EX-99.1 3 a04-1536_1ex99d1.htm EX-99.1

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

CONTACT:

Walter M. Pressey

 

 

 

President & CFO

 

 

 

(617) 912-1921

 

 

 

 

 

 

 

Kate Rajeck

 

 

 

Investor Relations

 

 

 

(617) 912 4380

 

 

 

www.bostonprivate.com

 

BOSTON PRIVATE REPORTS STRONG ORGANIC GROWTH IN
ASSETS UNDER MANAGEMENT AND BALANCE SHEET
ASSETS

 

Fourth Quarter 2003 EPS up 12%

Dividend Increases 20%

 

Boston, MA, January 22, 2004 – Boston Private Financial Holdings, Inc. (Nasdaq: BPFH) today announced earnings for the fourth quarter ended December 31, 2003 of $0.28 per diluted share, a 12% increase compared to $0.25 reported in the fourth quarter of 2002.  The Company also announced a 20% increase to $0.06 per share in its quarterly cash dividend to shareholders.

 

The results for the fourth quarter lifted adjusted earnings for the full year 2003 to $1.05 per diluted share, up 3% from $1.02 per diluted share in 2002.  Adjusted earnings at the Company have increased for eleven years at a compounded annual growth rate of 19%.  Cash EPS for 2003 was $1.08 compared to $1.04 for 2002.  Boston Private’s GAAP earnings for 2003 were $0.92 per diluted share, due to $3.0 million in costs stemming from a retroactive tax assessment and abandoned lease costs, both of which were previously reported.  The Company believes certain non-GAAP financial measures, such as adjusted earnings, fully taxable equivalent net interest income, efficiency ratio and cash earnings, provide information for investors to effectively compare financial trends of ongoing business activities.

 

2003 Year-End Financial Results

For the year ended December 31, 2003, Boston Private reported total revenues of $133.8 million, an increase of 16% over 2002.  GAAP net income for the full year 2003 was $21.8 million and adjusted net income was $24.8 million, up 4% over 2002.  Assets Under Management (AUM) at year-end were $11.0 billion, up 70% from $6.4 billion at year end 2002.  Organic growth across the affiliates accounted for $2.3 billion, or 50% of the increase and $2.0 billion, or 45% of the increase, resulting from market appreciation.  Acquired assets of $236 million accounted for 5% of the increase.

 

1

 

Timothy L. Vaill, Chairman and Chief Executive Officer, said, “Boston Private’s solid operational results for 2003 reflect the persistent execution of our growth and diversification strategy.  Our robust net new asset management sales of $2.3 billion for the year fueled the growth of our AUM to a record high, a significant achievement that outpaced the benefit from the improvement in market conditions.  As a result, our investment management fees grew 30% and our financial planning fees 18% over 2002.  Our success in asset growth reflects the tremendous sales talent and investment expertise we have throughout the Boston Private organization.”

 

Fees and other income for the year were $66.1 million, up 27% over the prior year and represents 49% of total revenues.  Net interest income increased 7% to $70.5 million, up from $65.9 million at year end 2002, on a fully taxable equivalent basis.  Increased business volume added approximately $12.7 million of interest income to more than offset the effect of interest rate margin compression, which decreased net interest income by approximately $8.1 million.  The Company’s net interest margin for the year was 3.64%, down 15% from 4.19% a year ago due to interest rate compression widespread in the banking industry.  Boston Private’s balance sheet assets increased 21% to approximately $2.2 billion, compared to $1.8 billion at year end 2002.

 

Vaill continued, “Private banking has been a foundation of our wealth management business for over 15 years and our success is reflected by the 21% growth in our balance sheet assets this year.  Our aggressive sales efforts delivered 18% growth in deposits and 24% growth in our loan portfolio over 2002.  A prolonged margin compression environment across the banking industry has offset the full benefit of this growth and impacted our net interest income.  We believe by remaining focused on growing our balance sheet, we will experience even stronger returns when interest rates improve.”

 

“We are gratified by our fourth quarter and full year performance as we strive to serve the complex needs of our wealth management clients and compete in a rapidly growing and attractive market.  By combining three core business lines, private banking, investment management and financial planning, we are pursuing a well defined growth strategy that will continue to produce a track record of sustained returns for our shareholders in future years.” Vaill said.

 

Fourth Quarter 2003 Results

For the three months ending December 31, 2003, the Company reported revenues of $36.2 million, an increase of 23% over $29.5 million in the fourth quarter of 2002.  Net income for the quarter was $6.9 million compared to $5.8 million for the same period a year ago, an 18% increase.  AUM as of December 31, 2003 was $11.0 billion, a 16.6% increase over the $9.4 billion recorded at September 30, 2003.  AUM grew at all of Boston Private’s banking and investment management affiliates during the fourth quarter with $701 million in organic new sales, $835 million in market appreciation and $24 million in acquired assets.

 

Fees and other income for the quarter were up 44% to $18.7 million, or 52% of total revenues, compared to the same period a year ago.  Investment management fees of $15.2 million were up 65% and financial planning fees of $1.8 million increased 31%.  In the aggregate, these fees accounted for $17.1 million or 47% of total revenues.

 

2

 

Net interest income increased to $18.4 million, up 8% compared to the same period in 2003 on a fully taxable equivalent basis.  This was accomplished through organic growth of deposits and loans, offset in part by a decrease in the Company’s net interest margin to 3.47%, down from 4.00% a year ago, and 3.53% last quarter.  Increased business volume added approximately $3.4 million of interest income to more than offset the effect of interest rate margin compression, which decreased net interest income by approximately $2.0 million.  Boston Private’s average balance sheet assets increased 24% to approximately $2.2 billion, compared to $1.8 billion for the fourth quarter of 2002.

 

Loan Portfolio Growth and Quality Remain Strong

Boston Private’s loan portfolio achieved strong growth results in the fourth quarter.  As of December 31, 2003, commercial loans, which averaged approximately $702,000 per loan, totaled $881 million, up 30% over last year.  The residential mortgage loan portfolio, which averaged $543,000 per loan, totaled $651 million, up 20% over December 31, 2002.  The combined loan portfolio grew 24% over the same period last year, totaling $1.6 billion at December 31, 2003.  Loan quality remained strong, with the ratio of nonperforming loans to total loans at 0.08%.

 

Walter M. Pressey, President and Chief Financial Officer said, “Our lending business achieved excellent growth while keeping our commitment to high quality underwriting and we continue to be proud of our low level of non-accrual loans.  During the fourth quarter of 2003, we’ve seen a dramatic shift away from fixed rate, re-financing activity in our jumbo mortgage business which we typically sell to the secondary market.  As a result, we have returned to booking more variable rate jumbo mortgage loans on our balance sheet, as shown by the 20% growth in our residential loan portfolio.  Our commercial lending portfolio grew by 30% even after some significant pay-offs and our new business pipeline remains robust.”

 

Strategic Expansion Developments

Boston Private is optimistic about growth prospects for the wealth management market and is pursuing the expansion of its regional presence to new targeted markets.  The Company will be entering two new regions with the acquisitions of First State Bancorp, the holding company of First State Bank of California, based in Los Angeles County with $185 million in assets and an 80% interest in Dalton, Greiner, Hartman, Maher & Co. based in New York City with $3.0 billion in assets under management.  The Company is also rounding out its wealth management presence in Northern California with a 20% interest in Bingham, Osborn & Scarborough, LLC located in San Francisco with $900 million in assets.  These transactions are subject to several conditions, including the approval by state and federal regulators and management anticipates these transactions will close first quarter 2004.

 

“We made excellent progress toward achieving our long-term expansion goals this year.  Through Dalton, Greiner and First State Bancorp we will be entering the New York Metro and Southern California regions and Bingham, Osborn and Scarborough will round out our “cluster” of companies in Northern California.  These acquisitions will enhance the market position we have established in New England, Northern California and the Pacific Northwest and combined, extend Boston Private’s presence to five key U.S. regional markets.” concluded Vaill.

 

3

 

As part of the Company’s acquisition strategy, Boston Private successfully raised new capital to fund future growth and acquisitions in December.  The Company completed the sale of 2.07 million shares of common stock (including a 570,000 share overallotment option) for net proceeds of $47.4 million to the Company.  In connection with the offering, the Company also entered into a forward sale agreement pursuant to which an affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated borrowed and sold an additional 2.3 million shares of Boston Private’s common stock.  The Company expects to receive, within the next twelve months, additional net proceeds initially valued at $52.6 million upon settlement of the forward sale agreement.

 

Fourth Quarter 2003 Dividend Payment Increases 20%

Concurrent with the release of the fourth quarter 2003 earnings, the Board of Directors of Boston Private Financial Holdings declared a cash dividend to shareholders of $0.06 per share, reflecting the quarterly earnings performance.  This is the third consecutive year the Company has increased its quarterly dividend since the inception of a dividend in January 2000.  The record date for this dividend is February 3, 2004 and the payment date will be February 17, 2004.

 

Outlook for 2004

When asked about the Company’s outlook for 2004, Pressey commented “This year we look forward to entering Southern California and New York while continuing to aggressively increase our existing market share in New England and Northern California.  To support these efforts, we will invest in growth while managing operating expenses effectively and maintaining strong risk management practices.”

 

Pressey continued, “Our strategy to diversify our business geographically and by business line enabled us to reach new sales performance levels in 2003.  Improved market conditions enhanced this success in our asset management business, while industry-wide compression reduced our net interest income growth to 7%.  We believe that diversification helps us to weather extreme market conditions in the short run, but that over a five year period market fluctuations tend to even out, allowing for our strong organic growth to produce average compound growth of earnings per share of 15% per year.  We are optimistic about our future opportunities and over the long term, expect to continue to deliver solid returns for our shareholders.”

 

Conference Call

Management will host a conference call to review the Company’s financial performance and business developments on Thursday, January 22nd at 4:30 pm eastern time.  Interested parties may join the call by dialing 800-867-0731.  The password required is “Boston”.  The call will be simultaneously web cast and may be accessed on the Internet by linking through, www.bostonprivate.com, www.prnewswire.com , or Yahoo! Finance.  A continuous telephone replay will be available beginning Thursday at 6:30 pm.  The replay telephone number is 800-388-9064.

 

4

 

About Boston Private Financial Holdings

 

Established in 1987, Boston Private Financial Holdings, Inc. (Nasdaq: BPFH) offers a full range of high-touch wealth management services. Boston Private’s six operating companies are located in New England and California, offering individualized wealth management, financial planning, investment management, and private banking services to its domestic and international clientele. The subsidiaries include: in New England, Boston Private Bank & Trust Company, Westfield Capital Management Company, LLC, RINET Company LLC, and Boston Private Value Investors, Inc. and in Northern California, Sand Hill Advisors, Inc. and Borel Private Bank & Trust Company. Boston Private also has a minority holding in Coldstream Holdings, Inc., the parent company of Coldstream Capital Management, Inc. based in Bellevue, Washington.  As of December 31, 2003, Boston Private managed approximately $11.0 billion in client assets and had balance sheet assets of approximately $2.2 billion.  It is a member of the Standard & Poor’s 600 Index and is included on the Nasdaq Financial-100 Index®.

 

New England Region

Boston Private Bank & Trust Company specializes in providing private banking and investment services to individuals, their families and their businesses.  It has an investment management emphasis on mid to large cap equity and actively managed fixed income portfolios.  It also offers commercial and residential lending services including a Second Time Homebuyer Program.  Under its Accessible Banking Program, the Bank is an active provider of real estate financing for affordable housing, economic development and small businesses.

 

Westfield Capital Management Company, LLC specializes in separately managed domestic growth equity portfolios in all areas of the capitalization spectrum.  All members of Westfield’s Investment Committee conduct rigorous fundamental research in analyzing company growth prospects for investment.  Westfield’s clients consist of pension funds, endowments and foundations and mutual funds as well as high net worth individuals. Westfield also acts as the investment manager of several limited partnerships.

 

RINET Company, LLC provides fee-only financial planning, tax planning and investment management services to high net worth individuals and their families.  Its capabilities include tax planning and preparation, asset allocation, estate planning, charitable planning and planning for employment benefits, including 401(k) plans, alternative investment analysis and mutual fund investing.

 

Boston Private Value Investors, Inc. manages equity and fixed income accounts for high net worth clients and selected institutions primarily in New England and the Northeast. The firm is a large cap value-style investor with its headquarters in Concord, New Hampshire and an office at Ten Post Office Square in Boston, Massachusetts.

 

Northern California Region

Borel Private Bank & Trust Company serves the financial needs of individuals, their families and their businesses in Northern California. Borel conducts commercial and private banking, which includes accepting demand, savings and time deposits and making commercial, real estate and consumer loans. Borel offers various savings plans as well as other customary banking services and

 

5

 

facilities. Additionally, Borel offers trust services and provides a variety of other fiduciary services including management, advisory and administrative services to individuals.

 

Sand Hill Advisors, Inc. has been providing wealth management services to high net worth investors and select institutions in Northern California for over 21 years. The firm manages investments covering a wide range of asset classes for both taxable and tax-exempt portfolios. A registered investment advisor headquartered in Palo Alto, California, Sand Hill has special expertise in transitional wealth counsel.

 

Pacific Northwest Region

Coldstream Capital Management Inc. is a multi-client family office providing comprehensive wealth management services to high net worth individuals and their families.  Since inception in 1996, Coldstream Capital Management has helped families with considerable assets grow, enhance and safeguard their wealth by offering objective advice and comprehensive strategies tailored to match their personal and financial goals.

 

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 and costs related to the integration of merged entities, as well as, excluding other significant gains or losses that are unusual in nature, and fully taxable equivalent income.  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 core 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 within the meaning of the Private Securities Litigation Reform Act of 1995.  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 improved market conditions and prevailing and future interest rates, prospects for growth in balance sheet assets and assets under management, 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, regulatory determinations with respect to the Company’s anti-money laundering program, and its continued satisfactory progress in addressing regulatory issues identified in Boston Private Bank’s informal agreement with bank regulatory agencies; risks related to the implementation of current acquisitions and the identification of future acquisitions; adverse conditions in the capital markets and the impact of such conditions on Boston Private’s asset management activities; continued or increased 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.

 

6

 

Boston Private Financial Holdings, Inc.

Selected Financial Data

(Unaudited)

 

(Dollars In Thousands, Except Per Share Data)

 

 

 

December 31,
2003

 

December 31,
2002

 

% Change

 

FINANCIAL DATA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Balance Sheet Assets

 

$

2,196,297

 

$

1,820,741

 

20.6

%

Stockholders’ Equity

 

235,452

 

$

167,382

 

40.7

%

Boston Private Bank Tangible Capital

 

107,879

 

$

86,661

 

24.5

%

Borel Private Bank Tangible Capital

 

45,500

 

$

36,975

 

23.1

%

Investment Securities

 

396,546

 

$

345,857

 

14.7

%

Loans held for sale

 

4,900

 

$

30,923

 

(84.2

)%

Commercial Loans

 

880,626

 

676,189

 

30.2

%

Consumer Loans

 

15,183

 

16,198

 

(6.3

)%

Residential Mortgage Loans

 

651,290

 

544,166

 

19.7

%

Home Equity and Other Loans

 

65,465

 

65,173

 

0.4

%

Total Loans

 

1,612,564

 

1,301,726

 

23.9

%

Allowance for Loan Losses

 

20,172

 

17,050

 

18.3

%

Nonperforming Loans

 

1,311

 

1,057

 

24.0

%

Other Real Estate Owned

 

—

 

—

 

nm

 

Nonperforming Assets

 

1,311

 

1,057

 

24.0

%

Deposits

 

1,658,461

 

1,400,333

 

18.4

%

Borrowings

 

263,620

 

218,389

 

20.7

%

 

 

 

 

 

 

 

 

Book Value Per Share

 

$

9.36

 

$

7.42

 

26.0

%

Market Price Per Share

 

$

24.84

 

$

19.86

 

25.1

%

 

 

 

 

 

 

 

 

ASSETS UNDER MANAGEMENT:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Westfield Capital Management

 

$

6,153,000

 

$

2,766,000

 

122.5

%

Boston Private Bank & Trust

 

1,986,000

 

1,605,000

 

23.7

%

Sand Hill Advisors - Regular Accounts

 

818,000

 

456,000

 

79.4

%

Sand Hill Advisors - Concentrated Stock Portfolios

 

42,000

 

21,000

 

100.0

%

Boston Private Value Investors

 

779,000

 

501,000

 

55.5

%

RINET Company

 

800,000

 

591,000

 

35.4

%

Borel Private Bank & Trust Company

 

538,000

 

501,000

 

7.4

%

Less: Intercompany Subadvisory Relationship

 

(150,000

)

—

 

nm

 

Total Assets Under Management

 

$

10,966,000

 

$

6,441,000

 

70.3

%

 

 

 

 

 

 

 

 

FINANCIAL RATIOS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity/Total Assets

 

10.72

%

9.19

%

16.6

%

Nonperforming Loans/Total Loans

 

0.08

%

0.08

%

0.0

%

Allowance for Loan Losses/Total Loans

 

1.25

%

1.31

%

(4.6

)%

Allowance for Loan Losses/Nonperforming Assets

 

1538.67

%

1613.06

%

(4.6

)%

Allowance for Loan Losses and Tangible Capital/ Total Loans

 

10.76

%

10.81

%

(0.5

)%

Allowance for Loan Losses and Tangible Capital/ Nonperforming Assets

 

13238.06

%

13309.93

%

(0.5

)%

Nonperforming Assets/Total Assets

 

0.06

%

0.06

%

0.0

%

 

 

 

 

Three Months Ended

 

 

 

Year Ended

 

 

 

 

 

December 31, 2003

 

December 31, 2002

 

% Change

 

December 31,
2003

 

December 31,
2002

 

% Change

 

OPERATING RESULTS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

18,427

 

$

17,024

 

8.2

%

$

70,454

 

$

65,865

 

7.0

%

FTE Adjustment

 

871

 

467

 

86.5

%

2,689

 

1,841

 

46.1

%

Net Interest Income

 

17,556

 

16,557

 

6.0

%

67,765

 

64,024

 

5.8

%

Investment Management Fees - Westfield Capital Management

 

9,434

 

4,520

 

108.7

%

28,492

 

18,500

 

54.0

%

Investment Management Fees - Boston Private Bank & Trust

 

2,633

 

2,277

 

15.6

%

9,946

 

9,139

 

8.8

%

Investment Management Fees - Sand Hill Advisors

 

1,153

 

851

 

35.5

%

3,849

 

4,084

 

(5.8

)%

Investment Management Fees - Boston Private Value Investors

 

1,301

 

969

 

34.3

%

4,511

 

3,964

 

13.8

%

Investment Management Fees - Borel Private Bank & Trust Company

 

657

 

578

 

13.7

%

2,628

 

2,399

 

9.5

%

Total Investment Management Fees

 

15,178

 

9,195

 

65.1

%

49,426

 

38,086

 

29.8

%

Financial Planning Fees

 

1,823

 

1,392

 

31.0

%

6,951

 

5,893

 

18.0

%

Cash Administration Fees

 

147

 

203

 

(27.6

)%

680

 

833

 

(18.4

)%

Gain on Sale of Loans

 

151

 

1,073

 

(85.9

)%

2,855

 

2,609

 

9.4

%

Other Fees

 

731

 

699

 

4.6

%

3,462

 

2,871

 

20.6

%

Total Fees

 

18,030

 

12,562

 

43.5

%

63,374

 

50,292

 

26.0

%

Equity in Earnings of Partnerships

 

37

 

(22

)

268.2

%

202

 

(40

)

nm

 

Gain on Sale of Investments

 

594

 

439

 

35.3

%

2,508

 

1,619

 

54.9

%

Total Fees and Other Income

 

18,661

 

12,979

 

43.8

%

66,084

 

51,871

 

27.4

%

Total Revenue

 

36,217

 

29,536

 

22.6

%

133,849

 

115,895

 

15.5

%

Loan Loss Provision

 

820

 

630

 

30.2

%

3,155

 

2,495

 

26.5

%

Salaries and Benefits

 

17,356

 

13,695

 

26.7

%

62,668

 

52,631

 

19.1

%

Occupancy and Equipment

 

3,233

 

3,252

 

(0.6

)%

15,634

 

11,894

 

31.4

%

Professional Services

 

1,305

 

607

 

115.0

%

5,265

 

3,275

 

60.8

%

Marketing and Business Development

 

899

 

1,010

 

(11.0

)%

3,647

 

3,388

 

7.6

%

Contract Services and Processing

 

587

 

428

 

37.1

%

1,856

 

1,499

 

23.8

%

Amortization of Goodwill and Intangibles

 

88

 

39

 

125.6

%

239

 

88

 

171.6

%

Other

 

1,648

 

1,587

 

3.8

%

6,758

 

5,987

 

12.9

%

Operating Expenses

 

25,116

 

20,618

 

21.8

%

96,067

 

78,762

 

22.0

%

Income Before Taxes

 

10,281

 

8,288

 

24.0

%

34,627

 

34,638

 

(0.0

)%

Income Tax Expense

 

3,403

 

2,460

 

38.3

%

12,804

 

10,893

 

17.5

%

Net Income

 

$

6,878

 

$

5,828

 

18.0

%

$

21,823

 

$

23,745

 

(8.1

)%

 

7

 

 

 

Three Months Ended

 

 

 

Year Ended

 

 

 

 

 

December 31,
2003

 

December 31,
2002

 

% Change

 

December 31,
2003

 

December 31,
2002

 

% Change

 

PER SHARE DATA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Share

 

$

0.30

 

$

0.26

 

15.4

%

$

0.96

 

$

1.06

 

(9.4

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

$

0.28

 

$

0.25

 

12.0

%

$

0.92

 

$

1.02

 

(9.8

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Common Shares Outstanding

 

23,245,063

 

22,517,300

 

3.2

%

22,822,608

 

22,412,665

 

1.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Diluted Shares Outstanding

 

24,385,688

 

23,276,155

 

4.8

%

23,714,644

 

23,357,066

 

1.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP EPS to Adjusted EPS (on a fully diluted basis)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings Per Share (GAAP basis)

 

$

0.28

 

$

0.25

 

12.0

%

$

0.92

 

$

1.02

 

(9.8

)%

REIT Tax Adjustment

 

$

0.00

 

$

0.00

 

nm

 

$

0.06

 

$

0.00

 

nm

 

Lease Accrual

 

$

0.00

 

$

0.00

 

nm

 

$

0.07

 

$

0.00

 

nm

 

Adjusted Earnings Per Share

 

$

0.28

 

$

0.25

 

12.0

%

$

1.05

 

$

1.02

 

2.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Adjusted EPS to Cash EPS (on a fully diluted basis)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Earnings Per Share

 

$

0.28

 

$

0.25

 

12.0

%

$

1.05

 

$

1.02

 

2.9

%

Reverse Book Amortization of Intangible Assets (net of taxes)

 

$

0.00

 

$

0.00

 

nm

 

$

0.01

 

$

0.00

 

nm

 

Cash Savings from Tax Amortization

 

$

0.01

 

$

0.01

 

nm

 

$

0.02

 

$

0.02

 

nm

 

Cash Earnings Per Share

 

$

0.29

 

$

0.26

 

12.5

%

$

1.08

 

$

1.04

 

3.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (GAAP Basis)

 

$

6,878

 

$

5,828

 

18.0

%

$

21,823

 

$

23,745

 

(8.1

)%

REIT Tax Adjustment

 

$

0

 

$

0

 

nm

 

$

1,438

 

$

0

 

nm

 

Lease Accrual

 

$

0

 

$

0

 

nm

 

$

1,544

 

$

0

 

nm

 

Adjusted Net Income

 

$

6,878

 

$

5,828

 

18.0

%

$

24,805

 

$

23,745

 

4.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income

 

$

6,878

 

$

5,828

 

18.0

%

$

24,805

 

$

23,745

 

4.5

%

Reverse Book Amortization of Intangible Assets (net of taxes)

 

$

52

 

$

20

 

160.0

%

$

140

 

$

41

 

241.5

%

Cash Savings from Tax Amortization

 

$

160

 

$

132

 

21.2

%

$

554

 

$

499

 

11.0

%

Cash Net Income

 

$

7,090

 

$

5,980

 

18.6

%

$

25,499

 

$

24,285

 

5.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proforma Net Income and Earnings Per Share under FAS 123

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (GAAP Basis)

 

6,878

 

5,828

 

18.0

%

21,823

 

23,745

 

(8.1

)%

Less: Stock Based Employee and Director Compensation Expense

 

657

 

568

 

15.7

%

2,375

 

2,671

 

(11.1

)%

Proforma FAS 123 Net Income

 

6,221

 

5,260

 

18.3

%

19,448

 

21,074

 

(7.7

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proforma Basic Earnings Per Share -FAS 123

 

$

0.27

 

$

0.23

 

17.4

%

$

0.85

 

$

0.94

 

(9.6

)%

Proforma Diluted Earnings Per share -FAS 123

 

$

0.26

 

$

0.23

 

13.0

%

$

0.82

 

$

0.90

 

(8.9

)%

 

Detailed Reconciliation of GAAP And Adjusted Earnings

 

 

 

Three Months Ended
December 31, 2003

 

Twelve Months Ended
December 31, 2003

 

 

 

GAAP
Earnings

 

REIT Tax
Adjustment

 

Lease Accrual
Adjustment

 

Adjusted
Earnings

 

GAAP
Earnings

 

REIT Tax
Adjustment

 

Lease Accrual
Adjustment

 

Adjusted
Earnings

 

Revenues

 

$

36,217

 

$

0

 

$

0

 

$

36,217

 

$

133,849

 

$

0

 

$

0

 

$

133,849

 

Allowance for Loan Losses

 

820

 

0

 

0

 

820

 

3,155

 

0

 

0

 

3,155

 

Expenses

 

25,116

 

0

 

0

 

25,116

 

96,067

 

(244

)

(2,375

)

93,448

 

Pre-Tax Income

 

10,281

 

0

 

0

 

10,281

 

34,627

 

244

 

2,375

 

37,246

 

Income Tax Expense

 

3,403

 

 

 

 

 

3,403

 

12,804

 

(1,194

)

831

 

12,441

 

Net Income

 

$

6,878

 

$

0

 

$

0

 

$

6,878

 

$

21,823

 

$

1,438

 

$

1,544

 

$

24,805

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

$

0.28

 

$

0.00

 

$

0.00

 

$

0.28

 

$

0.92

 

$

0.06

 

$

0.07

 

$

1.05

 

 

 

 

Three months ended
December 31, 2002

 

Twelve Months Ended
December 31, 2002

 

 

 

GAAP
Earnings

 

Adjustment

 

Adjustment

 

Adjusted
Earnings

 

GAAP
Earnings

 

Adjustment

 

Adjustment

 

Adjusted
Earnings

 

Revenues

 

$

29,536

 

$

0

 

$

0

 

$

29,536

 

$

115,895

 

$

0

 

$

0

 

$

115,895

 

Allowance for Loan Losses

 

630

 

0

 

0

 

630

 

2,495

 

0

 

0

 

2,495

 

Expenses

 

20,618

 

0

 

0

 

20,618

 

78,762

 

0

 

0

 

78,762

 

Pre-Tax Income

 

8,288

 

0

 

0

 

8,288

 

34,638

 

0

 

0

 

34,638

 

Income Tax Expense

 

2,460

 

0

 

0

 

2,460

 

10,893

 

0

 

0

 

10,893

 

Net Income

 

$

5,828

 

$

0

 

$

0

 

$

5,828

 

$

23,745

 

$

0

 

$

0

 

$

23,745

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

$

0.25

 

$

0.00

 

$

0.00

 

$

0.25

 

$

1.02

 

$

0.00

 

$

0.00

 

$

1.02

 

 

8

 

 

 

Three Months Ended

 

 

 

Twelve Months Ended

 

 

 

 

 

December 31,
2003

 

December 31,
2002

 

% Change

 

December 31,
2003

 

December 31,
2002

 

% Change

 

OPERATING RATIOS & STATISTICS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on Average Equity

 

13.99

%

14.23

%

(1.7

)%

12.16

%

15.36

%

(20.8

)%

Return on Average Assets

 

1.24

%

1.30

%

(4.6

)%

1.06

%

1.42

%

(25.4

)%

Net Interest Margin

 

3.47

%

4.00

%

(13.3

)%

3.64

%

4.19

%

(13.1

)%

Total Fees and Other Income/Total Revenue

 

51.53

%

43.94

%

17.3

%

49.37

%

44.76

%

10.3

%

Efficiency Ratio

 

69.35

%

69.81

%

(0.7

)%

71.77

%

67.96

%

5.6

%

Net Loans Charged-off (recovered)

 

—

 

(54

)

(100.0

)%

—

 

(34

)

(100.0

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADJUSTED OPERATING RATIOS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on Average Equity

 

13.99

%

14.23

%

(1.7

)%

13.83

%

15.36

%

(10.0

)%

Return on Average Assets

 

1.24

%

1.30

%

(4.6

)%

1.21

%

1.42

%

(14.8

)%

Efficiency Ratio

 

69.35

%

69.81

%

(0.7

)%

69.82

%

67.96

%

2.7

%

 

AVERAGE BALANCE SHEET:

 

 

 

Three Months Ended

 

 

 

Year Ended

 

 

 

 

 

December 31,
2003

 

December 31,
2002

 

% Change

 

December 31,
2003

 

December 31,
2002

 

% Change

 

AVERAGE ASSETS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-Bearing Cash

 

$

673

 

$

1,334

 

(49.6

)%

$

729

 

$

975

 

(25.2

)%

Federal Funds Sold

 

105,366

 

44,901

 

134.7

%

75,690

 

36,085

 

109.8

%

Money Market Investments

 

30,163

 

63,292

 

(52.3

)%

41,943

 

60,269

 

(30.4

)%

U.S. Treasuries and Agencies

 

179,181

 

153,164

 

17.0

%

170,524

 

125,832

 

35.5

%

Municipal Securities

 

193,623

 

98,653

 

96.3

%

171,780

 

101,090

 

69.9

%

Corporate Bonds

 

15,369

 

28,486

 

(46.0

)%

17,113

 

22,283

 

(23.2

)%

Mortgage-Backed Securities

 

854

 

1,453

 

(41.2

)%

1,068

 

1,765

 

(39.5

)%

FHLB Stock

 

11,112

 

7,746

 

43.5

%

9,721

 

7,311

 

33.0

%

Commercial Loans

 

834,897

 

639,775

 

30.5

%

764,585

 

588,754

 

29.9

%

Residential Loans

 

654,055

 

567,430

 

15.3

%

604,559

 

548,290

 

10.3

%

Home Equity and Other Consumer Loans

 

79,469

 

84,860

 

(6.4

)%

78,457

 

80,745

 

(2.8

)%

Total Earning Assets

 

2,104,762

 

1,691,094

 

24.5

%

1,936,169

 

1,573,399

 

23.1

%

Allowance for Loan Losses

 

(19,594

)

(16,753

)

17.0

%

(18,481

)

(15,751

)

17.3

%

Other Assets

 

136,621

 

117,234

 

16.5

%

133,642

 

114,719

 

16.5

%

TOTAL AVERAGE ASSETS

 

$

2,221,789

 

$

1,791,575

 

24.0

%

$

2,051,330

 

$

1,672,367

 

22.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE LIABILITIES AND STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings Accounts

 

$

25,356

 

$

22,855

 

10.9

%

$

24,448

 

$

23,159

 

5.6

%

NOW Accounts

 

175,772

 

176,447

 

(0.4

)%

189,219

 

149,447

 

26.6

%

Money Market Accounts

 

977,495

 

687,973

 

42.1

%

862,224

 

654,546

 

31.7

%

Certificates of Deposit

 

255,610

 

254,004

 

0.6

%

253,659

 

254,171

 

(0.2

)%

Total Interest-Bearing Deposits

 

1,434,233

 

1,141,279

 

25.7

%

1,329,550

 

1,081,323

 

23.0

%

Federal Funds Purchased

 

33

 

152

 

(78.3

)%

953

 

922

 

3.4

%

Repurchase Agreements

 

72,279

 

87,574

 

(17.5

)%

72,267

 

64,907

 

11.3

%

FHLB Borrowings

 

200,168

 

135,805

 

47.4

%

177,097

 

128,858

 

37.4

%

Total Interest-Bearing Liabilities

 

1,706,713

 

1,364,810

 

25.1

%

1,579,867

 

1,276,010

 

23.8

%

Noninterest-Bearing Deposits

 

280,438

 

238,445

 

17.6

%

260,082

 

219,774

 

18.3

%

Other Liabilities

 

37,966

 

24,500

 

55.0

%

31,970

 

21,979

 

45.5

%

Total Liabilities

 

2,025,117

 

1,627,755

 

24.4

%

1,871,919

 

1,517,763

 

23.3

%

Stockholders’ Equity

 

196,672

 

163,820

 

20.1

%

179,411

 

154,604

 

16.0

%

TOTAL AVERAGE LIABILITIES & STOCKHOLDERS’ EQUITY

 

$

2,221,789

 

$

1,791,575

 

24.0

%

$

2,051,330

 

$

1,672,367

 

22.7

%

 

9

 

 

 

December 31,
2003

 

September 30,
2003

 

% Change

 

FINANCIAL DATA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Balance Sheet Assets

 

$

2,196,297

 

$

2,097,519

 

4.7

%

Stockholders’ Equity

 

235,452

 

182,177

 

29.2

%

Boston Private Bank Tangible Capital

 

107,879

 

100,755

 

7.1

%

Borel Private Bank Tangible Capital

 

45,500

 

41,501

 

9.6

%

Investment Securities

 

396,546

 

433,090

 

(8.4

)%

Loans Held for Sale

 

4,900

 

8,475

 

(42.2

)%

Commercial Loans

 

880,626

 

782,288

 

12.6

%

Consumer Loans

 

15,183

 

13,672

 

11.1

%

Residential Mortgage Loans

 

651,290

 

636,964

 

2.2

%

Home Equity and Other Loans

 

65,465

 

65,740

 

(0.4

)%

Total Loans

 

1,612,564

 

1,498,664

 

7.6

%

Allowance for Loan Losses

 

20,172

 

19,275

 

4.7

%

Nonperforming Loans

 

1,311

 

1,074

 

22.1

%

Other Real Estate Owned

 

—

 

—

 

nm

 

Nonperforming Assets

 

1,311

 

1,074

 

22.1

%

Deposits

 

1,658,461

 

1,618,625

 

2.5

%

Borrowings

 

263,620

 

254,241

 

3.7

%

 

 

 

 

 

 

nm

 

Book Value Per Share

 

$

9.36

 

$

7.98

 

17.3

%

Market Price Per Share

 

$

24.84

 

$

23.56

 

5.4

%

 

 

 

 

 

 

 

 

ASSETS UNDER MANAGEMENT:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Westfield Capital Management

 

$

6,153,000

 

$

4,979,000

 

23.6

%

Boston Private Bank & Trust

 

1,986,000

 

1,800,000

 

10.3

%

Sand Hill Advisors - Regular Accounts

 

818,000

 

726,000

 

12.7

%

Sand Hill Advisors - Concentrated Stock Portfolios

 

42,000

 

34,000

 

23.5

%

Boston Private Value Investors

 

779,000

 

708,000

 

10.0

%

RINET Company

 

800,000

 

775,000

 

3.2

%

Borel Private Bank & Trust Company

 

538,000

 

529,000

 

1.7

%

Less: intercompany subadvisory relationship

 

(150,000

)

(145,000

)

3.4

%

Total Assets Under Management

 

$

10,966,000

 

$

9,406,000

 

16.6

%

 

 

 

 

 

 

 

 

FINANCIAL RATIOS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity/Total Assets

 

10.72

%

8.69

%

23.4

%

Nonperforming Loans/Total Loans

 

0.08

%

0.07

%

14.3

%

Allowance for Loan Losses/Total Loans

 

1.25

%

1.29

%

(3.1

)%

Allowance for Loan Losses/Nonperforming Assets

 

1538.67

%

1794.69

%

(14.3

)%

Allowance for Loan Losses and Tangible Capital/ Total Loans

 

10.76

%

10.78

%

(0.2

)%

Allowance for Loan Losses and Tangible Capital/ Nonperforming Assets

 

13238.06

%

15040.13

%

(12.0

)%

Nonperforming Assets/Total Assets

 

0.06

%

0.05

%

20.0

%

 

 

 

Three Months Ended

 

 

 

 

 

December 31,
2003

 

September 30,
2003

 

% Change

 

OPERATING RESULTS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

18,427

 

$

17,620

 

4.6

%

FTE Adjustment

 

871

 

729

 

19.5

%

Net Interest Income

 

17,556

 

16,891

 

3.9

%

Investment Management Fees - Westfield Capital Management

 

9,434

 

7,680

 

22.8

%

Investment Management Fees - Boston Private Bank & Trust

 

2,633

 

2,515

 

4.7

%

Investment Management Fees - Sand Hill Advisors

 

1,153

 

888

 

29.8

%

Investment Management Fees - Boston Private Value Investors

 

1,301

 

1,259

 

3.3

%

Investment Management Fees - Borel Private Bank & Trust Company

 

657

 

671

 

(2.1

)%

Total Investment Management Fees

 

15,178

 

13,013

 

16.6

%

Financial Planning Fees

 

1,823

 

1,825

 

(0.1

)%

Cash Administration Fees

 

147

 

157

 

(6.4

)%

Gain on Sale of Loans

 

151

 

1,119

 

(86.5

)%

Other Fees

 

731

 

947

 

(22.8

)%

Total Fees

 

18,030

 

17,061

 

5.7

%

Equity in Earnings of Partnerships

 

37

 

16

 

131.3

%

Gain on Sale of Investments

 

594

 

395

 

50.4

%

Total Fees and Other Income

 

18,661

 

17,472

 

6.8

%

Total Revenue

 

36,217

 

34,363

 

5.4

%

Loan Loss Provision

 

820

 

786

 

4.3

%

Salaries and Benefits

 

17,356

 

16,046

 

8.2

%

Occupancy and Equipment

 

3,233

 

3,430

 

(5.7

)%

Professional Services

 

1,305

 

1,807

 

(27.8

)%

Marketing and Business Development

 

899

 

894

 

0.6

%

Contract Services and Processing

 

587

 

416

 

41.1

%

Amortization of Goodwill and Intangibles

 

88

 

64

 

37.5

%

Other

 

1,648

 

1,527

 

7.9

%

Operating Expenses

 

25,116

 

24,184

 

3.9

%

Income before Taxes

 

10,281

 

9,393

 

9.5

%

Income Tax Expense

 

3,403

 

3,011

 

13.0

%

Net Income

 

$

6,878

 

$

6,382

 

7.8

%

 

10

 

 

 

Three Months Ended

 

 

 

 

 

December 31,
2003

 

September 30,
2003

 

% Change

 

PER SHARE DATA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Share

 

$

0.30

 

$

0.28

 

7.1

%

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

$

0.28

 

$

0.27

 

3.7

%

 

 

 

 

 

 

 

 

Average Common Shares Outstanding

 

23,245,063

 

22,767,187

 

2.1

%

 

 

 

 

 

 

 

 

Average Diluted Shares Outstanding

 

24,385,688

 

23,843,064

 

2.3

%

 

 

 

 

 

 

 

 

Reconciliation of GAAP EPS to Adjusted EPS (on a fully diluted basis)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings Per Share (GAAP basis)

 

$

0.28

 

$

0.27

 

3.7

%

REIT Tax Adjustment

 

$

0.00

 

$

0.00

 

nm

 

Lease Accrual

 

$

0.00

 

$

0.00

 

nm

 

Adjusted Earnings Per Share

 

$

0.28

 

$

0.27

 

3.7

%

 

 

 

 

 

 

 

 

Reconciliation of Adjusted EPS to Cash EPS (on a fully diluted basis)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Earnings Per Share

 

$

0.28

 

$

0.27

 

3.7

%

Reverse Book Amortization of Intangible Assets (net of taxes)

 

$

0.00

 

$

0.00

 

nm

 

Cash Savings from Tax Amortization

 

$

0.01

 

$

0.01

 

nm

 

Cash Earnings Per Share

 

$

0.29

 

$

0.28

 

3.6

%

 

 

 

 

 

 

 

 

Adjusted Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (GAAP)

 

$

6,878

 

$

6,382

 

7.8

%

REIT Tax Adjustment

 

$

0

 

$

0

 

nm

 

Lease Accrual

 

$

0

 

$

0

 

nm

 

Adjusted Net Income

 

$

6,878

 

$

6,382

 

7.8

%

 

 

 

 

 

 

 

 

Cash Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income

 

$

6,878

 

$

6,382

 

7.8

%

Reverse Book Amortization of Intangible Assets (net of taxes)

 

$

52

 

$

37

 

40.5

%

Cash Savings from Tax Amortization

 

$

160

 

$

146

 

9.6

%

Cash Net Income

 

$

7,090

 

$

6,565

 

8.0

%

 

 

 

 

 

 

 

 

Proforma Net Income and Earnings Per Share under FAS123

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

6,878

 

6,382

 

7.8

%

Less: Stock Based Employee and Director Compensation Expense

 

657

 

547

 

20.1

%

Proforma Net Income

 

6,221

 

5,835

 

6.6

%

 

 

 

 

 

 

 

 

Proforma Basic Earnings Per Share

 

$

0.27

 

$

0.26

 

3.8

%

 

 

 

 

 

 

 

 

Proforma Diluted Earnings Per Share

 

$

0.26

 

$

0.24

 

8.3

%

 

 

 

 

 

 

 

 

OPERATING RATIOS & STATISTICS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on Average Equity

 

13.99

%

14.30

%

(2.2

)%

Return on Average Assets

 

1.24

%

1.22

%

1.6

%

Net Interest Margin

 

3.47

%

3.53

%

(1.7

)%

Total Fees and Other Income/Total Revenue

 

51.53

%

50.85

%

1.3

%

Efficiency Ratio

 

69.35

%

70.38

%

(1.5

)%

Net Loans charged-off (recovered)

 

—

 

—

 

nm

 

 

 

 

 

 

 

 

 

ADJUSTED OPERATING RATIOS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on Average Equity

 

13.99

%

14.30

%

(2.2

)%

Return on Average Assets

 

1.24

%

1.22

%

1.6

%

Efficiency Ratio

 

69.35

%

70.38

%

(1.5

)%

 

11