Boston Private Financial Holdings Inc.'s chairman and chief executive said its definitive agreement to acquire a Bellevue, Wash., company will not set back plans to buy its way into other regions this year.
On Monday, Boston Private announced that it had agreed to acquire Charter Financial Corp., a private banking company for professionals and family-owned businesses in the Seattle and Puget Sound region, for $70.8 million in cash and stock.
Timothy Vaill, Boston Private's top executive, said in an interview Monday that the acquisition would help Boston Private deepen its penetration in the region.
Boston Private entered the Pacific Northwest in December 2002 by acquiring 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 that acquisition Coldstream has tripled its assets under management, to $1 billion.
"Since we bought Coldstream, we have been looking for a bank to partner them with in that region, and we identified Charter right from the beginning," Mr. Vaill said. "We have been talking to them for four years, and six months ago they came to us and said the time was right."
Boston Private's growth strategy for the past 13 years has been to establish regional hubs by acquiring a wealth manager and a bank and then opening offices in that 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 it plans to expand into nine other areas by making acquisitions at least every 18 months. The markets high on Boston Private's list are Atlanta, Washington, Chicago, Colorado, Phoenix, Philadelphia, and Texas.
"This latest deal does not interfere with our growth strategy," he said. "We have several conversations that are going on simultaneously. Once we find the right partner, the time might not be right, so we have to be patient. Nothing will stop our expansion plan."
Mr. Vaill expects Boston Private, which targets individuals with $2 million to $20 million of assets, to maintain its recent pace of two to three acquisitions a year. In October 2005, it acquired Gibraltar Private Bank and Trust Co. in Coral Gables, and in June it bought Anchor Capital Holdings LLC, a Boston firm that added separately managed accounts to Boston Private's menu.
Analysts said they do not expect the Charter deal to slow Boston Private's expansion plan.
Lana Chan, an analyst with Bank of Montreal's BMO Capital Markets, who covers Boston Private, said it likes to assemble regional clusters that include a wealth manager and a bank.
"It is always possible to see more deals, but it is hard to predict when they will happen," she said. "This is a relatively small deal for Boston Private, so it really won't preclude them from making another deal in the next 18 months."
Mr. Vaill said Boston Private "has contacts on the ground in each region, and we are talking to the investment banking community about certain areas" where his firm has identified targets. "We are going to be really opportunistic."
It is important to continue to grow nationally, but "we want the regions we are in to be fully complemented with a wealth management platform and a banking platform," he said. "Seattle now has a full complement of services. I don't see more deals up there anytime soon."
Boston Private's assets under management increased 38.2% last year, to $32.7 billion, as it completed two acquisitions and added offices in Palo Alto, Calif., New York, Naples, Fla., Lexington, Mass., and Hingham, Mass.
Mr. Vaill said he does not expect to add as many offices this year.
"Last year was kind of an anomaly," he said. "We are not on that same pace this year. It takes a while to absorb new offices. I want management to focus on these offices we opened in 2006. I don't want us to get stretched too thin."
He said his company wants to target regions with newly affluent individuals, instead of competing with companies like Northern Trust Corp., State Street Corp., or Bessemer Trust for established wealth.
Charter had about $322 million of assets, $249 million of deposits, and $3 million of net income last year. It has offices in Bellevue, Redmond, Kent, and Seattle. Mr. Vaill said these are ideal locations for Boston Private to use for growth in the Pacific Northwest.
"I don't expect a whole of expansion in this region in the next 12 months," he said. "We want to get things going from here with what we just acquired."
