Umb Financial Corporation · NASDAQ:UMBF
Umb Financial — Q1 2020 Earnings Presentation
34 slides from Umb Financial's earnings presentation, Apr 28, 2020
Slide 1: First Quarter 2020
First Quarter 2020 April 28, 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: Our Response to COVID-19
Our Response to COVID-19 Operational Readiness Associates Communities Customers UMB is a founding member of the Kansas City Regional COVID-19 Response and Recovery Fund. UMB was able to donate and deliver 2,400 N95 masks to 29 clients in eight states who are on the front line of the crisis, includin
Slide 4: Earnings Summary – 1Q 2020
Earnings Summary – 1Q 2020 The Company adopted ASU 2016-13 as of 1/1/2020. See additional information on slides 9-11. Non-GAAP adjustments include acquisition expense, severance expense, COVID-19 related expenses and the cumulative tax impact of these adjustments. See the non-GAAP reconciliations an
Slide 5: Noninterest Income – 1Q 2020
Noninterest Income – 1Q 2020 1st Quarter ‘20 Drivers As-stated noninterest income decreased $11.9MM, or 10.8%, compared to 4Q’19, primarily driven by: Reductions related to market valuation adjustments due to volatility, including a $16.6MM decrease in company-owned life insurance income, a $3.5MM r
Slide 6: Noninterest Income Composition
Noninterest Income Composition Trust & Securities Processing Composition: ($ in millions) Source of Income: 1Q’20 4Q’19 1Q’19 Personal Banking $ 15.7 $ 16.2 $ 15.3 Institutional Banking 31.3 30.5 26.7 $ 47.0 $ 46.8 $ 42.0 Bankcard Fees Service Charges on Deposit Accounts Trust & Securities Processin
Slide 7: Noninterest Expense – 1Q 2020
Noninterest Expense – 1Q 2020 Operating noninterest expense, which excludes the impact of acquisition expense, severance expense and COVID-19 related expense, was $186.6 million for the first quarter of 2020, a decrease of $16.2 million, or 8.0 percent, compared to the linked quarter, and a decrease
Slide 8: Asset Quality
Asset Quality
Slide 9: 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 March 27th 50% probability the economy performs better or worse Catalysts: COVID-19, equity market turmoil and plunge in global oil prices GDP forecasted t
Slide 10: CECL: Conservative & Prudent Reserve Build
CECL: Conservative & Prudent Reserve Build 1Q20 Balances Allowance % of total ACL % Commercial $11,236 $157.9 83% 1.4% National Businesses $523 $3.6 2% 0.7% Consumer real estate $1,445 $4.2 2% 0.3% Credit cards $374 $18.8 10% 5.0% Other $372 $3.4 2% 0.9% Total Loans $13,950 $187.9 98% 1.4% HTM Secur
Slide 11: CECL: Drivers of Change to Allowance
CECL: Drivers of Change to Allowance 12/31/19 Day 1 Adjustment 01/01/20 Net Charge-offs Portfolio Changes 3/31/20 Economic Outlook Allowance for Credit Losses ($ in millions)
Slide 12: Net Charge-Off History
Net Charge-Off History (1) Commercial Loans includes commercial and industrial, commercial credit card, asset-based and factoring loans. (2) Other includes all real-estate related loans (commercial, residential and HELOC), plus consumer loans and DDA charge-offs.
Slide 13: Supporting Customers In Need
Supporting Customers In Need Loan Modifications Commercial Banking Credit Line Draws & Utilization Paycheck Protection Program Size $2k - $10M Median size $122k Actively working to process applications in second round Modification requests represent ~12% of loan portfolio Business banking – proactiv
Slide 14: Balance Sheet
Balance Sheet
Slide 15: Select Balance Sheet Items
Select Balance Sheet Items $ in thousands, average balances; unaudited Three Months Ended
Slide 16: Strong Capital Position
Strong Capital Position Capital Ratio Trends (%) Total Risk-Based Capital Tier 1 Risk-Based Capital Tier 1 Leverage Common Equity Tier 1 (1) 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 in
Slide 17: High Quality Investment Portfolio
High Quality Investment Portfolio Securities Held to Maturity $1.1 billion at March 31, 2020 Securities Available for Sale $7.6 billion at March 31, 2020 Governmental Other Higher Education Healthcare Utility Social Service Industrial Cultural Civic K-12 Education NFP - Other Average Balance: $7.5 b
Slide 18: Securities Portfolio Statistics
Securities Portfolio Statistics (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. AFS Portfolio Activity
Slide 19: Deposit Trends and Composition
Deposit Trends and Composition Commercial 29.5% Consumer* 26.7% Healthcare 13.2% Institutional 30.6% Non-Interest Bearing 34.3% Interest-Bearing MMDA & Savings 26.0% Time Deposits * Includes consumer banking, private wealth and small business By Type By Line of Business Deposit Growth & Cost Deposit
Slide 20: Growth of Diversified Loan Portfolio
Growth of Diversified Loan Portfolio Average Loans & Yields 15-yr CAGR: 10.7% (2004-2019) Long-Term Track Record
Slide 21: Loan Portfolio Composition
Loan Portfolio Composition Loan Repricing / Maturity Schedule 55% of loans reprice in 2Q 2020 65% of loans reprice in the next 12 months Variable Rate Loans 64% of loans are variable, $8.9 billion at March 31, 2020 Tied to LIBOR for the next quarter: 68% or ~$6.1 billion Tied to Prime for the next q
Slide 22: Quarterly Loan Activity
Quarterly Loan Activity $ in millions 1Q'20 419 3Q119 219 10119 Gross Loan Production 8159 1,021.6 850.3 844.2 930.4 Revolving Balance Changes 320.6 29.9 (143.6) 83 (139.9) Net Charge-offs (77) (7.6) (2.2) (12.6) (12.3) Payoffs (3186) (385.8) (274.4) — (287.3) ~— (194.2) Paydowns (292.2) (270.2) = (
Slide 23: Commercial & Industrial Loan Portfolio
Commercial & Industrial Loan Portfolio C&I Portfolio Statistics C&I Industry Composition * Other - 10% Auto-Related: 3.0% Food/Bev Manufacturing: 2.5% Entertain/Recreation: 2.1% Government/Education: 1.3% Consumer Services: 0.4% Utilities: 0.4% Textile Manufacturing: 0.3% C&I loans (including leases
Slide 24: Commercial Real Estate – Disciplined Expansion
Commercial Real Estate – Disciplined Expansion Total CRE Composition CRE Growth Trends Construction / Land Dev. Owner-Occ CRE Retail Construction 1% Investment CRE $ billions Farmland Investment CRE and construction / land development managed by Real Estate Group (“REG”); details on following slide
Slide 25: Investment CRE / Construction
Investment CRE / Construction Retail Multifamily Other * Office Building Hotel Industrial Sr. Living Student Housing Resi. Rental Investment CRE and Construction/Development loans $3.4 billion, 24% of total UMB loans Average Loan-to-value: 63% Recourse: 91% of portfolio Regulatory Concentrations: To
Slide 26: Exposure to Sensitive Industries
Exposure to Sensitive Industries We analyzed our portfolios in each category for specific characteristics based on what is currently known, such as guarantees, recourse, liquidity positions and hedging strategies that provide protection, as well as those which may carry more risk if the current envi
Slide 27: Card Purchase Volumes
Card Purchase Volumes Purchase Volume & Interchange Revenue Commercial Credit Consumer Credit Consumer Debit Healthcare Debit Institutional Banking – IBIS Debit Interchange ($ in millions)
Slide 28: Appendix
Appendix
Slide 29: Returning Capital to Our Shareholders
Dividend increase = 165.9% Industry Median* +59% increase *Industry is defined as publicly traded banks with dividend data reported for both 2005 and 2019, available at time of printing, 1/25/20. (142 banks) Source: S&P Global Returning Capital to Our Shareholders Annual Dividends Declared 2005 - 20
Slide 30: Long-Term Value Creation
Long-Term Value Creation Data as available at time of printing, 01/25/20. (1) See reconciliation of tangible book value per share on slide 34. *KBW Nasdaq Regional Bank Index (50 banks); **All publicly-traded banks with data reported for both 2004 and 2019; ***UMB traditional peer group (15 banks).
Slide 31: Non-GAAP Reconciliations
Non-GAAP Reconciliations In this presentation, we provide information about pre-tax pre-provision income, net operating (loss) income, operating (losses) earnings per share-diluted (operating EPS-diluted), operating return on average equity (operating ROE), operating return on average assets (operat
Slide 32: Non-GAAP Reconciliations
Non-GAAP Reconciliations (i) Calculated using the Company's marginal tax rate of 22.2%. Net Operating Income Operating Noninterest Expense & Efficiency Ratio
Slide 33: Non-GAAP Reconciliations
Non-GAAP Reconciliations Pre-Tax, Pre-Provision Income Tangible Common Equity Ratio (unaudited; $ in thousands except per share data) (unaudited; $ in thousands)
Slide 34: Non-GAAP Reconciliations
Non-GAAP Reconciliations Tangible Book Value Share count for December 31, 2004 adjusted for Company’s 2-for-1 stock split on May 31, 2006. (1)