Umb Financial Corporation · NASDAQ:UMBF
Umb Financial — Q2 2023 Earnings Presentation
53 slides from Umb Financial's earnings presentation, Jul 26, 2023
Slide 1: 2nd Quarter 2023 Update
2 Quarter 2023 nd Update Kansas City, MO July 25, 2023
Slide 2: Presentation Index
Presentation Index Corporate Overview 3 Opportunity – Our Investment Thesis 8 2nd Quarter 2023 Results 17 Line of Business Updates 34 Appendix 45 Board of Directors Forward-Looking Statements Non-GAAP Reconciliations Peer Group Please refer to the Forward-Looking Statements on slide 47 for important
Slide 3: Corporate Overview
Corporate Overview Highlights Founded 1913 Ticker UMBF - Nasdaq Market Cap $3.0 B Total Assets $41.2 B Gross Loans $22.5 B Total Deposits $33.5 B Private Wealth Customer Assets (1) $15.9 B Institutional Assets Under Administration (AUA) (2) $414.9 B UMB Financial Corporation Headquarters Common Equi
Slide 4: Business Model: Our Diverse Foundation
Business Model Our Diverse Foundation Commercial & Personal Banking Services 2Q’23 Revenue: $226.5 million. 2Q’23 Average Deposits: $18.0 billion Commercial Consumer Private Wealth Average loans: $18.7B (1) Average loans: $3.0B (1) (2) AUM = $11.9B Average deposits: $11.8B Average deposits: $6.2B AU
Slide 5: Beyond Financials: Our Culture
Beyond Financials Our Culture Our Vision Our Values Customers First the We do the unparalleled to create an environment that unparalleled consistently exceeds the expectations of our customers. customer experience Integrity & Trust We demonstrate our uncompromising honesty and integrity to earn the
Slide 6: Beyond Financials: Our Culture
Beyond Financials Our Culture Creating an unparalleled customer experience requires a culture where our people feel part of something more, something bigger. We foster this experience through our policies, our business decisions and our expectations of each associate. MORE MORE MORE HEART TRUST OPPO
Slide 7: Beyond Financials: Our Commitment to Corporate Citizenship
Beyond Financials Our Commitment to Corporate Citizenship Inclusion & Diversity Strong Corporate Governance Effective governance practices preserve the confidence and We want our company to be as diverse as the world we live in. trust of our stakeholders. As an early CEO Action for Diversity and I
Slide 8: Our Investment Thesis
Our Investment Thesis Salt Lake City, UT
Slide 9: Investment Thesis: Our Opportunity
Investment Thesis Our Opportunity Runway for Growth Solid capital levels and ample liquidity sources Strong regulatory capital ratios Access to multiple contingent funding sources Diverse deposit base across multiple lines of business, customer segments and geographies No one commercial sector
Slide 10: Capital & Liquidity Supports Growth Outlook
Capital & Liquidity Supports Growth Outlook Tier 1 Capital Ratio Equity / Assets Tangible Equity / Tangible Assets (2) UMBF Peer Median (1) UMBF Equity / Assets UMBF TCE / Tang. Assets (2) Peer Median TCE / Tang. Assets (1) (2) Cash & Securities / Assets (3) Average Loans / Average Deposits UMBF Pee
Slide 11: Balance Sheet Growth Across All Business Cycles
Balance Sheet Growth Across All Business Cycles Average Deposits 15 Year 2.89% CAGR 12.0% 2.10% 0.53% 0.32% Average Deposits Average Total Deposit Cost Peer Median Deposit Cost (1) Annual Deposit Growth 4% 14% 16% 11% 14% 10% 13% 6% 11% 9% 4% 7% 14% 20% 25% 8% Average Loans 15 Year CAGR 11.0% Annual
Slide 12: Differentiated Revenue Profile: Multiple Sources of Growth
Differentiated Revenue Profile Multiple Sources of Growth Net Interest Income $913.8 15 Year CAGR $ 815.5 $731.2 9.5% $670.9 $610.4 $558.9 $495.3 $412.1 $317.0 $320.1 $333.3 $350.1 $275.1 $303.0 $310.6 $232.7 Annual NII 7% 18% 10% 3% 2% 1% 4% 5% 18% 20% 13% 9% 10% 9% 12% 12% Growth Fee Income Provid
Slide 13: Resilient Credit Metrics Through All Economic Environments
Resilient Credit Metrics Through All Economic Environments Net Charge-Offs / Average Loans 15 Year Average 0.30% 0.21% UMBF Peer Median (1) Industry (2) Nonperforming Loans / Loans 15 Year Average 0.44% 0.09% UMBF Peer Median (1) Industry (2) (1) UMB traditional peers (15 banks), as of latest availa
Slide 14: Risk-Adjusted Returns: Rowing Close to Shore
Risk-Adjusted Returns Rowing Close to Shore Risk-Weighted Assets / Assets UMBF Peer Median (1) Return on Risk-Weighted Assets UMBF Peer Median (1) (1) UMB traditional peers (15 banks), data as of latest available annual period. Source: S&P Global Market Intelligence. 14
Slide 15: Dividend Trends: Sustained Growth
Dividend Trends Sustained Growth Annual Dividends Declared (1) (2) 2023 = $1.52 +2.0% vs. 2022 +292.1% 2002 - 2022 (2) (1) Dividends adjusted for 2-for-1 stock split in 2006. (2) Annualized 2023 full-year dividend assumes all 4 quarters are $0.38/share, consistent with dividends declared for the fir
Slide 16: Outperformance Building Long-Term Value
Outperformance Building Long-Term Value 15-Year Compounded Annual Growth Rates 2007 – 2022 Diluted Earnings Per Share Tangible Book Value Per Share (1) UMBF KRX* Peer Median** Industry*** *KBW Nasdaq Regional Bank Index (median of 50 banks); **UMB’s traditional peers (median of 15 banks); ***Median
Slide 17: 2nd Quarter 2023 Financial Review
2nd Quarter 2023 Financial Review St. Louis, MO
Slide 18: 2Q 2023 Results At-A-Glance
2Q 2023 Results At-A-Glance $ millions, except per share amounts. 2Q ’22 1Q ’23 2Q ’23 Linked-Quarter Variance & Commentary Average Loans 18,317.9 21,271.6 22,191.6 45% of LQ growth from C&I; 33% from construction; 10% from residential R/E LQ annualized growth % 22.0% 19.3% 17.3% End-of-Period Loans
Slide 19: 2Q 2023 Earnings Highlights
2Q 2023 Earnings Highlights Net Income Operating PTPP Income (1) $187.1 $137.6 $135.4 $131.2 $134.1 $127.9 $100.2 $92.4 $90.1 $88.0 Operating PTPP Income – gains/losses on inv. securities (2) Net Income Diluted EPS Operating PTPP Income, ex. gains/losses on inv. securities Dollars in millions, excep
Slide 20: Revenue Trends
Revenue Trends 2Q ’22 3Q ’22 4Q ’22 1Q ’23 2Q ’23 Linked-Qtr. Variance $∆ %∆ Interest Income 248.6 300.3 366.8 408.7 461.4 52.6 12.9 Interest Expense 23.8 66.9 121.6 167.1 235.8 68.7 41.1 Net Interest Income $ 224.8 $ 233.5 $ 245.2 $ 241.7 $ 225.6 $ (16.1) (6.7%) Trust & securities processing 58.9 5
Slide 21: Net Interest Income
Net Interest Income Asset Yield and Liability Cost Trends $245.2 $241.7 $233.5 $224.8 $225.6 EA % IBL % COF % Liquidity Trends $ millions $3.7B $3.0B Pre- pandemic $2.0B $ billions $1.8B $1.5B $2.1B 8.4% 10.5% 4.3% 5.1% 5.4% 7.8% Net Interest Income NIM Spread Int-bearing due from banks Fed funds &
Slide 22: Noninterest Income
Noninterest Income Included sale of Visa B shares Current Quarter Drivers $176.3 Noninterest income increased $7.9mm, or 6.1%, vs. 1Q’23. Primary drivers: An increase of $6.2mm in investment securities gains, largely driven by an impairment loss on an AFS subordinated debt security in 1Q’23 and in
Slide 23: Noninterest Expense
Noninterest Expense Linked-Qtr. Variance 2Q ’22 3Q ’22 4Q ’22 1Q ’23 2Q ’23 $∆ %∆ Severance & acquisition expenses 0.1 0.3 0.4 0.5 4.9 4.4 NM Salary & Benefits, ex. severance & acquisition 121.3 136.2 135.6 142.0 138.4 (3.6) (2.5) Occupancy 12.0 12.2 12.4 12.2 11.7 (0.4) (3.5) Equipment 18.3 18.8 19
Slide 24: Diversified Loan Portfolio
Diversified Loan Portfolio 2Q ’22 1Q ’23 2Q ’23 Linked-Qtr. $∆ Variance %∆ $ 22,192 Commercial & Industrial 8,194 9,566 9,980 413 4.3 $21,272 CRE/Construction 6,570 7,812 8,178 366 4.7 $ 20,295 Residential Real Estate 2,459 2,738 2,834 96 3.5 $ 19,284 Credit Card 428 454 486 32 7.1 $ 18,318 Specialt
Slide 25: Quarterly Loan Activity
Quarterly Loan Activity 2Q ’22 3Q ’22 4Q ’22 1Q ’23 2Q ’23 Gross Loan Production $1,250.6 $1,269.0 $1,296.8 $933.8 $986.3 Revolving Balance Changes 557.1 540.2 532.7 554.7 431.9 Net (Charge-offs) Recoveries (28.1) (1.2) (2.2) (4.6) 0.1 (1) Payoffs (243.0) (401.1) (426.9) (395.7) (534.5) (1) Paydow n
Slide 26: Strong Asset Quality
Strong Asset Quality Net Loan Charge-Offs (Recoveries) Delinquencies 0.75% 0.50% 0.25% 0.00% ($0.1) Net Charge-offs (Recoveries) NCOs / Average Loans Delinquencies (1) Delinquencies / Total Loans Nonperforming Loans Allowance for Credit Losses Nonperforming Loans NPLs / Total Loans Allowance for Cre
Slide 27: Detailed Net Charge-Off History
Detailed Net Charge-Off History Historical ($ in thousands) 2004 2005 2006 2007 2008 2009 2010 2011 (1) Commercial Loans 893 1,818 2,367 1,569 2,943 4,113 6,007 11,880 (1) Other 5,248 5,855 4,625 6,704 8,812 16,145 15,690 12,255 Total Net Charge-Offs (Recoveries) $ 6,141 $ 7,673 $ 6,992 $ 8,273 $ 11
Slide 28: High-Quality Investment Portfolio
High-Quality Investment Portfolio Available-for-Sale (1) Held-to-Maturity (1) $8,093 $7,566 $6,999 $6,963 $6,816 $5,785 $5,872 $5,872 $5,824 Average balances - $ millions Average balances - $ millions $5,199 GNMA/GSE Mortgage-Backed Municipals Corp. & Commercial Paper GSE Agencies Treasuries Collate
Slide 29: Securities Portfolio Statistics
Securities Portfolio Statistics $ in millions Balances as of June 30, 2023; $ in millions Amortized Fair Unrealized (4) Securities Portfolio Activity (1) Cost Value Loss - Net 2Q'22 3Q'22 4Q'22 1Q'23 2Q'23 Available for Sale Roll-off / Cash Flow $384 $304 $246 $250 $243 Mortgage-backed 4,308 3,713 (
Slide 30: Diversified Deposit Mix
Diversified Deposit Mix Deposits by Line of Business $31,589 $31,374 $31,562 $31,475 Brokered $29,797 7% Fund Services 6% Commercial Institutional Capital Markets & Corp. Trust 14% Commercial Banking 37% Investor Solutions 7% Healthcare Services 9% Consumer & Private Wealth 20% Personal Linked-Qtr.
Slide 31: Deposit Diversity & Characteristics
Deposit Diversity & Characteristics Average balances for 2Q’23 Average balances for 2Q’23; based on NAICS industry classifications % of % of % of Total Deposits by Line of Business Top Commercial Sectors Deposits Commercial Deposits Middle Market Commercial 26.3% Professional, Scientific, & Technica
Slide 32: Interest Rate Sensitivity
Interest Rate Sensitivity Impact to Net Interest Income Assumptions Ramp Scenario – Static Balance Sheet Projected rates for new loans and deposits based on historical analysis, management outlook and repricing strategies Asset prepayments and other market risks are developed from industry estim
Slide 33: Liquidity & Capital Position
Liquidity & Capital Position Available Liquidity Ample Sources Liquidity Strong Capital As of June 30, 2023 $ billions Total Available Liquidity Sources * $ 15.9 Regulatory Capital Ratios Estimated Uninsured Deposits (1) 22.0 (2) 12.59% Estimated Uninsured Deposits, as adjusted 13.7 Liquidity / Adju
Slide 34: Line of Business Updates
Line of Business Updates Milwaukee, WI
Slide 35: Commercial Banking: Commercial Capabilities
Commercial Banking Commercial Capabilities Commercial Lending Portfolio Average Loan Balance & Composition $18.7B Middle Market C&I Lending Working capital lines Owner-Occupied CRE Equipment loans Investment Real Estate 29% Investment Real Estate Office Retail Middle Market Industrial
Slide 36: Commercial Banking: C&I Lending
Commercial Banking C&I Lending Commercial & Industrial Statistics C&I Industries as % of UMB Loans (1) Includes Middle Market, Lending Verticals & Small / Medium Business Other (2) Finance & Considerations Commercial Services Insurance ▫ Internal limits on loan size and projects per sponsor 9% ▫
Slide 37: Commercial Banking: Commercial Real Estate
Commercial Banking Commercial Real Estate Commercial Real Estate Statistics Investment CRE as % of UMB Loans (1) Total CRE & Construction = 37% of UMB loans $8.3B Mixed Other (4) Owner-occupied – new purchase or refinance Use Real estate development – construction / perm Const. / Land Dev. 9%
Slide 38: Investment Real Estate: Select Property Details
Investment Real Estate Select Property Details Total Investment CRE Portfolio Office CRE Portfolio Average Loan-to-Value, Select Industries MSA Diversification $ millions Statistics Industrial: 62% Dallas-Fort Worth-Arlington, TX $207 Average Loan: $8.5mm Jacksonville, FL $92 Multifamily: 54%
Slide 39: Personal Banking: Consumer
Personal Banking Consumer Strategic & Stable Source of Low-Cost Funds High Customer Satisfaction Consumer plays a strategic role for UMB as a large and stable source of Consumer serves the personal banking needs of deposits. Poised for continued asset growth clients across all divisions of the bank
Slide 40: Personal Banking: Private Wealth Management
Personal Banking Private Wealth Management Customer Assets Wealth Management Financial planning Personal $11.9B Trust Discretionary investment management Non-Managed AUA 21% Investment research & education 25% Brokerage services Managed Assets (AUM) Other $4.0B 5% Trust Management IRAs 5% an
Slide 41: Institutional Banking: Fund Services & Institutional Custody
Institutional Banking Fund Services & Institutional Custody Assets Under Administration Registered Funds & Alternative Investments Provides services for 1,700 funds, including registered and alternative investment funds, PE funds, real estate and venture capital funds and $383B ETFs and more. $382B
Slide 42: Institutional Banking: Corp/Specialty Trust & Capital Markets
Institutional Banking Corp/Specialty Trust & Capital Markets Corporate Trust & Escrow Services Capital Markets Division Provides trustee, paying agent and escrow services to municipal Capital solutions including fixed income sales, trading and underwriting and corporate issuers. for institutional, m
Slide 43: Institutional Banking: Investor Solutions & Healthcare Services
Institutional Banking Investor Solutions & Healthcare Services Investor Solutions Our banking as a service (BaaS) solution includes deposit services for checking, saving, and investment accounts, including expanded FDIC insurance through our proprietary Sweep Program. $57B ~70mm Sample Fintech Partn
Slide 44: Payments: Credit & Debit Card Products
Payments Credit & Debit Card Products Card Purchase Volume & Interchange Trends 2Q ’23 Card Spend $4,079 $4.0B $4,020 $3,812 $3,680 $3,708 #24 Healthcare Debit Consumer Debit Inst. Cash Mgmt. 24th in U.S. Credit Card Commercial Credit Consumer Credit Interchange Income Purchase Volume (2) Dollars in
Slide 45: Appendix
Appendix Phoenix, AZ
Slide 46: Governance: Our Board of Directors
Governance Our Board of Directors Robin Beery Janine Davidson K.C. Gallagher Greg Graves Mariner Kemper Sandy Kemper CC (Chair), RC CC, GC AC, RC Lead Independent Chairman of Director, GC (Chair) the Board Gordon Lansford Tim Murphy Tammy Peterman Kris Robbins Josh Sosland Leroy Williams AC (Chair),
Slide 47: Forward-Looking Statements
Forward-Looking Statements This presentation contains, and our other communications may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or cur
Slide 48: Non-GAAP Reconciliations
Non-GAAP Reconciliations The following are non-GAAP measures used from time to time. To the extent a non-GAAP measure is used in this presentation, a reconciliation to such measure’s closest GAAP equivalent is provided below. UMB believes that these non-GAAP financial measures may be useful to inves
Slide 49: Non-GAAP Reconciliations
Non-GAAP Reconciliations Operating Pre-Tax, Pre-Provision Income Three Months Ended Jun. 30, Mar. 31, Dec. 31, Sept. 30, Jun. 30, 2023 2023 2022 2022 2022 Net interest income (GAAP) $ 225,611 $ 241,696 $ 245,166 $ 233,485 $ 224,791 Noninterest income (GAAP) 138,082 130,200 125,497 128,723 176,335 No
Slide 50: Non-GAAP Reconciliations
Non-GAAP Reconciliations Tangible Common Equity Ratio & Tangible Common Equity Ratio, ex. AOCI As of Jun. 30, Mar. 31, Dec. 31, Jun. 30, 2023 2023 2022 2022 Total shareholders' equity (GAAP) $ 2,831,628 $ 2,814,659 2,667,093 $ 2,642,888 Less: Intangible assets Goodwill 207,385 207,385 207,385 182,22
Slide 51: Non-GAAP Reconciliations
Non-GAAP Reconciliations Operating Return on Tangible Common Equity, Excluding AOCI Return on Tangible Common Equity As of Jun. 30, Mar. 31, Jun. 30, 2023 2023 2022 Average shareholders' equity (GAAP) $ 2,876,832 $ 2,724,435 $ 2,648,360 Less: Average Intangible assets Average Goodwill 207,385 207,38
Slide 52: Non-GAAP Reconciliations
Non-GAAP Reconciliations Tangible Book Value As of Jun. 30, Dec. 31, Dec. 31, 2023 2022 2007 Total shareholders' equity (GAAP) $ 2,831,628 $ 2,667,093 $ 890,574 Less: Intangible assets Goodwill 207,385 207,385 94,512 Other intangibles, net 75,184 78,724 16,463 Total intangibles, net 282,569 286,109
Slide 53: Our Peer Group
Our Peer Group ASB Associated Banc-Corp HWC Hancock Whitney Corporation BOKF BOK Financial Corporation ONB Old National Bancorp CADE Cadence Bank PNFP Pinnacle Financial Partners, Inc. COLB Columbia Banking System, Inc. PB Prosperity Bancshares, Inc. CBSH Commerce Bancshares, Inc. SNV Synovus Financ