After a quarter in which Boston Private Financial Holdings Inc. traded its long-term expansion plans for extra capital, analysts expected it would use the proceeds from several divestitures to repay its federal aid.

Not so fast, said Timothy L. Vaill, Boston Private's chairman and chief executive.

Though it could repay "tomorrow" the $154 million it received from the Troubled Asset Relief Program, the extra capital is a good "insurance policy" that it wants to maintain for as long as economic conditions remain questionable, Vaill said in an interview Thursday.

"We have to be careful, because this economy is not fully recovered," he said. "We don't want to get into a position where our capital is thin."

Boston Private, which posted its third-quarter results Wednesday, does not have a timetable for repaying Tarp, Vaill said, but the matter remains "on my desk and not in a back drawer."

"I really have a bipolar approach to Tarp," he said. "On one hand, I want to pay the government back as quickly as possible, but I want to do it carefully and hand in hand with the regulators and with economic conditions in mind. … We can afford to keep this insurance policy a while longer."

Most asset managers and asset servicers that received Tarp money, including State Street Corp., Bank of New York Mellon Corp. and Northern Trust Corp., repaid it quickly to illustrate financial strength.

But Christopher McGratty of KBW Inc.'s Keefe, Bruyette & Woods Inc., said Boston Private is wisely taking its time. He said it has "clearly" improved its balance sheet, but it remains cautious. "Not every bank is treating Tarp the same," he said. "Some companies have raised capital and still held on to Tarp. I think repaying Tarp is on Boston Private's radar, but it is not imminent."

Vaill said Boston Private's "conservative approach" forced it to raise capital by selling certain units while still keeping Tarp funds. "We want to be darn sure we don't take any precipitous steps when there is still softness in the economy," he said.

In September, Boston Private sold Gibraltar Private Bank and Trust Co. in Coral Gables, Fla., to private investors for $93 million in cash, and sold 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.

As recently as two years ago Boston Private's strategy was to establish hubs nationally by buying regional wealth managers and private banks. Analysts said it averaged a deal every 18 months and had its eye on expanding into 12 to 15 other regions.

Gerard Cassidy of Royal Bank of Canada's RBC Capital Markets said Boston Private's expansion strategy "ran amok" in the past few years. When the economy faltered, it found itself holding a portfolio of bad loans in Florida and Southern California, and it has spent the past year trying to make repairs.

"The company's strategy of building pods of financial services companies in different regions seems to be gone," Cassidy said. "They appear to be ready to take a more focused approach to a few key regions. They are rethinking their long-term strategy as they fight the tide of rising nonperforming assets."

Vaill said Boston Private is "refining" its strategy. It has "backed away" from manufacturing investment products and plans to focus on existing markets — New England, the Pacific Northwest, Northern California, Southern California, New York and Philadelphia. "We think that there are really some long-term opportunities to expand the franchise, but short-term we want to apply our capital resources in existing markets," he said.

The company reported Wednesday it sliced its quarterly loss to $31.36 million, or $0.60 a share, from $273.36 million, or $5.86 a share, a year earlier. Revenue for the quarter rose 0.22%, to $66.24 million. Analysts polled by Thomson Reuters expected the company to report a loss of 48 cents a share on revenue of $83.93 million.

Its tangible common equity ratio rose 57 basis points, to 6.31%, from a year earlier. Deposits increased 18%, to $4.1 billion, and loans increased 7%, to $4.3 billion. Assets under management rose 8%, to $18.1 billion from the previous quarter but fell 6% from a year earlier.

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