UMB Financial Corporation · NASDAQ:UMBF
UMB Financial — Q4 2016 Earnings Presentation
55 slides from UMB Financial's earnings presentation, Jan 24, 2017
Slide 1: UMB Financial Fourth Quarter 2016
UMB Financial Fourth Quarter 2016 January 24, 2017 Exhibit 99.2
Slide 2: Cautionary Notice about Forward-Looking Statements
Cautionary Notice about 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 stric
Slide 3: 4Q 2016 Performance Highlights
4Q 2016 Performance Highlights
Slide 4: Earnings Summary – 4Q 2016
Earnings Summary – 4Q 2016 $ in thousands, except share and per share data; unaudited Non-GAAP adjustments include fair value adjustments on contingent consideration, acquisition expenses, non-acquisition related severance expense and one-time marketing agent termination costs. See non-GAAP reconcil
Slide 5: Earnings Summary – Full Year 2016
Earnings Summary – Full Year 2016 $ in thousands, except share and per share data; unaudited Non-GAAP adjustments include contingency reserve expense, fair value adjustments on contingent consideration, acquisition expenses, non-acquisition related severance expense and one-time marketing agent term
Slide 6: Net Operating Income Non-GAAP Definition
Net operating income for the relevant period is defined as GAAP net income, adjusted to reflect the impact of excluding the following: (i) the Company’s 2014 contingency reserve for the settlement of the disputes related to the acquisition of Prairie Capital Management, LLC (PCM), (ii) fair value ad
Slide 7: Operating Noninterest Expense & Efficiency Ratio Non-GAAP Reconciliation
Operating Noninterest Expense & Efficiency Ratio Non-GAAP Reconciliation Operating ROE is calculated as net operating income, divided by the Company’s average total shareholders’ equity for the relevant period. Operating ROA is calculated as net operating income, divided by the Company’s average ass
Slide 8: Select Balance Sheet Items
Select Balance Sheet Items $ in thousands, average balances; unaudited Three Months Ended
Slide 9: Consistent Loan Growth
Consistent Loan Growth Average Total Loans 5 Year CAGR 16.3%
Slide 10: Net Charge-Off History
Net Charge-Off History (1) Commercial Loans includes Commercial & Industrial, Commercial Credit Card, Commercial Real Estate, Real Estate Construction, Asset-Based and Factoring loans. (2) Other includes Consumer, Residential Real Estate, HELOC, and DDA Charge-offs.
Slide 11: Loan Classification Trends
Loan Classification Trends % of total loans
Slide 12: Key Performance Metrics
Key Performance Metrics See slides 6 and 7 for additional disclosures and reconciliations related to these non-GAAP financial measures. Q1 2016 & Q2 2016 data is recast to reflect the adoption of ASU 2016-09.
Slide 13: Profitability Metrics
Profitability Metrics NIM/Total Assets Fee Income/Total Assets Expense/Total Assets Revenue/FTE UMBF Peer Median Performance metrics are annualized actual results. Peer medians for Q4 2016 are calculated using reported results, where available, or consensus estimates where results are not yet availa
Slide 14: 4Q 2016 Financials
4Q 2016 Financials
Slide 15: Noninterest Income – 4Q 2016
Noninterest Income – 4Q 2016 Noninterest income decreased $5.6 million, or 4.6%, compared to 3Q’16, driven by: the recognition of $3.0 MM in gains on the sale securities in 3Q’16 that did not repeat in 4Q’16; and $1.1MM lower equity earnings on alternative investments from changes in the valuation o
Slide 16: Noninterest Income Composition – 4Q 2016
Bankcard Fees Noninterest Income Composition – 4Q 2016 Trust & Securities Processing Revenue Trust & Securities Processing Composition: Service Charges on Deposit Accounts Trust & Securities Processing Gains on Sales of Securities Other Brokerage Fees Trading & Investment Banking ($ in millions) Ins
Slide 17: Noninterest Income – Full Year 2016
Noninterest Income – Full Year 2016 Noninterest income increased $9.6 million, or 2.1%, compared to FY’15 driven by: a $14.9MM increase in equity earnings on alternative investments from improvements in the valuation of the underlying PCM fund investments; a $7.8MM increase in bank-owned and company
Slide 18: Noninterest Income Composition – Full Year
Bankcard Fees Noninterest Income Composition – Full Year 2016 Trust & Securities Processing Revenue Trust & Securities Processing Composition: Service Charges on Deposit Accounts Trust & Securities Processing Gains on Sales of Securities Other Brokerage Fees Trading & Investment Banking ($ in millio
Slide 19: Noninterest Expense – 4Q 2016
Noninterest expense increased $6.5 million, or 3.6%, compared to 3Q’16, driven by: an increase of $3.6MM in other expense due to a $2.7MM expense to terminate IIM marketing agent contracts and $700k of operational losses within the Bank segment; an increase of $2.6MM in Legal & Consulting expense du
Slide 20: Noninterest Expense – Full Year 2016
Noninterest expense increased $28.2 million, or 4.0%, compared to FY’15 driven by: $11.4MM of increases in bonus and commission expense for performance-related incentives; $9.1MM of increased salary expense; and, $5.1MM in higher deferred compensation plan fair-value adjustments. Acquisition expense
Slide 21: Securities Available for Sale and Held to Maturity
Securities Available for Sale $6.5 billion at December 31, 2016 High Quality Investment Portfolio Agencies Corporates Municipals Mortgage-Backed Securities Treasuries (2) (1) Securities Held to Maturity $1.1 billion at December 31, 2016 Governmental Other Higher Education Healthcare Utility Social S
Slide 22: Securities and Loan Statistics
Securities and Loan Statistics AFS Portfolio Activity at December 31, 2016 (1) Roll off includes cash flow from maturities, calls or amortizations of securities and is presented net of sales. (2) Purchased amount is presented net of purchases made related to sales. Loan Portfolio Statistics at Decem
Slide 23: Deposit Growth
Deposit Growth Deposits & Percent of Free Funds Actual EOP Balances; $ in billions 4Q 2016 Cost of Interest-Bearing Liabilities 0.26% Including DDA 0.17% $11.7 $13.6 $13.6 $15.1 $16.6
Slide 24: Strong Capital Position
Strong Capital Position Capital Ratio Trends (1) 2015 & 2016 ratios calculated under Basel III requirements. Total Risk-Based Capital Tier 1 Risk-Based Capital Tier 1 Leverage Common Equity Tier 1 (1) (1)
Slide 25: Business Segment Updates
Business Segment Updates
Slide 26: Segment Financials
Segment Financials (Sin thousands, unaudited) Institutional Investment Management Segment Results Variance vs. 3Q'16 vs. 4Q'15 4Q1e 3Q16 4Q15 Net interest income $ - § - § - - - Noninterest income 20,882 (2.9) @7) Noninterest expense . , 18,690 21.2 94 Net income before taxes 2,192 (162.6) Income ta
Slide 27: Segment Financials (continued)
Segment Financials (continued)
Slide 28: Institutional Investment Management – Assets Under Management
$27.3 $23.5 $31.2 Institutional Investment Management $31.2 $27.2 Assets Under Management $ in billions Scout assets under management stood at $27.3 billion on December 31, 2016, a decrease of $809 million from September 30, 2016 Six Scout funds have received a four-star rating from Morningstar—Inte
Slide 29: AUM Drivers
AUM Drivers $ in millions Institutional Investment Management 4Q’16 3Q’16 2Q’16 1Q’16 4Q’15 Equity Scout Funds ($238MM) Separate Accts ($51MM) Fixed Income Scout Funds ($2MM) Separate Accts ($18MM) 4Q’16 Net Flows
Slide 30: AUM by Strategy
AUM by Strategy – As of December 31, 2016 Equity Fixed Income Equity Strategies International MidCap International ADR Emerging Markets Global Small Cap Other: Equity Opportunity Fixed Income Strategies Core Plus Low Duration Long Duration Core Real Return Unconstrained Intermediate Other: Global Ag
Slide 31: Morningstar Ratings
Morningstar Ratings as of Dec. 31, 2016 Fund Name Category Overall Rating Funds in Category Scout International Foreign Large Blend 606 Scout Global Equity World Stock 848 Scout Mid Cap Mid-Cap Blend 371 Scout Small Cap Small Growth 599 Scout Core Plus Bond – Institutional Class Intermediate-Term Bo
Slide 32: Important Disclosures
Important Disclosures 1. The returns for periods prior to April 1, 2005 do not reflect the fees and expenses in effect as of April 1, 2005. If the new fees and expenses and the Advisor’s agreement to limit total Fund expenses were in effect for the periods shown, returns would have been lower. 2. Th
Slide 33: Scout Equity Funds Average Annual Total Returns
Scout Equity Funds Average Annual Total Returns (%) as of December 31, 2016 QTR 1 Year 3 Year 5 Year 10 Year Since Inception Exp. Ratio (%) (Gross / Net) Inception Date Scout International Fund (UMBWX)1 -0.31% 6.82% -0.81% 6.01% 2.77% 7.71% 1.05 / 1.05 9/14/1993 MSCI EAFE Index -0.71% 1.00% 1.60% 6.
Slide 34: Scout Fixed Income Funds Average Annual Total Returns
Scout Fixed Income Funds Average Annual Total Returns (%) as of December 31, 2016 QTR 1 Year 3 Year 5 Year 10 Year Since Inception Exp. Ratio (%) (Gross/Net) Inception Date Scout Low Duration Bond Fund (SCLDX)5 -0.24% 1.81% 1.12% N/A N/A 1.49% 0.92 / 0.40 8/29/2012 Bloomberg Barclays 1-3 Year U.S. G
Slide 35: Asset Servicing Assets Under Administration
Asset Servicing Assets Under Administration $ in billions Investment Management Series Trusts continue to grow, with 88 active funds and $17.0 billion in assets at December 31, 2016; AUA in this product has nearly tripled in the past 3 years Added 70 net new alternative funds serviced in 2016 Ranked
Slide 36: Asset Servicing
Asset Servicing Fund Accounting & Administration Alternative Asset Servicing Custody Transfer Agency
Slide 37: Bank Line of Business Detail – 4Q'16
Bank Personal Banking Commercial & Business Banking Institutional Banking Healthcare Services Treasury & Other (2) (1) Net interest income chart excludes ($158k) and noninterest income chart excludes ($557k) in “Treasury & Other”. (2) Includes Prairie Capital Management income and expense. Net Inter
Slide 38: Bank - Diverse Sources of Net Income
Bank - Diverse Sources of Net Income Includes PCM’s income and expense. Personal Banking Commercial & Business Banking Institutional Banking Healthcare Services Treasury & Other (1) Bank Segment Net Income Before Tax 4Q’16 4Q’15 1Q’16 3Q’16 2Q’16 $32.3M $42.7M $45.8M $50.8M $46.6M
Slide 39: Loan Paydowns, Payoffs, and Line Changes
Loan Paydowns, Payoffs, and Line Changes
Slide 40: Bank – Loan Composition
Bank – Loan Composition Diverse Loan Book (Actual Loan Balances at December 31,) Commercial Credit Card Commercial & Industrial (1) HELOC Residential Real Estate Real Estate Construction Commercial Real Estate Consumer Credit Card Consumer Other $5.7B $6.5B $7.5B $9.4B $10.5B 1.3% 2.3% 3.4% 1.5% 2.3
Slide 41: Bank – Regional Lending
Colorado Kansas City Kansas Greater MO St. Louis Arizona Texas Oklahoma Marquette Transportation Fin (Natl. Sales) Nebraska Marquette Business Credit (Natl. Sales) Bank – Regional Lending $187.2 $313.2 $197.4 $204.1 $68.1 $213.2 $268.1 $5.7B $6.5B $7.5B $9.4B $10.5B $227.0 $139.9 $138.6 Loans by Reg
Slide 42: Commercial Real Estate Portfolio
Commercial Real Estate Portfolio CRE & Construction Lending (Actual Loan Balances at December 31,) $3.9B $3.1B $2.1B $1.9B $1.5B 4.6% 1.9% 0.6% 2.6% 1.4% 2.4% 1.9% 2.9% Investment CRE Owner Occ. CRE Construction Farmland Multi-Family CRE Residential Construction
Slide 43: Bank – Total Deposits
Bank – Total Deposits Diverse Sources of Deposits (Actual Deposits at December 31,) $11.7B $13.6B $13.6B $15.1B $16.6B Personal Banking - Consumer Commercial Institutional - IAM Personal Banking - Private Wealth Asset Servicing Healthcare Institutional - IBIS Small Business Other 0.2% 0.2% 0.9%
Slide 44: Personal Banking
$8.8B $10.2B $11.6B $12.8B $13.6B $1.2B $1.2B $1.4B $1.6B $1.7B Home Equity Lines of Credit $ in millions Assets Under Management $ in millions Personal Banking
Slide 45: Institutional Banking - Business Description
Institutional Banking - Business Description Investor Solutions Corporate Trust Investment Banking Public Finance Distressed Debt FDIC Sweep Provides banking solutions to 7 of top 10 clearing Broker-Dealer’s and 6 of top 10 independent Broker-Dealer’s Provides services to more than 25MM investor acc
Slide 46: Institutional Banking FDIC Sweep Program
Institutional Banking FDIC Sweep Program $ in billions 5 Year CAGR 28.6%
Slide 47: Healthcare Services
Healthcare Services 2012 2013 2014 2015 2016 HSA investment assets as % of total healthcare deposits & assets 7.2% 7.4% 8.3% 9.2% 8.7% HSA deposits as % of total UMB deposits 3.4% 4.4% 6.2% 7.8% 9.7% Healthcare Deposits and Assets $ in millions $430.5 $642.4 $917.5 $1,292.4 $1,765.2 +36.6% Year-end
Slide 48: Healthcare Services – Growth & Potential
Industry information source: Devenir Research 2016 Midyear HSA Market Statistics & Trends report dated August 16, 2016. Rankings as of June 30, 2016. Deposit and asset growth rates on an annual basis, as of December 31, 2015. HCS represents a unique asset as one of the top 10 leaders in a high growt
Slide 49: Multi-Channel Healthcare Strategy
Multi-Channel Healthcare Strategy UMB offers a modular and configurable platform of applications and services that deliver the underlying core banking functionality to our healthcare partners Broker/Employer TPAs Health Plans Technology Firms Payment Aggregators Healthcare Partners HCS Applications
Slide 50: Card Purchase Volumes
Card Purchase Volumes Purchase Volume & Interchange Revenue Commercial Credit Consumer Credit Consumer Debit Healthcare Debit Institutional Banking – IBIS Debit Interchange ($ in millions) $2.3B $1.4B $1.6B $2.1B $2.3B 1.4% 1.8% 1.6% 1.4% 1.5%
Slide 51: Appendix
Appendix
Slide 52: Peer Group Companies
Peer Group Companies Company Ticker BOK Financial Corporation BOKF CoBiz Financial Inc. COBZ Commerce Bancshares, Inc. CBSH Cullen/Frost Bankers, Inc. CFR First Midwest Bancorp, Inc. FMBI Hancock Holding Company HBHC Old National Bancorp ONB Prosperity Bancshares PB Signature Bank NY SBNY SVB Financ
Slide 53: Market Capture – UMB vs. Peers vs. Indices
Market Capture – UMB vs. Peers vs. Indices Source: Thomson Reuters
Slide 54: Overall Market Capture
Overall Market Capture Overall Capture Ratio & Total Return 01/01/07 – 12/31/16 Source: Thomson Reuters
Slide 55: UMB Financial Fourth Quarter 2016
UMB Financial Fourth Quarter 2016 January 24, 2017