Blog   Tagged ‘balance sheet’

The Credit Conversation: Now is the time to talk with your private banker

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Personal lending was a completely different world just a few short years ago. With shifts in the financial landscape, economic uncertainty and low interest rates, this is a good time for you to talk with a private banker and create a financial plan for the future—and the conversation should start with the topic of credit.

What was best for a person five years ago may not be the right choice now. Markets shift, and it’s important to occasionally survey the financial landscape with your private banker and possibly prepare for new opportunities.

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  • Work with advisors, not transaction managers.
    Sound financial planning is built on strong relationships, not individual transactions. Those relationships are built on knowledge and trust. A private banker should be acting as your advisor so they can help you make decisions that fit both your short- and long-term goals. Advisors will focus on tomorrow’s financial decisions, not today’s transaction.
  • Don’t make credit decisions with blinders on.
    No financial decision should be made without knowing the overall financial picture. In a trustworthy banking relationship, your private banker works alongside an entire team of experts to determine the best lending solutions for areas such as investment, tax and retirement purposes while also taking into consideration the overall wealth and estate plan.
  • Create a customized credit plan.
    It’s important to understand all the options. The truth: most people don’t proactively manage the borrowing side of their personal balance sheets when they plan to purchase a luxury vehicle, a business or a second home. That may stem from not knowing all of the varied credit options available.

    A private banker can help you explore and customize lending solutions to match risk and best leverage your assets. This provides you with options that may extend beyond the ones commonly offered in the marketplace.
  • Prepare for the unexpected with a line of credit.
    As the old saying goes, the time to borrow money is when you don’t need it. For example, a line of credit can be an invaluable tool to help you prepare for the unexpected and manage your overall financial picture. 

    Lines of credit can be used for a wide variety of purposes, including major ticket purchases, home improvements, education and medical bills. Additionally, lines of credit can provide you with peace of mind if and when unexpected expenses occur.

As you plan for your future, it’s important to talk with a professional who can ensure you are taking full advantage of the many credit solutions available to you while also providing you with advice related to your overall wealth plan.

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.


Ms. Stokes is a senior vice president and director of Private Banking at UMB. She is responsible for driving sales and relationship management activities. She works closely with the Wealth Management leadership team and regional presidents to grow business and helps to develop roles in wealth management, relationship management and presentation skills. She joined UMB in 2009 and has more than 30 years of experience in the financial services industry. She earned a bachelor’s degree in business administration from the University of Missouri- Kansas City and a Bachelor of Arts from the graduate school of retail banking.

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Watching the Forecast: Ag interest rates may soon rise

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If you are an agribusiness leader, you have many variables to consider in today’s market. Weather patterns spanning across the too wet/too dry continuum continue to baffle producers. Grain and commodity prices have started to gain strength, and both are up from recent levels but are still below the highs of the past several years. And land prices continue to hold (for now) at historically high levels in many areas of the country.

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These factors are all important, but there is one other variable that may be the most important when planning for your financial future: interest rates. With historically low rates currently being offered for operating lines of credit, as well as some floating rate term debt financing that has been put in place during the last four to five years, it’s important to remember that interest rates can change as fast and dramatically as corn prices.

As the American economy improves and the Federal Reserve Bank looks at beginning to ease its securities purchasing, the stage is set for a return to “normal” interest scenarios during the next couple of years. As that happens, producers with large floating rate exposure can expect to see their interest expense double or even triple during that same time frame. The range between fixedand floating rates will also expand, returning to levels similar to those before the financial crisis. When that happens, borrowers with only floating rates will be at the mercy of the financial markets in terms of controlling their interest expense.

Reviewing your balance sheets and future cash flows now – with an eye toward the next several years – can both produce large potential interest expense savings and protect against possible loan repayment challenges. As you look ahead, here are four steps to better financial planning:

  1. Review your current debt and forecast projected debt levels for the next four years. Include your amounts, repayments required, current rates, and most importantly, whether your rates are fixed or floating.
  2. Optimize how you use your fixed assets (land or equipment) for securing the minimum level of total debt anticipated each year. This should be done regardless of whether it is presently for revolving/working capital lines or fixed assets.
  3. Determine your available cash flow for debt service during the next four years.
  4. Structure new fixed-rate debt now by using a conservative debt service coverage ratio (1.3 to 1 or greater).

By fixing rates now, with proper use of fixed assets as collateral, and carefully forecasting future operational cash flows, you can effectively lock in today’s historically low rates, save tens of thousands of dollars or more in interest expense, and be far better prepared to manage other variables that may come into play.

 

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. Watson serves as president of the UMB Agribusiness Division. He joined UMB in August of 2005 and has also served as the president of the UMB Kansas region. Watson is a graduate of Wabash College in Crawfordsville, Indiana with a major in Psychology. He has also attended The Colorado School of Banking, The National Commercial Lending School (where he has also been an instructor), and the Stonier Graduate School of Banking.

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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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Partnering for what’s ahead: A conversation with Will and Bart of AmeriFlex

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Take a look at this video highlighting one of our many fantastic clients, or should I say business partners.

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Mr. Fee serves as president of UMB’s Texas region and is responsible for designing and executing a strategy to establish UMB Bank in the Texas market, initially by way of Dallas. He joined UMB in 2002 and has also served as the community bank president of the UMB South Kansas City region. Fee earned Bachelor of Science with a major in Business Administration and Accounting from the University of Kansas in Lawrence, Kan.

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