Boston Private Financial Holdings Reports Fourth Quarter 2010 Results
Boston, MA - January 27, 2011 - Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the “Company” or “BPFH”) today reported a fourth quarter 2010 GAAP Net Loss Attributable to the Company of $10 million, compared to a $7.2 million net loss in the third quarter of 2010. The net loss for the fourth quarter was primarily driven by $32.6 million in Provision for Loan Losses, largely attributable to continued credit-related stress in the commercial real estate (“CRE”) portfolio at the Company's Northern California banking affiliate.
After accounting for non-cash equity adjustments and preferred dividends, BPFH reported a fourth quarter 2010 GAAP net loss per share of $0.14 compared to a $0.10 GAAP net loss per share in the third quarter of 2010.
For the full year 2010, the Company reported a GAAP net loss of $11 million, compared to GAAP net income of $5.2 million for 2009. After accounting for non-cash equity adjustments and preferred dividends, BPFH reported a 2010 GAAP net loss per share of $0.29, compared to a $0.52 GAAP net loss per share for 2009.
“Managing credit has been our top priority for the past several quarters, with a particular focus on Northern California,” said CEO and President Clay Deutsch. “Working out our problem assets continues to be the primary factor influencing our results. Further degradation of previously criticized loans, primarily in the Northern California CRE portfolio, was the main driver of our elevated provision in the fourth quarter of 2010.”
“We do see encouraging signs of balance sheet improvement,” continued Mr. Deutsch. “Our overall levels of classified and non-accrual loans were reduced substantially during the fourth quarter and we continue to see substantial paydowns in January. We continue to reduce construction exposure as evidenced by the 50% decline in construction loans outstanding year-over-year. This mix shift may sacrifice nominal yield, but it also lowers our risk profile substantially and reflects our commitment to focus on high performance private banking.”
“We also see a number of positive indicators that speak to the client attraction and development strengths of our core private banking and wealth management businesses,” continued Mr. Deutsch. “Year-over-year, our residential mortgage portfolio has increased 12%, our deposit base grew 5% at attractive funding costs and fee-based revenues have grown 10%.”
In addition to reporting fourth quarter results, the Company made two additional restructuring announcements.
The BPFH board of directors has approved a plan to merge the Company's four private banks into one consolidated banking entity. While subject to regulatory and related approvals, the Company intends to begin immediately working on a 12-month integration program.
“We are very committed to integrating our banks into one high-performing private bank,” said Mr. Deutsch. “Our primary motive is superior client service and client growth as we consistently deliver the full power of our Company's product set and skill set across all our markets. In addition, we will realize substantial gains in productivity and profitability.”
“We have developed a comprehensive transition plan to guide the next 12 months. Detailed analysis suggests an estimated cost savings of 8-9% of our current banking cost base when fully implemented, and a substantial improvement in building margins and overall profitability. Of the 8-9% in estimated savings, two-thirds is employment related, which translates into an 11% reduction in force in the Private Banking Group.”
In a separate announcement, BPFH's wealth advisory affiliate Coldstream Holdings, Inc. announced today that it has repurchased all of BPFH's stock holdings in the firm. BPFH had been a minority shareholder of Coldstream since 2002. Coldstream contributed less than $0.1 million to the Company's total revenue in 2010. This transaction is expected to result in a pre-tax gain of $0.5 million in the first quarter of 2011.
Key Financials (Note: All comparisons relate only to continuing operations).
Revenue for the fourth quarter was $76.4 million, an increase of $2.6 million, or 4%, from $73.7 million on a linked quarter basis. On a year to date basis, Revenue was up 2% to $292.5 million.
Net Interest Income for the fourth quarter was $45 million, a decrease of $1.5 million, or 3%, from $46.4
The following information was filed by Boston Private Financial Holdings Inc (BPFH) on Thursday, January 27, 2011 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.