UMB Financial Corporation

Hello, everyone, and thank you for joining the UMB Financial Fourth Quarter 2025 Financial Results Conference call. My name is Gabrielle, and I will be coordinating your call today. During the presentation, you can register a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two on your telephone keypad. I will now hand over to your host, Kay Gregory. Please go ahead.

Good morning and welcome to our fourth quarter 2025 call. Mariner Kemper, Chairman and CEO, and Ram Shankar, CFO, will share a few comments about our results, then we'll open the call for questions from equity research analysts. Jim Rine, President of The Holding Company and CEO of UMB Bank, along with 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 our acquisition, as well as other opportunities management foresees. Forward-looking statements and any pro forma metrics are subject to assumptions, risks, and uncertainties, as outlined in our SEC filings and summarized in our presentation on slide 50. 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 laws. Presentation materials are available online at investorrelations.umb.com and include reconciliations of non-GAAP financial measures. All per share metrics refer to common shares and are on the diluted share basis. Now I'll turn the call over to Mariner Kemper.

Thank you, Kay, and good morning, everyone. We will share some brief comments about our results, then open up for questions. We reported another strong quarter to close out 2025 with the successful acquisition of Heartland Financial, the opening of our first branch location in Utah, and another year of record earnings. We posted significant improvements in our profitability metrics as we continue to build scale, deliver profitable growth on both sides of the balance sheet, and maintain our unwavering focus on strong asset quality metrics. A few fourth quarter metrics that I want to highlight are return on average assets of 120 compared to 104 in the third quarter, return on average common equity of 1127 up from 1014, and an efficiency ratio that improved to 55.5 from 58.1 in the third quarter and 61.8 in the period a year ago. I'm incredibly proud of our associates for delivering strong fundamental and financial performance in 2025 while providing outstanding customer experience to our existing and newly acquired clients, all of which continue to drive our exceptional results. Reported net income available for common shareholders for the fourth quarter was $209.5 million, or $2.74 per share, an increase of 16.1% from the third quarter. For the full year, we earned 684.6M or $9.29 per share. Fourth quarter included 39.7M of acquisition expenses compared to 35.6M last quarter. Excluding these and some smaller non-recurring items, our fourth quarter net operating income was $235.2M or $3.08 per share. Fourth quarter net interest income totaled 522.5 million, an increase of 10% from the third quarter. This was driven by double-digit growth in loans and DDAs, along with the impact of lower rates on our index deposits benefited net interest income. Our few businesses continued their strong performance in the quarter, while our total non-interest income was impacted by several market-related variances. New business activity from our fund services and private wealth teams continued to drive results, which contributed $4.5 million or 5.1% linked quarter increase in trust and security processing income. During the quarter, we exited substantially all of our position in Voyager shares. While we can't predict the future success in our private investment business, our pipeline remains strong, and we're likely to see periodic monetizations going forward. Looking at the balance sheet, we posted 13% lean quarter annualized growth in average loans and 5.6% in average deposits. Quarterly top-line loan production reached $2.6 billion in the quarter. We are seeing positive activity across our footprint, and I'm excited about our additional opportunities in our acquired markets post-conversion. CNI was, again, our strongest contributor this quarter with 27% annualized growth over the third quarter average balances. The rate of net payoffs and paydowns as a percentage of total loans was 3.9%. Looking ahead into the first quarter, overall loan activity and pipeline remained strong. Our loan growth has continued to outpace many peer banks. Banks that have reported fourth quarter results so far have posted a 4.9% median annualized increase in average loans compared to our 13%. Total net charge-offs for the fourth quarter were just 13 basis points. For the full year of 2025, net charge-offs were 23 basis points, below a long-term historical average of 27 basis points. Total non-performing loans were 145 million or 37 basis points of loans, while total criticized loan levels improved 9.1% from the prior quarter. Industry-wide NPLs for the banks reported so far or a median of 55 basis points. Our total losses levels will fluctuate from quarter to quarter as we manage our book. We're quick to recognize trouble, take action, and address any issues. This proactive management has been consistent, and historically, we've seen very little migration to loss as evidenced by our chart of history. We're incredibly proud of our history. As I mentioned, for the 20-year period ending with 2025, our annual losses have averaged just 27 basis points. Over that same period, average loan balances have increased from $3 billion to $36 billion through market and vertical expansion, including our recent acquisition. This equates to a median annual growth rate of 10.4%. We've achieved these results through our focus on risk management and the continuity that comes by having the same team in place managing credit together through all of these cycles. We continue to build capital with December 31st common equity tier one ratio of 10.96%, a 26 basis point increase from September and ahead of the timeline in which we noted in our announcement of our acquisition. Our capital priorities remain the same with organic growth at the top of the list. Many bank management teams have received questions on their fourth quarter calls about their M&A stance, and I'd like to proactively address that topic. As I've said many times, we don't need to do M&A. We have a strong proven ability to generate assets, and we continue to take share and grow organically at a pace ahead of our peers, as you saw us demonstrate in this past quarter. And we do that with exceptional asset quality metrics that we are really proud of. We expect these trends to continue, especially given the opportunities we see for penetration in our newly acquired markets. and expanding in our existing markets. Organic growth is and always will be our top capital priority. At the same time, we also feel that we're adept at evaluating and integrating acquisitions to bolster our organic growth. We're still answering our phones, building and maintaining relationships, and we expect the tuck-in acquisitions that make financial and strategic sense can be part of our ongoing strategy. We've also been asked about the size of potential deals. Without giving specific parameters, we would be wary of transactions that would put us close to the $100 billion mark. We are in the early stages of assessing what the threshold means to us, and until we are ready, our appetite for any M&A will continue to be measured. While many believe thresholds may move under the current administration, we are operating as though those rules still remain in place. We believe that we've built something very special here at UNP, including one of the best teams in the business. We are not going to put that at risk by pursuing a deal that might dilute our culture, our business model, our organic momentum, or our strong balance sheet. Finally, as we look into 2026, we're excited to continue the momentum we saw in 2025 and capitalize on the opportunities in our newly acquired markets. As always, Our primary focus will be on positive operating leverage, no matter what the economic or geopolitical environment brings our way. I'll turn it over to Ram for more detail.