Financial Highlights - UMB Financial Corporation's market capitalization is $7.7 billion[5] - Total assets reached $69.3 billion[5] - Gross loans amounted to $35.9 billion[5] - Total deposits totaled $58.5 billion[5] - Institutional Assets Under Administration (AUA) reached $558.9 billion[5] - The Common Equity Tier 1 Capital Ratio is 10.11%[5] - The Total Risk Based Capital Ratio is 12.54%[5] Q1 2025 Performance - Commercial & Personal Banking Services revenue was $398.9 million, with average deposits of $33.7 billion[9] - Institutional Banking Services revenue was $164.9 million, with average deposits of $16.6 billion[12] - Net Interest Income (NII) was $397.6 million, including Purchase Accounting Adjustments (PAA) accretion of $28.6 million[62] - Net income available to common shareholders (GAAP) was $79.3 million, or $1.21 per diluted share[62]

Financial Data and Key Metrics Changes - The company reported net income of $1.7 million for the quarter, a significant decline from $15.3 million in the prior quarter, resulting in earnings per diluted share of $0.06 compared to $0.50 previously [7][29] - The pretax income decreased by $17.3 million to $2.4 million in the first quarter, driven by a higher provision for credit losses, a decline in net interest income, and increased noninterest expenses [29][30] - The allowance for credit losses increased to $129.5 million, representing coverage of total loans at 1.63%, up 19 basis points from the prior quarter [21][31] Business Line Data and Key Metrics Changes - Commercial lending grew by $109.1 million or 4.3% from December 31, 2024, reflecting the impact of new additions to the Commercial & Industrial (C&I) team [11] - Deposits increased by $146.2 million in the first quarter, primarily through time deposits in digital and branch channels, enhancing the bank's liquidity [12][32] - Noninterest income rose to $8.2 million for the first quarter, compared to $4.1 million in the prior quarter, largely due to a $200 million separate account BOLI transaction [36] Market Data and Key Metrics Changes - The company noted modest exposure to government contracting and GSA-linked assets, which reduces sensitivity to changes in federal budget spending [13] - The DC economy is diversified beyond the federal government, including educational institutions, a growing technology sector, and tourism, supporting long-term stability [14] Company Strategy and Development Direction - The company is focused on preserving capital flexibility, improving portfolio quality, and managing through volatility while maintaining long-term franchise value [17][28] - There is an emphasis on exploring asset disposition strategies for office loans to address evolving valuation risks [15][16] - The company aims to deepen relationship-based deposits and drive operational excellence despite challenges in asset quality and valuation pressures [41][42] Management's Comments on Operating Environment and Future Outlook - Management acknowledged sustained pressure on office property valuations and the need for adequate reserves to absorb potential losses [15][17] - The outlook for net interest margin (NIM) is being adjusted downward due to higher funding costs, but there is optimism for improvement as funding costs decrease [35][60] - The company remains confident in its ability to execute strategic priorities and maintain a resilient capital base [18][40] Other Important Information - The company reported a tangible common equity ratio of 11% at quarter-end, with 75% of total deposits insured, reflecting a stable funding base [31][32] - The average deposits grew by $381.6 million from a year ago during the first quarter of 2024 [32] Q&A Session Summary Question: Insights on Office Portfolio Reserve Drivers - Management explained that the reserve build was driven by updated assumptions regarding probability of default and loss given default based on recent appraisals, leading to a $14.3 million increase in the allowance for credit losses related to the office portfolio [46][48] Question: Impact of Government Contracting on Credit - Management noted that the government contracting portfolio is modest, with ongoing communication with clients to assess potential impacts from federal budget changes [55][56] Question: NIM Expansion Assumptions - Management indicated that the forecast for NIM does not include Fed rate cuts and is driven by a new pricing structure for third-party payment processing and redeployment of funds into higher-earning assets [57][60] Question: Office Portfolio Appraisal Updates - Management confirmed that appraisals for the office portfolio are conducted proactively, with updates provided as necessary [100][102] Question: Growth in C&I Portfolio - Management expressed optimism about the growth in the C&I pipeline, attributing it to new team members and increased activity [104][105]

Financial Data and Key Metrics Changes - The company reported net income of $1,700,000 for the quarter, reflecting continued earnings pressure compared to $15,300,000 in the prior quarter [5][18] - Pre-tax income declined by $17,300,000 to $2,400,000 in the first quarter, driven by a higher provision for credit losses, a decline in net interest income, and increased non-interest expenses [18] - The allowance for credit losses increased to $129,500,000, representing coverage of total loans at 1.63%, up 19 basis points from the prior quarter [13][19] - Net interest income before provision totaled $65,600,000, decreasing from $70,800,000 in the prior quarter due to lower average interest-bearing cash balances and lower rates on loans [21] - The tangible common equity ratio decreased by two basis points to 11% at quarter end, while book value per share increased by $0.39 to $40.99 [20] Business Line Data and Key Metrics Changes - The commercial lending platform saw loans grow by $109,100,000 or 4.3% over the previous quarter [7] - Deposits grew by $146,200,000, largely through time deposits in digital and branch channels, enhancing the bank's liquidity strength [8] - Non-interest income increased to $8,200,000 for the first quarter, compared to $4,100,000 in the prior quarter, primarily driven by a separate account BOLI transaction [24] Market Data and Key Metrics Changes - The DC economy is diversified beyond the federal government, including educational institutions, a growing technology sector, and tourism, which supports long-term stability [9] - The company has modest exposure to government contracting and GSA-linked assets, reducing sensitivity to changes in federal budget spending [8] Company Strategy and Development Direction - The company is focused on preserving capital flexibility, improving portfolio quality, and managing through volatility while maintaining long-term franchise value [11][27] - There is an emphasis on executing a disciplined strategy to enhance franchise value and position the company as a leading community bank in the Greater Washington DC Metro Area [7][9] - The company plans to explore asset disposition strategies for office loans to address evolving valuation risks [10] Management's Comments on Operating Environment and Future Outlook - Management acknowledges sustained pressure on office property valuations and the need for adequate reserves in light of market uncertainties [10][11] - The company remains optimistic about the long-term strength of the Washington DC region despite current challenges [10] - Management is actively reassessing capital allocation priorities, including shareholder return strategies, to align with forward-looking earnings [11] Other Important Information - The company has a strong capital position, with Tier one leverage increasing by 37 basis points to 11.11% [19] - Average deposits have grown by $381,600,000 from a year ago, reflecting a stable funding base [20] - The company is seeing a robust pipeline in its C and I lending, indicating potential growth in that area [76] Q&A Session Summary Question: Can you provide more details on the reserve build related to the office portfolio? - The reserve increase was driven by updated assumptions regarding probability of default and loss given default, resulting in a $14,300,000 increase to the allowance for credit losses related to the performing office portfolio [34][36] Question: What is the outlook for the C and I portfolio growth? - All indications point to an increase in the C and I portfolio growth, supported by new team members and a robust pipeline [75][78] Question: How sensitive is the margin guidance to potential Fed rate cuts? - The forecast does not include changes to Fed rate cuts, and the company is relatively neutral to interest rate movements due to its loan book structure [42][43]

Financial Data and Key Metrics Changes - The company reported net income of $1,700,000 for the quarter, reflecting continued earnings pressure compared to $15,300,000 in the prior quarter [6][21] - The provision for credit losses increased to $26,300,000, with $13,900,000 related to the increase in the office overlay [15][21] - The allowance for credit losses rose to $129,500,000, representing coverage of total loans at 1.63%, an increase of 19 basis points from the prior quarter [15][22] - Net interest income before provision totaled $65,600,000, decreasing from $70,800,000 in the prior quarter [24] - The tangible common equity ratio decreased two basis points to 11% at quarter end, while book value per share increased by $0.39 to $40.99 [22][23] Business Line Data and Key Metrics Changes - Commercial lending grew by $109,100,000 or 4.3% over the previous quarter, indicating positive momentum in this segment [9] - Deposits increased by $146,200,000, largely through time deposits in digital and branch channels [10] - Non-interest income rose to $8,200,000 for the first quarter, compared to $4,100,000 in the prior quarter, driven by a separate account BOLI transaction [27][28] Market Data and Key Metrics Changes - The company noted modest exposure to government contracting and GSA-linked assets, which reduces sensitivity to changes in federal budget spending [10] - The DC economy is diversified, including educational institutions, a growing technology sector, and tourism, supporting long-term stability [11] Company Strategy and Development Direction - The company is focused on preserving capital flexibility, improving portfolio quality, and managing through volatility while maintaining long-term franchise value [13][30] - There is an emphasis on executing a disciplined strategy to enhance franchise value and position the company as a leading community bank in the Greater Washington DC Metro Area [9][11] - The company plans to explore asset disposition strategies for office loans to address evolving valuation risks [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged sustained pressure on office property valuations and the need for adequate reserves [12] - The company remains optimistic about the long-term strength of the Washington DC region despite current uncertainties [11][30] - Management is actively reassessing capital allocation priorities, including shareholder return strategies, in light of credit conditions [13] Other Important Information - The company has a strong liquidity position with available liquidity totaling $4,800,000,000 [24] - The average deposits have grown by $381,600,000 from a year ago, reflecting a stable funding base [23] Q&A Session Summary Question: Can you provide more details on the reserve build related to the office portfolio? - The reserve increase was driven by actual appraisal experiences and updated assumptions regarding probability of default and loss given default [36][37] Question: What is the outlook for the C and I portfolio growth? - All indications point to an increase in the C and I portfolio growth due to new team members and a robust pipeline [79][80] Question: How sensitive is the margin outlook to potential Fed rate cuts? - The forecast does not include changes to Fed rate cuts, and the company is relatively neutral to interest rate movements in the short term [43][46] Question: What is the company's strategy regarding loan sales and resolutions? - The company is considering various strategies, including loan sales and aggressive resolutions, based on a cost-benefit analysis [72][73]