Boston Private Financial Holdings Inc. (BPFH) Tuesday reported an increase in profit for the first quarter, with no provision for bad loans during the quarter. Nevertheless, both earnings and revenues for the quarter came in short of Wall Street estimates.
Boston Private also said that it has agreed to buyback all of the preferred stock held by equity firm Carlyle Group LP (CG). Following the news, shares of the company surged 14 percent in extended trading hours.
Boston Private Financial first-quarter profit rose to $11.8 million or $0.15 per share from $8.4 million or $0.11 per share last year. On average, nine analysts polled by Thomson Reuters expected the company to earn $0.17 per share for the quarter. Analysts' estimates typically excludes special items.
Assets under management increased increased 7 percent to $21.9 billion.
Chief Executive Clayton Deutsch said, "Our Wealth Management businesses performed well in the quarter. Core Fees and Income increased 3% on a linked quarter basis and Assets Under Management increased 7% in the same period."
Net interest income inched down 1 percent to $44.3 million from $44.8 million last year. Analysts expected interest income of $46.72 million for the quarter.
Boston Private had no provision for loan losses in the first quarter, compared to a provision of $4.0 million last year.
Meanwhile, the company has agreed to repurchase all of the shares of preferred stock held by its largest shareholder Carlyle. Deutsch said the repurchase will benefits all of the company's shareholders.
"This transaction will allow us to simultaneously secure a lower cost form of permanent capital, deliver immediate stated and tangible ROE accretion, and boost EPS by the third quarter of 2013," Deutsch said.
The stock repurchase price will be based on the five-day weighted average closing price of Boston Private common stock ending on April 17, the same pricing mechanism originally used to price Carlyle's existing investment in the company.
The shares of preferred stock being repurchased represent 48 percent of Carlyle's total equity ownership of the company as of March 31. After giving effect to the stock repurchase, Carlyle's total equity ownership in the company will be 9.8 percent, consisting entirely of shares of common stock.
Boston Private also declared a cash dividend of $0.05 per share, payable on May 17 to shareholders on the record as of May 4.
BPFH closed Tuesday's trading at $9.59, up $0.18 or 1.91%, on the Nasdaq. The stock surged $1.31 or 13.66% in after hours trade.
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