The Company has two reportable segments: (i) Private Banking and (ii) Wealth Management and Trust, as well as the Parent Company (Boston Private Financial Holdings, Inc., the “Holding Company”) within Holding Company and Eliminations. The financial performance of the Company is managed and evaluated according to these two segments. Each segment is managed by a segment leader (“Segment Leader”) who has full authority and responsibility for the performance and the allocation of resources within their segment. The Company’s Chief Executive Officer (“CEO”) is the Company’s Chief Operating Decision Maker (“CODM”).

The Segment Leader for Private Banking is the CEO of Boston Private Bank, who is also the Company’s CEO. The Bank’s banking operations are reported in the Private Banking segment. The Segment Leader for Wealth Management and Trust is the President of Private Banking, Wealth and Trust. The Segment Leader of Wealth Management and Trust reports to the CEO of the Company. The Segment Leaders have authority with respect to the allocation of capital within their respective segments, management oversight responsibility, performance assessments, and overall authority and accountability within their respective segment. The Company’s CODM communicates with the President of Private Banking, Wealth and Trust regarding profit and loss responsibility, strategic planning, priority setting and other matters. The Company’s Chief Financial Officer reviews all 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. On September 1, 2019, KLS merged into Boston Private Wealth. As a result, the results of KLS are included in the results of Boston Private Wealth within the Wealth Management and Trust segment for all periods presented. The Wealth Management and Trust segment offers planning-based financial strategies, wealth management, family office,

financial planning, tax planning, and trust services to individuals, families, institutions, and nonprofit institutions. The Wealth Management and Trust segment operates in New England, New York, Southeast Florida, the San Francisco Bay Area, and Southern California.

The 2018 segment results have been adjusted for comparability to the 2019 segment results for the following changes. Prior to the third quarter of 2019, the Company had three reportable segments: Affiliate Partners, Private Banking, and Wealth Management and Trust. For the first two quarters of 2019, the Affiliate Partners segment was comprised of two affiliates: KLS and DGHM, each of which are RIAs. Prior to the first quarter of 2019, the Affiliate Partners segment also included Anchor and BOS for the periods owned. On April 13, 2018, the Company completed the sale of its ownership interest in Anchor. On December 3, 2018, the Company completed the sale of its ownership interest in BOS.

With the integration of KLS into Boston Private Wealth in the third quarter of 2019, the Company reorganized the segment reporting structure to align with how the Company's financial performance and strategy is reviewed and managed. The results of KLS are now included in the results of Boston Private Wealth within the Wealth Management and Trust segment, and the results of DGHM are now included in Holding Company and Eliminations for all periods presented. The results of Anchor and BOS for the periods owned are included in Holding Company and Eliminations. See Part II. Item 8. “Financial Statements and Supplementary Data - Note 3: Asset Sales and Divestitures” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 for additional information.

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 nine months ended September 30, 2019 and 2018.



	Three months ended September 30,					Nine months ended September 30,
	2019		2018			2019		2018
Private Banking	(In thousands)
Net interest income	$	57,058	$	60,551		$	174,814	$	177,129
Fees and other income	3,403		3,337			9,465		8,637
Total revenue	60,461		63,888			184,279		185,766
Provision/ (credit) for loan losses	167		(949		)	104		(2,291		)
Operating expense (1)	38,134		44,706			117,256		124,003
Income before income taxes	22,160		20,131			66,919		64,054
Income tax expense	4,212		4,469			13,520		13,063
Net income from continuing operations	17,948		15,662			53,399		50,991
Net income attributable to the Company	$	17,948	$	15,662		$	53,399	$	50,991

Assets	$	8,617,207	$	8,292,901		$	8,617,207	$	8,292,901
Depreciation	$	2,229	$	2,398		$	7,271	$	6,013



	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Wealth Management and Trust	(In thousands)
Net interest income	$	99	$	98	$	309	$	222
Fees and other income	19,106		19,769		57,188		59,108
Total revenue	19,205		19,867		57,497		59,330
Operating expense (1)	13,888		16,434		43,864		49,981
Income before income taxes	5,317		3,433		13,633		9,349
Income tax expense	1,751		1,130		4,465		3,019
Net income from continuing operations	3,566		2,303		9,168		6,330
Net income attributable to the Company	$	3,566	$	2,303	$	9,168	$	6,330

Assets	$	143,326	$	127,229	$	143,326	$	127,229
Amortization of intangibles	$	671	$	701	$	2,015	$	2,103
Depreciation	$	290	$	409	$	991	$	1,230



	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Holding Company and Eliminations (2)	(In thousands)
Net interest income (3)	$	(1,004	)	$	(1,008	)	$	(3,172	)	$	(2,782	)
Fees and other income	2,617			9,208			8,101			36,407
Total revenue	1,613			8,200			4,929			33,625
Operating expense	3,515			7,417			10,629			29,814
Income/ (loss) before income taxes	(1,902		)	783			(5,700		)	3,811
Income tax expense/ (benefit)	(446		)	(138		)	(2,182		)	12,804
Net income/ (loss) from continuing operations	(1,456		)	921			(3,518		)	(8,993		)
Noncontrolling interests	96			924			265			2,942
Discontinued operations (4)	—			—			—			1,696
Net income/ (loss) attributable to the Company	$	(1,552	)	$	(3	)	$	(3,783	)	$	(10,239	)

Assets (including eliminations)	$	(69,589	)	$	(44,290	)	$	(69,589	)	$	(44,290	)
Amortization of intangibles	$	—		$	49		$	—		$	146
Depreciation	$	51		$	109		$	147		$	336



	Three months ended September 30,					Nine months ended September 30,
	2019		2018			2019		2018
Total Company (2)	(In thousands)
Net interest income	$	56,153	$	59,641		$	171,951	$	174,569
Fees and other income	25,126		32,314			74,754		104,152
Total revenue	81,279		91,955			246,705		278,721
Provision/ (credit) for loan losses	167		(949		)	104		(2,291		)
Operating expense	55,537		68,557			171,749		203,798
Income before income taxes	25,575		24,347			74,852		77,214
Income tax expense	5,517		5,461			15,803		28,886
Net income from continuing operations	20,058		18,886			59,049		48,328
Noncontrolling interests	96		924			265		2,942
Discontinued operations (4)	—		—			—		1,696
Net income attributable to the Company	$	19,962	$	17,962		$	58,784	$	47,082

Assets	$	8,690,944	$	8,375,840		$	8,690,944	$	8,375,840
Amortization of intangibles	$	671	$	750		$	2,015	$	2,249
Depreciation	$	2,570	$	2,916		$	8,409	$	7,579

The Holding Company and Eliminations calculation of net income attributable to the Company includes net income from discontinued operations of zero and $1.7 million for the nine months ended September 30, 2019 and 2018, 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.