Boston Private Financial Holdings, Inc. Announces Results for Second Quarter

Strong Operating Growth Combined with Non-Cash Charges

Dividend Reduced in Conjunction with Capital Plan
BOSTON--(Business Wire)--
Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) ("Boston
Private") today reported a second quarter GAAP loss of $80.6 million
or $2.11 per share. The GAAP loss was driven by two non-cash charges
totaling $82 million, net of tax, with an impact of $2.15 per share
and by an increased loan loss provision at First Private Bank & Trust
of $17.8 million, net of tax, or $0.42 per share. The non-cash charges
include the previously announced non-cash compensation charge for the
equity ownership restructuring of Westfield Capital, as well as the
non-cash goodwill and intangible impairment charges associated with
First Private. The goodwill impairment charge is the direct result of
continued economic deterioration in Southern California, its negative
impact on First Private's loan portfolio, and the resulting
deterioration in the value of this affiliate.

Operational highlights for the second quarter of 2008 include:

-- Total revenue 24% higher than a year ago, up 2% on a linked
quarter basis

-- Loan growth of 4% and Deposit growth of 2% from the prior
quarter

-- AUM/Advisory grew 5% ($2 billion) during the quarter

-- 88% of the Investment Management segments' AUM performed in
the top quartile of peer investment managers for the one year
performance period.

"Our financial performance, with the exception of First Private,
was very strong in a number of areas despite difficult and challenging
market conditions," said Timothy L. Vaill, Chairman and CEO. "I
believe we have been able to weather these challenges because of our
diversification, our focus on and the performance in the wealth
management sector and the hard work of our exceptional team. During
the second quarter we experienced continued strength and growth in
many areas of our business from our fee-based affiliates to our core
Private Banking Group. The exception, as we've noted, has been First
Private Bank. While the performance of this affiliate weighs on our
overall results for the quarter, we have isolated the loan portfolio
issues and are aggressively working to resolve them. Importantly, this
experience helped drive us to look even more closely at overall credit
standards across our banks and further scrutinize our loan portfolios
across the enterprise. As a result, we have significantly improved our
company-wide risk management practices, resources and procedures. We
are confident that we have put the right team in place, both locally
and at the corporate level, to oversee and execute this process, led
by our Private Banking Group CEO, James Dawson."

Concurrent with this release of the second quarter 2008 earnings,
and in conjunction with our capital plan, the Board of Directors of
Boston Private Financial Holdings, Inc. voted to reduce the quarterly
dividend from $0.10/share to $0.01/share effective with the next
payout date of August 15, 2008. Mr. Vaill said, "By reducing our
dividend at this time, we will significantly increase our internal
generation of equity capital which, together with our external capital
raising plan, will create a level of capital strength prudent in this
kind of challenging economic environment. Over time, as and when
conditions improve, we will re-evaluate our dividend rate and when
appropriate, hope to return our dividend payout ratio to a level more
in line with our historical practices."

Financial Highlights

-- Total revenues for the second quarter 2008 were up 24% to
$120.0 million, compared to revenues of $96.6 million a year
ago. On a linked quarter basis, revenues were up $2.6 million,
or 2%.

-- Net Interest Income for the second quarter was up 17% to $51.8
million, compared to $44.2 million a year ago. On a linked
quarter basis, net interest income was up $2.1 million, or 4%.

-- Wealth Advisory fees for the second quarter were up 64% to
$12.7 million, compared to $7.7 million a year ago. On a
linked quarter basis, Wealth Advisory fees increased $0.3
million, or 2%.

-- Investment Management and Trust fees for the second quarter
were up 4% to $42.3 million as compared to $40.4 million a
year ago. On a linked quarter basis, Investment Management and
Trust fees were up $1.9 million, or 5%.

-- The Company recognized a gain of $5.1 million, net of tax, or
$0.13 per share, from repurchasing $86.5 million of its 3%
contingent convertible senior notes due in 2027. The funds
were replaced with funding sources that had lower interest
rates, which contributed to the decrease in the Company's
borrowing yields.

-- Total Assets Under Management/Advisory increased 5% or $2
billion to $38 billion from consolidated and unconsolidated
affiliates on a linked quarter basis, with $700 million coming
from net new flows and $1.3 billion from investment
performance.

Banking Segment (excluding First Private):

-- Recorded $1.8 million in net charge-offs during the second
quarter, which represented approximately 4 basis points of
total loans as compared to $1.1 million or 2 basis points of
total loans in net charge-offs during the first quarter of
2008.

-- Non-performing loans as a percentage of total loans remained
relatively flat at 71 basis points versus 70 basis points in
the prior quarter.

-- The allowance for credit losses as a percentage of total loans
was 1.25%, higher than the prior quarter by 8 basis points.

-- Classified loans, which include loans classified as either
sub-standard, doubtful or loss, for the second quarter of 2008
were $92.5 million, up 76% from $52.5 million in the first
quarter of 2008. 53% or $21.4 million is attributable to the
Southern Florida region and 38% or $15.4 million is
attributable to the Pacific Northwest region.

First Private Bank:

-- First Private recorded $21.1 million in net charge-offs during
the second quarter, compared to $0.6 million in the prior
quarter.

-- Non-performing loans increased $18.2 million to $69.4 million
from the prior quarter.

-- The allowance for credit losses as a percentage of total loans
increased to 7.5%, up 60 basis points from the prior quarter.

-- The classified loans increased to $152.9 million, or 5% in the
second quarter of 2008 from $145.1 million in the first
quarter of 2008.

-- As a result of the increased provision and non-performing
loans, the Company recorded an additional $13.7 million in
goodwill impairment at First Private. This charge was in
addition to the $20.6 million of impairment at First Private
recorded in the first quarter of 2008.

"Our core banking business segment, excluding First Private, is
performing well," said David Kaye, CFO. "We had positive loan growth
and deposit growth, and our investment portfolios are performing
strongly. However, we are disappointed with the continuing
deterioration and resultant charge-offs and provisions especially in
Southern California. While we posted a provision expense of $31.9
million this quarter, 73% of the provision, or $23.3 million, is
directly attributable to First Private, 18% attributable to other
provisions, and 9% is directly related to strong loan growth at our
other private banking affiliates. From 6/30/06 to 6/30/08 we have seen
loans receivable increase from $4.0 billion to $5.6 billion, or 42%.
As far as the rest of the business is concerned, we are pleased with
the continuing strong performance from the fee-based businesses, which
drove 50% of our revenues during the second quarter."

Jay Cromarty, CEO of the Investment Management and Wealth Advisory
Group said, "We experienced continued strong performance in the Asset
Management and Wealth Advisory segments of our business in the second
quarter. AUM was up 6% year over year and 7% on a linked quarter
basis. Highlights of the quarter included significant net flows of
approximately $700 million at Westfield and $100 million at Anchor.
Dalton, Greiner experienced strong investment performance which now
puts every one of their strategies ahead of its respective benchmark
for the one, three, five, ten year and since inception time periods."

Credit Commentary

As previously announced, the Company retained a leading
independent loan review company to review the portfolios and credit
practices in place across all five of its private banks, which is now
complete. Reviews at First Private and Gibraltar Private were
completed in the first quarter and reviews at the other three banks
were completed in the second quarter. Management considered this
independent review, among other factors, when establishing the loan
loss reserves at the end of each quarter. Similar reviews by the same
firm will be conducted on a regular basis at all of the Company's
banks on a going forward basis.

In addition to the independent loan review, the Company has
undertaken a series of initiatives to implement enhanced credit
quality, loan administration and overall risk management across the
enterprise. These initiatives include naming James R. Shulman to the
newly created position of Chief Credit Officer at the holding company,
charged with overseeing credit across the organization and
consolidating and standardizing key risk management practices
including appraisal policies, loan reviews and loan loss reserve
methodologies. Mr. Shulman brings over 20 years of experience working
as an analyst on credit risk in both banking and investments.

Continued economic decline in Southern California impacted overall
banking results. Provisions for loan losses were $31.9 million in the
second quarter which reflects an increase of $12.3 million over the
first quarter of 2008 with $23.3 million or 73% attributable to First
Private.

"With continuing market deterioration, we and the banking industry
as a whole face a challenging near-term outlook," said James Dawson,
CEO of the Private Banking Group. "However, we were encouraged by the
results of the final report from the independent loan review firm on
the loan portfolios across the Company. We've dedicated significant
time to evaluating our credit quality and risk management practices,
and I am confident that, with the additional steps we've taken and the
people we have put in place, we are well positioned for the future."

In Closing

Mr. Vaill concluded, "With the clarity of hindsight, we are
committed to further enhancing the credit culture and portfolio, and
mitigating our risks in Southern California going forward. We believe
that the steps we've taken to strengthen our credit operations
positions our Company for a strong recovery within a revised credit
culture. Above all, we believe our core business strategy is very
sound. We are focused on serving affluent customers in key geographic
regions in the United States, providing wealth management products and
services to help clients and their families and their businesses
gather, protect, and grow their assets. We are diversified across
banking and fee-based segments and with our affiliates located near
pockets of emerging affluence, they are constantly generating new
opportunities.

"As I have said for many years now, we are focused on building an
organization that will create value for shareholders, customers and
employees both in the near term and over time. We have a quality
management team that has proven it can execute and deliver results and
we have some of the best employees in the business who are focused on
doing all they can to meet client needs in these trying times.
Although the current environment is difficult, and may remain this way
for a while, the foundation of our business - serving clients with
excellence - is solid. We believe we are well-positioned to maintain a
steady course and I am confident in our future prospects."

Management will hold a conference call at 8:00 a.m. Eastern time
on Wednesday, July 23, 2008, to discuss its financial results in more
detail. To access the call:

Dial In #: 866-383-8119

International Dial In #: 617-597-5344

Passcode: 77828245

Replay Information:

Available from 7/23/2008 to 7/30/2008

Dial In #: 888-286-8010

International Dial In #: 617-801-6888

Passcode: 21295643

The call will be simultaneously webcast and may be accessed on the
Internet by linking through www.bostonprivate.com.

Boston Private Wealth Management Group

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

For more information about Boston Private, visit the Company's web
site at www.bostonprivate.com.

Statements in this press release that are not historical facts are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, and are intended to be covered by
the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. Forward-looking statements involve risks and
uncertainties. These statements include, among others, statements
regarding our strategy, evaluations of future interest rate trends and
liquidity, prospects for growth in assets, and prospects for overall
results over the long term. You should not place undue reliance on our
forward-looking statements. You should exercise caution in
interpreting and relying on forward-looking statements because they
are subject to significant risks, uncertainties and other factors
which are, in some cases, beyond Boston Private's control.
Forward-looking statements are based on the current assumptions and
beliefs of management and are only expectations of future results.
Boston Private'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 Boston Private's private banking and
asset investment advisory activities, changes in interest rates,
competitive pressures from other financial institutions, a
deterioration in general economic conditions on a national basis or in
the local markets in which Boston Private operates, including changes
which adversely affect borrowers' ability to service and repay our
loans, changes in loan defaults and charge-off rates, adequacy of loan
loss reserves, reduction in deposit levels necessitating increased
borrowing to fund loans and investments, the passing of adverse
government regulation, the risk that goodwill and intangibles recorded
in Boston Private's financial statements will become impaired, and
risks related to the identification and implementation of
acquisitions, as well as the other risks and uncertainties detailed in
Boston Private's Annual Report on Form 10-K and other filings
submitted to the Securities and Exchange Commission. Boston Private
does not undertake any obligation to update any forward-looking
statement to reflect circumstances or events that occur after the date
the forward-looking statements are made.

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

June 30, June 30, December 31,
FINANCIAL DATA: 2008 2007 2007
------------------------- ------------

Total Balance Sheet Assets $ 7,182,508 $ 5,939,469 $ 6,818,131
Stockholders' Equity 641,555 663,695 662,461
Investment Securities 798,111 576,137 719,934
Goodwill 317,733 311,240 349,889
Intangible Assets, Net 101,594 118,828 108,349

Commercial and Construction
Loans 3,355,241 2,701,540 3,182,081
Residential Mortgage Loans 1,885,928 1,603,529 1,765,217
Home Equity and Other Consumer
Loans 354,896 281,092 312,602
------------------------- ------------
Total Loans 5,596,065 4,586,160 5,259,900

Loans Held for Sale 13,552 8,603 6,782

Deposits 4,462,607 3,902,432 4,375,101
Borrowings 1,947,619 1,256,505 1,632,944

Book Value Per Share $ 16.63 $ 17.84 $ 17.68
Market Price Per Share $ 5.67 $ 26.87 $ 27.08

ASSETS UNDER MANAGEMENT AND
ADVISORY:

Private Banking $ 4,653,000 $ 4,298,000 $ 4,738,000
Investment Managers 22,930,000 21,891,000 23,058,000
Wealth Advisory (1) 9,705,000 8,860,000 9,055,000
Less: Inter-company
Relationship (317,000) (250,000) (286,000)
------------ ------------ ------------
Consolidated Affiliate Assets
Under Management and
Advisory $36,971,000 $34,799,000 $36,565,000

Unconsolidated 1,022,000 1,200,000 1,188,000
------------ ------------ ------------
Total Unconsolidated Assets
Under Management and
Advisory $37,993,000 $35,999,000 $37,753,000

FINANCIAL RATIOS:

Stockholders' Equity/Total
Assets 8.93% 11.17% 9.72%
Tangible Equity/Tangible
Assets 3.29% 4.24% 3.21%
Allowance for Credit
Losses/Total Loans 1.84% 1.13% 1.46%
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Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
OPERATING RESULTS: 2008 2007 2008 2007
------------------ ------------------

Net Interest Income - on a
Fully Taxable Equivalent
Basis (FTE) $ 53,653 $45,960 $105,191 $ 90,980
FTE Adjustment 1,874 1,722 3,741 3,358
------------------ ------------------
Net Interest Income 51,779 44,238 101,450 87,622
------------------ ------------------
Investment Management and
Trust Fees:
Private Banking 8,167 7,182 15,982 13,856
Investment Managers 34,088 33,267 66,664 64,316
------------------ ------------------
Total Investment Management
Fees 42,255 40,449 82,646 78,172
------------------ ------------------
Total Wealth Advisory Fees 12,684 7,737 25,071 15,003
Other Fees 4,468 4,141 7,422 7,789
------------------ ------------------
Total Fees 59,407 52,327 115,139 100,964
------------------ ------------------
Investment Gains 193 5 795 8
Gain on Retirement of Debt 8,582 - 19,906 -
------------------ ------------------

Total Fees and Other Income 68,182 52,332 135,840 100,972
------------------ ------------------
Total Revenue 119,961 96,570 237,290 188,594
------------------ ------------------

Provision for Loan Losses 31,904 745 51,552 1,921
------------------ ------------------
Salaries and Employee Benefits 53,869 46,672 106,712 93,272
Occupancy and Equipment 8,852 8,103 17,782 15,978
Professional Services 6,664 4,129 11,641 7,335
Marketing and Business
Development 3,170 2,834 6,056 5,432
Contract Services and
Processing 2,017 1,608 3,875 3,044
Amortization of Intangibles 3,550 3,508 6,770 7,057
Provision for Unfunded Loan
Commitments (892) 422 (800) 585
Other 6,250 4,367 11,681 8,484
------------------ ------------------
Total Operating Expense 83,480 71,643 163,717 141,187
Income Before Minority
Interest, Income Taxes,
Impairment and Westfield
Profit Interest Granted 4,577 24,182 22,021 45,486
Westfield Profit Interest
Granted 66,000 - 66,000 -
Impairment, Net (6) 16,026 10,054 36,626 10,054
------------------ ------------------
(Loss)/Income Before Minority
Interest and Taxes (77,449) 14,128 (80,605) 35,432
Minority Interest 1,406 106 2,908 1,020
------------------ ------------------
Net (Loss)/Income before
Income Taxes (78,855) 14,022 (83,513) 34,412
Income Tax Expense 1,773 9,246 6,959 16,503
------------------ ------------------
Net (Loss)/Income $(80,628) $ 4,776 $(90,472) $ 17,909
------------------ ------------------
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Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
RECONCILIATION OF GAAP EARNINGS
TO CASH EARNINGS: 2008 2007 2008 2007
------------------ ------------------

Net (Loss)/Income (GAAP Basis) $(80,628) $ 4,776 $(90,472) $17,909

Cash Basis Earnings (2)
Book Amortization of Purchased
Intangibles, Net 1,947 1,890 3,733 3,801
Cash Benefit of Tax Deductions
from Purchased Intangibles &
Goodwill 1,145 1,077 2,280 2,188
Stock options, ESPP, and Other
Stock Compensation, Net 66,867 925 67,700 2,046
Impairment of Goodwill &
Intangibles, Net 16,026 10,054 36,626 10,054
------------------ ------------------
Total Cash Basis Adjustment 85,985 13,946 110,339 18,089
------------------ ------------------
Cash Basis Earnings $ 5,357 $18,722 $ 19,867 $35,998
------------------ ------------------
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Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
------------------ ------------------
PER SHARE DATA: (In thousands, except per share data)

Calculation of Net Income for EPS:

Net (Loss)/Income as Reported
for Basic EPS $(80,628) $4,776 $(90,472) $17,909
Interest on Convertible Trust
Preferred
Securities, Net of Tax - - - 1,500
------------------ ------------------
Net (Loss)/Income for Diluted
EPS $(80,628) $4,776 $(90,472) $19,409

Interest on Convertible Trust
Preferred
Securities, Net of Tax for
Cash EPS $- $750 $1,480 -

Calculation of Average Shares
Outstanding:
Weighted Average Basic Shares 38,172 36,616 37,817 36,447
Dilutive Effect of:
Stock Options, Stock Grants,
and Other (3) - 1,487 - 1,579
Convertible Trust Preferred
Securities (3) - - - 3,184
------------------ ------------------
Dilutive Potential
Common Shares - 1,487 - 4,763
Weighted Average Diluted
Shares 38,172 38,103 37,817 41,210
Weighted Average Diluted
Shares for cash EPS 39,146 41,288 41,950 41,210
(Loss)/Earnings per Share:
Basic ($2.11) $0.13 ($2.39) $0.49
Diluted ($2.11) $0.13 ($2.39) $0.47

RECONCILIATION OF GAAP EPS
TO CASH EPS:
(on a Diluted Basis)

(Loss)/Income Per Share (GAAP
Basis) ($2.11) $0.13 ($2.39) $0.47
Cash Basis Adjustment 2.25 0.34 2.90 0.44
------------------ ------------------
Cash Basis Earnings Per
Diluted Share $0.14 $0.47 $0.51 $0.91
------------------ ------------------
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Three Months Six Months Ended
Ended
June 30, June June 30, June
30, 30,
2008 2007 2008 2007
---------------- ----------------
OPERATING RATIOS & STATISTICS:

Return on Average Equity (48.48%) 2.89% (26.96%) 5.49%
Return on Average Assets (4.55%) 0.32% (2.58%) 0.61%
Net Interest Margin 3.39% 3.47% 3.35% 3.48%
Total Fees and Other Income/Total
Revenue 56.84% 54.19% 57.25% 53.54%
Net Loans Charged-off (Recovered) $22,936 ($525) $24,624 ($517)
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AVERAGE BALANCE Three Months Ended Three Months Ended
SHEET:

June 30, 2008 June 30, 2007
--------------------------- ---------------------------
Average Income/ Yield/ Average Income/ Yield/
AVERAGE ASSETS Balance Expense Rate Balance Expense Rate
--------------------------- ---------------------------
Earnings
Assets
Cash and
Investments $ 872,789 $ 9,083 4.16% $ 735,046 $ 9,139 4.96%
Loans
Commercial
and
Construc-
tion 3,212,768 53,628 6.62% 2,628,288 50,928 7.68%
Residential
Mortgage 1,833,659 27,306 5.96% 1,604,611 23,358 5.82%
Home Equity
and Other
Consumer 345,535 4,924 5.65% 276,672 5,442 7.83%
----------- -------- ----------- --------
Total
Earning
Assets 6,264,751 94,941 6.03% 5,244,617 88,867 6.74%
----------- -------- ----------- --------
Allowance for
Loan Losses (90,072) (48,008)
Cash and due
From Banks 61,189 54,105
Other
Assets 848,730 700,054
----------- -----------
TOTAL AVERAGE
ASSETS $7,084,598 $5,950,768
=========== ===========

AVERAGE
LIABILITIES
AND
STOCKHOLDERS'
EQUITY

Interest-
Bearing
Liabilities:
Deposits:
Savings and
NOW $ 678,791 $ 2,567 1.52% $ 564,742 $ 3,014 2.14%
Money Market 1,729,658 10,133 2.36% 1,867,200 15,727 3.38%
Certificate
of Deposits 1,281,553 12,098 3.80% 925,998 11,032 4.78%
----------- -------- ----------- --------
Total
Deposits 3,690,002 24,798 2.70% 3,357,940 29,773 3.56%
Junior
Subordinated
Debentures
and Other
Long-term
Debt 398,742 4,322 4.34% 234,021 3,320 5.58%
FHLB
Borrowings
and Other 1,427,899 12,168 3.37% 863,757 9,814 4.50%
----------- -------- ------ ----------- --------
Total
Interest-
Bearing
Liabilities 5,516,643 41,288 2.99% 4,455,718 42,907 3.85%
----------- -------- ------ ----------- --------
Non-interest
Bearing
Demand
Deposits 791,517 706,598
Payables and
Other
Liabilities 111,221 126,942
------------ ------------
Total
Liabilities 6,419,381 5,289,258
Stockholders'
Equity 665,217 661,510
------------ ------------
TOTAL AVERAGE
LIABILITIES &
STOCKHOLDERS'
EQUITY $7,084,598 $5,950,768
============ ============

Net Interest
Income $53,653 $45,960
Net Interest
Margin 3.39% 3.47%
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AVERAGE BALANCE SHEET: Six Months Ended

June 30, 2008
----------------------------
Average Income/ Yield/
Balance Expense Rate
----------------------------
AVERAGE ASSETS
Earnings Assets
Cash and Investments $ 878,876 $ 19,131 4.35%
Loans
Commercial and Construction 3,180,259 109,290 6.81%
Residential Mortgage 1,814,997 54,905 6.05%
Home Equity and Other Consumer 331,216 10,206 6.10%
----------- ---------
Total Earning Assets 6,205,348 193,532 6.20%
----------- ---------
Allowance for Loan Losses (81,820)
Cash and due From Banks 63,788
Other Assets 823,853
-----------
TOTAL AVERAGE ASSETS $7,011,169
===========

AVERAGE LIABILITIES AND STOCKHOLDERS'
EQUITY

Interest-Bearing Liabilities:
Deposits:
Savings and NOW $ 670,198 $ 5,813 1.74%
Money Market 1,795,326 23,978 2.69%
Certificate of Deposits 1,194,131 24,579 4.14%
----------- ---------
Total Deposits 3,659,655 54,370 2.99%
Junior Subordinated Debentures and
Other Long-term Debt 452,959 10,157 5.50%
FHLB Borrowings and Other 1,324,639 23,814 3.55%
----------- ---------
Total Interest-Bearing Liabilities 5,437,253 88,341 3.25%
----------- ---------
Non-interest Bearing Demand Deposits 778,306
Payables and Other Liabilities 124,485
------------
Total Liabilities 6,340,044
Stockholders' Equity 671,125
------------
TOTAL AVERAGE LIABILITIES &
STOCKHOLDERS' EQUITY $7,011,169
============

Net Interest Income $105,191
Net Interest Margin 3.35%
----------------------------

AVERAGE BALANCE SHEET: Six Months Ended

June 30, 2007
----------------------------
Average Income/ Yield/
Balance Expense Rate
----------------------------
AVERAGE ASSETS
Earnings Assets
Cash and Investments $ 713,827 $ 17,469 4.89%
Loans
Commercial and Construction 2,585,912 100,056 7.70%
Residential Mortgage 1,595,097 46,192 5.79%
Home Equity and Other Consumer 271,644 10,623 7.79%
----------- ---------
Total Earning Assets 5,166,480 174,340 6.73%
----------- ---------
Allowance for Loan Losses (47,447)
Cash and due From Banks 55,086
Other Assets 701,859
-----------
TOTAL AVERAGE ASSETS $5,875,978
===========

AVERAGE LIABILITIES AND STOCKHOLDERS'
EQUITY

Interest-Bearing Liabilities:
Deposits:
Savings and NOW $ 557,772 $ 5,944 2.15%
Money Market 1,870,212 31,437 3.09%
Certificate of Deposits 907,013 21,303 5.35%
----------- ---------
Total Deposits 3,334,997 58,684 3.55%
Junior Subordinated Debentures and
Other Long-term Debt 234,021 6,613 5.68%
FHLB Borrowings and Other 802,931 18,063 4.48%
----------- ---------
Total Interest-Bearing Liabilities 4,371,949 83,360 3.83%
-----------
Non-interest Bearing Demand Deposits 718,178
Payables and Other Liabilities 133,506
------------
Total Liabilities 5,223,633
Stockholders' Equity 652,345
------------
TOTAL AVERAGE LIABILITIES & STOCKHOLDERS'
EQUITY $5,875,978
============

Net Interest Income $ 90,980
Net Interest Margin 3.48%
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PRIVATE BANKING LOAN DATA AND June 30, June 30, December 31,
CREDIT QUALITY (4):
2008 2007 2007
---------------------- ------------
Commercial Loans:
New England $ 948,583 $ 808,287 $ 861,992
Northern California 775,093 678,276 698,353
South Florida 338,648 318,662 339,710
Pacific Northwest 160,347 - 153,686
---------------------- ------------
Subtotal Commercial Loans $2,222,671 $1,805,225 $2,053,741
Southern California 266,785 216,618 265,651
---------------------- ------------
Total Commercial Loans $2,489,456 $2,021,843 $2,319,392
---------------------- ------------

Construction Loans:
New England $ 115,897 $ 90,716 $ 123,242
Northern California 169,507 107,331 146,075
South Florida 271,727 259,723 268,731
Pacific Northwest 68,014 - 64,431
---------------------- ------------
Subtotal Construction Loans $ 625,145 $ 457,770 $ 602,479
Southern California 241,520 221,927 261,172
---------------------- ------------
Total Construction Loans $ 866,665 $ 679,697 $ 863,651
---------------------- ------------

Residential Mortgage Loans:
New England $1,109,596 $ 945,381 $1,022,155
Northern California 189,791 128,159 152,417
South Florida 548,565 519,408 553,356
Pacific Northwest 25,922 - 24,526
---------------------- ------------
Subtotal Residential Mortgage
Loans $1,873,874 $1,592,948 $1,752,454
Southern California 12,054 10,581 12,763
---------------------- ------------
Total Residential Mortgage Loans $1,885,928 $1,603,529 $1,765,217
---------------------- ------------

Home Equity and Other Consumer
Loans:
New England $ 69,801 $ 47,161 $ 55,802
Northern California 64,777 44,698 50,700
South Florida 196,872 181,611 191,820
Pacific Northwest 2,702 - 4,164
---------------------- ------------
Subtotal Home Equity and Other
Consumer Loans $ 334,152 $ 273,470 $ 302,486
Southern California 13,483 4,310 4,204
----------------------
Subtotal Home Equity and Other
Consumer Loans $ 347,635 $ 277,780
----------------------

---------------------- ------------
Subtotal Private Banking Loans $5,055,842 $4,129,413 $4,711,160
---------------------- ------------
Southern California 533,842 453,436 543,790
---------------------- ------------
Total Private Banking Loans $5,589,684 $4,582,849 $5,254,950
---------------------- ------------

Allowance for Credit Losses:
New England $ 25,423 $ 23,133 $ 24,131
Northern California 13,488 10,945 12,111
South Florida 16,965 11,793 12,406
Pacific Northwest 7,261 - 2,704
---------------------- ------------
Subtotal Allowance for Credit
Losses $ 63,137 $ 45,871 $ 51,352
Southern California 40,039 6,124 25,695
---------------------- ------------
Total Allowance for Credit Losses $ 103,176 $ 51,995 $ 77,047
---------------------- ------------

Classified Loans (5):
New England $ 9,300 $ 6,069 $ 12,807
Northern California 5,336 - -
South Florida 55,865 2,210 25,559
Pacific Northwest 22,025 - 1,236
---------- ----------- ------------
Subtotal Classified Loans $ 92,526 $ 8,279 $ 39,602
Southern California 152,887 8,919 80,499
---------------------- ------------
Total Classified Loans $ 245,413 $ 17,198 $ 120,101
---------------------- ------------

Non-performing Loans:
New England $ 7,794 $ 2,823 $ 7,390
Northern California 726 - -
South Florida 25,029 2,261 18,508
Pacific Northwest 2,213 - -
---------------------- ------------
Subtotal Non-performing Loans $ 35,762 $ 5,084 $ 25,898
Southern California 69,356 8,919 26,725
---------------------- ------------
Total Non-performing Loans $ 105,118 $ 14,003 $ 52,623
---------------------- ------------

Loans 30-89 Days Past Due:
New England $ 2,894 $ 4,031 $ 9,412
Northern California - - 479
South Florida 2,924 8,471 3,944
Pacific Northwest 1,769 - 75
---------------------- ------------
Subtotal Loans 30-89 Days Past
Due $ 7,587 $ 12,502 $ 13,910
Southern California 22,932 390 8,453
---------------------- ------------
Total Loans 30-89 Days Past Due $ 30,519 $ 12,892 $ 22,363
---------------------- ------------

Net Loans Charged-off/(Recovered) for the
Three Months Ended:
New England $ 953 $ 50 $ 4
Northern California $ 1 - $ 10
South Florida $ 365 - $ 480
Pacific Northwest $ 500 - $ 12
---------------------- ------------
Subtotal Net Loans Charged-
off/(Recovered) $ 1,819 $ 50 $ 506
Southern California 21,117 (575) -
---------------------- ------------
Total Net Loans Charged-
off/(Recovered) $ 22,936 ($525) $ 506
---------------------- ------------
*T

-0-
*T

June 30, March 31,
2008 2008
-------------------------
FINANCIAL DATA:

Total Balance Sheet Assets $ 7,182,508 $ 6,889,070
Stockholders' Equity 641,555 668,020
Investment Securities 798,111 728,542
Goodwill 317,733 330,743
Intangible Assets, Net 101,594 108,942

Commercial and Construction Loans 3,355,241 3,253,109
Residential Mortgage Loans 1,885,928 1,795,814
Home Equity and Other Consumer Loans 354,896 333,768
-------------------------
Total Loans 5,596,065 5,382,691

Loans Held for Sale 13,552 7,324
Deposits 4,462,607 4,370,379
Borrowings 1,947,619 1,742,158

Book Value Per Share $ 16.63 $ 17.35
Market Price Per Share $ 5.67 $ 10.59

ASSETS UNDER MANAGEMENT AND ADVISORY:

Private Banking $ 4,653,000 $ 4,727,000
Investment Managers 22,930,000 20,766,000
Wealth Advisory 9,705,000 9,805,000
Less: Inter-company Relationship (317,000) (313,000)
-------------------------
Consolidated Affiliate Assets Under
Management and Advisory $36,971,000 $34,985,000

Unconsolidated 1,022,000 1,050,000
-------------------------
Total Unconsolidated Assets Under
Management and Advisory $37,993,000 $36,035,000

FINANCIAL RATIOS:

Stockholders' Equity/Total Assets 8.93% 9.70%
Tangible Equity/Tangible Assets 3.29% 3.54%
Allowance for Credit Losses/Total Loans 1.84% 1.77%
*T

-0-
*T
Three Months Ended

June 30, March 31,
OPERATING RESULTS: 2008 2008
-------------------

Net Interest Income - on a Fully Taxable
Equivalent Basis (FTE) $ 53,653 $ 51,538
FTE Adjustment 1,874 1,868
-------------------
Net Interest Income 51,779 49,670
-------------------
Investment Management and Trust Fees:
Private Banking 8,167 7,815
Investment Managers 34,088 32,576
-------------------
Total Investment Management Fees 42,255 40,391
Total Wealth Advisory Fees 12,684 12,387
Other Fees 4,468 2,776
-------------------
Total Fees 59,407 55,554
-------------------
Investment Gains / Losses 193 781
Gain on Retirement of Debt 8,582 11,324
-------------------

Total Fees and Other Income 68,182 67,659
-------------------
Total Revenue 119,961 117,329
-------------------

Provision for Loan Losses 31,904 19,648
-------------------

Salaries and Employee Benefits 53,869 52,843
Occupancy and Equipment 8,852 8,930
Professional Services 6,664 4,977
Marketing and Business Development 3,170 2,885
Contract Services and Processing 2,017 1,858
Amortization of Intangibles 3,550 3,221
Provision for unfunded loan commitments (892) 92
Other 6,251 5,429
-------------------
Total Operating Expense 83,481 80,235
Income Before Minority Interest, Income Taxes,
Impairment and Westfield Profit Interest
Granted 4,576 17,445
Westfield Profit Interest Granted 66,000 -
Impairment, Net (6) 16,026 20,600
-------------------
Loss Before Minority Interest and Taxes (77,450) (3,155)
Minority Interest 1,406 1,503
-------------------
Loss Before Income Taxes (78,856) (4,657)
Income Tax Expense 1,773 5,187
-------------------
Net Loss $(80,628) $ (9,844)
-------------------
*T

-0-
*T
Three Months Ended
June 30, March
31,
RECONCILIATION OF EARNINGS BEFORE Q1 '08 IMPAIRMENT 2008 2008
------------------
TO CASH EARNINGS:

Net Loss (GAAP basis) $(80,628) $(9,844)

Cash Basis Earnings (2)
Book Amortization of Purchased Intangibles, Net 1,947 1,785
Cash Benefit of Tax Deductions from Purchased
Intangibles & Goodwill 1,145 1,136
Stock options, ESPP, and Other Stock Compensation,
Net 66,867 833
Impairment of Goodwill and Intangibles, Net 16,026 20,600
------------------
Total Cash Basis Adjustment 85,985 24,354
------------------
Cash Basis Earnings $ 5,357 $14,510
------------------
*T

-0-
*T
Three Months Ended
June 30, March 31,
2008 2008
--------------------
PER SHARE DATA: (In thousands, except per share
data)

Calculation of Net Income for EPS:

Net Loss Reported for Basic EPS $(80,628) $(9,844)
Interest on Convertible Trust Preferred
Securities, Net of Tax - -
--------------------
Net Loss for Diluted EPS $(80,628) $(9,844)

Interest on Convertible Trust Preferred
Securities, Net of Tax for Cash EPS $ - $ 740
Calculation of Average Shares Outstanding:
Weighted Average Basic Shares 38,172 37,457
Dilutive Effect of:
Stock Options, Stock Grants, and Other (3) - -
Convertible Trust Preferred securities (3) - -
--------------------
Dilutive Potential Common Shares - -
Weighted Average Diluted Shares 38,172 37,457
Weighted Average Diluted Shares for Cash EPS 39,146 41,539

Loss per Share:
Basic ($2.11) ($0.26)
Diluted ($2.11) ($0.26)

RECONCILIATION OF GAAP EPS TO CASH EPS:
(on a Diluted Basis)

Loss Per Share ($2.11) ($0.26)
Cash Basis Adjustment $ 2.25 $ 0.63
--------------------
Cash Basis Earnings Per Diluted Share $ 0.14 $ 0.37
--------------------

OPERATING RATIOS & STATISTICS:
Return on Average Equity (48.48%) (5.78%)
Return on Average Assets (4.55%) (0.57%)
Net Interest Margin 3.39% 3.32%
Total Fees and Other Income/Total Revenue 56.84% 57.67%
Net Loans Charged-off / (Recovered) $ 22,936 $ 1,688
--------------------
*T

-0-
*T
June 30, March 31,
2008 2008
---------------------
PRIVATE BANKING LOAN DATA AND CREDIT QUALITY
(4):
Commercial Loans:
New England $ 948,583 $ 914,683
Northern California 775,093 726,479
South Florida 338,648 342,474
Pacific Northwest 160,347 150,546
---------------------
Subtotal Commercial Loans $2,222,671 $2,134,182
Southern California 266,785 273,221
---------------------
Total Commercial Loans $2,489,456 $2,407,403
---------------------

Construction Loans:
New England $ 115,897 $ 93,709
Northern California 169,507 148,827
South Florida 271,727 268,966
Pacific Northwest 68,014 72,280
---------------------
Subtotal Construction Loans $ 625,145 $ 583,782
Southern California 241,520 262,920
---------------------
Total Construction Loans $ 866,665 $ 846,702
---------------------

Residential Mortgage Loans:
New England $1,109,596 $1,040,972
Northern California 189,791 169,810
South Florida 548,565 546,828
Pacific Northwest 25,922 27,378
---------------------
Total Residential Mortgage Loans $1,873,874 $1,784,988
Southern California 12,054 10,826
---------------------
Total Residential Mortgage Loans $1,885,928 $1,795,814
---------------------

Home Equity and Other Consumer Loans:
New England $ 69,801 $ 57,047
Northern California 64,777 58,443
South Florida 196,872 193,578
Pacific Northwest 2,702 3,716
---------------------
Subtotal Home Equity and Other Consumer Loans $ 334,152 $ 312,784
Southern California 13,483 13,560
---------------------
Total Home Equity and Other Consumer Loans $ 347,635 $ 326,344
---------------------

---------------------
Subtotal Private Banking Loans $5,055,842 $4,815,736
---------------------
Southern California 533,842 560,527
---------------------
Total Private Banking Loans $5,589,684 $5,376,263
---------------------

Allowance for Credit Losses:
New England $ 25,423 $ 24,375
Northern California 13,488 12,559
South Florida 16,965 16,330
Pacific Northwest 7,261 3,175
---------------------
Subtotal Allowance for Credit Losses: $ 63,137 $ 56,439
Southern California 40,039 38,664
---------------------
Total Allowance for Credit Losses: $ 103,176 $ 95,103
---------------------

Classified Loans (5):
New England $ 9,300 $ 11,348
Northern California 5,336 -
South Florida 55,865 34,476
Pacific Northwest 22,025 6,641
---------------------
Subtotal Classified Loans $ 92,526 $ 52,465
Southern California 152,887 145,105
---------------------
Total Classified Loans $ 245,413 $ 197,570
---------------------

Non-performing Loans:
New England $ 7,794 $ 7,240
Northern California 726 479
South Florida 25,029 20,447
Pacific Northwest 2,213 5,704
---------------------
Subtotal Non-performing Loans $ 35,762 $ 33,870
Southern California 69,356 51,197
---------------------
Total Non-performing Loans $ 105,118 $ 85,067
---------------------

Loans 30-89 days past due:
New England $ 2,894 $ 13,147
Northern California - 726
South Florida 2,924 1,357
Pacific Northwest 1,769 -
---------------------
Subtotal Loans 30-89 Days Past Due $ 7,587 $ 15,230
Southern California 22,932 10,510
---------------------
Total Loans 30-89 Days Past Due $ 30,519 $ 25,740
---------------------

Net Loans Charged-off for the Three Months
Ended:
New England $ 953 $ 1,005
Northern California 1 15
South Florida 365 76
Pacific Northwest 500 -
---------------------
Subtotal Net Loans Charged-off/(Recovered) $ 1,819 $ 1,096
Southern California 21,117 $ 592
---------------------
Total Net Loans Charged-off/(Recovered) $ 22,936 $ 1,688
---------------------
*T

-0-
*T
(1) The Company went from a minority to majority ownership of
Bingham, Osborn, & Scarborough in Q3 2007.
Prior period financial information is included with Earnings in
Equity Investments.
Prior period AUM data is shown for comparative purposes as being
included with the consolidated Company.

(2) The Company calculates its cash earnings by adjusting net income
to exclude the amortization of the purchased intangibles (net of
tax), the tax benefit on the portion of the purchase price
allocated to goodwill, which is deductible over a 15 year life,
impairment, and certain non-cash share based compensation plans
(net of tax). The tax savings are deferred under GAAP accounting
but are included in cash earnings since the tax savings (lower
tax payment) will be retained unless the acquired company is
sold. The Company uses certain non-GAAP financial measures, such
as Cash Earnings, to provide information for investors to
effectively analyze financial trends of ongoing business
activities.

(3) 3,187,800 and 3,187,275 potential common shares from the
convertible trust preferred securities were excluded from the
diluted EPS computations for the three and six months ended June
30, 2008, respectively because the effect would be anti-
dilutive. If the effect had been dilutive, interest expense, net
of tax, related to the convertible trust preferred securities of
$0.7 million and $1.5 million would be added back to net income
for diluted EPS computations for the three and six months ended
June 30, 2008, respectively. In addition 974,084 and 945,583
potential common shares from outstanding stock options, stock
grants and other were also excluded from the diluted EPS
computations for the three and six months ended June 30, 2008,
respectively.

(4) The concentration of the Private Banking loan data and credit
quality is based on the location of the lender.

(5) Classified loans include loans classified as either substandard,
doubtful, or loss.

(6) Gross impairment expense for the three and six months ended June
30, 2008 was $17.4 million and $38.0 million, respectively.

*T

Boston Private Financial Holdings, Inc.
David Kaye, 617-912-3949
Chief Financial Officer
dkaye@bostonprivate.com
or
Catharine Sheehan, 617-912-3767
Senior Vice President, Corporate Communications
csheehan@bostonprivate.com
or
Sloane & Company
John Hartz, 212-446-1872
jhartz@sloanepr.com

Copyright Business Wire 2008