Reportable segments

Management Reporting

The Company has four reportable segments (Private Banking, Wealth Management and Trust, Investment Management, and Wealth Advisory), and the Holding Company (Boston Private Financial Holdings, Inc.). The financial performance of the Company is managed and evaluated by these four areas. The segments are managed separately as a result of the concentrations in each function.

Measurement of Segment Profit and Assets

The accounting policies of the segments are the same as those described in Part II. Item 8. “Financial Statements and Supplementary Data - Note 1: Basis of Presentation and Summary of Significant Accounting Policies” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

Revenues, expenses, and assets are recorded by each segment, and separate financial statements are reviewed by their management and the Company’s segment chief executive officers.

Reconciliation of Reportable Segment Items

The following tables present a reconciliation of the revenues, profits, assets, and other significant items of reportable segments as of and for the three and six months ended June 30, 2018 and 2017. Interest expense on junior subordinated debentures is reported at the Holding Company.



	Three months ended June 30,					Six months ended June 30,
	2018		2017			2018			2017
Private Banking	(In thousands)
Net interest income	$	58,447	$	57,783		$	116,578		$	112,039
Fees and other income	2,825		2,634			5,300			4,462
Total revenues	61,272		60,417			121,878			116,501
Provision/ (credit) for loan losses	453		(6,114		)	(1,342		)	(6,295		)
Operating expense	39,670		36,904			79,297			71,962
Income before income taxes	21,149		29,627			43,923			50,834
Income tax expense	3,981		9,209			8,594			15,478
Net income from continuing operations	17,168		20,418			35,329			35,356
Net income attributable to the Company	$	17,168	$	20,418		$	35,329		$	35,356

Assets	$	8,637,774	$	7,951,911		$	8,637,774		$	7,951,911
Depreciation	$	2,031	$	1,343		$	3,615		$	2,714



	Three months ended June 30,					Six months ended June 30,
	2018		2017			2018		2017
Wealth Management and Trust	(In thousands)
Fees and other income	$	11,293	$	11,274		$	23,567	$	22,195
Operating expense	11,058		11,937			21,752		25,810
Income/ (loss) before income taxes	235		(663		)	1,815		(3,615		)
Income tax expense/ (benefit)	34		(239		)	509		(1,405		)
Net income/ (loss) from continuing operations	201		(424		)	1,306		(2,210		)
Net income/ (loss) attributable to the Company	$	201	$	(424	)	$	1,306	$	(2,210	)

Assets	$	73,202	$	74,842		$	73,202	$	74,842
Amortization of intangibles	$	701	$	727		$	1,402	$	1,454
Depreciation	$	334	$	341		$	655	$	678



	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Investment Management (1)	(In thousands)
Net interest income	$	2	$	4	$	6	$	8
Fees and other income	4,234		11,091		15,642		21,950
Total revenues	4,236		11,095		15,648		21,958
Operating expense	3,120		8,346		11,645		16,700
Income before income taxes	1,116		2,749		4,003		5,258
Income tax expense	249		894		920		1,738
Net income from continuing operations	867		1,855		3,083		3,520
Noncontrolling interests	202		512		690		974
Net income attributable to the Company	$	665	$	1,343	$	2,393	$	2,546

Assets	$	7,189	$	91,915	$	7,189	$	91,915
Amortization of intangibles	$	—	$	651	$	—	$	1,301
Depreciation	$	32	$	61	$	66	$	127



	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Wealth Advisory	(In thousands)
Net interest income	$	77	$	29	$	125	$	46
Fees and other income	13,717		12,980		27,256		25,823
Total revenues	13,794		13,009		27,381		25,869
Operating expense	9,227		8,943		19,763		18,386
Income before income taxes	4,567		4,066		7,618		7,483
Income tax expense	1,214		1,511		2,000		2,798
Net income from continuing operations	3,353		2,555		5,618		4,685
Noncontrolling interests	766		638		1,328		1,142
Net income attributable to the Company	$	2,587	$	1,917	$	4,290	$	3,543

Assets	$	76,175	$	75,247	$	76,175	$	75,247
Amortization of intangibles	$	48	$	48	$	97	$	97
Depreciation	$	164	$	235	$	327	$	461



	Three months ended June 30,						Six months ended June 30,
	2018			2017			2018			2017
Holding Company and Eliminations	(In thousands)
Net interest income	$	(981	)	$	(671	)	$	(1,781	)	$	(1,306	)
Fees and other income	26			39			73			94
Total revenues	(955		)	(632		)	(1,708		)	(1,212		)
Operating expense	1,309			1,691			2,784			3,743
Income/ (loss) before income taxes	(2,264		)	(2,323		)	(4,492		)	(4,955		)
Income tax expense/ (benefit) (2)	11,921			(1,412		)	11,402			(2,093		)
Net income/ (loss) from continuing operations	(14,185		)	(911		)	(15,894		)	(2,862		)
Discontinued operations	(2		)	1,063			1,696			2,695
Net income/ (loss) attributable to the Company	$	(14,187	)	$	152		$	(14,198	)	$	(167	)

Assets (including eliminations)	$	(78,137	)	$	(86,269	)	$	(78,137	)	$	(86,269	)



	Three months ended June 30,						Six months ended June 30,
	2018			2017			2018			2017
Total Company	(In thousands)
Net interest income	$	57,545		$	57,145		$	114,928		$	110,787
Fees and other income	32,095			38,018			71,838			74,524
Total revenues	89,640			95,163			186,766			185,311
Provision/ (credit) for loan losses	453			(6,114		)	(1,342		)	(6,295		)
Operating expense	64,384			67,821			135,241			136,601
Income before income taxes	24,803			33,456			52,867			55,005
Income tax expense	17,399			9,963			23,425			16,516
Net income from continuing operations	7,404			23,493			29,442			38,489
Noncontrolling interests	968			1,150			2,018			2,116
Discontinued operations	(2		)	1,063			1,696			2,695
Net income attributable to the Company	$	6,434		$	23,406		$	29,120		$	39,068

Assets	$	8,716,203		$	8,107,646		$	8,716,203		$	8,107,646
Amortization of intangibles	$	749		$	1,426		$	1,499		$	2,852
Depreciation	$	2,561		$	1,980		$	4,663		$	3,980

_____________________

(1)

Results for the Investment Management segment for the three and six months ended June 30, 2017 include results for DGHM and Anchor. Results for the Investment Management segment for the three and six months ended June 30, 2018 include results for DGHM and results for Anchor through its sale date in April 2018. Assets for the Investment Management Segment at June 30, 2017 include assets of DGHM and Anchor. Assets for the Investment Management segment at June 30, 2018 include assets of DGHM.


(2)	Income tax expense/ (benefit) for the three and six months ended June 30, 2018 include $12.7 million in additional expense related to the sale of Anchor in April 2018.