BOSTON, Jul 28, 2010 (BUSINESS WIRE) --

Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the "Company") today reported second quarter 2010 GAAP net income attributable to the Company of $1.1 million, compared to $5.1 million in the first quarter of 2010. After accounting for non-cash equity adjustments and preferred dividends, the Company reported a second quarter 2010 GAAP loss per share of ($0.07) compared to earnings per share of $0.02 in the first quarter of 2010.

During the quarter, the Company redeemed the remaining $104 million of its TARP Capital Purchase Program funds, resulting in a one-time non-cash equity adjustment of $5.0 million, or $0.07 per share. Going forward the redemption will result in annualized savings of $5.2 million, or $0.08 per share, due to the elimination of the associated preferred dividends.

Chairman and Chief Executive Officer Timothy L. Vaill said, "During this quarter, we saw continued improvement in our core business, with increases in loans, higher net interest income, and higher fee income from our wealth advisory and investment management segments, as well as positive AUM net flows.

"Credit quality at our banks in Southern California and the Pacific Northwest continued to improve, and we saw another quarter of quality results from our Boston bank. However, as a result of recent adverse developments relating to several large loan relationships in our Northern California commercial real estate portfolio, we took proactive steps to add to our provision for loan losses. Net income decreased this quarter primarily due to the higher provision for loan losses."

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

• Revenue for the second quarter was $70.7 million, a decrease of $1.1 million, or 2%, from $71.7 million on a linked quarter basis. Revenues were up 7% from $66.2 million compared to the same period in 2009.
• Net Interest Income for the second quarter was $45 million, an increase of $0.7 million, or 2%, from $44.3 million on a linked quarter basis. Net Interest Income was up 15% from $39.3 million compared to the same period in 2009.
• Net Interest Margin for the second quarter was 3.29%, up 11 basis points from 3.18% on a linked quarter basis. Net Interest Margin was up 15 basis points from 3.14% compared to the same period in 2009.
• Total Fee Income for the second quarter was $25.8 million, a decrease of $0.2 million, or 1%, from $25.9 million on a linked quarter basis. Total Fee Income was up 7% from $24.2 million compared to the same period in 2009.
• Operating Expenses for the second quarter were $56.7 million, an increase of $0.6 million, or 1%, on a linked quarter basis. Operating Expenses were down 2% from $57.7 million compared to the same period in 2009.
• Tangible Common Equity/Tangible Assets ("TCE/TA") at the end of the second quarter was 7.11%, an increase of 79 basis points from 6.32% on a linked quarter basis. TCE/TA was up 167 basis points from 5.44% compared to the same period in 2009.
• Total Balance Sheet Assets as of the end of the second quarter were down $0.2 million, or 3% to $5.9 billion on a linked quarter basis. Total Balance Sheet Assets were down 19% from $7.3 billion compared to the same period in 2009, due primarily to divestitures in late 2009.
• Provision for Loan Losses for the second quarter was $15 million, an increase of $7.3 million, or 96%, from $7.6 million on a linked quarter basis. Provision for Loan Losses was up 71% from $8.7 million compared to the same period in 2009.
• Allowance for Loan Losses as a percentage of Total Loans at the end of the second quarter was 1.76%, an increase of 8 basis points, from 1.68% on a linked quarter basis. Allowance for Loan Losses as a percentage of Total Loans was up 8 basis points from 1.68% compared to the same period in 2009.

"This quarter, we completed a successful capital raise, adding more than $33 million in capital, and fully repaid our TARP funds to the U.S. Treasury, which will deliver substantial annualized savings in the future," said David J. Kaye, Chief Financial Officer. "We improved upon our already-strong capital position and our TCE/TA ratio now stands at 7.11%. While our provision for loan losses is substantially higher this quarter as we address the issues in Northern California, we saw an improvement in credit quality at our other three banks, with lower classified and past due loans."

Total Deposits decreased 2% in the second quarter to $4.4 billion compared to the first quarter of 2010, driven by a reduction in brokered certificates of deposit. Total Loans increased 3% in the second quarter to $4.5 billion compared to the end of the first quarter of 2010. Residential loans and commercial loans each grew 4% as of the end of the second quarter compared to the end of the first quarter of 2010.

Non-Performing Loans as a percentage of Total Loans were 2.23% as of the end of the second quarter, an increase of 21 basis points from 2.02% at the end of the first quarter of 2010. Net Charge-offs for the quarter were $9.2 million, which represented 0.20% (not annualized) of Total Loans, compared to $2.8 million of Net Charge-offs during the first quarter of 2010, or 0.06% (not annualized) of Total Loans. Past Due Loans (30-89 days) as a percentage of Total Loans decreased 28 basis points, on a linked quarter basis, to 0.17%.

Total Company Assets Under Management ("AUM") decreased while fee income increased during the second quarter of 2010 as compared to the first quarter of 2010. Total AUM for the second quarter was $18.3 billion, a decrease of $885 million, or 5%, from $19.2 billion on a linked quarter basis. The Company experienced second quarter AUM net inflows of $10 million, as compared to $70 million of net inflows in the prior quarter.

"Although the economy continues to present challenges, particularly in the Northern California commercial real estate portfolio, we are taking action to deal with these issues. However, we are seeing positive signs in our core business, and in these uncertain times we continue to offer the high-net-worth market a compelling value proposition of local, high-touch private banking, wealth advisory and investment management services," Mr. Vaill said.

"As previously announced, Clay Deutsch will be taking over as Chief Executive Officer and President at Boston Private Financial Holdings at the end of the month" Vaill continued. "A McKinsey & Company veteran who started his career in banking three decades ago, Clay brings rich industry experience and expertise in wealth management and has helped many businesses develop and improve their growth strategies over the years. I want to wish Clay the best as the Company continues to deliver outstanding service and advice to clients in our markets around the country."

Dividend Payments

Concurrent with the release of the second quarter 2010 earnings, the Board of Directors of the Company declared a cash dividend to shareholders of $0.01 per share. The record date for this dividend is August 11, 2010 and the payment date is August 25, 2010.

Non-GAAP Financial Measures

The Company uses certain non-GAAP financial measures, such as the TCE/TA ratio, 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 Total Equity to Total Assets ratio to the non-GAAP measure is attached.

Conference Call

Management will hold a conference call at 9 a.m. Eastern Time on Thursday, July 29, to discuss the financial results in more detail. To access the call:

Dial In #: 866-831-6267
International Dial In #: 617-213-8857
Passcode: 52395985

Replay Information:
Available from July 29 at 12 noon to August 5
Dial In #: 888-286-8010
International Dial In #: 617-801-6888
Passcode: 12287780

The call will be simultaneously webcast and may be accessed on www.bostonprivate.com.

Boston Private Financial Holdings, Inc.

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

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

Note to Editors:

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

Statements in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties. These statements, which are based on certain assumptions and describe our future plans, strategies and expectations, include, among others, statements regarding our strategy, effectiveness of our investment programs, and evaluations of future interest rate trends and liquidity, expectations as to growth in assets, deposits and results of operations, receipt of regulatory approval for pending acquisitions, success of acquisitions, future operations, market position, financial position, and prospects, plans and objectives of management. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Company's control. Forward-looking statements are based on the current assumptions and beliefs of management and are only expectations of future results. The Company's actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, adverse conditions in the capital and debt markets and the impact of such conditions on the Company's private banking, investment management and wealth advisory activities; changes in interest rates; competitive pressures from other financial institutions; the effects of 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 the value of the securities in our investment portfolio, changes in loan defaults and charge-off rates; the adequacy of loan loss reserves; reductions 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; and risks related to the identification and implementation of acquisitions; and changes in assumptions used in making such forward looking statements, as well as the other risks and uncertainties detailed in the Company's Annual Report on Form 10-K, as updated by the Company's Quarterly Reports on Form 10-Q; and other filings submitted to the Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.

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

SOURCE: Boston Private Financial Holdings, Inc.

Boston Private Financial Holdings, Inc.
Catharine Sheehan, 617-912-3767
Senior Vice President, Corporate Communications
csheehan@bostonprivate.com
or
Sloane & Company
John Hartz, 857-598-4779
jhartz@sloanepr.com