<PAGE> 1
As filed with the Securities and Exchange Commission on May 13, 1999
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended MARCH 31, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______ to _______.
Commission File Number: 0-17089
BOSTON PRIVATE FINANCIAL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
COMMONWEALTH OF MASSACHUSETTS 04-2976299
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
TEN POST OFFICE SQUARE
BOSTON, MASSACHUSETTS 02109
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (617) 912-1900
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15 (d) of the Securities Exchange Act of
1934 during 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, 1999:
<TABLE>
<CAPTION>
<S> <C>
Common Stock - Par Value $1.00 10,812,813 shares
- ------------------------------ -----------------
(class) (outstanding)
</TABLE>
================================================================================
<PAGE> 2
BOSTON PRIVATE FINANCIAL HOLDINGS, INC
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <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 Changes in Stockholders' Equity 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7 - 9
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 10 - 18
Item 3 Quantitative and Qualitative Disclosures about Market Risk 19
PART II - OTHER INFORMATION
Item 1 Legal Proceedings 19
Item 2 Changes in Securities and Use of Proceeds 19
Item 3 Defaults upon Senior Securities 19
Item 4 Submission of Matters to a Vote of Security Holders 19
Item 5 Other Information 19
Item 6 Exhibits and Reports on Form 8-K 19
Signature Page 20
</TABLE>
2
<PAGE> 3
BOSTON PRIVATE FINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
--------- ------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C>
ASSETS:
Cash and due from banks $ 17,608 $ 12,924
Federal funds sold 7,000 11,000
Investment securities available for sale (amortized
cost of $61,204 and $53,996, respectively) 60,904 54,102
Mortgage-backed securities available for sale (amortized
cost of $7,550 and $11,840, respectively) 7,551 11,909
Loans receivable:
Commercial 169,401 154,940
Residential mortgage 184,878 173,810
Home equity 19,724 19,866
Other 302 335
--------- ---------
Total loans 374,305 348,951
Less allowance for loan losses (4,641) (4,386)
--------- ---------
Net loans 369,664 344,565
Stock in the Federal Home Loan Bank of Boston 4,718 4,718
Premises and equipment, net 3,567 3,627
Excess of cost over net assets acquired, net 3,229 3,424
Management fees receivable 3,244 3,288
Accrued interest receivable 2,565 2,405
Other assets 4,100 5,285
--------- ---------
Total assets $ 484,150 $ 457,247
========= =========
LIABILITIES:
Deposits $ 363,686 $ 334,852
Securities sold under agreements to repurchase 10,026 6,241
FHLB borrowings 71,322 76,329
Accrued interest payable 1,178 651
Other liabilities 4,032 6,883
--------- ---------
Total liabilities 450,244 424,956
--------- ---------
STOCKHOLDERS' EQUITY:
Common stock, $1.00 par value per share;
authorized: 18,000,000 shares
issued: 10,812,613 shares in 1999 and 10,747,744
shares in 1998 10,813 10,748
Additional paid-in capital 13,045 12,680
Retained earnings 10,572 9,246
Stock subscriptions receivable (332) (495)
Accumulated other comprehensive income (loss) (192) 112
--------- ---------
Total stockholders' equity 33,906 32,291
--------- ---------
Total liabilities and stockholders' equity $ 484,150 $ 457,247
========= =========
</TABLE>
3
<PAGE> 4
BOSTON PRIVATE FINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-----------------------------
1999 1998
------------- ------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C>
Interest and dividend income:
Commercial loans $ 3,525 $ 3,076
Residential mortgage loans 3,056 2,348
Home equity and other loans 379 332
Investment securities 610 570
Mortgage-backed securities 169 266
FHLB stock dividends 76 64
Federal funds sold 132 86
Deposits in banks 28 40
------------ ------------
Total interest and dividend income 7,975 6,782
------------ ------------
Interest expense:
Savings and NOW 111 102
Money market 1,540 1,139
Certificates of deposit 1,109 1,065
Federal funds purchased 38 39
Securities sold under agreements to repurchase 79 52
FHLB borrowings 1,072 1,101
Other short-term borrowings -- 14
------------ ------------
Total interest expense 3,949 3,512
------------ ------------
Net interest income 4,026 3,270
Provision for loan losses 238 284
------------ ------------
Net interest income after provision for loan losses 3,788 2,986
------------ ------------
Fees and other income:
Investment management and trust 4,207 3,740
Equity in earnings of partnerships 90 205
Deposit account service charges 69 51
Gain on sale of loans 44 39
Gain on sale of investment securities 46 55
Other 104 55
------------ ------------
Total fees and other income 4,560 4,145
------------ ------------
Operating expense:
Salaries and employee benefits 4,258 3,826
Occupancy 371 329
Equipment 217 157
Professional services 622 368
Marketing 143 94
Business development 168 128
Amortization of intangibles 70 81
Other 399 351
------------ ------------
Total operating expense 6,248 5,334
------------ ------------
Income before income taxes 2,100 1,797
Income tax expense 649 609
------------ ------------
Income before cumulative effect of change in
accounting principle 1,451 1,188
Cumulative effect of change in accounting principle 125 --
------------ ------------
Net income $ 1,326 $ 1,188
============ ============
Per share data:
Basic earnings per share:
Income before cumulative effect of change in
accounting principle $ 0.13 $ 0.11
Cumulative effect of change in accounting principle (0.01) --
------------ ------------
Net income $ 0.12 $ 0.11
============ ============
Diluted earnings per share:
Income before cumulative effect of change in
accounting principle $ 0.13 $ 0.11
Cumulative effect of change in accounting principle (0.01) --
------------ ------------
Net income $ 0.12 $ 0.11
============ ============
Average common shares outstanding 10,777,918 10,671,213
============ ============
Average diluted shares outstanding 11,117,998 11,081,198
============ ============
</TABLE>
4
<PAGE> 5
BOSTON PRIVATE FINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER
COMMON PAID-IN RETAINED STOCK COMPREHENSIVE
STOCK CAPITAL EARNINGS SUBSCRIPTIONS INCOME (LOSS) TOTAL
-------- --------- -------- ------------- ------------- --------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 $ 10,641 $ 12,140 $ 3,800 $ (669) $ (23) $ 25,935
Net income -- -- 1,188 -- -- 1,188
Other comprehensive
income, net:
Change in unrealized gain
(loss) on securities
available for sale -- -- -- -- (62) (62)
--------
Total other comprehensive
income 1,126
Stock options exercised 44 315 -- -- -- 359
Stock subscription payments -- -- -- 165 -- 165
-------- -------- -------- -------- -------- --------
Balance at March 31, 1998 10,552 11,909 3,122 (681) (137) 27,585
Balance at December 31, 1998 10,748 12,680 9,246 (495) 112 32,291
Net income -- -- 1,326 -- -- 1,326
Other comprehensive income,
net:
Change in unrealized gain
(loss) on securities
available for sale -- -- -- -- (304) (304)
--------
Total other comprehensive
income 1,022
Proceeds from issuance of
47,769 shares of common stock 48 328 -- -- -- 376
Stock options exercised 17 37 -- -- -- 54
Stock subscription payments -- -- -- 163 -- 163
-------- -------- -------- -------- -------- --------
Balance at March 31, 1999 $ 10,813 $ 13,045 $ 10,572 $ (332) $ (192) $ 33,906
======== ======== ======== ======== ======== ========
</TABLE>
5
<PAGE> 6
BOSTON PRIVATE FINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1999 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,326 $ 1,188
Adjustments to reconcile net income to net cash from
operating activities:
Depreciation and amortization 430 292
Gain on sale of loans (44) (39)
Gain on sale of investment securities (46) (55)
Provision for loan losses 238 284
Distributed (undistributed) earnings of
partnership investments 1,738 (205)
Loans originated for sale (5,487) (5,495)
Proceeds from sale of loans 5,531 5,534
(Increase) decrease in:
Accrued interest receivable (160) (132)
Investment management fees receivable 44 (548)
Other assets (382) (535)
Increase (decrease) in:
Accrued interest payable 527 56
Other liabilities (2,851) 160
-------- --------
Net cash provided (used) by operating activities 864 505
-------- --------
Cash flows from investing activities:
Net decrease (increase) in fed funds sold 4,000 (20,250)
Investment securities available for sale:
Purchases (40,444) (20,480)
Sales 27,105 14,583
Maturities 6,040 2,880
Mortgage-backed securities available for sale:
Sales 3,387 --
Principal payments 895 --
Investment securities held to maturity:
Purchases -- (874)
Maturities -- 1,400
Mortgage-backed securities held to maturity:
Principal payments -- 2,028
Net decrease (increase) in loans (25,247) (3,309)
Purchase of FHLB stock -- (516)
Recoveries on loans previously charged off 24 2
Capital expenditures (145) (329)
-------- --------
Net cash provided (used) by investing activities (24,385) (24,865)
-------- --------
Cash flows from financing activities:
Net increase (decrease) in deposits 28,834 21,383
Net increase (decrease) in repurchase agreements 3,785 4,274
Net increase (decrease) in federal funds purchased -- (13,255)
FHLB advances:
Proceeds 3,629 24,180
Repayments (8,636) (14,292)
Net increase (decrease) in other short-term borrowings -- (517)
Proceeds from stock subscriptions receivable 163 165
Proceeds from issuance of common stock 430 359
-------- --------
Net cash provided (used) by financing activities 28,205 22,297
-------- --------
Net increase (decrease) in cash and due from banks 4,684 (2,063)
Cash and due from banks at beginning of year 12,924 12,361
-------- --------
Cash and due from banks at end of period $ 17,608 $ 10,298
======== ========
Supplementary disclosures of cash flow information:
Cash paid during the period for interest $ 3,422 $ 3,455
Cash paid during the period for income taxes 313 700
Supplementary disclosures of non-cash activities:
Transfer of loans to other real estate owned -- 42
</TABLE>
6
<PAGE> 7
BOSTON PRIVATE FINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The consolidated financial statements of Boston Private Financial Holdings,
Inc. (the "Company") include the accounts of the Company and its wholly-owned
subsidiaries, Boston Private Bank & Trust Company (the "Bank"), and Boston
Private Investment Management, Inc. ("BPIM"). The Bank's consolidated financial
statements include the accounts of its wholly-owned subsidiaries, BPB Securities
Corporation, Boston Private Asset Management Corporation, and Boston Private
Preferred Capital Corporation. BPIM's consolidated financial statements include
the accounts of its wholly-owned subsidiary, Westfield Capital Management
Company ("Westfield"). 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 loan losses. In connection with the determination of the allowance
for loan losses, 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 of a normal recurring nature, which in the
opinion of management, are required for a fair presentation of the results and
financial condition of the Company. The interim results of consolidated
operations are not necessarily indicative of the results for the entire year.
The information in this report should be read in conjunction with the
consolidated financial statements and accompanying notes included in the
December 31, 1998 Annual Report to Shareholders. Certain fiscal 1998 information
has been reclassified to conform with the 1999 presentation.
(2) EARNINGS PER SHARE
Basic EPS excludes dilution and is computed by dividing income available to
common stockholders by the weighted average number of common shares outstanding
during the period. Diluted EPS reflects the potential dilution that could occur
if securities or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the entity. The earnings per share calculation is
based upon the weighted average number of common shares and common share
equivalents outstanding during the period. Stock options, when dilutive, are
included as common stock equivalents using the treasury stock method.
The following table is a reconciliation of the numerators and denominators
of basic and diluted earnings per share computations for the three months ended
March 31:
<TABLE>
<CAPTION>
1999 1998
------------------------------ ------------------------------
Per Per
Share Share
Income Shares Amount Income Shares Amount
------- ------- ------ ------- ------- ------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
BASIC EPS
Net Income $1,326 10,778 $0.12 $1,188 10,671 $0.11
===== =====
EFFECT OF DILUTIVE SECURITIES
Stock Options -- 340 -- 410
------ ------ ------ ------
DILUTED EPS
------ ------- ----- ------- ------ -----
Net Income $1,326 11,118 $0.12 $ 1,188 11,081 $0.11
====== ======= ===== ======= ====== =====
</TABLE>
7
<PAGE> 8
BOSTON PRIVATE FINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(3) BUSINESS SEGMENTS
Management Reporting
The Company has two reportable segments, the Bank and Westfield. The
financial performance of the Company is managed and evaluated by business
segment. The segments are managed separately because each business is a company
with different clients, employees, systems, risks, and marketing strategies.
Description of Business Segments
The Bank pursues a "private banking" business strategy and is principally
engaged in providing banking, investment and fiduciary products to high net
worth individuals, their families and businesses in the greater Boston area and
New England and, to a lesser extent, Europe and Latin America. The Bank offers
its clients a broad range of basic deposit services, including 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. In
addition, it provides investment advisory and asset management services,
securities custody and safekeeping services, trust and estate administration and
IRA and Keogh accounts. The Bank's investment management emphasis is on
large-cap equity and actively managed fixed income portfolios.
Westfield serves the investment management needs of high net worth
individuals and institutions with endowments or retirement plans in the greater
Boston area, New England, and other areas of the U.S. Westfield specializes in
growth equity portfolios with a particular focus on identifying and managing
small and mid-cap equity positions. It also acts as the managing general partner
for three limited partnerships, one invests primarily in technology stocks,
another invests primarily in small capitalization equities and a third, started
in June 1998, invests primarily in midcap equities.
Measurement of Segment Profit and Assets
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. Revenues, expenses, and assets
are recorded by each segment, and separate financial statements are reviewed by
management. In addition to direct expenses, each business segment is allocated a
share of holding company expenses based on the segment's percentage of
consolidated net income.
Reconciliation of Reportable Segment Items
The following tables are a reconciliation of the revenues, net income,
assets, and other significant items of reportable segments as of and for the
quarters ended March 31, 1999 and 1998.
<TABLE>
<CAPTION>
1999
-------------------------------------------------------------
BANK WESTFIELD OTHER INTERSEGMENT TOTAL
--------- --------- --------- ------------ --------
(in thousands)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues from External Customers:
Net Interest Income $ 4,026 $ 31 $ -- $ (31) $ 4,026
Non-Interest Income 2,052 2,508 -- -- 4,560
-------- ------- ------ --------- --------
Total Revenues 6,078 2,539 -- (31) 8,586
Provision for Loan Losses 238 -- -- -- 238
Non-Interest Expense 4,440 1,933 -- -- 6,373
Income Taxes 401 248 -- -- 649
-------- ------- ------ --------- --------
Segment Profit $ 999 $ 358 $ -- $ (31) $ 1,326
-------- ------- ------ ---------- --------
BALANCE SHEET DATA:
Total Segment Assets $480,673 $ 3,821 $1,805 $ (2,149) $484,150
======== ======= ====== ========= ========
</TABLE>
8
<PAGE> 9
BOSTON PRIVATE FINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
1999
-------------------------------------------------------------
BANK WESTFIELD OTHER INTERSEGMENT TOTAL
--------- --------- --------- ------------ --------
(in thousands)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues from External Customers:
Net Interest Income $ 3,277 $ -- $ 2 $ (9) $ 3,270
Non-Interest Income 1,415 2,730 -- -- 4,145
-------- ------- ------ --------- --------
Total Revenues 4,692 2,730 2 (9) 7,415
Provision for Loan Losses 284 -- -- -- 284
Non-Interest Expense 3,451 1,883 -- -- 5,334
Income Taxes 262 347 -- -- 609
-------- ------- ------ --------- --------
Segment Profit $ 695 $ 500 $ 2 $ (9) $ 1,188
-------- ------- ------ --------- --------
BALANCE SHEET DATA:
Total Segment Assets $388,862 $ 3,805 $ 488 $ (574) $392,581
======== ======= ====== ========= ========
</TABLE>
(4) RECENT ACCOUNTING DEVELOPMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS 133, "Accounting for Derivative Instruments and Hedging Activities." This
statement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, (collectively referred to as "derivatives") and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the balance sheet and measure those instruments at fair
market value. Under this statement, an entity that elects to apply hedge
accounting is required to establish at the inception of the hedge the method it
will use for assessing the effectiveness of the hedging derivative and the
measurement approach for determining the ineffective aspect of the hedge. This
statement is effective for all fiscal quarters of fiscal years beginning after
June 15, 1999. This statement will not have a material effect on the Company's
consolidated financial statements.
9
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 1999
This quarterly report contain certain statements that may be considered
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. The Company's actual results could differ materially from those
projected in the forward-looking statements as a result of, among other factors,
changes in loan defaults and charge-off rates, reduction in deposit levels
necessitating increased borrowing to fund loans and investments, changes in
interest rates, fluctuations in assets under management and other sources of fee
income, the impact of year 2000 issues on the Company, its clients and its
vendors, changes in assumptions used in making such forward-looking statements,
as well as the factors listed under "Risk Factors and Factors Affecting Forward
Looking Statements", in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998.
GENERAL
Boston Private Financial Holdings, Inc. (the "Company") is incorporated
under the laws of the Commonwealth of Massachusetts and is registered with the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board")
as a bank holding company under the Bank Holding Company Act of 1956, as amended
(the "BHCA"). On July 1, 1988, the Company became the parent holding company of
Boston Private Bank & Trust Company (the "Bank"), a trust company chartered by
the Commonwealth of Massachusetts and insured by the Federal Deposit Insurance
Corporation (the "FDIC"). Effective April 22, 1998, the Company changed its name
from Boston Private Bancorp, Inc. to Boston Private Financial Holdings, Inc.
On October 31, 1997, the Company acquired Westfield Capital Management
Company Inc. ("Westfield"), a Massachusetts corporation engaged in providing a
range of investment management services to individual and institutional clients,
in exchange for 3,918,367 newly issued shares of the Company's common stock.
Concurrent with the acquisition, the Company formed a subsidiary, Boston Private
Investment Management, Inc., as a holding company for Westfield. The acquisition
was accounted for as a "pooling of interests." Accordingly, the current and
prior period results of operations of the Company have been restated to reflect
the results of operations on a consolidated basis.
The Company conducts substantially all of its business through its
wholly-owned operating subsidiaries, the Bank and Westfield. The Company's and
the Bank's principal office is located at Ten Post Office Square, Boston,
Massachusetts, and Westfield is located at One Financial Center, Boston,
Massachusetts.
The Bank pursues a "private banking" business strategy and is principally
engaged in providing banking, investment and fiduciary products and services to
high net worth individuals, their families and businesses in the greater Boston
area and New England and, to a lesser extent, Europe and Latin America. The Bank
offers its clients a broad range of basic deposit services, including 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 personal loans. In
addition, it provides investment advisory and asset management services,
securities custody and safekeeping services, trust and estate administration and
IRA and Keogh accounts.
Westfield serves the investment management needs of high net worth
individuals and institutions with endowments or retirement plans in the greater
Boston area, New England, and other areas of the U.S. Westfield specializes in
growth equity portfolios with a particular focus on identifying and managing
small and mid-cap equity positions. It also acts as the managing general partner
for three limited partnerships, one invests primarily in technology stocks,
another invests primarily in small capitalization equities and a third, started
in June 1998, invests primarily in midcap equities.
10
<PAGE> 11
FINANCIAL CONDITION
TOTAL ASSETS Total assets increased $26.9 million, or 5.9% from $457.2
million at December 31, 1998 to $484.2 million at March 31, 1999. This
increase is primarily due to continued loan growth funded by deposit balances.
INVESTMENTS Total investments (consisting of cash, federal funds sold,
investment securities, mortgage-backed securities, and stock in the FHLB of
Boston) totaled $97.8 million, or 20.2% of total assets, at March 31, 1999,
compared to $94.7 million, or 20.7% of total assets, at December 31, 1998. Funds
from the sale and maturity of $36.5 million of investment securities and
mortgage-backed securities were primarily reinvested in municipal bonds.
Management periodically evaluates investment alternatives to properly manage the
overall balance sheet. The timing of sales and reinvestments is based on various
factors, including management's evaluation of interest rate trends and loan
demand.
The following table is a summary of investment and mortgage-backed
securities available for sale as of March 31, 1999 and December 31, 1998:
<TABLE>
<CAPTION>
Unrealized
Amortized ----------------- Market
Cost Gains Losses Value
---------- ------- ------ ---------
<S> <C> <C> <C> <C>
AT MARCH 31, 1999
U.S. Government and agencies $ 28,134 $ 3 $ (278) $ 27,859
Municipal bonds 33,070 71 (96) 33,045
Mortgage-backed securities 7,550 26 (25) 7,551
========== ====== ====== =========
Total investments $ 68,754 $ 100 $ (399) $ 68,455
========== ====== ====== =========
AT DECEMBER 31, 1998
U.S. Government and agencies $ 35,074 $ 10 $ (34) $ 35,050
Municipal bonds 18,922 132 (2) 19,052
Mortgage-backed securities 11,840 83 (14) 11,909
========== ====== ====== =========
Total investments $ 65,836 $ 225 $ (50) $ 66,011
========== ====== ====== =========
</TABLE>
LOANS Total loans increased $25.4 million, or 7.3%, during the first
quarter of 1999 from $349.0 million, or 76.3% of total assets, at December 31,
1998, to $374.3 million, or 77.3% of total assets, at March 31, 1999. Both the
commercial and residential mortgage loan portfolios experienced significant
growth due to the strong local economy and low interest rate environment.
Interest rates affect both the level of new loan originations and refinances or
paydowns of existing loans. During the first quarter of 1999, interest rates
were at fairly stable, low levels, and demand for new residential and commercial
loans and refinances was strong. Commercial loans increased $14.5 million, or
9.3%, and residential mortgage loans increased $11.1 million, or 6.4%, during
the first quarter of 1999 as a result of net new loan originations.
RISK ELEMENTS The following table sets forth information regarding
non-performing loans, non-performing assets, and delinquent loans 30-89 days
past due as to interest or principal at the dates indicated.
<TABLE>
<CAPTION>
MARCH 31, 1999 DECEMBER 31, 1998
-------------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Loans accounted for on a nonaccrual basis $ 636 $ 565
Loans past due 90 days or more, but
still accruing -- --
------ ------
Total non-performing loans 636 565
Other real estate owned -- --
====== ======
Total non-performing assets $ 636 $ 565
====== ======
Delinquent loans 30-89 days past due 3,703 3,307
====== ======
</TABLE>
11
<PAGE> 12
The Company discontinues the accrual of interest on a loan when the
collectibility of principal or interest is in doubt. In certain instances, loans
that have become 90 days past due may remain on accrual status if the value of
the collateral securing the loan is sufficient to cover principal and interest
and the loan is in the process of collection.
Total non-performing assets increased by $71,000, or 12.6% during the first
quarter of 1999, however the percentage of non-performing assets to total assets
remained fairly stable at 0.13%. 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.
At March 31, 1999, loans with an aggregate balance of $3.7 million, or
0.99% of total loans, were 30 to 89 days past due, an increase of $396,000, or
12.0%, from $3.3 million, or 0.95% of total loans, reported at December 31,
1998. Most of these loans are adequately secured and management's success in
keeping these borrowers current varies from month to month.
ALLOWANCE FOR LOAN LOSSES The allowance for loan losses is established
through a charge to operations. When management believes that the collectibility
of a loan's principal balance is unlikely, the principal amount is charged
against the allowance. Recoveries on loans which have been previously charged
off are credited to the allowance as received.
The allowance for loan losses is determined using a systematic analysis and
procedural discipline based on historical experience, product types and
industry benchmarks. The allowance is segregated into three components;
"general", "specific" and "unallocated". The general component is determined by
applying coverage percentages to groups of loans based on risk ratings and
product types. A system of periodic loan reviews is performed to individually
assess the inherent risk and assign risk ratings to each loan. Coverage
percentages applied are determined based on industry practice and management's
judgment. The specific component is established by allocating a portion of the
allowance for loan losses to individual classified loans on the basis of
specific circumstances and assessments. The unallocated component supplements
the first two components based on management's judgment of the effect of
current and forecasted economic conditions on the borrowers' abilities to repay,
an evaluation of the allowance for loan losses in relation to the size of the
overall loan portfolio, and consideration of the relationship of the allowance
for loan losses to non-performing loans, net charge-off trends, and other
factors. While this evaluation process utilizes historical and other objective
information, the classification of loans and the establishment of the allowance
for loan losses relies to a great extent on the judgment and experience of
management.
While management evaluates currently available information in establishing
the allowance for 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 loan losses. Such agencies may require the financial
institution to recognize additions to the allowance based on their judgments
about information available to them at the time of their examination.
The following table is an analysis of the Bank's allowance for loan losses
for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1999 1998
---------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Ending gross loans $ 374,305 $ 279,779
========== =========
Allowance for loan losses, beginning of period $ 4,386 $ 3,645
Provision for loan losses 238 284
Charge-offs (7) (376)
Recoveries 24 2
---------- ---------
Allowance for loan losses, end of period $ 4,641 $ 3,555
========== =========
</TABLE>
12
<PAGE> 13
DEPOSITS AND BORROWINGS The Company experienced an increase in total
deposits of $28.8 million, or 8.6%, during the first quarter of 1999, from
$334.9 million, or 73.2% of total assets, at December 31, 1998, to $363.7
million, or 75.1% of total assets, at March 31, 1999. This increase was most
pronounced in certificates of deposit $100,000 or greater, and savings accounts.
The increase in savings accounts was primarily due to the Bank acting as agent
for client funds on a temporary basis.
The following table shows the composition of the Company's deposits at
March 31, 1999 and December 31, 1998:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Demand deposits $ 44,517 $ 47,766
NOW 36,689 35,735
Savings 28,344 4,235
Money market 164,038 164,626
Certificates of deposit under $100,000 29,169 29,874
Certificates of deposit $100,000 or greater 60,929 52,616
--------- ---------
Total $ 363,686 $ 334,852
========= =========
</TABLE>
Total borrowings (consisting of securities sold under agreements to
repurchase ("repurchase agreements"), federal funds purchased, FHLB borrowings
and other short-term borrowings) decreased by $1.2 million or 1.5%, during the
first three months of 1999. This decrease was attributable to paydowns of FHLB
borrowings, partially offset by an increase in repurchase agreements with cash
management customers of the Bank. 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.
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 investment management fees, deposit inflows,
loan repayments, borrowed funds, and maturity and sales of investment
securities. These sources fund the Company's lending and investment activities.
Management is responsible for establishing and monitoring liquidity targets
as well as strategies to meet these targets. At March 31, 1999, cash, federal
funds sold and securities available for sale amounted to $93.1 million, or 19.2%
of total assets of the Company. This compares to $89.9 million, or 19.7% of
total assets, at December 31, 1998.
In general, the Bank maintains a liquidity target of 10% to 20% of total
assets. The Bank is a member of the FHLB of Boston and as such has access to
both short and long-term borrowings of up to $149 million at the current time.
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 for the foreseeable
future.
Westfield's primary source of liquidity consists of investment management
fees that are collected on a quarterly basis. At March 31, 1999 Westfield had
working capital of approximately $1.9 million. Management believes that
Westfield has adequate liquidity to meet its commitments for the foreseeable
future.
The Company's primary sources of funds are dividends from its subsidiaries,
issuance of its Common Stock and borrowings. Management believes that the
Company has adequate liquidity to meet its commitments for the foreseeable
future.
CAPITAL RESOURCES Total stockholders' equity of the Company at March 31,
1999 was $33.9 million, as compared to $32.3 million at December 31, 1998. This
increase was the result of the Company's net income for the quarter of $1.3
million, plus the exercise of stock options, less the change in accumulated
other comprehensive income.
13
<PAGE> 14
The following table presents actual capital amounts and regulatory capital
requirements as of March 31, 1999 and December 31, 1998:
<TABLE>
<CAPTION>
TO BE WELL CAPITALIZED
FOR CAPITAL ADEQUACY PURPOSES UNDER PROMPT CORRECTIVE
ACTUAL ACTION PROVISIONS
------------------------------- ------------------------------- ----------------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
--------------- --------------- --------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
AS OF MARCH 31, 1999:
Total risk-based capital
Company $ 34,548 11.78% $ 23,462 > 8.0% $ 29,328 > 10.0%
Bank 30,592 10.56 23,181 8.0 28,976 10.0
Tier I risk-based
Company 30,870 10.53 11,731 4.0 17,597 6.0
Bank 26,957 9.30 11,590 4.0 17,386 6.0
Tier I leverage capital
Company 30,870 6.60 18,706 4.0 23,383 5.0
Bank 26,957 5.82 18,513 4.0 23,141 5.0
AS OF DECEMBER 31, 1998:
Total risk-based capital
Company $ 32,185 11.77% $ 21,873 > 8.0% $ 27,341 > 10.0%
Bank 29,157 10.87 21,452 8.0 26,815 10.0
Tier I risk-based
Company 28,755 10.52 10,936 4.0 16,405 6.0
Bank 25,792 9.62 10,726 4.0 16,089 6.0
Tier I leverage capital
Company 28,755 6.57 17,509 4.0 21,886 5.0
Bank 25,792 5.96 17,318 4.0 21,647 5.0
</TABLE>
YEAR 2000 READINESS DISCLOSURE
Scope and Overview. In 1996, the Company formed a Year 2000 project team
to identify information technology and non-information technology systems,
procedures, and practices that require modification or replacement. The Year
2000 problem concerns the inability of computer-based systems, including among
others, computer hardware, embedded chips, and computer software programs, to
recognize properly and process date-sensitive information involving 20th and
21st century dates. Data processing for the Company's major operating systems
(investment management, custody, loans and deposits) is conducted through third
party vendors using on-site computer interfaces. Inventory and Year 2000
readiness assessment of all information technology and non-information
technology systems and applications has been completed and all third party
vendors who service the Company have been contacted. Efforts to bring the major
operating systems, and certain outsourced applications, into compliance with
Year 2000 requirements have or will be accomplished primarily through the
installation of updated or replacement hardware or programs developed by third
parties. In addition the status of all Company facilities and all significant
third-party providers of goods and services to the Company has been assessed.
State of Readiness. The Company's Year 2000 Readiness Program contains a
number of discrete segments, including Awareness and Assessment, Project
Planning, Remediation, User Acceptance Test Plans, Unit Testing, Commercial,
Personal, Contingency Plans for Information Systems and Contingency Plans for
Business Continuation. Awareness and Assessment, Project Planning for all
aspects and User Acceptance Test Plans for mission critical systems have been
completed. Mission critical systems are defined by the Company as those vital to
the successful
14
<PAGE> 15
continuance of core business activities. Contingency Planning for all mission
critical information technology systems and for Business Continuation has been
completed and will be updated periodically during 1999.
The Company relies on several third party service providers for key
business processes. It continues to work closely with these companies to monitor
the progress of their Year 2000 efforts. The Company's Year 2000 project team
has contacted all material service providers to discuss and assess their Year
2000 readiness. In addition, the Company is seeking verbal and written
verification from its material third party service providers as to their Year
2000 readiness. The Company began Year 2000 testing with material third party
service providers during the third quarter of 1998, and plans to complete
testing by June 30, 1999. This schedule continues to track in line with the
Company's overall Year 2000 project plan.
The Remediation phase, wherein non-compliant software and hardware are
either modified or replaced, was substantially completed by December 31, 1998
for mission critical applications and by March 31, 1999 for non-mission critical
applications. The Company has yet to identify any operating system which appears
unlikely to be Year 2000 compliant or for which a suitable alternative cannot be
implemented. The Company expects to complete User Acceptance Testing for mission
critical information technology and non-information technology systems by June
30, 1999.
The initial portion of the Commercial phase, which includes the
evaluation of credit risk stemming from problems borrowers may have in resolving
their own Year 2000 issues, has been completed; however, monitoring of the
remediation efforts of high risk customers will be ongoing. During the
monitoring stage the Company is taking steps designed to reduce any increased
potential credit risk as a result of borrowers' Year 2000 issues. Assessment of
Year 2000 risk has been incorporated into the loan underwriting process. During
this phase the Company is also evaluating investments made on behalf of
investment management and trust clients and in the Company's own investment
portfolio to determine risk stemming from problems securities issuers may have
in resolving their own Year 2000 issues. Also encompassed in this phase, are
in-process evaluation, assessment and monitoring of the state of readiness of
the Company's funds providers and the capital markets. The Personal phase is
largely focused on customer communications as to the state of the Company's Year
2000 readiness. Initial communications have been distributed and the process is
ongoing.
Risks of Year 2000 Issues. The Company's businesses are substantially
dependent upon its data processing software and hardware systems, and on its
ability to process information. If the Company failed to be Year 2000 compliant,
as compared to its competitors, there could be an adverse effect on the
Company's business. In addition, since the Company is regulated by various
regulatory agencies of state and federal banking authorities, failure to be Year
2000 compliant could subject the Company to formal supervisory or enforcement
actions, which could have an adverse impact on the Company's business.
Since the Company relies on third parties for software and other
support, there are risks that the Company's operations could be disrupted by
adverse developments affecting the operations of these third parties. Such risks
include, among others, an inability to process and underwrite loan applications,
to credit deposits and withdrawals from deposit accounts, to credit loan
payments or track delinquencies, to properly reconcile and record daily activity
or to engage in normal banking activities. The Company continues to discuss
these matters with, obtain written certification from, and test the systems of
third party service providers as to Year 2000 compliance. However, there can be
no assurance that any potential impact associated with incompatible systems
after December 31, 1999 would not have a material adverse effect on the
Company's business, financial condition or results of operation.
Additionally, if those commercial borrowers whose operations depend
heavily on automated systems experience Year 2000 compliance problems affecting
their ability to repay, the Company's financial condition and results of
operations could be adversely affected by requirements to record additional loan
loss provision. Furthermore, the Company faces financial risk from its fund
providers as the Year 2000 problem may produce some deposit contraction forcing
a change to alternative and higher costing funding sources. Finally, to the
extent that certain utility and communication services utilized by the Company
face Year 2000 problems, the Company's operations could be disrupted.
Contingency Plans. The Company believes that, with modifications to
existing systems and conversions to new systems, the Year 2000 problem will not
pose significant operational problems for the Company's systems as so
15
<PAGE> 16
modified and converted. The Company expects that the necessary modifications
will be implemented prior to the Year 2000, although there can be no assurance
that this will be the case. In the event that modifications are not completed
prior to the Year 2000, the Company has developed contingency plans. However,
there can be no assurance that these plans will fully mitigate any failures or
problems. Furthermore, there may be certain mission critical third party
services where alternative arrangements are limited or unavailable.
Expenses. Year 2000 Readiness Program expenses are absorbed within
normal spending levels. The Company upgrades its hardware and associated
software and invests in new information technology systems as part of its
ongoing operations. Neither the upgrades, nor new investments made to date
through March 31, 1999, have been accelerated due to the Year 2000 Readiness
Program. Management currently estimates that out-of-pocket costs related to the
Year 2000 Readiness Program will be less than $100,000. The Company's credit
risk associated with borrowers may increase to the extent that borrowers fail to
adequately address Year 2000 issues. As part of the Company's Year 2000 project,
existing loans have been evaluated to identify and monitor loans to those
borrowers with the highest Year 2000 risk.
The Company currently expects that the total aggregate expenses to
address the Year 2000 issue will not be material to the Company's consolidated
results of operations, although as the Company proceeds with its implementation
plan, there may be additional unforeseen costs, which may be significant.
The preceding "Year 2000 Readiness Disclosure" discussion contains
various forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1933. These forward-looking statements represent the
Company's beliefs or expectations regarding future events. When used in the
"Year 2000 Readiness Disclosure" discussion, the words "believes," "expects,"
"estimates," and similar expressions are intended to identify forward-looking
statements. Forward-looking statements include, without limitation, the
Company's expectations as to when it will complete the modification and testing
phases of its Year 2000 project plan as well as its Year 2000 contingency plans;
its estimated cost of achieving Year 2000 readiness; and the Company's belief
that its internal systems will be Year 2000 compliant in a timely manner. All
forward-looking statements involve a number of risks and uncertainties that
could cause the actual results to differ materially from the projected results.
Factors that may cause these differences include, but are not limited to, the
availability of qualified personnel and other information technology resources;
the ability to identify and remediate all date sensitive lines of computer code
or to replace embedded computer chips in affected systems or equipment; and the
actions of governmental agencies or other third parties with respect to Year
2000 problems.
16
<PAGE> 17
RESULTS OF OPERATIONS
NET INCOME. The Company recorded net income of $1.3 million, or $0.12 per
diluted share, for the quarter ended March 31, 1999. This represents an 11.6%
increase over the net income of $1.2 million, or $0.11 per diluted share, for
the same period in 1998. During the quarter ended March 31, 1999, the Company
implemented an accounting change that resulted in a non-recurring charge of
$125,000. Excluding the impact of this non-recurring charge, net income would
have been $1.4 million , or $0.13 per diluted share, an increase of 22.1% over
last year.
NET INTEREST INCOME. For the quarter ended March 31, 1999, net interest
income was $4.0 million, an increase of $756,000, or 23.1%, over the same period
in 1998. This increase was primarily attributable to an increase of $90.8
million, or 25.5%, in the average balance of earning assets. The Company's net
interest margin was relatively flat at 3.65% for the first quarter of 1999,
compared to 3.67% for the same period last year.
INTEREST INCOME. During the first three months of 1999, interest income was
$8.0 million, an increase of $1.2 million, or 17.6%, over the same period in
1998. Interest income on commercial loans increased 14.6% to $3.5 million for
the three months ended March 31, 1999, compared to $3.1 million for the same
period in 1998. Interest income from residential mortgage loans increased 30.2%
to $3.1 million compared to $2.3 million, and home equity and other loans
increased 14.2% to $379,000 compared to $332,000, for the same periods,
respectively. These increases were primarily due to an increase in loan volume,
partially offset by a decrease in yield. The average balance of commercial loans
increased 25.6% while the average rate decreased 8.7%, or 81 basis points to
8.51% for the quarter ended March 31, 1999. The average balance of residential
mortgage loans increased 36.1%, while the average rate decreased 4.3%, or 31
basis points to 6.92% for the same period, and the average balance of home
equity and other loans increased 24.3%, while the average rate decreased 8.7%,
or 69 basis points to 7.56%.
Total investment income decreased $11,000, or 1.1%, to $1.0 million for the
quarter ended March 31, 1999, compared to $1.0 million for the same period in
1998. This decrease was primarily attributable to a reduction in the average
yield on investments of 42 basis points, or 7.3%, partially offset by an
increase in average balances.
INTEREST EXPENSE. Interest paid on deposits and borrowings increased
$437,000, or 12.4%, to $3.9 million for the three months ended March 31, 1999,
from $3.5 million for the same period during 1998. This increase in the
Company's interest expense reflects an increase in the average balance of
interest-bearing liabilities of $78.1 million, or 25.3% between the two periods,
partially offset by a 9.5% decrease in the average cost of interest-bearing
liabilities from 4.55% for the first quarter of 1998, to 4.12% for the first
quarter of 1999.
PROVISION FOR LOAN LOSSES. The provision for loan losses was $238,000 for
the quarter ended March 31, 1999, compared to $284,000 for the same period in
1998. Management evaluates several factors including new loan originations,
estimated charge-offs, and risk characteristics of the loan portfolio when
determining the provision for loan losses. These factors include the level and
mix of loan growth, the level of non-accrual and delinquent loans, and the level
of charge-offs and recoveries. Also see discussion under "Financial Condition
- -Allowance for Loan Losses." Net recoveries were $17,000 during the first
quarter of 1999, compared to $374,000 of net charge-offs for the same period in
1998.
FEES AND OTHER INCOME. Fees and other income increased $415,000, or 10.0%
to $4.6 million for the three month period ending March 31, 1999, compared to
$4.1 million for the same period in 1998. The majority of fee income is
attributable to advisory fees earned on assets under management. These fees
increased $467,000, or 12.5% to $4.2 million for the first quarter of 1999
compared to $3.7 million for the same period in 1998. This increase is primarily
due to a 6.5% increase in assets under management from $2.5 billion on March 31,
1998 to $2.7 billion on March 31, 1999.
Deposit account service fees have increased $18,000, or 35.3%, to $69,000
for the first quarter of 1999 as a result of an increase in the number of
deposit accounts. Gain on sale of loans has increased $5,000 to $44,000 due to a
higher volume of fixed rate loans sold in the secondary market. Other fee income
increased $49,000 to $104,000 due to a higher level of non-amortized loan fees.
17
<PAGE> 18
OPERATING EXPENSE. Total operating expense for the first quarter of 1999
increased $914,000, or 17.1% to $6.2 million compared to $5.3 million for the
same period in 1998. This increase in total operating expense was primarily
attributable to the Company's continued growth and expansion. The Company has
experienced a 23.3% increase in total assets, and a 23.4% increase in the number
of employees from March 31, 1998 to March 31, 1999. In April, 1998, the Company
opened a new banking office in Wellesley, Massachusetts.
Salaries and benefits, the largest component of operating expense,
increased $432,000, or 11.3%, to $4.3 million for the quarter ended March 31,
1999, from $3.8 million for the same period in 1998. This increase was due to a
23.4% increase in the number of employees, normal salary increases, and the
related taxes thereon.
Occupancy and equipment expense increased $102,000, or 21.0%, to $588,000
for the first quarter of 1999, from $486,000 for the same period last year. This
increase was primarily attributable to higher depreciation expense as a result
of the Company's continued investments in technology, and the occupancy expenses
related to the new banking office in Wellesley, Massachusetts which was opened
in April 1998.
Professional services include outsourced data processing and custody
expense, legal fees, consulting fees, and other professional services such as
audit and tax preparation. These expenses increased $254,000, or 69.0% as a
result of legal and consulting expenses incurred for strategic projects, and
increased service and volume related charges for data processing and custody.
Marketing expenses increased $49,000, or 52.1%, to $143,000 for the first
quarter of 1999 as a result of ongoing advertising designed to increase the
visibility of the Company and its products and services. The Company also
experienced a $40,000, or 31.3% increase in business development expense as a
result of an increase in the number of employees and new business activity.
Other expenses include supplies, telephone, postage, publications and
subscriptions, and other miscellaneous business expenses. These expenses have
increased $48,000, or 13.7% to $399,000, primarily as a result of increased
business volume and an increase in the number of employees.
INCOME TAX EXPENSE. The Company recorded income tax expense of $649,000 for
the first quarter of 1999 as compared to $609,000 for the same period last year.
The effective tax rate was 30.9% and 34.0% for the two periods, respectively.
The decrease in the Company's effective tax rate is a result of a tax saving
strategy implemented during the first quarter of 1999.
18
<PAGE> 19
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
For information related to this item, see the Company's December 31, 1998
Form 10-K, Item 6 - Interest Rate Sensitivity and Market Risk. No material
changes have occurred since that date.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For information related to this item, see the Company's December 31, 1998
Form 10-K. No material changes have occurred since that date.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
No changes in security holders' rights have taken place.
ITEM 3. DEFAULTS 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
Exhibits.
Exhibit 27.1 Financial Data Schedule
No reports on Form 8-K were filed during the three-month period ended March
31, 1999.
19
<PAGE> 20
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 FINANCIAL HOLDINGS, INC.
(Registrant)
MAY 13, 1999 /s/ TIMOTHY L. VAILL
- ------------ --------------------------------------
Timothy L. Vaill
Chairman and Chief
Executive Officer
MAY 13, 1999 /s/ WALTER M. PRESSEY
- ------------ --------------------------------------
Walter M. Pressey
Executive Vice President and
Chief Financial Officer
20
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 17,608
<INT-BEARING-DEPOSITS> 2,376
<FED-FUNDS-SOLD> 7,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 68,455
<INVESTMENTS-CARRYING> 68,754
<INVESTMENTS-MARKET> 68,455
<LOANS> 374,305
<ALLOWANCE> (4,641)
<TOTAL-ASSETS> 484,150
<DEPOSITS> 363,686
<SHORT-TERM> 10,026
<LIABILITIES-OTHER> 5,210
<LONG-TERM> 71,322
0
0
<COMMON> 10,813
<OTHER-SE> 23,093
<TOTAL-LIABILITIES-AND-EQUITY> 484,150
<INTEREST-LOAN> 6,960
<INTEREST-INVEST> 1,015
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 7,975
<INTEREST-DEPOSIT> 2,760
<INTEREST-EXPENSE> 3,949
<INTEREST-INCOME-NET> 4,026
<LOAN-LOSSES> 238
<SECURITIES-GAINS> 46
<EXPENSE-OTHER> 6,248
<INCOME-PRETAX> 2,100
<INCOME-PRE-EXTRAORDINARY> 2,100
<EXTRAORDINARY> 0
<CHANGES> 125
<NET-INCOME> 1,326
<EPS-PRIMARY> 0.12
<EPS-DILUTED> 0.12
<YIELD-ACTUAL> 7.26
<LOANS-NON> 636
<LOANS-PAST> 3,703
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,386
<CHARGE-OFFS> 7
<RECOVERIES> 24
<ALLOWANCE-CLOSE> 4,641
<ALLOWANCE-DOMESTIC> 4,641
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
