Boston Private Financial hit with bad loans in California

Boston Private Financial Holdings says bad loans at its private bank in California will trigger a net loss between $9.2 million and $14.2 million in the first quarter.

Boston Private released preliminary figures that estimate the company will incur an impairment charge between $20 million and $25 million. The company hired a third-party valuation firm to look at soured loans at the company's private banking affiliate in southern California.

The provision for loan losses in the first quarter will be $19.6 million, reflecting an $18.5 million increase over the year-earlier period, Boston Private Financial said in a release. Almost 70 percent of the increase is tied to First Private Bank & Trust, which is in southern California, the epicenter of the subprime mortgage crisis.

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Meanwhile, the company set aside more money for loan losses to reflect deterioration in the southern Florida real estate market. Gibraltar Private Bank, Boston Private Financial's affiliate in Florida, had had limited losses in land development and construction loans.

"We added to the reserves to reflect the overall deterioration in the Southern Florida economy and an increase in the amount of criticized loans," Boston Private Financial CEO Timothy Vaill said in a statement.