Boston Private Financial Holdings Inc. hopes last year's strategic about-face becomes this year's growth.
In 2009 the company effectively exchanged its long-term expansion plans for extra capital. Now, with a stronger balance sheet, it can focus on developing a smaller — but stronger — network of wealth advisers, analysts say.
In a research note Thursday after Boston Private announced a smaller fourth-quarter net loss, David Rochester, an analyst at FBR Capital Markets Corp. said the derisking of its balance sheet and improved capital levels are good signs that Boston Private has "incrementally reduced uncertainty with regard to the earnings stream and reduced the probability of a capital raise over the next year."
In Boston Private's results call, Timothy L. Vaill, its chairman and chief executive, said "steady progression was the story of the year for us."
The company announced earlier this month that the Treasury Department had granted it approval to begin repaying the $154 million in outstanding Series C preferred stock that was issued through the Capital Purchase Program.
The redemption of $50 million of preferred stock was completed Jan. 14. Boston Private said it will result in annual savings of $2.5 million, or $0.04 a share, because of the elimination of the associated preferred dividends.
Boston Private reported a fourth-quarter net loss from continuing operations of $3.16 million, or $0.05 a share, compared with a loss of $13.62 million, or $0.22 a share, a year earlier. Revenue for the quarter rose 38.8% year over year, to $83.4 million.
Vaill said Boston Private specifically requested not to fully repay the $154 million of Tarp funding right away. "We think repaying in stages is the right way," he said.
Boston Private spent much of last year's second half selling businesses to generate cash. In September it sold Gibraltar Private Bank and Trust Co. in Coral Gables, Fla., to private investors for $93 million in cash, and Rinet Co. LLC, an advisory firm in Boston for the ultrawealthy, to its management team for $6 million.
In October, Boston Private said it would complete the sale of Westfield Capital Management Co. to the company's management team by the end of this quarter rather than in 2014. That sale is expected to generate $59 million.
Vaill said these initiatives added $100 million of cash to the company's balance sheet. David Kay, Boston Private's chief financial officer, said it has increased its Tier 1 capital ratio to more than 16%.
Analysts said this conservative approach is a marked change. As recently as two years ago Boston Private's strategy was to establish hubs nationally by buying regional wealth managers and private banks. It averaged a deal every 18 months and had its eye on expanding into 12 to 15 other regions.
Vaill said the company will take a long-term approach to growing in those markets.
"Vigilance will remain our watchword," he said.
Another silver lining for Boston Private was its wealth advisory group, which has been able to retain its customers and bring in new assets, according to Jay Cromarty, an executive vice president at Boston Private and CEO of the wealth advisory group.
Boston Private's assets under management rose 11% year over year in the fourth quarter, to $18.5 billion (they fell 2% from the previous quarter). The wealth advisory group accounts for 60% of those assets, Cromarty said.