Boston Private Financial Holdings Reports Third Quarter 2009 Results

http://www.businesswire.com/news/home/20091028006454/en

BOSTON--(Business Wire)--
Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) ("the Company") today
reported third quarter 2009 GAAP net income from continuing operations of $390
thousand, up from a GAAP net loss from continuing operations of $141 thousand in
the second quarter 2009. Including the loss from discontinued operations, the
Company reported a third quarter 2009 GAAP net loss of $31.4 million. After
accounting for losses attributed to the Company`s discontinued operations and
other adjustments, BPFH reported a third quarter 2009 GAAP loss per share of
$0.60 per diluted share compared to a $0.24 loss per diluted share reported in
the second quarter 2009.

In the third quarter, the Company announced a series of actions directed at
strengthening its balance sheet, reducing risk and streamlining operations. On
September 17th, the Company announced the divestiture of Gibraltar Private Bank
for $93 million in cash, along with the sale of its wealth advisory affiliate
RINET Company. In addition, on October 6th BPFH announced an agreement in which
management at Westfield will complete the purchase of the firm in 2009, rather
than in 2014, which will provide $59 million in initial proceeds and the
retention of a 12.5% share in Westfield`s revenues for eight years. The
Westfield transaction is expected to close in the fourth quarter. As a result of
these transactions, each of these affiliates is included in discontinued
operations.

Chairman and CEO Timothy L. Vaill said, "We believe that we are a stronger
business today thanks to the steps we took during the quarter to improve our
balance sheet and establish the groundwork for sustainable long-term growth as
the economy recovers. Our actions during the quarter added almost $100 million
in cash to our balance sheet, strengthened our capital position, improved our
overall credit metrics, reduced credit risk and improved liquidity. For the
quarter, while we continued to build provision for loan losses, we were able to
essentially break even. We remain very cautious about continuing economic
trends, particularly in the Northern California market, and their impact on our
portfolios."

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

* Net Interest Income for the third quarter was $39.7 million, an increase of
$0.4 million, or 1%, from $39.3 million on a linked quarter basis. Net Interest
Income was up 4% from $38.0 million compared to the same period in 2008.
* Revenue for the third quarter was $66.2 million, with substantially the same
revenue on a linked quarter basis and for the same period in 2008.
* Expenses for the third quarter were $55.9 million, down $1.7 million or 3%,
from $57.7 million on a linked quarter basis. Expenses were up 1% from $55.1
million compared to the same period in 2008.
* Tangible Common Equity/Tangible Assets ("TCE/TA") was 6.31%, up 87 basis
points from 5.44% on a linked quarter basis. TCE/TA was up 57 basis points from
5.74% compared to the same period in 2008.
* Total Balance Sheet Assets for the third quarter were $5.9 billion, down $1.4
billion, or 19%, from $7.3 billion on a linked quarter basis. The decrease is
primarily due to the discontinued operations of the divested companies. Total
Balance Sheet Assets were down 17% from $7.0 billion compared to the same period
in 2008.
* Provision for Loan Losses for the third quarter was $9.1 million, up $0.4
million or 4%, from $8.7 million on a linked quarter basis. Provision for Loan
Losses was down 93% from $135.1 million compared to the same period in 2008.
* Allowance for Loan Losses as a percentage of Total Loans was essentially flat,
at 1.69% from 1.68% on a linked quarter basis.

"As a result of affiliate divestitures during the third quarter, we
significantly improved our credit position and increased our overall financial
strength," said David J. Kaye, Chief Financial Officer. "Through the sale of
Gibraltar, we reduced classified loans by $86 million, or 37%, and
non-performing assets by $30 million, or 21%. Further, our strong capital base
positions us well to deal with continued economic challenges and invest for
future growth."

Total Deposits increased 2% during the third quarter to $4.1 billion and were up
18% on a year-over-year basis. Total Loans increased 2% during the third quarter
to $4.3 billion and were up 7% on a year-over-year basis.

Non-Performing Loans as a percentage of Total Loans were 2.31%, up from 1.97% in
the second quarter of 2009. Net Charge-offs for the third quarter were $7.1
million, which represented approximately 16 basis points of Total Loans,
compared to $5.3 million of net charge-offs during the second quarter 2009, or
13 basis points of Total Loans. Past Due Loans (30-89 days) as a percentage of
Total Loans declined 44 basis points on a linked quarter basis to 0.26%.

The Wealth Advisory and Investment Management businesses experienced an increase
in assets under management (adjusted for affiliate sales) and an increase in fee
income during the third quarter. Total Assets Under Management/Advisory ("AUM")
increased 8%, or $1.4 billion, to $18.1 billion in the third quarter. Total AUM
was down 6% on a year-over-year basis. Total fee income was up 7%, or $1.4
million, to $22.7 million in the third quarter 2009. Total fee income was down
13%, or $3.5 million on a year-over-year basis.

The Company experienced third quarter AUM outflows of $107 million, as compared
to $14 million of inflows in the prior quarter. AUM flows were down $165 million
compared to the same period in 2008.

Vaill concluded, "As we continue to manage proactively through a difficult
market, the actions we have taken have put us in a stronger financial position
and have created more flexibility to allocate resources going forward. We are
focused on our core wealth management strategy, helping our affiliates increase
current market share and expand their reach among new and existing customers who
need reliable, personalized advice and strategic financial counsel as much as
ever."

Dividend Payments
Concurrent with the release of the third quarter 2009 earnings, the Board of
Directors of the Company declared a cash dividend to shareholders of $0.01 per
share. The record date for this dividend is November 2, 2009 and the payment
date is November 16, 2009.

Non-GAAP Financial Measures
The Company calculates its cash earnings by adjusting net income to exclude net
amortization of intangibles, impairment, and the impact of certain non-cash
share based compensation plans. The Company uses certain non-GAAP financial
measures, such as the TCE/TA ratio, to provide information for investors to
effectively analyze financial trends of ongoing business activities, and to
enhance comparability with peers across the financial sector. (A detailed
reconciliation table is attached.)

Conference Call
Management will hold a conference call at 9:00 a.m. Eastern Time on Thursday,
October 29, to discuss the financial results in more detail. To access the call:

Dial In #: (866) 730-5766
International Dial In #: (857) 350-1590
Passcode: 39344264

Replay Information:
Available from 10/29/2009 to 11/5/2009
Dial In #: (888) 286-8010
International Dial In #: (617) 801-6888
Passcode: 90431608

Boston Private Financial Holdings, Inc.
Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) is a national financial
services 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 selective acquisitions 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.

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

Note to Editors:

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

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 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 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 the Company operates, including changes which adversely affect
borrowers` ability to service and repay our loans; changes in loan defaults and
charge-off rates; changes in the value of securities and other assets, adequacy
of loan loss reserves, or deposit levels necessitating increased borrowing to
fund loans and investments; the passing of adverse government regulation; the
risk that goodwill and intangibles recorded in the Company`s financial
statements will become impaired; and risks related to the identification and
implementation of acquisitions, as well as the other risks and uncertainties
detailed in the Company`s Annual Report on Form 10-K, as updated by the
Company`s Quarterly Reports on Form 10-Q; and other filings submitted to the
Securities and Exchange Commission. The Company does not undertake any
obligation to update any forward-looking statement to reflect circumstances or
events that occur after the date the forward-looking statements are made.

Boston Private Financial Holdings, Inc.

Selected Financial Data (1)

(In Thousands, except share data)

(Unaudited)

(In thousands, except per share data) Sept 30, Sept 30, June 30,
FINANCIAL DATA: 2009 2008 2009

Total Balance Sheet Assets $ 5,869,590 $ 7,033,574 $ 7,265,738
Total Equity 619,176 506,357 648,035
Investment Securities 691,805 822,071 765,517
Goodwill 105,102 94,623 105,102
Intangible Assets, Net 44,032 61,128 46,056

Commercial Loans 2,333,851 2,138,675 2,273,465
Construction and Land Loans 330,196 405,295 424,563
Residential Mortgage Loans 1,471,811 1,315,925 1,323,683
Home Equity and Other Consumer Loans 194,515 179,250 208,506
Total Loans 4,330,373 4,039,145 4,230,217

Loans Held for Sale 18,308 99,101 35,371
OREO and Other Repossessed Assets 16,442 3,268 13,147

Deposits 4,141,023 3,518,385 4,066,691
Borrowings 956,158 1,513,910 1,015,578

Book Value Per Common Share $ 9.03 $ 8.84 $ 9.56
Market Price Per Share $ 6.47 $ 8.74 $ 4.48

ASSETS UNDER MANAGEMENT AND ADVISORY:

Private Banking $ 3,421,000 $ 3,512,000 $ 3,241,000
Investment Managers 6,972,000 8,001,000 6,298,000
Wealth Advisory 6,928,000 7,005,000 6,400,000
Less: Inter-company Relationship (18,000 ) (303,000 ) (16,000 )
Consolidated Affiliate Assets Under Management and Advisory $ 17,303,000 $ 18,215,000 $ 15,923,000

Unconsolidated 815,000 1,000,000 800,000
Total Unconsolidated Assets Under Management and Advisory $ 18,118,000 $ 19,215,000 $ 16,723,000

FINANCIAL RATIOS:

Total Equity/Total Assets 10.55 % 7.20 % 8.92 %
Tangible Common Equity/Tangible Assets (2) 6.31 % 5.74 % 5.44 %
Allowance for Loan Losses/Total Loans 1.69 % 1.30 % 1.68 %
Allowance for Loan Losses/Non-Accrual Loans 73 % 62 % 85 %
Allowance for Loan Losses/Classified Loans 49 % 44 % 50 %

Three Months Ended Three Months Ended Nine Months Ended
Sept 30, Sept 30, June 30, Sept 30 Sept 30
OPERATING RESULTS: 2009 2008 2009 2009 2008

Net Interest Income - on a Fully Taxable Equivalent Basis (FTE) $ 41,448 $ 39,800 $ 41,163 $ 123,770 $ 117,913
FTE Adjustment 1,731 1,787 1,861 5,342 5,527
Net Interest Income 39,717 38,013 39,302 118,428 112,386
Investment Management and Trust Fees:
Private Banking 5,385 5,721 5,039 15,328 17,167
Investment Managers 8,347 11,597 7,707 24,161 35,015
Total Investment Management Fees 13,732 17,318 12,746 39,489 52,182
Total Wealth Advisory Fees 8,927 8,853 8,496 25,696 26,253
Other Fees 2,482 1,704 2,914 6,611 7,252
Total Fees 25,141 27,875 24,156 71,796 85,687
Investment Gains 1,064 531 951 5,459 1,326
Gain/(Loss) on Sale of Loans and OREO, Net 318 (332 ) 1,834 6,423 287
Gain on Retirement of Debt - - - 407 19,906

Total Fees and Other Income 26,523 28,074 26,941 84,085 107,206
Total Revenue 66,240 66,087 66,243 202,513 219,592

Provision for Loan Losses 9,099 135,145 8,730 31,155 180,935

Salaries and Employee Benefits 32,868 33,352 32,403 95,272 99,635
Occupancy and Equipment 6,731 6,070 6,877 19,837 18,067
Professional Services 4,429 5,010 4,909 14,362 13,947
Marketing and Business Development 1,447 1,757 1,804 4,860 5,839
Contract Services and Processing 1,323 1,246 1,294 3,920 3,814
Amortization of Intangibles 2,024 2,085 2,279 5,940 6,343
FDIC Insurance 2,619 865 3,707 7,734 2,471
Other 4,495 4,745 4,384 13,294 11,838
Total Operating Expense 55,936 55,130 57,657 165,219 161,954

Operating Income/(Loss), before Tax 1,205 (124,188 ) (144 ) 6,139 (123,297 )
Warrant Expense - 2,233 - - 2,233
Impairment, Net (9) - 71,204 - - 107,830
Income/(Loss) from Continuing Operations, before Tax 1,205 (197,625 ) (144 ) 6,139 (233,360 )
Income Tax Expense/(Benefit) 815 (45,822 ) (3 ) 1,629 (48,710 )
Income/(Loss) from Continuing Operations, Net of Tax 390 (151,803 ) (141 ) 4,510 (184,650 )
Discontinued Operations, Net of Tax (1) (30,614 ) (120,303 ) (7,763 ) (39,006 ) (175,164 )
Net Loss (30,224 ) (272,106 ) (7,904 ) (34,496 ) (359,814 )
Less: Net Income/(Loss) Attributable to the Noncontrolling Interest 1,136 1,255 579 2,481 4,019
Net Loss Attributable to the Company $ (31,360 ) $ (273,361 ) $ (8,483 ) $ (36,977 ) $ (363,833 )

Three Months Ended Three Months Ended Nine Months Ended
Sept 30, Sept 30, June 30, Sept 30 Sept 30
RECONCILIATION OF GAAP EARNINGS 2009 2008 2009 2009 2008
TO CASH EARNINGS:

Net Loss Attributable to the Company $ (31,360) $ (273,361) $ (8,483) $ (36,977) $ (363,833)

Cash Basis Loss (3)
Book Amortization of Purchased Intangibles, Net $ 1,469 $ 1,818 1,701 $ 4,452 $ 5,550
Cash Benefit of Tax Deductions from Purchased Intangibles & Goodwill 1,074 1,169 1,066 3,209 3,449
Stock options, ESPP, and Other Stock Compensation, Net 1,158 3,247 1,036 2,901 70,947
Non-cash Valuation Adjustments, Net - 196,449 - 1,357 233,075
Dividends on Preferred Securities (4)(5) (1,998) - (1,356) (5,864) -
Total Cash Basis Adjustment $ 1,703 $ 202,683 $ 2,447 $ 6,055 $ 313,021

Cash Basis Loss $ (29,657) $ (70,678) $ (6,036) $ (30,922) $ (50,812)

Three Months Ended Three Months Ended Nine Months Ended
Sept 30, Sept 30, June 30, Sept 30 Sept 30
2009 2008 2009 2009 2008
PER SHARE DATA:

Calculation of Income/(Loss) for EPS:

Income/(Loss) from Continuing Operations, Net of Tax $ 390 $ (151,803) $ (141) $ 4,510 $ (184,650)
Less: Net Income/(Loss) Attributable to the Noncontrolling Interest, Net of Tax 1,136 1,255 579 2,481 4,019
Income/(Loss) from Continuing Operations Attributable to the Company $ (746) $ (153,058) $ (720) $ 2,029 $ (188,669)
Increase in Redemption Value, Net (2,002) - (1,624) (4,773) -
Accretion of Beneficial Conversion Feature (4) (5,450) (28,142) (4,879) (14,696) (28,142)
Accretion of Preferred Series C Discount (5) (402) - (242) (1,024) -
Dividends on Preferred Securities (4)(5) (1,998) (136) (1,356) (5,864) (136)
Loss from Continued Operations Available to the Common Shareholder $ (10,598) $ (181,336) $ (8,821) $ (24,328) $ (216,947)
Loss from Discontinued Operations Available to the Common Shareholder $ (30,614) $ (120,303) $ (7,763) $ (39,006) $ (175,164)
Net Loss Available to the Common Shareholder $ (41,212) $ (301,639) $ (16,584) $ (63,334) $ (392,111)

Calculation of Average Shares Outstanding:
Weighted Average Basic Shares (6) 68,552 51,459 67,861 67,034 42,649
Weighted Average Diluted Shares for cash EPS 68,552 51,459 67,861 67,034 42,649

Loss per Share - Basic and Diluted:
Loss per Share from Continued Operations $ (0.15) $ (3.52) $ (0.13) $ (0.37) $ (5.08)
Loss per Share from Discontinued Operations $ (0.45) $ (2.34) $ (0.11) $ (0.58) $ (4.11)
Net Loss per Share $ (0.60) $ (5.86) $ (0.24) $ (0.95) $ (9.19)

RECONCILIATION OF GAAP LOSS PER SHARE TO CASH EARNINGS/(LOSS) PER SHARE:
(on a Diluted Basis)

Loss per Share (GAAP Basis) $ (0.60) $ (5.86) $ (0.24) $ (0.95) $ (9.19)
Cash Basis Adjustment (3) 0.17 4.49 0.15 0.49 8.00
Cash Basis Loss Per Diluted Share $ (0.43) $ (1.37) $ (0.09) $ (0.46) $ (1.19)

Three Months Ended Three Months Ended Nine Months Ended
Sept 30, Sept 30, June 30, Sept 30, Sept 30
2009 2008 2009 2009 2008
OPERATING RATIOS & STATISTICS:

Return on Average Equity (18.78%) (156.78%) (4.81%) (6.92%) (70.24%)
Return on Average Assets (2.05%) (14.95%) (0.44%) (0.80%) (6.73%)
Net Interest Margin 3.08% 3.14% 3.21% 3.18% 3.15%
Total Fees and Other Income/Total Revenue 40.04% 42.48% 40.67% 41.52% 48.82%
Loans Charged-off, Net $ 7,091 $ 164,255 $ 5,320 $ 22,235 $ 188,437

AVERAGE BALANCE SHEET: Three Months Ended Three Months Ended
Sept 30, 2009 Sept 30, 2008
Average Income/ Yield/ Average Income/ Yield/
AVERAGE ASSETS Balance Expense Rate Balance Expense Rate
Earning Assets
Cash and Investments $ 1,125,566 $ 7,061 2.51 % $ 887,941 $ 8,856 3.97 %
Loans
Commercial and Construction 2,633,405 39,292 5.91 % 2,678,706 42,592 6.30 %
Residential Mortgage 1,378,985 18,028 5.23 % 1,321,267 18,332 5.55 %
Home Equity and Other Consumer 209,957 2,372 4.44 % 162,628 2,231 5.40 %
Total Earning Assets 5,347,913 66,753 4.96 % 5,050,542 72,011 5.67 %
Allowance for Loan Losses (72,815 ) (77,507 )
Cash and due From Banks (Non-Interest Bearing) 22,325 44,763
Other Assets 598,463 2,261,073
TOTAL AVERAGE ASSETS $ 5,895,886 $ 7,278,871

AVERAGE LIABILITIES AND STOCKHOLDERS' EQUITY

Interest-Bearing Liabilities:
Deposits:
Savings and NOW $ 470,852 $ 823 0.69 % $ 477,475 $ 1,666 1.39 %
Money Market 1,236,179 5,004 1.61 % 1,279,897 6,938 2.16 %
Certificate of Deposit 1,589,505 9,222 2.30 % 1,230,484 10,471 3.39 %
Total Deposits 3,296,536 15,049 1.81 % 2,987,856 19,075 2.54 %
Junior Subordinated Debentures and Other Long-term Debt 239,028 3,072 5.14 % 331,645 4,049 4.88 %
FHLB Borrowings and Other 768,985 7,184 3.69 % 1,135,778 9,087 3.13 %
Total Interest-Bearing Liabilities 4,304,549 25,305 2.33 % 4,455,279 32,211 2.86 %
Non-interest Bearing Demand Deposits 820,082 621,224
Payables and Other Liabilities 75,987 1,457,015
Total Liabilities 5,200,618 6,533,518
Redeemable Non-Controlling Interest 51,388 51,133
Stockholders' Equity 643,880 694,220
TOTAL AVERAGE LIABILITIES & STOCKHOLDERS' EQUITY $ 5,895,886 $ 7,278,871

Net Interest Income $ 41,448 $ 39,800
Net Interest Margin 3.08 % 3.14 %

AVERAGE BALANCE SHEET: Nine Months Ended Nine Months Ended
Sept 30, 2009 Sept 30, 2008
Average Income/ Yield/ Average Income/ Yield/
AVERAGE ASSETS Balance Expense Rate Balance Expense Rate
Earning Assets
Cash and Investments $ 1,030,896 $ 23,846 3.14 % $ 852,513 $ 26,943 4.20 %
Loans
Commercial and Construction 2,625,060 116,962 5.93 % 2,616,935 132,072 6.66 %
Residential Mortgage 1,336,009 53,332 5.32 % 1,282,154 53,697 5.58 %
Home Equity and Other Consumer 204,163 6,821 4.43 % 175,596 7,609 5.69 %
Total Earning Assets 5,196,128 200,961 5.16 % 4,927,198 220,321 5.92 %
Allowance for Loan Losses (69,801 ) (71,322 )
Cash and due From Banks (Non-Interest Bearing) 25,223 48,663
Other Assets 615,293 2,222,793
TOTAL AVERAGE ASSETS $ 5,766,843 $ 7,127,332

AVERAGE LIABILITIES AND STOCKHOLDERS' EQUITY

Interest-Bearing Liabilities:
Deposits:
Savings and NOW $ 446,317 $ 2,512 0.75 % $ 520,838 $ 6,010 1.54 %
Money Market 1,132,606 14,997 1.77 % 1,277,998 24,431 2.55 %
Certificate of Deposit 1,505,086 28,492 2.53 % 1,134,136 32,927 3.88 %
Total Deposits 3,084,009 46,001 1.99 % 2,932,972 63,368 2.89 %
Junior Subordinated Debentures and Other Long-term Debt 250,037 9,473 5.05 % 416,366 14,205 4.55 %
FHLB Borrowings and Other 850,072 21,717 3.40 % 989,980 24,835 3.30 %
Total Interest-Bearing Liabilities 4,184,118 77,191 2.46 % 4,339,318 102,408 3.14 %
Non-interest Bearing Demand Deposits 828,918 636,651
Payables and Other Liabilities 50,749 1,422,560
Total Liabilities 5,063,785 6,398,529
Redeemable Non-Controlling Interest 38,650 45,737
Stockholders' Equity 664,408 683,066
TOTAL AVERAGE LIABILITIES & STOCKHOLDERS' EQUITY $ 5,766,843 $ 7,127,332

Net Interest Income $ 123,770 $ 117,913
Net Interest Margin 3.18 % 3.15 %

PRIVATE BANKING LOAN DATA AND CREDIT QUALITY (7): Sept 30, Sept 30, June 30,
2009 2008 2009
Commercial Loans:
New England $ 1,077,277 $ 946,263 $ 1,056,761
Northern California 908,056 801,437 864,660
Southern California 233,899 236,377 228,500
Pacific Northwest 115,287 155,927 124,261
Total Commercial Loans $ 2,334,519 $ 2,140,004 $ 2,274,182

Construction and Land Loans:
New England $ 98,181 $ 110,682 $ 134,907
Northern California 175,888 204,261 228,245
Southern California 8,300 22,310 11,811
Pacific Northwest 47,827 68,042 49,600
Total Construction and Land Loans $ 330,196 $ 405,295 $ 424,563

Residential Mortgage Loans:
New England $ 1,116,088 $ 1,077,917 $ 1,048,424
Northern California 213,370 203,644 207,573
Southern California 120,175 9,126 65,394
Pacific Northwest 22,178 25,237 2,292
Total Residential Mortgage Loans $ 1,471,811 $ 1,315,924 $ 1,323,683

Home Equity and Other Consumer Loans:
New England $ 96,063 $ 83,461 $ 93,901
Northern California 69,502 75,027 83,431
Southern California 20,733 13,928 22,539
Pacific Northwest 4,308 2,706 4,610
Subtotal Home Equity and Other Consumer Loans $ 190,606 $ 175,122 $ 204,481

Total Private Banking Loans $ 4,327,132 $ 4,036,345 $ 4,226,909

Sept 30, Sept 30, June 30,
2009 2008 2009

Allowance for Loan Losses:
New England $ 27,131 $ 25,029 $ 27,142
Northern California 22,146 13,745 17,275
Southern California 11,698 6,447 12,295
Pacific Northwest 12,035 7,210 14,290
Total Allowance for Loan Losses $ 73,010 $ 52,431 $ 71,002

Classified Loans (8):
New England $ 14,376 $ 8,466 $ 14,514
Northern California 48,992 5,391 30,159
Southern California (10) 39,580 86,295 48,367
Pacific Northwest 44,755 18,722 49,287
Total Classified Loans $ 147,703 $ 118,874 $ 142,327

Non-performing Assets:
New England $ 10,408 $ 7,240 $ 11,056
Northern California 48,993 726 20,821
Southern California (11) 33,837 72,448 41,870
Pacific Northwest 23,043 6,954 22,866
Total Non-performing Assets $ 116,281 $ 87,368 $ 96,613

Loans 30-89 Days Past Due:
New England $ 2,185 $ 3,740 $ 6,490
Northern California 136 350 14,945
Southern California 5,713 15,726 5,189
Pacific Northwest 3,321 918 3,175
Total Loans 30-89 Days Past Due $ 11,355 $ 20,734 $ 29,799

Loans Charged-off, Net for the Three Months Ended:
New England $ 546 $ 448 $ 1,392
Northern California 129 (2 ) 1,216
Southern California 2,411 163,809 1,760
Pacific Northwest 4,005 - 952
Total Net Loans Charged-off, Net $ 7,091 $ 164,255 $ 5,320

(1) During the second quarter of 2009 the Company completed the sale of its affiliates Boston Private Value Investors and Sand Hill Advisors. In the third quarter of 2009 the Company completed the sale of its affiliates RINET and Gibraltar. Accordingly, prior period and current financial information related to the divested companies are included with discontinued operations.

In addition, on October 6, 2009 the Company announced an agreement whereby the management of Westfield Capital Management ("WCM") will complete the purchase of the firm in 2009, instead of in 2014 as previously contemplated. As a result, prior period and current financial information related to WCM is included with discontinued operations.

Prior period AUM, for comparative purposes, was adjusted to exclude the assets managed from the divested companies and WCM operations.

(2) 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: the equity from the TARP funding of $154 million, and goodwill and intangible assets and includes the difference between redemption value and value per ARB 51 for redeemable non-controlling interests.

The Company uses certain non-GAAP financial measures, such as the Tangible Common Equity to Tangible Assets ratio, to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector.
A reconciliation from the Company's GAAP Total Equity to Total Assets ratio to the Non-GAAP Tangible Common Equity to Tangible Assets ratio is presented below:

Sept 30, Sept 30, June 30,
2009 2008 2009

Total Balance Sheet Assets $ 5,869,590 $ 7,033,574 $ 7,265,738
LESS: Goodwill and intangible assets, Net (149,134 ) (155,751 ) (151,158 )
Tangible Assets (non-GAAP) 5,720,456 6,877,823 7,114,580

Total Equity 619,176 506,357 648,035

LESS: Goodwill and intangible assets, Net (149,134 ) (155,751 ) (151,158 )
TARP Funding (154,000 ) - (154,000 )

ADD: Difference between redemption value of non-controlling interests and
value under ARB 51
44,963 44,416 44,181
Total adjusting items (258,171 ) (111,335 ) (260,977 )

Tangible Common Equity (non-GAAP) 361,005 395,022 387,058

Total Equity/Total Assets 10.55 % 7.20 % 8.92 %
Tangible Common Equity/Tangible Assets (non-GAAP) 6.31 % 5.74 % 5.44 %

(3) The Company calculates its cash earnings/(loss) by adjusting net income/(loss) 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, non-cash valuation adjustments, and certain non-cash share based compensation plans (net of tax). The benefit on
the portion of the purchase price allocated to goodwill 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 computation of cash earnings per
share includes the effect of dividends paid or accrued on Preferred Securities but excludes the accretion of the beneficial
conversion feature, the change in redemption values related to the redeemable noncontrolling interests and the accretion of the
Preferred Series C Discount. The Company uses certain non-GAAP financial measures, such as Cash Earnings/(Loss), to provide
information for investors to effectively analyze financial trends of ongoing business activities.

(4) Accretion of the beneficial conversion feature and dividends on the preferred securities that the Company issued during the
third quarter of 2008. In accordance with EITF 98-5 Accounting for Convertible Securities with Beneficial Conversion Features or
Contingently Adjustable Conversions, the beneficial conversion feature is accounted for as a preferred stock dividend and
reduces the income available to common shareholders.

(5) Accretion of the preferred discount and dividends on the preferred securities that the Company issued during the fourth quarter
of 2008.

(6) The diluted EPS computation for the three and nine months ended September 30, 2008 and 2009 and for the three months ended June
30, 2009 does not assume:
exercise or contingent issuance of options or other dilutive securities; conversion of the convertible trust preferred
securities or the Class B preferred securities; nor the exercise of the warrants because the results would have been
antidilutive. As a result of the antidilution, the potential common shares excluded from the diluted EPS computation are as
follows:

Three Months Ended Nine Months Ended
Sept 30, 2009 Sept 30, 2008 June 30, 2009 Sept 30, 2009 Sept 30, 2008
Potential common shares from the convertible trust preferred securities 3,228,687 3,228,687 3,228,687 3,228,687 3,201,079
Potential common shares from the exercise or contingent issuance 463,721 932,774 981,098 699,035 876,680
of the options or other dilutive securities
Potential common shares from the conversion of the Class A - 4,346,022 - - 1,464,594
preferred stock
Potential common shares from the conversion of the Class B 7,261,091 4,972,269 7,261,091 7,261,091 1,675,636
preferred stock
Potential common shares from the exercise of the warrants - 984,110 - - 331,642

In addition, if the effect of the conversion of the trust preferred securities would have been dilutive, interest expense, net of tax, related to the convertible trust preferred securities of $0.7 million for the three month periods and $2.2 million for the nine month periods ended Sept 30, 2009 and 2008, respectively, would be added back to net income for diluted EPS computations for the periods presented.

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

(8) Classified loans include loans classified as either substandard or doubtful.

(9) Gross impairment expense for the three and nine months ended Sept 30, 2008 was $84.7 million and $122.7 million, respectively.

(10) Includes the non-strategic loans held for sale of $12.8 million and $17.5 million at September 30, 2009 and June 30, 2009, respectively.

(11) Includes the non-strategic loans held for sale of $13.8 million and $18.6 million at September 30, 2009 and June 30, 2009, respectively.

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

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