Boston Private to Buy Back Shares from Carlyle

Boston Private Financial Holdings (BPFH) plans to buy back all of the preferred stock held by its largest investor, the Carlyle Group, for approximately $70 million.

The purchase would reduce Carlyle's stake in the Boston private bank by 48%, to around $75 million, it said Tuesday. The private-equity firm also holds just under 10% of its common stock.

The bank issued the shares to Carlyle for $75 million in 2008, according to an annual report released last month. The redemption price will be based on the average closing price of its common stock for the five days ending on Wednesday.

Boston private plans to issue depository shares to fund the purchase, it said.

"We are pleased to announce this important agreement with the Carlyle Group, which we believe benefits all shareholders," said Clayton Deutsch, chief executive and president of Boston Private, in the news release. "This transaction will allow us to simultaneously secure a lower cost form of permanent capital, deliver immediate stated and tangible [return on equity] accretion, and boost [earnings per share] by the third quarter of 2013."

In the first quarter of 2012, the bank repurchased about $15 million worth of stock warrants held by Carlyle and a director of the bank, it said in its annual report.

Boston Private also announced Tuesday that it earned $13.2 million in the first quarter, a 38% increase from a year earlier that was driven by higher wealth management income.

The $6.2 billion-asset bank recorded $29.9 million in income from fees and loan sales, up 14% from the prior year, as fees from investment management and banking rose. Assets under management increased 7%, to $21.9 billion.

Net interest income dipped by 1%, to $44.3 million, because of lower asset yields and a decline in net interest margin of 14 basis points, to 3.27%.

Boston Private's credit quality improved on the quarter, as it made no provision for loan losses, compared with a $4 million provision in the first quarter of 2012. Net chargeoffs declined 18%, to $1.8 million.