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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.


Mr. Kemper 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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Mariner Kemper – 2014 Chairman of the Board of the American Royal

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Mariner Kemper is taking the reins of the America Royal. He will be continuing a family tradition of involvement in this organization with his father, R. Crosby Kemper, Jr. serving as chair in 1991 and 1992. The building itself, Kemper Arena, was named in honor of Mariner’s grandfather, R. Crosby Kemper, Sr. Below is an excerpt from his speech at Tuesday’s annual meeting.

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Mariner Kemper Addresses the American Royal

It is truly an honor to continue the tradition of The American Royal. The mission of The American Royal is—

To promote and celebrate the excellence in agricultural progress and to develop future generations of leaders through agrarian values.

My personal interest in this mission dates back to the lessons I learned from my father. My childhood and adolescent memories are filled with a connection to land, nature, animals and getting your hands dirty.

Sure they wore suits and ties, worked in office buildings, and helped people manage their money – the RIGHT way. But at the end of the day, and most Saturday afternoons – ties were replaced by hats, hallways replaced by fences and ceilings became the blue sky.

My father truly loved the American Royal as did his father before him. I share that love and understanding of the agrarian lifestyle and values.

The example of Eisenhower

This philosophy really hit home this past Thanksgiving as I was reading the biography of President Eisenhower by Stephen Ambrose.

President Eisenhower. Here’s a man who served as Supreme Commander in Chief of World War II and President of the United States. And when he could find time to take a break from serving our nation, what did he do? He returned to his roots in Abilene, Kansas. Put on his boots, saddled a horse, talked about the weather and last year’s alfalfa crop, and voiced his opinion on John Deere vs. International Harvester. He put himself in an environment that he believed in:  the values, the sensibility and self-reliance born from an agrarian lifestyle. He embraced and understood the work ethic and ambition that is formed from living off the land. And then carried those principles and experiences in leading people and our nation to peace and prosperity.

I believe we need to “act like Ike,” as many have said before. Lead with that work ethic and ambition. Self-reliance. Values matter.

State of The American Royal

Today, The American Royal enters the 115th year of serving and celebrating agriculture. And the core of our mission is to support the future of agriculture. We cannot, and must not, lose sight of this purpose to serve current and future generations. Every year we are introduced to some of these inspirational leaders, The Royal Scholars, and are captivated by their accomplishments and what is important to them.

It’s motivating.

And when we listen to them, it’s not about their farm, their town, their county or their state. Their vision is about our future and our country – and this reinforces what The American Royal stands for.

The American Royal is not an isolated activity for Kansas City or the Midwest. It is the AMERICAN Royal. You can build a case that every person, every company, every community is touched by and obligated to play a role in our agriculture system. After all, our economy and livelihood are reliant on a functional and safe agricultural system.

We are lucky to have such a rich ag history in Kansas City that gives us the platform to not only provide leadership but to celebrate what Kansas City and our surrounding regions mean to our national food and agrarian culture.

As Greg Maday once coined, the American Royal is truly Kansas City’s most authentic asset. Every city has a performing arts center. Every city has a football team, but there are only a handful of cities in America that have something as special as the American Royal.

The American Royal is a critical piece in that food chain. We have done a great job as a supporter and advocate of agriculture throughout the years. The American Royal livestock shows, rodeos, educational programs, scholarships and world-famous barbecues are a foundation we all can take pride in.

Our Barbecue is the world’s largest, but in my opinion, it is still Kansas City’s best kept secret. When visitors come to town, what’s the first thing they want to do? Hit up a world-famous Kansas City barbecue joint. We have a better reputation nationally than we recognize locally. We are continually listed on every Best Barbecue list and the Food Network does regular exposés on Kansas City barbeque. The American Royal barbecue should be THE event in Kansas City. It’s one of our best assets.

And now is the time to think and act deeper than our roots and beyond our fences. But before we do that, we must have a heightened focus on cultivating our community. It is essential for us to involve a broader base of individual, civic and corporate support for The American Royal.

We need to act and think like Louisville, Kentucky when it comes to the Kentucky Derby. Or like Austin, Texas when it comes to the South by Southwest Festival. Or Mardi Gras in New Orleans. Those communities not only rally around the purpose–they also captivate the attention and participation of people throughout the U.S. and internationally.

And that’s what we need to do. That’s what we CAN do. The American Royal is valuable, unique and important—and it’s up to all of us to make sure others have the opportunity to know the purpose it serves and the benefits it provides.  This will be part of our mission for 2014, and we need your help to make it happen.

The American Royal in 2014

Many believe no other city in the U.S. can claim an agricultural history as rich as Kansas City’s. From Lewis & Clark, to The Oregon Trail to one of the country’s biggest railway hubs, Kansas City has served as a focal point for transporting grains, animals and freight. A recent report estimated the total value of freight handled within the Kansas City area each year is more than $800 billion. 

Thanks in large part to the entrepreneurial vision of Kansas City Southern Railway, Kansas City has direct access to markets throughout the southern U.S., Mexico and the Pacific region.

This intersection of transportation and commerce has fueled entrepreneurial opportunities established by the Greater Kansas City Chamber of Commerce’s Big 5 initiative. In fact, Kansas City has now established a global reputation as the center of the Animal Health Industry, and hosts several important international animal health conferences every year.

Given this, here are my three priorities for 2014:

  1. Capitalize on location in the Heartland – We have an opportunity to rally around what is unique in Kansas City and become recognized nationally. I also want to expand scholarship and educational activities.
  2. Secure broader engagement and endorsement from corporate and civic leadership – The impact of the American Royal is undeniable. Compared to the MLB All-Star Game that brought $60 million to the local economy ONCE, the American Royal does this every year. We need to remind the community of this impact to engage more advocates. Our ultimate goal is for the entire city to feel ownership of the American Royal.
  3. And finally, create a collaboration between Kansas City and American Royal for new facility – A new facility will breathe new life into the American Royal and agriculture. The American Royal will remain the inspiration for the future of agriculture. Rather, it will SAVE the city money. All while catering to constituents, community and ag-related interests from across the country.

As we look to the future, our role is not to defend The American Royal, but rather to promote it and build excitement for what we offer. We have an obligation and a responsibility before us.

President Eisenhower once said, Whatever America hopes to bring to pass in the world must first come to pass in the heart of America.

Well America, here we are. The American Royal. 


Mr. Kemper 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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This February: Don’t be silent – GO RED

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Heart disease is the No. 1 killer of women and is more deadly than all forms of cancer combined. And, if that statistic isn’t startling enough, consider that heart disease causes one in three women’s deaths each year, killing approximately one woman every minute.

As the co-chair of the American Heart Association 2014 Go Red For Women Campaign, I am committed to educating as many people as possible about ways to reduce and end heart disease. 

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We all have women we hold close to our hearts. Whether it is a mother, daughter, wife, sister, cousin, or friend, they all deserve to know the life-saving knowledge about heart disease and how to prevent it. There are several false assumptions that people believe such as: heart disease is only for older people, it doesn’t affect women that are physically fit, and that it’s more of a ‘man’s’ disease than for women. The fact is that these are nothing more than myths.

This month, I’m asking all women and their loved ones to encourage each other to join the Go Red For Women movement. Started more than a decade ago, the Go Red For Women Movement has saved more than 650,000 women’s lives and counting. Raising awareness through participation in events such as National Wear Red Day®on February 7 is a great way to get the conversation going with those around you. In addition to that event, there are many ways to get involved – find out how here.

And finally, I encourage you to start the journey toward heart disease prevention and education with a focus on YOU first. Knowing your risk and practicing a healthy lifestyle are the first steps to becoming an advocate and an example for the cause. From there, you are set to begin adding to those 650,000 lives already saved. This is your call to action: Go Red!

 

ABOUT GO RED FOR WOMEN

The American Heart Association’s Go Red For Women movement has been impacting the health of women for 10 years. More than 650,000 women’s lives have been saved, but the fight is far from over. Now is the time to shout louder, stand stronger and demand change. It’s time to come together in a movement that is not just FOR women, but BY women. It’s time for women to Go Red. Visit GoRedForWomen.org for more information or call 1-888-MY-HEART. The American Heart Association’s Go Red For Women movement is nationally sponsored by Macy’s, with additional support from our cause supporters.

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.


Dana Abraham is president of the Private Wealth Management Division and is responsible for the delivery of comprehensive financial services to high-net-worth clients. Her areas of focus include Wealth Planning, Private Banking, Personal Trust, Investment Management and Insurance. She joined UMB in 2005 and has more than 20 years of experience in the financial services industry. Abraham earned a bachelor’s degree in business administration with a concentration in both accounting and economics from the University of Louisiana. She is a graduate of Leadership Overland Park and Kansas City Tomorrow Leadership programs.

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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 


Mr. Kemper 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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A note from our CFO

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This year, UMB has celebrated many achievements in reaching our 100-year milestone. One thing we are particularly proud of is our ongoing effort to be transparent in our communication.

You may have read the news articles about two specific things: depositor exiting UMB and our capital raise project. First and foremost, I want to clearly state that these two topics are completely unrelated. Anyone who has ever been through a common stock offering knows it’s not something you can pull off in a couple of days. The timing of the two events was unfortunate, because it created incorrect assumptions. We did not execute a capital raise because of the depositor.

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To comply with securities rules related to our stock offering, we were limited in what we could say about the depositor. However, now that we are on the other side, I would like to take the opportunity to provide more context.

  • Depositor
    A few notes on the depositor. The organization is still a UMB customer. We previously disclosed that the deposits would move over the next 120 days, and as of today, the deposits remain on our balance sheet. Additionally, the customer will continue to work with UMB on their asset servicing business even after the deposits have exited.The decision to move the deposits off of our balance sheet was a result of ongoing dialogue we have had with the customer for the past couple of years. UMB has had a longstanding risk management strategy, and during a review of potential deposit concentrations, we approached the customer to reduce their deposits. They did so, but because of continued growth in the customer’s business, the deposits began increasing again. UMB will continue to monitor our deposit concentrations and will continue to make decisions that are best for our company and our shareholders. We have multiple unique sources of deposits: Institutional Banking and Investment Services (IBIS), Fund Services and Health Savings Accounts (HSAs) just to name a few, so it is important that we are continuously monitoring and adjusting as appropriate.
  • Capital Raise
    Our company has been growing steadily over the past few years and that is evident in our financial results. We have experienced robust balance sheet growth, especially in loans. After we completed our recent forecasts, it was clear that the expectations for growth would continue. We needed to grow our capital to support our balance sheet growth. We plan to use the money raised to support our continued growth and for general corporate purposes.When I tell my kids what I’ve been up to the last couple of months, I essentially tell them that I went to New York and asked strangers and current shareholders to invest in our company. And based on our consistent and stable growth for more than 100 years, they gave us more than $200 million.A simple analogy—but it essentially describes our capital raise campaign. Also important to note, the majority of the investors are new to UMB which validates our current investors, and is a testament to the work our associates have been doing over the last century.

I hope this gives you some color to our recent news. It’s a fantastic time for UMB and I look forward to what the next 100 years will bring!

 

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.


Mr. Hagedorn is president and chief executive officer of UMB Bank and vice chairman of UMB Financial Corporation. Prior to this role, Hagedorn served as chief financial officer and chief administrative officer of UMB Financial Corporation. He joined UMB in March 2005.

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