The Company has three reportable segments: Private Banking, Wealth Management and Trust, and Affiliate Partners, as well as the Parent Company (Boston Private Financial Holdings, Inc.) (the “Holding Company”). The financial performance of the Company is managed and evaluated by these three segments. The segments are managed separately as a result of the concentrations in each function.

The Company’s CEO is the Company’s Chief Operating Decision Maker (“CODM”). The Company’s CEO is also the CEO of the Bank which comprises the Private Banking segment. The President of Private Banking, Wealth Management and Trust oversees the Wealth Management and Trust segment and reports to the CEO of the Company. The day-to-day activities of the Company’s affiliates (within the Affiliate Partners segment) are managed by the affiliate CEOs. Executive management has authority with respect to the allocation of capital within their segments, management oversight responsibility, performance assessments, and overall authority and accountability for all of the affiliates within their segment. The Company’s CEO communicates with the affiliate CEOs and the President of Private Banking, Wealth Management and Trust regarding profit and loss responsibility, strategic planning, priority setting and other matters. The Company’s Chief Financial Officer reviews all affiliate financial detail with the CODM on a monthly basis.

The Bank currently conducts business under the name of Boston Private Bank & Trust Company in all markets. The Bank is chartered by The Commonwealth of Massachusetts and is insured by the FDIC. The Bank is principally engaged in providing private banking services to high net worth individuals, privately owned businesses and partnerships, and nonprofit organizations. In addition, the Bank is an active provider of financing for affordable housing, first-time homebuyers, economic development, social services, community revitalization and small businesses.

The Wealth Management and Trust segment is comprised of the trust operations of the Bank and the operations of Boston Private Wealth. The segment offers investment management, wealth management, family office, and trust services to individuals, families, and institutions. The Wealth Management and Trust segment operates in New England, Southeast Florida, the San Francisco Bay Area, and Southern California.

DGHM serves the needs of pension funds, endowments, trusts, foundations and select institutions, mutual funds and high net worth individuals and their families throughout the United States and abroad. DGHM specializes in value-driven equity portfolios with products across the capitalization spectrum. DGHM is located in New York, with one affiliate administrative office in South Florida.

KLS provides comprehensive, planning-based financial strategies to high net worth individuals and their families, and nonprofit institutions. The services the firm offers include fee-only financial planning, tax planning, tax preparation, estate and insurance planning, retirement planning, charitable planning and intergenerational gifting and succession planning. KLS manages investments covering a wide range of asset classes for both taxable and tax-exempt portfolios. KLS is located in New York and Southern California.

The Company previously had four reportable segments whereby the Affiliate Partners segment was bifurcated into two segments: Investment Management and Wealth Advisors. At the start of 2018, both the Investment Management and Wealth Advisors segments each had two consolidated affiliates. On April 13, 2018, the Company completed the sale of its ownership interest in Anchor. Anchor was previously in the Investment Management segment. On December 3, 2018, the Company completed the sale of its ownership interest in BOS. BOS was previously in the Wealth Advisory segment. The results of Anchor and BOS for the periods owned are included in the results of the Affiliate Partners segment and the Company. See Part II. Item 8. “Financial Statements and Supplementary Data - Note 3: Asset Sales and Divestitures” in the Company’s

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.”

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, 2019 and 2018. Interest expense on junior subordinated debentures is reported at the Holding Company.



	Three months ended June 30,				Six months ended June 30,
	2019		2018		2019			2018
Private Banking	(In thousands)
Net interest income	$	58,419	$	58,447	$	117,756		$	116,578
Fees and other income	2,804		2,825		6,062			5,300
Total revenues	61,223		61,272		123,818			121,878
Provision/ (credit) for loan losses	1,363		453		(63		)	(1,342		)
Operating expense (1)	37,805		39,670		79,122			79,297
Income before income taxes	22,055		21,149		44,759			43,923
Income tax expense	4,878		3,981		9,308			8,594
Net income from continuing operations	17,177		17,168		35,451			35,329
Net income attributable to the Company	$	17,177	$	17,168	$	35,451		$	35,329

Assets	$	8,619,399	$	8,637,774	$	8,619,399		$	8,637,774
Depreciation	$	2,373	$	2,031	$	5,043		$	3,615



	Three months ended June 30,				Six months ended June 30,
	2019		2018		2019		2018
Wealth Management and Trust	(In thousands)
Fees and other income	$	10,815	$	11,293	$	21,776	$	23,567
Operating expense (1)	9,438		11,058		19,681		21,752
Income before income taxes	1,377		235		2,095		1,815
Income tax expense	417		34		620		509
Net income from continuing operations	960		201		1,475		1,306
Net income attributable to the Company	$	960	$	201	$	1,475	$	1,306

Assets	$	89,659	$	73,202	$	89,659	$	73,202
Amortization of intangibles	$	672	$	701	$	1,344	$	1,402
Depreciation	$	252	$	334	$	539	$	655



	Three months ended June 30,				Six months ended June 30,
	2019		2018		2019		2018
Affiliate Partners (2)	(In thousands)
Net interest income	$	104	$	79	$	210	$	131
Fees and other income	10,596		17,951		21,411		42,898
Total revenues	10,700		18,030		21,621		43,029
Operating expense	7,070		12,347		14,543		31,408
Income before income taxes	3,630		5,683		7,078		11,621
Income tax expense	1,199		1,463		2,299		2,920
Net income from continuing operations	2,431		4,220		4,779		8,701
Noncontrolling interests	69		968		169		2,018
Net income attributable to the Company	$	2,362	$	3,252	$	4,610	$	6,683

Assets	$	71,466	$	83,364	$	71,466	$	83,364
Amortization of intangibles	$	—	$	48	$	—	$	97
Depreciation	$	130	$	196	$	257	$	393



	Three months ended June 30,						Six months ended June 30,
	2019			2018			2019			2018
Holding Company and Eliminations	(In thousands)
Net interest income	$	(1,063	)	$	(981	)	$	(2,168	)	$	(1,781	)
Fees and other income	165			26			379			73
Total revenues	(898		)	(955		)	(1,789		)	(1,708		)
Operating expense	1,346			1,309			2,866			2,784
Income/ (loss) before income taxes	(2,244		)	(2,264		)	(4,655		)	(4,492		)
Income tax expense/ (benefit)	(1,125		)	11,921			(1,941		)	11,402
Net income/ (loss) from continuing operations	(1,119		)	(14,185		)	(2,714		)	(15,894		)
Discontinued operations (3)	—			(2		)	—			1,696
Net income/ (loss) attributable to the Company	$	(1,119	)	$	(14,187	)	$	(2,714	)	$	(14,198	)

Assets (including eliminations)	$	(67,651	)	$	(78,137	)	$	(67,651	)	$	(78,137	)



	Three months ended June 30,					Six months ended June 30,
	2019		2018			2019			2018
Total Company (2)	(In thousands)
Net interest income	$	57,460	$	57,545		$	115,798		$	114,928
Fees and other income	24,380		32,095			49,628			71,838
Total revenues	81,840		89,640			165,426			186,766
Provision/ (credit) for loan losses	1,363		453			(63		)	(1,342		)
Operating expense	55,659		64,384			116,212			135,241
Income before income taxes	24,818		24,803			49,277			52,867
Income tax expense	5,369		17,399			10,286			23,425
Net income from continuing operations	19,449		7,404			38,991			29,442
Noncontrolling interests	69		968			169			2,018
Discontinued operations (3)	—		(2		)	—			1,696
Net income attributable to the Company	$	19,380	$	6,434		$	38,822		$	29,120

Assets	$	8,712,873	$	8,716,203		$	8,712,873		$	8,716,203
Amortization of intangibles	$	672	$	749		$	1,344		$	1,499
Depreciation	$	2,755	$	2,561		$	5,839		$	4,663

The Holding Company and Eliminations calculation of net income attributable to the Company includes net income from discontinued operations for the six months ended June 30, 2019 and 2018 of zero and $1.7 million, respectively. The Company received the final payment related to a revenue sharing agreement with Westfield Capital Management Company, LLC (“Westfield”) in the first quarter of 2018. The Company will not receive additional income from Westfield now that the final payment has been received.