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 20, 2016
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. Furthermore, 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 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 20, 2016 , Boston Private Financial Holdings, Inc. (the “Company”) issued a press release announcing its financial results for the third quarter and nine months ended September 30, 2016 . The text of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.


Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On October 19, 2016, the Compensation, Governance and Executive Committee of the Board of Directors of the Company approved an Executive Vice President Severance Pay Plan (the “Severance Plan”). Under the Severance Plan, which is effective October 19, 2016, an employee of the Company, Boston Private Bank & Trust Company (the “Bank”), or any of the Bank’s subsidiaries with the title of Executive Vice President or above will receive certain severance benefits if such employee’s job is eliminated or the employee is terminated without cause, including, without limitation, payment of base salary for a period of twelve months following termination of employment (the “severance period”), a pro-rated bonus, a monthly cash payment equal to the employer’s share of the premium for group medical and/or dental benefit plan continuation under COBRA during the severance period, pro-rata vesting of time- and performance-based restricted stock awards (other than as provided in the applicable award agreement), and outplacement benefits. The receipt of any severance payment is contingent upon the execution by such employee of a general release of claims against the Company and certain other conditions, including the non-solicitation of clients and employees for the severance period. Executives who otherwise have an agreement providing for severance pay are not eligible to receive payments under the Severance Plan.
The above description is a summary of the terms of the Severance Plan and is subject to and qualified in its entirety by the terms of the Severance Plan, a copy of which is attached hereto as Exhibit 10.1 and incorporated by reference herein.

Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
10.1    Executive Vice President Severance Pay Plan
99.1    Earnings Press Release of the Company dated October 20, 2016









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/ D AVID  J. K AYE
 
Name:
David J. Kaye
 
Title:
Executive Vice President, Chief
Financial and Administrative Officer
Date: October 20, 2016
 
 




EXHIBIT INDEX
Exhibit No.
 
Description
10.1

 
Executive Vice President Severance Pay Plan
99.1

 
Earnings Press Release of the Company dated October 20, 2016



Exhibit 10.1












BOSTON PRIVATE FINANCIAL HOLDINGS, INC.
EXECUTIVE VICE PRESIDENT SEVERANCE PAY PLAN


SUMMARY PLAN DESCRIPTION
Effective October 19, 2016










TABLE OF CONTENTS
Page
INTRODUCTION
1
SECTION 1 PLAN PARTICIPATION
1
SECTION 2 SEVERANCE BENEFITS
2
When Severance Benefits Are Paid                                  2
When Severance Benefits Are Not Paid                                  3
SECTION 3 PAYMENT AMOUNT
3
Calculation of Severance Pay                                      3
Commencement and Payment of Severance Pay                              4
Effect of Other Severance Pay                                      4
Loans or Other Obligations                                      4
Taxation of Severance Pay                                      4
SECTION 4 OTHER BENEFITS
5
Outplacement                                              5
Bonus                                                  5
Vesting of Equity Awards                                      5
Medical and Dental Benefit Continuation                              5
Other Benefits                                              6
SECTION 5 SITUATIONS AFFECTING PLAN BENEFITS
6
SECTION 6 PLAN ADMINISTRATION
7
Administration                                              7
Delegation                                              7
Powers                                                  7







i

Rules and Procedures                                          8
Reports                                                  8
Effect of Mistake                                          8
Applicable Law                                              8
Nonalienation of Benefits                                      8
No Vested Interest                                          8
No Employment Rights                                          8
Section 409A                                              9
SECTION 7 CLAIMS PROCEDURE
10
SECTION 8 ADDITIONAL DEFINITIONS
11
SECTION 9 ERISA REQUIRED INFORMATION
12
Official Plan Name                                      12
Plan Administrator And Sponsor                                  12
Plan Number                                          13
Plan Type                                          13
Plan Year                                          13
Agent for Service of Legal Process                              13
Funding                                          13
Pension Benefit Guaranty Corporation                              13
ERISA Rights                                          13
SECTION 10 AMENDMENT AND TERMINATION
14


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INTRODUCTION
This is the summary plan description (“ SPD ”) for the Boston Private Financial Holdings, Inc. Executive Vice President Severance Pay Plan (the “ EVP Plan ”). This SPD also serves as the official plan document.
The EVP Plan provides employees with the title of Executive Vice President or above of Boston Private Financial Holdings, Inc. (“ BPFH ”) and Boston Private Bank & Trust Company (the “Bank”) and the Bank’s subsidiaries (collectively with the Bank, “Participating Employers”) with the opportunity to receive certain pay and benefits in connection with an involuntary termination of employment due to a job elimination or a termination of employment by the Company without cause as described below (“ Severance Benefits ”). For purposes of the EVP Plan, the “ Company ” refers to any and all of BPFH and the Participating Employers. The Company may discharge its responsibilities through BPFH or any Participating Employer.
A covered employee’s own employer is referred to in this SPD as the “ Employer .” This SPD contains information that will help you understand your Severance Benefits. Therefore, we encourage you to read through the material carefully.
If you are eligible for severance benefits specified in Section 2 (“ Severance Benefits ”) under the EVP Plan, you will generally receive your severance pay in the form of salary continuation (“ Severance Pay ”) over a period of twelve months following your termination of employment.
Additional capitalized terms used herein are defined in Section 8 or otherwise below.
If you have any questions regarding the EVP Plan and your eligibility for coverage under the EVP Plan, please contact BPFH’s Executive Vice President, Human Resources.
SECTION 1
PLAN PARTICIPATION
To be potentially eligible for Severance Benefits under the EVP Plan, you must hold the title of Executive Vice President or above with BPFH or a Participating Employer. Any Employees who are employed at a level of comparable position to Executive Vice President or above for entities that do not use the EVP titling structure are also eligible. All employees who are potentially eligible for Severance Benefits under the EVP Plan are referred to herein as “ EVP Employees .” Employees of an Employer eligible for the Boston Private Financial Holdings, Inc. Severance Pay Plan or who are parties to an agreement with an Employer that provides an opportunity to receive severance pay other than under this EVP Plan are not eligible for Severance Benefits under the EVP Plan.





1


SECTION 2
SEVERANCE BENEFITS
When Severance Benefits Are Paid
To be eligible to receive Severance Benefits, BPFH must find that your employment with your Employer has been terminated involuntarily due to a Job Elimination as described in (1) below or your termination is a Termination Without Cause as described in (2) below.
1.
A “ Job Elimination ” is the elimination of an EVP Employee's position due to restructuring, other organizational change or a reduction in force. Even if your position is eliminated, a termination of your employment due to misconduct and unsatisfactory job performance would not be a Job Elimination:

In addition, you will not be considered to have experienced a Job Elimination if you are offered a Comparable Position, regardless of whether you accept such position.
2.
A “Termination Without Cause” is a termination of an EVP Employee’s employment by the Participating Employer for reasons other than: (i) conduct by the EVP Employee constituting a material act of misconduct in connection with the performance of his or her duties, including, without limitation, misappropriation of funds or property of the Company or any of its subsidiaries or affiliates other than the occasional, customary and de minimis use of Company property for personal purposes; (ii) actions or omissions by the EVP Employee that satisfy the elements of (A) any felony or (B) a misdemeanor involving moral turpitude, deceit, dishonesty or fraud; (iii) any conduct by the EVP Employee that would reasonably be expected to result in material injury or reputational harm to the Company or any of its subsidiaries and affiliates; (iv) continued non-performance or unsatisfactory performance by the EVP Employee of his or her duties (including by reason of the EVP Employee’s physical or mental illness, incapacity or disability) which has continued for more than 45 days following written notice of such non-performance or unsatisfactory performance from the BPFH Board or the Chief Executive Officer of the Employer; (v) a material violation by the Executive of any of the Company’s (A) written employment policies or (B) written policies regarding confidential information; or (vi) failure to cooperate with a bona fide internal investigation or an investigation by regulatory or law enforcement authorities, after being instructed by the Company to cooperate, or the willful destruction or failure to preserve documents or other materials known to be relevant to such investigation or the inducement of others to fail to cooperate or to produce documents or other materials in connection with such investigation.

As with other determinations under the EVP Plan, BPFH’s determination of the reason for a termination of employment is conclusive and binding on all parties.
In order to receive (and to continue receiving) Severance Benefits, you must sign and not revoke an agreement that releases the Company, among others, from all legal claims (the “ Release Agreement ”).







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The Release Agreement must be in a form satisfactory to the Company. The Release Agreement may include provisions in addition to a release of legal claims, including without limitation provisions prohibiting disparagement, prohibiting solicitation of employees and/or clients, requiring the preservation of Company confidential information, confirming the return of all Company property, and requiring post-termination assistance with the transition of responsibilities and any litigation or regulatory matters involving the Company. You must sign and return the Release Agreement within the time period specified in the Release Agreement. If you otherwise qualify for Severance Benefits, the Company shall propose a Release Agreement to you.
When Severance Benefits Are Not Paid
You will not be eligible for Severance Benefits, and Severance Benefits will not be paid or provided, if:
*
you voluntarily choose to leave the Company;

*
you become disabled or die before the termination of your employment due to a Job Elimination or a Termination Without Cause;

*
the termination of your employment is due to a reason other than a Job Elimination or a Termination Without Cause;
 
*
you fail to sign and return the Release Agreement required by BPFH in a timely manner or you revoke the Release Agreement after signing;
 
*
the EVP Plan is ended, suspended or modified;

*
other circumstances set forth in Section 5 of the EVP Plan affect your entitlement to Severance Benefits, to the extent provided in Section 5.

If you receive notice of a Job Elimination or a Termination Without Cause, you need to remain employed until the date scheduled by your Employer for the termination of your employment. If you leave employment before that date (including either a voluntary termination or an involuntary termination for a reason other than the Job Elimination or Termination Without Cause), you will not be eligible for Severance Benefits unless BPFH’s Executive Vice President, Human Resources or General Counsel gives written approval to you that an earlier departure will be considered a Job Elimination or a Termination Without Cause for purposes of the EVP Plan.
SECTION 3
PAYMENT AMOUNT
Calculation of Severance Pay
Severance Pay consists of the payment of your Base Salary for a period of twelve months following your termination of employment (the “Severance Pay Period”).

3



Commencement and Payment of Severance Pay
The Severance Pay Period begins immediately after the date of termination. However, the Company is not obligated to commence the payment of Severance Pay immediately. The Company shall commence the payment of Severance Pay within sixty (60) days of the date of an otherwise qualifying involuntary termination, provided that you have not rejected the Release Agreement. Notwithstanding the foregoing, if such sixty (60) day period commences in one calendar year and ends in another, the payments shall commence in the second calendar year. Solely for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”), each installment payment of Severance Pay is considered to be a separate payment.
You will be considered to have rejected the Release Agreement if you either (1) do not sign and return the Release Agreement as directed within the time period specified in the Release Agreement or (2) if applicable, you exercise a right to revoke the Release Agreement within the time period specified in the Release Agreement. If Severance Pay or any other Severance Benefits commence but you subsequently reject the Release Agreement, your right to Severance Pay and any other Severance Benefits shall immediately end.
The Company shall pay Severance Pay on regular payroll dates applicable to your position for the Severance Pay Period, if practicable, in accordance with the Company’s regular pay practice. If payments commence after the first regular payroll date following the date of termination, the first payment of Severance Pay will include all Base Pay that would otherwise have been paid for the period between the date of termination and the first payment of Severance Pay if the Release had been signed and effective on the date of termination and Severance Pay had commenced on the first payroll date after termination.
Effect of Other Severance Pay
If an employee is eligible for Severance Pay under this EVP Plan, Severance Pay will be reduced by any termination payments required to be paid under applicable federal, state and local laws (other than state unemployment compensation) and any amounts payable due to a termination of employment under any other severance pay plan, policy or agreement.
Loans or Other Obligations
Any amounts that you owe to the Company may be deducted from your Severance Pay, unless such deduction violates Section 409A of the Code.
Taxation of Severance Pay
Your Severance Pay is considered taxable income. All required federal, state and local taxes will be deducted from Severance Pay.

4


SECTION 4
OTHER BENEFITS
In addition to Severance Pay, the Company shall provide the following benefits, also subject to the Release Agreement requirement described above.
Outplacement
The Company shall provide outplacement benefits. The terms for the provision of outplacement benefits will be determined by the Company.
Bonus
The “pro-rated bonus” to which you would otherwise be entitled under the Company’s annual bonus plan, which bonus will be prorated for the portion of the year you were employed by the Company, determined based on actual performance of the Company for the year, and paid when bonuses for the same period are paid to other executives, but no later than March 15 of the year following the year of your termination.
Vesting of Equity Awards
Except to the extent expressly addressed in the applicable agreement, the vesting of restricted stock awards that provide for only time-based vesting will be accelerated on a pro-rated basis from the grant date through the date of the termination of employment. Restricted stock awards that are subject to performance-based vesting will be vested and paid out at the end of the performance period based on the achievement of performance criteria during such performance period and pro-rated through the date of the EVP Employee’s termination of employment.
Medical and Dental Benefit Continuation
Unless otherwise expressly provided under a separate, existing agreement with an EVP Employee, the Company shall provide a monthly cash payment equal to the employer share of the premium for group medical and/or dental benefit plan continuation under COBRA effective for the Severance Pay Period, subject to the following:
1.
The Employee must timely elect COBRA continuation for the applicable plan or plans.

2.
The Severance Pay will be reduced by the regular employee share of the applicable plan premium for the same coverage.

If the EVP Employee becomes eligible for coverage under another group medical and/or dental benefit plan before the end of the Severance Pay Period, the EVP Employee’s continued eligibility for such paid COBRA coverage shall cease. Such an EVP Employee is expected to notify the Company promptly in the event of such eligibility or anticipated eligibility. As a condition of continued receipt of Severance Pay, an EVP Employee is obligated to respond promptly and fully to any reasonable inquiries concerning the






5


EVP Employee’s eligibility or anticipated eligibility for other group plan coverage. In the event that the Company pays for group plan coverage beyond the date when such payments are due under the EVP Plan, the Company may withhold any such overpayments from any remaining Severance Pay due to the EVP Employee.
Other Benefits
Severance Pay is not employment compensation for benefit plan purposes. You do not accrue any vacation, retirement or other benefits by reason of receiving Severance Pay. Rights to pay and benefits under other benefit plans or programs, including equity plans and programs, will be based on your period of employment up to the date of termination and the terms of the applicable plans and programs.
SECTION 5
SITUATIONS AFFECTING PLAN BENEFITS
In addition to what has been stated elsewhere, the following could affect Severance Benefits:
*
If you do not properly provide the requested information or do not comply with the conditions and requirements specified in the EVP Plan, Severance Benefits may be delayed or denied.
  
*
If you are offered a Comparable Position by BPFH, a Participating Employer or a Successor after your employment ends, your right to receive Severance Benefits shall end upon the extension of that offer, regardless of whether you accept it.
  
*
If you commence employment with BPFH, a Participating Employer or a Successor either immediately upon or at any time after the termination of your employment, your right to receive Severance Benefits, with respect to your former position, will end upon commencement of such employment, regardless of whether the employment is in a Comparable Position.

*
Coverage under the EVP Plan ends when your Severance Benefits end, if your title or status changes and you no longer meet the eligibility conditions, or if the EVP Plan is terminated.
 
*
If you violate any contractual or other legal obligations to the Company, including without limitation, your obligations under the Release Agreement, your right to receive Severance Benefits shall end immediately.
 
*
If you do not comply with the Non-Solicitation Condition of this EVP Plan set forth in Appendix A , your right to receive Severance Benefits shall end immediately.
 
*
If the Company determines that providing Severance Benefits may be contrary to law, a regulatory requirement or regulatory guidance, no Severance Benefits will be paid or otherwise provided. The Company may, in its discretion, request a determination or other












6


guidance from one or more regulatory authorities concerning the permissibility of providing Severance Benefits. If the Company has made such a request but has not received sufficient information to make a determination by the date of the termination of your employment regarding whether such a payment is permissible, the Company shall not offer Severance Benefits in exchange for a Release Agreement until and unless the Company subsequently determines that payment would be permissible under the law, regulatory requirements and regulatory guidance. In the event that the Company determines that payment would be permissible, it shall offer Severance Benefits in exchange for a Release Agreement. In such event, for the purpose of the “Commencement and Payment of Severance Pay” provision of Section 3 of the EVP Plan, the sixty (60) day period referenced in the first paragraph of that provision shall commence on the date of the determination by the Company that providing Severance Benefits would be permissible rather than on the date of an otherwise qualifying involuntary termination. In no event will the Company be obligated to provide Severance Benefits if it determines that such payment is not permissible.

SECTION 6
PLAN ADMINISTRATION
Administration
BPFH is the “ Plan Administrator .” The Plan Administrator is responsible for carrying out the provisions of the EVP Plan.
Delegation
BPFH may delegate any of its authority or responsibilities as Plan Administrator or otherwise under the EVP Plan to a Participating Employer with respect to its Employees. BPFH or its delegate may from time to time appoint one or more individuals, or a committee, and delegate such of its power and duties as it deems desirable to any such individual or individuals or committee, in which case every reference herein made to BPFH shall be deemed to mean or include the individual or individuals or committee so appointed as to matters so delegated. Such individual or individuals shall be officers or other employees of BPFH or such other persons as BPFH may appoint.
Powers
The Plan Administrator shall have complete control of the administration of the EVP Plan, with all powers necessary to enable it properly to carry out its duties in that respect. BPFH shall be authorized and have full discretion to apply the terms of the EVP Plan, to interpret the EVP Plan and to determine all questions arising in the administration, construction and application of the EVP Plan. In addition, BPFH may increase the amount of severance provided and make other changes to the terms and conditions of severance if it determines special circumstances exist. The decision of BPFH upon all matters within the scope of its authority shall be conclusive and binding on all parties.







7


Rules and Procedures
The Plan Administrator may from time to time establish such supplemental rules and procedures for the administration of the EVP Plan and the transaction of its business as it deems necessary.
Reports
The Plan Administrator shall be responsible for the preparation and delivery of all reports, notices, plan summaries and plan descriptions required to be filed with any governmental office or to be given to any Employee, former Employee or beneficiary.
Effect of Mistake
If there is a mistake or misstatement about eligibility, participation, or service, or about the amount of payment made to a participant or beneficiary, the Plan Administrator will, if possible, try to correct the error. This may be done by withholding, accelerating, or adjusting payments as necessary to ensure the proper payment from the EVP Plan is made, except to the extent that such correction would result in a Section 409A violation.
Applicable Law
This EVP Plan, and any and all rights hereunder, shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts (without regard to any conflicts of law provisions thereof), to the extent not preempted by federal law.
Nonalienation of Benefits
No Severance Benefit will be subject in any way to alienation, sale, transfer, assignment, pledge, attachment, garnishment, execution, or encumbrance of any kind. Any attempt to accomplish the same will be void. In the event that the Plan Administrator finds that such an attempt has been made with respect to any such Severance Benefit due or to become due to any Employee hereunder, the Plan Administrator in its sole discretion may terminate the interest of such Employee in such Severance Benefit and apply the amount of such Severance Benefit to or for the Severance Benefit of such Employee as the Plan Administrator may determine, and any such application will be a complete discharge of all liability with respect to such Severance Benefit.
No Vested Interest
No other person other than the Plan Administrator has any right, title or interest in or to any assets of the EVP Plan or to any Company contribution thereto.
No Employment Rights
Nothing contained in the EVP Plan will give any Employee the right to be retained in the employment of his or her Employer, or affect the right of any Employer to dismiss any Employee. The adoption and maintenance of the EVP Plan will not constitute a contract between any Employer and any Employee or consideration for, or an inducement to or condition of, the employment of any Employee.






8


Section 409A
All payments to be made under the EVP Plan are intended to be exempt from Section 409A of the Code and the provisions of the EVP Plan will be interpreted in accordance with that intent. Each payment of Severance Pay is considered to be a separate payment. Anything in the EVP Plan to the contrary notwithstanding, if at the time of an Employee’s separation from service within the meaning of Section 409A of the Code, the Company determines that the Employee is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, then to the extent any payment or benefit that the Employee becomes entitled to under the EVP Plan on account of the Executive’s separation from service would be considered deferred compensation subject to the 20 percent additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, such payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (A) six months and one day after the Employee’s separation from service, or (B) the Employee’s death. The determination of whether and when a separation from service has occurred shall be made in accordance with the presumptions set forth in Treasury Regulation Section 1.409A1(h). To the extent that any amounts payable under the EVP Plan are determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code, such amounts shall be subject to such additional rules and requirements as specified by the Company from time to time in order to comply with Section 409A of the Code.











9


SECTION 7
CLAIMS PROCEDURE
If you believe that you are entitled to Severance Benefits under the EVP Plan that you are not receiving or that have been denied to you, you may make a written request for such Severance Benefits to:
Boston Private Financial Holdings, Inc.
Ten Post Office Square
Boston, MA 02109
Attention: Executive Vice President, Human Resources or General Counsel

You will be notified in writing within 90 days after your request is received whether your claim for Severance Benefits is approved or denied. (Under special circumstances, the Plan Administrator may require an additional 90 days to consider the claim. If an extension is needed, you will receive written notice of the extension before the end of the initial 90-day period. In no event will a decision be rendered later than 180 days after receipt of your request for Severance Benefits.)
If your claim is denied by the Plan Administrator, the notice of denial will contain the following information:
•
The specific reason or reasons for the denial;

•
Specific reference to the EVP Plan provisions on which the denial is based;

•
A description of any additional material or information necessary in order to receive the Severance Benefits claimed;

•
An explanation of the claims appeal procedure; and
 
•
A statement that you have the right to bring a civil action under Section 502(a) of ERISA (following a denial of an appeal). You must exhaust the claims and appeals process described below before you can bring legal action against the EVP Plan either in state or federal court. Also, failure to follow the EVP Plan’s prescribed claims and appeals process in a timely manner will also cause you to lose your right to bring legal action against the EVP Plan regarding a denial of your appeal.
  
If you disagree with the decision of the Plan Administrator, you may file an appeal.
Your request must include the following:
•
the reasons for your appeal;

10




•
the EVP Plan provisions on which the appeal is based; and
 
•
copies of all documents or materials that support your claim.
  
You, or your authorized representative, may review all documents, records and other information relevant to your claim for Severance Benefits.
The Plan Administrator will reexamine all facts relating to the appeal taking into account all comments, documents, records and other information submitted by you relating to your claim, regardless of whether such information was submitted to or considered by the Plan Administrator in the initial benefit eligibility determination. Normally, a decision on your appeal will be made within 60 days after your appeal is received. If special circumstances require a further extension of time for reviewing your appeal, you will receive written notice of the extension before the end of the initial 60-day period. In no event will a decision be rendered later than 120 days after receipt of your appeal.
The final decision will be in writing, will refer to the EVP Plan provisions on which the decision is based, and will be binding on all persons affected. If your appeal is denied, the Plan Administrator’s written notification to you will include:
•
the specific reason for the denial of your appeal;
•
specific reference to pertinent Plan provisions on which the Plan Administrator based its denial of your appeal;
•
a statement that you are entitled to receive, upon request and free of charge, reasonable access to and copies of, all documents, records and other information relevant to your claim for Severance Benefits; and
•
a statement that you have a right to bring a civil action under Section 502(a) of ERISA.
SECTION 8
ADDITIONAL DEFINITIONS
The “ Base Salary ” is your base annual compensation rate as of the date your employment is terminated, including any before-tax contributions you make to your Employer’s 401(k) plan, cafeteria plan or pre-tax transportation plan, or any elective contribution you make to your Employer’s elective non-qualified deferred compensation plan.
The Base Salary does not include bonuses, incentive awards, overtime pay and any other form of compensation. In the case of an Employee who is scheduled to work on a part-time basis, the Base Salary means the base annual compensation rate based on the Employee’s part-time schedule.
“ COBRA ” means the group health benefit continuation provisions of the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended.

11



A “ Comparable Position ” is any job with BPFH, any Participating Employer or any Successor, if such job:
•
does not require you to commute more than fifty (50) miles further than you did immediately preceding your termination; and

•
has a Base Salary and short-term target incentive opportunity equal to or greater than the prior Base Salary and short-term target incentive opportunity.
  
The “ Effective Date ” of the EVP Plan is October 19, 2016.
An “ Employee ” is a person who is treated as a regular employee by BPFH or any Participating Employer and whose monetary compensation from his or her Employer is reported to the Internal Revenue Service as W-2 income.
“ ERISA ” is the Employee Retirement Income Security Act of 1974, as amended.
A “Successor” means an entity that acquires all or a controlling portion of the business of BPFH or a Participating Employer through any form of acquisition, merger or reorganization.
SECTION 9
ERISA REQUIRED INFORMATION
Official Plan Name
The official name of the EVP Plan is the Boston Private Financial Holdings, Inc. Executive Vice President Severance Pay Plan.
Plan Administrator and Sponsor
The Plan Administrator and sponsor of the EVP Plan is:
Boston Private Financial Holdings, Inc.
Ten Post Office Square
Boston, MA 02109
Telephone (617) 912-3799
Fax (617) 912-4511
The Plan Administrator has the exclusive discretionary right to apply the terms of the EVP Plan, to interpret the terms and provisions of the EVP Plan and to determine any and all questions arising under the EVP Plan or in connection with the administration thereof, including, without limitation, the right to remedy or resolve possible ambiguities, inconsistencies, or omissions, by general rule or particular decision.

12



Plan Number
Documents and reports for the EVP Plan are filed with the U.S. Department of Labor under two numbers: BPFH’s Employer Identification Number (EIN) and the EVP Plan Number (PN). The EIN for BPFH is 04-2976299. The PN is 505.
Plan Type
The EVP Plan is an employee benefit welfare plan.
Plan Year
The plan year is January 1 through December 31.
Agent for Service of Legal Process
BPFH is the EVP Plan’s agent for service of legal process and may be served at the address indicated in the section entitled “Plan Administrator and Sponsor.”
Funding
All Severance Benefits are paid from the Company’s general assets.
Pension Benefit Guaranty Corporation
A governmental agency known as the Pension Benefit Guaranty Corporation (“ PBGC ”) insures the benefits payable under plans which provide for fixed and determinable retirement benefits. Because the EVP Plan does not provide a fixed and determinable retirement benefit, the PBGC does not include the EVP Plan within its insurance program.
ERISA Rights
The EVP Plan is subject to ERISA. As a Plan participant, you are entitled to certain rights and protections under ERISA.
Under ERISA, Plan participants are entitled to:
•
Examine, without charge at the Plan Administrator’s office, all official Plan documents (including insurance contracts) and copies of all documents filed with the U.S. Department of Labor, such as detailed Summary Annual Reports.
 
•
Obtain copies of all official Plan documents and other Plan information upon written request to the Plan Administrator. The Plan Administrator may charge a reasonable fee for the copies.
  
•
Receive a summary of the EVP Plan’s annual financial report. The Plan Administrator is required to furnish each participant with a copy of this Summary Annual Report.

13



 
You also have the right to expect “fiduciaries,” the people who are responsible for the management of the EVP Plan, to act prudently and to act in the interest of you and other EVP Plan participants and beneficiaries. Another one of your ERISA-guaranteed rights means that no one - including your Employer or any other person - may fire you or otherwise discriminate against you in any way to prevent you from obtaining a Plan benefit or exercising your rights under ERISA.
ERISA also guarantees your rights to written notice if any part of a claim is denied or ignored, in whole or in part. Because your rights under ERISA are protected by law, you also can file suit if a right is denied. For example, if you request certain Plan-related materials from the Plan Administrator and do not receive them within 30 days, you may file suit in a Federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay a fine of up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator. You may file suit in a Federal court if you have a claim for Benefits under the EVP Plan that is denied or ignored, in whole or in part. You also can seek assistance from the U.S. Department of Labor or file suit in a Federal court if a Plan fiduciary has misused Plan funds or if you are discriminated against for asserting your rights. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose because, for example, the court finds your claim frivolous, you may be ordered to pay all these costs and fees on your own, including any court costs and attorney fees.
If you have any questions about the EVP Plan, you should contact the Plan Administrator. If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the Plan Administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Ave. N.W., Washington, D.C. 20210.
SECTION 10
AMENDMENT AND TERMINATION
BPFH reserves the right to make from time to time any amendment or amendments to the EVP Plan. BPFH further reserves the right to terminate the EVP Plan at any time. A termination of employment or an amendment of the EVP Plan will not affect rights of any Employee whose employment terminates before such amendment or termination. Any Employee who is terminated from employment after an amendment or termination will have the right to receive only such benefits, if any, as are due under the EVP Plan’s terms as in effect after such amendment or termination.


14


APPENDIX A
Boston Private Financial Holdings, Inc. Executive Vice President
Severance Pay Plan - Non-Solicitation Condition

In accordance with the terms of the Boston Private Financial Holdings, Inc. Executive Vice President Severance Pay Plan (“ EVP Plan ”), in order to receive (and to continue receiving) Severance Benefits, EVP Employees must comply with the following requirements. Capitalized terms not defined in this Appendix A are defined in the EVP Plan. Specifically, during the Severance Pay Period, as a condition to continued eligibility for Severance Benefits, an EVP Employee shall not directly or indirectly:
1.
solicit or accept for employment with another employer or employ any person who is then, or was within the prior six (6) months, employed by the Company, or request, influence or advise any person who at the time of such communication is employed by the Company to leave such employment; or

2.
influence or advise any business that is or may be competitive with the business of the Company to employ any person who is employed by the Company; or

3.
(A) solicit any known customer or client of the Company to do business with any person or entity other than the Company, (B) accept from any known customer or client of the Company any business for the benefit of any person or entity other than the Company, or (C) request, induce or advise any known customer or client of the Company to withdraw, curtail, diminish or cease his, her or its business with the Company; or

4.
(A) solicit any prospect of the Company to do business with any person or entity other than the Company, or (B) accept from any prospect of the Company any business for the benefit of any person or entity other than the Company.

For purposes of this Appendix A:
1.
A business “is or may be competitive with the business of the Company” if such business is engaged in banking, investment management, financial planning, trust administration or other related financial services.

2.
To be “employed” means to perform services as a common law employee or as an independent contractor.

3.
If the EVP Employee advises others to encourage a person to become employed or become a customer of some person other than the Company, the EVP Employee will be considered to have solicited such person or customer regardless of whether the EVP Employee directly engages in solicitation of the person.

4.
The EVP Employee shall be considered to “accept for employment” or “employ” any person who becomes employed by another employer if:

15



  
a.
the EVP Employee advises any other business with which the EVP Employee is affiliated to consider such person for employment,

b.
the EVP Employee participates in any way in the consideration of any such person for employment, or
 
c.
such person becomes employed in a position in which the EVP Employee supervises such person.

5.
The EVP Employee shall be considered to “accept” business from a customer or client if the EVP Employee performs services for such customer or client;
  
6.
A “customer or client of the Company” means any person or entity who or which at any time did business with the Company;

7.
A “known customer or client of the Company” means any customer or client of the Company either:

a.
whom or which the EVP Employee serviced during his or her employment with the Company (or, after the EVP Employee’s employment has ended, whom or which the EVP Employee serviced during the last twelve (12) months of the EVP Employee’s employment); or

b.
about whom or which the EVP Employee learned Restricted Information during his or her employment (or, after the EVP Employee’s employment has ended, about whom or which the EVP Employee learned Restricted Information during the last twelve (12) months of his or her employment).

8.
A “prospect of the Company” means any person or entity with which the EVP Employee had individual contact during the EVP Employee’s employment with the Company (or, after the EVP Employee’s employment has ended, during the last twelve (12) months of his or her employment); provided that such contact included soliciting such person or entity to become a customer or client of the Company.

9.
“ Restricted Information ” means all information concerning the Company that is confidential, proprietary, or not readily available to the general public, however and whenever acquired, whether or not in writing, whether or not a trade secret or marked or designated as “secret” or “confidential,” and whether or not obtained before or after the date of this Agreement, and includes the following: (i) all account, financial, and personal information, including identifying information, regarding any customer or client of the Company that is in the possession of the Company; (ii) all financial data, budgets, reports, forecasts, schedules, statements, and projections; (iii) all information identifying or tending to identify any of the clients, vendors, employees, suppliers, contractors, consultants, or referral sources of the Company; (iv) all information regarding all intellectual property of the Company, including any and all patents, trademarks, copyrights, trade names, service marks, and trade secrets, and any and all copy, ideas, plans, designs, methods, scripts, concepts, creations, inventions, recordings, know how, discoveries developments, improvements, and advertising and promotional materials, and all computer systems, programs, software, access codes, object codes, source codes, and specifications; (v) all information regarding the markets, products, services, programs,

16


contracts, prospects, capital projects, research and development, business plans and strategies, and methods, processes, procedures, and techniques of business and operation of the Company; and (vi) every study, report, summary, analysis, notation, synopsis, compilation, and other document that is prepared by or for the Company, or any agent, officer, member, manager, or employee of the Company and contains or reflects any of the foregoing information concerning the Company; but excludes in each case information that is readily available to the general public.

During the Severance Pay Period, as a further condition of continued eligibility for Severance Benefits, the EVP Employee shall notify the Company in writing of any subsequent engagement, occupation or employment, whether as owner, employee, officer, director, agent, consultant, independent contractor or the like, and of his or her duties and responsibilities with respect to any such position.
Notwithstanding the foregoing, if the EVP Employee’s employment is involuntarily terminated due to a Termination Without Cause upon or following a Change of Control, the EVP Employee’s obligations under this Appendix A shall no longer be in effect. For purposes of this Appendix A , a “Change of Control” means the consummation of (i) the dissolution or liquidation of BPFH, (ii) the sale of all or substantially all of the assets of BPFH on a consolidated basis to an unrelated person or entity, (iii) a merger, reorganization or consolidation pursuant to which the holders of BPFH’s outstanding voting power immediately prior to such transaction do not own a majority of the outstanding voting power of the surviving or resulting entity (or its ultimate parent, if applicable), or (iv) the acquisition of all or a majority of the outstanding voting stock of BPFH in a single transaction or a series of related transactions by an entity or a group of persons or entities; provided, however, that a capital raising event or a merger effected solely to change BPFH’s domicile shall not constitute a Change of Control.



17


BPLOGO2015A04.JPG

Boston Private Financial Holdings, Inc. Reports Third Quarter 2016 Results
Third Quarter Highlights:
•
Net Interest Income Growth: Net Interest Income increased 7% year-over-year and 1% linked quarter to $49.9 million.
•
Deposit and Loan Growth: Average Total Deposits increased 3% year-over-year to $5.9 billion, and Average Total Loans increased 4% year-over-year to $5.8 billion.
•
Assets Under Management: Total Assets Under Management/Advisory (“AUM”) was flat year-over-year at $27.5 billion.
•
Provision Credit: The Company recorded a provision credit of $0.1 million.
Boston, MA - October 20, 2016 - Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the “Company” or “BPFH”) today reported third quarter 2016 GAAP Net Income Attributable to the Company of $19.6 million, compared to $16.4 million for the second quarter of 2016 and $13.5 million for the third quarter of 2015. Third quarter 2016 diluted earnings per share were $0.22, compared to $0.18 in the second quarter of 2016 and $0.16 in the third quarter of 2015.

“We are pleased with the Company’s performance during the third quarter,” said Clayton G. Deutsch, CEO. “The Company achieved earnings growth through a combination of increased revenue coupled with expense discipline, while remaining focused on asset quality and risk management. Our core Private Banking performance continues to be strong in 2016. All of our businesses remain committed to delivering exceptional client experiences, which we believe will drive attractive long-term performance.”

Core Fees and Income/Assets Under Management
Core Fees and Income increased 1% linked quarter to $37.9 million. Year-over-year, Core Fees and Income are down 4% due primarily to lower levels of AUM during the previous year offset by higher Other Banking Fee Income.
AUM increased to $27.5 billion in the third quarter, up 1% from $27.3 billion in the second quarter of 2016 and flat year-over-year, reflecting positive market action partly offset by negative net flows. The Company experienced negative net flows of $336 million during the third quarter, compared to negative $199 million and negative $751 million in the second quarter of 2016 and third quarter of 2015, respectively. During the third quarter, net flows by segment were negative $120 million for Wealth Management & Trust, negative $111 million for Investment Management, and negative $105 million for Wealth Advisory.
Net Interest Income
Net Interest Income for the third quarter was $49.9 million, up 1% from $49.2 million for the second quarter of 2016. On a year-over-year basis, Net Interest Income increased 7% from $46.5 million.  The current quarter includes $0.3 million of interest recovered on previous nonaccrual loans while the second quarter of 2016 and third quarter of 2015 included interest recoveries of $0.6 million and $0.3 million, respectively. Excluding interest recovered on previous nonaccrual loans, Net Interest Income on an FTE basis increased 2% linked quarter and 6% year-over-year.
Net Interest Margin was 2.88% for the third quarter, down three basis points from 2.91% for the second quarter of 2016. Net Interest Margin was up four basis points from 2.84% for the third quarter of 2015. Excluding interest recovered on previous nonaccrual loans, Net Interest Margin was 2.86%, a decrease of 2 basis points linked quarter and an increase of 4 basis points year-over-year.

1


Total Operating Expenses
Total Operating Expenses for the third quarter of 2016 were $61.7 million, down 5% from $64.7 million for the second quarter of 2016. On a year-over-year basis, Total Operating Expenses declined less than 1% from $61.9 million, primarily due to decreases in legal and consulting fees, other expenses, and occupancy expenses.
Provision and Asset Quality
The Company recorded a provision credit of $0.1 million for the third quarter of 2016, compared to a provision credit of $2.5 million for the second quarter of 2016 and a provision expense of $2.6 million for the third quarter of 2015. The provision credit in the third quarter of 2016 was due to net recoveries and a decrease in loss factors which were partially offset by an increase in Criticized Loans and loan growth.
Criticized Loans increased 5% linked quarter and decreased 1% year-over-year to $158.8 million. Nonaccrual Loans (“Nonaccruals”) decreased 14% to $16.5 million on a linked quarter basis. On a year-over-year basis, Non-accruals decreased 46% from $30.7 million. As a percentage of Total Loans, Nonaccruals were 28 basis points at September 30, 2016, down 5 basis points from June 30, 2016, and down 27 basis points from September 30, 2015.
Additional credit metrics are listed below:
(In millions)
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Total Criticized Loans
$
158.8

 
$
150.7

 
$
166.9

 
$
154.1

 
$
160.9

Total Loans 30-89 Days Past Due and Accruing  (12)
$
4.6

 
$
7.6

 
$
8.3

 
$
13.1

 
$
7.0

Total Net Loans (Charged-off)/ Recovered
$
2.1

 
$
1.9

 
$
1.1

 
$
0.9

 
$
(1.6
)
Allowance for Loan Losses/
Total Loans
1.32
%
 
1.32
%
 
1.35
%
 
1.37
%
 
1.41
%
Capital Ratios
Capital ratios are listed below:
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
BPFH Ratios:
 
 
 
 
 
 
 
 
 
Total Risk-Based Capital *
14.0
%
 
14.0
%
 
14.0
%
 
13.9
%
 
13.8
%
Tier I Risk-Based Capital *
12.7
%
 
12.7
%
 
12.7
%
 
12.6
%
 
12.6
%
Tier I Leverage Capital *
9.5
%
 
9.6
%
 
9.5
%
 
9.5
%
 
9.6
%
TCE/TA (4)
7.4
%
 
7.4
%
 
7.3
%
 
7.0
%
 
7.2
%
Tier I Common Equity/
Risk Weighted Assets *
10.0
%
 
10.0
%
 
9.9
%
 
9.8
%
 
9.7
%
* September 30, 2016 information is presented based on estimated data.


2


Dividend Payments
Concurrent with the release of third quarter 2016 earnings, the Board of Directors of the Company declared a cash dividend to common shareholders of $0.10 per share. The record date for this dividend is November 4, 2016, and the payment date is November 18, 2016.
The Board of Directors of the Company also declared a cash dividend to holders of the Non-Cumulative Perpetual Preferred Stock, Series D of $17.375 per share, which will result in a dividend of $0.434375 per depositary share. The record date for this dividend is November 15, 2016, and the payment date is December 15, 2016.
Non-GAAP Financial Measures
The Company uses certain non-GAAP financial measures, such as tangible book value per share; the TCE/TA ratio; return on average common equity; return on average tangible common equity; pre-tax, pre-provision earnings; total operating expense excluding restructuring; the efficiency ratio (FTE basis); and Net Interest Income and Net Interest Margin excluding interest recovered on previous nonaccrual loans; 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 a.m. Eastern Time on Friday, October 21, 2016, to discuss the financial results, business highlights and outlook. To access the call:
Dial In #: (888) 317-6003
Elite Entry Number: 2067019

Replay Information:
Available from October 21, 2016 at 12 noon until October 28, 2016
Dial In #: (877) 344-7529
Conference Number: 10094056
The call will be simultaneously webcast and may be accessed on www.bostonprivate.com

3


Boston Private Financial Holdings, Inc.
Boston Private Financial Holdings, Inc. is a national financial services organization that owns Wealth Management and Private Banking affiliates with offices in Boston, New York, Los Angeles, San Francisco, San Jose, Florida, Wisconsin, Texas and the Washington D.C. area. The Company has total assets of greater than $7 billion, and manages approximately $27 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 .
Forward-Looking Statements
Certain statements in this press release that are not historical facts may constitute 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, 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 weakness in general economic conditions on a national basis or in the local markets in which the Company operates; 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; changes in government regulation; 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, dispositions and restructurings; 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. Forward-looking statements speak only as of the date on which they are made. 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 statement is made.
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 wholly-owned subsidiary of BPFH. The information reported in this press release is related to the performance and results of BPFH.
###
CONTACT:
Adam Bromley
Vice President Corporate Finance and Director of Investor Relations
Boston Private Financial Holdings, Inc.
(617) 912-4386
abromley@bostonprivate.com


4


BPLOGO2015A04.JPG
Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
(In thousands, except share and per share data)
Assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
67,631

 
$
126,167

 
$
113,946

 
$
238,694

 
$
43,640

Investment securities available for sale
1,249,578

 
1,191,523

 
1,151,529

 
1,084,510

 
1,023,255

Investment securities held to maturity
98,881

 
105,297

 
111,337

 
116,352

 
121,679

Stock in Federal Home Loan Banks
36,084

 
44,374

 
34,202

 
35,181

 
35,518

Loans held for sale
5,316

 
4,677

 
5,383

 
8,072

 
7,685

Total loans
5,869,498

 
5,751,497

 
5,658,181

 
5,719,212

 
5,607,472

Less: Allowance for loan losses
77,669

 
75,753

 
76,427

 
78,500

 
79,246

Net loans
5,791,829

 
5,675,744

 
5,581,754

 
5,640,712

 
5,528,226

Other real estate owned (“OREO”)
1,800

 
2,042

 
98

 
776

 
776

Premises and equipment, net
32,089

 
31,752

 
31,575

 
31,036

 
30,841

Goodwill
152,082

 
152,082

 
152,082

 
152,082

 
152,082

Intangible assets, net
28,267

 
29,836

 
31,422

 
33,007

 
34,806

Fees receivable
11,185

 
11,129

 
11,041

 
11,258

 
11,308

Accrued interest receivable
18,062

 
18,061

 
17,590

 
17,950

 
17,039

Deferred income taxes, net
39,319

 
36,942

 
43,164

 
51,699

 
45,438

Other assets
149,427

 
149,975

 
128,540

 
121,179

 
128,235

Total assets
$
7,681,550

 
$
7,579,601

 
$
7,413,663

 
$
7,542,508

 
$
7,180,528

Liabilities:
 
 
 
 
 
 
 
 
 
Deposits
$
5,812,243

 
$
5,536,092

 
$
5,786,860

 
$
6,040,437

 
$
5,647,859

Deposits Held For Sale
105,788

 
110,558

 
—

 
—

 
—

Securities sold under agreements to repurchase
77,466

 
43,304

 
63,182

 
58,215

 
35,698

Federal funds purchased
125,000

 
180,000

 
40,000

 
—

 
60,000

Federal Home Loan Bank borrowings
522,681

 
678,012

 
523,952

 
461,324

 
461,899

Junior subordinated debentures
106,363

 
106,363

 
106,363

 
106,363

 
106,363

Other liabilities
134,322

 
135,289

 
114,223

 
111,468

 
109,695

Total liabilities
6,883,863

 
6,789,618

 
6,634,580

 
6,777,807

 
6,421,514

Redeemable Noncontrolling Interests (“RNCI”)
16,199

 
15,843

 
16,938

 
18,088

 
18,257

Shareholders’ Equity:
 
 
 
 
 
 
 
 
 
Preferred stock, $1.00 par value; authorized: 2,000,000 shares
47,753

 
47,753

 
47,753

 
47,753

 
47,753

Common stock, $1.00 par value; authorized: 170,000,000 shares
83,195

 
83,380

 
83,024

 
83,411

 
83,645

Additional paid-in capital
597,209

 
597,989

 
599,825

 
600,670

 
598,968

Retained earnings
39,415

 
28,985

 
21,740

 
12,886

 
5,960

Accumulated other comprehensive income/ (loss)
10,134

 
12,654

 
6,687

 
(1,500
)
 
1,287

Total Company’s shareholders’ equity
777,706

 
770,761

 
759,029

 
743,220

 
737,613

Noncontrolling interests
3,782

 
3,379

 
3,116

 
3,393

 
3,144

Total shareholders’ equity
781,488

 
774,140

 
762,145

 
746,613

 
740,757

Total liabilities, redeemable noncontrolling interests and shareholders’ equity
$
7,681,550

 
$
7,579,601

 
$
7,413,663

 
$
7,542,508

 
$
7,180,528



5


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
Three Months Ended
 
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Interest and dividend income:
(In thousands, except share and per share data)
Loans
$
50,074

 
$
49,731

 
$
50,046

 
$
49,463

 
$
48,058

Taxable investment securities
1,537

 
1,507

 
1,594

 
1,239

 
1,094

Non-taxable investment securities
1,444

 
1,400

 
1,390

 
1,348

 
1,264

Mortgage-backed securities
3,079

 
2,982

 
3,065

 
2,863

 
2,681

Federal funds sold and other
469

 
405

 
507

 
449

 
425

Total interest and dividend income
56,603

 
56,025

 
56,602

 
55,362

 
53,522

Interest expense:
 
 
 
 
 
 
 
 
 
Deposits
4,163

 
4,075

 
4,182

 
4,281

 
4,007

Federal Home Loan Bank borrowings
1,929

 
2,139

 
1,953

 
1,960

 
2,051

Junior subordinated debentures
591

 
584

 
578

 
973

 
979

Repurchase agreements and other short-term borrowings
49

 
58

 
10

 
8

 
12

Total interest expense
6,732

 
6,856

 
6,723

 
7,222

 
7,049

Net interest income
49,871

 
49,169

 
49,879

 
48,140

 
46,473

Provision/ (credit) for loan losses
(138
)
 
(2,535
)
 
(3,133
)
 
(1,655
)
 
2,600

Net interest income after provision/ (credit) for loan losses
50,009

 
51,704

 
53,012

 
49,795

 
43,873

Fees and other income:
 
 
 
 
 
 
 
 
 
Investment management fees
10,717

 
10,627

 
10,658

 
10,889

 
11,360

Wealth advisory fees
12,750

 
12,551

 
12,712

 
12,569

 
12,515

Wealth management and trust fees
10,826

 
11,208

 
10,916

 
11,782

 
12,424

Other banking fee income
3,447

 
2,982

 
3,233

 
1,719

 
2,780

Gain on sale of loans, net
156

 
197

 
209

 
178

 
364

Total core fees and income
37,896

 
37,565

 
37,728

 
37,137

 
39,443

Gain/ (loss) on sale of investments, net
273

 
245

 
1

 
215

 
5

Gain/ (loss) on OREO, net
137

 
—

 
280

 
—

 
35

Other
1,706

 
(1,015
)
 
13

 
366

 
(37
)
Total other income
2,116

 
(770
)
 
294

 
581

 
3

Operating expense:
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
40,924

 
40,614

 
42,560

 
39,520

 
37,938

Occupancy and equipment
9,521

 
9,928

 
9,587

 
9,989

 
9,064

Professional services
2,290

 
3,015

 
3,515

 
3,778

 
2,848

Marketing and business development
1,623

 
1,811

 
2,170

 
4,001

 
2,008

Contract services and data processing
1,865

 
1,737

 
1,679

 
1,505

 
1,600

Amortization of intangibles
1,568

 
1,586

 
1,586

 
1,799

 
1,655

FDIC insurance
722

 
1,015

 
1,020

 
1,089

 
916

Restructuring
—

 
905

 
1,112

 
2,000

 
1,504

Other
3,157

 
4,120

 
3,480

 
3,726

 
4,396

Total operating expense
61,670

 
64,731

 
66,709

 
67,407

 
61,929

Income before income taxes
28,351

 
23,768

 
24,325

 
20,106

 
21,390

Income tax expense
8,652

 
7,626

 
7,438

 
5,638

 
8,182

Net income from continuing operations
19,699

 
16,142

 
16,887

 
14,468

 
13,208

Net income from discontinued operations (1)
1,047

 
1,245

 
2,065

 
1,455

 
1,316

Net income before attribution to noncontrolling interests
20,746

 
17,387

 
18,952

 
15,923

 
14,524

Less: Net income attributable to noncontrolling interests
1,110

 
989

 
911

 
921

 
994

Net income attributable to the Company
$
19,636

 
$
16,398

 
$
18,041

 
$
15,002

 
$
13,530


6


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
Nine Months Ended
 
September 30,
2016
 
September 30,
2015
Interest and dividend income:
(In thousands, except share and per share data)
Loans
$
149,851

 
$
142,721

Taxable investment securities
4,638

 
3,164

Non-taxable investment securities
4,234

 
3,410

Mortgage-backed securities
9,126

 
8,070

Federal funds sold and other
1,381

 
941

Total interest and dividend income
169,230

 
158,306

Interest expense:
 
 
 
Deposits
12,420

 
11,721

Federal Home Loan Bank borrowings
6,021

 
5,999

Junior subordinated debentures
1,753

 
2,902

Repurchase agreements and other short-term borrowings
117

 
54

Total interest expense
20,311

 
20,676

Net interest income
148,919

 
137,630

Provision/ (credit) for loan losses
(5,806
)
 
100

Net interest income after provision/ (credit) for loan losses
154,725

 
137,530

Fees and other income:
 
 
 
Investment management fees
32,002

 
34,805

Wealth advisory fees
38,013

 
37,868

Wealth management and trust fees
32,950

 
39,527

Other banking fee income
9,662

 
6,721

Gain on sale of loans, net
562

 
1,029

Total core fees and income
113,189

 
119,950

Gain/ (loss) on sale of investments, net
519

 
21

Gain/ (loss) on OREO, net
417

 
124

Other
704

 
3,356

Total other income
1,640

 
3,501

Operating expense:
 
 
 
Salaries and employee benefits
124,098

 
119,881

Occupancy and equipment
29,036

 
27,194

Professional services
8,820

 
9,083

Marketing and business development
5,604

 
5,062

Contract services and data processing
5,281

 
4,532

Amortization of intangibles
4,740

 
4,912

FDIC insurance
2,757

 
2,890

Restructuring
2,017

 
1,724

Other
10,757

 
12,496

Total operating expense
193,110

 
187,774

Income before income taxes
76,444

 
73,207

Income tax expense
23,716

 
24,754

Net income from continuing operations
52,728

 
48,453

Net income from discontinued operations (1)
4,357

 
4,956

Net income before attribution to noncontrolling interests
57,085

 
53,409

Less: Net income attributable to noncontrolling interests
3,010

 
3,486

Net income attributable to the Company
$
54,075

 
$
49,923



7


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
 
Three Months Ended
PER SHARE DATA:
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
(In thousands, except share and per share data)
Calculation of Income for EPS:
 
 
 
 
 
 
 
 
 
Net income attributable to the Company
$
19,636

 
$
16,398

 
$
18,041

 
$
15,002

 
$
13,530

Adjustments to Net Income Attributable to the Company to arrive at Net Income Attributable to Common Shareholders, treasury stock method (2)
(1,006
)
 
(970
)
 
(289
)
 
(1,182
)
 
159

Net Income Attributable to the Common Shareholders, treasury stock method
$
18,630

 
$
15,428

 
$
17,752

 
$
13,820

 
$
13,689

 
 
 
 
 
 
 
 
 
 
End of Period Common Shares Outstanding
83,194,714

 
83,380,426

 
83,023,755

 
83,410,961

 
83,645,364

 
 
 
 
 
 
 
 
 
 
Weighted Average Shares Outstanding:
 
 
 
 
 
 
 
 
 
Weighted average basic shares outstanding
81,301,499

 
81,236,809

 
81,301,499

 
81,134,931

 
81,103,938

Weighted average diluted shares outstanding (3)
83,562,283

 
83,519,939

 
83,279,866

 
83,579,050

 
83,438,413

 
 
 
 
 
 
 
 
 
 
Diluted Total Earnings per Share
$
0.22

 
$
0.18

 
$
0.21

 
$
0.17

 
$
0.16


 
Nine Months Ended
PER SHARE DATA:
September 30,
2016
 
September 30,
2015
 
(In thousands, except share 
and per share data)
Calculation of Income for EPS:
 
 
 
Net income attributable to the Company
$
54,075

 
$
49,923

Adjustments to Net Income Attributable to the Company to arrive at Net Income Attributable to Common Shareholders, treasury stock method (2)
(2,265
)
 
(1,829
)
Net Income Attributable to the Common Shareholders, treasury stock method
$
51,810

 
$
48,094

 
 
 
 
Weighted Average Shares Outstanding:
 
 
 
Weighted average basic shares outstanding
81,280,014

 
80,801,113

Weighted average diluted shares outstanding (3)
83,430,480

 
83,229,029

 
 
 
 
Diluted Total Earnings per Share
$
0.62

 
$
0.58

 
 
 
 




8


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(In thousands, except per share data)
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
FINANCIAL DATA:
Book Value Per Common Share
$
8.82

 
$
8.71

 
$
8.60

 
$
8.38

 
$
8.29

Tangible Book Value Per Share (4)
$
6.65

 
$
6.53

 
$
6.39

 
$
6.16

 
$
6.05

Market Price Per Share
$
12.83

 
$
11.78

 
$
11.45

 
$
11.34

 
$
11.70

 
 
 
 
 
 
 
 
 
 
ASSETS UNDER MANAGEMENT AND ADVISORY:
 
 
 
 
 
 
 
 
 
Wealth Management and Trust
$
7,334,000

 
$
7,313,000

 
$
7,137,000

 
$
7,976,000

 
$
8,060,000

Investment Managers
10,176,000

 
10,006,000

 
9,838,000

 
9,952,000

 
9,830,000

Wealth Advisory
10,028,000

 
9,974,000

 
9,857,000

 
9,688,000

 
9,537,000

Less: Inter-company Relationship
(11,000
)
 
(17,000
)
 
(21,000
)
 
(21,000
)
 
(21,000
)
Total Assets Under Management and Advisory
$
27,527,000

 
$
27,276,000

 
$
26,811,000

 
$
27,595,000

 
$
27,406,000

 
 
 
 
 
 
 
 
 
 
FINANCIAL RATIOS:
 
 
 
 
 
 
 
 
 
Total Equity/ Total Assets
10.17
%
 
10.21
%
 
10.28
%
 
9.90
%
 
10.32
%
Tangible Common Equity/ Tangible Assets (4)
7.38
%
 
7.36
%
 
7.34
%
 
6.98
%
 
7.24
%
Tier I Common Equity/ Risk Weighted Assets (4)
10.02
%
 
9.95
%
 
9.92
%
 
9.80
%
 
9.73
%
Allowance for Loan Losses/ Total Loans
1.32
%
 
1.32
%
 
1.35
%
 
1.37
%
 
1.41
%
Allowance for Loan Losses/ Nonaccrual Loans
471
%
 
395
%
 
314
%
 
295
%
 
258
%
Return on Average Assets - Three Months Ended (Annualized)
1.03
%
 
0.88
%
 
0.99
%
 
0.81
%
 
0.74
%
Return on Average Common Equity - Three Months Ended (Annualized) (5)
10.20
%
 
8.68
%
 
9.84
%
 
8.06
%
 
7.32
%
Return on Average Tangible Common Equity - Three Months Ended (Annualized) (5)
14.30
%
 
12.43
%
 
14.11
%
 
11.92
%
 
10.93
%
Efficiency Ratio - Three Months Ended (6)
65.04
%
 
70.41
%
 
70.87
%
 
71.59
%
 
66.18
%
 
 
 
 
 
 
 
 
 
 
DEPOSIT DETAIL:
 
 
 
 
 
 
 
 
 
Demand deposits (noninterest-bearing)
$
1,770,631

 
$
1,636,273

 
$
1,609,669

 
$
1,689,604

 
$
1,555,609

NOW
556,096

 
547,777

 
565,394

 
588,337

 
489,104

Savings
74,866

 
70,553

 
76,019

 
72,336

 
74,516

Money market
2,879,952

 
2,771,080

 
2,959,328

 
3,105,172

 
2,938,427

Certificates of deposit
530,698

 
510,409

 
576,450

 
584,988

 
590,203

Total Deposits
$
5,812,243

 
$
5,536,092

 
$
5,786,860

 
$
6,040,437

 
$
5,647,859



9


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:
09/30/16
06/30/16
09/30/15
 
09/30/16
06/30/16
09/30/15
 
09/30/16
06/30/16
09/30/15
AVERAGE ASSETS
 
 
 
 
 
 
 
 
 
 
 
Interest-Earning Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and Investments:
 
 
 
 
 
 
 
 
 
 
 
Taxable investment securities
$
372,852

$
372,413

$
340,170

 
$
1,537

$
1,507

$
1,094

 
1.65
%
1.62
%
1.29
%
Non-taxable investment securities (8)
271,864

261,678

249,854

 
2,221

2,153

1,945

 
3.27
%
3.29
%
3.12
%
Mortgage-backed securities
629,748

588,419

526,408

 
3,079

2,982

2,681

 
1.96
%
2.03
%
2.04
%
Federal funds sold and other
152,892

124,790

213,372

 
469

405

425

 
1.20
%
1.29
%
0.78
%
Total Cash and Investments
1,427,356

1,347,300

1,329,804

 
7,306

7,047

6,145

 
2.05
%
2.09
%
1.85
%
Loans (9):
 
 
 
 
 
 
 
 
 
 
 
Commercial and Industrial (8)
1,065,787

1,084,821

1,023,717

 
10,626

10,813

10,424

 
3.90
%
3.94
%
3.98
%
Commercial Real Estate
1,976,327

1,910,968

1,854,337

 
19,860

19,559

19,328

 
3.93
%
4.05
%
4.08
%
Construction and Land
117,183

150,927

165,685

 
1,263

1,456

1,443

 
4.22
%
3.82
%
3.41
%
Residential
2,300,392

2,256,296

2,208,004

 
17,812

17,441

17,083

 
3.10
%
3.09
%
3.09
%
Home Equity
122,505

123,687

116,201

 
1,105

1,073

999

 
3.59
%
3.49
%
3.41
%
Other Consumer
182,315

177,805

170,901

 
1,154

1,073

983

 
2.52
%
2.43
%
2.28
%
Total Loans
5,764,509

5,704,504

5,538,845

 
51,820

51,415

50,260

 
3.55
%
3.58
%
3.58
%
Total Earning Assets
7,191,865

7,051,804

6,868,649

 
59,126

58,462

56,405

 
3.25
%
3.30
%
3.24
%
LESS: Allowance for Loan Losses
76,424

77,345

78,263

 
 
 
 
 
 
 
 
Cash and due From Banks (Non-Interest Bearing)
39,301

40,253

38,631

 
 
 
 
 
 
 
 
Other Assets
445,517

427,013

404,945

 
 
 
 
 
 
 
 
TOTAL AVERAGE ASSETS
$
7,600,259

$
7,441,725

$
7,233,962

 
 
 
 
 
 
 
 
AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
 
Interest-Bearing Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Interest-Bearing Deposits (9):
 
 
 
 
 
 
 
 
 
 
 
NOW
$
551,085

$
554,565

$
509,265

 
$
120

$
104

$
81

 
0.09
%
0.08
%
0.06
%
Savings
76,999

75,431

71,776

 
25

23

22

 
0.13
%
0.12
%
0.12
%
Money Market
2,922,687

2,897,151

2,944,893

 
2,877

2,836

2,731

 
0.39
%
0.39
%
0.37
%
Certificates of Deposit
560,546

559,271

593,466

 
1,141

1,112

1,173

 
0.81
%
0.80
%
0.78
%
Total Interest-Bearing Deposits (13)
4,111,317

4,086,418

4,119,400

 
4,163

4,075

4,007

 
0.40
%
0.40
%
0.39
%
Junior Subordinated Debentures
106,363

106,363

106,363

 
591

584

979

 
2.17
%
2.17
%
3.60
%
FHLB Borrowings and Other
624,528

719,655

526,697

 
1,978

2,197

2,063

 
1.24
%
1.21
%
1.53
%
Total Interest-Bearing Liabilities
4,842,208

4,912,436

4,752,460

 
6,732

6,856

7,049

 
0.55
%
0.56
%
0.59
%
Noninterest Bearing Demand
Deposits (9) (13)
1,824,548

1,628,057

1,623,524

 
 
 
 
 
 
 
 
Payables and Other Liabilities
135,901

116,444

102,076

 
 
 
 
 
 
 
 
Total Average Liabilities
6,802,657

6,656,937

6,478,060

 
 
 
 
 
 
 
 
Redeemable Noncontrolling Interests
19,504

19,725

22,020

 
 
 
 
 
 
 
 
Average Shareholders' Equity
778,098

765,063

733,882

 
 
 
 
 
 
 
 
TOTAL AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS' EQUITY
$
7,600,259

$
7,441,725

$
7,233,962

 
 
 
 
 
 
 
 
Net Interest Income - on a Fully Taxable Equivalent Basis (FTE)
 
 
 
 
$
52,394

$
51,606

$
49,356

 
 
 
 
LESS: FTE Adjustment (8)
 
 
 
 
2,523

2,437

2,883

 
 
 
 
Net Interest Income (GAAP Basis)
 
 
 
 
$
49,871

$
49,169

$
46,473

 
 
 
 
Interest Rate Spread
 
 
 
 
 
 
 
 
2.70
%
2.74
%
2.65
%
Bank only Net Interest Margin
 
 
 
 
 
 
 
 
2.92
%
2.95
%
2.91
%
Net Interest Margin
 
 
 
 
 
 
 
 
2.88
%
2.91
%
2.84
%

10


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:
09/30/16
09/30/15
 
09/30/16
09/30/15
 
09/30/16
09/30/15
AVERAGE ASSETS
 
 
 
 
 
 
 
 
Interest-Earning Assets:
 
 
 
 
 
 
 
 
Cash and Investments:
 
 
 
 
 
 
 
 
Taxable investment securities
$
373,273

$
334,473

 
$
4,638

$
3,164

 
1.66
%
1.27
%
Non-taxable investment securities (8)
265,280

240,902

 
6,512

5,246

 
3.27
%
2.90
%
Mortgage-backed securities
594,461

527,081

 
9,126

8,070

 
2.05
%
2.04
%
Federal funds sold and other
160,114

150,611

 
1,381

941

 
1.14
%
0.90
%
Total Cash and Investments
1,393,128

1,253,067

 
21,657

17,421

 
2.07
%
1.86
%
Loans (9):
 
 
 
 
 
 
 
 
Commercial and Industrial (8)
1,072,051

982,228

 
32,358

32,014

 
3.97
%
4.30
%
Commercial Real Estate
1,915,839

1,793,923

 
59,216

56,789

 
4.06
%
4.17
%
Construction and Land
147,548

147,914

 
4,367

3,772

 
3.89
%
3.36
%
Residential
2,262,262

2,170,086

 
52,555

50,375

 
3.10
%
3.10
%
Home Equity
121,849

117,394

 
3,260

3,070

 
3.57
%
3.50
%
Other Consumer
172,578

167,672

 
3,193

2,903

 
2.47
%
2.32
%
Total Loans
5,692,127

5,379,217

 
154,949

148,923

 
3.60
%
3.67
%
Total Earning Assets
7,085,255

6,632,284

 
176,606

166,344

 
3.30
%
3.33
%
LESS: Allowance for Loan Losses
78,008

77,751

 
 
 
 
 
 
Cash and due From Banks (Non-Interest Bearing)
39,869

39,547

 
 
 
 
 
 
Other Assets
432,005

409,265

 
 
 
 
 
 
TOTAL AVERAGE ASSETS
$
7,479,121

$
7,003,345

 
 
 
 
 
 
AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
Interest-Bearing Liabilities:
 
 
 
 
 
 
 
 
Interest-Bearing Deposits (9):
 
 
 
 
 
 
 
 
NOW
$
549,429

$
517,983

 
$
311

$
236

 
0.08
%
0.06
%
Savings
75,958

71,902

 
71

58

 
0.13
%
0.11
%
Money Market
2,958,051

2,837,614

 
8,615

7,877

 
0.39
%
0.37
%
Certificates of Deposit
566,022

598,456

 
3,423

3,550

 
0.81
%
0.79
%
Total Interest-Bearing Deposits (13)
4,149,460

4,025,955

 
12,420

11,721

 
0.40
%
0.39
%
Junior Subordinated Debentures
106,363

106,363

 
1,753

2,902

 
2.17
%
3.60
%
FHLB Borrowings and Other
623,030

524,704

 
6,138

6,053

 
1.29
%
1.52
%
Total Interest-Bearing Liabilities
4,878,853

4,657,022

 
20,311

20,676

 
0.55
%
0.59
%
Noninterest Bearing Demand Deposits (9) (13)
1,691,872

1,498,105

 
 
 
 
 
 
Payables and Other Liabilities
121,601

101,222

 
 
 
 
 
 
Total Average Liabilities
6,692,326

6,256,349

 
 
 
 
 
 
Redeemable Noncontrolling Interests
20,225

22,157

 
 
 
 
 
 
Average Shareholders' Equity
766,570

724,839

 
 
 
 
 
 
TOTAL AVERAGE LIABILITIES, RNCI, AND SHAREHOLDERS' EQUITY
$
7,479,121

$
7,003,345

 
 
 
 
 
 
Net Interest Income - on a Fully Taxable Equivalent Basis (FTE)
 
 
 
$
156,295

$
145,668

 
 
 
LESS: FTE Adjustment (8)
 
 
 
7,376

8,038

 
 
 
Net Interest Income (GAAP Basis)
 
 
 
$
148,919

$
137,630

 
 
 
Interest Rate Spread
 
 
 
 
 
 
2.75
%
2.74
%
Bank only Net Interest Margin
 
 
 
 
 
 
2.96
%
2.98
%
Net Interest Margin
 
 
 
 
 
 
2.92
%
2.91
%


11


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(In thousands)
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
LOAN DATA (10):
 
 
 
 
Commercial and Industrial Loans:
 
 
 
 
 
 
 
 
 
New England
$
856,372

 
$
814,839

 
$
849,615

 
$
894,277

 
$
827,301

San Francisco Bay Area
129,302

 
116,224

 
118,385

 
122,754

 
125,093

Southern California
113,496

 
111,854

 
101,971

 
94,524

 
84,428

Total Commercial and Industrial Loans
$
1,099,170

 
$
1,042,917

 
$
1,069,971

 
$
1,111,555

 
$
1,036,822

Commercial Real Estate Loans:
 
 
 
 
 
 
 
 
 
New England
$
856,005

 
$
797,450

 
$
816,324

 
$
799,109

 
$
766,253

San Francisco Bay Area
611,224

 
633,735

 
611,461

 
622,123

 
625,145

Southern California
587,341

 
546,127

 
497,734

 
492,902

 
512,250

Total Commercial Real Estate Loans
$
2,054,570

 
$
1,977,312

 
$
1,925,519

 
$
1,914,134

 
$
1,903,648

Construction and Land Loans:
 
 
 
 
 
 
 
 
 
New England
$
56,268

 
$
90,408

 
$
106,258

 
$
106,048

 
$
111,280

San Francisco Bay Area
26,400

 
36,808

 
35,281

 
52,876

 
35,627

Southern California
16,028

 
15,333

 
25,135

 
24,510

 
23,504

Total Construction and Land Loans
$
98,696

 
$
142,549

 
$
166,674

 
$
183,434

 
$
170,411

Residential Loans:
 
 
 
 
 
 
 
 
 
New England
$
1,409,385

 
$
1,385,102

 
$
1,361,547

 
$
1,368,192

 
$
1,356,057

San Francisco Bay Area
476,986

 
470,694

 
463,645

 
462,327

 
462,630

Southern California
429,719

 
424,320

 
391,683

 
399,021

 
393,199

Total Residential Loans
$
2,316,090

 
$
2,280,116

 
$
2,216,875

 
$
2,229,540

 
$
2,211,886

Home Equity Loans:
 
 
 
 
 
 
 
 
 
New England
$
90,592

 
$
91,728

 
$
84,693

 
$
83,712

 
$
81,796

San Francisco Bay Area
23,826

 
26,714

 
26,134

 
28,966

 
27,076

Southern California
6,851

 
7,044

 
7,980

 
7,150

 
5,915

Total Home Equity Loans
$
121,269

 
$
125,486

 
$
118,807

 
$
119,828

 
$
114,787

Other Consumer Loans:
 
 
 
 
 
 
 
 
 
New England
$
167,140

 
$
166,998

 
$
145,450

 
$
152,984

 
$
161,186

San Francisco Bay Area
6,764

 
8,299

 
8,347

 
4,530

 
5,782

Southern California
5,799

 
7,820

 
6,538

 
3,207

 
2,950

Total Other Consumer Loans
$
179,703

 
$
183,117

 
$
160,335

 
$
160,721

 
$
169,918

Total Loans:
 
 
 
 
 
 
 
 
 
New England
$
3,435,762

 
$
3,346,525

 
$
3,363,887

 
$
3,404,322

 
$
3,303,873

San Francisco Bay Area
1,274,502

 
1,292,474

 
1,263,253

 
1,293,576

 
1,281,353

Southern California
1,159,234

 
1,112,498

 
1,031,041

 
1,021,314

 
1,022,246

Total Loans
$
5,869,498

 
$
5,751,497

 
$
5,658,181

 
$
5,719,212

 
$
5,607,472


12


Boston Private Financial Holdings, Inc.
Selected Financial Data (Unaudited)
(In thousands)
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
CREDIT QUALITY (10):
 
 
 
 
Special Mention Loans:
 
 
 
 
 
 
 
 
 
New England
$
25,248

 
$
27,903

 
$
38,927

 
$
40,121

 
$
46,924

San Francisco Bay Area
22,786

 
24,381

 
23,288

 
15,764

 
11,087

Southern California
6,278

 
15,044

 
24,710

 
13,326

 
12,718

Total Special Mention Loans
$
54,312

 
$
67,328

 
$
86,925

 
$
69,211

 
$
70,729

Accruing Substandard Loans (11):
 
 
 
 
 
 
 
 
 
New England
$
19,748

 
$
17,447

 
$
19,157

 
$
22,026

 
$
16,996

San Francisco Bay Area
19,157

 
19,750

 
20,235

 
19,990

 
20,108

Southern California
49,148

 
27,027

 
16,299

 
16,398

 
22,405

Total Accruing Substandard Loans
$
88,053

 
$
64,224

 
$
55,691

 
$
58,414

 
$
59,509

Nonaccruing Loans:
 
 
 
 
 
 
 
 
 
New England
$
11,020

 
$
13,028

 
$
17,988

 
$
19,572

 
$
22,815

San Francisco Bay Area
3,543

 
4,196

 
4,369

 
4,977

 
5,096

Southern California
1,928

 
1,964

 
1,999

 
2,022

 
2,816

Total Nonaccruing Loans
$
16,491

 
$
19,188

 
$
24,356

 
$
26,571

 
$
30,727

Other Real Estate Owned:
 
 
 
 
 
 
 
 
 
New England
$
1,800

 
$
2,042

 
$
98

 
$
191

 
$
191

San Francisco Bay Area
—

 
—

 
—

 
585

 
585

Southern California
—

 
—

 
—

 
—

 
—

Total Other Real Estate Owned
$
1,800

 
$
2,042

 
$
98

 
$
776

 
$
776

Loans 30-89 Days Past Due and Accruing (12):
 
 
 
 
 
 
 
 
 
New England
$
2,735

 
$
5,213

 
$
4,723

 
$
7,118

 
$
6,733

San Francisco Bay Area
1,018

 
70

 
986

 
2,806

 
14

Southern California
836

 
2,343

 
2,598

 
3,170

 
227

Total Loans 30-89 Days Past Due and Accruing
$
4,589

 
$
7,626

 
$
8,307

 
$
13,094

 
$
6,974

Loans (Charged-off)/ Recovered, Net for the Three Months Ended:
 
 
 
 
 
 
 
 
 
New England
$
1,704

 
$
1,276

 
$
(2,146
)
 
$
120

 
$
(1,618
)
San Francisco Bay Area
318

 
537

 
3,454

 
703

 
(57
)
Southern California
32

 
48

 
(248
)
 
86

 
70

Total Net Loans (Charged-off)/ Recovered
$
2,054

 
$
1,861

 
$
1,060

 
$
909

 
$
(1,605
)
Loans (Charged-off)/ Recovered, Net for the Nine Months Ended:
 
 
 
 
 
 
 
 
 
New England
$
834

 
 
 
 
 
 
 
$
(622
)
San Francisco Bay Area
4,309

 
 
 
 
 
 
 
3,514

Southern California
(168
)
 
 
 
 
 
 
 
416

Total Net Loans (Charged-off)/ Recovered
$
4,975

 
 
 
 
 
 
 
$
3,308




13


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

FOOTNOTES:
(1)
Net income from discontinued operations consists of contingent payments or expenses related to our divested affiliates, including Westfield Capital Management Company, LLC.

(2)
Adjustments to net income attributable to the Company to arrive at net income attributable to the common shareholders, as presented in these tables, include decrease/ (increase) in noncontrolling interests redemption value and dividends paid on preferred stock.

(3)
When the Company has positive net income from continuing operations attributable to the common shareholders, 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. These additional shares 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 earnings per share calculation. The potential dilutive shares relate to: unexercised stock options, unvested restricted stock, and unexercised stock warrants. See Part II. Item 8. “Financial Statements and Supplementary Data - Note 16: Earnings Per Share” in the Company's Annual Report on Form 10-K for the year ended December 31, 2015 for additional information.

(4)
The Company uses certain non-GAAP financial measures, such as: Tangible Book Value Per Share and the Tangible Common Equity (“TCE”) to Tangible Assets (“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.

Reconciliations from the Company's GAAP Total Equity to Total Assets ratio to the Non-GAAP TCE to TA 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 non-convertible Series D Preferred stock and exclude Goodwill and Intangible Assets, net.
(In thousands, except per share data)
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Total Balance Sheet Assets
$
7,681,550

 
$
7,579,601

 
$
7,413,663

 
$
7,542,508

 
$
7,180,528

LESS: Goodwill and Intangible Assets, net
(180,349
)
 
(181,918
)
 
(183,504
)
 
(185,089
)
 
(186,888
)
Tangible Assets (non-GAAP)
$
7,501,201

 
$
7,397,683

 
$
7,230,159

 
$
7,357,419

 
$
6,993,640

Total Shareholders' Equity
$
781,488

 
$
774,140

 
$
762,145

 
$
746,613

 
$
740,757

LESS: Series D Preferred Stock (non-convertible)
(47,753
)
 
(47,753
)
 
(47,753
)
 
(47,753
)
 
(47,753
)
LESS: Goodwill and Intangible Assets, net
(180,349
)
 
(181,918
)
 
(183,504
)
 
(185,089
)
 
(186,888
)
Total adjusting items
(228,102
)
 
(229,671
)
 
(231,257
)
 
(232,842
)
 
(234,641
)
Tangible Common Equity (non-GAAP)
$
553,386

 
$
544,469

 
$
530,888

 
$
513,771

 
$
506,116

Total Equity/Total Assets
10.17
%
 
10.21
%
 
10.28
%
 
9.90
%
 
10.32
%
Tangible Common Equity/Tangible Assets (non-GAAP)
7.38
%
 
7.36
%
 
7.34
%
 
6.98
%
 
7.24
%
 
 
 
 
 
 
 
 
 
 
Total Risk Weighted Assets *
$
5,535,061

 
$
5,464,529

 
$
5,412,514

 
$
5,449,239

 
$
5,397,148

Tier I Common Equity *
$
554,369

 
$
543,801

 
$
536,925

 
$
534,241

 
$
525,004

Tier I Common Equity/ Risk Weighted Assets
10.02
%
 
9.95
%
 
9.92
%
 
9.80
%
 
9.73
%
 
 
 
 
 
 
 
 
 
 
End of Period Shares Outstanding
83,194,714

 
83,380,426

 
83,023,755

 
83,410,961

 
83,645,364

 
 
 
 
 
 
 
 
 
 
Book Value Per Common Share
$
8.82

 
$
8.71

 
$
8.60

 
$
8.38

 
$
8.29

Tangible Book Value Per Share (non-GAAP)
$
6.65

 
$
6.53

 
$
6.39

 
$
6.16

 
$
6.05

*     Risk Weighted Assets and Tier I Common Equity for September 30, 2016 are presented based on estimated data.


14


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

(5)
The Company uses certain non-GAAP financial measures, such as: Return on Average Common Equity and Return on Average Tangible Common Equity 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 Return on Average Equity ratio to the Non-GAAP Return on Average Common Equity ratio, and the Non-GAAP Return on Average Tangible Common Equity ratio are presented below:

The Company annualizes income data based on the number of days in the period presented and a 365 day year. The Company calculates Average Common Equity by adjusting Average Equity to exclude Average Preferred Equity. The Company calculates Average Tangible Common Equity by adjusting Average Equity to exclude Average Goodwill and Intangible Assets, net and Average Preferred Equity.
 
Three Months Ended
(In thousands)
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Total average shareholders' equity
$
778,098

 
$
765,063

 
$
755,400

 
$
743,150

 
$
733,882

LESS: Average Series D preferred stock (non-convertible)
(47,753
)
 
(47,753
)
 
(47,753
)
 
(47,753
)
 
(47,753
)
Average common equity (non-GAAP)
730,345

 
717,310

 
707,647

 
695,397

 
686,129

LESS: Average goodwill and intangible assets, net
(181,191
)
 
(182,787
)
 
(184,415
)
 
(185,983
)
 
(187,728
)
Average Tangible Common Equity (non-GAAP)
$
549,154

 
$
534,523

 
$
523,232

 
$
509,414

 
$
498,401

 


 

 
 
 
 
 

Net income attributable to the Company
$
19,636

 
$
16,398

 
$
18,041

 
$
15,002

 
$
13,530

LESS: Dividends on Series D preferred stock
(868
)
 
(869
)
 
(869
)
 
(869
)
 
(869
)
Common net income (non-GAAP)
18,768

 
15,529

 
17,172

 
14,133

 
12,661

ADD: Amortization of intangibles, net of tax (35%)
1,020

 
1,031

 
1,031

 
1,169

 
1,076

Tangible common net income (non-GAAP)
$
19,788

 
$
16,560

 
$
18,203

 
$
15,302

 
$
13,737

 
 
 
 
 
 
 
 
 
 
Return on Average Equity - (Annualized)
10.01
%
 
8.60
%
 
9.69
%
 
8.01
%
 
7.31
%
Return on Average Common Equity - (Annualized) (non-GAAP)
10.20
%
 
8.68
%
 
9.84
%
 
8.06
%
 
7.32
%
Return on Average Tangible Common Equity - (Annualized) (non-GAAP)
14.30
%
 
12.43
%
 
14.11
%
 
11.92
%
 
10.93
%

 
Nine Months Ended
(In thousands)
September 30,
2016
 
September 30,
2015
Total average shareholders' equity
$
766,570

 
$
724,839

LESS: Average Series D preferred stock (non-convertible)
(47,753
)
 
(47,753
)
Average common equity (non-GAAP)
718,817

 
677,086

LESS: Average goodwill and intangible assets, net
(182,794
)
 
(189,391
)
Average Tangible Common Equity (non-GAAP)
$
536,023

 
$
487,695

 
 
 
 
Net income attributable to the Company
$
54,075

 
$
49,923

LESS: Dividends on Series D preferred stock
(2,606
)
 
(2,606
)
Common net income (non-GAAP)
51,469

 
47,317

ADD: Amortization of intangibles, net of tax (35%)
3,081

 
3,193

Tangible common net income (non-GAAP)
$
54,550

 
$
50,510

 
 
 
 
Return on Average Equity - (Annualized)
9.43
%
 
9.21
%
Return on Average Common Equity - (Annualized) (non-GAAP)
9.57
%
 
9.34
%
Return on Average Tangible Common Equity - (Annualized) (non-GAAP)
13.61
%
 
13.85
%
 
 
 
 


15


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

(6)
The Company uses certain non-GAAP financial measures, such as: pre-tax, pre-provision earnings, total operating expenses excluding restructuring expense, and the efficiency 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.

Reconciliations from the Company's GAAP income from continuing operations before income taxes to non-GAAP pre-tax, pre-provision earnings; from GAAP total operating expense to non-GAAP total operating expense excluding restructuring; and from GAAP efficiency ratio to Non-GAAP efficiency ratio (FTE basis), excluding restructuring, are presented below:
 
Three Months Ended
(In thousands)
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Income before income taxes (GAAP)
$
28,351

 
$
23,768

 
$
24,325

 
$
20,106

 
$
21,390

ADD BACK: Provision/ (credit) for loan losses
(138
)
 
(2,535
)
 
(3,133
)
 
(1,655
)
 
2,600

Pre-tax, pre-provision earnings (non-GAAP)
$
28,213

 
$
21,233

 
$
21,192

 
$
18,451

 
$
23,990

 
 
 
 
 
 
 
 
 
 
Total operating expense (GAAP)
$
61,670

 
$
64,731

 
$
66,709

 
$
67,407

 
$
61,929

Less: Amortization of intangibles
1,568

 
1,586

 
1,586

 
1,799

 
1,655

Less: Restructuring
—

 
905

 
1,112

 
2,000

 
1,504

Total operating expense (excluding amortization of intangibles and restructuring) (non-GAAP)
$
60,102

 
$
62,240

 
$
64,011

 
$
63,608

 
$
58,770

Total operating expense (excluding restructuring) (non-GAAP)
61,670

 
63,826

 
65,597

 
65,407

 
60,425

 
 
 
 
 
 
 
 
 
 
Net interest income
$
49,871

 
$
49,169

 
$
49,879

 
$
48,140

 
$
46,473

Total core fees and income
37,896

 
37,565

 
37,728

 
37,137

 
39,443

Total other income
2,116

 
(770
)
 
294

 
581

 
3

FTE income
2,523

 
2,437

 
2,416

 
2,997

 
2,883

Total revenue (FTE basis)
$
92,406

 
$
88,401

 
$
90,317

 
$
88,855

 
$
88,802

Efficiency Ratio, before deduction of intangible amortization (GAAP)
68.61
%
 
75.30
%
 
75.89
%
 
78.51
%
 
72.08
%
Efficiency Ratio, FTE Basis excluding restructuring (non-GAAP)
65.04
%
 
70.41
%
 
70.87
%
 
71.59
%
 
66.18
%
 
Nine Months Ended
(In thousands)
September 30,
2016
 
September 30,
2015
Income before income taxes (GAAP)
$
76,444

 
$
73,207

ADD BACK: Provision/ (credit) for loan losses
(5,806
)
 
100

Pre-tax, pre-provision earnings (non-GAAP)
$
70,638

 
$
73,307

 
 
 
 
Total operating expense (GAAP)
$
193,110

 
$
187,774

Less: Amortization of intangibles
4,740

 
4,912

Less: Restructuring
2,017

 
1,724

Total operating expense (excluding amortization of intangibles and restructuring) (non-GAAP)
$
186,353

 
$
181,138

Total operating expense (excluding restructuring) (non-GAAP)
191,093

 
186,050

 
 
 
 
Net interest income
$
148,919

 
$
137,630

Total core fees and income
113,189

 
119,950

Total other income
1,640

 
3,501

FTE income
7,376

 
8,038

Total revenue (FTE basis)
$
271,124

 
$
269,119

Efficiency Ratio, before deduction of intangible amortization (GAAP)
73.22
%
 
71.92
%
Efficiency Ratio, FTE Basis excluding restructuring (non-GAAP)
68.73
%
 
67.31
%
 
 
 
 

16




(7)
The Company uses certain non-GAAP financial measures, such as: net interest income excluding interest recovered on previous nonaccrual loans and net interest margin excluding interest recovered on previous nonaccrual loans 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 net interest income to non-GAAP net interest income excluding interest recovered on previous nonaccrual loans; and from GAAP net interest margin to non-GAAP net interest margin excluding interest recovered on previous nonaccrual loans, are presented below:
 
Three Months Ended
(In thousands)
September 30,
2016
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
Net interest income (GAAP basis)
$
49,871

 
$
49,169

 
$
49,879

 
$
48,140

 
$
46,473

ADD: FTE income
2,523

 
2,437

 
2,416

 
2,997

 
2,883

Net interest income, FTE basis
52,394

 
51,606

 
52,295

 
51,137

 
49,356

LESS: Interest recovered on previously nonaccrual loans
343

 
565

 
1,089

 
255

 
298

Net interest income, FTE basis, excluding interest recovered on previously nonaccrual loans (non-GAAP)
52,051

 
51,041

 
51,206

 
50,882

 
49,058

 
 
 


 
 
 
 
 


Net Interest Margin (FTE basis)
2.88
%
 
2.91
%
 
2.96
%
 
2.88
%
 
2.84
%
Net Interest Margin, FTE basis, excluding interest recovered on previously nonaccrual loans (non-GAAP)
2.86
%
 
2.88
%
 
2.90
%
 
2.86
%
 
2.82
%

(8)
Interest income on Non-taxable Investments and Loans are presented on an FTE basis using the federal statutory rate of 35% for each period presented.
    
(9)
Average Loans includes Loans Held for Sale and Nonaccrual Loans. Average Deposits includes Deposits Held for Sale.

(10)
The concentration of the Private Banking loan data and credit quality is primarily based on the location of the lender's regional offices.

(11)
Accruing substandard loans include loans that are classified as substandard but are still accruing interest income. Boston Private Bank & Trust Company 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 nonaccrual at some time in the future.

(12)
In addition to loans 30-89 days past due and accruing, at June 30, 2016, the Company had one loan totaling $0.1 million that was more than 90 days past due but still on accrual status. This loan originated in the San Francisco Bay Area region. At September 30, 2016, March 31, 2016, and December 31, 2015, the Company had no loans outstanding more than 90 days past due but still on accrual status. At September 30, 2015, the Company had one loan totaling $0.1 million that was more than 90 days past due but still on accrual status. This loan originated in the New England region.

(13)
Average Total Deposits is the sum of Average Total Interest-Bearing Deposits and Average Noninterest Bearing Demand Deposits.



17