UMBF - Earnings call transcript Q1 2022 | UMB Financial Corporation

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Operator

Hello and welcome to today’s UMB Financial First Quarter 2022 Financial Results Conference Call. My name is Elliot and I will be coordinating your call today. [Operator Instructions] I would now like to hand over to Kay Gregory, Investor Relations. Please go ahead, when you are ready.

Kay Gregory

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

statements, differ are let on me slide are risks, that contains to Before of of we our which which These from We SEC Actual our may remind those statements, subject to as results risks begin, in are uncertainties. summarized by in securities today’s obligation to XX speak forth you no laws. only presentation except the today. required forward-looking set included and undertake and assumptions, forward-looking them filings presentation. update extent

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

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

Mariner Kemper

and today. thanks joining great for a to Kay XXXX off everyone us start. to you, is Thank

in in growth million of Solid linked-quarter quarter a average release, loans. first our reflecting performance XX.X% $X.X we the quality posted portfolio. provision included annualized the loan And

had combined we fee income, levels previous the with quarter. strong that from Additionally, moderated expense

net first per on income $X.XX or share. per was the $XXX million income pre-provision For FTE million or Pretax basis share. $XXX.X $X.XX an was quarter,

our quarter. PPP a regulatory are well First along saw made the the from our us the asset business income the various on was current million, an income positives net to update flat in basis. income balances, days our factoring items position In moves in many Ram the a Non-interest detail of relatively economic of line the the from businesses, highlighted X.X%, that increase for share But fourth will there fee continued and sale quarter. fee quarter positive of a of compared perspective. environment, The with few we more presentation. across drivers. of was the impact growth on runoff sheet interest balance quarter by and totaled linked-quarter we offset and in $XXX.X portfolio fewer

rely to heading don’t mortgage for income, is sale environment. likely our we peers, a First, into which rate drag a of on be raising on gain some

a and begun Second, rates of of well NSF portion see very And we’ve as XXb-X early, a less deposit service small and fees OD return rise. fees of represent than while X% to are total charges revenue. our interest

year million. For the full are income those XXXX, where brokerage was fees booked, $XX.X

As rates linked-quarter non-interest million typical than normalization discussed Total in expenses moderated. total $XX.X of to a in the income is fell subsequent on some in X.X% stream years, that basis, we higher fell XXXX. the A just for that fourth a tailwind quarter of as dropped us. expense

Excluding contributions first from and PPP, operating we X.X% on of a basis, last versus leverage quarter in first a XXXX, quarter year. linked-quarter generated positive the of X.X%

and in St. of to X.X% Salt our been grew of particularly are City, although strong, residential balance drivers XX% phenomenal growth X industrial the cost XX.X% more year-over-year loan mentioned. annualized the linked-quarter loans linked-quarter Commercial from to closely loan City, on basis. Lake saw sheet, in quarter is real over estate for projects, first billion. quarter growth Denver a a Kansas monitoring with of on has balances Average markets. in the labor. Slide behind balances showing activity loan and snapshot than year-to-date the our basis. XX materials estate real demand and Moving just the C&I PPP a mortgage portfolio is We excluding Average developers balances and I annualized increasing our Most balances Louis increased XX% fourth

rely I mortgage we As sale revenue. on mentioned, heavily gain on don’t

very Payment XXXX Assistance applicants XX launched it program. in towards we strong a just had of at in and loans, recent again production, However, loan top-line new quarter. to $X.X and the were for Total the billion first implemented portfolio with quarter. coming quarters. of XX, line program December and Pay-offs underserved continue X.X% shown in grow in was recently our geared Down is as slide pay-downs own markets, The new on

continue the we see see across unpredictable, be second to all opportunities on While loan likely verticals what stronger in the Based estimating first pay-off quarter. now, is be production than quarter. can we to gross

on this the driven by Asset there nonaccruals coming position the we and an a quality for which as our levels, favorable consistent we’re with resolution did quarter expect from At see and in averages. net weeks. strong time, like first shown feel our one fourth largely basis increase slide XX XX XX historical outlook good quarter, and is relationship. in the a We points remains charge-offs in with

head we The performed. in how provides at This to balance back are I on comes quality just has our first credit quarter Strong into a basis. negative. the ratio prior the look XX% flexibility linked-quarter for real our deposit metrics XX% strong with with average Back quarter. and the on growth, environment. continued a conditions annualized nearly balances cycle, loan-to-deposit the average increasing As of us sheet. in when growth raising Despite test rate loan low remains period our

We M&A. our we share deployment in and remain in have a the X annual per our plenty important approved capital authorization. $X.XX see quarterly standard in dividend opportunistic toolkit of pipeline. to opportunity repurchase renewed Yesterday, for Board million share to fund our of addition growth potential These

and our available social just issues. been Finally, environmental, and corporate our to continued actions is report and highlights citizen related published corporate has governance website. our latest efforts on It

quarter. the the quarter and first for position far rest we’ve year, by well strong are of Our we the encouraged us in activity so the results second seen

Ram. Ram? turn I’ll to it Now, over

Ram Shankar

quarter Thank PPP fourth by to the quarter. quarter impact compared average growth asset amortized X fewer The $X.X Average contribution million income $XX.X sale first the origination in the earning quarter asset PPP earning million quarter-end, PPP balances. and was PPP basis to interest the of the you, yields last December million the of to just yields average was flat billion million. interest decreased with down loan $XXX.X reduction million stood At offset our in remain. $X income relatively fees $X Mariner. by approximately from decline at at X.XX% million of $XX.X $X income first Net million fees in days quarter balances was $XXX.X $XXX XXst, in $X of at XXXX. million, and compared into to under the the and unamortized income $X.X in in and overall factoring PPP the million net the book We impacted points million

XX, in assets balances. liquidity remain this XX deposits, the average And basis blended of fourth of the levels. pre-pandemic points. quarter, total free with average cost in in shows reverse driven remained compared elevated yield the DDA deposits balances from moderated balances and was slightly still As comprised basis Fed points funds at points basis now from as to shown increase The quarter on slide including of earning a by repo our growth X account, fourth XX% cash and X% XX

First ramp interest year the quarter slide net income fourth one two. in offset XX show the driven interest days points and basis X.X% year margin on levels by XXX loan impact of to predicted book, to quarter. is static by number the AFS rate X.X% the in to liquidity points basis positive scenario balance in fell changes We’ve interest decline sheet, mix income various rise in from quarter largely added impacts in of in In X X.XX%, deck from a and in a our estimated plus net in net scenarios. rate the changes

repriced XX% those are just the XX% LIBOR. rate, average under of On within XX to or tied to with are tied loans about XX% and variable short-term side, asset of $X.X months. They billion rates

securities rates. value our XXst, fair portfolio loan book transferred the to on capital nearly we securities rates At the help press has our of equity. March XX and And impact Notwithstanding we March from the XX% our indicated reinvested strong release, as the $X AFS is growth, our in in billion Additionally, securities flow of months classified cash held HTM portfolio higher expected with next to to rising our of to available tangible to maturity. at be was portfolio $X.X of manage to reduce continued securities generate grow. billion a as in

from declined million the AOCI, expected, changes As $XXX drove which rate in environment year-end. by

we’re affect impact we’ll Although mitigate value potential of mindful opportunities continue fluctuations AOCI the and to to on in tangible book evaluate earnings, that don’t impact.

quarter first transfer million in $XXX.X on As increase Back XX.XX% at our ratios, $X.X you’ve healthcare $X.X the fourth focusing and heard the remain was by with of we included strong income income increased $X regulatory Noninterest Deposit CETX us service million client in million increase business. charges a an quarter. million, fees and conversion for X.XX%. risk-based total statement. our run capital business ratio say from before, at to the XX.XX%, which at and capital leverage

as linked-quarter from such lower and incentive elevated the life included are increased the These legal insurance higher to including marketing revenue business income investment slide are drivers payroll a similar As the has decrease $X.X were compensation of reset basis. on by the I Both by mentioned consulting driven other Derivative expense. Non-interest XX. in and taxes, than are shown fourth of from $X.X quarter represent and in line costs security expense at and compensation costs. fee card came income increased Mariner the XX. and on offset quarter. shown million $XXX,XXX income on slide million in reductions expense. just trends in million of first less line on the included in total and factoring the levels Other the prior NSF/OD $X.X COLI partially mentioned, compensation reduced seasonal typical X% for a linked-quarter variable increased fees our gain income and income, offset bank company-owned deferred $X.X quarter deferred this the sale our gains The was million

for tax first rate XX.X% effective Our was the quarter.

XX% concludes prepared of year turn to That the the portion full begin to call. I’ll approximate Q&A it the to it we will the And XX%. operator remarks. back XXXX, For anticipate our

Operator

Fargo. [Operator Instructions] Our today comes Wells first Jared from Shaw from question

line Your open. is

Timur Braziler

Jared. on This is Timur just in Hi. funding filling Maybe Good Braziler the morning. outlook. starting for

period wondering cash the the you deposit or to how of utilizing that funding keep help that guys loan rate a So on? growth I’m those loan-to-deposit end balances year XX% at the going and pipeline flows, environment? you options. end some just optimism cash remains period of securities in as clearly, look or rising with are ramp the expectation there, that you the maybe to you fund ratio, about as that utilize goes primarily Are have higher thinking growth,

Mariner Kemper

got the can for growth, kind to what the question. shortness window, we flexibility of at got with need our investment Thanks the keep of Yes. we I’d the tap. we’ve and the and of we obviously tap loan-to-deposit to ratio we’ve lots book say, and fund what

Timur Braziler

rising and environment? and longer? is that book Okay. about in a deposit keeping a lower deposit And rates betas you guess, of thinking I deposit about be you rate are rising as think the driver going to betas, betas for How

Mariner Kemper

Ram, can shocked I high to level, We’ve we’ve that. that. analyzed take the mean, seven Sunday. you ways

to to with do We’re to have have have their just follow. And going with what the banks rates. four of monitor to a deposit largest to And do betas will lot deposit or we’ll what it. happens three

that’s We And to index. some XX% funds. have do. what index do of it’ll are hard them going

are deposit So, just that be betas we’ll something monitoring.

ends have on deposit of all we’ll that being XX% just history up. see betas. around a We where And

Ram Shankar

flow, a From cash given there’s perspective a more to non-index the experience as time, and assume like for more do bit we on be disciplined XX% flexibility Timur, it. us Yes. last certainly, beta the deposit But about little lot deposits loan-to-deposit a the ratio, so. the soft modeling index securities similar

‘XX So for part thinking our will ‘XX. certainly, and be that of

Timur Braziler

the you I’m yields And then, the bond saw reinvestment quarter that what high of X%. seeing were today reinvestment the first wondering, out still Ram, book? I are the for in kind deck in of just

Ram Shankar

higher It’s are Yes. than to going XX the be. roll-off points basis about where

today, two-year if our be look the slides, on to roll-offs are for are the one expect where of months, at you under XXX yields to our five-year So and next to the we XXX. closer X%. XX our based And

this assuming stays So, way it there’s is. a the up pick nice

Timur Braziler

or just pretty then, expectation usage that through stability see optimism, book. to line for And ticking utilization in wondering, continues line just we of up ramp Nice there higher of any year? commercial level Okay. particular that incremental And I’m usage the that continued are is line industries coming last close there, the is to you’re me. to from? much the seeing

Mariner Kemper

with Terry Tom got We’ve us.

Let’s Tom take that.

Tom Terry

It’s been question. The the good utilization across Yes. board. a really has

Our C&I been strong. has business very

So, is look particular there to one at. not industry

Operator

We now Race from Sandler. turn to Piper Nathan

Nathan Race

XX% I XX% soft And believe, slide the out that index. two you a a quarter Question the just or of hard of just on appreciate number or about sensitivity. mentioned XX. the close deposit rate to ago. think disclosures threw is Ram, I I Mariner on base

want NII contemplated XXX% disclosed just the you interest slide is to the if increase deposits And So in that guys on XX? confirm beta that. those on rate sensitivity,

Ram Shankar

Yes.

index So, the Mariner that’s is X% about indexed. mentioned, soft XX%. hard There’s another

hard XXX% a to index It that points, that. one the beta. is XX% XX% So, And It of gets for every basis XX%. anywhere from mean client be the not doesn’t formulaic. it’s XX could

So, beta. do XXX% that is as the it case our XX. it’s have contemplated by is basis lot of flexibility. always rates. case opposed X% not in market adjusting where soft to The projections -- And we on slide We index a on a

Nathan Race

quarter. portfolio securities on an the We some absolute this growth had basis. balance about in thinking just then, And

forward a book is dollar maybe the allowing just balance basis going to reprice the to the higher cash what here the sheet to securities the -- on grow curious as Fed from that’s increases rate absolute just just on rates? versus So continue appetite

Ram Shankar

Yes.

Our to increase size hope to strategy is and the of securities continue our book.

we understated about what the happened of So, value $XXX talked with market is million period-end comments, my decline, is securities, had what as rate. for about because I investment balances in prepared of in

liability each and and probably or sheet. conditions this. committee we expected on about So, few asset from deposit either current -- the last talk also month cash with months, on based balance reinvesting flows, flows just we’ll our do cash in the overbuy some cash flows, We’ll about continue

Mariner Kemper

And it pretty short. we’re keeping

part other So, that’s that. of the

Ram Shankar

about at points. the duration months. is the portfolio, in last our nice XX XX swap look two-year curve AFS see, the has, as days -- And increased thing you is XXX duration the yes, adjusted if of The basis part you

three-year some cash part our flows, two-year keeping to of our curve. the we’re part curve, So, two the cash of on XX% of the invested of flows

risk -- managing rates happen headed. going duration are in all that’s we’re of extension So, a to to of where that’s given context us,

Mariner Kemper

in second than my quarter. And stronger the I growth, mention loan also -- loan did quarter first even the prepared pipeline looks remarks, the

some up top that’ll also. of So, that

Nathan Race

it. Got

more that Just maybe kind Is first the in each turning clarifying is one-time one-time conversion to nature? healthcare results one, that just of in of that $X quarter? question, solutions a costs, item fees, impacts maybe more million seasonal

Jim Rine

last that’s again going any Nate, this onetime that is a don’t this year Rine. year. that Yes. is We amount. and Jim anticipate happened event, anticipate in -- material That we happening and don’t forward

Mariner Kemper

partner of the the has relationships do of it’s that -- tail we previous to end that that tail off about really our It’s themselves. a in couple end the us. business moving talked of behind that And quarters, with companies that for as decided we --

of And talking about so, the growth… growth -- the them

Jim Rine

those growth book, that The away. design on the were Yes. to going was that by go

year-over-year growth and the On has year-over-year, relationships. the been those book that without spend XX% have, we up the been X% has card well, as

Mariner Kemper

forward-looking the relationships. two what trajectory from the versus That’s more of of those was left business

Nathan Race

curious Obviously, out over services fee we spots fees, as Understood, fund institutional income a remain see opportunities. the management very trust asset where the the look lot next guys and corporate bright the of Also across growth various on you lines. helpful. and few quarters,

just particular curious if of those be in I’m lines So, or primary quarter to for forward? expect -- this overall sorry, two fee you going income drivers growth kind

Ram Shankar

a heavily a particular, public real continue amount markets from markets. what’s fund services to you and backdrop And hedge lot be services. the private an in which perspective. we I’ve community about and is equity, are success is the be that growth private continued for investor the and really of making for to an the there so being both specific expansion has of That’s Yes. is brought, driven areas the towards where for And are REIT, happened enormous in I’m business very backdrop in would our twofold. The trust weighted excited in really of markets estate, One, are services, businesses for those been the those about. -- provider fund, fund similar past comments strength fund great corporate make,

leaders. second in has very opportunity disruption an a within disruption, the space. the is the for one the as the of private created in positioned with We’re equity created piece space the in that from activity of sector. that outsized And firms And space well has the us lot

to And the so, that case. continues be

excited. very We’re

year-over-year the On see of That’s a numbers. in basis, $XXX about little billion Number are is activity. -- You to over the a downside. up. continue linked-quarter And really a basis, on numbers just under administration. market assets accounts we it’s

a trends a So, there. is of story. Corporate great earnings bit continue trust story, be latent a fantastic to

about activity. about XXb-X and player. government stand main to Certainly, the cetera, coastal from share et But pick the the with we our volumes and as basis, accelerated as in where districts eventual see in -- are federal and sewer and poised offices to fees building spending talk be we talked Dallas, highways, state continue the we the larger. on our to national We footprint also a on continue York dollar New markets in up now bridges, we

So, deals player because number as now years space on a where larger. volume issues. number But we’re in for heavily are number coastal X we X on the played playing the of we’re

take be something, or of Illinois that’s or to deal So, Iowa water a district going hundred if you in couple million. a

New in You do and a water talking York district deal billions.

sliding our unleash again, the that’s picking traveling see trend of the people in business, pandemic, because has which are to aviation and So, been business, again. that that are starting transactions along sideways with we’re as up

on businesses. what’s across of great right both all those profiles have businesses institutional the excited super going we’re in so, I’d the say, And now board. about

health their then, And we mentioned, solutions investor grow business, wealth we’ve are what for really nice as go-forward those the trends wealth. our clients our business. for institutional, business all care just what our our Jim clients, isn’t The of new business, good is which grow seen trends as business, Our -- trends. in now are

trends all you pumped about of what lies to Jim. we’re fee I don’t ahead. the anything, add So, for about our want if pretty know and excited businesses

Jim Rine

the just crossover to add, lines is division I funds. those would services, the for commercial fund a there with provide liquidity we

commercial So, able services. to to provide over fund referrals been has

X-figure is more us, product first the fee with lines, quarter one That we the integrated is strong. ways best them increase commercial a can in really income to the backlog too. the Additionally, producing great been very for traditional -- of payables and has far as the tail of fees as one for

So...

Ram Shankar

Coupled with commercial card.

Jim Rine

card Exactly, in has your which been well. with spend, is deck, which -- as

Nathan Race

That’s could great you I investor one deck guys solutions banking-as-a-service written just ask color. on particular. the more that I noticed If in solution. in that

So, to kind that opportunities. kind you of about in to They these it’s are or banks within want I’m nonbank guys if like that depository the on not any services the hear provide Obviously, days. implies term more shift entities. thinking among line a sure of strategy your how increasingly we

So, if of I particular? just update think how you in of and was about kind going kind along the curious those that within forward an there opportunities lines is

Mariner Kemper

not exactly. mean, sure that yes, mean I is. sure I’m not -- we’ve I’m doing. been Well, I banking-as-a-service business is what that’s what

some are that’s seen providing that the historical -- a growth, wanting to of of part of our fintechs just you deck, been as customers. have brokerage provide firms. And of business it’s has part the banking their So, that services wirehouses, we for in with the see And business. lot so mature the

the and to I as banking broker answers them but white question, label, for wirehouses our our that business labeling is well. provider customers banking that well products as fintechs. know premier their if and products your a white through is dealers, don’t to for are We

Nathan Race

that in not historical the that kind I business terms some The if really Mariner. and with historically, any entities appreciate maybe that. going isn’t there’s No, of Right. I’m sure shift strategy working changeable. in of to forward fintechs other understand approach wirehouses but I color, outside

Mariner Kemper

is the the I new mean, think No, fintechs. I Yes. that’s the path path.

the up come ready. would So, companies that create pipeline be new ideas, new as through they we the

a of go-to ideas. new provider player we’re in with a kind As space, the folks premier for

Ram Shankar

far to we not it our have APIs We’ve to make build continued access as strategy, strategy. easier the But in as out shift that shifted to systems.

Operator

question Chris next Our from from comes KBW. McGratty

Chris McGratty

you Can revenues be was want Ram, the the the And XXb-X I we repeat us make -- fees. should correlation year. remind million said how last was it just got also, you about remember to I color sure think $XX rates? precut? on whether and Could Thanks. between -- thinking just I you it the

Ram Shankar

Yes.

onset in before run So, $XX by cut our rates rate the was that million. for the XXXX, Fed of XXX COVID, on item line points

So, than is in based was And XXXX, $XX back million is, also we what today. a to the million. smaller the was that on point $XX dropped book it $XX that make significantly million

being we given to up So, goes But it item pretty And XXXX the us significant be. where lag rate for interest nice for and see that. get future on revenue are a us. we’re that the the when typically that. way with are the rates XXXX, potential rates is specifics hiked to tailwind be There for line they to we should about a between if the usually, of on going is and beta hit when the benefit haven’t in

Mariner Kemper

rates we rising sooner And been anticipated. have than

shorter, pretty business. the decent back One size and would ‘XX trust so. add, new of But very aviation in nascent. have book mentioned, be example, business So, our Ram related that lags to the been a example old would also as book I just would that

-- the one example. so, is that And particular business

corporate You’ve will that got from have all trust, the fees. growth aviation will we’ve trust and aviation XXb-X an had trust benefit in

Chris McGratty

in the -- this revenues year, exactly pick fee if so, where that line that would And income believe forward Okay. and Is be? the would curve? those up -- then you

Ram Shankar

the starting on transpired quarter and be to some in what will It based we March. brokerage and line, see expect second benefits the insurance

Chris McGratty

I in deposits these deposits? benefits realize these us other do the you a where don’t where relates for of the Could beta heard deposits the liquidity perspective. where the remind else benefit that higher kind the having you certainly, us lie? Can you to Like, just question index. relationship the remind other -- to full indexed referenced, deposits you -- need had The from XX you just

Mariner Kemper

broadly are Well, the I we’re obviously, long mean for term. so material, -- our willing the pressure and business building I mean, and deposits raw pain speaking, take for to

I asking be -- about example an the example, like, come that specifically money indexed would with it. for why et issuance be with we would of think, lockbox, And that government hard government piece come business you’re a be take come that and with would of would some would would cetera. bond opportunities, treasury,

at can’t in you our singular vertical. a at deposits So, look it

to right? lending, at the higher off You relationship comes got with good. the So, look overall profitability. the treasury, we’ll some profitability cetera. of fees, index isn’t And overall bond we we’ll if issuance because on beta that, But move take overall do that or et something deposits

Chris McGratty

Yes. I looking for. was That’s what

Mariner Kemper

car income. Yes, service

name it. You

Chris McGratty

Okay. that of much had deposit the we’ve given months? the pockets liquidity trying what guess, to Are any be will and so the figure XX and we’re about growth seen base all into final -- would not. your the I as what question analysts over particularly you’re flow there will system, I stay worried out last

Mariner Kemper

Sorry.

We have little can that? repeat technical you -- a

Chris McGratty

risk deposit, unwinding money with no balance -- problem. from guess, the parked I Yes, the the sheet. Fed of

risk growth is that of be at more lot if you’ve there I’m hey, banks. deposits analysis done of deposit great of wondering to flight. a has been as might any Your say, just any chunky

Mariner Kemper

answers based a excess is about business. is success, internally growth dialogue, we how much want I’m of that the is you how liquidity. much our of at all post-pandemic I and $X.X of billion volumes, different you’re We I mean, that on to internally. claim is debate sure any $X.X lot, is much on experts really and to what that that new -- whole cetera, about that be we we we how not this the of describing country are the just et that. if pre- excess think And customer have customer growth, having billion. to And up what look --

closely. to to watching We’re Ram, do you add that? it want

Ram Shankar

transpired rate the deposits, you just back disintermediation that our cutting types DDAs during Fed total some do as kind No, XX% surge to on it go interest close cycle, modeling alternative rate right? precisely money we were DDA our cycle came right? XX%, from the for if So, to like started of scenarios the assuming the market deposits. So, of Yes. last to balances was rates, we what happened down are of and before just to or deposits history, other

into all that’s built assumptions. beta alternative scenario our So,

do of that transpire interest DDAs rate be XX% So, are going to the where we expect because of some always not our to at cycles.

Mariner Kemper

lands… where But that

Ram Shankar

guess, Where that lies. land anybody’s where the DARP is [ph] and

Mariner Kemper

and There loan good billion whether amount loan-to-deposit XX% have sheet sitting very I or at room up the liquidity our news is is for into billion, us is we ratio. to -- mean, $X run enormous ratio still our products growth and loan-to-deposit goes and $X other of or off-balance feel an safe sound about

Operator

from Long We to Instructions] James. now David Raymond [Operator turn

David Long

I little Is Is about drivers obviously that you how on hiring really C&I that gains, and into to impacting relationships footprint? gain? a growth, deeper some expectations and your you driven are veteran the are? your your growth those dig it by the core there. everyone. wanted PPP morning, Good talk the utilization? pipeline just traditional market you share bankers just Can what within drivers of your and Have been it

Jim Rine

really St. Phoenix, Well, whether all one it’s except penetration. markets Colorado, be, market particular hasn’t been Dallas, story, industry. Louis, and we same It’s Kansas really this coming been every City. been in under is several It’s And the the Jim there last we’ve Rine. And been it a regions. market, are the penetrated quarters, telling from

Said have are a the compelling types We story. hiring right of talent. before, companies. They on calling we right the are

We around to are able turn quickly. things

cetera. rates, et cetera, on et competitive are We

target talent order we that -- then, the it’s with. to need So, do companies grow business handle we top clients And we’re we types that able the retain want to the right of to to business. in

been and made it’s really what’s our it’s us for many So, years. been successful formula

Mariner Kemper

can’t turn You on C&I overnight.

taking mortgage on. stuff taking your happen doesn’t turn unless which it want some your when to So, business dries about, C&I and on be you overnight, talk up you’re on shouldn’t business, you

been and just it’s with calling business is XXX building as -- -- people have been built we’ve for time, long, So, takes this years long a that cycle such. it’s pipeline long around a the

we So, things to of it get takes lot are. where to a

Jim Rine

But things we doing we’re not haven’t done.

We’re we doing so. more of what do,

Mariner Kemper

Yes. pretty the Couple think, energy areas, sector are benefiting right strong. is I that of now,

so, sector. in prices. with nice There’s benefit the commodity And nice rebound agribusiness had we’ve energy in some a

Industrial our And depending a Companies a on build so, seeing -- there. strong. basis housing. be marketplace, shortage in there’s for to in on Mountain last-mile distribution. is Midwest, which very continues inventories side some And national the CRE we’re same-day, nice of there’s activity particularly on market, the

So, strong. the multifamily to continues be

So, areas, areas all strong some are it’s trends. that says, Jim outperforming some directional pretty and see those while are across

David Long

Got side, No, that’s competitive is side Good business? appreciated. commercial of the the color. -- the in the competition then, the how impacting it. spreads on And

Mariner Kemper

else say. best always after the and go And out it’s It’s I and know best the business, don’t anything if we business there, always everybody robust. always there’s wants to It’s competitive. --

Jim Rine

pricing the people periods time. a rate things willing So, to is are rising longer in always lock in of for competitive environment, this

those swaps we on And we’re a so, balance sheet. doing have fixed comfortable what see for those fixing But, XX-year request want versus XX-year, the with. would you we’re to rates, when the

folks we’re some and not reaching, see do ever now, it’s competitive as you been. so, to people But, And few a that. outside right of willing it’s stretching as

Mariner Kemper

customers quarters we’ll swap which You income us for look the Jim fees. might handful lock as of next because just is swap continued to grow see our be over of what back-to-back increasing mentioned, some rates,

David Long

taking Thanks, my it. I you questions. appreciate guys. Got

Mariner Kemper

of you and just are add, slide XX, we talked on interested I who excess for in this might about liquidity, that. those

liquidity bottom in a we point deck. what’s new helpful, It’s there. It’s you find balance right really balance of I to put that very happened chart I’d a XX you our thinking about have others’ point little I think where it and quadrant slide a to place. think, there. you in -- it’s I’d the we to in excess on and our likely sheets. sheet slide

Operator

from Nathan We Race question have follow-up Sandler. Piper a from

Nathan Race

talked deviate about about the the to of ranges like Just doesn’t curious on the how we the in that should sound are charge-offs It likely trajectory you guys think from reserve? historical past. have

at to can we quarters, kind do if the curious expectations you forward? expect growth around build loan next X% guys hold expect So, just to or high-single-digit over reserve the few of just least I’m going given

Mariner Kemper

industry, a so this for great how another think whether us. all of seem little draw down bit of repeated who’s Right questions. always A think cycle, staring XX seems been or recession now, guy we you at here question. those for deal cetera. our which I’ll for might our et as one historic end watched and a a sort end as forward-looking mistake us a big a that soapbox a That’s it industry. uncertain and recessionary of do It’s about of be, the it’s not the million-dollar or few environment, happen if CEO of Thanks. I less towards we times, is a the an of to though years reserves has pre-CECL, reserves all, the cycle, the been this had at deep

more it lot a less we’ve it’s caused our has how on, be against in lot pushed to And And be always Moody’s. that based math-driven have case, that. very got algorithm, -- of to a an works. to optionality We CECL

So, said a bragging our industry has have what do I we reserves. concerned they are. a times at of to really Moody’s what charge-off charge-off much rates of that not the everything to hear with it’s about forward-looking is tough, when to charge-off your their am And rate sure about look about what I’m perfect. set good. kind big are your of when they’re is level perfect. like how lot That’s a matters you part when projections brag banks is It’s what not their rates lot

that And a the that our it concerned again, seeing drawing we’re I’m we’re down reserves. industry level little so, at

I just little not what bit it our think, philosophical us. looks and year to kind late desire relates or of like, -- as I’d of economy. statement it make the that’s charge-offs So, a we performance be year would concerned about relates I’m next our -- to worried necessarily. But, I’m are the around as hold specifically I this reserve unemployment where weaken that my will to also higher around our hold at Moody’s project and be they that there’s is. economic asked should hold conditions should -- slightly that My And that that now that’s are. to our allow some us will be. where where they desire you hope using it they friends would about CECL

that’s if know helpful. don’t I So,

comes reserves boxes of a to like. our what have when it We lot look

the the we hope things, that do my see where around at and so, And Moody’s and right is our reserves friends our right things can keep they are.

Ram Shankar

Yes. for Until of loan growth. know, provision lot comes you that a happens, Nate, as our

growth, back economic at with it down But said, economic ratio Moody’s expense. points. favorable basis wait XX have you get So, anticipation to was, is, We right? was allowance the to provision until So, quarter, forecast, each And and this more part of of what’s X forecast but the come time But changes a basis allowance is there. CECL we is subsequent in becoming there, we day model clearly, the that look more what our points, right and organic on that’s XX our Moody’s to the any variables, pressure is not if use see and loan the driving what it of conditions. quantitative I we to their forecast is right? echo Mariner get what said, Moody’s lot

point, to really. this hard That’s say. at question it’s million-dollar a So,

Mariner Kemper

what XX very, low track environment The very news of us, we we performance Yes. right? the is being of our be it’s have don’t than though, the been about charge-offs, different a industry-leading record to charge-offs, having good years, regardless is. any expect long last So, that

Nathan Race

with predict AOCI Obviously, with uncertainty That’s one particularly TCE down came And fully to last all the just on it. swing that Got one Perhaps appreciate exists Yes. maybe it’s the out capital. the CECL this I difficult under framework, there. quarter. helpful.

appetite. has the pressure peers. just just a few your the Obviously, lot buyback an the over stock terms So, to months get curious been update of last in like under of

from So, just also then, acquisition any opportunity curious near what how just just of days? you guys buybacks And are these over terms in update the an thinking appetite you’re about the term? perspective seeing for

Mariner Kemper

Yes.

want deployment capital first in is do making people, fresh. invest cetera. thing we obviously, money to as growth, statement, hiring to That’s the our is where is our broad et go, So sure a technology our loan going business, so

M&A every term. fit both, to we’ve long accretive always that and always performers on to us approach the for performance keeping be be increase be that And the an to enough to buybacks, culturally as Second be one that continue then we’re to year. we country what the is you market. type eye well to lastly, -- have goal our And our comments are to that companies just allow is same relates then lastly, of to dividend. add activity. then look value highest the our value to be dividend to it and in able continue we perform made doing with add of And would opportunistic would is to able that want consistency And the to by

which be to on at in continue we last the is time, things if the the list. right at demonstrated of time the at we and we’ll us buyers. available the right, it are in that it’s We’ve it done do we to those other all it. price if So -- the look will not past see We’ve the believe and

Ram Shankar

shares quarter. in period-end early at we only have The the count, the XXX,XXX on I’d share if look did add first back thing Yes. bought you is

about of then, regulatory on we is which be opportunistic So, the we our gown base it’s from decisions comments to TCE more what my And will we script, even capital capital down, risk-based buybacks. Mariner’s has just though That’s what on. focus the ratios. point, is I’ll echo --

-- interest rates, be the happening even ratios. might focus for running based on though So, business temporarily our capital the risk-based what’s with is impacted, TCE that primarily

Nathan Race

so actually just in first expense quarter. one the on the outlook. by seems more Okay, line great. It I like And the impacted if salary seasonally was and could forth ask just the payroll impacts

the directionally on trend growth kind maybe for Ram, any expenses overall just and into just second XXXX? of just So quarter expense how thoughts expectations

Ram Shankar

Yes. specific of the of first mentioned, so so are. two or day from days you Without less see in But good a FICA point. payroll guidance, puts quarter. a as lot then, first Obviously, spiked levels there’s and giving expenses Generally, jump-off a first our where a our quarter, the lot and especially takes -- should that you that payments, is $XXX bonus quarter bit. moderate one that the to and had less with also the quarter compared little second million

April, that other effect. then, probably So, And go way. cycle kicks our into merit normal the should in

of would point some say year. inflation So, I that is speaking, and this wage that good will $XXX salary million have generally numbers. remainder a the But jump-off for

Operator

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

Timur Braziler

follow-up two here Timur Hey, questions. with guys. more

of for, floors? that just loans, Ram, of maybe floor at at us the Just you the portion currently can update schedule? of variable what an looking kind is And rate run-offs give kind on

Ram Shankar

Yes.

$X.X the Most billion floors -- the $XX $XXX we increases money or loans will And the that XX it loans. in floor by have be of variable million later. more XX basis will points, on money. billion side. the then, And in have, book of So, those -- consideration we of to if to basis our Fed so the the points of than of the be in on then

Timur Braziler

prepared tick-up industry? any additional me, in Can I on called there. additional loan give Thank the helpful us out the color then, would loans, just Any know be great. it’s Okay, color last nonperforming or you. in remarks. And for you type

Mariner Kemper

to But, to really expect prepared think it itself disclose one And for is we in reasons. it various we’re as I we the mentioned Yes. don’t sundry resolve credit. favorably. that comments,

Operator

We no further the closing questions. management to back have I’ll team for hand now remarks.

Kay Gregory

us thank XXX-XXX-XXXX. the at calls, us you shortly. you your right. you. this may time Thank recording Well, All for interest. your if will follow-up morning. reach And appreciate be website and any you The We replay joining have on

Operator

for your to call now We’d Today’s has participation. concluded. you like thank

your disconnect lines. now may You

UMB Financial (UMBF) 27 Apr 222022 Q1 Earnings call transcript