Boston Private Financial Makes Loss, Cuts Dividend, Seeks New Capital

Tom Burroughes

23 July 2008

US-based Boston Private Financial Holdings said it suffered a second-quarter loss of $80.6 million or $2.11 per share, compared to profit of $4.78 million or $0.13 per share in the year ago quarter, as it suffered charges of $82 million and increased provisions for bad loans.

Cash basis earnings for the quarter fell to $5.36 million or $0.14 per share, from $18.72 million or $0.47 per share in the year ago quarter, the bank said.

Total revenues for the quarter were $119.96 million, up from $96.57 million in the year ago quarter.

"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 Vaill, chairman and chief executive. He said: "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,” he said.

The board voted to reduce the quarterly dividend from $0.10 a share to $0.01 a share effective with the next payout date of 15 August 2008.

Meanwhile, the bank said that the Carlyle Group, the US private equity firm, will invest about $75 million in newly issued equity securities of Boston Private, as part of a move by Boston to raise fresh capital to strengthen its balance sheet.

Boston Private Financial said it also intends to raise about $85 million through sale of shares of its common stock in an underwritten public offering.