UMB(US:UMBF)2021-07-28 20:05Financial Data and Key Metrics Changes - Net income for Q2 2021 was $87.4 million, or $1.79 per share, with a pretax preprovision income of $138 million, or $2.83 per share [14] - Net interest income increased by 3.6% from the first quarter and 12.8% year-over-year, despite a 31 basis point decline in earning asset yields [15][31] - Fee income for the quarter rose by 21% on a linked-quarter basis, significantly impacted by a $7.2 million gain from Tattooed Chef investments [16][36] - The provision expense was higher due to strong loan growth and elevated charge-offs, primarily from one commercial factoring relationship [9] Business Line Data and Key Metrics Changes - Average loan growth was 19% on a linked-quarter annualized basis, excluding PPP balances [8] - Institutional banking contributed more than half of the fee income, with Corporate Trust and Specialty Trust teams experiencing growth of 68% and 109% respectively [19] - Fund services assets under administration increased to $379 billion from $286 billion year-over-year, with a 30% increase in fee income contribution [20] Market Data and Key Metrics Changes - The average residential mortgage balances increased by 6.2% from the first quarter to $1.7 billion, with funded mortgage loans increasing by 33% to $276 million [24] - Commercial line utilization slightly increased to 32%, with growth in C&I coming from various industries [23] - The company has seen a resurgence in aviation financing activity, particularly benefiting from its location in Dublin [20] Company Strategy and Development Direction - The company aims to grow shareholder value through organic growth and opportunistic acquisitions, with a focus on maintaining a strong capital position [29] - The Board approved a 15.6% increase in the quarterly dividend, reflecting a commitment to returning value to shareholders [29] - The company is actively seeking M&A opportunities that align with its culture and add value, while also focusing on loan growth in under-penetrated markets [70] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the economic recovery and its impact on loan growth, citing significant liquidity and stimulus in the market [62] - The company expects charge-offs to return to historical levels of about 25 to 30 basis points for the full year of 2021 [11] - Management noted that the transition back to office work is underway, which is expected to enhance productivity and customer engagement [12] Other Important Information - The effective tax rate for the first half of the year was 17%, with an anticipated range of 16% to 18% for the full year [40] - The company maintains strong capital ratios, with a total risk-based capital of 13.84% and a CET1 ratio of 11.91% [40] Q&A Session Summary Question: Details on the factoring loss - Management clarified that the loss was tied to a specific commercial factoring relationship and emphasized the overall strong performance of the loan portfolio [46][48] Question: Expectations for AUA growth - Management indicated that new business pipelines remain strong, but asset values are harder to predict due to market conditions [55] Question: Drivers for C&I growth and line utilization - Management attributed loan growth to a recovering economy and significant liquidity, with new business from new customers driving C&I growth [62][64] Question: Capital deployment priorities - Management expressed a desire to deploy capital for growth and pursue M&A opportunities, while also increasing the dividend as a catch-up measure [68][69] Question: Fee income performance - Management noted strong performance across all asset-based businesses, with significant business development and new client activity contributing to fee income growth [78][80]