8. Business Segment Reporting

The Company has strategically aligned its operations into the following four reportable segments: Commercial Banking, Institutional Banking, Personal Banking, and Healthcare Services (collectively, the Business Segments). Senior executive officers regularly evaluate Business Segment financial results produced by the Company’s internal reporting system in deciding how to allocate resources and assess performance for individual Business Segments. Previously, the Company had the following three Business Segments: Bank, Institutional Investment Management, and Asset Servicing. During 2017, the Company sold all of the outstanding stock of Scout, its institutional investment management subsidiary. As the operations of Scout are included in discontinued operations, the Company no longer presents such operations as one of its business segments. The Company’s reportable Business Segments include certain corporate overhead, technology and service costs that are allocated based on methodologies that are applied consistently between periods. For comparability purposes, amounts in all periods are based on methodologies in effect at June 30, 2018. Previously reported results have been reclassified in this filing to conform to the current organizational structure.

The following summaries provide information about the activities of each segment:

Commercial Banking serves the commercial lending and leasing, capital markets, and treasury management needs of the Company’s mid-market businesses and governmental entities by offering various products and services. Such services include commercial loans, commercial credit cards, letters of credit, loan syndication services, consultative services, and a variety of financial options for companies that need non-traditional banking services. Capital markets services include asset-based financing, asset securitization, equity and mezzanine financing, factoring, private and public placement of senior debt, as well as merger and acquisition consulting. Treasury management services include depository services, account reconciliation services, electronic fund transfer services, controlled disbursements, lockbox services, and remote deposit capture services.

Institutional Banking is a combination of banking services, fund services, and asset management services provided to institutional clients. This segment also provides mutual fund cash management, international payments, corporate trust and escrow services, as well as correspondent banking and investment banking. Products and services include bond trading transactions, cash letter collections, investment portfolio accounting and safekeeping, reporting for asset/liability management, and Federal funds transactions. Institutional Banking also includes UMB Fund Services, which provides fund administration and accounting, investor services and transfer agency, marketing and distribution, custody and alternative investment services.

Personal Banking combines consumer services and asset management provided to personal clients. This segment combines the Company’s consumer bank with the individual investment and wealth management solutions. The range of services offered to UMB clients extends from a basic checking account to estate planning and trust services. Products and services include the Company’s bank branches, call center, internet banking and ATM network, deposit accounts, retail credit cards, private banking, installment loans, home equity lines of credit, residential mortgages, small business loans, brokerage services, and insurance services in addition to a full spectrum of investment advisory, trust, and custody services.

Healthcare Services provides healthcare payment solutions including custodial services for health savings accounts (HSAs) and private label, multipurpose debit cards to insurance carriers, third-party administrators, software companies, employers and financial institutions.

Business Segment Information

Business Segment financial results for the three and six months ended June 30, 2018 and June 30, 2017 were as follows (in thousands):

	Three Months Ended June 30, 2018
	Commercial Banking		Institutional Banking		Personal Banking		Healthcare Services		Total
Net interest income	$	93,011	$	16,279	$	31,111	$	9,825	$	150,226
Provision for loan losses		5,139		322		1,539		—		7,000
Noninterest income		19,178		43,411		28,720		8,980		100,289
Noninterest expense		62,859		47,551		54,259		12,549		177,218
Income before taxes		44,191		11,817		4,033		6,256		66,297
Income tax expense		7,246		1,939		662		1,026		10,873
Income from continuing operations	$	36,945	$	9,878	$	3,371	$	5,230	$	55,424
Average assets	$	9,740,000	$	3,934,000	$	4,799,000	$	2,147,000	$	20,620,000

	Three Months Ended June 30, 2017
	Commercial Banking		Institutional Banking		Personal Banking		Healthcare Services		Total
Net interest income	$	86,810	$	12,415	$	30,615	$	7,554	$	137,394
Provision for loan losses		12,114		320		2,066		—		14,500
Noninterest income		21,714		48,161		31,135		9,296		110,306
Noninterest expense		62,545		46,610		56,516		11,268		176,939
Income before taxes		33,865		13,646		3,168		5,582		56,261
Income tax expense		7,188		3,137		106		1,059		11,490
Income from continuing operations	$	26,677	$	10,509	$	3,062	$	4,523	$	44,771
Average assets	$	9,842,000	$	3,316,000	$	5,293,000	$	1,864,000	$	20,315,000

	Six Months Ended June 30, 2018
	Commercial Banking		Institutional Banking		Personal Banking		Healthcare Services		Total
Net interest income	$	185,006	$	32,023	$	62,003	$	19,116	$	298,148
Provision for loan losses		13,117		672		3,211		—		17,000
Noninterest income		39,775		88,830		59,434		17,775		205,814
Noninterest expense		125,131		94,383		109,225		24,355		353,094
Income before taxes		86,533		25,798		9,001		12,536		133,868
Income tax expense		13,516		4,030		1,406		1,959		20,911
Income from continuing operations	$	73,017	$	21,768	$	7,595	$	10,577	$	112,957
Average assets	$	9,765,000	$	3,882,000	$	4,885,000	$	2,151,000	$	20,683,000

	Six Months Ended June 30, 2017
	Commercial Banking		Institutional Banking		Personal Banking		Healthcare Services		Total
Net interest income	$	172,108	$	23,971	$	60,809	$	14,821	$	271,709
Provision for loan losses		18,934		789		3,777		—		23,500
Noninterest income		40,919		93,828		59,671		18,805		213,223
Noninterest expense		125,202		91,362		112,632		21,553		350,749
Income before taxes		68,891		25,648		4,071		12,073		110,683
Income tax expense		14,870		5,456		1,015		2,595		23,936
Income from continuing operations	$	54,021	$	20,192	$	3,056	$	9,478	$	86,747
Average assets	$	9,730,000	$	3,391,000	$	5,317,000	$	1,837,000	$	20,275,000