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CEO Corner: UMBF Earnings Summary

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Yesterday we shared our earnings report for the second quarter of 2017. I’m pleased to share some high-level results and notable milestones achieved during the second quarter.

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Loan growth

Increasing loan balances are a driver of revenue growth for our company, and we again delivered solid results with average balances for the second quarter increasing 9.4 percent year-over-year, led by C&I loans.

Key Metrics

Our ongoing efforts to drive positive operating leverage are paying off. For the first half of 2017, revenue growth outpaced operating expense growth, resulting in increased operating leverage of 3.7 percent. On a year-over-year quarterly basis, operating leverage was 4.7 percent, as revenue increased 10.6 percent while expenses increased 5.9 percent. We remain focused on generating and improving the positive operating leverage as we continue to invest in our business to drive revenue growth.

Over the past 13 years, our net charge-off (NCO) ratio has averaged 0.29 percent, while our loan book has more than tripled. More recently, NCOs have averaged just 0.23 percent quarterly over the past five years.

That said, credit trends can be inconsistent from one quarter to another, and, as such, NCOs for the second quarter came in at $10 million, or 0.37 percent of loans. The increase in commercial charge-offs was driven primarily by one credit to a manufacturing and distribution company, which accounted for more than half the charge-offs in the quarter. We periodically have anomalies in our charge-offs – however, given what we know today and the characteristics of our portfolio, we expect our NCOs to return to a level more in-line with historical rates.

Milestones

Several of our businesses hit remarkable milestones during the second quarter.

  • Healthcare Services saw their number of health savings accounts (HSAs) pass the 1 million mark and posted a 30 percent increase in deposits compared to one year ago. Healthcare Services now holds $1.8 billion in deposits and represents 11.5 percent of our total deposits. In general, HSAs continue to show impressive growth, and as the fifth largest HSA provider (by accounts) in the U.S., we are in an extremely strong position to capitalize on this industry trend.
  • Fund Services had a great quarter as well, as assets under administration topped the $200 billion mark. The team brought in new servicing and custody business during the quarter, which helped drive a $1 million improvement in revenue compared to first quarter.
  • Finally, we saw tremendous growth in our Agribusiness division. According to the American Bankers Association’s Top Farm Lenders list, UMB ranked as the No. 20 Ag lender in the nation, which is a remarkable jump from 2012, when we ranked No. 49.

I would like to thank our dedicated associates for their commitment to customer service. And, of course, none of this would be possible without the trust and support of our clients.


Mariner is the chairman and chief executive officer of UMB Financial Corporation and UMB Bank, n.a. He joined UMB in 1997. Mr. Kemper is active in both civic and philanthropic endeavors. One of the causes he is most passionate about is the arts. He currently serves as a trustee and executive committee member for the Denver Art Museum and is a past board member for The Arts Council of Metropolitan Kansas City.



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CEO Corner: UMBF Earnings Summary

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As we head into spring and close another successful quarter of financial performance at UMB, I would like to take a moment to look back at recent activity and to share key highlights from our first quarter earnings report.

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Here are some noteworthy items from first quarter of 2017:

  • We had a strong first quarter with net income of $44.2 million.
  • We continue to post double-digit year-over-year loan growth.
  • This loan growth, along with our efforts to achieve an optimal mix of earning assets and increased loan yields, drove a 13.9 percent increase in net interest income.

We also recently announced our plans to sell Scout Investments (Scout) following a strategic review of our businesses, including the capital needs for each of them.

After evaluating our core strengths and the competitive environment in which Scout operates, we were faced with a decision to either achieve scale through acquisitions or to exit the business and deploy capital generated into our core banking operations.

We believe we found the right partner, both culturally for associates and for the enhanced distribution capabilities, scale and resources needed to further Scout.

We want to be clear that this agreement to sell Scout does not diminish our commitment to investment management for individuals and institutions.

We continue to offer asset management solutions to our private wealth, Prairie Capital Management and institutional banking clients. We have experienced robust growth in these businesses, and that growth continued in the first quarter of 2017.

It’s also worth noting that diverse revenue streams continue to be an important part of our business model. We have many growth avenues to replace the revenue provided by Scout, including our Healthcare Services, Institutional Banking and Fund Services businesses, as well as continued loan growth.

As we head into the second quarter, we remain focused. Focused on our key priorities. Focused on providing excellent service. And, most importantly, focused on partnering with our customers for success.


Mariner is the chairman and chief executive officer of UMB Financial Corporation and UMB Bank, n.a. He joined UMB in 1997. Mr. Kemper is active in both civic and philanthropic endeavors. One of the causes he is most passionate about is the arts. He currently serves as a trustee and executive committee member for the Denver Art Museum and is a past board member for The Arts Council of Metropolitan Kansas City.



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Introducing our 2016 Annual Report

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We are pleased to share the UMB Financial Corporation 2016 Annual Report with you. In addition to the financial information, our report includes a message from our leadership teams and key data from other areas of our diverse business.

As we look to the future, we first want to thank our clients. We are proud of all that was accomplished during the past year, none of which would have been possible without their support and trust.

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2016 was a great year for UMB. We recorded record revenue, improved net income and renewed our commitment to operational efficiency and financial discipline.

We achieved several noteworthy milestones across many divisions of our company. For example, our UMB Private Wealth Management division expanded into Dallas and Ft. Worth, Texas.

We also retained our number one Kansas City market share leader in deposits ranking for the sixth year in a row. We saw growth in commercial and industrial loans, average commercial deposits and commercial real estate loans, as well as growth in total commercial earning assets.

In Fund Services, we saw growth in both alternative investment funds and private equity funds serviced, as well as continued asset growth in the Investment Managers Series Trusts.

All that said, our greatest asset continues to our talented associates and their commitment to delivering the unparalleled customer experience.

Thank you for the trust and confidence you place in us.

-Mariner Kemper


Mariner is the chairman and chief executive officer of UMB Financial Corporation and UMB Bank, n.a. He joined UMB in 1997. Mr. Kemper is active in both civic and philanthropic endeavors. One of the causes he is most passionate about is the arts. He currently serves as a trustee and executive committee member for the Denver Art Museum and is a past board member for The Arts Council of Metropolitan Kansas City.



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CEO Corner: UMBF Earnings Summary

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Earnings infographicOur recent earnings report reflected our financial performance in 2016’s fourth quarter and a snapshot of the full year. I’m pleased to share some high-level results, and call out a few important points.

Here are some key points that were particularly noteworthy for us:

  1. We had a great fourth quarter, with net income of $42.9 million, and $158.8 million for the full year. That reflects record annual net income, which increased nearly 37 percent from 2015, double-digit year-over-year loan growth, and perhaps most importantly, continued improvement in our profitability metrics.
  2. During 2016, we fully integrated our acquisition of Marquette and grew the combined customer base with average loans increasing 12.5 percent. The acquisition doubled our presence in the Arizona and Texas regions, driving a significant part of that loan growth.
  3. We continued our progress in optimizing our balance sheet by shifting earning assets into loans. The results can be seen in our improving net interest margin (NIM), which in the fourth quarter, increased 24 basis points from a year ago to 3.00 percent. This was driven by loan volumes and by a more optimal asset mix.
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Last year was certainly an interesting year for our industry, with the continued low-rate outlook turning to a more positive sentiment almost overnight following the election. While it’s too early to predict what a potentially new economic and regulatory environment could mean for UMB, some of the potential changes that have been suggested could prove beneficial.

Suffice it to say, we are listening to the discussions and different thoughts regarding what may or may not come to fruition, and we look forward to seeing what 2017 holds for the industry and the economy. That said, our path in the year ahead is to maintain focus on our key priorities.

I am very proud of the progress we made in 2016 and look forward to working with all our associates in providing our customers with another excellent year of service and partnership.

Read more in American Banker, UMB Financial profit rises on double-digit loan growth‡.

 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Mariner is the chairman and chief executive officer of UMB Financial Corporation and UMB Bank, n.a. He joined UMB in 1997. Mr. Kemper is active in both civic and philanthropic endeavors. One of the causes he is most passionate about is the arts. He currently serves as a trustee and executive committee member for the Denver Art Museum and is a past board member for The Arts Council of Metropolitan Kansas City.



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Welcome Marquette Financial Companies

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Chairman and CEO Mariner Kemper welcomes recently acquired Marquette Financial Companies.

 

 

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Mariner is the chairman and chief executive officer of UMB Financial Corporation and UMB Bank, n.a. He joined UMB in 1997. Mr. Kemper is active in both civic and philanthropic endeavors. One of the causes he is most passionate about is the arts. He currently serves as a trustee and executive committee member for the Denver Art Museum and is a past board member for The Arts Council of Metropolitan Kansas City.



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2014 Earnings Explained

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We recently released our Fourth Quarter 2014 earnings. Here’s a breakdown of the fundamentals that made 2014 a successful year, what caused the challenges and what we’re looking forward to in the months and years to come.

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Mariner is the chairman and chief executive officer of UMB Financial Corporation and UMB Bank, n.a. He joined UMB in 1997. Mr. Kemper is active in both civic and philanthropic endeavors. One of the causes he is most passionate about is the arts. He currently serves as a trustee and executive committee member for the Denver Art Museum and is a past board member for The Arts Council of Metropolitan Kansas City.



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The news is out

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Chairman and CEO Mariner Kemper explains reasons behind UMB’s agreement to acquire Marquette Financial Companies.

This is an exciting time for UMB, our associates and our customers. UMB is a strategic buyer, which means we only consider businesses that fit with our strategy and are a financial and cultural fit.

With that in mind, we’ve been actively searching for an opportunity like this and we believe that our agreement with Marquette Financial Companies (MFC) is a home run. Here’s why:

  • We expect the combination of UMB and MFC to be financially attractive with complementary balance sheets.
  • We will enhance our diversified financial services business model.
  • It would add two specialty lending businesses, asset management and trust services.
  • We will increase our banking presence in Arizona and Texas, two key growth markets for UMB.
  • UMB will grow our asset management business in the Minneapolis, Arizona and Texas markets.
  • Our two companies have similar cultures – and that’s important for a successful combination to work.

Marquette meets the many requirements we’ve been looking for in an acquisition. Until the transaction is approved and has closed sometime in mid-2015, both companies will continue to operate separately.

Ideal culture fit

What do we mean by having similar cultures? The main similarities are found in our values … how we approach business and each other with integrity. Ethics. A desire to do the right thing. We’ve both been influenced by a history of strong leadership with deep ties to our communities. Our cultures nurture and practice collaboration and we both place emphasis on diversity and inclusion in the workplace.

Giving back to our communities where we do business through volunteering and financial support also is foundational to our businesses. MFC has primarily focused on affordable housing, community economic development and financial education for youth and adults. We’ve traditionally focused on the arts and financial education, as well as community development.

Both of us care deeply about keeping our associates engaged and retaining them throughout their careers. We’re especially proud of that at UMB.

Why customers should take note

Once this acquisition is approved and closed, expected to be in mid-2015, our customers will have access to more products and services, as well as more locations to conduct business.

Where specifically? Customers of the various MFC businesses will be able to utilize UMB’s banking and wealth management centers in eight states – Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas. For UMB customers, they’ll be able to visit Meridian Bank branches in the Phoenix and Ft. Worth areas as they transition to UMB Bank.

Marquette also has specialized business units including business credit, commercial finance, transportation finance and asset management services.

What’s next?

Stay tuned. Both companies will continue to operate separately for now.

  • Customers will continue to do business as usual while the transaction is pending approval.
  • Integration plans are being developed.
  • Our goal is a seamless transition for customers and we pledge to actively communicate.

Great acquisitions work when the cultures fit together. That’s the case here, and I’m confident that it will provide us all with opportunities for future success.

 

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When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Mariner is the chairman and chief executive officer of UMB Financial Corporation and UMB Bank, n.a. He joined UMB in 1997. Mr. Kemper is active in both civic and philanthropic endeavors. One of the causes he is most passionate about is the arts. He currently serves as a trustee and executive committee member for the Denver Art Museum and is a past board member for The Arts Council of Metropolitan Kansas City.



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Veterans Day

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As we use Veterans Day to honor the many people who have sacrificed for us, we’ve been reflecting on what else we can do to better serve our veterans.

Our new job portal is geared specifically for those with a military background. It’s one way we’re trying to connect with veterans, but like many of you, we’re always looking for ways to thank these service men and women.

What ways have you seen organizations succeed in serving individuals and families connected to the military?

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Mariner is the chairman and chief executive officer of UMB Financial Corporation and UMB Bank, n.a. He joined UMB in 1997. Mr. Kemper is active in both civic and philanthropic endeavors. One of the causes he is most passionate about is the arts. He currently serves as a trustee and executive committee member for the Denver Art Museum and is a past board member for The Arts Council of Metropolitan Kansas City.



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More than an annual report—and a look at what’s ahead

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CEO Mariner Kemper shares thoughts from the 2013 Annual Report and some of the challenges facing UMB in 2014.

UMB is not your typical financial organization. We are unique. With our business model, we’re more than just a bank—we’re a financial services company that owns a good-sized regional bank, an institutional asset management company, a fund services business, and a payments solutions business. That diversification, with nearly 60 percent of revenue coming from non-bank services, is key to UMB’s success. This did not come about by accident—it’s a core strategy backed by years of investment and organic growth.

There are a lot of organizations that would love to be where we are. Many banks in our size category are trying to figure out how we’ve done it—they would like to emulate it. What they will figure out is that you can’t create this overnight. Replicating UMB’s business model is not easy. It took this company 100 years to be excellent at it.

Quality has always been our focus. To find out more about our focus on quality, take a look at our 2013 Annual Report.

Challenges for 2014

1)      Economic cyclesAs much as we all desire calm waters, the norm has always been to experience economic cycles. When will the economy take a turn again? No one knows, but history teaches us that these factors do move up and down—so we can be confident that change is in our collective future.

When the economy was at the top, people were saying “It’s different this time.” When things were getting overheated, you’d constantly hear “But, it’s different this time.” It’s never different.

  • The good news: UMB has proven over the last century that we can thrive in all economic conditions. We have a solid balance sheet and take pride in our extraordinary credit quality and are well positioned to benefit when interest rates begin to move up.
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2)      Bank regulation – The philosophy of expanding regulatory intervention is affecting all areas of our economy—primarily financial services. In the last four years, we have increased our own audit and compliance departments by 62 percent (and rising). Instead of helping, we believe that piling on more regulation passes on the higher costs of doing business to the consumer. To see the failure, you do not have to look further than Washington’s posturing about “too big to fail” banks. Far from solving that big-bank problem, since 2008, we have seen less than a dozen of the largest banks grow to control fully two-thirds of total U.S. banking assets.

  • The good news: Regardless of government regulations, we remind our people to stay prudent and trust the practices we have had in place for more than 100 years. We’re not followers.

The Next 100

Last year, we looked back on the 100-year history of UMB. We’ve found that although many things have changed, our founding principals have remained the same. This has allowed us to weather the storms and provide solid long-term returns to our investors. The below statistics clearly show how UMB compares to the industry.

UMBFvsIndustry

As we head into our next 100 years, our foundation remains the same as we strive to do what’s right, not what’s popular at the moment.

We hope you’ll join us on this journey of continuing our quality story.


Mariner is the chairman and chief executive officer of UMB Financial Corporation and UMB Bank, n.a. He joined UMB in 1997. Mr. Kemper is active in both civic and philanthropic endeavors. One of the causes he is most passionate about is the arts. He currently serves as a trustee and executive committee member for the Denver Art Museum and is a past board member for The Arts Council of Metropolitan Kansas City.



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In memory

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It is with profound sorrow that I share the passing of my father, R. Crosby Kemper, Jr., chairman emeritus of UMB Financial Corporation. He passed away yesterday.

My father had a tremendous influence on the growth and vitality of UMB and on so many businesses throughout the Midwest. He was a man of great intellect, integrity and values, and was an inspiration to all that had the pleasure to know him. He also leaves a profound legacy of contributions to civic and charitable causes related to his beloved Kansas City. His business acumen and personal generosity were evident in all that he did. 

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To help pay tribute, there is a legacy site, rcrosbykemperjr.com, that has been created to honor him. The site includes his biography, photos, videos and extensive personal history. And while there is no possible way to truly convey who he was and the contributions he made, I believe this site provides a glimpse of that, clearly showing he lived every day to the fullest and that this world is a better place because of him.

Also, if you have a favorite memory of my dad that you would like to share, you can post this on UMB Bank’s Facebook page or send an email to condolences@umb.com.

Our family thanks you for your support and thoughts during this difficult time.

Sincerely,

Mariner 


Mariner is the chairman and chief executive officer of UMB Financial Corporation and UMB Bank, n.a. He joined UMB in 1997. Mr. Kemper is active in both civic and philanthropic endeavors. One of the causes he is most passionate about is the arts. He currently serves as a trustee and executive committee member for the Denver Art Museum and is a past board member for The Arts Council of Metropolitan Kansas City.



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