UMB(US:UMBF)2023-01-25 16:19Financial Data and Key Metrics Changes - Net income for Q4 2022 was $100.2 million or $2.06 per share, with full-year net income of $431.7 million or $8.86 per share, representing a 22.3% increase compared to 2021 [4] - Operating pre-tax, pre-provision EPS for the year was $11.73 per share, up from $9.26 per share in the prior year [5] - Net interest income for Q4 increased by 5% sequentially, driven by over $1 billion increase in average loans, a 21% annualized increase [5][6] Business Line Data and Key Metrics Changes - Total loan production for Q4 was $1.3 billion, bringing full-year 2022 originations to a record $5 billion [7] - C&I lending contributed nearly half of the average loan growth for the quarter, with balances increasing 21% on a linked quarter annualized basis [8] - Average residential mortgage balances increased 21% year-over-year despite rising rates [9] Market Data and Key Metrics Changes - Average total deposits for Q4 increased by 5.3% or 21% on an annualized basis compared to Q3 [10] - DDA balances represented 40% of average deposits, down from 42% in Q3 [10] - Non-performing assets comprised a modest 5 basis points of total assets, indicating strong credit quality [9] Company Strategy and Development Direction - The company aims to maintain positive operating leverage and expects to generate leverage of 6.7% for the full year of 2022 [7] - Focus on commercial and institutional customers, with a unique funding mix that allows for different pacing in the current repricing environment [5][6] - The company is optimistic about growth opportunities in 2023, despite the unpredictability of the current rate environment [11] Management's Comments on Operating Environment and Future Outlook - Management noted that customers are cautiously optimistic about the economic environment, with strong pipelines for the first quarter [22] - The company does not anticipate significant changes in the need for HSAs following the recent acquisition, maintaining a competitive position in the market [23][24] - Management expects net interest income to continue growing, driven by loan growth and market share gains [34] Other Important Information - The effective tax rate was 19.1% for Q4 and 18.9% for the full year, with expectations for 2023 to be around 19% to 20% [18] - Total fee income for Q4 was $125.5 million, a slight decrease from $128.7 million in Q3, with a full-year increase of 18.6% in fee income [15][16] Q&A Session Summary Question: Thoughts on tightening credit in a recessionary environment - Management stated they do not change their approach based on economic conditions and focus on quality opportunities [21] Question: Outlook for HSA acquisition and competitive positioning - Management expressed confidence in their competitive platform and strong pipeline following the HSA acquisition [23][24] Question: Insights on balance sheet and deposit runoff - Management clarified they expect rotation rather than runoff in deposits, with a strong pipeline for growth [28][29] Question: Expectations for margin trajectory and loan growth - Management anticipates continued net interest income growth and stable margins, driven by market share gains [34] Question: Trends in charge-offs and credit quality - Management expects to maintain performance levels without significant changes in charge-off guidance [42]