Each quarter following UMB’s earnings results, Ram Shankar, UMB chief financial officer, provides an overview of the earnings highlights. Included below is an audio recording of his remarks. Note: Some of the slide references correspond to the full 1Q21 UMBF Earnings Presentation given on April 27, 2021.

First quarter 2021 earnings summary

Our first quarter was a great start to 2021. We had strong balance sheet growth, continued fee income momentum and solid credit quality.

For the first quarter, we earned $92.6 million, or $1.91 per share, well above analyst estimates of about $1.48 per share. We saw strong revenue growth, with net interest income increasing by 11.6% and fee income growing by 10.6% compared to the first quarter of 2020.

In our recent annual meeting, Mariner shared our runway for growth, which begins with our track record of relative outperformance in loan growth.

That track record continued in the first quarter. Our average loan balances, excluding PPP loans, grew by 8.4% on an annualized basis, compared to the fourth quarter 2020, and 9.7% on a year-over-year basis. Our loan growth stood out, as many banks have experienced slower growth or even shrinking loan balances in recent quarters.

Our history of strong, resilient credit

Our loan growth has been accomplished while not compromising our standards for credit quality. Net charge-offs averaged just 13 basis points of loans, while levels of nonperforming assets improved. These two slides show our historical performance and more recent trends.

Improving macroeconomic conditions and the continued quality of our loan portfolio led us to reduce the reserves we hold for future potential credit losses.


Diversified deposit mix

Deposits, which are the fuel that fund our loan growth, grew by nearly 30% on an annualized basis.

Of course, UMB isn’t alone in deposit growth, as banks across the industry are flush with cash, in part because of the unprecedented levels of stimulus, including PPP loans, that have been injected into the economy. UMB clearly got more than our fair share of this money supply. We are a port during any storm and our customers gravitate towards us – even more so during the uncertain times. This was certainly true during the Great Recession in 2008 and is playing out in a similar fashion currently.

This excess liquidity and high levels of cash weigh on banks’ net interest margin, the spread between what banks charge borrowers and pay depositors. Net interest income in 2020 fell 5% across the industry, the biggest drop on record. This trend continued into the first quarter, although at UMB, our strong asset growth helped bolster our net interest income.

Another tenet of our investment thesis is our above peer levels of fee income that provides diversity and helps support net interest income in challenging rate environments.

Fee income for the quarter was impacted largely by swings in investment security gains and losses. You’ll recall that in the fourth quarter, we had a successful investment in Tattooed Chef, which drove a gain of $108.8 million. The value of that investment fluctuates along with TTCF’s stock price, and the impact flows through our income statement. For the first quarter, we had an unrealized loss of $16.1 million.

Excluding market fluctuations, there were bright spots as we continue to focus on growth in fee income.

Corporate citizenship report

To wrap up, our 2020 Corporate Citizenship Report was just published and highlights some of the great things going on related to our ESG efforts.

After a great start, I’m looking forward to what the rest of 2021 will bring for UMB.

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