Boston Private Financial Holdings Reports Third Quarter 2009 Results

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 17^th, 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 6^th 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 of the options or other dilutive securities	463,721	932,774	981,098	699,035	876,680
Potential common shares from the conversion of the Class A preferred stock	-	4,346,022	-	-	1,464,594
Potential common shares from the conversion of the Class B preferred stock	7,261,091	4,972,269	7,261,091	7,261,091	1,675,636
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 (BPFH)