Boston Private Reports First Quarter 2021 Results

First Quarter 2021 Highlights include:

• Net income of $10.7 million, or $0.13 per diluted share
• Return on average common equity (non-GAAP) of 4.9%
• Return on average tangible common equity (non-GAAP) of 5.6%
• Average total deposits of $8.8 billion, a 24% increase year-over-year
• Average total loans of $7.1 billion, a 1% increase year-over-year
• Total assets under management/advisory ("AUM") of $17.2 billion, a 19% increase year-over-year driven by favorable market action
• Total provision credit of $9.0 million

Boston Private Financial Holdings, Inc. (NASDAQ:BPFH) (the "Company" or "Boston Private") today reported first quarter 2021 Net income attributable to the Company of $10.7 million, compared to $25.0 million for the fourth quarter of 2020 and $0.8 million for the first quarter of 2020. First quarter 2021 Diluted earnings per share were $0.13, compared to $0.30 in the fourth quarter of 2021 and $0.01 in the first quarter of 2020.

"I am proud of the dedication and commitment shown by the Boston Private employees who continue to deliver exceptional client service and execute on our strategic objectives, while also preparing for our pending merger with SVB Financial Group," said Anthony DeChellis, CEO of Boston Private. "This quarter's financial results include transaction costs related to the pending merger with SVB Financial Group, a release from our allowance for loan losses, and continued strong deposit growth."

Announced Merger

As previously announced, the Company entered into a definitive merger agreement with SVB Financial Group ("SVB") pursuant to which SVB will acquire Boston Private. The transaction was unanimously approved by both companies' Boards of Directors and is expected to close in mid-2021, subject to the satisfaction of customary closing conditions, including receipt of customary regulatory approvals and approval by the shareholders of Boston Private.

The Company's financial results in the first quarter of 2021 were impacted by:

• Transaction costs of $10.7 million related to the proposed merger with SVB, or ($0.09) per diluted share on a tax-effected basis
• Gain of $2.4 million related to the revaluation of a receivable from the divestiture of former affiliate, Bingham, Osborn & Scarborough, LLC ("BOS"), or $0.02 per diluted share on a tax-effected basis
• Total provision credit of $9.0 million, including a provision credit for loan losses of $7.0 million and a credit for unfunded loan commitments of $2.0 million, or $0.08 per diluted share on a tax-effected basis

Net interest income for the first quarter of 2021 was $59.5 million, flat linked quarter and a 4% increase year-over-year. The year-over-year increase was primarily driven by $3.6 million of Paycheck Protection Program ("PPP") loan-related income recognized in the first quarter of 2021. The Small Business Administration ("SBA") forgave $75 million of PPP loans in the first quarter of 2021, which drove the accelerated recognition of PPP income.

Net interest margin decreased 7 basis points on a linked quarter basis to 2.45%. The decline was primarily driven by excess cash and investments balances and lower asset yields, partially offset by lower funding costs.

Total core fees and income for the first quarter of 2021 were $22.8 million, a 10% decrease linked quarter. The linked quarter decrease was primarily driven by lower swap fee income within Private banking fees and lower Investment management fees in the first quarter of 2021.

Total other income includes a gain of $2.4 million for the first quarter of 2021 related to the revaluation of the BOS receivable.

Total AUM was $17.2 billion as of March 31, 2021, a 1% increase linked quarter. The linked quarter increase was primarily driven by the impact of higher equity market values, partially offset by net outflows.

Total net flows were negative $408 million during the first quarter of 2021, driven by net flows of negative $388 million at DGHM and negative $20 million in the Wealth Management and Trust segment. New business into the Wealth Management & Trust segment was $231 million for the first quarter of 2021, compared to $297 million for the fourth quarter of 2020.

Total noninterest expense for the first quarter of 2021 was $75.9 million, a 31% increase linked quarter and a 25% increase year-over-year. The increase was primarily driven by $10.7 million of transaction costs within Merger costs expense related to the proposed merger with SVB. The linked quarter increase was also driven by seasonal compensation expense for bonuses and payroll taxes, and both the linked quarter and year-over-year increases were also driven by higher Information systems expense from technology initiatives placed in service.

Income Tax Expense

The Company's effective tax rate for the first quarter of 2021 was 36.3%. The effective tax rate is higher primarily due to the expected non-deductibility of certain transaction costs related to the proposed merger with SVB.

Average total loans, excluding PPP (non-GAAP) in the first quarter of 2021 decreased 1% linked quarter and decreased 3% year-over-year.

• Average Commercial and industrial loans decreased 10% year-over-year driven by lower revolving line usage
• Average Residential mortgage loans decreased 6% year-over-year, driven by the sale of $72 million of loans late in the third quarter of 2020 and slowed originations throughout 2020
• Average Commercial real estate loans increased 5% year-over-year, driven by increased loan balances attributable to the debt service reserve program and the conversion of two loans from construction to permanent financing during the fourth quarter of 2020
• Average PPP loans decreased 6% linked quarter. End-of-period PPP loans increased 12% linked quarter as $130 million of originations late in the quarter were partially offset by the SBA's forgiveness of $75 million of loans early in the first quarter of 2021

Average total deposits in the first quarter of 2021 increased 6% linked quarter and 24% year-over-year to $8.8 billion, driven by a combination of existing and new client balances.

The Company recorded a Total provision credit for credit losses of $9.0 million during the first quarter of 2021. The provision release was primarily driven by an improved economic forecast related to the current expected credit losses methodology and a change in the weighting of forecast scenarios used. The Allowance for loan losses as a percentage of Total loans, excluding PPP loans (non-GAAP), was 1.08% in the first quarter of 2021, compared to 1.19% in the fourth quarter of 2020.

Total nonaccrual loans as of March 31, 2021 were $25.8 million, an increase of $1.9 million, or 8%, on a linked quarter basis, primarily driven by one Commercial real estate relationship in New England and one Commercial and industrial relationship in Northern California.

Total criticized and classified loans as of March 31, 2021 were $314.4 million, a decrease of $3.6 million, or 1%, linked quarter. Classified loans increased 24% to $161.9 million in the first quarter of 2021, primarily driven by the downgrade of three Commercial real estate loans in New England and Northern California.

As of March 31, 2021:

• Residential loans on deferral totaled approximately $20 million, or 2.7% of total residential loans, compared to a peak of approximately $220 million, or 7% of total Residential loans, in the second quarter of 2020. This represents a decrease of 91% from the peak in the second quarter of 2020
• Commercial and industrial loans on deferral totaled approximately $6 million, or 0.5% of total Commercial and industrial loans, compared to a peak of approximately $125 million, or 13% of total Commercial and industrial loans, in the second quarter of 2020. This represents a decrease of 95% from the peak in the second quarter of 2020
• Borrowers with loans totaling $1.3 billion that qualified for and accepted the Commercial real estate debt service reserve program remain in the program, representing a total loan balance of approximately $70 million, or 2.7% of total Commercial real estate loans. The twelve month coverage period for debt service reserve balances will elapse in the second quarter of 2021

The Company's tangible book value per share increased 3% year-over-year to $9.61 in the first quarter of 2021.

Dividend Payments

Concurrent with the release of first quarter 2021 earnings, the Board of Directors of the Company declared a cash dividend payable to common shareholders of $0.06 per share. The record date for this dividend is May 7, 2021, and the payment date is May 21, 2021.

Non-GAAP Financial Measures

The Company uses certain non-GAAP financial measures to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector.

These non-GAAP financial measures include: return on average common equity; return on average tangible common equity; return on average assets; tangible book value per share; pre-tax, pre-provision income; tangible common equity / tangible assets; the efficiency ratio, excluding amortization of intangibles; net income/(loss) attributable to the Company, excluding notable items; total noninterest expense, excluding reserve for unfunded loan commitments; net income/(loss) attributable to the common shareholders, treasury stock method, excluding notable items; diluted earnings/(loss) per share, excluding notable items; average total loans, excluding PPP; and total loans, excluding PPP.

A detailed reconciliation table of the Company's GAAP to non-GAAP measures is included in the tables of this release and beginning on page 14 of the attached financial statements.

About Boston Private

Boston Private is a leading provider of integrated wealth management, trust and banking services to individuals, families, businesses and nonprofits.

For more than 30 years, Boston Private has delivered comprehensive advice coupled with deep technical expertise to help clients simplify their lives and achieve their goals. The firm offers the capabilities of a large institution with the superior service of a boutique firm to clients across the United States.

Boston Private is the corporate brand of Boston Private Financial Holdings, Inc. (NASDAQ:BPFH).

For more information, visit www.bostonprivate.com.

Forward-Looking Statements

Certain statements in this press release that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties. These statements include, among others, statements regarding our strategy; evaluations of interest rate trends and future liquidity; expectations as to changes in assets, deposits and results of operations; the impact of the COVID-19 pandemic; future operations; market position and financial position; and prospects, plans and objectives of management. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Company's control.

Forward-looking statements are based on the current assumptions and beliefs of management and are only expectations of future results. The Company's actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, the negative impacts and disruptions of the COVID-19 pandemic and measures taken to contain its spread on our employees, customers, business operations, credit quality, financial position, liquidity and results of operations; the failure to obtain our shareholder's approval to our proposed merger with SVB; the risk that a condition to closing of the proposed merger may not be satisfied; the risk that a regulatory approval that may be required for the proposed merger is not obtained or is obtained subject to conditions that are not anticipated; the effect of the announcement of the proposed merger on our ability to maintain relationships with our key partners, customers and employees, and on our operating results and business generally; changes in customer behavior; the possibility that future credits losses are higher than currently expected due to changes in economic assumptions, customer behavior or adverse economic developments; turbulence in the capital and debt markets; changes in interest rates; increases in loan defaults and charge-off rates; decreases in the value of securities and other assets; changes in loan loss reserves; decreases in deposit levels necessitating increased borrowing to fund loans and investments; competitive pressures from other financial institutions; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics; changes in regulation; reputational risk relating to the Company's participation in the Paycheck Protection Program and other pandemic-related legislative and regulatory initiatives and programs; risks that goodwill and intangibles recorded in the Company's financial statements will become impaired; the risk that the Company's deferred tax asset may not be realized; risks related to the identification and implementation of acquisitions, dispositions and restructurings; changes in assumptions used in making such forward-looking statements; and the other risks and uncertainties detailed in the Company's 2020 Annual Report on Form 10-K and updated by the Company's Quarterly Reports on Form 10-Q and other filings submitted to the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made. The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.