UMB Financial Corporation · NASDAQ:UMBF
UMB Financial — Q1 2017 Earnings Presentation
51 slides from UMB Financial's earnings presentation, Apr 25, 2017
Slide 1: UMB Financial First Quarter 2017
UMB Financial First Quarter 2017 April 25, 2017 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: 1Q 2017 Highlights
UMB 1Q 2017 Highlights
Slide 4: Earnings Summary – 1Q 2017
Earnings Summary – 1Q 2017 $ 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: Net Operating Income Non-GAAP Reconciliation
Net operating income for the relevant period is defined as GAAP net income, adjusted to reflect the impact of excluding the following: (i) fair value adjustments on contingent consideration for the acquisition of Reams Asset Management Company (Reams), (ii) expenses related to acquisitions, (iii) no
Slide 6: 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 7: Select Balance Sheet Items
Select Balance Sheet Items $ in thousands, average balances; unaudited Three Months Ended
Slide 8: Consistent Loan Growth
Consistent Loan Growth Average Total Loans 5 Year CAGR 15.9%
Slide 9: Net Charge-Off History
Net Charge-Off History (1) Commercial Loans includes commercial & 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 10: Loan Classification Trends
Loan Classification Trends % of total actual loans
Slide 11: Key Performance Metrics
Key Performance Metrics See slides 5 and 6 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 12: 1Q 2017 Financials
UMB 1Q 2017 Financials
Slide 13: Noninterest Income – 1Q 2017
Noninterest Income – 1Q 2017 Noninterest income increased $4.5 million, or 3.8%, compared to 4Q’16, primarily driven by: a $2.4MM increase in unrealized gains on the company’s capital in certain Scout funds; a $1.1MM increase in deposit service charges largely in Healthcare Services; and Solid growt
Slide 14: Noninterest Income Composition – 1Q 2017
Bankcard Fees Noninterest Income Composition – 1Q 2017 Trust & Securities Processing Revenue Trust & Securities Processing Composition: Service Charges on Deposit Accounts Trust & Securities Processing Gains on Sales of Securities Other Brokerage Fees Trading & Investment Banking ($ in millions) Ins
Slide 15: Noninterest Expense – 1Q 2017
Noninterest expense increased $2.4 million, or 1.3%, compared to 4Q’16, driven by: increases in payroll taxes, 401(k) benefits, and medical insurance expense in the salary and employee benefits line; partially offset by decreases in marketing and business development expenses and legal and consultin
Slide 16: Securities Available for Sale / High Quality Investment Portfolio
Securities Available for Sale $6.6 billion at March 31, 2017 High Quality Investment Portfolio Agencies Corporates Municipals Mortgage-Backed Securities Treasuries (2) (1) Securities Held to Maturity $1.2 billion at March 31, 2017 Governmental Other Higher Education Healthcare Utility Social Service
Slide 17: Securities and Loan Statistics
Securities and Loan Statistics AFS Portfolio Activity at March 31, 2017 (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 March 31
Slide 18: Deposit Growth
Deposit Growth Deposits & Percent of Free Funds Actual EOP Balances; $ in billions 1Q 2017 Cost of Interest-Bearing Liabilities 0.35% Including DDA 0.23% $12.6 $13.2 $12.3 $15.4 $15.9
Slide 19: Strong Capital Position
Strong Capital Position Capital Ratio Trends (1) 2015 - 2017 ratios calculated under Basel III requirements. Total Risk-Based Capital Tier 1 Risk-Based Capital Tier 1 Leverage Common Equity Tier 1 (1) (1) (1)
Slide 20: Business Segment Updates
UMB Business Segment Updates
Slide 21: Segment Financials
Segment Financials (1) Fourth quarter 2016 noninterest expense includes $2.7 million in costs related to the one-time buy-out and termination of certain marketing and referral agreements. (1)
Slide 22: Segment Financials (continued)
Segment Financials (continued)
Slide 23: Institutional Investment Management Assets Under Management
$27.3 $27.9 $31.2 Institutional Investment Management $31.2 $27.2 Assets Under Management $ in billions Scout assets under management stood at $27.9 billion on March 31, 2017, an increase of $590 million from December 31, 2016 Net outflows for 1Q’17 were -$1.8 million and the market impact was +$592
Slide 24: AUM Drivers
AUM Drivers $ in millions Institutional Investment Management 1Q’17 4Q’16 3Q’16 2Q’16 1Q’16 Equity Scout Funds ($56MM) Separate Accts ($90MM) Fixed Income Scout Funds ($35MM) Separate Accts $179MM 1Q’17 Net Flows
Slide 25: AUM by Strategy
AUM by Strategy – As of March 31, 2017 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 Aggre
Slide 26: Financial Impact of Divestiture of Scout
Financial Impact of Divestiture of Scout (1) Income before taxes for discontinued operations includes $2.7 million in costs related to the buy-out and termination of certain marketing and referral agreements incurred in the fourth quarter of 2016 and $2.0 million in one-time severance expense primar
Slide 27: Asset Servicing Assets Under Administration
Asset Servicing Assets Under Administration $ in billions Investment Management Series Trusts continue to grow, with 86 active funds and $17.9 billion in assets at March 31, 2017; AUA in this product has grown by $10.7 billion in the past 3 years UMB Fund Services now services $13 billion in private
Slide 28: Asset Servicing
Asset Servicing Fund Accounting & Administration Alternative Asset Servicing Custody Transfer Agency
Slide 29: UMB Fund Services – Turnkey Solutions
UMB Fund Services – Turnkey Solutions A turnkey, cost-effective means of starting and operating a mutual fund—ideal for advisors who wish to offer a mutual fund to enhance their product line. Ideal for advisors seeking a low-cost pooled alternative to enter the qualified retirement plan market space
Slide 30: Bank Line of Business Detail – 1Q'17
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 31: 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) 4Q’16 1Q’17 1Q’16 3Q’16 2Q’16 $42.7M $45.8M $46.6M $51.6M $50.8M Bank Segment Net Income Before Tax
Slide 32: Loan Paydowns, Payoffs, and Line Changes
Loan Paydowns, Payoffs, and Line Changes
Slide 33: Bank – Loan Composition
Bank – Loan Composition Diverse Loan Book (Average Loan Balances for the three months ended March 31,) Commercial Credit Card Commercial & Industrial HELOC Residential Real Estate Real Estate Construction Commercial Real Estate Consumer Credit Card Consumer Other $5.8B $6.7B $7.5B $9.5B $10.6B Facto
Slide 34: 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 $5.8B $6.7B $7.5B $9.5B $10.6B Loans by Region (Average Loan Balances for the three months ended March 31,) High
Slide 35: Commercial Real Estate Portfolio
Commercial Real Estate Portfolio CRE & Construction Lending (Average Loan Balances for the three months ended March 31,) $4.0B $3.2B $2.2B $1.9B $1.5B Investment CRE Owner Occ. CRE Construction Farmland Multi-Family CRE Residential Construction (1) Percentages less than 5% have been omitted. (1)
Slide 36: Bank – Total Deposits
Bank – Total Deposits Diverse Sources of Deposits (Average Deposits for the three months ended March 31,) $11.6B $13.1B $13.3B $15.4B $15.6B Personal Banking - Consumer Commercial Institutional - IAM Personal Banking - Private Wealth Asset Servicing Healthcare Institutional - IBIS Small Business Oth
Slide 37: Personal Banking
$10.2B $11.6B $12.8B $13.6B $13.9B $1.2B $1.4B $1.6B $1.7B $1.7B Home Equity Lines of Credit $ in millions Assets Under Management $ in millions Personal Banking
Slide 38: 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 39: Institutional Banking FDIC Sweep Program
Institutional Banking FDIC Sweep Program 5 Year CAGR 28.5% $54.0B $41.9B $30.9B $23.7B $18.5B
Slide 40: Healthcare Services
Healthcare Services 2013 2014 2015 2016 1Q’17 HSA investment assets as % of total healthcare deposits & assets 7.4% 8.3% 9.2% 8.7% 10.0% HSA deposits as % of total UMB deposits 4.4% 6.2% 7.8% 9.7% 11.3% +26.8% Mar. 31, 2017 vs. Mar. 31, 2016 Healthcare Deposits & Assets $2,000M $1,765M $1,292M $918M
Slide 41: Healthcare Services – Growth & Potential
Industry information source: Devenir Research 2016 Year-End HSA Market Statistics & Trends report dated February 22, 2017. Rankings as of December 31, 2016. Deposit and asset growth rates on an annual basis, as of December 31, 2016 HCS represents a unique asset as one of the top 5 leaders in a high
Slide 42: Multi-Channel Healthcare Strategy
Multi-Channel Healthcare Strategy UMB offers a modular and configurable platform of applications and services that deliver the underlying core banking functionality to our healthcare partners Broker/Employer TPAs Health Plans Technology Firms Payment Aggregators Healthcare Partners HCS Applications
Slide 43: Card Purchase Volumes
Card Purchase Volumes Purchase Volume & Interchange Revenue Commercial Credit Consumer Credit Consumer Debit Healthcare Debit Institutional Banking – IBIS Debit Interchange ($ in millions) $2.8B $1.8B $2.1B $2.3B $2.7B 1.0% 1.5% 1.3% 1.0% 1.2%
Slide 44: Appendix
UMB Appendix
Slide 45: 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 46: Market Capture – UMB vs. Peers vs. Indices
Market Capture – UMB vs. Peers vs. Indices Source: Thomson Reuters
Slide 47: Overall Market Capture
Overall Market Capture Overall Capture Ratio & Total Return 04/01/07 – 03/31/17 Source: Thomson Reuters
Slide 48: Announcement of Agreement to Sell Scout Investments to Carillon Tower Advisers
Announcement of Agreement to Sell Scout Investments, Inc. to Carillon Tower Advisers UMB Financial April 20, 2017
Slide 49: Strategic Rationale
Strategic Rationale This transaction allows us to allocate more time, energy and capital to our core banking businesses as well as our asset servicing operations. While Scout has generated shareholder value over the years, it has limited connectivity with our relationship-based banking model and lac
Slide 50: Transaction Summary
Transaction Summary Consideration $172.5 million in cash, subject to customary purchase price adjustments Required Approvals Customary regulatory approvals, including Hart-Scott-Rodino Anticipated Closing By year-end 2017 Price Adjustments Revenue run rate adjustments (1) The purchase price is reduc
Slide 51: 2016 Segment Financials
2016 Segment Financials Institutional Investment Management (1) (2) (1) Noninterest expense includes $2.7 million in costs related to the one-time buy-out and termination of certain marketing and referral agreements incurred in the fourth quarter of 2016 and $2.0 million in severance expense primari