UMB Financial Corporation (NASDAQ:UMBF) Q2 2019 Earnings Conference Call - Final Transcript
Jul 31, 2019 • 09:30 am ET
[Operator instructions] Our first question today will come from Jared Shaw with Wells Fargo Securities. Please go ahead.
Hi, good morning.
Good morning, Jared.
Maybe if I could start with -- on the securities portfolio. It looks like -- still seeing a little bit of growth there. Should we assume that, that continues to uptick here? And on the muni side, are you still focusing purchases on munis to continue to extend duration at this point? Or was that really more of a clean-up in the quarter in terms of repositioning?
Hi, Jared. No, I think the size of the portfolio will be pretty close to where it is right now. Obviously, a lot of it will depend on what happens with excess liquidity. As you know, we get a little inflow of public funds in the third and fourth quarters. That'll determine what the size of the portfolio would be. But as we said in the prepared remarks, we are looking more in the long-dated duration on the muni side, Fannie Mae DUS bonds, those are kind of the investments we're making. So you would see the percentage of muni securities creep up relative to the rest of the book.
And that's somewhat dependent on supply. We like munis when there's tight supply, so that has something to do with what that will look like.
Okay. Thanks for the color. And then on the other income, can you just walk us through some of the components there? So there we saw the COLI come down this quarter. Is this a stable level for that? And in terms of the offsetting expense level, should we assume that we're pretty stable at this level if we exclude that $1.9 million of specific items you called out?
No. I would -- I think it just jumps around. It's a catch-all category, as you know, right? So there's usually market valuations on different equity investments that we have in our Prairie Capital business and other businesses as well. There's always derivative fees. Our capital markets income flows through that. So it's a lot -- depends on volume-related stuff. So I would say, it's probably a higher mark this quarter because of all the movements. And then there was the offsetting $3.4 million swing on the COLI that also rolls into other income.
But from each quarter, though, the COLI deal is pretty much a wash with the income and expense, regardless of how big it gets with market activity, it usually is pretty close to a wash.
Okay. And then finally for me, just loan growth continues to be pretty strong here. Can you talk about the pipeline and what you're seeing I guess in the market to keep driving good levels of loan growth here?
Yes. Hi, this is Jim. We have seen great C&I growth coming from not only Kansas City, but the outlying markets, Dallas, Colorado, Phoenix, our growth markets and even in our -- what would be the traditional secondary