Title: Boston%20Private:%20Long-Term%20Value%20Creation
1Boston PrivateLong-Term Value Creation
Jonathan H. Parker President, Western Region
Robert J. Whelan Chief Financial Officer
2Forward Looking Statements
- Statements in this presentation that are not
historical facts are forward-looking statements
within the meaning of the Private Securities
Litigation Reform Act of 1995 that involve risks
and uncertainties. These factors include, among
others, strategic growth rates, the strength of
the company's business, the quality of the
companys loan portfolio, changes in the interest
rate environment, adverse conditions in the
capital markets and the impact of such conditions
on Boston Privates asset management activities,
competitive pressures from other financial
institutions, the risk that goodwill and
intangibles recorded in the Companys financial
statements will become impaired, and risks
related to the identification and implementation
of acquisitions, as well as the other risks and
uncertainties detailed in Boston Private's Annual
Report on Form 10-K and other filings submitted
to the Securities and Exchange Commission.
Boston Private does not undertake any obligation
to update any forward-looking statement to
reflect circumstances or events that occur after
the date the forward-looking statements are made.
3Agenda
- Overview
- Strategy
- Results
- Future
- Conclusion
4Overview
5Boston Privates Mission To provide wealth
management solutions to successful people, their
families, private companies and selected
institutions through trusted relationships that
help preserve, grow and transfer assets over the
clients financial lifecycle.
6Corporate Profile
Geography
Balances
AUM/advisory 33 billion Bank assets 6
billion Loans 4 billion Deposits 4
billion
- Six regions
- 13 affiliates
- 41 offices
- 1,060 employees
People
Economics
Revenues 345 million Net income 54
million EPS GAAP 1.43 Cash 1.82
Market cap 1 billion
- Experienced team in the field
- Shared values and culture
- Key Driver client service
7Wealth Management Members
Private Banking
Wealth Advisory
Investment Management
8Primary Focus High Net Worth Market
Preserve, grow and transfer assets. . .
Tax Strategies
Financial Planning
Philanthropy
Jumbo Mortgages
Estate Planning
Business Loans
Investment Management
Private Banking
Trust Services
. . . and create a unique customer experience
9Corporate Leadership Team
Extensive experience across business disciplines
Executive Title Years Previous
Tim Vaill Chairman CEO 35 The Boston Company
Walt Pressey President 35 The Boston Company
Jon Parker President, Western Region 30 Edgar, Dunn Consulting
Jay Cromarty President, Eastern Region 20 State Street Global Advisors
Megan Chambers General Counsel 20 Ropes Gray, Loomis Sayles
Bob Whelan Chief Financial Officer 20 MFS Investment Management
Katie Kearney Corporate Development 10 Lesavoy Financial Planning
10Strategy
- Capitalizing on a Unique Business Model
11Boston Privates Strategic Vision To build a
national wealth management franchise that is
broadly recognized ? particularly among the newly
affluent--as the preferred place to have
financial assets managed, and to generate an
above average total return to our shareholders
over the long-term
12How are we different?
Enabled by
Guided by
Targeted Market Research
Foundation of HC Support
Capital Stewardship
Strategic Acquisitions
UniqueBusinessModel
Sustainable Organic Growth
Diversification Focus
In - Market Business Expansion
Adding Distribution Channels
Balanced Affiliate Management
13Targeted Market Research
Focus on HNW demographic and private companies
HNW Investable Assetsand Related Fee Income
Percent of Millionaires Who Own Private Companies
8.4 Annually
Source CapGemini World Wealth Report 2005.
Source VIP Forum
14Strategic Acquisitions
Follow intellectual and investment capital
Intellectual Capital
Investment Capital
Business Formation
Wealth Accumulation
Infrastructure Support
Attractive Regions For Acquisitions
15In - Market Business Expansion
- Fund expansion and growth in numerous ways
- Local tie-in acquisitions
- Encino, Kanon Bloch Carre, CHP
- Experienced team lift-outs with clients and AUM
- New office development
- Hingham, Los Altos, Naples, New York
- Aggressive marketing and sales programs
- Advertising campaigns, sales training
16Adding Distribution Channels
Diversify and expand business growth via
sales/delivery systems
Local
National
Wealth Advisory
PrivateBanking
InvestmentManagement
- Small platform, high-touch environments
- Firms embedded in local communities
- Centers-of-influence
- National intermediaries
- Broker/Dealers
- Institutional consultants
- Managed accounts
- Sub-advisory and SMA
17Foundation of Support
Value added by the holding company
- Financial Strength
- Access to public capital
- Co-investing for business growth
- Consolidated balance sheet
- Liquidity for principals
- Intellectual Capital
- Market research
- Strategic advice and counsel
- Legal, compliance, HR
- Leadership/succession planning
- Communications Network
- Exchange of best practices
- Professional forums
- Internet/Intranet development
- Entrepreneurial Culture
- Consultative advisor
- Safety net enables risk taking
- Support autonomy
18Capital Stewardship
Efficient cash management and capital deployment
External Capital
Capital Users
Capital Generators
Holding Company
Dividends to Shareholders
19Diversification Focus
Enables sustainable non-volatile returns
Banking Activity
AUM By Client Type
Revenue By Business Type
DEPOSITS 4.1B
Corporate 3
Wealth Advisory8
Sub-Advisory15
Foundations Endowments11
NOW 9
CDs 21
High NetWorth 48
InvestmentManagement39
ERISA /Public23
Private Banking53
DDAs 19
MMDA 51
AUM By Investment Style
Revenue By Geography
LOANS 4.3B
Consumer Home Equity 6
Commercial 58
S. California 8
Balanced 14
New England 48
Equity (Value) 31
Florida 17
Alternative 8
Residential Mortgage 36
Equity (Growth) 39
Fixed Income 8
New York 11
N. California 16
20Balanced Affiliate Management
Autonomy with strong governance
Holding Company
Affiliate Partners
Oversight
Independence
Governance Compliance Capital
Market / Clients Employees Operations
21Results
UniqueBusinessModel
Overall Business Growth
Sustainable Organic Growth
22Overall Revenue Growth
344.9
263.3
10 Year CAGR 25
196.8
133.6
116.0
105.4
82.5
66.3
53.2
45.1
30.4
36.6
23Overall AUM Growth
29.8
21.3B
19.3B
10 Year CAGR 46
11.0B
6.5B
6.4B
5.7B
3.7B
2.6B
2.2B
0.7B
24Overall Loan and Deposit Growth
10 Year CAGR 36
10 Year CAGR 35
4.3B
4.1B
209M
206M
Includes Acquisitions
25Overall Net Income Growth
10 Year CAGR 23
26Overall Earnings Per Share Growth
10 Year CAGR 16 Cash Basis
1.82
10 Year CAGR 15 GAAP Basis
Cash Basis
27Sustainable Organic Growth
Organic Growth After 3 Years Ownership by
Boston Private
Note Based on Revenues
28Sustainable Organic Growth
5 Year Organic Growth Record in New England
Organic Growth at AffiliatesSince Acquisition
Westfield AUM 686 Borel Net
Income 103 Boston Private Bank Assets
2,860
No acquisitions during this time
29Executive Retention Rates
Retention Rates Since Acquisition
Absent normal retirements or forced terminations
30Dividends Paid to Shareholders
6 Year CAGR 18
Commenced Dividend in 2000
31Sustainable Growth Metrics
32Long-Term Value Creation
BPFH Total Return To Investors (12/1995
12/2006)
33Future
- Steps to additional Value Creation
341. Enhance Existing Platform
- Co-invest with affiliates in marketing / sales to
generate organic growth - Execute on in-market business growth
opportunities - Fill out core capabilities in existing clusters
352. Build-Out Wealth Management Franchise
Be located in 15 of top 30 newly-affluent
geographic regions
Asian Theater?
European Theater?
Existing location
Potential location
363. Expand Product Distribution
Build broad-scale access to products and national
distribution
- Provide affiliates access to best of breed in
all investment categories - Private banking, family office and philanthropic
services nationwide - National platform broad scale distribution of
proprietary products - More products through existing distribution
channels
374. Employ a Distinctive Brand Strategy
Endorsement model unifies and distinguishes local
brands
Enduring Excellence
Members of Boston Private Wealth Management Group
385. Attract and Retain Top Talent
- Foster culture of values, opportunity and respect
- Communicate with clarity and consistency
- Emphasize the complete person skills cultural
fit - Provide creative compensation programs
- Actively endorse entrepreneurship
39Conclusion
Boston Private is creating long-term value for
shareholders
- Unique and validated business model
- Demonstrated acquisition success and organic
growth - Financial sustainability through diversification
- Uncompromising commitment to entrepreneurial
environment which attracts and retains superior
professionals - Attractive total returns to shareholders over
ten-year period
40Boston PrivateLong-Term Value Creation
Jonathan H. Parker President, Western Region
Robert J. Whelan Chief Financial Officer
41Appendix
- Financial Performance
- EPS
- Revenue
- Expenses
- Segment Financial Summary
- Private Banking
- Wealth Advisory
- Investment Management
- Capital Management
42Growth
Consistent long term EPS growth
1.82
1.70
1.37
1.09
1.04
0.98
0.88
43Operating Revenue
Dramatic revenue increases
5 Year CAGR 27
( Millions)
44Operating Expenses
Affiliates increasing in size and investing in
future growth
( Millions)
45Private Banking
Core Strengths Core Strengths Core Strengths Core Strengths
Lending, Deposits, Mortgages and Cash Management Lending, Deposits, Mortgages and Cash Management Lending, Deposits, Mortgages and Cash Management Lending, Deposits, Mortgages and Cash Management
Partners Assets (M) Loans Deposits
Boston Private Bank Trust 2,456 1, 783 1,8224
Gibraltar Private Bank Trust 1,483 1,217 952
Borel Private Bank Trust 965 888 865
First Private Bank Trust 553 418 459
Total 5,457 4,308 4,098
Percentage of Revenue 51
46Private Banking Results
Robust loan growth with heightened competition
for deposits
Deposits (M)
6 year deposit CAGR 32
Loan Growth (M)
- 6 year loans CAGR 32
- Credit quality remains pristine with
non-performing at 0.23
47Core Net Interest Income and Margin
Net interest margin experienced pressure in Q4 06
3.85
48Loan Portfolio
Diversified loan portfolio
Consumer 1
Home Equity 5
Commercial 58
Residential Mortgage 36
49Wealth Advisory
Core Strengths Core Strengths
Fee-based financial planning, tax strategies and asset allocation Fee-based financial planning, tax strategies and asset allocation
Partners Assets Under Advisory (B)
KLS Professional Advisors Group 3.7
Bingham, Osborn Scarborough 1.8
RINET Company 1.3
Sand Hill Advisors 1.0
Coldstream Capital 1.1
Total 8.9
Percentage of Revenue 8
50Wealth Advisory and Investment Management Results
Wealth advisory growth less dependent on markets
Asset New Business Growth (B)
35
27
14
8
11
11
1.7
0.4
51Investment Management
Core Strengths Core Strengths Core Strengths
Full spectrum of portfolio management products and services Full spectrum of portfolio management products and services Full spectrum of portfolio management products and services
Partners Core Style AUM (B)
Westfield Capital Management US Growth 10.1
Anchor US Value 6.4
Dalton Greiner US Value 2.3
Boston Private Value Investors Large Cap Value 1.0
Boston Private Bank Balanced 2.4
Gibraltar Private Bank Growth Income 0.9
Borel Private Bank Fixed Income 0.7
Total Assets Managed 23.8 23.8
Percentage of Revenue 39 39
52Strong Capital Stewardship
Cash generators finance strategic capital
investment
Sources
Uses
- Reinvest in APs
- New Acquisitions
- Dividends
- Stock Repurchase
- Repay Debt
- Seed Capital
- HC Expenses
Dividends from Affiliate Partners
Sell Equity
Holding Company
Borrow
Earnings
53Banks Well Capitalized for Regulatory
Requirements
Total Risk-based Capital Actual To Be Well Capitalized
Boston Private Bank 11.41 10.00
Borel Private Bank 11.02 10.00
First Private Bank 12.65 10.00
Gibraltar Private Bank 11.17 10.00
BPFH 12.73 10.00
As of 9/30/06