UMB(US:UMBF)2021-10-27 18:50Financial Data and Key Metrics Changes - For Q3 2021, net income was $94.5 million or $1.94 per share, with pretax pre-provision income on an FTE basis at $115.3 million or $2.37 per share [10] - Net interest income increased by 4.3% from the previous quarter, driven by strong earning asset growth and controlled liability costs [11] - Net interest margin decreased to 2.52% from 2.56% in the prior quarter, influenced by elevated liquidity levels and re-pricing [11][28] - Non-interest income for the third quarter was $107.9 million, down $23.7 million from the last quarter, primarily due to market-related adjustments [34] Business Line Data and Key Metrics Changes - Average loan growth was 15.3% on a linked-quarter annualized basis, excluding PPP balances [8] - Average mortgage balances increased by 7.4% from the second quarter to $1.8 billion, with funded mortgage loans for the quarter at $236 million [15] - Fund services income and bank card fees increased by 8.5% and 7.1% respectively, while trading and investment banking income fell due to lower trading volumes [12] Market Data and Key Metrics Changes - The company reported strong loan growth driven by pricing and customer demand, despite supply chain dynamics and rising material costs affecting businesses [9] - The hotel and senior living portfolios stood at a combined $885 million, representing 5.5% of loans excluding PPP, with $419 million under closer monitoring [17] Company Strategy and Development Direction - The company aims to support strong organic growth while also looking for strategic acquisition opportunities, recently announcing a single branch acquisition in the Kansas City market [21] - The formal launch of the Family Wealth offering focuses on providing entrepreneurial investment strategies and sophisticated tax planning for wealthy families [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the loan growth outlook, anticipating strong pipelines despite potential payoffs and paydowns [42] - The company expects charge-offs to remain within historical levels of 25 to 30 basis points for the full year of 2021 [49] - Management noted that while wage inflation is present, voluntary turnover rates remain stable, indicating a strong company culture [74] Other Important Information - The company reported an improvement in total capital ratios, with total capital at 14.17% compared to 13.84% in the previous quarter [20] - The tangible book value per share increased nearly 10% over the past 12 months to $60.44 at September 30 [36] Q&A Session Summary Question: Loan growth outlook and impact of PPP - Management expects strong loan growth to continue, with unknown payoffs and paydowns impacting the outlook [42] Question: Lending relationships with PE firms - The company participates in M&A driven PE lending, focusing on acquisition debt [43] Question: Loan yields and competitive environment - Management indicated that the competitive environment remains aggressive, with loan yields near the bottom [44][46] Question: Fee income growth expectations - Fee income growth is anticipated to remain in the low to mid-single digit range, with strong growth in fund services and corporate trust areas [57] Question: Operational losses in the third quarter - Operational losses are typical business operating losses and not regulatory in nature [65] Question: Deposit growth sustainability - Management believes that a significant portion of deposit growth is sustainable due to the complexity of their business lines [70] Question: Wage inflation and employee retention - Management acknowledged wage inflation but noted that voluntary turnover rates have remained stable [74]