UMBF - Earnings call transcript Q2 2020 | UMB Financial Corporation

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Operator

Good day and welcome to the UMB Financial Corp.

Second Quarter 2020 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. to conference like Gregory. to now would turn over the Kay I go Please ahead.

Kay Gregory

welcome quarter Credit session. will our Kemper, morning and the Jim to Good and question-and-answer UMB of second also comments our CEO Bank be Ram Rine, for CEO few Terry, President and XXXX will Shankar, a CFO, Chief share Tom about results. Officer and Mariner call. available

risks that assumptions, are or forward-looking today's which included Before results on and filings set presentation may forward-looking in presentation. remind we begin, other statement. of currently and those and of to any let aspirations statements, are of page crisis. the are including Actual our you in our subject impacts the summarized differ risks, me uncertainties, SEC all potential circumstances future These contains unknown COVID-XX from two forth

of share as them applicable we only per earnings except speak on diluted on share the basis. a no update securities extent to statements today required by this call metrics obligation All to are and Forward-looking discussed laws. undertake

investorrelations.umb.com. materials at are and release available press online presentation Our

Now, I'll over turn Mariner the Kemper. call to

Mariner Kemper

safe you, navigate healthy an Thank thanks joining are for today. as hope and highly global polarized and increasingly you not family your we everyone I all only through our and but way us a Kay and pandemic, environment. politicized

UMB. core for through and dialogue. outreach principles proactive Inclusion engaging communities have We and been diversity always customers, have been associates, our and

Corporate conversations of with and inclusion efforts, the few Citizenship heightened and included of update a the groups I stereotypes, associates However, shown to recent using We to like for many others, variety ongoing comments there. we've foster along on topics. well and action our link as inclusion. dispel key are you time our encourage On by taken we've read page five diversity some slides, resource educate hosting as they sensitivity. this more offer a in of our

fully, our and customers workforce serve begun we've most in appointment-only in During offsite. We've operations the customers to while seeing continue remains our drive-thru most by quarter, our continued locations. of branches our

teams protocols. how efforts, via had and We're sales our continue a in with instances, video proud impressed our have small approach Our taking with with a a virtual adapt bringing and of associates workplace, return meetings on percentage I'm in and perform. our to basis, to phased-in measured clients success extremely enhanced employees and safety some back calling including the

my team the impact quarter, I'd likely health While Last like our unfortunate see the CECL of a economic timing crisis, with and paired priority. of I more thoughts shared office, back industry. its in the will and on take to safety our implementation of on the

of As risks best. of to deal at we on making how see great difficult continue subjectivity methodology actual the comparisons there's apply banks a

So, our we position us our and entered half us to what long-term, served the be doing year manage to through to crisis, have continue that quality maintaining maintaining We workforce, priorities support right focus well we a capital levels communities. the and on lies high customers, and solid liquidity standards second carry the know to in underwriting the what's of ahead. what and this over

record, us team with liquidity a of capital credit loan crisis. superior experienced particularly most with deposit strong and times an We flexibility. have position that ratio have in we levels solid to a importantly, provides a very track And

issue through economy, politicized, issues, in is a to where navigating relates it by every particularly deep and the waters, are the we rooted As an further muddled election pandemic, year. U.S. global social murky

persist these the into uncertainties fragile the economy these For year. be reasons, overall and continues likely to next will

significant we haven't to-date. among markets signs our and our of within borrowers, seen However, any deterioration

practices, $X.XX along and that posted our the million. remain share or headwinds. turn sheet on with second to million days $XX.X evidenced to as balance hear compared Total $XX.X the income of on share our mentioned, at we the by XX customers $XX.X $X.XX results, $XXX.X of XX% strong quarter, the prepared basis. was net income GAAP points a charge-offs. per our million a I fee into strengths or economic underwriting of the basis, highlighted X.X% per million to which a an We pre-provision and current Pretax our income linked-quarter increase basis continue generally XX to of represents second quarter I'll the Now, quality over quarter net of XXXX. operating increase weather

driven along and costs, in results we've MBS industry, whole drove from in fees million, positive card in loan While, including debit Similar increase [ph] volume, a trends in by and investment investment across and deposit evaluations, seen line. some across higher spend well which Net billion reductions brokerage and interest this banking business, as we credit find with quarter, adjustments, volumes, as in included which as of XXb-X can loans. our linked-quarter income our borrowing you increased market banking, saw the trading lower X.X% particularly categories. trading included related and reduced $X.X strong to municipals first $X.X PPP most

utilization, of from averages loan XX% outside in PPP XX, excluding PPP. following line normalization the COVID. was were initial at at growth which partly X.X% spike lower pay-downs $XXX New million, by slightly the June was quarter impact production pay-offs than of and at Organic of strong remains XX% commercial the first the and of negated historical balances, to

implications crisis. to In the first the of addition, understand bit we were a deals quarter of in had end customers pushed out some pipeline active the the at as pause

across strain Looking Average normalization estate, X.X% by see Driven and commercial several drive sheet increased balance as risk breakdowns of X.X% highs added slide hit our adjusted. the restrictions class. X.X% composition operating portfolio section product linked-quarter loan category industries well-balanced and a reviewing activity. by had We CREs of sensitive during XX, loan travel-related the levels in increase we and during and on And consumer ahead little as of we robust after performance. consumer by relationships Mortgage to basis prequalification companies. to lines, based and record PPP represents third We've excluding were balances utilization. the in industries, costs. to real loan annualized. and quarterly On living group on updated exposure of is businesses. potential expenses warehouse in continue occupancy This slide removed the impacted related on our into asset that exposure helping COVID XX transportation That presentation, our to our estate. quarter, line applications to comprised pandemic-related geographies, remains list with quarter, freight balances C&I increased to its quarter, April. on commercial the by shared the of when which and the portfolio portfolios we've industry the an diverse followed real activity loan X.X% the or just top shown of The senior largely we've

balances. As XX% an we if did category may with we After or looked we feel more represents as prolonged. that portion about last of crisis each more analysis, potentially carry specific well credits being quarter, again comfortable PPP risk at as for is specific in-depth as view the loans, the excluding we impacted total characteristics those which

on we included see, billion the slide diversified and Details eye this industries. that considerations we they continue category The an on evolve. shown Of slide. conditions We've details broadly we course, in among but some during the as was in expect a isn't the to as each losses this $XX,XXX median can and indication booked close quarter in on $X.X on they're the PPP portfolio, keep XX. are size loans you

asset at quality which million. see on times quarter XX, CECL provision that X.X charge-off of net slide $XX.X under million, looking provision, Now, second you and $X.X was represents

and was our prudent provision As the conservative. substantial reserve previously, and quarter in we build noted first

June to Additional our reserve as second coverage build allowance XX for million loan losses to loan the of quarter with X.X%. allowance an in $XXX.X total of brings

clients. long-term reputation credits PPP credit for based and basis Excluding to of peer to times improved quarter has year who X.X loans. CECL. the to points UMB charge-off had to a from reserves to to-date. two of keeping is it relationships or first our reported those just to have on from nearly XX XXXX for loans the compared historical quarter to was times NPLs being with is rank a prior of loss responsive, now the track end median is long-term coverage relates performance average as Total for assets and than we consistent, what our always non-performing X.XX% of that on adoption better times based Net good at our the prudent and loans, record it X.X have moving X.XX%,

will periods quality our keep for management While our during stress. differentiators, of risk this credit is that new key one we'll unpredictable territory and especially all environment focus on of the believe a us, of remain

we've Based on approved slide added at data the continuing our those more in in table totals loans billion granular we initial as XX. by for a We're in and risk type our on in flexibility quality to This look clients portfolio. shows inherent the the provide modifications through modification. you'll quarter, approximately see This loan in requests, table well. $X.X

fully dental balances. accepted of This necessary. not deferrals June general XX, those base. offer $X.X weren't of to practice to customer had loan excluding proactive determined strength as books, billion clients, PPP of largely were our business X.X% our of six-month modifications group. offices in banking they This our many our However, we on solution representing the speaks portfolio includes customers ultimately At a our the

our begin regular the making Our have with the deferral Anecdotally, and with of portion indicate conversations payments customers teams good are in a period. ongoing that our at will clients contact end dialogue. CRE

our in March borrowers difficult our moved of Teller through since XX% important among we industries in it's online platform options a we engage increased has makes of our number June. to branch of personal online capabilities significant digital We our last of continue second opened at in of increased of We mix sponsors. increased pandemic, account daily deposit drivers the ahead. launched As account The the that the reiterate number to increased, our accounts sure online just XX% is opening, tool the has existing a sheets the including banking wave a after fully capture uptake mid-March. navigate through. the been users and and as sensitive fully position Ultimately, channel. we banking to have our of timing quarter, appropriate upgrades, base finance the headwinds online the In have Usage what the and drive-thru-only customer reinvigoration and digital opening to Well the staffing finally, number said by especially begun the average make Mobile our of customers. lies second technology during I users XX% beginning, it network banking I enrolled our new transform days to operations light since DDA branches although offering, was within online access quarter the retail strong customer our the at and limited we're onboarded business, our ahead we'll from to users balance of our clear had about closing, XX% living and of look capabilities. the new platform. indicated in to we're May, has in we use the new sound of continually our what in

living interest strong a with and the prudent to help We diverse rate long-term of environment sources risk manage capital the revenue buffers for a provide history we're position, in continue liquidity in. management, to

I'll Ram? turn our to drivers to some of Now, discuss the results. over of it Ram

Ram Shankar

I'll Mariner. XX. of losses, on you, our the credit and CECL drivers slide begin for comments begin which Thank with on allowance

modeling, frequent the we discussed, quarter took considering expectations saw conservative to economic that approach and we changes previously a we at volatility our As time. in first

modified in commercial provision as As of looking mix, well $XX.X net allowance quarter macro-economic from loans. in in continue to Baseline real for will half any At and in reflected our second nearly the and growth, forward portfolios. million commercial as Mariner our for changes of our macro-economic June, variables losses economic million, June on our changes charge-offs, the provisioning linked-quarter. models. second provisioning noted, in the credit for assumptions Economic as estate quarter portfolio predicated $XX was attributed that prescribed drive losses Future XX% be credit consideration Approximately loan and Moody's down XX, key levels to totaled our issued the Forecast

XX adverse points compressed and excess of the the have of These in impact increase volumes the positive points quarter. the point first looking the XX Drivers margin place. was of rates change reinvestment loans. from income synthetic interest cost offset negative from the cost including earning results, deposits from a bearing month and basis by at Now, over increased included basis fell interest $X.X point points reduced quarter an a and points by one changes a XX driven and XX quarter-over-quarter $XXX.X basis basis from basis basis only from the the from funds, liquidity loan Total interest X.XX% the from loan in A yield, lower benefiting by Net net basis costs, of points decline from points portfolio, a XX down a PPP basis in LIBOR reduction points reduction yields. partially XX market in floor points were which lower first period. reduction basis to two the XX X.X%. offset PPP point basis one XX margin the of ago quarterly bearing points a interest represents free in benefit to first the yield decrease impact basis two loan loans spread by linked-quarter from in included from from the interest basis Net positive year liability million we reduction AFS three basis points rate. the five XXX negative including of bearing asset million points quarter liabilities of to interest basis and

a income, a is $XXX.X in expense. million As compensation resulted reflected by insurance swing the in the which is on income adjustment stated, other last and markets, volatile the continued from increase increase quarter, quarter fee impacts $XX.X the income a which life similar line. included in was for This million company-owned including valuation in deferred offset

included MBS valuation increased drove of by banking increases volumes Offsets from mentioned, reduction million has investment watching brokerage a bank and trading reduction market We've spending credit and portfolio. our benefits $X.X Mariner the to million income patterns. card As clear card debit fees $X.X solid and dramatically income. muni it's our peers that a reported pandemic in and have been as results impacted supplemented

have and Our stats card as spending. in are XX% well decline a we reduced care, decreases volumes, card spending, driven travel, in largely and as people year-over-year delayed nine. healthcare gasoline, purchase volume basis, as total saw some by medical On dental a on restaurants, slide entertainment routine

have first in expense, compared profit and or and and related the our development lower mentioned. this decreased first of benefits to expense corporate business pandemic. In and I million line, partially sharing million front, by $X.X to up the municipalities entertainment reduction to in make and compensation the offset the usual COLI expense. was good seen activities increase been and offset quarter quarter driven Marketing a income travel increased and for declines to in by a taxes On travel closings activities. deferred due the payroll to other XXX(k) from salaries $XX.X have the $XX.X which curtailed portion million the commercial card the quarter, school business Expenses XX.X% increased compared increase decline

$X costs COVID-XX tied our non-recurring response. million in we recorded to Additionally,

full the anticipate XX%. tax we the be XXXX, approximately to For XX% will year rate

linked-quarter deposits dispersed Moving XX on to free X.X% to total deposits. estimate balances now of nearly deposit to customers. the that and increased back about balance XX% basis related our June funds $XXX average of comprise demand sheet, million PPP We were funds a of

CETX of based and regulatory the ratio for common the with ratios of on inter-agency tangible assets adoption guidance capital regulatory strong maintain to transition to X.X%. continue We of equity XX.XX% capital

XX% ago. the per quarter, from book increased a tangible to of the Our share at end year $XX.XX value up

Regulatory prepared of And XX. remarks. shown That begin far to the capital comparison, now an it operator the I'll so portion to ratios on are back over call. our that shown have peers our concludes of For turn X.X%. Q&A slide have increase reported the

Operator

from begin session. [Operator Please now comes Our the go will question-and-answer McGuire Stephens. ahead. Instructions] We question first with Gordon

Gordon McGuire

Good morning.

Mariner Kemper

Good morning Gordon.

Gordon McGuire

quarter-over-quarter. seeing whether trends you'd to wanted and I'm start curious deposit outflows. that the in sticky balance much of $X.X billion balances, fairly the expect of of what you're so any to deposits size, terms on how or sheet PPP I far be in including seeing kind grew even you're July deposits,

Mariner Kemper

This soon so be We be I over give say in don't the doesn't a obviously is that that the anytime part we're environment and build liquidity liquidity of environment we Mariner. guidance. to But expect living to seems would we're don't look drawdowns soon. anytime in,

largely a have stuck if and it soundness liquidity And We picked very, do the liquidity. crisis, combination, just would temporary in to just There'll going during I people had think safety But to that I what history build be we've I indicator, question a largely of when environment, building around the share the But say, are to early, continue we very And book your tell. It's deposits. first still is of to we an happen. would early and than we're would see? diverse too balance rather I but say determine we liquidity. sheet. too build, is market part up what's a our and last it's say still

Gordon McGuire

the to think consistent that Is you had forward put of more quarter; the from on would I suggested that looking try here? And portfolio. the hand still last into securities cash you

Mariner Kemper

with we to loans into we'd a just rotate and of obviously, absence so be Well, what of rotating loan -- that to more securities. into we'll it's I rotate demand. of matter that demand, In like we're strategically, seeing liquidity the mean, want

Gordon McGuire

you you how what just for I'm more much an this quarter. repricing have room or strong floor deposit expect to kind if curious, on you cost, Ram, to cost, you how had that in could much And on estimate was pretty front? go of

Mariner Kemper

Ram. Go ahead

Ram Shankar

Yes.

June, second the for quarter about points basis XX at month we're in of right. mean, XX, I we're So, the

end basis curve, points were our to XX look out bottomed at we you around of short deposit on or so. XX the at the time, costs zero points if So, last basis

that's course, there's shifts four slight our and in three, deposit years Of some ago, been mix.

probably on pricing marginal points in deposit for XX basis quarter. the to on deposit So, there's taking. based downside But relative going saw it's on the some actions you this we're some be still room to drop the the aggressive past of cost

Gordon McGuire

me. And potentially subset what portfolio it industry like at basis then dollar a basis, impacted update was each on last last listed sensitive and I to thing the increased looks that? If more to quarter, categories. drove I look characteristics if the other compare in percent and months of think trends concern? have multifamily, And concern concern now? more Whether what ago so, curious particularly what some three the less from but it's more also migration warranted would I'm for or

Mariner Kemper

I'll answer take So, whole the I high all, right? then level a first percentage pick a if change and balance can you if for he mean, related to the of size don't is the Ram see slightly I you. have the smaller, up -- of portfolio sheet.

shift a part housing. senior was transportation we in other the we that's as put And So, a really then spoke, it. of just took out one and

if overall I Ram, the of concept. It's unmoved. really you to--? don't there. same as sheet error -- if know pretty margin balance that's if you of in size that, want So, would the component change kind size. I take it really a my that's would estimation, of you say describe much the I

Ram Shankar

That's No, exactly it. that's exactly it.

XX, added that and slide what what's in as is basis occupancy senior trends away You footnote an living, just differential so see about in the we category, and would on that took about headlines instead you see -- transportation because this points. and of around, then time we XXX atlas our right, about

you tick see that's marginally why up. So, it

Mariner Kemper

of a doesn't We in little interpreted. an our is as also to want group, it. think than just we're that of a I being watching this sort different we error view that loss want it's don't identified more echo see just loss. -- categories means -- it group just It's concept bit Yes, this of to I indicate its closely,

that's something to So, also the add to description.

Gordon McGuire

of I multifamily I the of switch impacted from these any senior increased in looking living, And there some more portfolios. XXX to but I if was potentially I And was appreciate went to at Okay. concern from out transportation was dollar XXX. curious balances guess

Mariner Kemper

shift. you want that. It's to minor take really Tom, a

Thomas Terry

Yes, is Tom Terry. this

more growth We loans been identification are that Some has shift -- There in of balances. is construction of, loans. in advancing, just not in have that there we you construction so about. an not are we're that is have the still seeing worried increase a

it's construction in natural our just loans. think we're I mainly the that growth seeing

Gordon McGuire

Okay. you. it. appreciate Thank I

Mariner Kemper

Gordon. Thanks

Operator

Chris comes Please KBW. Our next go from question of ahead. McGratty

Christopher McGratty

Good Great. morning everybody.

Mariner Kemper

morning Chris. Good

Christopher McGratty

robust, repricing optimistic that remarks, have or statement? markets more little on leads prepared which you I your the some outlook you seeing loan would And what loan loan growth for of characterize that think in a as be great. in Mariner you're to your you interested that I'm your peers. could than color is demand any bit

Mariner Kemper

Yes, sure.

growth, to loan that So, was second coming that on in even obviously down. you first decrease of where line all, a quarter, mostly utilization see small due

you at it look gross actually production, was If up.

the So, by side expected just the second even quarter quality a saw it it to was by of the positive gross we utilization That's way, indication quality. see of in rates, in come of we as which sign we in the negated that portfolio. the way

relates into any we we looking because the coming second a it and give as to and do, As coronavirus. quarter, in is we bit little quarter always higher into why quarter part next the weren't a of of look the of growth

of and parties to slow together and and down a was such. I close -- bit it hesitation little So, the call or it bring ability

So, into quarter. some has second of pushed third quarter

third identified growth quarter. the of we loans and some expected Some the pushed of have into we the

some we the the we growth, -- into the loans of Some into quarter. identified, expected the and of pushed third

is it's of market markets economic gains penetrated And in under see about part than it and in always far as the the that. as third growth more is what we quarter itself, our share loan growth about said is what be loan forward we've activity. that'll So

have loan growth, continuing economic low blocking not say and in It's of it's large market and an share more see tackling we when activity. indication we So, where take share we markets. robust to us market

activity. than gains share about more it's it is that's, economic So

Christopher McGratty

know, in fine you that. you you Maybe COVID has emerging been with maybe I ability emerging think I have think XX the in an management team, with have days expense to lead with you for branches. branches could what to guys a been synergies Thank tune I learned the managing follow-up, theme, guys some in terms the past that. appreciate of over about kind how past you've pretty in proactive environment, that this over thinking time. interested expenses you're last Thanks. and of I'm your the COVID, and

Mariner Kemper

Yeah. start the mean, we're Well, I middle of, middle saying, in I by the that. we're of or --

So in would in say right? related what And of I changes mobile some the pick mentioned an and is, our there is absolutely of to change products. we've up comments, all prepared coming, our activity platforms different

be we're -- I seeing what would say, process a would year XX was to process. is year -- a now once XX two So, I year a going it.

more are the react we all do to size a questions that it that the efficient, place and will uptake to we're the exactly we're assured be the are we're with to branch, know, -- how to but it's only what's too drive years in I two and you with in tell next our early it, product and analyzing with means It's process, branch be interface it pretty up base. do what of absolutely. on in mean, branch appointment Digital deep customer what going and think going become the I the neck deep will these in going transactions will do of over whether in change, Acceptance a dramatic in into it with our will that, industry, side, take we’re

Christopher McGratty

Great. PPP you're last maybe maybe That's for Ram, to outlook, of come in with help Thanks. can or great. and the modeling the us one fees the timing And the you how that amount it? are

Ram Shankar

right, we're and and seen, first what expect very what the is that's between quarters forgiveness, be said probably others to happen. in modeling that XX% So somewhere drudge remains off things a have fourth the to these earliest big we consistent Paying of That Yeah. Chris? XX%.

XX% probably, range. I distributed with evenly So would fourth quarters, would I the start between say, XX% first and to the

Christopher McGratty

amount the of the yet then -- that to were And fees be are that realized?

Ram Shankar

disclosed. about -- medium XXX-ish it's based yeah, the Yeah, we on it's about that

Our is size median the about XX,XXX. PPP on

using these For we balances. were modeling X.X% purposes, on about

Christopher McGratty

much. you Thank very Great.

Operator

Jaffray. of Instructions] ahead. [Operator Nathan comes Rice from Our go Please Piper next question

Nathan Rice

Hi, the guys to loan was guys. Good on a are of this just second morning. of deferral loans to expected point, slide are how to modifications, forward? need much curious, XX% currently loan deck. I are clients I deferred the talking disclosed in as those, just going as that touch -- want at you

Mariner Kemper

you want Tom, to take that?

Thomas Terry

commentary But this the the what to, we of really requests next low. roughly of hearing deferral, been been have At real-estate economy per second Certainly, of all less over book, customers Yeah. and portfolio, our could from the point, second level deferral those requested ahead on volume Of than positive In the of requests has and C&I now kind like has we're XX%. that slowed. is subject change. In and that. very lies right our it's pausing who feel very been it's far commercial the so a several weeks of months, that so deferral. the

Nathan Rice

great. Okay,

Mariner Kemper

to Well, sure we have because that note. the that make I had

deferrals, -- to were at we this point Tom versus approved. accepted those less from about of substantially percentage is So was what than And talked quarter billion first when X.X

Thomas Terry

billion what X.X was ultimately Yeah. And got X.X approved. that's billion, booked.

we So Yeah, don't the need for said of fact clients -- had that for approved -- that paying ultimately a lot modification on the for and in kept so a number it were I contract.

Mariner Kemper

what approved. because Yeah, number, number announcing the first number just so we were is is the first than today important the that more second

approved quarter. is number what -- last we end first at just of the The the

Nathan Rice

on the a what is guys the use deck we the others input effect saw early Understood. Got details from the far qualitative it. the you so in below the in And and little quarter, lines, June. the in like then slide a along quarter. looks from just think guess I Appreciate about it those provision score some provision third-party

just and COVID input varies think So knows at think going -- includes second state point. I by that this which, I wave of forward,

have how would the into economic curious, point. of quarter about a this kind and more of CECL had that kind the third if as and just at think impact component at quarter So your guys should current provision how provisioning least you provision, the to well we model,

Mariner Kemper

I'll just take questions in level we let modeling here can you me the there. my But Ram soapbox there, get a any second. want first, get high that get and into quick for to

You are CECL to relative out to I'm to trying a the in if to through credit try as actual you look relates banks. in tells or exist all look us. performance it not what fog CECL, believer risks actually for actually the know, what figure it

a to is what's all charge does those because accounting because dues, our we're to we how CECL attention my convention of bank are as it's every a, to the happening to we that what's to to, to loan you it's but about you relates off, different. complying need know, the And pay nothing means is to CECL joke, way happening our can banks I what's what feel it happening happening I our what actually -- across with, the it to is -- quality utilization and me look levels a is things portfolio. NPLs with past at the comply rates, information. You an what level

portfolio. the a bank's So way it's what an are problems it's to stupid -- a analyze in

So about that. how I that's feel

is So, peer times. we're X.X should helps being group is understand you covering X.X to is their group coverage provision X.X XXX allowance us against They're a coverage, at times, we're which what they're median you what X.X me, look at our at at know, are why peer one on at NPLs NPLs for at NPL our for XXX. the covering all -- at versus with times

on. those basis what's are means which know, kinds it of think off significantly, more than happens down to XX% overnight, So on rates, and of and outlook, that are now, look charge and things the versus to what a and current on term to an from your, your quality. And economy, performance way utilization are tangible, nine forecast short over that term that C&I past you that of and you of about is XX% is impacts beyond happened think forecasting COVID the in unemployment to ours the book at your disease a is happening it's our, focus are absurd your short virus. past actually because -- to impact quarters important the what's of happening I the impact to obscene trying are a those credit period, what's your impact And the And real our things know stronger unemployment then was. rate

what I that. in deployed corporate with with right the Moody's about spreads. think BBB But back using gave for spreads. And side. about and was macro out quarter the how corporate macro line you the we've think information million right for -- that's into is, it, which the quarter, provision our the spit that's And X and data is line the you gave I using of -- on that's, so that piece Moody's BBB stepping we're that we're our the in So

from And all macro using the -- that's would provision effects at we total it's portfolio those X.X spit to look And, that the the data qualitative update to using it, our slide side. model. our a our is out X.X. in know, -- XX if you million for update Our model data deck, you the XX, do page

So anyway, that's my take.

be having all anything. for I'm to the just You have silly, with doesn't anything ask banks, macroeconomic nonsense over because Board. to do And compared But of kind COVID all it to other by frustrated didn't it's that's that.

on my that's So take it.

Operator

question comes from go of Shaw ahead. Our Wells Fargo. next Please Jared

Timur Braziler

Braziler Hi. filling Good in Jared. is morning. for This actually Timur

Mariner Kemper

Hey, Timur.

Timur Braziler

over loan maybe the the switching base? CECL and any But from book, all third the those Appreciate coming commentary quarters, growth robust loan guys. on is commercial for color your in utilization of that rates commercial the Hey, certainly stabilize helpful. in to that have

Mariner Kemper

again? you that ask Can

Timur Braziler

to rates the quarter, of So as then book is those started commercial by driven And of at that book? the the XX%. you utilization stabilize being the loan in the the for commercial growth looking at third commentary at look any robust

Mariner Kemper

rates that the will be to unfold. are to line know, utilization that'll But a where utilization historic rate in you have our more is, now. hard So what this be be on things it's basis, it'll because, would on tell based with we prospective

its kind rate, So given fact probably going at have. it historic it with quarter, curve levels, in a not far as much that growth the play of a but kind it's looking into what we in loan the as will to is -- less drag, be of how growth it likely stabilized next to of line way play that's backward what in utilization the

Timur Braziler

then looking for at Understood. deferrals, Okay. six the more me, XX one breakout months? of versus And those can the have we deferred days for

Mariner Kemper

You Tom, the have Then there. got on that? that. we guess, I slide

Thomas Terry

six slide of all business on interest else a was are banking basis. done month The XX XX. So on done day category, on The majority vast deferrals. -- everything only those page

Timur Braziler

Okay.

deferral be really clients I cautious is you optimism are to going have of How kind gauge more coming until the outcome business then It's so of going a into this be going sub that banking getting period segment? on. hard a situation much ends? of Is deferral is. that visibility there And what gives enough you that the out guess, this? Or to of to period

Mariner Kemper

Tom. ahead, Go

Thomas Terry

segment, of majority our banking that practice to The Yeah. largely business finance dentists. loans,

down open you track they this. offices and elective when at except they sort close if should so of the back today, shut unknown period, to The the and clearly we're procedures. of fall entirely, changes, structure. but which of to to get payment XX kind into that the can procedures, closely days with XX then a able you back dental deferral to type more Dennison the be really the some type the normal is end follow are lockdown do emergency They And were for optimistic a they're back up, quite allowed that of for we first

the that slowly able -- to continue practices that the up, end procedures of type deferral at opens optimistic -- the be the off to elective come and back to they'll we're to economy dental do the be at up able as the agreement. So the

Timur Braziler

Thank Great. you.

Mariner Kemper

Thanks Timur.

Operator

[Operator question ahead. Instructions] comes of from Please KBW. Our go next McGratty Chris

Christopher McGratty

thanks for the follow-up. Great,

charges, from are obviously just course elevated that liquidity is cash May, to the get wanted that little bit over progression the kind lower June? just of in of a transactions it color heard service we've banks most But and trajectory didn’t of on April, the more Just waiting that. on

Mariner Kemper

that or got I? Jim You Ram

James Rine

-- Well, is Rine. this this is Jim

uptick But thought service related most seeing they're the same thing earnings primarily we the event, far as in actually balance credit but that to service are more quarter consistent on charges cash sheet. we're first as one-time charges, decline. on the with On

So loss not than offset. that causing certainly other line pressure. item increased market But -- that is loss business it's actions through particular other are or going business through of to not see or that of it's some

Christopher McGratty

Understood.

Mariner Kemper

some with pressure trends, right, underneath it. on but of on industry nothing stable based to point relatively So this sort just hood the no there's

Christopher McGratty

rates to And maybe the breakeven, just portfolio. one of a kind and where, your borrowers? be could your of some comment on portfolio on you occupancy quick of need those Could for hotel one in you kind for where make

Mariner Kemper

out, first And have is within limited we the then as you the service and answer just Well, XX%. we mostly know, it's under portfolio.

far As you something from I'm something Sydney for breakeven, we not that's know, have as that's Tom, sure Sydney.

Thomas Terry

top. We Not, don't. off

Mariner Kemper

-- Don't Yeah. can later. something we it's have that But that maybe we address XX%. about that's

in service again, with limited That something loaded I tend hotel the and feeling the are categories. said, sponsors. portfolio the limited have maybe it's relatively about that good certainly cetera. And so, closely can from other sure, outperform don't there to -- guaranteed large obviously know, pretty good. different hotels, we hotel. we're occupied and we with again, liquid you Just feel the the breakeven, to it's mean, we the to it's all feeling to expenses are it's, service watching And outperform other -- I'm we deal address et tending XX% future about, quarters where under portfolio, XXX%

Christopher McGratty

process then quick the on just one appreciate for I hotels. And that. deferral a

did work more your borrowers? banks board for hotel How get kind of were requiring that process had Some specifically deferral. more -- to equity the deferral

Mariner Kemper

I'll Yeah, that. take

the we board have position we start to that rule, just, strong require but to so to these, would out perhaps in and ahead started our cases. I lower as equity just do sponsors, stronger also some we're did, going some than gathering. in done, across the Generally, that deferral. deals basis into cost, we But a a value. We loan at lower on think hotel again, have didn't the additional out the go You with we loan of

Christopher McGratty

Thank you.

Mariner Kemper

Is that what you're asking? Okay.

Christopher McGratty

Thank Exactly. you. Yep.

Operator

David of Our James. Long Please Raymond next ahead. question comes go from

David Long

Good everyone. morning,

wanted asset this Just revenue can move there. around in bit about sense from guys you that my a consistent pretty business to is volatile those business quite held that numbers backdrop, ask servicing the have

in the pick So environment in share any on itself just the And puts that as to today business? takes curious lend and well? business that does also up market then

Mariner Kemper

Go Jim. ahead,

James Rine

to business share. partly, made been continued That acquire Yeah. strong for because has We've we've investments. market us

strong -- -- growth as our as seen we've investment as Milwaukee have teams to stable we've there. as Utah have and well alternative be don't We far anything to seen the I add. until

Mariner Kemper

space, add don't market the and is way. because they as player the we re-price strong and liquid same the The the they are thing up only asset would I side, hold better in alternative values size that, do the in alternative

U.S. of So priced assets in values lastly, continued way so a the of we business all with, than learned of from U.S. about, And, are volatility new into the we've less because have pipeline that seen been consolidation. new the they basically. seen hold And suspense place, grow the the helpful. better takes has market And reliance the a we business, industry, what goes to about when also is combination teams because hold on consolidation our have lastly, gains the heavier better. along with talking share pipeline

been And larger so, more within basically the in that's, anything us. other pipeline consolidations alive that's becomes for

And the growing of has so, pipeline our because been consolidation.

are the players. custody of some hired been. combinations of our along So with has business that's big three the We've kinds of people out -- those some

build institutional pure custody, custody some the fallout picked institutional see So strength from help key up side. again, the we to Largely, the on several just to alone. custody the we're starting people consolidation, side just really

David Long

I I that's for. -- guys. it. appreciate That's color it, was looking the Got

Operator

any session. [Operator turn Instructions] to back This Kay the remarks. over concludes There now are I time. no question-and-answer the Gregory, like closing this questions to conference for would at

Kay Gregory

you, Thank for and thanks for us today our call. joining

you, If day. you reach you and questions Relations XXX-XXX-XXXX. great a UMB Investor have further have can at Thank

Operator

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

You disconnect. now may

UMB Financial (UMBF) 29 Jul 202020 Q2 Earnings call transcript