Boston Private Financial Holdings Reports Fourth Quarter Results

Boston Private Financial Holdings, Inc. (NASDAQ: BPFH):

• Fourth quarter 2008 GAAP net loss was $24.9 million, or ($0.47) per diluted share, impacted primarily by non-cash impairment charges and increased provisions for loan losses. Non-GAAP cash earnings per share (as defined below) were $0.04 in the fourth quarter.
• Reduced risk exposure concentrated in Southern California by nearly 90% through sale or resolution of non-strategic loans from an original value of approximately $278 million (at March 31, 2008) to a now-current carrying value of $30 million.
• Provided a $22.8 million (pre-tax) loan loss provision during the fourth quarter, boosting the allowance for loan losses to $89.3 million and building a solid reserve to non-accrual loan ratio of 134% (excluding loans held for sale which have been marked to fair value).
• Bolstered capital through a private/public offering in July 2008 and participated in the U.S. Treasury’s Troubled Asset Relief Program – Capital Purchase Program ("TARP-CPP”) in November. Improved tangible common equity capital ("TCE”) to tangible assets ("TA”) ratio by 182 basis points during the year to 5.03%. Further, estimated Tier 1 Risk-Based Capital ("RBC”) and Total RBC ratios were increased to 14.9% and 16.2% respectively over the year, ahead of industry median levels and well in excess of regulatory capital minimums.
• Franchise growth during the year included $1 billion in net AUM inflows from fee-based businesses and an increase in private banking deposits by 12% year-over-year. Overall, AUM declined $9.3 billion for the year, primarily due to market depreciation.

Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) today reported a fourth quarter 2008 GAAP net loss of $24.9 million, or ($0.47) per diluted share, an improvement compared to a GAAP net loss of $31.2 million, or ($0.84) per diluted share reported in the fourth quarter 2007.

The $24.9 million GAAP net loss for the fourth quarter of 2008 included $25.0 million of non-cash, after-tax charges associated with goodwill and intangible impairments, $14.4 million of after-tax provisions for loan losses primarily due to declining credit quality in the Pacific Northwest and Florida, and a $2.6 million (after-tax) net loss on the disposition of non-strategic loans held for sale.

For the year, the Company reported a GAAP net loss of $388.8 million, or ($8.87) per diluted share, compared to GAAP earnings of $4.2 million, or $0.17 per diluted share, for the year in 2007. Included in the 2008 loss is $258.1 million in non-cash, after-tax charges associated with goodwill and intangible impairments, $133.2 million in after-tax provisions for loan losses, and a $66.0 million non-cash expense for re-equitizing affiliate partner Westfield Capital Management.

"While 2008 was a very disappointing year for the Company, we saw some positive results and have made solid headway in our efforts to strengthen and improve our core business,” said Timothy L. Vaill, Chairman and CEO. "We are seeing continued strong credit performance in New England and Northern California, which represent 66% of our loan portfolio. Our decision to raise capital and sell the non-strategic assets in Southern California places us in a stronger position to face the continuing market challenges. The addition of TARP-CPP capital will enable us to continue to increase lending to our core small business and affluent clients, and contributed to our ability to originate new loans in the fourth quarter, while adhering to strict underwriting standards. With many of these 2008 steps behind us, we remain confident that the true earnings power of our franchise will become clearer in 2009.”

Southern California Loan Portfolio Resolution

In the third quarter, the Company announced that it would sell a non-strategic loan portfolio consisting primarily of land and construction loans in the Inland Empire of Southern California. As of December 31, 2008, the Company has reduced its exposure from 72 loans with an original carrying value of approximately $278 million to 20 loans with a carrying value of approximately $34 million. During the quarter, the Company sold 52 loans for a net gain of $7.7 million which was offset by a further charge of $9.5 million to reflect updated fair value estimates, for a net loss of $1.8 million. The Company is in the process of working out the remaining loans in the portfolio and, subsequent to year end, has closed three additional loans, bringing the current carrying value to $30 million as of the date of this release.

Vaill commented, "We significantly reduced our risk exposure in Southern California through the loan sale and credit resolution efforts, nearly completing the disposition of the non-strategic loan portfolio. We have also effectively refocused that affiliate on its core private banking mission with a new management team and enhanced risk management practices in place. We are very pleased with progress so far and remain committed to growing this business over the long term.”

Strengthening the Balance Sheet

"Throughout the year we took important measures to build up our capital to protect against further market declines,” noted Vaill. "In the middle of the year, we executed a $173 million combination private/public fund raising transaction in partnership with the Carlyle Group. During the fourth quarter of 2008, we secured $154 million in TARP-CPP funding which will allow us to expand our lending programs through our private banks. We increased our loan loss provisions, greatly boosting our allowance for loan losses. Finally, we have absorbed our losses and maintained liquidity and capital ratios well in excess of industry benchmarks. We have the capital available to further increase our reserves should we deem such action necessary.”

Key Financials

"Our GAAP loss for the quarter was primarily driven by non-cash charges resulting from continued market declines and recessionary pressures,” said David J. Kaye, Chief Financial Officer. "None of these non-cash charges will directly impact our regulatory capital strength or liquidity. To address the difficult economic environment, we have raised capital and have taken affirmative steps to sell or negotiate the non-strategic loans in Southern California, both of which have greatly reduced our risk exposure, while we have carefully managed our costs and reduced fixed expenses. We have also prudently managed our credit and liquidity positions, significantly improved our tangible common equity to tangible assets ratio, and raised our Tier 1 RBC ratio to 14.9%, ahead of the industry median and more than double the regulatory requirements to be considered well capitalized.”

• Net Interest Income for the fourth quarter was flat at $49.9 million, compared to $50.2 million for the same period in 2007. On a linked quarter basis, Net Interest Income was down by $0.7 million, or 1%.
• Expenses for the fourth quarter, excluding impairments, were reduced 10% to $72.8 million compared to $80.7 million for the same period in 2007. On a linked quarter basis, expenses declined by $9.3 million, or 11%.
• Total Balance Sheet Assets for the fourth quarter increased 7% to $7.3 billion, compared to $6.8 billion at year end 2007. On a linked quarter basis, Balance Sheet Assets were up $244.5 million, or 3%, including a 2% increase in loans.
• There were no Other Than Temporary Impairment (OTTI) charges in the securities portfolio of $856.4 million and the Company had an unrealized gain of $8.6 million at the end of the fourth quarter.

Private Banking

Chief Executive Officer of the Private Banking Business James D. Dawson said, "We are pleased with the progress we’ve made in selling or otherwise working out our non-strategic loans in Southern California in the face of continuing declines in the overall economic environment. We have been working proactively and aggressively to identify and resolve problem loan issues across the enterprise. We recognize that the entire industry continues to face a very difficult credit environment, and we are positioning ourselves to address this environment as it unfolds.”

• Total deposits increased 6% during the quarter to $4.9 billion and were up 12% on a year-over-year basis.
• Excluding Loans Held for Sale, total loans increased 2% during the quarter to $5.5 billion and were up 4% on a year-over-year basis.
• Net charge-offs for the fourth quarter of 2008 were $4.1 million, which represented less than 1 basis point of total loans compared to $164.5 million of net charge-offs during the third quarter of 2008 primarily related to the transfer of non-strategic loans to Loans Held for Sale.
• Loan loss provision expense of $22.8 million exceeded charge-offs, boosting the allowance for loan losses to $89.3 million, or 1.63% as a percentage of total loans in the fourth quarter, as compared to 1.31% in the third quarter. This represents reserve coverage of 134% of the $66.7 million of non-accrual loans as of December 31, 2008, excluding the non-strategic Loans Held for Sale, which have been marked to fair value.
• Classified loans (loans classified as either sub-standard, doubtful or loss) (including Loans Held for Sale) for the fourth quarter were $148.0 million, down 16% from $175.8 million in the third quarter of 2008. The improvement in classified loans was driven by the loan sale in Southern California and was partially offset by increased classified loans in the Pacific Northwest. The non-strategic Loans Held for Sale represent 18% of these classified loans as of December 31, 2008.
• NPAs at the Company decreased by 11% on a linked quarter basis, driven primarily by the loan sale in Southern California. Difficult economic conditions continue to pressure NPAs in California and the Pacific Northwest.

Wealth Advisory and Investment Management

Chief Executive Officer of the Wealth Advisory and Investment Management Business Jay Cromarty commented, "In an incredibly challenging market, our wealth advisors and investment managers are continuing to provide great value to our clients, illustrated by the high client retention rates we achieved this year as we served our customers well, acting as a steady and measured voice in the midst of volatile market conditions.”

Cromarty also added, "Despite the year’s extraordinary headwinds, the Investment Management business held its own, with 85% of this segment’s investment strategies in the top quartile of performance for the three-year period. As a result, while fees and assets under management were down as a result of market deterioration, our managers continued to attract new clients, achieving a second year of positive net flows of $1.0 billion. Although we incurred modest outflows in the fourth quarter in our investment management segment, our wealth advisory segment sustained net inflows, reflecting strong customer trust especially when viewed relative to the industry.”

• AUM outflows (includes private banking trust assets) for the fourth quarter were ($277) million, down from positive flows of $547 million for the same period last year and $713 million in the third quarter of 2008.
• Total Assets Under Management/Advisory decreased 18% or $6.2 billion to $28.5 billion in the fourth quarter from consolidated and unconsolidated affiliates (including the private banking wealth management business) on a linked quarter basis due primarily to market depreciation.
• Investment Management and Trust fees for the fourth quarter were down 27% to $33.0 million, compared to $45.0 million for the same period in 2007. On a linked quarter basis, Investment Management and Trust fees were down $6.1 million, or 16%.
• Wealth Advisory fees for the fourth quarter were up 7% to $11.9 million, compared to $11.1 million for the same period in 2007. On a linked quarter basis, Wealth Advisory fees were down $0.6 million, or 5%.

Summary and Outlook

"This has been a challenging and difficult period for the financial services industry,” Mr. Vaill concluded. "Through it all, our diversification across our private banking and fee-based businesses has been a critical asset which has helped us weather the storm. Going forward, we remain committed to our core business strategy of serving high-net-worth customers by building long-term personal relationships. We recognize they need our services now more than ever and believe our specialized service model can make significant inroads in these difficult times. We have built a strong capital position, implemented continuing cost containment efforts, enhanced our credit processes, and are aggressively managing our credit risk. With all of these elements in place, we entered 2009 well-positioned for an extended downturn, if it should occur, and will continue to look for ways to expand our franchise as market conditions permit.”

Dividend Payments

Concurrent with the release of the fourth quarter 2008 earnings, the Board of Directors of the Company declared a cash dividend to shareholders of $0.01 per share. The record date for this dividend is February 2, 2009 and the payment date is February 16, 2009.

Cash Earnings

The Company calculates its cash earnings/(loss) by adjusting net income/(loss) to exclude the amortization of the purchased intangibles (net of tax), the tax benefit on the portion of the purchase price allocated to goodwill, which is deductible over a 15 year life, impairment, certain non-cash share based compensation plans (net of tax), and warrant expense. The tax savings are deferred under GAAP accounting but are included in cash earnings since the tax savings (lower tax payment) will be retained unless the acquired company is sold. The computation of cash earnings per share includes the effect of dividends paid or accrued on Preferred Securities but excludes the accretion of the beneficial conversion feature and the accretion of the Preferred Series C Discount. The Company uses certain non-GAAP financial measures, such as Cash Earnings/(Loss), to provide information for investors to effectively analyze financial trends of ongoing business activities. (A detailed reconciliation table is attached.)

Conference Call

Management will hold a conference call at 9:00 a.m. Eastern Time on Thursday, January 29, 2009, to discuss its financial results in more detail. To access the call:

Dial In #:		(800) 798-2801
International Dial In #:		(617) 614-6205
Passcode:		38974414

Replay Information:
Available from 1/29/2009 to 2/5/2009
Dial In #:		(888) 286-8010
International Dial In #:		(617) 801-6888
Passcode:		78584931

The call will be simultaneously webcast and may be accessed on the Internet by linking through www.bostonprivate.com.

Boston Private Financial Holdings, Inc.

BPFH is a national financial service organization comprised of independently operated affiliates located in key regions of the U.S. that offer private banking, wealth advisory and investment management services to the high net worth marketplace, selected businesses and institutions. The Company enters demographically attractive markets through a very selective acquisition process and then expands by way of organic growth. It employs a distinct business strategy, empowering its affiliates to run independently such that they can best serve their clients at the local level, while at the same time providing strategic oversight and access to resources, both financial and intellectual, to support management, compliance, legal, marketing, and operations. (NASDAQ: BPFH).

For more information about BPFH, visit the Company's web site at www.bostonprivate.com.

Note to Editors:

Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) is not to be confused with Boston Private Bank & Trust Company. Boston Private Bank & Trust Company is an independently operated and wholly-owned subsidiary of BPFH. The information reported in this press release is related to the performance and results of BPFH and do not reflect or impact the results of Boston Private Bank & Trust Company.

Statements in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties. These statements include, among others, statements regarding our strategy, evaluations of future interest rate trends and liquidity, prospects for growth in assets, and prospects for overall results over the long term. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Company’s control. Forward-looking statements are based on the current assumptions and beliefs of management and are only expectations of future results. The Company’s actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, adverse conditions in the capital and debt markets and the impact of such conditions on the Company’s private banking and asset investment advisory activities, changes in interest rates, competitive pressures from other financial institutions, a deterioration in general economic conditions on a national basis or in the local markets in which the Company operates, including changes which adversely affect borrowers’ ability to service and repay our loans, changes in loan defaults and charge-off rates, adequacy of loan loss reserves, reduction in deposit levels necessitating increased borrowing to fund loans and investments, the passing of adverse government regulation, the risk that goodwill and intangibles recorded in the Company’s financial statements will become impaired, and risks related to the identification and implementation of acquisitions, as well as the other risks and uncertainties detailed in the Company’s Annual Report on Form 10-K, as updated by our quarterly reports on Form 10Q; and other filings submitted to the Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.

(In thousands, except per share data)						December 31,				December 31,
FINANCIAL DATA:						2008				2007
	Total Balance Sheet Assets					$	7,266,338			$	6,818,131
	Stockholders' Equity						688,976				662,461
	Investment Securities						915,398				719,934
	Goodwill						108,765				349,889
	Intangible Assets, Net						69,778				108,349
	Commercial Loans						2,488,528				2,318,430
	Construction and Land Loans						687,811				863,651
	Residential Mortgage Loans						1,902,482				1,765,217
	Home Equity and Other Consumer Loans						399,835				312,602
	Total Loans						5,478,656				5,259,900
	Loans Held for Sale						36,846				6,782
	Deposits						4,920,605				4,375,101
	Borrowings						1,520,463				1,632,944
	Book Value Per Common Share					$	10.79			$	17.68
	Market Price Per Share					$	6.84			$	27.08
ASSETS UNDER MANAGEMENT AND ADVISORY:
	Private Banking					$	4,066,000			$	4,738,000
	Investment Managers						15,619,000				23,058,000
	Wealth Advisory						8,244,000				9,055,000
	Less: Inter-company Relationship						(268,000	)			(286,000	)
		Consolidated Affiliate Assets Under Management and Advisory				$	27,661,000			$	36,565,000
	Unconsolidated						815,000				1,188,000
		Total Unconsolidated Assets Under Management and Advisory				$	28,476,000			$	37,753,000
FINANCIAL RATIOS:
	Stockholders' Equity/Total Assets						9.48	%			9.72	%
	Tangible Equity/Tangible Assets						7.20	%			3.21	%
	Tangible Common Equity/Tangible Assets (1)						5.03	%			3.21	%
	Allowance for Credit Losses/Total Loans						1.70	%			1.46	%

					Three Months Ended										Twelve Months Ended
					December 31,				December 31,						December 31,				December 31,
OPERATING RESULTS:					2008				2007						2008				2007
	Net Interest Income - on a Fully Taxable Equivalent Basis (FTE)				$	51,722			$	51,987					$	209,333			$	194,937
	FTE Adjustment					1,799				1,837						7,326				7,016
	Net Interest Income					49,923				50,150						202,007				187,921
	Investment Management and Trust Fees:
	Private Banking					7,070				7,660						30,965				28,868
	Investment Managers					25,961				37,338						123,827				136,235
	Total Investment Management Fees					33,031				44,998						154,792				165,103
	Total Wealth Advisory Fees					11,877				11,116						49,456				36,232
	Other Fees					(3,661	)			3,041						4,206				12,653
		Total Fees				41,247				59,155						208,454				213,988
	Investment Gains/(Losses)					946				(236	)					2,272				(224	)
	(Loss)/Gain on Sale of Loans, Net					(4,154	)			440						(3,737	)			1,963
	Gain on Retirement of Debt					2,607				-						22,513				-
		Total Fees and Other Income				40,646				59,359						229,502				215,727
		Total Revenue				90,569				109,509						431,509				403,648
		Provision for Loan Losses				22,814				19,252						211,474				24,911
	Salaries and Employee Benefits					43,707				51,640						202,517				195,224
	Occupancy and Equipment					9,235				8,999						35,969				33,684
	Professional Services					5,763				4,341						23,735				15,629
	Marketing and Business Development					2,387				3,103						10,832				11,083
	Contract Services and Processing					2,007				1,816						7,826				6,555
	Amortization of Intangibles					2,338				3,699						12,443				14,484
	(Credit)/Provision for Unfunded Loan Commitments					(1,457	)			1,813						(1,967	)			369
	Other					8,787				5,242						27,178				18,366
		Total Operating Expense				72,767				80,653						318,533				295,394
		Operating (Loss)/Income				(5,012	)			9,604						(98,498	)			83,343
	Westfield Profit Interest Granted					-				-						66,000				-
	Warrant Expense					-				-						2,233				-
	Impairment, Net (8)					25,049				37,150						258,124				47,204
		(Loss)/Income Before Minority Interest and Taxes				(30,061	)			(27,546	)					(424,855	)			36,139
	Minority Interest					109				1,511						4,327				4,842
		(Loss)/Income before Income Taxes				(30,170	)			(29,057	)					(429,182	)			31,297
	Income Tax (Benefit)/Expense					(5,251	)			2,099						(40,430	)			27,127
		Net (Loss)/Income			$	(24,919	)		$	(31,156	)				$	(388,752	)		$	4,170

					Three Months Ended										Twelve Months Ended
					December 31,				December 31,						December 31,				December 31,
RECONCILIATION OF GAAP EARNINGS					2008				2007						2008				2007
	TO CASH EARNINGS:
	Net (Loss)/Income as Reported				$	(24,919	)		$	(31,156	)				$	(388,752	)		$	4,170
	Cash Basis Earnings/(Loss) (2)
	Book Amortization of
		Purchased Intangibles, Net			$	1,236			$	2,052					$	6,787			$	7,855
	Cash Benefit of Tax Deductions
		from Purchased Intangibles & Goodwill				1,181				1,098						4,630				4,398
	Stock options, ESPP, and Other Stock Compensation, Net					974				950						3,688				4,032
	Warrant Expense					-				-						2,233				-
	Westfield Profit Interest Granted					-				-						66,000				-
	Dividends Paid and/or Accrued on Preferred Securities (3)(4)					(715	)			-						(851	)			-
	Impairment, Net (8)					25,049				37,150						258,124				47,204
	Total Cash Basis Adjustment				$	27,725			$	41,250					$	340,611			$	63,489
	Cash Basis Earnings/(Loss)				$	2,806			$	10,094					$	(48,141	)		$	67,659
					Three Months Ended										Twelve Months Ended
					December 31,				December 31,						December 31,				December 31,
					2008				2007						2008				2007
PER SHARE DATA:
Calculation of Net Income for EPS:
	Net (Loss)/Income as Reported				$	(24,919	)		$	(31,156	)				$	(388,752	)		$	4,170
	Accretion of Beneficial Conversion Feature (3)					(3,909	)			-						(32,053	)			-
	Accretion of Preferred Series C Discount (4)					(126	)			-						(126	)			-
	Dividends Paid and/or Accrued on Preferred Securities (3)(4)					(715	)			-						(851	)			-
	Net (Loss)/Income for Basic EPS					(29,669	)			(31,156	)					(421,782	)			4,170
	Interest on Convertible Trust Preferred
		Securities, Net of Tax				-				-						-				3,000
	Net (Loss)/Income for Diluted EPS				$	(29,669	)		$	(31,156	)				$	(421,782	)		$	7,170
Interest on Convertible Trust Preferred
	Securities, Net of Tax for Cash EPS				$	-			$	750					$	-				3,000
Calculation of Average Shares Outstanding:
	Weighted Average Basic Shares					63,255				37,058						47,528				36,732
	Dilutive Effect of (5):
		Stock Options, Stock Grants, and Other				-				-						-				1,583
		Convertible Trust Preferred Securities				-				-						-				3,184
		Series A Convertible Preferred Shares				-				-						-				-
		Series B Convertible Preferred Shares				-				-						-				-
		Dilutive Potential Common Shares				-				-						-				4,767
	Weighted Average Diluted Shares					63,255				37,058						47,528				41,499
	Weighted Average Diluted Shares for cash EPS					63,701				41,960						47,528				41,499
(Loss)/Earnings per Share:
	Basic				$	(0.47	)		$	(0.84	)				$	(8.87	)		$	0.11
	Diluted				$	(0.47	)		$	(0.84	)				$	(8.87	)		$	0.17
RECONCILIATION OF GAAP EPS
	TO CASH EPS:
	(on a Diluted Basis)
	(Loss)/Income Per Share (GAAP Basis)				$	(0.47	)		$	(0.84	)				$	(8.87	)		$	0.17
	Cash Basis Adjustment					0.51				1.10						7.86				1.53
	Cash Basis Earnings/(Loss) Per Diluted Share				$	0.04			$	0.26					$	(1.01	)		$	1.70
					Three Months Ended										Twelve Months Ended
					December 31,				December 31,						December 31,				December 31,
					2008				2007						2008				2007
OPERATING RATIOS & STATISTICS:
	Return on Average Equity					(14.36	%)			(18.11	%)					(57.52	%)			0.62	%
	Return on Average Assets					(1.40	%)			(1.83	%)					(5.59	%)			0.07	%
	Net Interest Margin					3.16	%			3.39	%					3.27	%			3.52	%
	Total Fees and Other Income/Total Revenue					44.88	%			54.20	%					53.19	%			53.44	%
	Loans Charged-off, Net				$	4,058			$	506					$	193,174			$	78

AVERAGE BALANCE SHEET:					Three Months Ended											Three Months Ended
					December 31, 2008											December 31, 2007
					Average				Income/				Yield/			Average				Income/				Yield/
AVERAGE ASSETS					Balance				Expense				Rate			Balance				Expense				Rate
	Earnings Assets
		Cash and Investments			$	1,104,761			$	9,231			3.34	%		$	896,755			$	11,095			4.93	%
		Loans
			Commercial and Construction			3,145,800				49,658			6.24	%			3,109,737				63,246			7.45	%
			Residential Mortgage			1,877,389				27,834			5.93	%			1,754,303				22,722			6.06	%
			Home Equity and Other Consumer			382,674				5,183			5.32	%			305,759				5,330			7.32	%
			Total Earning Assets			6,510,624				91,906			5.61	%			6,066,554				102,393			6.67	%
	Allowance for Loan Losses					(72,235	)										(54,135	)
	Cash and due From Banks					88,221											67,231
	Other Assets					615,762											739,260
TOTAL AVERAGE ASSETS					$	7,142,372										$	6,818,910
AVERAGE LIABILITIES AND STOCKHOLDERS' EQUITY
	Interest-Bearing Liabilities:
		Deposits:
			Savings and NOW		$	490,335			$	1,459			1.18	%		$	585,175			$	3,068			2.08	%
			Money Market			1,436,735				8,082			2.24	%			1,870,804				15,731			3.34	%
			Certificate of Deposit			1,850,590				16,110			3.46	%			1,161,921				14,058			4.80	%
		Total Deposits				3,777,660				25,651			2.70	%			3,617,900				32,857			3.60	%
		Junior Subordinated Debentures and Other Long-term Debt				313,202				3,953			5.05	%			525,553				5,985			5.71	%
		FHLB Borrowings and Other				1,428,482				10,580			2.90	%			1,043,429				11,564			4.34	%
			Total Interest-Bearing Liabilities			5,519,344				40,184			2.89	%			5,186,882				50,406			3.84	%
	Non-interest Bearing Demand Deposits					846,152											794,829
	Payables and Other Liabilities					82,656											148,944
	Total Liabilities					6,448,152											6,130,655
	Stockholders' Equity					694,220											688,255
TOTAL AVERAGE LIABILITIES & STOCKHOLDERS' EQUITY					$	7,142,372										$	6,818,910
		Net Interest Income							$	51,722										$	51,987
		Net Interest Margin								3.16	%										3.39	%
AVERAGE BALANCE SHEET:					Twelve Months Ended											Twelve Months Ended
					December 31, 2008											December 31, 2007
					Average				Income/				Yield/			Average				Income/				Yield/
AVERAGE ASSETS					Balance				Expense				Rate			Balance				Expense				Rate
	Earnings Assets
		Cash and Investments			$	963,152			$	37,794			3.92	%		$	774,907			$	38,320			4.94	%
		Loans
			Commercial and Construction			3,193,245				210,884			6.55	%			2,801,717				221,117			7.89	%
			Residential Mortgage			1,844,787				110,896			6.01	%			1,670,145				95,296			5.71	%
			Home Equity and Other Consumer			351,394				20,483			5.75	%			286,024				21,978			7.68	%
			Total Earning Assets			6,352,578				380,057			5.95	%			5,532,793				376,711			6.81	%
	Allowance for Loan Losses					(82,518	)										(50,333	)
	Cash and due From Banks					66,120											74,503
	Other Assets					622,243											702,687
TOTAL AVERAGE ASSETS					$	6,958,423										$	6,259,650
AVERAGE LIABILITIES AND STOCKHOLDERS' EQUITY
	Interest-Bearing Liabilities:
		Deposits:
			Savings and NOW		$	608,501			$	9,606			1.58	%		$	564,758			$	11,995			2.12	%
			Money Market			1,551,978				41,660			2.68	%			1,864,603				62,722			3.36	%
			Certificate of Deposit			1,466,247				55,179			3.76	%			1,011,244				48,428			4.79	%
		Total Deposits				3,626,726				106,445			2.94	%			3,440,605				123,145			3.58	%
		Junior Subordinated Debentures and Other Long-term Debt				391,065				18,158			5.47	%			365,845				18,361			5.02	%
		FHLB Borrowings and Other				1,367,488				46,121			3.35	%			895,963				40,268			4.49	%
			Total Interest-Bearing Liabilities			5,385,279				170,724			3.16	%			4,702,413				181,774			3.87	%
	Non-interest Bearing Demand Deposits					789,476											748,538
	Payables and Other Liabilities					107,786											141,414
	Total Liabilities					6,282,541											5,592,365
	Stockholders' Equity					675,882											667,285
TOTAL AVERAGE LIABILITIES & STOCKHOLDERS' EQUITY					$	6,958,423										$	6,259,650
		Net Interest Income							$	209,333										$	194,937
		Net Interest Margin								3.27	%										3.52	%

PRIVATE BANKING LOAN DATA AND CREDIT QUALITY (6):					December 31,			December 31,
					2008			2007
	Commercial Loans:
		New England			$	986,381		$	861,992
		Northern California				821,307			698,353
		South Florida				326,922			339,710
		Pacific Northwest				134,426			153,686
	Subtotal Commercial Loans					2,269,036			2,053,741
		Southern California				220,636			265,651
	Total Commercial Loans				$	2,489,672		$	2,319,392
	Construction and Land Loans:
		New England			$	107,991		$	123,242
		Northern California				225,537			146,075
		South Florida				260,792			268,731
		Pacific Northwest				72,014			64,431
	Subtotal Construction and Land Loans					666,334			602,479
		Southern California				21,477			261,172
	Total Construction and Land Loans				$	687,811		$	863,651
	Residential Mortgage Loans:
		New England			$	1,087,843		$	1,022,155
		Northern California				211,976			152,417
		South Florida				549,601			553,356
		Pacific Northwest				23,858			24,526
	Subtotal Residential Mortgage Loans					1,873,278			1,752,454
		Southern California				29,204			12,763
	Total Residential Mortgage Loans				$	1,902,482		$	1,765,217
	Home Equity and Other Consumer Loans:
		New England			$	87,619		$	55,802
		Northern California				78,159			50,700
		South Florida				209,466			191,820
		Pacific Northwest				2,683			4,164
	Subtotal Home Equity and Other Consumer Loans					377,927			302,486
		Southern California				15,333			4,204
	Subtotal Home Equity and Other Consumer Loans				$	393,260		$	306,690
	Subtotal Private Banking Loans				$	5,186,575		$	4,711,160
		Southern California				286,650			543,790
	Total Private Banking Loans				$	5,473,225		$	5,254,950

					December 31,			December 31,
					2008			2007
	Allowance for Credit Losses:
		New England			$	26,127		$	24,131
		Northern California				15,622			12,111
		South Florida				25,895			12,406
		Southern California				11,597			25,695
		Pacific Northwest				14,139			2,704
	Total Allowance for Credit Losses				$	93,380		$	77,047
	Classified Loans (7):
		New England			$	3,210		$	12,807
		Northern California				10,875			-
		South Florida				57,495			25,559
		Southern California				14,274			80,499
		Pacific Northwest				34,968			1,236
	Subtotal Classified Loans					120,822			120,101
		Loans Held for Sale (9)				27,219			-
	Total Classified Loans				$	148,041		$	120,101
	Non-performing Assets:
		New England			$	6,476		$	7,390
		Northern California				6,102			-
		South Florida				31,803			18,508
		Southern California				10,666			27,911
		Pacific Northwest				19,248			-
	Subtotal Non-performing Assets					74,295			53,809
		Loans Held for Sale and OREO in Southern California (9)				34,336			-
	Total Non-performing Assets				$	108,631		$	53,809
	Loans 30-89 Days Past Due:
		New England			$	6,641		$	9,412
		Northern California				5,080			479
		South Florida				5,072			3,944
		Southern California				6,276			8,453
		Pacific Northwest				658			75
	Total Loans 30-89 Days Past Due				$	23,727		$	22,363
	Loans Charged-off, Net for the Three Months Ended:
		New England			$	1,598		$	4
		Northern California				394			10
		South Florida				9			480
		Southern California				386			-
		Pacific Northwest				1,671			12
	Total Net Loans Charged-off, Net				$	4,058		$	506

					December 31,				September 30,
					2008				2008
FINANCIAL DATA:
	Total Balance Sheet Assets				$	7,266,338			$	7,021,882
	Stockholders' Equity					688,976				547,273
	Investment Securities					915,398				843,922
	Goodwill					108,765				109,139
	Intangible Assets, Net					69,778				99,032
	Commercial Loans					2,488,528				2,469,896
	Construction and Land Loans					687,811				662,228
	Residential Mortgage Loans					1,902,482				1,869,669
	Home Equity and Other Consumer Loans					399,835				378,216
		Total Loans				5,478,656				5,380,009
	Loans Held for Sale					36,846				99,352
	Deposits					4,920,605				4,623,858
	Borrowings					1,520,463				1,709,908
	Book Value Per Common Share				$	10.79			$	9.55
	Market Price Per Share				$	6.84			$	8.74
ASSETS UNDER MANAGEMENT AND ADVISORY:
	Private Banking				$	4,066,000			$	4,451,000
	Investment Managers					15,619,000				20,240,000
	Wealth Advisory					8,244,000				9,291,000
	Less: Inter-company Relationship					(268,000	)			(303,000	)
		Consolidated Affiliate Assets Under Management and Advisory			$	27,661,000			$	33,679,000
	Unconsolidated					815,000				1,000,000
		Total Unconsolidated Assets Under Management and Advisory			$	28,476,000			$	34,679,000
FINANCIAL RATIOS:
	Stockholders' Equity/Total Assets					9.48	%			7.79	%
	Tangible Equity/Tangible Assets					7.20	%			4.98	%
	Tangible Common Equity/Tangible Assets (1)					5.03	%			4.98	%
	Allowance for Credit Losses/Total Loans					1.70	%			1.41	%

					Three Months Ended
					December 31,				September 30,
OPERATING RESULTS:					2008				2008
	Net Interest Income - on a Fully Taxable Equivalent Basis (FTE)				$	51,722			$	52,420
	FTE Adjustment					1,799				1,786
	Net Interest Income					49,923				50,634
	Investment Management and Trust Fees:
	Private Banking					7,070				7,912
	Investment Managers					25,961				31,203
	Total Investment Management Fees					33,031				39,115
	Total Wealth Advisory Fees					11,877				12,508
	Other Fees					(3,661	)			1,159
		Total Fees				41,247				52,782
	Investment Gains					946				531
	Loss on Sale of Loans, Net					(4,154	)			(297	)
	Gain on Retirement of Debt					2,607				-
		Total Fees and Other Income				40,646				53,016
	Total Revenue					90,569				103,650
	Provision for Loan Losses					22,814				137,108
	Salaries and Employee Benefits					43,707				52,097
	Occupancy and Equipment					9,235				8,952
	Professional Services					5,763				6,331
	Marketing and Business Development					2,387				2,389
	Contract Services and Processing					2,007				1,943
	Amortization of Intangibles					2,338				3,335
	(Credit)/Provision for Unfunded Loan Commitments					(1,457	)			290
	Other					8,787				6,712
		Total Operating Expense				72,767				82,049
		Operating (Loss)/ Income				(5,012	)			(115,507	)
	Westfield Profit Interest Granted					-				-
	Warrant Expense					-				2,233
	Impairment, Net (8)					25,049				196,449
		Loss Before Minority Interest and Taxes				(30,061	)			(314,189	)
	Minority Interest					109				1,310
		Loss Before Income Taxes				(30,170	)			(315,499	)
	Income Tax Benefit					(5,251	)			(42,138	)
		Net Loss			$	(24,919	)		$	(273,361	)

					Three Months Ended
					December 31,				September 30,
RECONCILIATION OF GAAP EARNINGS					2008				2008
	TO CASH EARNINGS:
	Net Loss as Reported				$	(24,919	)		$	(273,361	)
	Cash Basis Earnings/(Loss) (2)
	Book Amortization of
		Purchased Intangibles, Net				1,236				1,818
	Cash Benefit of Tax Deductions
		from Purchased Intangibles & Goodwill				1,181				1,169
	Stock options, ESPP, and Other Stock Compensation, Net					974				1,014
	Warrant Expense					-				2,233
	Westfield Profit Interest Granted					-				-
	Dividends Paid and/or Accrued on Preferred Securities (3)(4)					(715	)			(136	)
	Impairment, Net (8)					25,049				196,449
	Total Cash Basis Adjustment					27,725				202,547
	Cash Basis Earnings/(Loss)				$	2,806			$	(70,814	)
					Three Months Ended
					December 31,				September 30,
					2008				2008
PER SHARE DATA:
Calculation of Net Income for EPS:
	Net Loss as Reported				$	(24,919	)		$	(273,361	)
	Accretion of Beneficial Conversion Feature (3)					(3,909	)			(28,143	)
	Accretion of Preferred Series C Discount (4)					(126	)			-
	Dividends Paid and/or Accrued on Preferred Securities (3)(4)					(715	)			(136	)
	Net (Loss) for Basic EPS					(29,669	)			(301,640	)
	Interest on Convertible Trust Preferred
		Securities, Net of Tax				-				-
	Net Loss for Diluted EPS				$	(29,669	)		$	(301,640	)
Calculation of Average Shares Outstanding:
	Weighted Average Basic Shares					63,255				50,979
	Dilutive Effect of (5):
		Stock Options, Stock Grants, and Other				-				-
		Convertible Trust Preferred Securities				-				-
		Series A Convertible Preferred Shares				-				-
		Series B Convertible Preferred Shares				-				-
		Dilutive Potential Common Shares				-				-
	Weighted Average Diluted Shares					63,255				50,979
	Weighted Average Diluted Shares for Cash EPS					63,701				50,979
Loss per Share:
	Basic				$	(0.47	)		$	(5.92	)
	Diluted				$	(0.47	)		$	(5.92	)
RECONCILIATION OF GAAP EPS
	TO CASH EPS:
	(on a Diluted Basis)
	Loss Per Share (GAAP Basis)				$	(0.47	)		$	(5.92	)
	Cash Basis Adjustment					0.51				4.53
	Cash Basis Earnings/(Loss) Per Diluted Share				$	0.04			$	(1.39	)
OPERATING RATIOS & STATISTICS:
	Return on Average Equity					(14.36	%)			(157.51	%)
	Return on Average Assets					(1.40	%)			(15.11	%)
	Net Interest Margin					3.16	%			3.22	%
	Total Fees and Other Income/Total Revenue					44.88	%			51.15	%
	Loans Charged-off, Net				$	4,058			$	164,493

					December 31,			September 30,
					2008			2008
PRIVATE BANKING LOAN DATA AND CREDIT QUALITY (6):
	Commercial Loans:
		New England			$	986,381		$	946,263
		Northern California				821,307			801,446
		South Florida				326,922			331,212
		Pacific Northwest				134,426			155,927
	Subtotal Commercial Loans					2,269,036			2,234,848
		Southern California				220,636			236,377
	Total Commercial Loans				$	2,489,672		$	2,471,225
	Construction and Land Loans:
		New England			$	107,991		$	110,682
		Northern California				225,537			204,252
		South Florida				260,792			256,942
		Pacific Northwest				72,014			68,042
	Subtotal Construction and Land Loans					666,334			639,918
		Southern California				21,477			22,310
	Total Construction and Land Loans				$	687,811		$	662,228
	Residential Mortgage Loans:
		New England			$	1,087,843		$	1,077,917
		Northern California				211,976			203,644
		South Florida				549,601			553,745
		Pacific Northwest				23,858			25,237
	Total Residential Mortgage Loans					1,873,278			1,860,543
		Southern California				29,204			9,126
	Total Residential Mortgage Loans				$	1,902,482		$	1,869,669
	Home Equity and Other Consumer Loans:
		New England			$	87,619		$	83,461
		Northern California				78,159			75,027
		South Florida				209,466			196,142
		Pacific Northwest				2,683			2,706
	Subtotal Home Equity and Other Consumer Loans					377,927			357,336
		Southern California				15,333			13,928
	Total Home Equity and Other Consumer Loans				$	393,260		$	371,264
	Subtotal Private Banking Loans				$	5,186,575		$	5,092,645
		Southern California				286,650			281,741
	Total Private Banking Loans				$	5,473,225		$	5,374,386

					December 31,			September 30,
					2008			2008
	Allowance for Credit Losses:
		New England			$	26,127		$	26,224
		Northern California				15,622			14,816
		South Florida				25,895			18,731
		Southern California				11,597			8,999
		Pacific Northwest				14,139			7,311
	Total Allowance for Credit Losses:				$	93,380		$	76,081
	Classified Loans (7):
		New England			$	3,210		$	8,466
		Northern California				10,875			5,391
		South Florida				57,495			56,927
		Southern California				14,274			7,083
		Pacific Northwest				34,968			18,722
	Subtotal Classified Loans					120,822			96,589
		Loans Held for Sale (9)				27,219			79,212
	Total Classified Loans				$	148,041		$	175,801
	Non-performing Assets:
		New England			$	6,476		$	7,240
		Northern California				6,102			726
		South Florida				31,803			35,233
		Southern California				10,666			1,732
		Pacific Northwest				19,248			6,954
	Subtotal Non-performing Assets					74,295			51,885
		Loans Held for Sale and OREO in Southern California (9)				34,336			70,716
	Total Non-performing Assets				$	108,631		$	122,601
	Loans 30-89 days past due:
		New England			$	6,641		$	3,740
		Northern California				5,080			350
		South Florida				5,072			4,202
		Southern California				6,276			6,186
		Pacific Northwest				658			918
	Subtotal Loans 30-89 Days Past Due					23,727			15,396
		Loans Held for Sale (9)				-			9,540
	Total Loans 30-89 Days Past Due				$	23,727		$	24,936
	Loans Charged-off, Net for the Three Months Ended:
		New England			$	1,598		$	448
		Northern California				394			(3	)
		South Florida				9			239
		Pacific Northwest				1,671			-
	Subtotal Loans Charged-off, Net					3,672			684
		Southern California				386			163,809
	Total Loans Charged-off, Net				$	4,058		$	164,493

	(1) The Company calculates tangible common equity by adjusting total equity to exclude the equity from the TARP funding of $154 million.
	(2) The Company calculates its cash earnings/(loss) by adjusting net income/(loss) to exclude the amortization of the purchased intangibles (net of tax), the tax benefit on the portion of the purchase price allocated to goodwill, which is deductible over a 15 year life, impairment, certain non-cash share based compensation plans (net of tax), and warrant expense. The tax savings are deferred under GAAP accounting but are included in cash earnings since the tax savings (lower tax payment) will be retained unless the acquired company is sold. The computation of cash earnings per share includes the effect of dividends paid or accrued on Preferred Securities but excludes the accretion of the beneficial conversion feature and the accretion of the Preferred Series C Discount. The Company uses certain non-GAAP financial measures, such as Cash Earnings/(Loss), to provide information for investors to effectively analyze financial trends of ongoing business activities.
	(3) Accretion of the beneficial conversion feature and dividends paid on the preferred securities that the Company issued during the third quarter of 2008. In accordance with EITF 98-5 Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversions, the beneficial conversion feature is accounted for as a preferred stock dividend and reduces the income available to common shareholders.
	(4) Accretion of the preferred discount and dividends paid on the preferred securities that the Company issued during the fourth quarter of 2008.
	(5) The diluted EPS computation for the three and twelve months ended December 31, 2008, does not assume: exercise or contingent issuance of options or other dilutive securities; conversion of the convertible trust preferred securities or the two classes of the preferred securities; nor the exercise of the warrants because the results would have been antidilutive. As a result of the antidilution, the potential common shares excluded from the diluted EPS computation are as follows:
					Three Months Ended		Twelve Months Ended
					December 31, 2008
		Potential common shares from the convertible trust preferred securities			3,228,687		3,207,981
		Potential common shares from the exercise or contingent issuance of the options or other dilutive securities			1,982,740		1,261,765
		Potential common shares from the conversion of the two classes of preferred stock			7,261,091		4,178,913
		Potential common shares from the exercise of the warrants			361,496		368,849
		In addition, if the effect of the conversion of the trust preferred securities would have been dilutive, interest expense, net of tax, related to the convertible trust preferred securities of $0.7 million and $3.0 million would be added back to net income for diluted EPS computations for the three and twelve months ended December 31, 2008, respectively.
	(6) The concentration of the Private Banking loan data and credit quality is based on the location of the lender.
	(7) Classified loans include loans classified as either substandard, doubtful, or loss.
	(8) Gross impairment expense for the three and twelve months ended December 31, 2008 was $38.8 million and $286.8 million, respectively. Gross impairment expense for the three months ended September 30, 2008 was $209.9 million.
	(9) Loans Held for Sale represents non-strategic loans in Southern California.