
%
1.58
%
2.10
%
Loans: (6)
 
 
 
 
 
 
 
 
 
 
 
Commercial and Construction (5)
2,346,169

2,400,681

2,587,847

 
32,204

33,819

36,481

 
5.39
%
5.49
%
5.56
%
Residential Mortgage
1,794,929

1,742,769

1,637,831

 
19,022

19,131

19,621

 
4.24
%
4.39
%
4.79
%
Home Equity and Other Consumer
318,003

316,268

295,395

 
2,993

2,971

3,116

 
3.71
%
3.75
%
4.16
%
Total Loans
4,459,101

4,459,718

4,521,073

 
54,219

55,921

59,218

 
4.81
%
4.94
%
5.19
%
Total Earning Assets
5,683,178

5,705,592

5,605,579

 
59,216

60,839

64,907

 
4.12
%
4.20
%
4.59
%
Less: Allowance for Loan Losses
99,387

103,233

81,543

 
 
 
 
 
 
 
 
Cash and due From Banks (Non-Interest Bearing)
53,582

31,690

27,983

 
 
 
 
 
 
 
 
Other Assets
543,271

456,139

443,124

 
 
 
 
 
 
 
 
TOTAL AVERAGE ASSETS
$
6,180,644

$
6,090,188

$
5,995,143

 
 
 
 
 
 
 
 
AVERAGE LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
 
Interest-Bearing Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
Savings and NOW
$
539,489

$
517,271

$
559,413

 
$
357

$
358

$
467

 
0.26
%
0.28
%
0.33
%
Money Market
1,857,755

1,910,004

1,698,381

 
2,506

2,787

3,821

 
0.54
%
0.59
%
0.89
%
Certificates of Deposit
1,006,639

1,029,713

1,277,670

 
3,058

3,156

4,422

 
1.21
%
1.23
%
1.37
%
Total Deposits
3,403,883

3,456,988

3,535,464

 
5,921

6,301

8,710

 
0.69
%
0.73
%
0.98
%
Junior Subordinated Debentures
188,645

192,416

193,645

 
1,851

1,905

2,511

 
3.92
%
3.96
%
5.19
%
FHLB Borrowings and Other
657,122

644,084

614,459

 
4,688

4,780

5,392

 
2.79
%
2.94
%
3.43
%
Total Interest-Bearing Liabilities
4,249,650

4,293,488

4,343,568

 
12,460

12,986

16,613

 
1.16
%
1.21
%
1.51
%
Non-interest Bearing Demand Deposits
1,139,457

1,128,330

986,892

 
 
 
 
 
 
 
 
Payables and Other Liabilities
224,717

117,707

104,806

 
 
 
 
 
 
 
 
Total Liabilities
5,613,824

5,539,525

5,435,266

 
 
 
 
 
 
 
 
Redeemable Noncontrolling Interests
21,516

20,613

19,542

 
 
 
 
 
 
 
 
Stockholders' Equity
545,304

530,050

540,335

 
 
 
 
 
 
 
 
TOTAL AVERAGE LIABILITIES & STOCKHOLDERS' EQUITY
$
6,180,644

$
6,090,188

$
5,995,143

 
 
 
 
 
 
 
 
Net Interest Income - on a Fully Taxable Equivalent Basis (FTE)
 
 
 
 
$
46,756

$
47,853

$
48,294

 
 
 
 
FTE Adjustment (5)
 
 
 
 
1,684

1,829

1,850

 
 
 
 
Net Interest Income (GAAP Basis)
 
 
 
 
$
45,072

$
46,024

$
46,444

 
 
 
 
Interest Rate Spread
 
 
 
 
 
 
 
 
2.96
%
2.99
%
3.08
%
Net Interest Margin
 
 
 
 
 
 
 
 
3.26
%
3.29
%
3.42
%

9


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
Average Balance
 
Interest Income/Expense
 
Average Yield/Rate
(In Thousands)
Nine Months Ended
 
Nine Months Ended
 
Nine Months Ended
AVERAGE BALANCE SHEET:
Sep 30,
2011
Sep 30,
2010
 
Sep 30,
2011
Sep 30,
2010
 
Sep 30,
2011
Sep 30,
2010
AVERAGE ASSETS
 
 
 
 
 
 
 
 
Earning Assets:
 
 
 
 
 
 
 
 
Cash and Investments:
 
 
 
 
 
 
 
 
Taxable investment securities
$
375,172

$
293,883

 
$
4,263

$
4,742

 
1.51
%
2.15
%
Non-taxable investment securities (5)
193,435

189,991

 
4,443

5,928

 
3.06
%
4.16
%
Mortgage-backed securities
233,309

240,176

 
5,521

6,228

 
3.16
%
3.46
%
Federal funds sold and other
474,173

515,648

 
849

943

 
0.24
%
0.24
%
Total Cash and Investments
1,276,089

1,239,698

 
15,076

17,841

 
1.58
%
1.92
%
Loans: (6)
 
 
 
 
 
 
 
 
Commercial and Construction (5)
2,379,006

2,569,262

 
98,338

109,482

 
5.47
%
5.59
%
Residential Mortgage
1,741,302

1,572,909

 
56,882

57,758

 
4.36
%
4.90
%
Home Equity and Other Consumer
328,641

278,313

 
8,831

9,418

 
3.57
%
5.01
%
Total Loans
4,448,949

4,420,484

 
164,051

176,658

 
4.89
%
5.30
%
Total Earning Assets
5,725,038

5,660,182

 
179,127

194,499

 
4.15
%
4.56
%
Less: Allowance for Loan Losses
100,761

75,446

 
 
 
 
 
 
Cash and due From Banks (Non-Interest Bearing)
39,696

29,658

 
 
 
 
 
 
Other Assets
476,103

500,203

 
 
 
 
 
 
TOTAL AVERAGE ASSETS
$
6,140,076

$
6,114,597

 
 
 
 
 
 
AVERAGE LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
 
 
 
Interest-Bearing Liabilities:
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
Savings and NOW
$
532,340

$
537,323

 
$
1,090

$
1,575

 
0.27
%
0.39
%
Money Market
1,867,430

1,666,649

 
8,107

11,504

 
0.58
%
0.92
%
Certificates of Deposit
1,039,997

1,361,830

 
9,674

15,642

 
1.24
%
1.54
%
Total Deposits
3,439,767

3,565,802

 
18,871

28,721

 
0.73
%
1.08
%
Junior Subordinated Debentures
191,639

193,645

 
5,648

7,505

 
3.93
%
5.17
%
FHLB Borrowings and Other
666,263

635,764

 
14,382

17,121

 
2.85
%
3.55
%
Total Interest-Bearing Liabilities
4,297,669

4,395,211

 
38,901

53,347

 
1.20
%
1.62
%
Non-interest Bearing Demand Deposits
1,136,918

1,011,493

 
 
 
 
 
 
Payables and Other Liabilities
152,885

100,739

 
 
 
 
 
 
Total Liabilities
5,587,472

5,507,443

 
 
 
 
 
 
Redeemable Noncontrolling Interests
20,657

20,508

 
 
 
 
 
 
Stockholders' Equity
531,947

586,646

 
 
 
 
 
 
TOTAL AVERAGE LIABILITIES & STOCKHOLDERS' EQUITY
$
6,140,076

$
6,114,597

 
 
 
 
 
 
Net Interest Income - on a Fully Taxable Equivalent Basis (FTE)
 
 
 
$
140,226

$
141,152

 
 
 
FTE Adjustment (5)
 
 
 
5,419

5,380

 
 
 
Net Interest Income (GAAP Basis)
 
 
 
$
134,807

$
135,772

 
 
 
Interest Rate Spread
 
 
 
 
 
 
2.95
%
2.94
%
Net Interest Margin
 
 
 
 
 
 
3.25
%
3.31
%

10


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(In Thousands)
September 30,
2011
 
June 30,
2011
 
September 30,
2010
LOAN DATA (7):
 
 
Commercial and Industrial Loans:
 
 
 
 
 
New England
$
502,382

 
$
480,452

 
$
435,695

San Francisco Bay
57,918

 
60,065

 
76,136

Southern California
42,770

 
45,001

 
49,025

Pacific Northwest
38,223

 
34,326

 
42,855

Eliminations and other, net
—

 
(116
)
 
(213
)
Total Commercial and Industrial Loans
$
641,293

 
$
619,728

 
$
603,498

Commercial Real Estate Loans:
 
 
 
 
 
New England
$
627,413

 
$
625,328

 
$
647,182

San Francisco Bay
662,436

 
670,469

 
859,858

Southern California
194,998

 
170,496

 
184,358

Pacific Northwest
109,983

 
102,295

 
91,482

Total Commercial Real Estate Loans
$
1,594,830

 
$
1,568,588

 
$
1,782,880

Construction and Land Loans:
 
 
 
 
 
New England
$
90,751

 
$
78,149

 
$
97,585

San Francisco Bay
41,157

 
42,286

 
97,791

Southern California
5,530

 
3,215

 
1,869

Pacific Northwest
7,279

 
6,920

 
13,670

Total Construction and Land Loans
$
144,717

 
$
130,570

 
$
210,915

Residential Mortgage Loans:
 
 
 
 
 
New England
$
1,237,389

 
$
1,217,654

 
$
1,154,671

San Francisco Bay
322,783

 
321,110

 
277,321

Southern California
177,647

 
177,320

 
159,321

Pacific Northwest
53,056

 
51,587

 
43,645

Total Residential Mortgage Loans
$
1,790,875

 
$
1,767,671

 
$
1,634,958

Home Equity Loans:
 
 
 
 
 
New England
$
90,082

 
$
91,041

 
$
102,321

San Francisco Bay
49,475

 
52,132

 
51,761

Southern California
5,756

 
4,910

 
5,085

Pacific Northwest
5,343

 
5,445

 
5,176

Total Home Equity Loans
$
150,656

 
$
153,528

 
$
164,343

Other Consumer Loans:
 
 
 
 
 
New England
$
137,692

 
$
140,006

 
$
99,248

San Francisco Bay
12,427

 
14,330

 
20,391

Southern California
11,970

 
12,199

 
10,444

Pacific Northwest
1,688

 
1,180

 
1,391

Eliminations and other, net
1,571

 
1,640

 
2,206

Total Other Consumer Loans
$
165,348

 
$
169,355

 
$
133,680

Total Loans
 
 
 
 
 
New England
$
2,685,709

 
$
2,632,630

 
$
2,536,702

San Francisco Bay
1,146,196

 
1,160,392

 
1,383,258

Southern California
438,671

 
413,141

 
410,102

Pacific Northwest
215,572

 
201,753

 
198,219

Eliminations and other, net
1,571

 
1,524

 
1,993

Total Loans
$
4,487,719

 
$
4,409,440

 
$
4,530,274


11


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(In Thousands)
September 30,
2011
 
June 30,
2011
 
September 30,
2010
CREDIT QUALITY (7):
 
Special Mention Loans:
 
 
 
 
 
New England
$
60,383

 
$
55,051

 
$
54,375

San Francisco Bay
71,640

 
68,262

 
66,493

Southern California
32,189

 
16,158

 
7,872

Pacific Northwest
13,901

 
17,029

 
21,325

Total Special Mention Loans
$
178,113

 
$
156,500

 
$
150,065

Accruing Classified Loans (8):
 
 
 
 
 
New England
$
21,328

 
$
17,213

 
$
19,228

San Francisco Bay
55,426

 
57,420

 
66,061

Southern California
23,815

 
25,145

 
11,467

Pacific Northwest
3,310

 
3,697

 
9,308

Total Accruing Classified Loans
$
103,879

 
$
103,475

 
$
106,064

Non-performing Loans:
 
 
 
 
 
New England
$
33,413

 
$
29,095

 
$
20,872

San Francisco Bay
27,449

 
31,753

 
99,573

Southern California (9)
10,186

 
13,226

 
12,585

Pacific Northwest
2,397

 
5,868

 
10,060

Total Non-performing Loans
$
73,445

 
$
79,942

 
$
143,090

Other Real Estate Owned:
 
 
 
 
 
New England
$
1,301

 
$
1,498

 
$
892

San Francisco Bay
5,847

 
10,974

 
4,283

Southern California
345

 
345

 
4,141

Pacific Northwest
1,668

 
1,668

 
3,753

Total Other Real Estate Owned
$
9,161

 
$
14,485

 
$
13,069

Loans 30-89 Days Past Due and Accruing:
 
 
 
 
 
New England
$
348

 
$
3,060

 
$
5,515

San Francisco Bay
16,649

 
2,304

 
8,270

Southern California
3,947

 
1,137

 
2,860

Pacific Northwest
—

 
—

 
226

Total Loans 30-89 Days Past Due and Accruing
$
20,944

 
$
6,501

 
$
16,871

Loans Charged-off/ (Recovered), Net for the Three Months Ended:
 
 
 
 
 
New England
$
752

 
$
127

 
$
393

San Francisco Bay
3,266

 
2,036

 
11,896

Southern California
179

 
(3,552
)
 
(1,224
)
Pacific Northwest
286

 
739

 
48

Total Net Loans Charged-off/ (Recovered)
$
4,483

 
$
(650
)
 
$
11,113

Loans Charged-off/ (Recovered), Net for the Nine Months Ended:
 
 
 
 
 
New England
$
2,153

 
 
 
$
3,215

San Francisco Bay
16,591

 
 
 
20,901

Southern California
(4,460
)
 
 
 
(1,635
)
Pacific Northwest
1,019

 
 
 
580

Total Net Loans Charged-off/ (Recovered)
$
15,303

 
 
 
$
23,061




12


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

(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: Tangible Book Value; the Tangible Common Equity ("TCE") to Tangible Assets ("TA") ratio; the TCE to Risk Weighted Assets ratio; pre-tax, pre-provision earnings; and operating expenses excluding restructuring costs to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector.

Reconciliations from the Company's GAAP Total Equity to Total Assets ratio to the Non-GAAP TCE to TA ratio, and the Non-GAAP TCE to Risk Weighted Assets ratio, and from GAAP Book Value to Non-GAAP Tangible Book Value are 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 Goodwill and Intangible Assets, net and includes the difference between Redemption Value and value per ARB 51 for Redeemable Non-controlling Interests.
(In Thousands)
September 30,
2011
 
June 30,
2011
 
September 30,
2010
Total Balance Sheet Assets
$
6,023,309

 
$
6,036,778

 
$
6,031,266

LESS: Goodwill and Intangible Assets, net
(146,774
)
 
(147,951
)
 
(146,153
)
Tangible Assets (non-GAAP)
5,876,535

 
5,888,827

 
5,885,113

Total Equity
551,654

 
538,970

 
533,762

LESS: Goodwill and Intangible Assets, net
(146,774
)
 
(147,951
)
 
(146,153
)
ADD: Difference between Redemption Value of Non-controlling Interests and value under ARB 51
14,641

 
14,170

 
12,608

Total adjusting items
(132,133
)
 
(133,781
)
 
(133,545
)
Tangible Common Equity (non-GAAP)
419,521

 
405,189

 
400,217

Total Equity/Total Assets
9.16
%
 
8.93
%
 
8.85
%
Tangible Common Equity/Tangible Assets (non-GAAP)
7.14
%
 
6.88
%
 
6.80
%
 
 
 
 
 
 
Total Risk Weighted Assets *
4,037,336

 
3,965,672

 
4,165,485

Tangible Common Equity/Total Risk Weighted Assets (non-GAAP)
10.39
%
 
10.22
%
 
9.61
%
 
 
 
 
 
 
End of Period Shares Outstanding
78,004

 
77,942

 
76,592

EOP Carlyle Common Convertible Shares
7,261

 
7,261

 
7,261

Common Equivalent Shares
85,265

 
85,203

 
83,853

 
 
 
 
 
 
Book Value Per Common Share
$
6.33

 
$
6.17

 
$
6.21

Tangible Book Value Per Share
$
4.92

 
$
4.76

 
$
4.77


* Risk Weighted Assets for September 30, 2011 is shown on a pro-forma basis



13


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

Reconciliations from the Company's GAAP net income attributable to the Company to Non-GAAP pre-tax, pre-provision earnings and from GAAP operating expenses to Non-GAAP operating expenses excluding restructuring costs are presented below:
(In Thousands)
September 30,
2011
 
June 30,
2011
 
September 30,
2010
Net income/(loss) attributable to the Company (GAAP)
$
11,679

 
$
14,545

 
$
(7,236
)
ADD BACK: Provision/ (credit) for loan losses
4,500

 
(2,190
)
 
32,050

ADD BACK: Income tax expense/(benefit)
4,570

 
4,229

 
(12,412
)
Pre-tax, pre-provision earnings (Non-GAAP)
$
20,749

 
$
16,584

 
$
12,402

 
 
 
 
 
 
Total operating expense (GAAP)
$
56,478

 
$
62,465

 
$
60,979

LESS: Restructuring expense
1,116

 
4,304

 
—

Total operating expenses (excluding restructuring costs) (Non-GAAP)
$
55,362

 
$
58,161

 
$
60,979


(3)
Adjustments to Net Income/(Loss) Attributable to the Company to arrive at Net Income/(Loss) Attributable to the Common Stockholders, as presented in these tables, include decrease/ (increase) in Noncontrolling Interests Redemption Value; Dividends on Preferred Securities; and Accretion of Discount on Series C Preferred Stock.

(4)
When the Company has positive Net Income from Continuing Operations Attributable to the Common Stockholders, 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 restricted stock, unexercised stock warrants, contingently issuable shares, unconverted Convertible Preferred stock, and unconverted Convertible Trust Preferred securities. The amount of shares that were anti-dilutive for the three and nine months ended September 30, 2011 were 1.7 million for both periods. The amount of shares that were anti-dilutive for the three and nine months ended September 30, 2010 were 10.5 million, and 10.7 million respectively. The amount of shares that were anti-dilutive for the three months ended June 30, 2011 were 1.7 million. See Part II. Item 8. "Financial Statements and Supplementary Data - Note 1: Basis of Presentation and Summary of Significant Accounting Policies"in the Company's Annual Report on Form 10-K, as amended, for the year ended December 31, 2010 for additional information.

(5)
Interest Income on Non-taxable Investments and Loans are presented on an FTE basis using the federal statutory rate.
    
(6)
Includes Loans Held for Sale and Non-accrual Loans.
    
(7)
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”.

(8)
Accruing classified 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 nonperforming at some time in the future.

(9)
Includes the non-strategic loans held for sale of $2.9 million at September 30, 2010. There were no non-strategic loans held for sale at September 30, 2011 or June 30, 2011.

14
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