Umb Financial Corporation · NASDAQ:UMBF
Umb Financial — Q4 2023 Earnings Presentation
52 slides from Umb Financial's earnings presentation, Jan 31, 2024
Slide 1: 4th Quarter 2023 Update
4 Quarter 2023 th Update Kansas City, MO January 30, 2024
Slide 2: Presentation Index
Presentation Index Corporate Overview 3 Opportunity – Our Investment Thesis 8 4th Quarter 2023 Results 16 Line of Business Updates 32 Appendix 43 Board of Directors Forward-Looking Statements Non-GAAP Reconciliations Peer Group Please refer to the Forward-Looking Statements on slide 45 for important
Slide 3: Corporate Overview
Corporate Overview Highlights Founded 1913 Ticker UMBF - Nasdaq Market Cap $4.1 B Total Assets $44.0 B Gross Loans $23.2 B Total Deposits $35.8 B Private Wealth Customer Assets (1) $16.3 B Institutional Assets Under Administration (AUA) (2) $447.2 B Common Equity Tier 1 Capital Ratio 10.94% UMB Fina
Slide 4: Business Model: Our Diverse Foundation
Business Model Our Diverse Foundation Commercial & Personal Banking Services 4Q’23 Revenue: $236.3 million. 4Q’23 Average Deposits: $19.5 billion Commercial Consumer Private Wealth Average loans: $19.5B (1) Average loans: $3.1B (1) (2) AUM = $12.3B Average deposits: $13.4B Average deposits: $6.1B 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 CAGR 2.22% 11.1% 2.01% 1.37% Average Deposits Average Total Deposit Cost Peer Median Deposit Cost (1) Annual Deposit 14% 16% 11% 14% 10% 13% 6% 11% 9% 4% 7% 14% 20% 25% 8% 1% Growth Average Loans (2) 15 Year CAGR 11.8% Annual L
Slide 12: Differentiated Revenue Profile: Multiple Sources of Growth
Differentiated Revenue Profile Multiple Sources of Growth Net Interest Income $913.8 $920.1 15 Year CAGR $ 815.5 $731.2 8.4% $670.9 $610.4 $558.9 $495.3 $412.1 $317.0 $320.1 $333.3 $350.1 $303.0 $310.6 $275.1 Annual NII 18% 10% 3% 2% 1% 4% 5% 18% 20% 13% 9% 10% 9% 12% 12% 1% 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 0.29% 0.05% UMBF Peer Median (1) Industry (2) Nonperforming Loans / Loans 15 Year Average 0.44% 0.06% UMBF Peer Median (1) Industry (2) (1) UMB peers (15 banks), as of latest available annual p
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 (2) UMBF Peer Median (1) (1) UMB peers (15 banks), data as of latest available annual period. Source: S&P Global Market Intelligence. (2) The numerator for the calculation of
Slide 15: Dividend Trends: Sustained Growth
Dividend Trends Sustained Growth Annual Dividends Declared (1) 2023 = $1.53 +2.7% vs. 2022 +282.5% 2003 - 2023 (1) Dividends adjusted for 2-for-1 stock split in 2006. 15
Slide 16: 4th Quarter 2023 Financial Review
4th Quarter 2023 Financial Review St. Louis, MO
Slide 17: 4Q 2023 Results At-A-Glance
4Q 2023 Results At-A-Glance $ millions, except per share amounts. 4Q ’22 3Q ’23 4Q ’23 Linked-Quarter Variance & Commentary Average Loans 20,294.7 22,751.5 23,109.1 Strong top line production of $909mm, partially offset by increased commercial payoffs/paydowns. LQ annualized growth % 21.0% 10.1% 6.3
Slide 18: 4Q 2023 Earnings Highlights
4Q 2023 Earnings Highlights Net Income & Net Operating Income (1) Operating PTPP Income (2) $135.4 $134.1 $134.9 $127.9 $126.6 $112.0 $101.1 $98.4 $92.8 $93.8 Net Income EPS Operating PTPP Income – gains/losses on inv. securities (3) Net Operating Income (1) Operating EPS (1) Operating PTPP Income,
Slide 19: Revenue Trends
Revenue Trends Linked-Qtr. Variance 4Q ’22 1Q ’23 2Q ’23 3Q ’23 4Q ’23 $∆ %∆ Interest Income 366.8 408.7 461.4 472.0 496.6 24.6 5.2 Interest Expense 121.6 167.1 235.8 249.7 266.1 16.4 6.6 Net Interest Income $ 245.2 $ 241.7 $ 225.6 $ 222.3 $ 230.5 $ 8.2 3.7% Trust & securities processing 59.2 62.4 6
Slide 20: Net Interest Income
Net Interest Income Asset Yield and Liability Cost Trends $245.2 $241.7 $230.5 EA % $225.6 $222.3 IBL % COF % Liquidity Trends $ millions Pre- $3.0B pandemic $2.6B $2.1B $ billions $2.0B $1.8B $1.8B 8.4% 5.1% 5.4% 7.8% 5.0% 6.8% Net Interest Income NIM Spread Int-bearing due from banks Fed funds & r
Slide 21: Noninterest Income
Noninterest Income Current Quarter Drivers $140.3 Noninterest income increased $6.9mm or 5.2%, vs. 3Q’23. Primary drivers: $138.1 $130.2 $133.3 ▪ Increases of $3.7mm in company-owned life insurance (“COLI”) income and $567k in $125.5 derivative income, both in “other income”, and ▪ An increase of $2
Slide 22: Noninterest Expense
Noninterest Expense Linked-Qtr. Variance $ in millions 4Q ’22 1Q ’23 2Q ’23 3Q ’23 4Q ’23 $∆ %∆ Severance expense 0.4 0.5 4.9 2.4 1.2 (1.2) (48.8) Salary & Benefits, ex. severance expense 135.6 142.0 138.4 131.0 133.0 2.0 1.5 Occupancy 12.4 12.2 11.7 12.3 12.3 0.0 0.1 Equipment 19.0 17.8 17.1 17.2 1
Slide 23: Diversified Loan Portfolio
Diversified Loan Portfolio Linked-Qtr. Variance 4Q ’22 3Q ’23 4Q ’23 $∆ %∆ $ 22,751 $ 23,109 $ 22,192 CRE/Construction 7,324 8,545 8,890 345 4.0 $21,272 Residential Real Estate 2,679 2,923 2,945 22 0.8 $ 20,295 Credit Card 457 478 496 18 3.7 Consumer 146 139 153 14 10.3 Commercial & Industrial 9,130
Slide 24: Quarterly Loan Activity
Quarterly Loan Activity 4Q ’22 1Q ’23 2Q ’23 3Q ’23 4Q ’23 Gross Loan Production $1,296.8 $933.8 $986.3 $648.9 $909.0 Revolving Balance Changes 532.7 554.7 431.9 478.8 381.3 Net (Charge-offs) Recoveries (2.2) (4.6) 0.1 (4.6) (1.4) (1) Payoffs (426.9) (395.7) (534.5) (497.3) (707.9) (1) Paydow ns (25
Slide 25: Strong Asset Quality
Strong Asset Quality Net Loan Charge-Offs (Recoveries) Delinquencies ($0.1) Net Charge-offs (Recoveries) NCOs / Average Loans Delinquencies (1) Delinquencies / Total Loans Nonperforming Loans Allowance for Credit Losses Nonperforming Loans NPLs / Total Loans Allowance for Credit Losses on Loans ACL
Slide 26: Detailed Net Charge-Off History
Detailed Net Charge-Off History Historical ($ 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 27: High-Quality Investment Portfolio
High-Quality Investment Portfolio Available-for-Sale (1) Held-to-Maturity (1) $6,999 $6,963 $6,816 $6,537 $6,408 $5,872 $5,872 $5,824 $5,766 $5,705 Average balances - $ millions Average balances - $ millions GNMA/GSE Mortgage-Backed General Obligation Municipals Corp. & Commercial Paper GSE Agencies
Slide 28: Securities Portfolio Statistics
Securities Portfolio Statistics Net Securities Portfolio Activity (1) Amortized Fair Unrealized Cost Value $ in millions $ in millions; as of 12/31/23 Loss (4) (3) Available for Sale 4Q'22 1Q'23 2Q'23 3Q'23 4Q'23 Mortgage-backed 4,129 3,621 (508) Roll-off / Cash Flow $246 $250 $243 $240 $262 Municip
Slide 29: Diversified Deposit Mix
Diversified Deposit Mix Deposits by Line of Business $32,675 $31,374 $31,562 $31,475 $31,330 Brokered 5% Fund Services 7% Commercial Capital Markets Institutional & Corp. Trust 12% Commercial Banking 41% Investor Solutions 8% Healthcare Services 9% Consumer & Private Wealth 18% Personal 4Q ’22 3Q ’2
Slide 30: 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 31: Capital & Liquidity Position
Capital & Liquidity Position Strong Capital Available Liquidity Sources As of December 31, 2023 $ billions Regulatory Capital Ratios Total Available Liquidity Sources * 19.4 (2) Estimated Uninsured Deposits 24.4 12.85% (3) Estimated Uninsured Deposits, as adjusted 16.2 10.94% Liquidity / Uninsured D
Slide 32: Line of Business Updates
Line of Business Updates Milwaukee, WI
Slide 33: Commercial Banking: Commercial Capabilities
Commercial Banking Commercial Capabilities Commercial Lending Portfolio Average Loan Balance & Composition $19.5B Middle Market ▪ C&I Lending ▪ Working capital lines ▪ Owner-Occupied CRE ▪ Equipment loans Investment Real Estate 31% Investment Real Estate ▪ Office ▪ Retail Middle Market ▪ Industrial
Slide 34: 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) ▪ Considerations Retail Finance & ▫ Internal limits on loan size and projects per sponsor Insurance Tech. & 9% ▫ Conc
Slide 35: Commercial Banking: Commercial Real Estate
Commercial Banking Commercial Real Estate Commercial Real Estate Statistics Investment CRE as % of UMB Loans (1) ▪ Total CRE & Construction = 38% of UMB loans $8.9B 1-4 Unit Other (5) ▪ Owner-occupied – new purchase or refinance Rentals ▪ Real estate development – construction / perm Const. / Land D
Slide 36: Investment Real Estate: Select Property Details
Investment Real Estate Select Property Details Total Investment CRE Portfolio Office CRE Portfolio Average Loan-to-Value, Select Asset Classes MSA Diversification $ millions Statistics Dallas-Fort Worth-Arlington, TX MSA $228 ▪ Industrial: 61% ▪ Average Loan: $9.2mm Jacksonville, FL MSA 92 ▪ Multifa
Slide 37: 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 38: Personal Banking: Private Wealth Management
Personal Banking Private Wealth Management Customer Assets Wealth Management $12.3B Personal ▪ Financial planning Non-Managed Trust AUA ▪ Discretionary investment management 22% 25% ▪ Strategic wealth solutions for ultra-high net worth Managed Assets families (AUM) Other ▪ Business succession and ex
Slide 39: Institutional Banking: Fund Services & Institutional Custody
Institutional Banking Fund Services & Institutional Custody Assets Under Administration Registered Funds & Alternative Investments $411B Provides services for 1,700 funds, including registered and alternative $400B investment funds, PE funds, real estate and venture capital funds and ETFs and more.
Slide 40: 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 41: Institutional Banking: Investor Solutions & Healthcare Services
Institutional Banking Investor Solutions & Healthcare Services Investor Solutions $53B ~75mm 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 42: Payments: Credit & Debit Card Products
Payments Credit & Debit Card Products Card Purchase Volume & Interchange Trends 4Q ’23 Card Spend $4.1B $4,079 $4,088 $4,020 $4,009 $3,708 #24 Healthcare Debit Consumer Debit Inst. Cash Mgmt. 24th in U.S. Credit Card Commercial Credit Consumer Credit Interchange Income Purchase Volume (1) Dollars in
Slide 43: Appendix
Appendix Phoenix, AZ
Slide 44: Governance: Our Board of Directors
Governance Our Board of Directors Robin Beery Janine Davidson K.C. Gallagher Greg Graves Mariner Kemper Gordon Lansford CC (Chair), RC CC, GC AC, RC Lead Independent Chairman of AC (Chair), CC Director, GC (Chair) the Board Tim Murphy Tammy Peterman Kris Robbins Josh Sosland Leroy Williams AC, CC GC
Slide 45: 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 46: Additional Information
Additional Information Estimated Uninsured Deposit Analysis $ billions Estimated Uninsured Deposits (1) 24.4 (2) Less: Affiliate Deposits (2.0) (3) Less: Collateralized Deposits (6.2) (4) Estimated uninsured deposits ex. items above $16.2 Total Deposits (5) $35.8 Estimated total uninsured deposits a
Slide 47: 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 48: Non-GAAP Reconciliations: Net Operating Income
Non-GAAP Reconciliations Net Operating Income Three Months Ended Dec. 31, Sept. 30, Dec. 31, 2023 2023 2022 Net income (GAAP) $ 70,923 $ 96,554 $ 100,173 Adjustments: Acquisition expense 52 70 851 Severance expense 1,207 2,359 358 FDIC special assessment 52,840 - - (1) Tax-impact of adjustments (12,
Slide 49: Non-GAAP Reconciliations: Operating Pre-Tax, Pre-Provision Income
Non-GAAP Reconciliations Operating Pre-Tax, Pre-Provision Income Three Months Ended Dec. 31, Sept. 30, Dec. 31, 2023 2023 2022 Net interest income (GAAP) $ 230,522 $ 222,287 $ 245,166 Noninterest income (GAAP) 140,254 133,317 125,497 Noninterest expense (GAAP) 289,974 231,441 237,818 Adjustments to
Slide 50: Non-GAAP Reconciliations: Tangible Common Equity Ratio
Non-GAAP Reconciliations Tangible Common Equity Ratio Tangible Common Equity Ratio, ex. AOCI As of Dec. 31, Sept. 30, Dec. 31, Dec. 31, 2023 2023 2022 2008 Total shareholders' equity (GAAP) $ 3,100,419 $ 2,806,659 $ 2,667,093 $ 974,811 Less: Intangible assets Goodwill 207,385 207,385 207,385 104,924
Slide 51: Non-GAAP Reconciliations: Return on Tangible Common Equity
Non-GAAP Reconciliations Return on Tangible Common Equity Operating Return on Tangible Common Equity, Excluding AOCI Three Months Ended Dec. 31, Sept. 30, Dec. 31, 2023 2023 2022 Average shareholders' equity (GAAP) $ 2,954,967 $ 2,891,854 $ 2,621,693 Less: Average Intangible assets Average Goodwill
Slide 52: Non-GAAP Reconciliations: Tangible Book Value
Non-GAAP Reconciliations Tangible Book Value As of Dec. 31, Sept. 30, Dec. 31, Dec. 31, 2023 2023 2022 2008 Total shareholders' equity (GAAP) $ 3,100,419 $ 2,806,659 $ 2,667,093 $ 974,811 Less: Intangible assets Goodwill 207,385 207,385 207,385 104,924 Other intangibles, net 71,012 73,060 78,724 18,