UMB(US:UMBF)2022-01-26 16:55Financial Data and Key Metrics Changes - In Q4 2021, net income was $78.5 million or $1.61 per share, with pretax, pre-provision income on an FTE basis at $113.4 million or $2.32 per share [13] - Net interest income for Q4 was $210.6 million, relatively flat compared to Q3, with a reported net interest margin (NIM) falling 15 basis points to 2.37% [23][26] - Non-interest income for Q4 was $118.8 million, an increase of $10.9 million from Q3, driven by market fluctuations and increased derivative income [30] Business Line Data and Key Metrics Changes - Fund services total assets under administration grew nearly 25% year-over-year to $419 billion, with custody assets surpassing $150 billion [14] - In Private Wealth, new asset sales increased 17% over the prior year, indicating strong growth in this segment [15] - Average loans for Q4, excluding PPP balances, increased nearly 13% year-over-year and nearly 6% on a linked quarter annualized basis [16] Market Data and Key Metrics Changes - Average C&I loans increased 12% on a linked quarter annualized basis, reflecting strong pipelines and backlogs across most industries [17] - Average residential mortgage balances grew 6.5% from Q3, with a nearly 26% annualized increase [18] - Total top-line loan production reached a record $1.4 billion for the quarter, with payoffs and paydowns at 5.6% of loans [19] Company Strategy and Development Direction - The company aims to generate positive operating leverage in 2022, excluding the impact of PPP, and is focused on prudent investments in people and platforms [12][35] - Management is optimistic about benefiting from anticipated economic expansion and higher interest rates, expecting to capture more than its fair share of growth [9] - The company is positioned to take advantage of market disruptions in fund servicing and private equity, indicating a strong long-term outlook [66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued loan growth despite challenges from supply chain and labor issues, with clients showing interest in expansion [17] - The company anticipates that net interest margin has bottomed out and will likely improve with expected rate hikes in 2022 [28] - Management highlighted the resilience of the team and the positive trajectory for 2022, despite ongoing pandemic challenges [22] Other Important Information - The company experienced higher operating expenses in Q4 due to increased incentive compensation and charitable contributions, with expectations for these expenses to reset lower in Q1 [10][34] - The effective tax rate was 20.2% for Q4 and 17.7% for the full year 2021, with an anticipated rate of 17% to 19% for 2022 [35] Q&A Session Summary Question: Clarification on margin guidance - Management clarified that the 2.4% margin guidance is for the full year 2022, influenced by various factors [39] Question: Insights on C&I utilization rates - Management noted that utilization rates have fluctuated and are difficult to predict, with historical rates around 30% pre-COVID [40][42] Question: Expectations for deposit stickiness - Management indicated that significant deposit growth was influenced by public funds and institutional dollars, with expectations for some outflows in Q1 [56] Question: Rate sensitivity and NII benefits - Management stated that 55% of total loans are variable, with a potential NII benefit of 1% for a 100 basis point rate increase in the first year [85] Question: Sustainability of fund services growth - Management expressed confidence in the sustainability of fund services growth due to ongoing market disruptions and a shift towards private equity [64][66]