BOSTON PRIVATE FINANCIAL HOLDINGS:

Transcription

1 BOSTON PRIVATE FINANCIAL HOLDINGS: A National Wealth Management Franchise Timothy L. Vaill Chairman & CEO Walter M. Pressey Vice Chairman & President David J. Kaye Chief Financial Officer June 2010

2 Forward Looking Statements Statements in this presentation 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 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 forwardlooking 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, asset management and investment advisory activities; changes in interest rates; competitive pressures from other financial institutions; the effects of a continuing deterioration in general economic conditions on a national basis or in the local markets in which the Company operates, including changes which adversely affect borrowers ability to service and repay our loans; changes in 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. 2

3 Key Investment Highlights Proven long-term client-centric business model Focus on attractive high-net worth market niche Strengthened business through multi-pronged repositioning Robust capital and liquidity position Stable and improving credit quality Poised for growth and increasing profitability post TARP Well-Positioned to Execute on Our Growth Strategy 3

4 Executive Management Update On June 8, we announced that Clayton G. Deutsch, currently a senior partner at McKinsey & Company, will become Chief Executive Officer and President effective July 31, 2010 Mr. Deutsch began his career in banking in the 1970s and has been at McKinsey since 1980 He brings deep experience with a number of leading financial institutions, including expertise in private banking, wealth advisory and wealth management BPFH Board will elect a new non-executive Chairman from the independent directors to assume that role also on July 31, 2010 Tim Vaill will continue to serve as a BPFH Director Walt Pressey will continue to serve as Vice Chairman and remain a BPFH Director Remainder of senior management unchanged 4

5 Proven Long-Term Strategy Remains The Same HIGH NET WORTH MARKET Client Experience 5

6 Client-Centric, Private Banking Model Private Banks account for 75% of revenue Private Banking Wealth Advisory Investment Management Q1 Revenue $55.4M $9.3M $9.2M AUM $3.6B $7.4B $7.3B Average Operating Margin* 33% 29% 18% Footprint 4 banks 24 offices 4 firms 5 offices 2 firms 3 offices Fee-based revenues generate 35% of core revenues *Q2 08 Q1 10 quarterly average excluding tax, provision, impairment and one-time items 6

7 Attractive National Footprint Affiliates by Region Key Financial Metrics Seattle Boston AUM: $18.3 billion San Francisco Philadelphia New York Assets: $6.0 billion Los Angeles Loans: $4.4 billion Deposits: $4.5 billion 6 Regions 10 Affiliates 32 Offices Q1 Revenue: $71.7 million Note: Financial data as of March 31,

8 Past and Present Initiatives 2010 Enhance core profitability Expand Ideal Private Bank Model Grow in existing markets Optimize balance sheet Improve credit quality Repay TARP Bolstered capital Reduced risk Increased liquidity

9 Strong Capital Position Change in Tier 1 ratio due to transaction Pro forma Tier 1 ratio vs. median of all banks with assets of $5-10bn 15.7% 16.4% 13.7% 13.7% 12.7% 12.5% Q $25mm Equity Raise $104mm TARP Repayment Pro Forma BPFH Pro Forma Median Including TARP Median Excluding TARP Strong holding company liquidity to support growth initiatives Boosts TCE / TA to 6.8% pro forma, our highest level since 2003 Ratios include 2008 Carlyle preferred and exclude gross-up participation by Carlyle in this offering 9

10 Improving Credit Quality NPAs & Provision NPA levels continue to fall ($ in Millions) % $ % $ % $ % 1.7% $ $ % 2.0% 1.8% 1.6% 1.4% 40 Q Q Q Q Q % Total NPA's NPA's / Total Assets Provision declined to lowest level since 3Q 2007 $13,325 $13,804 (45%) ($ in Thousands) $8,730 $9,099 $7,615 Q Q Q Q Q

11 Improving Credit Quality Loans By Type $2,000 $1,800 $1,749 Construction Portfolio declined 30% year-over-year $1,600 $1,400 $1,538 NPLs Total Loans ($ in Millions) $1,200 $1,000 $800 $600 $400 $468 $294 $277 $200 $32.0 $0 $7.0 $16.0 $33.0 $1.0 CRE Residential C&I Construction HELOC & Consumer % Total Loans 40% 36% 11% 7% 6% NPLs/Loans 1.84% 0.46% 3.46% 11.1% 0.22% Excludes loans in suspense and accounting adjustments 11

12 Strong Balance Sheet Growth Continues Core deposits increased 6% in Q Deposit Growth: 19% $5,000 $4,000 $3,759 $4,067 $4,141 $4,255 $4, % 110% ($ in Millions) $3,000 $2,000 $1, % 100% 95% $0 Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10 Loan to Deposit Ratio Core Deposits Other Deposits Residential loan portfolio grew 17% year-over-year 90% $4,500 $4,000 $4,158 $4,230 $4,330 $4,307 $4,359 ($ in Millions) $3,500 $3,000 $2,500 $2,000 $1,500 Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10 Commercial & Construction Residential HE & Consumer Other deposits represent CDARS and Brokered Deposits 12

13 Recovery in AUM Net Flows (AUM net flows in $ millions) $300 $200 $100 $0 ($100) ($200) ($176) Private Banks Investment Managers Wealth Advisors Market Effect on AUM $69 ($21) ($107) ($133) $2,000 $1,500 $1,000 $500 $0 ($500) ($1,000) ($1,500) ($2,000) ($300) ($2,500) Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10 ($3,000) Excluding market changes and acquisitions 13

14 Q Recap / Financial Highlights Enhancing Core Profitability Reported net income from continuing operations of $5.8mm and GAAP EPS of $0.02 Net interest margin of 3.18%, up 21bps from 2.97% on a linked quarter basis Fee income increase of 1% from the prior quarter and 15% from Q Improving Credit Quality NPAs / assets of 1.73%, a decrease of 4bps from 1.77% at Q Net charge-offs / average loans of approximately 0.06% compared to 0.43% during Q Optimizing Balance Sheet Grew residential mortgage portfolio 17% YoY; construction exposure decreased 30% Core deposits up 6% and brokered deposits down 9% on a linked quarter basis Loans / deposits of 97% compared to 111% at Q

15 Q QTD Financial Update ($ in millions unless otherwise stated) Q QTD Thru May Q QTD Thru May Q Q QTD Variance Q Total Revenue $49.1 $ % $71.7 Operating Expense $37.7 $36.9 2% $56.0 Total Loans $4.5bn $4.2bn 7% $4.4bn Total Deposits $4.4bn $3.9bn 13% $4.5bn Assets Under Management $17.9bn $15.9bn 12% $18.3bn Net Charge-offs $2.9 $1.9 53% $2.8 Non-Performing Loans $85.3 $86.7 (2%) $88.1 Provision $6.2 $4.6 35% $7.6 15

16 Opportunity In Existing Markets Achieve scale and expand balance sheet and fee business in existing markets Examples: Lift-outs of key business leaders In-market branch/office acquisitions Expand investment management & trust services within private banks Capitalize on dislocation in our markets and attract our target customer base 16

17 Key Investment Highlights Proven long-term client-centric business model Focus on attractive high-net worth market niche Strengthened business through multi-pronged repositioning Robust capital and liquidity position Stable and improving credit quality Poised for growth and increasing profitability post TARP Well-Positioned to Execute on Our Growth Strategy 17