The recent divestiture in wealth management subsidiaries could free up capital for future acquisition opportunities, while staff reductions were an attempt to make up for slow growth, Boston Private executives said on an earnings call last week.

Those were some of the main insights from executives as they explained recent moves to lay off 7 percent of the company’s work force and sell its stake in San Francisco-based Bingham, Osborn & Scarborough.

The announcements come as Boston Private reported third quarter earnings of $18 million, a significant improvement from the linked quarter, but down $1.8 million from the third quarter of last year.

“Our return performance in the second quarter was unacceptable,” Boston Private CEO and President Clayton Deutsch said on the earnings call. “So we worked very hard on the expense side of the ledger. Long term, the advance as a company is going to be driven by expansion of the wealth business and disciplined growth of the balance sheet on both the loan and deposit side of the ledger.”

The staffing reduction initiative that led to the layoffs came with a $5.8 million expense, but is expected to generate $11 million in annual savings starting in 2019.

“I want to emphasize, it’s not an unwind of our client-generating, revenue-generating investments,” Deutsch said. “It’s taking a very fresh look at the staffing intensity of our management team, of our functions, of our business model and a streamlining of all of that.”

The decision to lay off staff came from difficulties to grow loans and deposits.

Boston Private increased its average total deposits 5 percent year-over-year, but the cost of interest-bearing deposits grew 22 basis points to 98 basis points, while the cost of total funds grew 11 basis points to 86 basis points. Net interest income was the lowest it has been in the past five quarters.

In terms of loan movement, the company increased average total loans 6 percent year-over-year, but saw a slight rollback on loan book development in the quarter after it decreased its loan-to-deposit ratio back to 100 percent, according to Deutsch.

“I mean as you saw in the quarter, we will not tolerate the loan-to-deposit ratio of 105 percent; that’s just – that’s not a good number,” he said. “So our loan book development in the third quarter does reflect a slight rollback by us, self-restraint by us to better match asset build what we’re demonstrating on the deposit side.”

The good news, Deutsch said, is that the bank’s wealth business continues to show promise, generating $315 million in net flows in the third quarter, bringing total net flows on the year to $394 million. That’s after last quarter when the bank reported $77 million in negative net flows due to the departure of a senior wealth advisor.

Boston Private has taken on a new strategy over the past year, building up its own personal brand of wealth management and shedding its wealth subsidiaries. At the end of last year, the company sold its stake in Boston-based Anchor Capital Advisors. Recently, it sold its stake in Bingham, Osborn & Scarborough.

The divestitures will free up capital that can be used to expedite share repurchases – Boston Private has already received approval to repurchase $20 million of shares in the fourth quarter.

Investors were concerned the divestiture in Bingham, Osborn & Scarborough would result in million in lost earnings, but Deutsch said the long term strategy is to use capital from share repurchases to invest back into the company. This investment could include acquisitions to grow the company’s integrated private banking and wealth management divisions.

“I’ve been saying to our following for several years that we’re committed to building a really high-quality wealth and private banking franchise,” Deutsch said. “As we do that, we’re very attracted to organic investment, but also M&A-enabled expansion of the reach of our wealth business and our private banking and trust capabilities.”