Umb Financial Corporation · NASDAQ:UMBF
Umb Financial — Q1 2023 Earnings Presentation
52 slides from Umb Financial's earnings presentation, Apr 26, 2023
Slide 1: 1st Quarter 2023 Update
1 Quarter 2023 st Update Kansas City, MO April 25, 2023
Slide 2: Presentation Index
Presentation Index Corporate Overview 3 Opportunity – Our Investment Thesis 8 1st 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 $2.8 B Total Assets $40.6 B Gross Loans $21.8 B Total Deposits $31.9 B Private Wealth Customer Assets (1) $15.4 B Institutional Assets Under Administration (AUA) (2) $411.5 B UMB Financial Corporation Headquarters Common Equi
Slide 4: Business Model: Our Diverse Foundation
Business Model Our Diverse Foundation Commercial & Personal Banking Services 1Q’23 Revenue: $232.6 million. 1Q’23 Average Deposits: $20.4 billion Commercial Consumer Private Wealth Average loans: $17.9B (1) Average loans: $2.9B (1) (2) AUM = $11.4B Average deposits: $14.2B 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: 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 Denver, CO
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 Tangible Common Equity / Assets (2) UMBF Peer Median (1) UMBF Peer Median (1) Cash & Securities / Assets Average Loans / Average Deposits (3) UMBF Peer Median (1) UMBF Peer Median (1) (1) UMB traditional peers (15 banks), as of latest
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 1Q and 2Q 2023 dividends. The
Slide 16: Outperformance Building Long-Term Value
Outperformance Building Long-Term Value 15-Year Compounded Annual Growth Rates 2007 – 2022 (1) Diluted Earnings Per Share Tangible Book Value Per Share 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: 1st Quarter 2023 Financial Review
1st Quarter 2023 Financial Review Dallas, TX
Slide 18: 1Q 2023 Results At-A-Glance
1Q 2023 Results At-A-Glance 1Q ’22 4Q ’22 1Q ’23 Linked-Quarter Commentary Average Loans $ 17,361.1 $ 20,294.7 $ 21,271.6 45% from C&I; 30% from construction; end-of-period growth +$782mm LQ annualized growth % 16.0% 21.0% 19.3% Average Deposits 32,580.3 31,374.0 31,562.4 $1 bilion increase from Mar
Slide 19: 1Q 2023 Earnings Highlights
1Q 2023 Earnings Highlights Net Income Operating PTPP Income (1) $187.1 $137.6 $135.4 $131.2 $134.1 $119.4 $106.0 $100.2 $92.4 $88.0 Operating PTPP Income from equity investments (2) Net Income Diluted EPS Operating PTPP Income, ex. equity investments Dollars in millions, except per share amounts. (
Slide 20: Revenue Trends
Revenue Trends 1Q ’22 2Q ’22 3Q ’22 4Q ’22 1Q ‘23 Linked-Qtr. Variance $∆ %∆ Interest Income 221.8 248.6 300.3 366.8 408.7 41.9 11.4 Interest Expense 11.4 23.8 66.9 121.6 167.1 45.4 37.3 Net Interest Income $ 210.4 $ 224.8 $ 233.5 $ 245.2 $ 241.7 $ (3.5) (1.4%) Trust & securities processing 59.5 58.
Slide 21: Net Interest Income
Net Interest Income Asset Yield and Liability Cost Trends $245.2 $241.7 $233.5 $224.8 $210.4 EA % IBL % COF % Liquidity Trends Impact NIM $6.6B $ millions @ 0.78% Pre- $3.7B pandemic $ billions @ 1.27% $2.1B $2.0B $1.8B $1.5B @ 5.08% @ 4.30% @ 1.79% @ 2.83% @ 1.30% @ 0.19% @ 0.64% @1.60% @ 3.28% @ 4
Slide 22: Noninterest Income
Noninterest Income Included sale of Visa B shares Current Quarter Drivers $176.3 Noninterest income increased $4.7mm, or 3.7%, vs. 4Q’22. Primary drivers: ▪ Increases in market-related income, including a $4.0mm increase in company- owned life insurance income, and a $1.8mm increase in derivative in
Slide 23: Noninterest Expense
Noninterest Expense 1Q ’22 2Q ’22 3Q ’22 4Q ’22 1Q ‘23 Linked-Qtr. Variance $∆ %∆ Salaries & benefits 130.6 121.4 136.5 135.9 142.5 6.6 4.8 Occupancy 12.2 12.0 12.2 12.4 12.2 (0.2) (1.9) Equipment 18.2 18.3 18.8 19.0 17.8 (1.1) (5.9) Supplies & services 3.3 3.5 3.1 3.7 3.9 0.2 4.8 Marketing & busine
Slide 24: Diversified Loan Portfolio
Diversified Loan Portfolio 1Q ’22 4Q ’22 1Q ’23 Linked-Qtr. $∆ Variance %∆ $21,272 $ 20,295 CRE/Construction 6,338 7,324 7,812 488 6.7 $ 19,284 Commercial & Industrial 7,685 9,130 9,566 436 4.8 $ 18,318 Residential Real Estate 2,339 2,679 2,738 59 2.2 $ 17,361 Specialty Lending 464 559 565 5 1.0 Cre
Slide 25: Quarterly Loan Activity
Quarterly Loan Activity 1Q ’22 2Q ’22 3Q ’22 4Q ’22 1Q ‘23 Gross Loan Production $1,029.5 $1,250.6 $1,269.0 $1,296.8 $933.8 Revolving Balance Changes 407.0 557.1 540.2 532.7 554.7 Net Charge-offs (8.4) (28.1) (1.2) (2.2) (4.6) (1) Payoffs (474.2) (243.0) (401.1) (426.9) (395.7) (1) Paydow ns (393.1)
Slide 26: Strong Asset Quality
Strong Asset Quality Net Loan Charge-Offs Delinquencies Net Charge-offs NCOs / Average Loans Delinquencies (1) Delinquencies / Total Loans Nonperforming Loans Allowance for Credit Losses Nonperforming Loans NPLs / Total Loans Allowance for Credit Losses on Loans ACL / Total Loans Dollars in millions
Slide 27: Detailed Net Charge-Off History
Detailed Net Charge-Off History Historical ($ 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 $ 6,141 $ 7,673 $ 6,992 $ 8,273 $ 11,755 $ 20,258
Slide 28: High-Quality Investment Portfolio
High-Quality Investment Portfolio Available-for-Sale (1) Held-to-Maturity (1) $11,278 $8,093 $7,566 $6,999 $6,963 Average balances - $ millions Average balances - $ millions $5,785 $5,872 $5,872 $5,199 $1,894 GNMA/GSE Mortgage-Backed Municipals Corp. & Commercial Paper GSE Agencies Treasuries Collat
Slide 29: Securities Portfolio Statistics
Securities Portfolio Statistics $ in millions End-of-period balances; $ in millions Amortized Fair Unrealized (4) Securities Portfolio Activity (1) Cost Value Loss - Net 1Q'22 2Q'22 3Q'22 4Q'22 1Q'23 Available for Sale Roll-off / Cash Flow 446 384 304 246 250 Mortgage-backed 4,435 3,901 (533) Roll-o
Slide 30: Diversified Deposit Mix
Diversified Deposit Mix Deposits by Line of Business $32,580 $31,589 $31,374 $31,562 Fund $29,797 Services 6% Institutional Capital Mkts. & Corp. Trust Commercial 13% Investor Solutions 7% Commercial Banking 45% Healthcare Services 9% Consumer & Private Wealth 20% Personal 1Q ’22 4Q ’22 1Q ’23 Linke
Slide 31: Deposit Diversity & Characteristics
Deposit Diversity & Characteristics Average balances for 1Q’23 Average balances for 1Q’23; based on NAICS industry classifications % of % of Total Deposits by Line of Business % of Deposits Top Commercial Sectors Commercial Deposits Middle Market Commercial 33.0% Insurance Carriers & Related Activit
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 Liquidity Sources Strong Capital Regulatory Capital Ratios As of March 31, 2023 $ billions Total 12.49% Source Available 10.57% FHLB Advance Collateral 0.9 UMBF Fed Discount Window 7.4 ratio 10.00% 8.35% Free Bond Collateral 1.4 Insured Cash Sweep 0.2 Regulatory 6.50% Ca
Slide 34: Line of Business Updates
Line of Business Updates Salt Lake City, UT
Slide 35: Commercial Banking: Commercial Capabilities
Commercial Banking Commercial Capabilities Commercial Lending Portfolio Average Loan Balance & Composition $17.9B Middle Market ▪ C&I Lending ▪ Working capital lines ▪ Owner-Occupied CRE ▪ Equipment loans Investment Real Estate 28% Investment Real Estate ▪ Office ▪ Retail Middle Market 53% ▪ Industr
Slide 36: Commercial Banking: C&I Lending
Commercial Banking C&I Lending Commercial & Industrial Statistics C&I Industry Diversification (1) (2) ▪ Average loan size: $4.5 million ▪ Considerations Finance & Commercial Insurance ▫ Internal limits on loan size and projects per sponsor Services Other (3) 18% ▫ Concentration guidelines for all l
Slide 37: Commercial Banking: Commercial Real Estate
Commercial Banking Commercial Real Estate Commercial Real Estate Statistics Investment CRE / Construction Portfolio (1) ▪ Owner-occupied – new purchase or refinance $8.0B ▪ Real estate development – construction / Mixed Use perm financing, bridge financing, renovations Const. / Land Dev. Other (4) 2
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 $193 ▪ Average Loan: $8.2mm ▪ Multifamily: 55% Jacksonville, FL $92
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 $11.4B Personal ▪ Discretionary investment management Non-Managed Trust ▪ Investment research & education AUA 21% ▪ Brokerage services 26% Managed Assets (AUM) Other 5% IRAs $4.0B Trust Management and E
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 $407B 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 $60B ~70mm 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. Sample Fintech Partn
Slide 44: Payments: Credit & Debit Card Products
Payments Credit & Debit Card Products Card Purchase Volume & Interchange Trends 1Q ’23 Card Spend $4.1B $4,079 $3,812 $3,723 $3,680 $3,708 #24 24th in U.S. Credit Card Healthcare Debit Consumer Debit Inst. Cash Mgmt. Purchase Volume (1) Commercial Credit Consumer Credit Interchange Income Dollars in
Slide 45: Appendix
>= aa Appendix SF = sen gt * ae <= —— Minneapolis, MN j
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 by from time to time. To the extent a non-GAAP measure is used during 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 t
Slide 49: Non-GAAP Reconciliations: Tangible Book Value
Non-GAAP Reconciliations Tangible Book Value As of Dec. 31, Dec. 31, 2022 2007 Total shareholders' equity (GAAP) $ 2,667,093 $ 890,574 Less: Intangible assets Goodwill 207,385 94,512 Other intangibles, net 78,724 16,463 Total intangibles, net 286,109 110,975 Total tangible shareholders' equity (Non-
Slide 50: Non-GAAP Reconciliations: Tangible Common Equity Ratio
Non-GAAP Reconciliations Tangible Common Equity Ratio & Tangible Common Equity Ratio, ex. AOCI As of Mar. 31, Dec. 31, Mar. 31, 2023 2022 2022 Total shareholders' equity (GAAP) $ 2,814,659 $ 2,667,093 $ 2,748,405 Less: Intangible assets Goodwill 207,385 207,385 182,225 Other intangibles, net 76,426
Slide 51: Non-GAAP Reconciliations: Return on Tangible Common Equity
Non-GAAP Reconciliations Operating Return on Tangible Common Equity, Excluding AOCI Return on Tangible Common Equity As of March 31, December 31, March 31, 2023 2022 2022 Average shareholders' equity (GAAP) $ 2,724,435 $ 2,621,693 $ 2,933,005 Less: Average Intangible assets Average Goodwill 207,385
Slide 52: Our Peer Group
CADE Cadence Bank CBSH Commerce Bancshares, Inc. Our Peer Group CFR Cullen/Frost Bankers, Inc. FNB F.N.B. Corporation FULT Fulton Financial HWC Hancock Whitney Corporation ASB Associated Banc-Corp ONB Old National Bancorp BOKF BOK Financial Corporation PNFP Pinnacle Financial Partners, Inc. CADE Cad