UMB Financial Corporation (NASDAQ:UMBF) Q1 2018 Earnings Conference Call - Preliminary Transcript

Apr 25, 2018 • 09:30 am ET

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UMB Financial Corporation (NASDAQ:UMBF) Q1 2018 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Good morning, and welcome to the UMB Financial First Quarter 2018 Financial Results Conference Call. All participants will be in listen-only mode. (Operator Instructions). Please note, this event is being recorded.

I would now like to turn the conference over to Kay Gregory. Please go ahead.

Executive
Kay Gregory

Good morning, and thank you for joining us. On the call today are Mariner Kemper, President and CEO; Ram Shankar, CFO; and Mike Hagedorn, CEO of UMB Bank. Before we begin, let me remind you that today's presentation contains forward-looking statements, all of which are subject to some assumptions, risks and uncertainties. Actual results and other future events, circumstances or aspirations may differ from those set forth in any forward-looking statement. Information about factors that may cause them to differ is contained in our SEC filings. Forward-looking statements made speak only as of today, and we undertake no obligation to update them, except to the extent required by securities laws.

Our earnings release and supporting slides are available on our website at umbfinancial.com in the Investors section. Reconciliations of non-GAAP financial measures have been included in the release and on Slides 32 and 33 of the supporting materials. All earnings per share metrics discussed in this call are on a diluted share basis for continuing operations. Please refer to the tables contained in the press release for details about basic and diluted earnings per share.

Now I'll turn the call over to Mariner Kemper.

Executive
John Kemper

Thank you, Kay. Welcome, everyone, and thank you for joining us. April marks the anniversary of our first charter in 1913, and we're wrapping up our 105th year. 2018 is off to a good start, with first quarter highlights that include a continued margin expansion, expense control and improved profitability metrics. Beginning on slide four, we earned $57.5 million or $1.15 per share for the quarter. On a non-GAAP basis, operating net income was $59.1 million or $1.18 per share. Operating leverage continues to be a focus, and on a non-GAAP operating basis, first quarter leverage was a positive 6.5% year-over-year and a positive 5% linked quarter.

As we discussed last quarter, we are investing in 2018 toward building and solidifying our competitive position in the marketplace, and we highlighted plans in various growth businesses. Even as we continue to ramp up these investments, we will maintain a diligent focus on efficiency and expense control. Now I'd like to cover our lending and credit highlights. Average loans balances of 11.3 billion for the first quarter represent a year-over-year increase of 6.9%. Compared to the fourth quarter, average loans increased 1.8% or 7.3% on a linked-quarter annualized basis. According to the Feds H.8 data, total average loans increased 0.7% quarter-over-quarter. Top line production for the quarter remained strong at 520 million, and we have an active pipeline. Our outlook remains positive for loan production even as we continue to watch how excess customer liquidity may impact borrowing activity and pricing in the coming months.

Turning to slide seven. You'll see a chart