UMB(US:UMBF)2021-05-01 01:51Financial Data and Key Metrics Changes - Net income for Q1 2021 was $92.6 million, or $1.91 per share, with pretax pre-provision income on an FTE basis at $108.7 million, or $2.24 per share [9][31] - Year-over-year, net interest income increased by 11.6%, despite a challenging interest rate environment [12] - Noninterest income for the quarter was $108.9 million, impacted by a $16.1 million pretax loss on the valuation of Tattooed Chef investment [37] Business Line Data and Key Metrics Changes - Trust and Securities Processing income increased by 8% from the previous quarter and nearly 17% year-over-year, with assets under administration in fund services rising to $345 billion from $252 billion a year ago [14] - Specialty Corporate Trust launched internationally, opening an office in Dublin, enhancing growth potential in the aviation trust business [15] - The Investor Solutions team added 4 fintech relationships in 2020 and is seeing traction from recent investments in private wealth services [17] Market Data and Key Metrics Changes - Average loan-to-deposit ratio was 61% for the quarter, with average balances of core deposits increasing by 7.5% on a linked-quarter basis and 28.8% year-over-year [23][24] - Modified loan balances declined to just $14 million, under 0.5% of loans, indicating strong credit quality [27] - The company experienced an 8.4% linked-quarter annualized increase in average loan balances, excluding PPP [20] Company Strategy and Development Direction - The company is focused on growing market share in unpenetrated markets and verticals, with a robust pipeline in both C&I and CRE [22][72] - There is an active M&A process, with ongoing conversations with other banks, seeking quality deals rather than pursuing transactions for the sake of it [61][104] - The company is also exploring partnerships in fintech, offering banking as a service products to enhance fee income [63] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer sentiment is returning to normalized levels, with debit and credit card spending returning to pre-pandemic levels [8] - The company anticipates continued strong momentum and market opportunities, despite uncertainties related to COVID trends [22] - There is cautious optimism regarding the potential for increased spending related to the proposed infrastructure bill [16] Other Important Information - The total allowance for credit losses on loans stands at $202.8 million, with an allowance to loan coverage of 1.23% [28] - The company maintains strong capital ratios, with total risk-based capital at 14.28% and CET1 ratio at 12.25% [39] - The wealth management business had a strong quarter, with new business and the launch of a family office business [106] Q&A Session Summary Question: Clarification on net interest income guidance for Q2 - Management confirmed modest pressure on GAAP margin for Q2, with confidence in net interest income growth due to loan growth and securities portfolio deployment [41][50] Question: Loan production levels and expectations for growth - Management indicated that recent loan production declines are primarily timing-related, with expectations for strong growth as the economy normalizes [58][72] Question: Capital deployment and M&A outlook - Management is actively pursuing M&A opportunities but is focused on quality deals rather than rushing into transactions [61][104] Question: Sustainability of institutional fee income growth - Management expressed confidence in the sustainability of growth in fund services and corporate trust, driven by increased activity in private investing [90][92]