Umb Financial Corporation · NASDAQ:UMBF
Umb Financial — Q3 2020 Earnings Presentation
40 slides from Umb Financial's earnings presentation, Oct 27, 2020
Slide 1: Third Quarter 2020
Third Quarter 2020 October 27, 2020 UMB Financial Exhibit 99.2
Slide 2: Cautionary Notice about Forward-Looking Statements
Cautionary Notice about Forward-Looking Statements This presentation of UMB Financial Corporation (the “company,” “our,” “us,” or “we”) contains, and our other communications may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These sta
Slide 3: Corporate Snapshot
Corporate Snapshot Corporate Trust / Investment Banking Division Fund Services Asset-based lending Accounts receivable financing Healthcare Services Prairie Capital Management Private Wealth Management / Personal Trust 91 banking centers 232 ATMs Our Footprint National Presence UMB Financial Corpora
Slide 4: Well-Positioned for the Current Environment
Peer Source for all charts: S&P Global; current as of 10/23/20 *Industry NCO/Avg Loans source: FDIC Quarterly Banking Profile Well-Positioned for the Current Environment Excess Liquidity Long-Term History of Quality Credit Metrics Leading Fee Income Strong Capital Position Net Charge-offs / Average
Slide 5: Our Commitment to Corporate Citizenship
Our Commitment to Corporate Citizenship Inclusion & Diversity Community Impact Efficient & Sensible Resource Use Strong Corporate Governance As we all navigate a global pandemic and an increasingly polarized environment, we are engaging our associates, customers and communities through pro-active ou
Slide 6: Our Continued Response to COVID-19
Our Continued Response to COVID-19 Operational Readiness Associates Communities Customers Maintaining business continuity protocol and executive-level pandemic task force Increased and strengthened network capacity Early move to drive-through only branches to protect associates and customers; now se
Slide 7: 3Q Financial Highlights
3Q Financial Highlights
Slide 8: Earnings Summary – 3Q 2020
Earnings Summary – 3Q 2020 The Company adopted ASU 2016-13 as of 1/1/2020. See additional information on slides 30-32. Non-GAAP adjustments include provision for credit losses. See the non-GAAP reconciliation and additional information on slide 37. Non-GAAP adjustments include acquisition expense, s
Slide 9: Noninterest Income – 3Q 2020
Noninterest Income – 3Q 2020 3rd Quarter ‘20 Drivers Noninterest income decreased $7.5MM, or 6.2%, compared to 2Q’20, primarily driven by: A decrease of $6.2MM in company-owned life insurance income, included in “other income,” reflecting lower market valuations. This decrease is offset by a proport
Slide 10: Noninterest Income Composition – 3Q 2020
Noninterest Income Composition – 3Q 2020 Trust & Securities Processing Composition: ($ in millions) Source of Income: 3Q’20 2Q’20 3Q’19 Personal Banking $ 16.4 $ 15.0 $ 16.4 Institutional Banking: Asset Servicing 24.7 22.5 21.0 Corp. Trust & Inst. Asset Mgmt. 9.5 8.8 7.8 $ 50.6 $ 46.3 $ 45.2 Other S
Slide 11: Card Purchase Trends
Card Purchase Trends Purchase Volume & Interchange Revenue (1) Percentages less than 5% have been omitted. Change in purchase volume – 3rd quarter vs. 2nd quarter of indicated year 2016 2017 2018 2019 2020 (5.9%) (5.8%) (3.7%) +2.1% +21.1%
Slide 12: Noninterest Expense – 3Q 2020
Noninterest Expense – 3Q 2020 Operating noninterest expense, which excludes the impact of acquisition expense, severance expense and COVID-19 related expense, was $193.7 million for the third quarter of 2020, a decrease of $10.6 million, or 5.2 percent, compared to the linked quarter, and an increas
Slide 13: Balance Sheet
Balance Sheet
Slide 14: Select Balance Sheet Items
Select Balance Sheet Items $ in thousands, average balances; unaudited Three Months Ended Other average earning assets include taxable and tax-exempt securities, trading securities, federal funds and resell agreements and interest bearing due from banks.
Slide 15: Strong Capital Position
Strong Capital Position Capital Ratio Trends (%) These ratios are reflective of the Company’s election to utilize the 5-year regulatory capital phase-in of the adoption of ASU 2016-13 under recently issued inter-agency guidance. Total Risk-Based Capital Tier 1 Leverage Common Equity Tier 1 / Tier 1
Slide 16: High Quality Investment Portfolio
High Quality Investment Portfolio Securities Held to Maturity $1.1 billion at September 30, 2020 Securities Available for Sale $8.7 billion at September 30, 2020 Governmental Other Higher Education Healthcare Utility Social Service Industrial Cultural Civic K-12 Education NFP - Other Average Balance
Slide 17: Securities Portfolio Statistics
Securities Portfolio Statistics (1) Roll off includes cash flow from maturities, calls or amortizations of securities and excludes roll off related to non-core purchases. (2) Purchased amount is presented net of purchases made related to sales. AFS Portfolio Activity
Slide 18: Deposit Trends and Composition
Deposit Trends and Composition Average Deposit Growth and Cost 5-yr CAGR: 8.8% (2014-2019) 15-yr CAGR: 9.5% (2004-2019) Long-Term Track Record At September 30, 2020 Deposits by Type Deposits by Line of Business Non-Interest Bearing Interest-Bearing MMDA & Savings Time Deposits Interest-Bearing Perfo
Slide 19: Growth of Diversified Loan Portfolio
Growth of Diversified Loan Portfolio Average Loans & Yields 5-yr CAGR: 12.8% (2014-2019) 15-yr CAGR: 10.7% (2004-2019) Long-Term Track Record
Slide 20: Loan Portfolio Composition
Loan Portfolio Composition Variable Rate Loans: 52% of loans are variable, $8.3 billion at September 30, 2020 Tied to LIBOR for the next quarter: 72% or ~$6.0 billion Tied to Prime for the next quarter: 28% or ~$2.3 billion Loan Repricing / Maturity Schedule: 51% reprice in 4Q 2020 63% reprice in th
Slide 21: Quarterly Loan Activity
Quarterly Loan Activity Commercial Banking Line Draws & Utilization Trends PPP loans of are included in gross loan production and net loan growth in second and third quarter 2020.
Slide 22: Commercial & Industrial Loan Portfolio
Commercial & Industrial Loan Portfolio C&I Portfolio Statistics (1) C&I Industry Diversification (2) Oil & Gas Average loan size: $4.4 million Considerations Internal limits on loan size and projects per sponsor Concentration guidelines for all lending verticals, monitored for changing conditions In
Slide 23: Commercial Real Estate – Disciplined Expansion
Commercial Real Estate – Disciplined Expansion Construction / Land Dev. 15% Owner-Occupied 28% Investment CRE 47% $5.9B Farmland 9% Total Portfolio: Average Loan-to-value: 62% Recourse: 90% Regulatory Concentrations (3) Total non-farmland CRE / Total RBC: 147% Construction & Development Loans / Tota
Slide 24: Paycheck Protection Program (“PPP”)
Paycheck Protection Program (“PPP”) Kansas City CO St. Louis AZ KS TX PPP Loans by Region PPP Loans by Industry Originated more than 5,300 PPP loans totaling $1.5 billion; median size $53k Greater MO – 1.9% Other – 0.2% NE – 0.6% OK – 0.5%
Slide 25: Exposure to Sensitive Industries
Exposure to Sensitive Industries We analyzed our portfolios in each category for specific characteristics based on what is currently known, such as guarantees, recourse, liquidity positions and hedging strategies that provide protection, as well as those which may carry more risk if the current envi
Slide 26: Asset Quality
Asset Quality
Slide 27: Loan Risk Profile – 3Q 2020
Loan Risk Profile – 3Q 2020 At June 30 2020 Total past due and accruing amounts include loans 30-89 days past due of $7.5 million and loans > 90 days past due of $1.4 million.
Slide 28: Modification Trends
Modification Trends June 30, 2020 September 30, 2020 Modifications on loans only; excludes modifications on held-to-maturity securities of $9.0 million at 9/30/20 and $15.8 million at 6/30/20. Percentages are modifications on loans as percentage of total loans excluding PPP balances. Business bankin
Slide 29: Net Charge-Off History
Net Charge-Off History Loan categories for disclosure were updated in Q1 2020 with the adoption of ASU 2016-13. In prior periods, net charge-offs for “Commercial Loans” included C&I, commercial credit card, asset-based and factoring loans. Net charge-offs for “Other” included consumer credit cards,
Slide 30: Current Expected Credit Loss (“CECL”) Implementation
Current Expected Credit Loss (“CECL”) Implementation CECL Methodology and Key Assumptions Macroeconomic forecast Moody’s Baseline forecast as of September 8th 50% probability the economy performs better or worse Assumptions: Seven-day moving average of COVID-19 cases peaked in July and 13.7 million
Slide 31: CECL: Conservative & Prudent Reserve Build
CECL: Conservative & Prudent Reserve Build 3Q20 Balances Allowance % of total ACL % Commercial $11,408 $178.9 83% 1.6% National Businesses $497 $3.6 2% 0.7% Consumer real estate $1,841 $7.6 4% 0.4% Credit cards $366 $17.3 8% 4.7% Other $349 $4.3 2% 1.2% Total Loans, ex. PPP $14,461 $211.7 99% 1.5% P
Slide 32: 3Q’20 Changes to Allowance
3Q’20 Changes to Allowance Allowance for Credit Losses ($ in millions) $203.6 ($5.1) Net Charge-offs $16.0 Credit Risk Changes ACL 06/30/20 ACL 09/30/20 $214.5
Slide 33: Appendix
Appendix
Slide 34: Returning Capital to Our Shareholders
Dividend increase = 228.9% Returning Capital to Our Shareholders Annual Dividends Declared 2000 - 2020 2020 = $1.25 3.3% annual increase (1) Dividends adjusted for 2-for-1 stock split in 2006. (1)
Slide 35: Long-Term Value Creation
Long-Term Value Creation (1) Growth rates for earnings per share represent compound annual rates based on a rolling twelve-month period ending September 30, 2020. (2) Tangible book value per share is a non-GAAP measure. See reconciliation on slide 40. *All publicly-traded banks with data reported fo
Slide 36: Non-GAAP Reconciliations
Non-GAAP Reconciliations In this presentation, we provide information about pre-tax pre-provision income, net operating income, operating earnings per share-diluted (operating EPS-diluted), operating return on average equity (operating ROE), operating return on average assets (operating ROA), operat
Slide 37: Non-GAAP Reconciliations: Pre-Tax, Pre-Provision Income
Non-GAAP Reconciliations Pre-Tax, Pre-Provision Income
Slide 38: Non-GAAP Reconciliations: Net Operating Income
Non-GAAP Reconciliations (1) Calculated using the Company's marginal tax rate of 22.2%. Net Operating Income
Slide 39: Non-GAAP Reconciliations: Operating Noninterest Expense & Efficiency Ratio
Non-GAAP Reconciliations Operating Noninterest Expense & Efficiency Ratio
Slide 40: Non-GAAP Reconciliations: Tangible Common Equity Ratio
Non-GAAP Reconciliations Tangible Common Equity Ratio Tangible Book Value Share count for December 31, 2004 adjusted for Company’s 2-for-1 stock split on May 31, 2006.