Boston Private Financial Holdings Inc. says it will maintain its expansion strategy after a first quarter whose results came in essentially flat compared to a year ago.
The Boston company announced Thursday that its earnings per share had fallen a cent, to 34 cents, beating the average of analysts expectations by a penny, according to Thomson Financial. Cash earnings were flat at 44 cents per diluted share. The profit was up 2.4% from a year earlier, to $13.1 million, but fell 15.9% from the fourth quarter.
Revenues in the first quarter grew 12.4%, to $92 million, from a year earlier, and assets under management increased 3.5%, to $30.9 billion, from a year earlier. Excluding the June 2006 purchase of Anchor Holdings Inc., revenue rose 2.5%, to $83.9 million, and assets under management increased 6.1%, to $26.9 billion.
Timothy L. Vaill, the companys chairman and chief executive officer, said in an earnings conference call that Boston Private continues to grow organically and wants to remain an active buyer in a market that continues to consolidate.
There has been a lot of business consolidation in the last 90 to 120 days, and this provides us with a great amount of challenges and opportunity, he said. We are faced with bigger and stronger competitors with big pockets, but the opportunity is there to offer the market an alternative with a smaller platform and local delivery.
In February, Boston Private announced it had agreed to buy Charter Financial Corp., a Bellevue, Wash., private banking company for $70.8 million in cash and stock. Mr. Vaill said Thursday that the deal, which is expected to close early next quarter, would help deepen the companys penetration in the Seattle and Puget Sound region.
Boston Private entered the Pacific Northwest in December 2002 with the purchase of Coldstream Capital Management, a multiclient wealth manager for family offices that is also based in Bellevue and has branches in Seattle and Portland, Ore. Since then Coldstream has tripled its assets under management, to $1 billion.
Boston Privates growth strategy for 13 years has been to establish regional hubs by acquiring a wealth manager and a bank and then opening offices in the region. In addition to Seattle, it used this strategy to establish itself in San Francisco, Los Angeles, New York, Boston, and Coral Gables, Fla.
Mr. Vaill said when the Charter deal was announced that Boston Private plans to expand into nine other areas by acquiring at least every 18 months. The markets high on Boston Privates list are Atlanta, Washington, Chicago, Colorado, Phoenix, Philadelphia, and Texas.
Acquisitions are an important part of our strategy, but for marketplace entry not for growth purposes, Mr. Vaill said on Thursday. We hope organic growth will follow from there. We are going to continue to identify attractive markets, but it is hard to predict when and where they will come from. We are an opportunistic acquirer, and these things take time.
Richard X. Bove, an analyst at Punk, Ziegel & Co., said he is confident that consolidation will continue. At the moment, he said, however, the market is going through a period of repricing as buyers take a wait-and-see approach because smaller banks book value may fall 15% to 20% in six months.
The price of smaller banks has been coming down meaningfully, and right now bigger banks are cautious about buying even at the lower prices, he said. I think this means that we arent going to get as many transactions going forward.
In addition to acquiring, Boston Private added offices to expand. Last year, it opened offices in Palo Alto, Calif.; New York; Naples, Fla.; and Lexington and Hingham, Mass. Walter M. Pressey, Boston Privates president and interim chief financial officer, said the company opened three offices this year and plans one in Beverly, Mass., next month but has no plan to open more this year.
Deposits grew 7.8% in the first quarter, to $4.1 billion, from a year earlier, and loans increased 18.6%, to $4.5 billion.
Wealth advisory fee income rose 13.3%, to $7.3 million, from a year earlier, and investment management fee income increased 30%, to $37.7 million.
