UMBF - Earnings call transcript Q3 2017 | UMB Financial Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the UMB Financial's Third Quarter 2017 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Kay Gregory, Director of Investor Relations. ahead. go Please

Kay Gregory

thank and joining us. Good you morning for

Kemper, the Hagedorn, Ram CEO, today CEO Mariner call are President Shankar, UMB and Bank. On of CFO; and Mike

forward-looking Form you Before assumptions, to or uncertainties. other today's me aspirations begin, and and of remind results events, we presentation are differ differ XX-Qs let risks, XX-K that may contains future statements, Actual factors statement. Information materially about Form filings. SEC from subject those other may our them and set is all which that to forth and in in subsequent any circumstances, forward-looking contained cause

Forward-looking obligation in presentation to of law. extent as no except statements them Securities made the to speak and only update required undertake today's we by today,

slides. deck Our and earnings release, five financial the is of under at and in our events measures in to the pages share supporting release, Reconciliations basis. metrics All per that, the diluted in to diluted tables the news details umbfinancial.com, website basic have on as on well refer the of over slide and I'll earnings discussed call Investor on contained supporting available Section. are With about earnings call earnings in the included release Please non-GAAP seven been Mariner a for the Kemper. as share. through the per earnings turn share

Mariner Kemper

joining you us. Thank for you, Thank Welcome Kay. everyone.

$X.XX reconciliations, income from Discontinued our growth corporate from that lending share, a included $XX.X expense operations and reflects $X.XX $X.XX share. operating results operations substantial $X.XX quarter X, from On national you On a of million net per a wealth, continued or margin was strong $X.X share. per combined expansion, or $X.X the private share income was third operations platforms. for basis will contributions as share, posted operating finance Our businesses our million net positive per million. and or shown strong at $XXX,XXX million remained pretax or in trust, continuing per divestiture in $XX.X which a and non-GAAP services see income of $X.XX Slide leverage, loss discontinued

in At to $XX.X snapshot and and year-over-year for $XX.X or leverage business Year-to-date Average and rates. of and that than X quarter invest continue continue to time, to why posted rather loan and goal. long-term the reported of has the been us for represented will are loan $X.X%. calls loan loan average mentioned balance million. million our emphasize increased annualized There quarter well X.X% a balances XXXX of lower mid the expense than linked quarter have $XXX annualized growth few and reasons our X.X% our in just under we've year, quarter show growth October improving history. grew leverage as of results revenue slightly on and X.X%. XX, our same quarter third year-over-year growth. position same focusing historical growth of was the the increase prior X.X% compared specific producing X.X% As of linked operating sheet revenue growth had the last of expenses net By increase period we operating third to of we Slides comparison billion quarters for banks X.X% X

mid-May. in discussed cap we $XXX the on last million the First, call happened

last average and quarter So, quarter. rest saw only this half balance of impact the we the

to was are about verticals past And will on discussion. their quarters. softness putting $XXX on to you've lending. lending at from production were factoring average our some the strong experienced further based offset cash net heard more discuss the own third our some as there in by demand million from slower third, use. Mike into quarter some in related fourth bank $XXX the Second, pipeline line in remained the four compared to of past the the and same growth reduction consolidation color vendors detail other of And quarter. business and the Top-line strong and we commercial million push borrowers CRE in asset verticals

look fourth we the pay variability the the quarter, quarter, production to to with similar is As and downs to predict of what difficult third although fluctuations going into the past line pipeline we've seen precision. and the related is the timing

largely every the the which trends see past chart X.XX% quarter ratio, showing another Credit net the release Turning XX, basis to $X of points to for averaged years. Slide inconsistent approximately charge-offs The share were an of agricultural from X credit press borrower. commercial during history the table to one quarter in related that net million of and to you charge-off to were will charge-offs third I has our shown one loans. the XX quarter

charged at we We balance, have all portion the while renewal least some recover records during are the with borrower and of pursuing quarter. to the we loss at some options and

this to credit, the portfolio Excluding of continues in performance. of line quality historical general be

the working to the and Finally, through to in close transaction progress consensus and Scout expect make towards divestiture we fourth the we of elicitation client continue quarter. practice

a it look segment disclosures. I'll hand for Now, drivers our discussion behind Ram at to the and Ram? of further over results our

Ram Shankar

on call. good most operations and I'll will focus on of morning and later to results continuing everyone. update an give quarter in Mariner my Scout last Similar Thanks discussion the

at income million X.X%. quarter the during quarter in the Looking quarter. versus additional of X.XX% Mix X.XX% the and third growth margin was of third $XXX.X factoring largest second the driver the loan quarter. of net million for in Net the represented Net interest the CRE, increase asset were $X.X income first interest interest our of base increase portfolios statement. linked including shift income

and benefit hike of quarter the to a increased AFS book loan portion expanded yields points. points X.XX%, bearing points liability our points to partially Our offset over yield larger basis by rate liabilities improvement plus the cost. X cost basis basis assets on DDA in June interest of earnings the munis basis to while X yields driven full higher was XX our by increased second The XX of purchase from by quarter and

During X.XX% basis yields an are by had a point to approximately expanded Compared the X approximately third points points basis funds margin. from rising of are our this provide benefit when XXXX environment. XXXX that increased XX basis the in December that of the hikes free the as basis interest points recorded deposits XX began basis have rate bearing was XX to Since cost margin fees quarter, quarter benefit loan fed driven expansion from interest has by of a while rate loan we a This was bearing the extents a $X.X linked details impact decrease quarter rate increase the in by mix was of XX of deposits on the card deposit of points. basis. to lesser non-interest Slide within changes short-term in driven which points income to some categories. increased million our XX bank basis and $X changes cost shift index million on deposit decreased in XX related or primarily to XX X.X% fees. higher

as and reflecting quarter quarter solution rates. purchase the to offers recorded card rewards experience. in As customer we We program vary These well digital related redemption redemption our forfeiture volumes better and card expenses reward as for and the vendor expense our replaced and adjustments third experience. one second a both that prior can we discussed to with quarter last card

from which card commercial and had total investment quarter, and represented and the purchase significant and a impact expense For XX% trading decrease the item rebate our quarter, funds. line the for to $X.X seed credit increased our reward card related The spend in which on of X.X% of of quarter held million debit income was volume. certain income second capital banking $XXX,XXX million, $X.X Scout the

last liquidated previous our those second positive mark-to-market investments like the As I and end quarters. negative Scout funds the such quarter in at there adjustments noted or in were of we in as no quarter,

flows institutional kept line lines. experienced business that Our customers from revenue the trading some on whose and also quarter conditions activities MBS market volatile more linked have municipal revenue and as underwriting side banking into

commercial typical end fluctuations healthcare basis earnings and our credit points July by during seasonal basis and another XXX,XXX greater deposit extent the in rate in income impressive decreased a increase would maintain cited here the the impacted However, X the results summer negatively client a competitive in reducing revenues. heard was other of to outlook increases slowdown fees the from from quarter points we're the XX.X% and third our teams. On declining banks we political with who activities activity, physical banking plus uncertainty consistent Deposit sales September. by investment approximately institutional from income service at charge brokers ECR on increased by typical X qualified to also rate. seeing non-bank and for the and hedge what quarter our recent year-over-year quarter We newer basis lower from charge

quarter from branch second $X other line. primary the a Finally, the slide. the non-interest the Further year-over-year in variance building are driving included increase the that negative driver, gain in in the of detail sale on income non-interest to included a on income of million

quarter, XX.X%. press XX.X% XX.X% changes significantly third $X.X bonus Slide while stated second expense, the each as quarter in of in second non-interest and million the $X.X continuing release flat. to represented non-interest and to and quarter quarter. the basis million quarter the For XX Employee medium expense compared income the in salary's from and of detailed revenue of to compared expense drivers peer wage which the contain second remained better X.X% compared operations an decreased decreased second or the on than benefit expense commission

X.X%. basis, some card bonuses variable activities. costs and and increase flat are salary items incentives. with volume Increases bank reminder, bonuses, of largely fees in and posting medical tend quarter offset a expense commissions, were by expense of just a our based as salary revenue such virtually or benefit and line lower correlate processing to On As year-over-year and expense an in and nature remained commissions wage expense and third

portion Finally, with benefits third compensation tax XX.X% resulted the larger sources rate our largely tax year-to-date of excess in from of recorded and a from income tax increase through associated exempt stock quarter. an effective

XX% tax year We be for rate full to approximately expect operations. the continuing the for XXXX

was quarter. were for balance we million third discontinued income Mariner the Slide divestiture the quarter which to Scout versus the second $XX.X operations cost comment for on $XX.X Investments quarter Before earlier. of will included sheet, which Revenue the the in million $XX.X $X.X that mentioned the million are XX. from expenses I Total million move for on from components shown

Scout in Slide details under stood $XX management You will at and find XX, September changes billion. the assets to of on assets of drivers the Scout management beginning At appendix under the XX.

balance portfolio. composition turning Now shows the XX of sheet. to our investment the Slide

the placement growth in and assets demand fund from We private for continued to available the loan portfolio. portfolio to shift sale bond

the third our and from X balances last increased third in time. purchases quarter, points bond to and the AFS from the up million yield made the were maturity the portfolio portfolio prior $XXX our were X AFS second reduction in on shown year, was and a activities the while X.XX% Details of portfolio to yield. quarter compared over of revenue yield points million quarter average billion For Slide portfolio to increased average our $X.X past $XXX HTM same quarter. are basis the The related XX. quarters The accretive basis X.XX% on statistics average health

Compared full between increase rate X impact increased from of basis deposit cost of to quarter, flat and quarter the our the deposits performance performance well deposit care the points XX bearing reflecting billion million, basis health linked categories. points, average quarter XX declines second average DDA, deposits $XXX at MMDA quarter increased The deposits on compared prior than in the public in Turning on basis June and $XXX the million. demand other points. more deposits seasonal the cost XX, run-off an to DDA deposits bonds mixed interest $XX.X of X changes points for were increases as balances. increased deposit for Including at the third Slide prior liabilities offset of as while balances quarter the the and was increase the of interest institutional to basis essentially our quarter bearing base to

in more beta deposits, we've and movements institutional line our seen modeling. with or to slower While continued be commercial than in simulation

XXX,XXX servicing In your margin the as for Mike? stood Series clients income now at method our past on by quarter $XX financials third Moving details Slide $XX.X XX.X% million then, a we and linked and Slide appreciation. Mike of assets million of at cover to questions. pretax on from basis market drivers to XX.X% in which and ago. to each. new UMB hand currently years our end have segments be by turnkey increased Services, servicing compared related assets asset business. assets and the The now cost on private I of quarter will the end followed segment, well details the Act year million In space, will administration $X through to by five on AUA are second increase was related The Manager the quarter approximately under $XXX.X funds launch XX. $XXX.X to new assets ago. in in $X.X segment near happy the Trust driven million funds Fund who levels take XXXX. new to see and bank to billion compared billion $XXX.X effective quarter at results, Details to bank, Non-interest we as a in servicing bought XX the this XX.X% alternative year Investment for service billion over segment quarter XX the XX will quarter for you and and the to new was second the it an provide on year-over-year advisors and XX equity for

Mike Hagedorn

profit segment a compared reduced million $XX.X net decreased earlier the a for bank to salary or the due Ram of quarter for X.X% bank of quarter discussed posted drive million quarter. and income quarter The second $X.X help an XX.X% Expenses increase Ram. of expense the the Thanks largely linked pretax X.X% benefits to and pretax basis. margin of on

balances loan increased and and X.X% booked to another total renewal to in related loan increased a Drivers rates the year-over-year of points. the and yield increases growth quarter. to to increased points portfolio; during positive X loans on prime as XX our loans yields points XX of rose annualized average XX changes X.X% on portfolio basis basis, a quarter basis reduction customers average the basis basis LIBOR during basis were partially reprice; paid-off included linked points While loans X to loan points rate existing net by These related and new the quarter. offset

few four book downs came quarter Mariner projects XX, loan were positive strong loan completed is and The and we line average Slide mentioned, you seeing gross and shown with selling Pay levels lending X.X% verticals. and composition where of the see are will our sold XX, of pay of pay book XX as earlier. loans on the and view from offs clients as their markets the businesses. book from quarters. trends million to in are Total Mariner our mentioned Turning which our represented a saw $XXX offs equally Slide production for past of over we C&I in our and our regional several construction

quarterly quarter XX balances portfolio Funding we our quarter transportation XX.X% staffing, market oil often last by have been quarter. came receivables a XX% experienced is in in to has closed had in factoring the by ago. total and quarter and combining new past represents continues and space non-transportation factoring receivables growth XX.X% each for Factoring offs. and balances average industries new finance combined business, related we team transportation even during year of pay platforms credit services, estate since commercial pipelines impacted financing new tremendous of $XXX quarter lending the balances, processed. approximately the national transportation on The strong the asset million $XX business the volume strong to In on increased a history and this client more and Our XX to of of In plastic last recycling underwriting factoring our of months the up best in the importance verticals, the of the has over portion standards. variety now as retention portion year We building balances. CRE climate balances. base commercial by and add finance of construction, average the began to and million grown remain outstanding focused In production including year. our improve a billion average are more AVL third The has from relationships field XX% XXXX Year-to-date our business $XX.X in XX% this in real portfolio business receivable our are lending, from commercial space in third have efforts acquired cleaning. during in quality existing and growth client a and increase commitments. added and commercial XXXX. drive borrowers XX compared

deliberate portfolios early continue team the manner. opportunities out tenure The construction our in deals qualified to of same and CRE only allows CRE We thereby and vetted committee. the build to to our be most industry loan expertise sending

sheet by than quarters, on during a year-to-date. the CRE We billion funded XXXX, CRE and Arizona, construction lending. real the have and volume and more with and Within reviewing in overall and the deals Consistent of have our third loans quality, and on launched estate of combined grown we total retail steady XX% multifamily followed and loans. XX% average we other construction average Texas when although, office. our with our leaders commercial group. represent industrial represents And quarter loans seen quarter of CRE XX% CRE investments footprint, loans the of prior Kansas of since our supply XX.X% in stretch balance $X to average don't and dedicated construction Multifamily balances our projects

CRE our our capital. balances of context, further For XXX% space are approximately

private our consumer of In lending bank make $X banking to quarter to private about changes during under the billion continue just consumer third with third $XX added for efficiency. were and to million loans And our our $X.X the averaging quarter. teams funding and continues for average wealth division, improve deposits banking a quarter. personal of Our the provide billion deposits

bringing and During wealth and third commercial four facilities. consolidated branch banking to the quarter, private total we centers our locations three XX

improve including to leverage branch and operating consolidations, it includes some buildings efforts Our makes investments where property prudent about holdings strategic the sale our decisions of sense.

our our at five delivery report continue staffing of locations XX that shows while model in and reviews new pleased Slide Xk end in the XX% model billion. stands the retail the per private center We Combined under institutional and process. third quarter management transition are segment. hours or in we branches year from bank AUM a were incentives was September $XX.X operating to asset of to XX representing brokerage assets that banking CAGR capital businesses operating to under billion new are and branches at level Xk after management the transition of additional management, now $X.X health the of XXXX AUM five

as We have client revenue build planning, in areas focus and we business wealth such relationships with trust levels lead our seen business transition expand as AUM planning. transfer and on financial within expertise

Over increased our trust XX% world the private past XX.X%. private XX and as wealth contribution base increased and to processing the months securities income client total our

for teams serve sales MBS help the our commitment asset and overall. continue to line both institutional lower non-bank the families and channel management the in banking, we revenue In to municipal remains Our with five underwriting clients endeavor. that institutions build results and relationships

optimal recent Building has by what trading revenue our excited the the been bond will market our and non-vX I'm quarters qualified to I'm bring. less given see business to strategy this and streams. bank pleased team significant differentiate traditional challenged with of accomplished been conditions coming part Our a quarters. environment capabilities has what the rate has during

over These to the year time HSA on billion increased now mark Turning health XX.X% rankings our released experience a a total assets XX.X% to at in by business deposits HSA to increasing Xth XX% in tend an continues funding of Slide market making XX Xth for result represent shows the $X past to quarter rank our continue assets. total they our the end decision $XXX care to the part of at are to and terms XX% as surpass Research characteristics Slide strong holders assets as year XX, mid-year and of and deposits. similar Investment deposits Devenir our and and first and our in core grow performance. of million. more accounts deposits the to the the of in U.S. deposits. HSA UMB XX.X% a business to of up stand have important invest terms year-over-year from in deposits represented XXXX in well of Investments account ago the

account the and health services During in of related highlighted These capabilities to help HSA care marketing trends partners consumer our use and quarter, services build holder behavior programs accounts. to choose education. and analytics understand awareness better data

information the to in including health to related the to general order related in changes association We follow determine executive advocates It's for rapidly changing consumer [indiscernible] and in continue care too recent and care reform remarks are discussions to prepared With question. my potential turn Washington the but we more line healthcare clients. operator, early for that, their open health providing directed the up health over will control over and I will access dollars. conclude who it back

Operator

[Operator session. question Lynch. America ahead. question-and-answer the with begin of now Bank will from comes Poonawala Ebrahim go Instructions] The Merrill We Please first

Ebrahim Poonawala

Good guys. morning

Mariner Kemper

morning Ebrahim. Good

Ram Shankar

Good morning.

Ebrahim Poonawala

to if we it post sort I million trying about bonus, had the does just there on saving of it decline out, have talk want lot understand $XXX expense to think this understand and back terms it would that what's had, high we at the you to that a slower into way better bit to customer XXXs like be may sure from expense, looking do book led the the that helpful? expenses, or go to sort in just the best recent, cost we look of of decline as with grow particular to efforts sequential of any think the lower and a the activity sounded make can

Ram Shankar

decline going lot quarter in it a factors. some different with said claims, of into bonus there run on the of medical commissions fourth even script or can Hey depend yes Ram, as our expenses to expense typically lot is of especially its I a variable variability related was in lot expenses, or Ebrahim and in rate healthcare comp my benefits the

way best see think at item. you the So look it basis saw on should on same the that growth if it year-over-year line kind so right, we you about last is to year the we what expense suggest of a

Ebrahim Poonawala

okay. Understood,

right year, it down from last flat And all last it about I'll XX%... here. year think just, essentially So, from see was

Mariner Kemper

give we more about of but that, leverage, guidance been were as a towards your to to overall. seeing on I you're operating last we do year's kind to think that specific to I think don't think Obviously general move is we've thinking focused on we're it. rate towards what trying But way thinking drift growth if we were

Ebrahim Poonawala

Fair point to enough. XX% X the that your to XX X but, quarters? lower you volatility it understand I the Mariner, And to ratio just turned assume about should reasonable is think next efficiency have is the quarter-to-quarter general and

Mariner Kemper

Again or a absolute run XXX been in get to our focused we invest, as have ratio. and we've on we the we as investments company so expense of we, continue rate Ebrahim, talking efficiency out leverage the more we're

long-term if the think So any we're going to our over back are one into of to that's strong. continue the for area company file business we prospects return growth the

Ebrahim Poonawala

moving growths like change best seen Fair the way think is the pay what enough, X% growth sort high sort elevated single And of look rate understood. might that for year-over-year to in quarters, loan a downs big payoffs, we've of absent few any loan loan backdrop? about macro to digits

Mike Hagedorn

morning. Well I think is good this Mike, is,

different remarks and downs that feel gross pay seen as we what prepared than about and very honestly the his in you've really said and production good payoffs well, averaged. we've the mine aren't Mariner As that

kind some good prospects change the we loan the about economy, feel absent So, for of in growth.

Mariner Kemper

then spend watching half perceived line mean than had tell. some in mean second our we're related noted utilization trying There activity previous out that all Mike is that noise had be impact, our I in But we we the remarks, production as any the so to, figure is rest gross had that from the down that's to I big at where you we well the have quarter, so right was quarter, data mentioning it third early a the in prepared the too seeing well. of anomalies fourth that's quarter to in think bit the indication, look industry we there kind little higher just actually of if was to of whether the remarks also pay I it's the rolled still only is into around, as we pay down quarter we prepared to

think I we think So, what gross And and general still general growth. pay in range stream think production still term. production, owned we from running the in you're we're can payoff outperform down peer seeing the our longer

Ebrahim Poonawala

just Understood. over you quarters, institutional third the And deposits of end on at particular one last those what's continue question outlook the deposits if on deposits, could, what's the amount next and the of quarter they your few run-off? will to

Ram Shankar

Ebrahim. Sure

our of total index mostly to our hard interest funding XX% equity funds effective. fed is and So about of some look now total funding at short-term funding if kind you rate right

funding healthcare rest So, to account fed if of another have fund but fairly have DDAs, then for that then that we extent though you that approximately way. that of we is one, XX% savings resilient in total increases we look our the anymore should go have see one been mix XX% funding that at

say terms that's So, our what funding would I and mix. in of deposit

Ebrahim Poonawala

Understood. getting better you And rate do if a another either that increase or increase worse about bearing X up think coming reasonable cost of bearing of to kind in of Ram, deposits, that about basis ways? interest you in hike see rate points of deposits X interest we saw is

Ram Shankar

XX gets if immediately to basis of or points. XX% yes, XX% resetting points about X think our So as that you math about funding basis X would so, be right the

Ebrahim Poonawala

of anything pressure as hike that, outside we not into another XXXX? you're move anything seeing beyond But you seeing that expect early precise get like rate don't

Mariner Kemper

are from those for different funding has So, deposits rate businesses rates we today, could pay so overnight as up isn't just just we all it about Right do have go other of obviously that, that, they lot those okay we up sensitive that of have. funds go as think the adding funding. Ebrahim use a going move or to viewpoint, reprice. I instance and talked it's relationships us we now one access reliance to you UMB is reduce that some they what that. have based just borrow to advantages think to to going to keep of can that bring We they a on up that business as are simple given on for other down, they don't that that we is to to we've clients our very want and going years better portfolio. that are the to can And institutional in choose the have deposits, We

Ebrahim Poonawala

Understood, Thanks for off. I'll hop my questions. taking

Mariner Kemper

Ebrahim. Thanks

Operator

question next ahead. go KBW. The from McGratty Chris with Please comes

Chris McGratty

good everybody. morning Hey

Mariner Kemper

morning Good Chris.

Ram Shankar

Chris. morning Good

Chris McGratty

Hey kind of your the loan a but substantial these guess bit follow about would Ram, of index portfolio ratio the that to liability I provides prior that sensitivity more they kind funding. of the bank, the think, unlock asset kind for question synergies wouldn't, I and I deposits I of you? what deposit to structure a up of more kind take for understand it of XX% favorable that given deposits remixing on want to to that of other your loan bring

Ram Shankar

Mike would right. just Chris, said, Mike what said As repeat I

well, those that. having going in synergy our with fed a to is there as to customers just the window relationship doing suppose So deposit institutional as

it the three in of XX% stayed should we look trends terms quarters you last level index funding. So, the similar if I XX% in think expect to at

hedges protect we've as that talked we the to to rates our our said, competitive our want on continue about, obviously, DDA So to done side. increased we Mike ECR turf we we expect maintain

will But, quarter. to well. end the at at will institutional remain money So it's of the of or the level the grow been remain index the as money we business part want that third

Chris McGratty

Okay. Thanks talked fees, be impacting for the in two about that. of it's kind expense on of May change card vendor the you last the the in reward quarters.

six past of expect into adjustments there for the is this of year, that kind will go of of kind revenues you next we kind these behind largely months? a and adjustment of going As you you if is is or catch-up given forward the fourth level into quarter kind do

Ram Shankar

healthcare trends the for adjustment you the and you in all down accrual to There then some if benefit is especially But adjustments million your from answer will the us. Chris $X.X look see in and about seasonal FSAs question, at related third quarter down the in quarter liability on business line that item. up will fourth rewards behind particular quarter these and to be third headwinds yes our

Mike Hagedorn

your Now because in robust. is offering of eye behavior response thing, Chris if on new client more increase, keep changes as having saying that the the result thing only a this redemptions to is our

be because would thing, So, change more over is it volume. that there time a good could

Chris McGratty

trends portfolio Understood. you the of terms Maybe this in one seeing you cited in big is I what your credit us remind remarks. just in ag sneak could in, is, Could just prices commodity quarter given how if where generally you the prepared are are?

Mike Hagedorn

the remainder was our we charged-off, to $X so one mentioned think prepared in on paid ag the the was said we there $X the his we $XXX as was there million. recovery it off is Mariner that Yes quarter total expect in be million some credit is and the portfolio in neighborhood fourth million, remarks X.X

Chris McGratty

Okay.

Mariner Kemper

Missouri say would company. but in business for as to started actually as a we in a Kansas relates not I ag's that roots Bank that, where it's And lending our us, it's new

So, we've lenders ag years. for been XXX

Chris McGratty

Ram tax my got you the that? quarter, of that. right, And rate the around fourth then year-to-date math Thank given in is XX All I for for appreciate into up grossing the quarter the you. a kind trends, Mariner is fourth or

Ram Shankar

to they XX Chris. XX higher Slightly that, for fourth quarter than are the

Chris McGratty

that's rate fair as then And year next a well? for

Ram Shankar

Correct.

Chris McGratty

I lot, appreciate a it. Thanks

Ram Shankar

Chris. Thanks

Operator

The next ahead. Please Incorporated. Stephens, go from Matt Olney question with comes

Matt Olney

good thanks guys. great, Hi morning

Ram Shankar

morning, Good Matt.

Mike Hagedorn

morning, Matt. Good

Matt Olney

about key I actually now, question it there when of leverage some are focused kind internally? positive what efficiency you of ratio, a Mariner. operating right simply the it curious you that first been growth, driving are on about you ROA, viewed the financial is just I'm think is for guess revenue it Mariner expense its do is metrics think how so

Mariner Kemper

a a high that this technology deliver keep a product we level, sending around hardware software, but, just have I company. as our platforms, is diversity of lot business to Well and that try and

that analytic our businesses our And key of spending every that the levels. competitive. planning the and process that profitable lines plans keep come pays to the make product in approve year sure mature with back-end we of for to All lines growth there spending which their impacted and that strategic business has appropriately that that us to keeps is to is the from

about expense spend. then jaws and are get know you the actual revenue just the think simplicity the revenue that, we the to So you is and the actual making widening that of sure

Matt Olney

from there believe and as be as detail. to for impact details XQ? us reversals anything in kind I then to loan clarify yields usual yields XQ, yield from any previous that. XQ some the any or gave have you yields, the of that I non-accrual loan And benefited was the may appreciate on from accretable just Mike, or Okay. far improvements its Thanks

Ram Shankar

this or from higher are from Matt, about onetime that of talked fees time prepayment fees these I our are X ABL again points basis these benefit and to fees, is we Ram. from to get Hey businesses not fees close margin time. factoring

had in fees. we mentioned a businesses pretty factoring quarter to Mike his prepared that good these and for led comments, As ABL

Mike Hagedorn

reflected And the said results. of had last to that impact to not in add the would been rate I second only changes variable loans the this the we full thing quarter quarter that, in is,

and that we expected so changes XX points that is is related seeing And driver. the to fourth you're the biggest LIBOR the obviously quarter basis and prime something in

Matt Olney

give business idea us that the overall mentioned portfolio? an the are yield you overall on can the ABL factoring, the versus loan And then what and of you

Mike Hagedorn

is go ahead. for Ram general memory, look the from you can I to going but on specifics, Hold give my

Ram Shankar

effective which XX% an million on it's X.X% of we of there. north have in yield is works balances the $XXX and because $XXX So how the factoring about million that is ABL about balances Matt, about has of just business on

Matt Olney

helpful that's on capital any that? the are to from the as as Okay better what Ram, curve, from how And looking thank the capital, thoughts that. me guys you just for deploy sales you additional and lastly far

Mariner Kemper

we've well years active of or of transaction one then And the you, to all an the bank like use other it. the or buying prefer obviously in business at if the new uses. we look capital a as have with sound is obviously behind past, to decent there couple loans uses bank but those and/or comments we looking work back capital find options We would larger transaction M&A client. we our the a building whatever, to absolutely are in of and effectively options. of as grew capital familiar stock other the will would do These at talked But, we size next, we over all of our

Mike Hagedorn

the just Yes. opportunistic I third when quarter. during we will quarter. XXX,XXX even We about are add back that -- bought third in the shares

Matt Olney

bit or was year you a some little so on some now? seemed like [indiscernible] And what it. Mariner, that pricing bank the M&A seeing the seen Is high. over opportunities traditional we've from given And there are it your the are on ago a expectations still bank increased Got last or too right end year.

Mariner Kemper

I various be mean guess are the reasons condition say our different the doesn't still friends that the won't still think proud, our for same case is opportunities, I same. still, there so but are peers I proud,

Mike Hagedorn

are here before just And I to and we buyer a fit and add in as culturally someone said that do. quality to Yes. that for we've will

wrappers. is to that. fixed know going kind not multiple buying of The we are to We strong be be going

Matt Olney

you, Understood. Thank guys.

Mariner Kemper

Thanks Matt.

Operator

comes Race next ahead. Piper with go The Jaffray. Nathan question Please from

Nathan Race

Hey, guys. Good morning.

Mariner Kemper

Good morning.

Ram Shankar

Good morning, Nath.

Nathan Race

size come going the appreciate the assume question guys obviously term from here, pick helpful? just depending and on terms terms of you securities sizes securities, the think progression flows. let's deposit the little of portfolio. be near But, here relative can about of of the from growth help the would a forward in dynamics help the and Ram absolute sheet loan around we a it's shrinkage the of as offs the pay I down securities balance get But, us can you relative just in on absolute commentary

Ram Shankar

Nath. decrease Sure, to think here I other not side from from Yes. increase materially going don't probably it's materially too. the here on

close So, billion. about to we are $X.X

just right, shrank AFS you in year-over-year million, little or what you a portfolio if our look I basis by So, in than said my portfolio what's on look grew at happened at by if sheet that. XXX our up a as prepared about balance happened more HTM comments,

So, strategy I rotation will not scale. and a we on the at that for have continue sheet same maybe this now been balance while think

Nathan Race

just stress just relationship? are Got that kind back it. can issues impacted then, one that perhaps the to of much to just in prices versus And the speak going how credit, you some deal Okay. guys just at commodity of was by operational where

Ram Shankar

Yes.

it's about or commodity commodity that's getting right not prices. prices to it's not that's But, I the on can what overall. of value was at. head arbitrage related related you So, collateral to And are It now. an all situation

Nathan Race

the Appreciate guys. color

Operator

question The with Instructions] John [Operator go Rodis FIG Partners. next comes from Please ahead.

John Rodis

Good morning everybody.

Mariner Kemper

John. morning, Good

John Rodis

wanted to Ram just two things I clarify.

roughly tax is year I XXXX? you for we the XX% XX% quarter said said, rate the to should think the to for Regarding for XX% full the using be XX%, fourth you XX% then it

Ram Shankar

I Yes. did.

John Rodis

look just X%. the appreciate about same are page, expenses you want to? talked that so and roughly at you and the And color year-over-year operating to to up sure make expenses guys what Okay. on I sort we back Ram Is just looking discussion then, I at the just are the year-over-year at were trend. of

Ram Shankar

John. fair That's

Mariner Kemper

place the Fair to is start.

within that's We not so will any guidance, give not range. a

Ram Shankar

environment, up. So, depends And up pick will the that banking swing Medical variable can revenue associated again, one investment claims it the picks expense income right? salary or benefit on other. the way comp with and

factors And we into think on rate why about. are the a leverage which is run that my our So there we expense operating prepared in focus lot talk go built of that that remarks said again, positive into a it. expenses variable lot of I have are

Mike Hagedorn

make that over would of most think the care earlier But, businesses, think metrics we which three will of the get the health We or asked in a somewhere we about have that the the seen important, And you of in trying question, And some is to growing was in have of going means care I all and Mariner all we be at And us end great or you quarter simple fast day I the we our answer day was end what really the invest roughly board. the financial at really last them. and of do businesses but whatever we XX that next matters do progress quarters that. the significant are if to -- the -- future to the in of paid answer across at months fairly need off the to so, some maybe above. not that. to to next the are four have us, example then get

John Rodis

Thank you. guys. I makes total understand Thanks Mike. that sense. That

Mariner Kemper

Thanks John.

Operator

over our question-and-answer concludes This session. closing for Kay any Gregory to like I to back turn would conference remarks. the

Kay Gregory

Xth. This our call Thank via at will it November accessed run site you today. Web us through can and replay be joining for

XXX-XXX-XXXX As any can your interest always with Relations and at Investor follow-up contact UMB Thank appreciate you time. questions. We you.

Operator

today's conference for The Thank presentation. attending concluded. is you now

now disconnect. may You

UMB Financial (UMBF) 25 Oct 172017 Q3 Earnings call transcript