A "toxic" Southern California residential and construction loan portfolio hampered Boston Private Financial Holdings Inc. last year and forced it to cut expenses this year, and analysts said it must learn from its mistakes before expanding into another region.

Boston Private said its fourth-quarter loss shrank 20.2% from a year earlier, to $24.9 million, or 47 cents per diluted share. The results included a $133.2 million charge related to loan losses, included those on Southern California loans that the company spent most of last year trying to sell.

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