Boston Private Announces Strong 2005 Results

BOSTON, Jan. 25 /PRNewswire-FirstCall/ -- Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) today reported fourth quarter 2005 non-GAAP cash earnings of $0.45 per diluted share versus $0.38 per diluted share for the fourth quarter 2004, an 18.4% increase. The Company recorded non-GAAP cash earnings of $1.71 per diluted share for the year ended 2005, up 24.8% compared to $1.37 per diluted share for the year ended December 31, 2004. The Company provides a detailed reconciliation of cash and GAAP earnings in the financial tables.

GAAP earnings for the fourth quarter 2005 were $0.38 per diluted share, compared to $0.33 per diluted share for the fourth quarter 2004, a 15.2% increase. For the year ended December 31, 2005, Boston Private reported GAAP earnings of $1.47 per diluted share, compared to $1.18 per diluted share for the year ended December 31, 2004, up 24.6%.

Included in the financial performance are the results from the acquisitions of KLS Professional Advisors ("KLS"), which Boston Private acquired on December 31, 2004, and Gibraltar Private Bank & Trust Company ("Gibraltar Private"), previously known as Gibraltar Bank, FSB, which Boston Private acquired on October 1, 2005. More detailed financial information regarding the acquired affiliate partners' financial results is outlined later in the press release.

  Highlights

  * Total Revenues for 2005 were up 33.8% to $263.3 million, compared to
    $196.8 million a year ago.

  * Total Operating Expenses for 2005 were up 30.6% to $181.8 million,
    compared to $139.2 million a year ago.

  * Positive Operating Leverage for 2005 with revenues growing 33.8% and
    operating expenses increasing 30.6%.

  * Net Income for 2005 was up 37.7% to $46.3 million, compared to $33.6
    million a year ago.

  * Total Assets Under Management/Advisory, including the Company's
    unconsolidated affiliates, increased $2.6 billion, or 12.2%, over the
    prior year to $23.7 billion.

  * Fee Income, increased $25.8 million, or 24.5%, over the prior year to
    $131.2 million.

  * Total Balance Sheet Assets at December 31, 2005 were $5.1 billion
    compared to $3.3 billion a year ago.

  * Total Deposits increased $1.4 billion, or 57.1%, from December 31, 2004
    to December 31, 2005 to $3.7 billion.

  * Total Loans increased $1.4 billion, or 61.2%, from December 31, 2004 to
    December 31, 2005 to $3.6 billion.

  * Net Interest Income increased 45.3% or $40.2 million over 2004, to
    $128.7 million.

    * Net interest margin, including the impact of trust preferred interest
      expense, was 3.88%, 27 basis points higher than the 2004 level of
      3.61%.
    * Core net interest margin increased 44 basis points to 4.10% from the
      2004 level of 3.66%.
    * Increased volume contributed $33.8 million, or 84%, to the increase of
      net interest income.
    * Increased rates contributed $6.4 million or 16%, to the increase of
      net interest income.

  * The Company also announced a 14% increase in its quarterly cash dividend
    to shareholders to $0.08 per share.

Mr. Timothy L. Vaill, Chairman and Chief Executive Officer of Boston Private, stated, "We are proud of our operational and financial accomplishments for 2005. Across our six geographic regions, our private banking, wealth advisory and investment management segments experienced strong growth -- a true testament to the strength of our diversified franchise. Our overall performance was in large part driven by our private banking business with both robust organic growth at our existing banks and the acquisition of Gibraltar Private. We experienced record loan and deposit growth while increasing our core net interest margin despite the rising interest rate environment in 2005. Our fee income businesses also contributed to our growth, increasing revenues by 24.5% in 2005, despite the sluggish performance of the stock market."

"Our most important achievement this year was the successful addition of Gibraltar Private to our family of wealth management affiliate partners. Gibraltar Private posted a strong fourth quarter and displays solid momentum heading into 2006 with a new office opening in Naples, Florida, scheduled for this spring. We are excited to have this talented team of individuals join our wealth management group. We are delighted that Gibraltar Private was accretive on a cash basis in the fourth quarter and it continues to exceed our initial expectations," continued Vaill.

Mr. Robert J. Whelan, Chief Financial Officer, stated that due to the implementation of FAS 123R, the Company will change its accounting for share- based compensation plans beginning on January 1, 2006. At that time, the Company will also restate its financial results for 2005 and 2004 to provide more comparable financial statements. The Company estimates that its after tax expense for share-based compensation plans would have been $2.7 million, or $0.08 per fully diluted share, if share-based compensation plans had been expensed in 2005.

"Over the past four years, I have emphasized that cash EPS is increasingly becoming an important metric for investors to calculate the full value of Boston Private," stated Mr. Walter M. Pressey, Boston Private's President. "The additional intangibles from the Gibraltar Private acquisition and the advent of expensing share-based compensation plans will further expand the difference between our cash and GAAP earnings per share. We recognize the importance of GAAP earnings as a measure of our financial strength; however, investors need to also evaluate the additional value above GAAP earnings provided by cash earnings as a result of the amortization of purchase intangibles, the tax benefits generated by purchase accounting and now the non-cash operating expense for our share-based compensation plans. The difference between cash and GAAP EPS is estimated to be approximately $0.35 per share for the full year 2006. By comparison our dividend rate for 2006 is expected to be $0.32 per share. The incremental operating cash flow generated by these non-cash expenses exceeds our dividend."

Mr. Vaill concluded, "We are pleased with our results in 2005 and are looking forward to 2006. We are significantly expanding our wealth management franchise with some exciting new office openings in Lexington, Massachusetts (opened in December), Los Altos, California (opened in December), Naples, Florida (opening this spring as mentioned previously), Hingham, Massachusetts (later this year), and New York City (opening in 2006). We also will continue to selectively evaluate other strategic opportunities and markets throughout the year. We believe that our diversified business model, our focus on organic growth, our opportunistic acquisition strategy, and our solid asset quality establishes a strong foundation for the continued growth of Boston Private's business."

Fourth Quarter 2005 Results

Boston Private's revenues increased 42.1% to $79.5 million for the fourth quarter of 2005, over revenues of $55.9 million for the fourth quarter of 2004. This increase was due to the acquisitions of Gibraltar Private and KLS, as well as growth achieved in each of the Company's businesses: private banking, wealth advisory and investment management. The KLS and Gibraltar Private acquisitions contributed $18.6 million in revenue for the fourth quarter.

The Company's net interest income increased 72.4% to $43.9 million for the fourth quarter of 2005 compared to $25.5 million for the fourth quarter of 2004. The increase was due to increased volume, which contributed $16.9 million, and rate increases which contributed $1.6 million. Excluding the impact of trust preferred interest expense, Boston Private's core net interest margin increased 22 basis points to 4.28% in the fourth quarter 2005 compared to 4.06% in the third quarter of 2005. The net interest margin, including the impact of the trust preferred, was 4.00% in the fourth quarter of 2005, compared to 3.88% in the third quarter of 2005. Boston Private's net interest margin would have been 7 basis points lower in the fourth quarter, if the Company had not acquired Gibraltar Private.

Boston Private's loan portfolio achieved strong growth with commercial loans up 50.3% and residential loans up 68.0% over the same period in the prior year. Commercial loans totaled $2.0 billion and represented 56.3% of the combined loan portfolio. Residential loans totaled $1.3 billion and represented 36.9% of the total portfolio. Combined, the loan portfolio grew 61.2% over the past twelve months totaling $1.4 billion. This loan growth was supported by growth in deposits, which increased $1.4 billion, or 57.1%, over the December 31, 2004 balance, to $3.7 billion. Gibraltar Private had $981.2 million and $967.5 million in loans and deposits, respectively, at December 31, 2005.

Investment management fee income for the fourth quarter 2005 totaled $28.1 million, up 11.4% over the fourth quarter 2004. The increase from the fourth quarter of 2004 was primarily due to the addition of Gibraltar Private, strong investment performance at certain affiliates and improved market action. Gibraltar Private generated $1.4 million of investment management fees in the fourth quarter.

In Boston Private's wealth advisory business, fee income increased $3.1 million from the fourth quarter of 2004 to $5.0 million for the fourth quarter of 2005. The increase from the fourth quarter of 2004 benefited from $2.8 million of fee income related to the acquisition of KLS on December 31, 2004.

Assets under management and advisory increased 10.5% to $21.3 billion at December 31, 2005 from $19.3 billion at December 31, 2004. Total assets under management and advisory, including the Company's unconsolidated affiliates, increased 12.2% over the prior year to $23.7 billion. Excluding assets under management and advisory for Gibraltar Private, assets under management increased 6.6% to $20.6 billion. Market action, or the general appreciation in the market prices of securities, resulted in an increase of $280 million in assets under management and advisory during the fourth quarter of 2005. Total assets under management and advisory had net inflows of $494 million, including Gibraltar Private which had $707 million of assets under management when acquired. Gibraltar Private had $757 million in assets under management and advisory as of December 31, 2005.

Operating expenses were $54.3 million for the fourth quarter of 2005, up 39.6% over the fourth quarter of 2004. The main drivers of operating expense growth were costs associated with operating expenses of the newly-acquired affiliates, incentive compensation, geographic expansion, and investments in new business initiatives. Operating expenses for Gibraltar Private and KLS were $12.1 million in the fourth quarter of 2005.

2005 Year End Results

For the year ended December 31, 2005, Boston Private reported total revenues of $263.3 million, a 33.8% increase from $196.8 million in 2004. Net income for 2005 was $46.3 million up 37.7% from $33.6 million in 2004.

The Company's net interest income increased 45.3% to $128.7 million in 2005 compared to $88.6 million in 2004. The increase was due to increased volume, which contributed $33.8 million, and rate increases which contributed $6.4 million. Excluding the impact of trust preferred interest expense, Boston Private's core net interest margin increased 44 basis points to 4.10% in 2005 compared to 3.66% in 2004. The net interest margin, including the impact of the trust preferred, was 3.88% in 2005, compared to 3.61% in 2004.

Investment management fee income for 2005 totaled $105.9 million, up 14.9% over $92.1 million in 2004. In Boston Private's wealth advisory business, fee income increased $11.2 million from 2004 to $19.1 million for 2005. The increase from the fourth quarter of 2004 benefited from $10.8 million of fee income in 2005 related to the acquisition of KLS.

Operating expenses were $181.8 million in 2005, up 30.6% over 2004. The main drivers of operating expense growth were costs associated with operating expenses of the newly-acquired affiliates, incentive compensation and investments in new business initiatives.

The Company benefited from positive operating leverage for the year. Revenues increased 33.8% in 2005 while operating expenses increased only 30.6% in 2005 resulting in pre-tax net income increasing by 41.7%.

Effective Tax Rate

Boston Private's effective tax rate for the fourth quarter was 36.6% and 37.1% for all of 2005.

Dividend Payment Continues

Concurrent with the release of the fourth quarter 2005 earnings, the Board of Directors of Boston Private Financial Holdings declared a cash dividend to shareholders of $0.08 per share, reflecting the quarterly earnings performance. The record date for this dividend is February 1, 2006 and the payment date is February 15, 2006.

Cash Earnings

Boston Private calculates its cash earnings by adjusting net income to exclude net amortization of intangibles, related tax benefits that result from purchase accounting, as well as the impact of certain non-cash share based compensation plans. Over and above GAAP earnings, the Company believes its cash earnings reports the additional value to shareholders generated by purchase accounting adjustments and the non-cash share based compensation plans. (A detailed reconciliation table is attached.)

Conference Call

Management will host a conference call to review the Company's financial performance and business developments on January 26, 2006 at 9 a.m. Eastern time. Interested parties may join the call by dialing 800-867-0731 and the password required is "Boston". The call will be simultaneously web cast and may be accessed on the Internet by linking through http://www.bostonprivate.com/, http://www.prnewswire.com/, or Yahoo! Finance. A continuous telephone replay will be available beginning at 11:30 a.m. Eastern time. The replay telephone number is 800-388-9064.

Boston Private Wealth Management Group

Boston Private Financial Holdings, Inc. is a wealth management firm that owns twelve independently-operated affiliate partners across the U.S. These partners comprise the Boston Private Wealth Management Group which provides private banking, financial planning/wealth advisory and investment management services to the high net worth marketplace, selected businesses and institutions. Through strategic acquisitions in demographically attractive geographic areas, the Company forms wealth management "clusters" that together deliver lifetime financial solutions on a local basis. The Company makes capital resources available to its affiliate partners and works with them on growth strategies, marketing, leadership development, compliance and technology.

This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Company's management uses these non- GAAP measures in its analysis of the Company's performance. These measures typically adjust GAAP performance measures to exclude the effects of charges and expenses related to the consummation of mergers and acquisitions, as well as excluding other significant gains or losses that are unusual in nature. Also included in these non-GAAP measures are net amortization of intangibles and tax benefits related to purchase accounting. Because these items and their impact on the Company's performance are difficult to predict, management believes that presentations of financial measures excluding the impact of these items provide useful supplemental information that is essential to a proper understanding of the operating results of the Company's businesses. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies.

Statements in this press release that are not historical facts are forward-looking statements as defined by United States securities laws. Forward-looking statements involve risks and uncertainties. These statements include, but are not limited to, prospects for long term financial performance, the impact on the Company's results of improved market conditions and prevailing and future interest rates, prospects for growth in balance sheet assets and assets under management and advisory 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 Boston Private's control and could cause actual results to differ materially from those set forth in the forward-looking statements. Factors that could cause actual results to differ materially from those set forth in the forward- looking statements include, among others, adverse conditions in the capital markets and the impact of such conditions on Boston Private's investment advisory activities; interest rate compression which may adversely impact net interest income; competitive pressures from other financial institutions which, together with other factors, may affect the Company's growth and financial performance; the effects of national and local economic conditions; and the risk that goodwill and intangibles recorded in the Company's financial statements will become impaired; as well as the other risks and uncertainties detailed in Boston Private's Annual Report on Form 10-K and other filings submitted to the Securities and Exchange Commission. Boston Private 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.

CONTACT: Robert J. Whelan Chief Financial Officer (617) 912-4220 Erica E. Smith Investor Relations (617) 912-3766 http://www.bostonprivate.com/ Dec. 31, 2005 Dec. 31, 2004 FINANCIAL DATA: Total Balance Sheet Assets $5,134,065 $3,273,193 Stockholders' Equity 533,590 321,227 Tangible Capital: Boston Private Bank & Trust 135,328 116,164 Borel Private Bank & Trust 75,812 59,242 First Private Bank & Trust 39,476 29,856 Gibraltar Private Bank & Trust 63,762 - Investment Securities 584,860 559,190 Goodwill 286,751 130,486 Intangible Assets 97,656 56,677 Commercial and Construction Loans 2,039,443 1,357,067 Residential Mortgage Loans 1,338,607 796,991 Home Equity and Other Consumer Loans 246,190 94,542 Total Loans 3,624,240 2,248,600 Loans Held for Sale 12,883 42,384 Allowance for Loan Losses and Off- Balance Sheet Risk 42,354 27,937 Non-performing Loans 7,900 1,137 Other Real Estate Owned - 377 Total Non-performing Assets 7,900 1,514 Deposits 3,748,141 2,386,368 Borrowings 703,379 474,171 Book Value Per Share $15.33 $11.61 Market Price Per Share $30.42 $28.17 ASSETS UNDER MANAGEMENT AND ADVISORY: Westfield Capital Management $8,325,000 $7,707,000 Boston Private Bank & Trust 2,310,000 2,010,000 Sand Hill Advisors 1,094,000 1,062,000 Boston Private Value Investors 867,000 860,000 RINET Company 1,129,000 1,051,000 Borel Private Bank & Trust 661,000 568,000 Dalton, Greiner, Hartman, Maher & Co. 3,259,000 3,353,000 KLS Professional Advisors Group 3,140,000 2,880,000 Gibraltar Private Bank & Trust 757,000 - Less: Inter-company Relationship (203,000) (185,000) Consolidated Affiliate Assets Under Management and Advisory $21,339,000 $19,306,000 Coldstream Capital Management 900,000 600,000 Bingham, Osborn, & Scarborough 1,415,000 1,167,000 Total Assets Under Management and Advisory $23,654,000 $21,073,000 FINANCIAL RATIOS: Stockholders' Equity/Total Assets 10.39% 9.81% Non-performing Loans/Total Loans 0.22% 0.05% Allowance for Loan Losses/Total Loans 1.04% 1.11% Allowance for Loan Losses and Off- Balance Sheet Risk/Total Loans 1.17% 1.24% Allowance for Loan Losses and Off- Balance Sheet Risk/Non-performing Assets 536.13% 1,845.24% Tangible Capital/ Tangible Assets 3.14% 4.34% Three Months Ended Twelve Months Ended Dec. 31 Dec. 31 Dec. 31 Dec. 31 OPERATING RESULTS: 2005 2004 2005 2004 Net Interest Income - on a Fully Taxable Equivalent Basis (FTE) $45,218 $26,542 $133,532 $92,683 FTE Adjustment 1,302 1,076 4,793 4,104 Net Interest Income 43,916 25,466 128,739 88,579 Investment Management Fees: Westfield Capital Management 12,668 11,755 48,878 43,829 Boston Private Bank & Trust 3,354 2,962 12,935 11,555 Sand Hill Advisors 1,522 1,530 6,171 5,682 Boston Private Value Investors 1,612 1,522 6,296 5,922 Borel Private Bank & Trust 956 789 3,495 2,937 Gibraltar Private Bank & Trust 1,369 - 1,369 - Dalton, Greiner, Hartman, Maher & Co. 6,640 6,687 26,729 22,222 Total Investment Management Fees 28,121 25,245 105,873 92,147 Wealth Advisory Fees: RINET Company 2,084 1,892 8,140 7,783 KLS Professional Advisors Group 2,848 - 10,782 - Other 61 29 164 115 Total Wealth Advisory Fees 4,993 1,921 19,086 7,898 Other Fees 1,516 2,031 6,278 5,352 Total Fees 34,630 29,197 131,237 105,397 Earnings in Equity Investments 503 804 1,556 1,019 Gain on Sale of Loans, Net 471 478 1,774 1,424 Gain / (Loss) on Sale of Investments, Net (20) - 20 373 Total Fees and Other Income 35,584 30,479 134,587 108,213 Total Revenue 79,500 55,945 263,326 196,792 Provision for Loan Losses 2,070 1,759 5,438 4,285 Salaries and Employee Benefits 34,611 26,340 118,897 93,218 Occupancy and Equipment 6,447 4,517 21,053 15,702 Professional Services 3,080 2,172 10,270 7,477 Marketing and Business Development 2,048 1,304 6,792 5,148 Contract Services and Processing 1,224 830 4,070 2,936 Amortization of Intangibles 3,018 1,388 7,634 4,664 Other 3,911 2,377 13,063 10,007 Total Operating Expense 54,339 38,928 181,779 139,152 Minority Interest 1,032 460 2,512 1,428 Income Before Income Taxes 22,059 14,798 73,597 51,927 Income Tax Expense 8,068 5,332 27,279 18,293 Net Income $13,991 $9,466 $46,318 $33,634 Three Months Ended Twelve Months Ended Dec. 31 Dec. 31 Dec. 31 Dec. 31 RECONCILIATION OF GAAP EARNINGS 2005 2004 2005 2004 TO ADJUSTED AND CASH EARNINGS: Net Income (GAAP Basis) $13,991 $9,466 $46,318 $33,634 Adjusted Net Income $13,991 $9,466 $46,318 $33,634 Cash Basis Earnings (1) Book Amortization of Purchased Intangibles, Net of Tax 1,641 680 3,982 2,251 Cash Benefit of Tax Deductions from Purchased Intangibles & Goodwill 1,032 821 4,129 3,259 Total Cash Basis Adjustment 2,673 1,501 8,111 5,510 Cash Basis Earnings $16,664 $10,967 $54,429 $39,144 Three Months Ended Twelve Months Ended Dec. 31 Dec. 31 Dec. 31 Dec. 31 2005 2004 2005 2004 PER SHARE DATA: (In thousands, except per share data) Calculation of Net Income for EPS: Net Income as reported and for basic EPS $13,991 $9,466 $46,318 $33,634 Interest on convertible trust preferred securities, net of tax 765 672 3,059 672 Net Income for diluted EPS $14,756 $10,138 $49,377 $34,306 Calculation of average shares outstanding: Weighted average basic shares (2) 34,219 27,280 29,425 27,313 Dilutive effect of: Stock Options and Stock Grants 1,338 904 912 875 Forward Agreement - 195 147 119 Convertible trust preferred securities 3,182 2,626 3,182 657 Dilutive potential common shares 4,520 3,725 4,241 1,651 Weighted average diluted shares 38,739 31,005 33,666 28,964 Earnings per Share: Basic $0.41 $0.35 $1.57 $1.23 Diluted $0.38 $0.33 $1.47 $1.18 RECONCILIATION OF GAAP EPS TO ADJUSTED AND CASH EPS: (on a Diluted Basis) Earnings Per Share (GAAP Basis) $0.38 $0.33 $1.47 $1.18 Eliminate Increase in Shares Outstanding - FAS 128 Revision (2) - - - $0.01 Adjusted Earnings Per Share $0.38 $0.33 $1.47 $1.19 Cash Basis Adjustment $0.07 $0.05 $0.24 $0.18 Cash Basis Earnings Per Diluted Share $0.45 $0.38 $1.71 $1.37 Three Months Ended Twelve Months Ended Dec. 31 Dec. 31 Dec. 31 Dec. 31 2005 2004 2005 2004 OPERATING RATIOS & STATISTICS: Return on Average Equity 10.64% 11.99% 11.95% 11.42% Return on Average Assets 1.10% 1.16% 1.20% 1.18% Net Interest Margin 4.00% 3.61% 3.88% 3.61% Core Net Interest Margin(3) 4.28% 3.77% 4.10% 3.66% Total Fees and Other Income/Total Revenue 44.76% 54.48% 51.11% 54.99% Efficiency Ratio 64.27% 67.35% 65.77% 67.90% Net Loans Charged-off / (Loan Recoveries) ($40) ($52) $46 $4 CASH OPERATING RATIOS: Return on Average Equity (4) 12.67% 13.90% 14.04% 13.30% Return on Average Assets (5) 1.31% 1.35% 1.41% 1.38% AVERAGE BALANCE SHEET: Three Months Ended Twelve Months Ended Dec. 31, Dec. 31, Dec. 31, Dec. 31, AVERAGE ASSETS: 2005 2004 2005 2004 Interest-Bearing Cash $13,150 $1,775 $6,546 $1,432 Federal Funds Sold and Other 287,272 166,721 170,870 114,564 U.S. Treasuries and Agencies 234,760 201,194 225,529 191,576 Municipal Securities 237,824 231,717 233,203 227,724 Corporate Bonds 35,895 30,442 32,486 40,305 Mortgage-Backed Securities 45,209 48,500 42,713 49,451 Stock in Federal Home Loan Banks 26,645 19,333 22,967 16,436 Commercial and Construction Loans 2,007,407 1,308,253 1,581,658 1,116,592 Residential Mortgage Loans 1,341,973 810,172 988,799 732,263 Home Equity and Other Consumer Loans 238,101 90,753 128,673 82,053 Total Earning Assets 4,468,236 2,908,860 3,433,444 2,572,396 Allowance for Loan Losses (36,640) (27,077) (29,744) (24,141) Goodwill 287,442 110,776 171,831 82,439 Intangible Assets 100,741 46,558 63,377 39,585 Other Assets 281,579 220,906 229,491 174,615 TOTAL AVERAGE ASSETS $5,101,358 $3,260,023 $3,868,399 $2,844,894 AVERAGE LIABILITIES AND STOCKHOLDERS' EQUITY: Savings Accounts $73,705 $36,721 $52,745 $32,325 NOW Accounts 354,639 220,992 263,222 211,501 Money Market Accounts 1,816,019 1,150,360 1,347,872 1,071,663 Certificates of Deposit 706,315 532,860 571,843 423,125 Total Interest-Bearing Deposits 2,950,678 1,940,933 2,235,682 1,738,614 Repurchase Agreements 105,290 84,175 100,362 76,784 FHLB Borrowings 343,887 258,135 304,529 243,957 Junior Subordinated Debentures 232,979 94,767 145,409 27,438 Other Borrowings 2,128 5,978 5,799 3,996 Total Interest-Bearing Liabilities 3,634,962 2,383,988 2,791,781 2,090,789 Non-interest Bearing Deposits 782,377 476,247 582,960 374,393 Other Liabilities 157,904 84,102 105,899 85,305 Total Liabilities 4,575,243 2,944,337 3,480,640 2,550,487 Stockholders' Equity 526,115 315,686 387,759 294,407 TOTAL AVERAGE LIABILITIES & STOCKHOLDERS' EQUITY $5,101,358 $3,260,023 $3,868,399 $2,844,894 Dec. 31, 2005 Sept. 30, 2005 FINANCIAL DATA: Total Balance Sheet Assets $5,134,065 $3,789,583 Stockholders' Equity 533,590 397,449 Tangible Capital: Boston Private Bank & Trust 135,328 129,854 Borel Private Bank & Trust 75,812 71,458 First Private Bank & Trust 39,476 37,276 Gibraltar Private Bank & Trust 63,762 - Investment Securities 584,860 540,235 Goodwill 286,751 132,246 Intangible Assets 97,656 48,424 Commercial and Construction Loans 2,039,443 1,586,875 Residential Mortgage Loans 1,338,607 880,041 Home Equity and Other Consumer Loans 246,190 91,071 Total Loans 3,624,240 2,557,987 Loans Held for Sale 12,883 8,232 Allowance for Loan Losses and Off- Balance Sheet Risk 42,354 31,795 Non-performing Loans 7,900 5,657 Other Real Estate Owned - - Total Non-performing Assets 7,900 5,657 Deposits 3,748,141 2,681,272 Borrowings 703,379 607,936 Book Value Per Share $15.33 $13.24 Market Price Per Share $30.42 $26.54 ASSETS UNDER MANAGEMENT AND ADVISORY: Westfield Capital Management $8,325,000 $8,374,000 Boston Private Bank & Trust 2,310,000 2,312,000 Sand Hill Advisors 1,094,000 1,087,000 Boston Private Value Investors 867,000 849,000 RINET Company 1,129,000 1,092,000 Borel Private Bank & Trust 661,000 653,000 Dalton, Greiner, Hartman, Maher & Co. 3,259,000 3,384,000 KLS Professional Advisors Group 3,140,000 3,030,000 Gibraltar Private Bank & Trust 757,000 - Less: Inter-company Relationship (203,000) (216,000) Consolidated Affiliate Assets Under Management and Advisory $21,339,000 $20,565,000 Coldstream Capital Management 900,000 875,000 Bingham, Osborn, & Scarborough 1,415,000 1,403,000 Total Unconsolidated Assets Under Management and Advisory $23,654,000 $22,843,000 FINANCIAL RATIOS: Stockholders' Equity/Total Assets 10.39% 10.49% Nonperforming Loans/Total Loans 0.22% 0.22% Allowance for Loan Losses/Total Loans 1.04% 1.11% Allowance for Loan Losses and Off- Balance Sheet Risk/Total Loans 1.17% 1.24% Allowance for Loan Losses and Off- Balance Sheet Risk/Non-performing Assets 536.13% 562.05% Tangible Capital/Tangible Assets 3.14% 6.01% Three Months Ended Dec. 31, 2005 Sept. 30, 2005 OPERATING RESULTS: Net Interest Income - on a Fully Taxable Equivalent Basis (FTE) $45,218 $31,219 FTE Adjustment 1,302 1,167 Net Interest Income 43,916 30,052 Investment Management Fees: Westfield Capital Management 12,668 13,226 Boston Private Bank & Trust 3,354 3,283 Sand Hill Advisors 1,522 1,523 Boston Private Value Investors 1,612 1,524 Borel Private Bank & Trust 956 896 Gibraltar Private Bank & Trust 1,369 - Dalton, Greiner, Hartman, Maher & Co. 6,640 6,931 Total Investment Management Fees 28,121 27,383 Wealth Advisory Fees RINET Company 2,084 2,031 KLS Professional Advisors Group 2,848 2,742 Other 61 51 Total Wealth Advisory Fees 4,993 4,824 Other Fees 1,516 1,430 Total Fees 34,630 33,637 Earnings in Equity Investments 503 548 Gain on Sale of Loans, Net 471 533 Gain / (Loss) on Sale of Investments, Net (20) - Total Fees and Other Income 35,584 34,718 Total Revenue 79,500 64,770 Provision for Loan Losses 2,070 1,728 Salaries and Benefits 34,611 29,278 Occupancy and Equipment 6,447 5,059 Professional Services 3,080 2,035 Marketing and Business Development 2,048 1,432 Contract Services and Processing 1,224 960 Amortization of Intangibles 3,018 1,539 Other 3,911 2,785 Total Operating Expense 54,339 43,088 Minority Interest 1,032 526 Income Before Income Taxes 22,059 19,428 Income Tax Expense 8,068 7,416 Net Income $13,991 $12,012 Three Months Ended Dec. 31, 2005 Sept. 30, 2005 RECONCILIATION OF GAAP EARNINGS TO ADJUSTED AND CASH EARNINGS: Net Income (GAAP Basis) $13,991 $12,012 Adjusted Net Income $13,991 $12,012 Cash Basis Earnings (1) Book Amortization of Purchased Intangibles, Net of Tax 1,641 780 Cash Benefit of Tax Deductions from Purchased Intangibles & Goodwill 1,032 1,032 Total Cash Basis Adjustment $2,673 $1,812 Cash Basis Earnings $16,664 $13,824 Three Months Ended Dec. 31, 2005 Sept. 30, 2005 PER SHARE DATA: (In thousands) Calculation of Net Income for EPS: Net Income as reported and for basic EPS $13,991 $12,012 Interest on convertible trust preferred securities, net of tax 765 765 Net Income for diluted EPS $14,756 $12,777 Calculation of average shares outstanding: Weighted average basic shares 34,219 27,954 Dilutive effect of: Stock Options and Stock Grants 1,338 789 Forward Agreement - 248 Convertible trust preferred securities 3,182 3,182 Dilutive potential common shares 4,520 4,219 Weighted average diluted shares 38,739 32,173 Earnings per Share: Basic $0.41 $0.43 Diluted $0.38 $0.40 RECONCILIATION OF GAAP EPS TO ADJUSTED AND CASH EPS: (on a Diluted Basis) Earnings Per Share (GAAP Basis) $0.38 $0.40 Adjusted Earnings Per Share $0.38 $0.40 Cash Basis Adjustment $0.07 $0.05 Cash Basis Earnings Per Diluted Share $0.45 $0.45 OPERATING RATIOS & STATISTICS: Return on Average Equity 10.64% 13.48% Return on Average Assets 1.10% 1.35% Net Interest Margin 4.00% 3.88% Core Net Interest Margin (3) 4.28% 4.06% Total Fees and Other Income/Total Revenue 44.76% 53.60% Efficiency Ratio 64.27% 64.06% Net Loans Charged-off / (Loan Recoveries) ($40) $10 (1) The Company defines Cash Basis Earnings as Adjusted Earnings, plus the amortization of the purchased intangibles (net of tax), plus the tax benefit on the portion of the purchase price which is deductible over a 15 year life. These tax savings are 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 Company uses certain non-GAAP financial measures, such as Cash Earnings, to provide information for investors to effectively analyze financial trends of ongoing business activities. (2) Due to a change that the Financial Accounting Standards Board ("FASB") made on March 31, 2004, additional shares of approximately 497,000 were included in average basic shares outstanding for the twelve months ending December 31, 2004 related to the Company's forward stock agreement. The Company amended the forward stock agreement on April 1, 2004 which eliminated the need to include the effect of the forward agreement in basic shares after that date. (3) The Company defines Core Net Interest Margin as Net Interest Margin excluding the interest expense on the Junior Subordinated Debentures. The Company utilizes Trust Preferred Securities to assist in the funding of acquisitions and believes it is useful to compare Net Interest Margin excluding the impact of this acquisition funding vehicle. (4) The Company calculates Return on Average Equity on a cash basis as Cash Basis Earnings divided by Average Equity. (5) The Company calculates Return on Average Assets on a cash basis as Cash Basis Earnings divided by Average Assets.

First Call Analyst: FCMN Contact: esmith@bostonprivate.com