Recent and upcoming unit sales at Boston Private Financial Holdings Inc. will give the bank holding company enough cash to repay government bailout funds without a capital raise, an analyst said Wednesday.
Fox-Pitt Kelton analyst Thomas Alonso raised his rating to "Outperform," from "In Line" and increased his target price to $9 from $7 due to expected improvement to the company's capital levels and a lower-risk balance sheet following the sales.
On Tuesday, Boston Private said it will sell its Westfield Capital Management unit to the division's management team now, rather than in 2014 as previously planned. Boston Private expects to receive cash proceeds of $59 million. The company will also receive 12.5 percent of Westfield's revenue for 8 years and a $5 million note due in one year.
Last month, Boston Private said it sold its Florida-based Gibraltar Private Bank & Trust to a group of private investors for $93 million, as well as Boston-based RINET Co., a wealth advisory firm catering to very high net worth clients, for an undisclosed amount.
The sale of Gibraltar reduced Boston Private's exposure to risky assets, Alonso said.
The company's improved capital ratio after the sales means it will likely be able to repay Troubled Asset Relief Program funds from the government, and provides flexibility for "other opportunities," Alonso said.
The Treasury Department gave Boston Private $154 million from TARP in return for preferred stock and warrants.
Shares of Boston Financial closed Tuesday at $6.23.