<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
/X/ Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For quarterly period ended: MARCH 31, 1996
OR
/ / Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
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Commission File No: 0-17089
BOSTON PRIVATE BANCORP, INC.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
COMMONWEALTH OF MASSACHUSETTS 04-2976299
--------------------------------- -------------------
(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
TEN POST OFFICE SQUARE, BOSTON, MA 02109
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(Address of Principal Executive Offices)
(617) 556-1900
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(Issuer's Telephone Number, Including Area Code)
Not Applicable
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(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the Issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes ( X ) No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of April 30, 1996:
Common Stock - Par Value $1.00 5,803,004 shares
------------------------------ ----------------
(class) (outstanding)
<PAGE> 2
<TABLE>
BOSTON PRIVATE BANCORP, INC. AND SUBSIDIARIES
FORM 10-QSB
INDEX
<CAPTION>
PAGE NUMBER
-----------
<S> <C> <C>
Cover Page 1
Index 2
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis or
Plan of Operations 7-12
PART II - OTHER INFORMATION
Item 1 Legal Proceedings 13
Item 2 Changes in Securities 13
Item 3 Default upon Senior Securities 13
Item 4 Submission of Matters to a Vote of Security Holders 13
Item 5 Other Information 13
Item 6 Exhibits and Reports on Form 8-K 13
Signature Page 14
</TABLE>
2
<PAGE> 3
<TABLE>
BOSTON PRIVATE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
ASSETS:
Cash and due from banks $ 6,712 $ 8,695
Federal funds sold 2,600 500
Investment securities available for sale (amortized cost of $27,474 and
$22,106 at March 31, 1996 and December 31, 1995, respectively) 27,329 22,292
Investment securities held to maturity (market value of $9,757 and
$12,783 at March 31, 1996 and December 31, 1995, respectively) 9,797 12,809
Mortgage-backed securities available for sale (amortized cost of $119
at December 31, 1995) -- 119
Mortgage-backed securities held to maturity (market value of $30,551 and
$31,967 at March 31, 1996 and December 31, 1995, respectively) 30,820 31,933
Stock in Federal Home Loan Bank of Boston 3,317 3,317
Loans receivable:
Commercial 71,868 72,729
Residential mortgage 78,456 74,447
Home equity 8,273 7,783
Other 274 297
-------- --------
Total loans 158,871 155,256
Less allowance for possible loan losses (2,003) (1,942)
-------- --------
Net loans 156,868 153,314
Other real estate owned 245 245
Premises and equipment, net 1,146 1,174
Excess of costs over net assets acquired, net 4,309 4,390
Accrued interest receivable 1,801 1,694
Deferred income tax asset, net 966 847
Other assets 489 222
-------- --------
Total assets $246,399 $241,551
======== ========
LIABILITIES:
Deposits $174,779 $178,885
Securities sold under agreements to repurchase 11,544 3,798
Federal Home Loan Bank of Boston borrowings 39,462 38,143
Payable due to acquisition 1,513 2,017
Accrued interest payable 501 508
Other liabilities 745 796
-------- --------
Total liabilities 228,544 224,147
-------- --------
STOCKHOLDERS' EQUITY:
Common stock, $1.00 par value per share;
shares authorized: 18,000,000;
shares issued: 5,798,371 in 1996 and 5,756,704 in 1995 5,798 5,757
Additional paid-in capital 12,224 12,114
Accumulated deficit (40) (541)
Treasury stock: 15,117 shares in 1996 and 20,017 shares in 1995 (34) (45)
Unrealized gain (loss) on securities available for sale, net (93) 119
-------- --------
Total stockholders' equity 17,855 17,404
-------- --------
Total liabilities and stockholders' equity $246,399 $241,551
======== ========
</TABLE>
3
<PAGE> 4
<TABLE>
BOSTON PRIVATE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------------------
1996 1995
---------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C>
Interest and dividend income:
Commercial loans $ 1,707 $ 1,196
Residential mortgage loans 1,430 941
Home equity and other loans 178 159
Investment securities 507 589
Mortgage-backed securities 475 479
FHLB stock dividends 52 72
Federal funds sold 15 86
Deposits in banks 15 1
---------- ----------
Total interest and dividend income 4,379 3,523
---------- ----------
Interest expense:
NOW 49 52
Savings 32 54
Money market 657 344
Certificates of deposit 753 803
Federal funds purchased 43 --
Securities sold under agreements to
repurchase 82 51
FHLB borrowings 615 555
Payable due to acquisition 20 --
---------- ----------
Total interest expense 2,251 1,859
---------- ----------
Net interest income 2,128 1,664
Provision for possible loan losses 67 38
---------- ----------
Net interest income after provision for
possible loan losses 2,061 1,626
---------- ----------
Fees and other income:
Trust and investment management 733 174
Deposit account service charges 40 38
Gain (loss) on sale of loans 35 --
Gain (loss) on sale of investment securities 3 --
Gain (loss) on sale of mortgage-backed securities (3) --
Other 60 28
---------- ----------
Total fees and other income 868 240
---------- ----------
Operating expense:
Salaries and employee benefits 1,363 839
Occupancy 111 94
Equipment 87 61
Data processing 27 23
FDIC insurance premiums -- 76
Legal expense 49 53
Marketing 66 99
Amortization of intangibles 81 9
Other 391 293
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Total operating expense 2,175 1,547
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Income before income taxes 754 319
Income tax expense 253 --
---------- ----------
Net income $ 501 $ 319
========== ==========
Net income per share $ 0.08 $ 0.06
========== ==========
Weighted average common and common equivalent shares
outstanding 6,070,000 5,618,000
========== ==========
</TABLE>
4
<PAGE> 5
<TABLE>
BOSTON PRIVATE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------
1996 1995
---- ----
(IN THOUSANDS)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 501 $ 319
Adjustments to reconcile net income to net
cash from operating activities:
Depreciation and amortization 165 54
(Gain) loss on sale of loans (35) --
Provision for possible loan losses 67 38
Payments received on other real estate owned -- 12
Loans originated for sale (4,822) --
Proceeds from sale of loans 4,857 --
(Increase) decrease in:
Accrued interest receivable (107) 84
Other assets (267) (126)
Increase (decrease) in:
Accrued interest payable (7) 187
Other liabilities (51) (223)
-------- -------
Net cash provided (used) by operating
activities 301 345
-------- -------
Cash flows from investing activities:
Net decrease (increase) in fed funds sold (2,100) (5,050)
Investment securities available for sale:
Purchases (11,136) (3,013)
Sales 4,055 --
Maturities 1,719 2,000
Investment securities held to maturity:
Maturities 3,000 5,000
Mortgage-backed securities available for sale:
Sales 116 --
Mortgage-backed securities held to maturity:
Principal payments 1,107 520
Net decrease (increase) in loans (3,618) (6,362)
Recoveries on loans previously charged off 24 46
Capital expenditures (48) (328)
-------- -------
Net cash provided (used) by
investing activities (6,881) (7,187)
-------- -------
Cash flows from financing activities:
Net increase (decrease) in deposits (4,106) (2,097)
Net increase (decrease) in repurchase agreements 7,746 8,437
FHLB advances:
Proceeds 31,000 --
Repayments (29,681) (53)
Net increase (decrease) in payable due to acquisition (524) --
Proceeds from issuance of common stock 162 --
-------- -------
Net cash provided (used) by
financing activities 4,597 6,287
-------- -------
Net increase (decrease) in cash and due from banks (1,983) (555)
Cash and due from banks at beginning of year 8,695 4,581
-------- -------
Cash and due from banks at end of period $ 6,712 $ 4,026
======== =======
Supplementary Disclosures:
Cash paid during the period for interest $ 2,238 $ 1,674
Cash paid during the period for income taxes 237 --
Non-cash transactions:
Increase (decrease) in unrealized gain (loss)
on securities available for sale, net of
estimated income taxes (212) 178
</TABLE>
5
<PAGE> 6
BOSTON PRIVATE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The consolidated financial statements include the accounts of Boston Private
Bancorp, Inc. (the "Company") and its wholly-owned subsidiaries, Boston Private
Bank & Trust Company (the "Bank"), BPB Securities Corporation, BPB Securities
Corporation II, and Boston Private Asset Management Corporation. All significant
intercompany accounts and transactions have been eliminated in consolidation.
In preparing the financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the balance sheet and revenues and expenses for
the period. Actual results could differ from those estimates. Material estimates
that are particularly susceptible to change relate to the determination of the
allowance for possible loan losses and valuation of other real estate owned. In
connection with the determination of the allowance for possible loan losses and
the carrying value of other real estate owned, management obtains independent
appraisals for significant properties.
The unaudited interim consolidated financial statements of the Company have
been prepared in accordance with generally accepted accounting principles and
include all necessary adjustments, which in the opinion of management, are
required for a fair presentation of the results and financial condition of the
Company.
These interim financial statements should be read in conjunction with the
December 31, 1995 consolidated financial statements and accompanying notes
included in the Annual Report to Shareholders. The interim results of
consolidated operations are not necessarily indicative of the results for the
entire year.
(2) Earnings Per Share
The earnings per share calculation is based upon the weighted average number
of common shares and common share equivalents outstanding during the period.
(3) Reclassifications
Certain fiscal 1995 information has been reclassified to conform with the
1996 presentation.
6
<PAGE> 7
BOSTON PRIVATE BANCORP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATIONS
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
GENERAL
- -------
Boston Private Bancorp, Inc., (the "Company"), is a one-bank holding company
which holds all of the issued and outstanding shares of capital stock of Boston
Private Bank & Trust Company (the "Bank"), a Massachusetts chartered trust
company. Of the 18,000,000 shares of common stock authorized, par value $1.00,
5,783,254 shares of Boston Private Bancorp, Inc. common stock were issued and
outstanding at March 31, 1996.
The Bank pursues a "private banking" mission and is principally engaged in
providing banking, investment and fiduciary products to successful individuals,
their families and their businesses as well as to foundations and institutional
clients. The Bank offers a full range of banking and investment management
services to its domestic and international clientele. The Bank's deposit
services include checking and savings accounts with automated teller machine
("ATM") access, and cash management services through sweep accounts and
repurchase agreements. The Bank also offers commercial, residential mortgage,
home equity and consumer loans and credit card services. In addition, it
provides investment advisory and asset management services, securities custody
and safekeeping services, trust and estate administration and IRA and Keogh
accounts.
On July 31, 1995, the Company acquired substantially all of the assets and
assumed certain liabilities of the investment management business of Cunningham,
Henderson, and Papin Incorporated ("CH&P, Inc.") for a purchase price of
approximately $4.2 million, of which $2.1 million, consisting of $1.5 million in
cash and 166,667 shares of the Company's common stock, was paid at closing. The
balance of the purchase price is payable in semi annual installments over the
next two years, 75% in cash and 25% in the common stock of the Company. The
acquisition was accounted for as a purchase. Accordingly, the results of
operations of CH&P Inc. have been included with those of the Company subsequent
to the date of the acquisition.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
-- Liquidity. Liquidity is defined as the ability to meet current and future
financial obligations of a short-term nature. The Company further defines
liquidity as the ability to respond to the needs of depositors and borrowers as
well as to earnings enhancement opportunities in a changing marketplace. Primary
sources of liquidity consist of deposit inflows, loan repayments, borrowed
funds, maturity of investment securities and sales of securities from the
available for sale portfolio. These sources fund the Company's lending and
investment activities.
7
<PAGE> 8
Management is responsible for establishing and monitoring liquidity targets
as well as strategies and tactics to meet these targets. In general, the Company
maintains a high degree of liquidity. At March 31, 1996, cash, federal funds
sold and securities available for sale amounted to $36.6 million, or 14.9% of
total assets. This compares to $31.6 million, or 13.1% of total assets at
December 31, 1995. In general, the Bank maintains a liquidity target of 10% to
20% of total assets. The Bank is a member of the Federal Home Loan Bank of
Boston ("FHLB of Boston"), and as such has access to both short and long-term
borrowings. In addition, the Bank maintains a line of credit at the FHLB of
Boston as well as other lines of credit with several correspondent banks.
Management believes that the Bank has adequate liquidity to meet its
commitments.
In contrast to the Bank, the holding company maintains minimal liquidity
because substantially all of its assets consist of the stock of the Bank. The
holding company's primary potential sources of funds are dividends from the
Bank, issuance of additional common stock, and borrowings.
-- Capital Resources. Total stockholders' equity of the Company at March 31,
1996 was $17.9 million, as compared to $17.4 million at December 31, 1995. This
increase was the result of the Company's net income for the quarter of $501,000,
plus the issuance of common stock relating to the acquisition of CH&P Inc. and
the exercise of stock options, less the change in the unrealized gain (loss) on
securities available for sale, net of estimated income tax benefit.
The Bank is subject to a number of regulatory capital measures. At March 31,
1996, the Bank's Tier I leverage capital ratio stood at 5.66%, compared to 5.54%
at December 31, 1995. The Bank is also subject to a risk-based capital measure.
The risk-based capital guidelines include both a definition of capital and a
framework for calculating risk-weighted assets by assigning balance sheet assets
and off-balance sheet items to broad risk categories. According to these
standards, the Bank had a Tier I risk adjusted capital ratio of 10.27% and a
Total risk adjusted capital ratio of 11.52% at March 31, 1996. This compares to
a Tier I risk adjusted capital ratio of 10.31% and a Total risk adjusted capital
ratio of 11.54% at December 31, 1995. The minimum Tier I leverage, Tier I risk
adjusted, and Total risk adjusted capital ratios necessary to be classified for
regulatory purposes as a "well capitalized" institution are 5.00%, 6.00% and
10.00%, respectively. The Bank, therefore, is considered to be "well
capitalized."
BALANCE SHEETS
- --------------
-- Total Assets. Total assets increased $4.8 million, or 2.0%, to $246.4
million at March 31, 1996 from $241.6 million at December 31, 1995. An increase
in portfolio lending during the first three months of 1996 was the primary
reason for the change. The increase in total assets was primarily funded by
growth in customer repurchase agreements, which increased $7.7 million, or
203.9%.
-- Loans. Total loans were $158.9 million, or 64.5% of total assets, at
March 31, 1996, compared to $155.3 million, or 64.3% of total assets, at
December 31, 1995. This increase of $3.6 million, or 2.3%, was primarily
attributable to increased loan originations in the residential loan portfolio.
Residential mortgage loans increased $4.0 million, or 5.4%, while commercial
loans decreased $861,000, or 1.2%, and home equity and other loans increased
$467,000, or 5.8%. The Company continues its efforts to identify quality lending
opportunities.
8
<PAGE> 9
-- Investments. Total investments (consisting of federal funds sold,
investment securities, mortgage-backed securities, and stock in the FHLB of
Boston) totaled $73.9 million, or 30.0% of total assets, at March 31, 1996,
compared to $71.0 million, or 29.4% of total assets, at December 31, 1995. Of
the total investment portfolio at March 31, 1996, $27.3 million were securities
identified as available for sale. The available for sale portfolio carried a
total of $145,000 in net unrealized losses at March 31, 1996.
-- Deposits and Borrowings. Total deposits decreased $4.1 million, or
2.3%, during the first quarter of 1996, from $178.9 million, or 74.1% of total
assets, at December 31, 1995, to $174.8 million, or 70.9% of total assets, at
March 31, 1996. This decrease was primarily attributable to the level of demand
deposit balances declining during the first quarter of 1996. Total borrowings
(consisting of securities sold under agreements to repurchase ("repurchase
agreements"), and FHLB borrowings) increased $9.1 million, or 21.6%, during the
first three months of 1996. This increase was attributable to an increase in
repurchase agreements with cash management customers of the Company. Management
will from time to time take advantage of opportunities to fund asset growth with
borrowings, but on a long-term basis, the Company intends to replace a portion
of its borrowings with core deposits.
ASSET QUALITY
- -------------
<TABLE>
-- Non-Performing Assets. The following table sets forth information
regarding non-performing assets, restructured loans and delinquent loans 30-89
days past due as to interest or principal at the dates indicated.
<CAPTION>
MARCH 31, DECEMBER 31,
--------- ------------
1996 1995
---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Loans accounted for on a nonaccrual basis $ 710 $443
Loans past due 90 days or more, but still
accruing 346 194
------ ----
Total non-performing loans 1,056 637
Other real estate owned 245 245
====== ====
Total non-performing assets $1,301 $882
====== ====
Restructured loans $ -- $ --
Delinquent loans 30-89 days past due 1,456 304
Non-performing loans as a percent of gross
loans .66% .41%
Non-performing assets as a percent of total
assets .53% .37%
Delinquent loans 30-89 days past due as a
percent of gross loans .92% .20%
</TABLE>
At March 31, 1996, the Company had non-performing assets of $1.3 million,
which represented .53% of total assets. The Company's non-performing assets
consisted of three loans over 90 days past due and still accruing interest with
an aggregate principal balance of $346,000, six nonaccruing loans with an
aggregate principal balance of $710,000, and two OREO properties with total book
value of $245,000. The $419,000, or 65.8%, increase in non-performing loans,
from $637,000 at December 31, 1995, to $1.1 million at March 31, 1996, is
primarily attributable to two loans, totaling $560,000, which became
non-performers earlier in the quarter, but which are fully secured.
9
<PAGE> 10
Non-performing assets increased $419,000, or 47.5%, from $882,000 at December
31, 1995, to $1.3 million at March 31, 1996, as a result of the increase in
non-performing loans mentioned above. At both March 31, 1996 and December 31,
1995, the Company did not have any loans required to be disclosed as troubled
debt restructurings. The Company continues to evaluate the underlying collateral
and value of each of its non-performing assets and pursues the collection of all
amounts due. See "Allowance for Possible Loan Losses."
-- Delinquencies. At March 31, 1996, loans with an aggregate balance of $1.5
million were 30 to 89 days past due, an increase of $1.2 million, or 379.6%,
from $304,000 reported at December 31, 1995. Most of these loans are well
secured and management's success in keeping these borrowers current varies from
month to month.
-- Allowance for Possible Loan Losses. During the first three months of
1996, the Company made provisions to the allowance for possible loan losses
totaling $67,000 and had $6,000 in charge-offs net of recoveries, bringing the
balance in the allowance to $2,003,000, compared to $1,942,000 at December 31,
1995. The allowance, expressed as a percentage of total loans, was 1.26% as of
March 31, 1996, compared to 1.25% at December 31, 1995. The allowance for
possible loan losses was 189.7% of non-performing loans at March 31, 1996,
compared to 304.9% of non-performing loans at December 31, 1995.
While management evaluates currently available information in establishing
the allowance for possible loan losses, future adjustments to the allowance may
be necessary if economic conditions differ substantially from the assumptions
used in making the evaluations. In addition, various regulatory agencies, as an
integral part of their examination process, periodically review a financial
institution's allowance for possible loan losses. These agencies may require
additions to the allowances based on their own judgments about information
available to them at the time of their examination.
As the Company continues to be affected by changes in the risk
characteristics of the loan portfolio, levels of non-performing loans, trends in
delinquencies and charge-offs, and current economy, it will continue to evaluate
the adequacy of the allowance for possible loan losses. Notwithstanding these
future evaluations, management believes that the allowance for possible loan
losses as of March 31, 1996 is adequate based upon the information currently
available.
10
<PAGE> 11
STATEMENTS OF INCOME, THREE MONTHS ENDED MARCH 31, 1996 and 1995
- ----------------------------------------------------------------
-- Net Income. The Company recorded net income of $501,000, or $.08 per
share, for the three months ended March 31, 1996, compared to $319,000, or $.06
per share, for the same period in 1995. Revenues generated by increases in
investment management and lending were partially offset by increases in funding
costs and operating expense.
-- Net Interest Income. For the quarter ended March 31, 1996, net interest
income was $2.1 million, an increase of $464,000, or 27.9%, over the same period
in 1995. This increase was primarily attributable to an increase in the average
balance of earning assets, which was $30.3 million, or 15.1%, higher than during
the comparable period a year earlier. This increase in average earning assets
were funded in part by an increase in average interest bearing liabilities of
$25.9 million, or 14.9%.
-- Interest Income. Loans. Income on commercial loans was $1.7 million for
the three months ended March 31, 1996, compared to $1.2 million for the same
period in 1995. Income from residential mortgage loans was $1.4 million compared
to $941,000, and home equity and other loans was $178,000 compared to $159,000,
for the same periods, respectively. The average balances of commercial and
residential mortgage loans increased $21.6 million, or 42.3%, and $19.3 million,
or 33.7%, compared to the first quarter of 1995, respectively. Meanwhile, the
yields on commercial and residential mortgage loans increased 3 basis points, to
9.40%, and 90 basis points, to 7.47%, compared with the prior year's period,
respectively.
-- Interest Income. Investments. Total investment income decreased to $1.0
million during the quarter ended March 31, 1996, compared to $1.2 million during
the same period in 1995. The decrease in total investment income of $177,000, or
14.4%, was primarily attributable to a decrease in the average balance of
investments of $13.0 million, or 15.3%, partially offset by an increase of 5
basis points, to 5.82%, in the overall yield on investments.
-- Interest Expense. Deposits and Borrowings. Interest paid on deposits and
borrowings increased $392,000, or 21.1%, to $2.3 million for the three months
ended March 31, 1996, from $1.9 million for the same period during 1995. This
increase in the Company's interest expense reflects an increase in the average
balance of interest-bearing liabilities of $25.9 million, or 14.9%, between the
two periods and higher rates paid on money market deposits, and borrowings. The
overall yield on interest-bearing liabilities increased 23 basis points from
4.27% for the first quarter of 1995 to 4.50% for the first quarter of 1996.
-- Provision for Possible Loan Losses. The provision for possible loan
losses was $67,000 for the quarter ended March 31, 1996, compared to $38,000 for
the same period in 1995. Management evaluates several factors including new loan
originations, estimated charge-offs, and risk characteristics of the loan
portfolio when determining the provision for the quarter. Also see discussion
under "Balance Sheets -- Allowance for Possible Loan Losses."
-- Fees and Other Income. Fees and other income was $868,000 for the three
month period ending March 31, 1996, compared to $240,000 for the same period in
1995. Trust and investment management fees attributable to the acquisition of
CH&P, Inc. for the 1996 period totaled $483,000,
11
<PAGE> 12
there was no similar fees for the 1995 period. Additionally, gains from sales of
loans were $35,000 during the first quarter of 1996, compared to no gains during
the same period in 1995.
-- Operating Expense. Total operating expense for the first quarter of 1995
increased to $2.2 million, compared to $1.5 million for the same period in 1995.
This increase of $628,000, or 40.6%, in total operating expense was primarily
attributable to the addition of CH&P, Inc. on July 31, 1995, and the Company's
continued expansion in its lending and deposit products. Specifically, the
following expenses increased: 1) salary and benefit expense increased $524,000,
or 62.5%, 2) occupancy and equipment expense increased $43,000, or 27.7%, 3)
amortization of intangibles increased $72,000, or 800.0%, and 4) other operating
expense increased $98,000, or 33.4%. These increases were partially offset by a
decrease in FDIC insurance premiums of $76,000, or 100.0%, resulting from a
reduction in the premium assessment rate effective June of 1995.
-- Income Tax Expense. The Company became fully taxable for financial
statement purposes during the first quarter of 1996, having fully utilized its
remaining deferred tax asset valuation reserve during the fourth quarter of
1995. As a result, the Company's effective tax rate for financial statement
purposes was 33.6% during the first quarter of 1996, compared to 0.0% for the
first quarter of 1995. For the foreseeable future the Company anticipates
remaining fully taxable.
12
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In January, 1994, the Bank became aware of a dispute among various parties
involved in a transaction in which it had served as bank of deposit for certain
certificates stated to reflect debt obligations of a foreign bank.
In December, 1994, the party which allegedly purchased the certificates filed
a complaint in the United States District Court for the District of
Massachusetts alleging certain claims against numerous individuals and entities,
including the Bank and one of its former officers, arising out of the
transaction, and seeking equitable relief and damages. The Bank believes it has
valid defenses to any and all claims and other allegations of wrongdoing in
connection with the transaction. The plaintiffs counsel has advised the Bank
that the plaintiff has recovered a significant portion of its damages from other
persons involved in the transaction.
In August 1995, the Bank filed for summary judgment against the plaintiff's
claims. The plaintiff also filed a motion for partial summary judgment on one of
its claims. On March 19, 1996, the court granted the Bank's summary judgment
motion and denied the plaintiff's motion, resulting in the dismissal of all
claims against the Bank. The plaintiff is currently seeking reconsideration of
its motion, which the Bank is vigorously opposing.
ITEM 2. CHANGE IN SECURITIES
No changes in security holders' rights have taken place.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
No defaults upon senior securities have taken place.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS
No matters submitted to a vote of security holders.
ITEM 5. OTHER INFORMATION
No information to report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No information to report.
13
<PAGE> 14
BOSTON PRIVATE BANCORP, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BOSTON PRIVATE BANCORP, INC.
(Registrant)
May 8, 1996 /s/ Timothy L. Vaill
- ----------- ------------------------------
(Date) Timothy L. Vaill
President and Chief
Executive Officer
May 8, 1996 /s/ Albert R. Rietheimer
- ----------- ------------------------------
(Date) Albert R. Rietheimer
Senior Vice President and
Chief Financial Officer
14
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