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Boston Private Financial Holdings Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 6, 2009 04:24PM

Boston Private Financial Holdings Inc. (BPFH) filed Quarterly Report for the period ended 2009-09-30. Boston Private Bancorp through its subsidiaries offers a full range of banking commercial and residential lending and trust and investment management services to its domestic and international clientele with a commitment to exceptional service. In the city of Boston Boston Private Bank & Trust Company offers a First Time Homebuyer program and ``soft second'' mortgage financing. Under its Accessible Banking program the Bank is an active provider of real estate financing for affordable housingeconomic development and small businesses. Boston Private Financial Holdings Inc. has a market cap of $367.6 million; its shares were traded at around $5.36 with and P/S ratio of 0.8. The dividend yield of Boston Private Financial Holdings Inc. stocks is 0.8%. Boston Private Financial Holdings Inc. had an annual average earning growth of 25.5% over the past 5 years.

Highlight of Business Operations:

Investment management and trust fee income for the third quarter of 2009 was $13.7 million, a decrease of $3.6 million, or 21%, compared to the same period in 2008, and was $39.5 million for the nine months ended September 30, 2009, a decrease of $12.7 million, or 24%, compared to the same period in 2008. The decrease is primarily attributed to the $1.1 billion, or 10% decrease in AUM at the Banks and Investment Managers as compared to September 30, 2008. AUM as of September 30, 2009 for the Banks and Investment Managers were $10.4 billion. The decrease in AUM is comprised of $0.6 billion in market decline, and net outflows of $0.5 billion. These declining AUM balances are primarily a result of negative market conditions due to an adverse business climate. Management fees for the Company’s Banks and Investment Management affiliates are typically calculated based on a percentage of AUM. Approximately 40% of the Company’s third quarter 2009 investment management and trust fees were calculated based on the September 30, 2009 market value of AUM; the remaining 60% of the Company’s investment management and trust fees were calculated based on June 30, 2009 market value of AUM.

Wealth Advisory fee income for the third quarter of 2009 was $8.9 million, an increase of $0.1 million, or 1%, compared to the same period in 2008, and was $25.7 million for the nine months ended September 30, 2009, a decrease of $0.6 million, or 2%, compared to the same period in 2008. The Company’s wealth advisory fee income was negatively affected by the challenging market conditions due to an adverse business climate. Assets Under Advisory (“AUA”) as of September 30, 2009, managed by the Wealth Advisors were $6.9 billion, a decrease of $0.1 billion, or 1%, compared to September 30, 2008. The decrease in AUA is comprised of $0.2 billion in market decline, slightly offset by positive flows of $0.1 billion.

Gain on repurchase of debt for the nine months ended September 30, 2009 decreased $19.5 million, compared to the same period in 2008, respectively. In the first nine months of 2008, the Company repurchased $194.0 million of its Notes, $107.5 million in the first quarter and $86.5 million in the third. During the first quarter of 2009, the Company repurchased $48.9 million of its Notes resulting in a net gain of $0.4 million. The remaining outstanding balance of $3.6 million was called and paid off in July 2009 at par.

Amortization of intangibles for the third quarter of 2009 was $2.0 million, a decrease of $0.1 million, or 3%, compared to the same period in 2008, and was $5.9 million for the nine months ended September 30, 2009, a decrease of $0.4 million, or 6%, compared to the same period in 2008. The decrease is related to the accelerated amortization generally taken in the first few years of the intangible arising from an acquisition as well as impairment charges recorded in 2008. The impairment charges in 2008 reduced the carrying value of the related assets, which decreases future amortization expense for the remainder of the life of the intangible. Intangibles at September 30, 2009 decreased $17.1 million, or 28%, to $44.0 million, compared to $61.1 million at September 30, 2008. See Part I. Item 1. “Notes to Unaudited Consolidated Financial Statements - Note 8: Goodwill and Intangible Assets” for further detail.

FDIC insurance expense for the third quarter of 2009 was $2.6 million, an increase of $1.8 million compared to the same period in 2008, and was $7.7 million for the nine months ended September 30, 2009, an increase of $5.3 million compared to the same period in 2008. The increase for the three months ending September 30, 2009 as compared to the same period in 2008 is primarily due to higher assessment rates, increased deposits, and the additional cost for our Banks participating in the TLGP. The increase for the nine months ending September 30, 2009 is, in addition to the same factors for the third quarter of 2009, due to the $3.2 million special assessment charged by the FDIC in the second quarter of 2009. Participating in the TLGP has helped our Banks increase their deposits as customers with balances in excess of the FDIC insurance coverage of $250 thousand can receive 100% FDIC insurance coverage on certain deposit products covered by the TLGP. The mix of deposits and the FDIC’s ratings of our Banks have an effect on the amount of FDIC insurance expense as well.

Other expenses include supplies, administrative expenses and other items. Other expenses for the third quarter of 2009 were $4.5 million, a decrease of $0.2 million, or 5%, compared to the same period in 2008, and were $13.3 million for the nine months ended September 30, 2009, an increase of $1.5 million, or 12%, compared to the same period in 2008. The third quarter decrease is primarily due to the fees associated with the closing of the Company’s $75 million line of credit in September of 2008. The nine month increase is primarily due to increased expenses related to OREO and repossessed assets, bank charges and insurance expense, offset by the savings from the fees associated with the closing of the Company’s $75 million line of credit in 2008.

Read the The complete Report

BPFH is in the portfolios of Kenneth Fisher of Fisher Asset Management, LLC, Arnold Schneider of Schneider Capital Management.


Stocks Discussed: BPFH,
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