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Boston Private has begun the process of consolidating one of its last remaining wealth affiliates, KLS Professional Services, as the company continues to forge a new path.

“We believe the strength of these two businesses when combined will achieve higher quality outcome for our clients and allow us to compete at the highest level,” said Boston Private CEO Anthony DeChellis on a recent earnings call. “We are bringing them together to grow the business more naturally.”

New York City-based KLS is one of two wealth affiliates remaining at Boston Private – the other is New York City-based Dalton Greiner Hartman & Maher.

Boston Private has for the last few years been moving away from its affiliate model to focus more on its own Boston Private brand of wealth management.

The company in December 2017 said it would sell its entire ownership stake in Boston-based Anchor Capital Advisors, one of its wealth management subsidiaries that managed over $9 billion in assets. Then in October of 2018, the company announced it would sell its ownership stake in San Francisco-based Bingham, Osborn & Scarborough.

All of these moves, along with hiring a new senior management team, were just the preface for the company’s larger expansion plan unveiled earlier this year that would see the bank triple its assets under management in its wealth management division from roughly $16 billion now to about $50 billion by 2022.

The plan also includes growing the bank’s private banking division 30 percent by 2022 and seeing the actual size of the bank grow from a roughly $8.4 billion in assets under management to $11.2 billion. 

Although KLS is being consolidated, Boston Private CFO Steve Gaven said the move is less about cost savings and more about revenue and growth.

“This isn’t a big play on we are going to put these two together and look to slack out a lot of expenses,” he said. “It’s really about as we do harvest gains, you are going to see us reinvest in the franchise and that’s a franchise we certainly want to reinvest in.”

DeChellis said while there would be some minor efficiencies as a result of combining the two businesses, headcount at KLS would not shrink. The integration is expected to occur during the third and fourth quarters of this year.

Overall, Boston Private reported second quarter net income of $19.4 million, or $0.22 per diluted share, compared to net income of $6.4 million in the second quarter of 2018. Net interest income in the quarter was $57.5 million, which is flat from the same period of last year. The margin lost seven basis points on the year, settling at 2.78 percent at the end of the quarter.

Total assets at the end of the second quarter were roughly $8.7 billion, slightly down year-over-year, and total loans reached more than $7 billion at the end of the quarter, up slightly year-over-year. Total assets under management were $16.2 billion at the end of the second quarter, a decrease of 4 percent year-over-year.

The provision for loan losses in the quarter was $1.4 million, up almost $1 million from the second quarter in 2018.