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CEO corner: UMBF earnings summary






Yesterday, we shared UMB earnings release for second quarter 2017. I’m pleased to share some high-level results and notable milestones achieved during Q2.

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.

Stay informed on industry trends and noteworthy company news by visiting the UMB In The News section on umb.comwhich is updated weekly for timely viewing.graphic line break

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When you click links marked with the “‡” symbol, you will leave UMB’s Web site and go to Web sites 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 Web sites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.