UMB Financial Corporation

Good morning, thank you for attending today's UMB Financial second quarter 2024 financial results call. My name is Jennifer and I'll be your moderator today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, press star one on your telephone keypad. I'd now like to turn the call over to Kay Gregory, UMB Investor Relations. Kay, please proceed.

Good morning, and welcome to our second quarter 2024 call. Mariner Kemper, President and CEO, and Ron Schaffner, CFO, will share a few comments about our results. Then we'll open up the call for questions. Jim Rhine, CEO of UMB Bank, and Tom Terry, Chief Credit Officer, will be available for the question and answer session. Before we begin, let me remind you that today's presentation contains forward-looking statements, including the discussion of future financial and operating results, benefits, synergies, gains, and costs that the company expects to realize from the pending acquisition as well as other opportunities management perceives. Forward-looking statements and any pro forma metrics are subject to assumptions, risks, and uncertainties as outlined in our SEC filings and summarized on slides 48 to 51 of our presentation. Actual results may differ from those set forth in forward-looking statements, which speak only as of today. We undertake no obligation to update them except to the extent required by securities law. Presentations and materials are available online at investorrelations.umb.com and include reconciliations of non-GAAP financial measures. Now I'll turn the call over to Mariner Kemper.

Thank you, Kay, and good morning, everyone. Thanks for joining us as we discuss our great second quarter results announced yesterday afternoon. Our strong first quarter Performance continued into the second quarter with net interest income growth driven by growing balance sheet and net interest margin expansion along with solid credit metrics. We reported gap earnings of 101.3 million or $2.07 per share driven by continued momentum across our various lines of business. On an operating basis, we earned 105.9 million or $2.16 per share. Balance sheet growth included a 7.7% linked quarter annualized increase in average loan balances led by commercial real estate and construction drops on previously approved lines. Additionally, average card balances increased 26.1% assisted by the full quarter impact of our co-brand card portfolio we acquired in March. Top line loan production was $926 million for the quarter. Payoffs and paydowns, which are difficult to predict, were 3.7% of balances, This is a slight increase from prior quarter, but in line with our historic averages. Credit quality in our loan portfolio remains excellent. Net charge-offs were, again, just five basis points of average loans for the quarter, and non-performing loans fell to a meager six basis points of total loans. Over the past eight quarters, our non-performing ratio has averaged eight basis points, compared to 39 basis points for our peer group and 35 basis points for the industry as a whole. Credit cards drove the small amount of charge-offs we saw in the quarter, while we had a net recovery in both CNI and specialty lending. In fact, CNI has posted net recoveries in four of the last five quarters. Asset quality has been very strong in our investment real estate portfolio. Since 2016, we charged up less than $1 million cumulatively, which can be attributed to just three loans. Provision of $14.1 million reflected continued loan growth, along with the impact of a recalibration of our models. Our coverage ratio increased three basis points to 0.99% of total loans. Average total deposits grew $815 million, or 9.7%, on a linked quarter annualized basis, including the intentional reduction of brokered CD balances and the expected seasonal decline in public funds. For comparison, peers have reported a median annualized increase of just 4.5% for the second quarter. Deposit growth in the quarter highlights our strong diversified funding profile, with growth coming from nearly all lines of business. On the consumer front, we've had good success from private banking and retail money market promotions with targeted marketing investments made in the first half of the year. Excluding broker CDs, average client deposits increased approximately 1.3 billion from the last quarter. In fact, since the turmoil of last spring, our deposits excluding broker CDs have increased by 4.2 billion or 14% over the second quarter of 2023. Ram will share a more detailed look at these and other quarterly drivers shortly. Finally, we remain excited about our pending acquisition of Heartland Financial and have shared a few updates in the deck. While it's early in the process, we've outlined milestones and progress in the integration planning. Our focus is to ensure a seamless transition without disrupting business as usual activities. The establishment of an integration team allows our customer facing associates to remain focused on serving the customer and generating growth. Again, we believe this transaction will accelerate UMB's growth strategy, further diversifying and de-risking our business model. The addition of this high-quality franchise is a great fit from a strategic, financial, and cultural perspective. And we look forward to capitalizing on the many opportunities we see as a combined company in 2025 and beyond. Now I'll turn it over to Ram.