UMB Financial Q3 2023 Earnings Call Transcript

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Provided by Quartr
October 25, 2023

There are 8 speakers on the call.

Operator

And welcome to today's UMB Financial Third Quarter 2023 Financial Results Conference Call. My name is Elliot, and I'll be coordinating your call today. I'd now like to hand over to Kay Gregory, Investor Relations. The floor is yours. Please go ahead.

Speaker 1

Good morning, and welcome to our Q3 2023 call. Mariner Kemper, President and CEO and Ram Shankar, CFO, will share a few comments about our results. Jim Rine, CEO of UMB Bank and Tom Terry, Chief Today's presentation contains forward looking statements, which are subject to assumptions, risks And uncertainties. These risks are included in our SEC filings and are summarized on Slide 46 of our presentation. Actual results may differ from those set forth in forward looking statements, which speak only as of today.

Speaker 1

We undertake no obligation to update them except to the extent required by security flaws. All earnings per share metrics discussed on this call are on a diluted share basis. Our presentation materials and press release are available online at investorrelations.umb.com. Now, I'll turn the call over to Mariner Kemper.

Speaker 2

Thank you, Kay. Good morning. I'm happy to be here with you today to share the details of our strong 3rd quarter performance. Our results reflect strong disciplined loan growth, stable deposits, continued momentum in many of our fee generating businesses, Expense control, stable margin and solid asset quality. I continue to be extremely proud of the long track record of prudent underwriting That has produced these asset quality metrics.

Speaker 2

Our loan portfolio remains healthy with 8 basis points net charge offs for the 3rd quarter And just 6 basis points year to date. Non performing loans improved 7 basis points from 9 basis points prior quarter. Provision for credit losses was $5,000,000 for the quarter compared to $13,000,000 in the 2nd quarter, driven largely by changes in macroeconomic variables And general improvement in the watch and classified categories. The average charge off ratio for the 5 quarter period shown in our deck It's the lowest in our history, impressive considering the 18% increase in average loan balances during that same time period. We saw improvement in the levels of both past watch loans and classified loans, which declined 13% and 6% respectively from the Q2.

Speaker 2

Our watch list levels fluctuate from time to time as we manage the book. And historically, we've seen very little migration Our current historical credit performance has been achieved through our focus on risk management macroeconomic trends and have regular conversations with our clients across our footprint, something we do in all economic environments. Despite uncertainty from the brewing geopolitical crisis as well as the volatility in interest rates, our commercial clients remain cautiously optimistic. Now I'll cover a few highlights from the quarter and Ron will follow-up with a few details and drivers. GAAP net income The Q3 was $96,600,000 or $1.98 per share.

Speaker 2

Operating net income was $98,400,000 or 2 point $0.02 per share. Net interest income decreased 1.5% from the 2nd quarter as loan growth Industry continues to be impacted by higher funding costs. Our net interest margin in the 3rd quarter is essentially flat on a linked quarter basis. The flexibility on the asset side of our balance sheet helps mitigate the continued impact of liability pricing. We have a loan to deposit ratio lower than our And largely variable asset base and strategically planned cash flows.

Speaker 2

In fee income, We saw solid results in several lines of this. Trust and securities processing income increased 8.2% driven by growth in all business Contributing to this line, Fund Services, Corporate Trust and Private Wealth. In Fund Services, assets under administration reached $400,000,000,000 in the Q3. Year to date, our team has added nearly 50 new clients, which helped drive the 9.2 Our non interest expense levels fell by 3.8% And included variances in deferred compensation expense related to the reduced COLI income. Additionally, severance expense declined along with salary and wage expense reflecting the ongoing efforts to control operating expenses.

Speaker 2

Ron will provide more additional color on these various drivers shortly. Turning to the balance sheet. The drivers behind our 10.1 Annualized growth and average loan balances this quarter are shown on Slide 24. For comparison, The banks that reported results through October 20 had a median linked quarter annualized increase of 5.3%. The Federal Reserve H8 data has predicted an increase in industry wide average loan balances of just 0.4% Banking model continues to build a pipeline of quality plans and given what we've seen today, we expect some continued outperformance relative to the industry and loan growth metrics.

Speaker 2

Total top line loan production as seen on Slide 25 was 649,000,000 With payoffs and paydowns declining slightly representing 3.2% of loans for the quarter, Credit quality is strong across our book and the CRE portfolio remains well diversified by property classification, tenant type and geography as shown on the slide on Page 3637. Looking ahead to the Q4, we see opportunity across our various lending verticals and geographic regions. We have continued to evaluate the best use of our capital And we remain disciplined on pricing, further emphasizing lending opportunities accompanied by meaningful deposit relationships. On the other side of the balance sheet, average total deposits were essentially flat versus the 2nd quarter. Declines in brokered CD balances and typical seasonal reductions Public funds were offset by growth in commercial deposit balances.

Speaker 2

We expect public fund balances will begin to rebuild again In the Q4, as we've noted previously, deposit balances will naturally ebb and flow as our largely commercial customer base This is funds for typical business purposes, including payroll, dividends and other activities. Finally, we strengthened our liquidity and capital position even further during the quarter as depicted on Slide 32. Our quarter end CET1 And total capital ratios were 10.77% and 12.68%, improved by 12 and 9 basis points respectively From June 30, our CET1 ratio compares favorably to the peer median. And in our press release, we announced that the Board I approved a 2.6% increase in our dividend bringing it to $0.39 per share payable in January. As we've shown on Slide 15 of our presentation, our quarterly dividend has increased 283% Over the past 20 years, there were 23 individual dividend increases during that period.

Speaker 2

To wrap it up, we're pleased with our results this quarter. The pundits have varying opinions, but it seems clear that inflation levels, however you want to measure it, haven't reached the Federal Reserve's expectations. All indications are that data dependent Fed will pause on further interest rate hikes. The variables now Our when rate cuts may begin and how quickly they may happen, but we fully expect a higher for longer scenario at least through 2024. Such a scenario would be favorable for our balance sheet as the pressure on deposit costs Largely abate while asset repricing continues through that period.

Speaker 2

Additionally, earning asset yields will improve as we use cash flows from our securities portfolio to fund higher yielding loans. With the uncertainty in the macro and geopolitical environment, We feel that our business model is prepared for a wide range of outcomes. It has proven itself over time as we've adapted This is a changing environment and set of circumstances. Now, I'll turn it over to Ram for a more detailed look at our results. Rob?

Speaker 3

Thanks, Mariner. I'll share a few additional drivers of our 3rd quarter results, then I'll discuss some key balance sheet items. Net interest margin for the Q3 was 2.43 percent, a decrease of just 1 basis point from the linked quarter. The largest drivers included positive impact At least 16 basis points from loan repricing and mix and 11 basis points from the benefit of free funds. These positives were mostly offset by a reduction of 25 basis Points from changes in interest bearing deposit pricing.

Speaker 3

Cycle to date, our earning asset beta has been 51%, Keeping pace with the total cost of funds beta of 51%. Our deposit remix showed some signs of slowing this quarter And we ended the quarter with 32% of total average deposits in DDA. This level is in line with the low point During the 2015, 2017 tightening cycle and although it's difficult to know for certain, we expect We are approaching the bottom. The decline in the EDA balances largely reflects corporate trust activity, which can be episodic. Commercial DDA balances increased approximately 1% over the linked quarter.

Speaker 3

With the current consensus that the Fed will hold rates for the time being, We continue to expect the terminal beta of approximately 50% for total deposits and 60% for loans through the end of this cycle. Looking ahead to the Q4, we expect NII to trend flat to slightly up while we'll see some additional modest Margin compression driven by mix shift as rate bearing public funds come on the balance sheet. Our reported noninterest income of $133,300,000 contains the market related variances to 2nd quarter levels, including a $3,500,000 decrease in company owned life Insurance income and $896,000 decrease in customer related derivative income as well as the impact of the $4,000,000 gain The sale of assets we discussed last quarter. These decreases were offset by a $5,100,000 increase In trust and security processing income driven largely by the new client acquisition in our fund services and corporate trust businesses. The detailed drivers of our $231,400,000 in non interest expense are shown in our slide and press release.

Speaker 3

A few items of note. We recorded $133,400,000 in salary and benefits expense, a decrease of $9,900,000 compared to the 2nd quarter. Included were just $425,000 in deferred compensation expense, a reduction of $2,800,000 from the prior quarter. This is the offset to decreased whole income. Dollars 2,400,000 in severance expense, a reduction of $2,500,000 A $1,600,000 decrease in salary and wages and $1,300,000 reduction in various other employee benefit costs.

Speaker 3

These decreases were partially offset by a $1,300,000 increase in operational losses. Considering the impact of $2,400,000 of severance Along with the deferred compensation expense and typical timing variances, we would put our quarterly starting point for expenses Close to $228,000,000 Looking ahead, we expect we'll make a typical 4th quarter charitable contribution of approximately $2,000,000 Our effective tax rate was 18.1% year to date compared to 18.8% in the same period in 2022. The decrease rate was driven primarily by a larger portion of income from tax exempt securities and variations in level of COLI income. For the full year 2023, we continue to expect a tax rate between 17% 19%. Now turning to more detail on the balance sheet.

Speaker 3

I'll start with our investment portfolio shown on Slides 2829. Our average investment security balances declined 2.7% from the 2nd quarter to 12,300,000,000 The healthy maturity book included $1,200,000,000 of industrial revenue bonds. During the quarter, dollars 240,000,000 of securities The average yield of 1.90% rolled up. The yield on our total AFS portfolio increased to 2.74% And has a duration of just over 4 years. The health and maturity portfolio, exclusive of the IRB bond I mentioned, At an average yield of 2.31 percent for the 3rd quarter.

Speaker 3

Additionally, the portfolio is expected to generate more than $1,600,000,000 of cash in the next 12 months providing further funding flexibility. The rollout of these securities, which have a blended rate of 2.18 percent We'll also improve our ALCI position over that period. As of September 30, the unrealized Pre tax loss of the AFS portfolio was $918,000,000 or 12.7 percent of the amortized costs. For the HGM portfolio, this loss was $876,000,000 including the IRB bonds. Slide 32 highlights our liquidity position along with contingent sources of funding.

Speaker 3

As of September 30, We had $18,100,000,000 in available liquidity sources. Liquidity coverage of adjusted uninsured deposits increased to 127% at quarterect. Our tangible common equity ratio was 6.13% at September 30. When excluding the impact of AOCI, That ratio improved to 8.06 percent. Tangible book value was $52.06 per share, an increase of 8% Compared to the same period a year ago, since September 30, 2018, we have experienced a 5.3% annualized growth rate in tangible book value per share.

Speaker 3

As we noted last quarter, we maintain our focus as a growth company while positioning our balance sheet to support that growth And provide the flexibility to address uncertainty in the industry. That concludes our prepared remarks. And I will now turn it back over to the operator to begin the

Operator

First question today comes from Nathan Race with Piper Sandler. Your line is open.

Speaker 4

Yes. Hi, everyone. Good morning. Thank you for taking the questions.

Speaker 3

Good morning.

Speaker 4

Ram, in terms of kind of the expectations for NII to be kind of flat to slightly down the quarter, Curious kind of what that contemplates in terms of the size of the earning asset base into the Q4. It looks like you guys were able to reduce some Wholesale sources in the quarter and you also have about $1,900,000,000 maturing in the 4th quarter. So just trying to think How we should think about the trajectory of the earning asset base with the

Speaker 3

Yes, sure, Nate. No material change in our investment portfolio other than Cash flows that will continue to rotate out into the loan portfolio. So you'll see that in one of our slide decks. We have what the expected cash flows from the portfolio is We still haven't purchased any new securities as you see in that disclosure as well. And then everything else on the earning asset side is going to be largely loan growth.

Speaker 3

So no material changes in the Fed account balances. Yes, we did bring down our liquidity balances from the Q2 to the Q3, But don't expect it to change materially from where it was.

Speaker 2

I would just add that as we've done in the past, we expect loan growth in the 4th quarter to be Like and strength to the quarter we just ended that was strong.

Speaker 4

Got it. That's helpful. Changing gears, think about the income going forward, obviously, you had nice growth in fund services revenue, Corporate and Institutional Asset Management, just curious how that pipeline looks in terms of new client win opportunities and if kind of The rate of growth that we saw in 3Q versus 2Q is kind of sustainable going forward?

Speaker 2

Yes. The strength remains Very good. Fund Services in particular we mentioned in our deck is you've had 50 new clients year to date And which is represents, I think, it gives us over 10% growth in the segment. The pipeline remains very strong for that business. There's been a lot of Location continues to be a lot of dislocation in the space as the private equity firms have gotten into The business and acquired our competitors has been very good for our business and we expect that to continue to be the case.

Speaker 2

Corporate Trust, the money has been unlocked, projects are getting done, public and private projects are getting done and That's unlocking value for us there. Everyone's seen what's happened with airline activity Being up and strong and moving again, so there we continue to and expect in the coming quarters for That revenue to unlock in our aviation vertical within Corporate Trust, our Healthcare business continues to be strong as we continue to focus more on direct sales or customer base. Our For our spend, we expect to continue to be strong going forward whether it's healthcare spend or it's commercial. So out of all cylinders really, we feel like there's nice profile growth across all of our Non interest income verticals and continue to feel good about that. As you know, in the Q2, we had that ARC sale $4,000,000 So if you take that out the trajectory from quarter to quarter and looking forward, it's pretty strong.

Speaker 4

Okay, great. And then just lastly, turning to credit quality, it's great to see improvement across the board In 3Q, I think one thing that we've seen from some of your peers thus far in earnings season is Some greater scrutiny on Shared National Credits. So just curious if you could remind us how large that portfolio is and to what degree you guys agent Any club dealers, shared national credits within the portfolio?

Speaker 5

Yes. This is Tom. Pardon me, Tom Terry, Chief Credit Officer. The shared national credits that we have about $2,500,000,000 Maybe closer to $3,000,000,000 Almost all of those related to other businesses. So for example, our Fund Services business, We have large health insurance companies as clients and we will participate in their Shared National Credit to support the fee income that We get on the Fund Services side.

Speaker 5

So we're not interested in Shared National Credits for the sake of being in them. The lion's share are ones that support other business and they're high quality. As far as agitating, We're we agent very pardon me, very few of those. So

Speaker 3

did that answer

Speaker 5

your question, Daniel?

Speaker 2

I think that was commitment outstanding. Outstanding is much, much slower.

Speaker 5

Yes, the $3,000,000,000 of commitment somehow.

Speaker 3

The most I would

Speaker 2

say a lot of the comment on those Fund service related lines, they're sort of really backup lines and doomsday lines, etcetera. They don't really get used for the most part.

Speaker 4

So utilization on that $3,000,000,000 is like 50% in terms of funded?

Speaker 3

So the balances Nick, the balances at $930,000,000 were about just under $500,000,000 So yes, the utilization tends to be pretty low. As Tom said, these are Other clients that we have outstanding lines to but don't get hacked. Yes. Just to make sure commitments are larger And balances are under $500,000,000

Speaker 4

Got it. And you really haven't seen any Negative credit migration within that portfolio recently?

Speaker 5

None at all.

Speaker 2

None of them are on the watch list.

Speaker 4

Correct. Okay, great. I'll step back. Thanks for the color.

Speaker 2

Thanks, Dave.

Operator

Our next question comes from Chris McGratty with KBW. Your line is open.

Speaker 6

Great. Good

Speaker 3

morning. Good morning, Chris.

Speaker 6

Hey, good morning, everybody. Mariner, maybe a question for you. You've talked and done a really good job historically on operating leverage. Expenses were really well controlled this quarter. How should we be thinking about operating leverage in this Increasingly tough environment for revenue.

Speaker 2

Well, I think you kind of you hit with the nail on the head there to see an environment with Really pretty much what's happened with interest costs, right? It's a storyline there. It's more challenging in this environment to accomplish Really, I would guess what any of us want to accomplish. We are still laser focused on it and It's obviously, we don't give guidance, but it would be hard for us to point you in any one direction. It's kind of early in the year about the budget for next year.

Speaker 2

Just to really be able to talk intelligently about where that might head, but we are Operating leverage and as opposed to efficiency ratio is definitely where we put our emphasis And we'll continue to be focused on it.

Speaker 6

Okay. And then I think I want to make sure I heard you on the 4th quarter loan growth. Was the expectation moderation from this quarter or I might have missed that?

Speaker 2

Similar in strength. Okay, got it.

Speaker 6

And then finally, in terms of the balance sheet, some of your peers are thinking about retooling Some of the investment portfolio given the moving rates, I mean any appetite to move things around in the bond portfolio? Obviously, you're not reinvesting, but any kind of restructuring that might be contemplated?

Speaker 3

Hey, Chris. As you know, we routinely evaluate these kinds of But at this time, very little appetite, desire or need really to do any of that.

Speaker 4

Okay. Thanks

Speaker 7

for taking the questions.

Speaker 3

Thanks,

Operator

We now turn to Timur Braziler with Wells Fargo Securities. Your line is open.

Speaker 7

Hi, good morning.

Speaker 3

Hey, Timo.

Speaker 7

Maybe Hi. Just following up on that last line of questioning, was the seasonal inflow expected on the public funds? I guess what's the expectation for the bond book and size next quarter? Are you going to be reinvesting some of those proceeds That are rolling off or is the bond book going to remain a source of funds for the loan growth you're seeing?

Speaker 3

It will remain a source of funds through the end of the year and maybe early into next year, and then we'll have to evaluate based on loan production and deposit goals and whatnot. But at this point, we're still going to let it fund our balance sheet growth or loan growth, I should say.

Speaker 7

Okay. And then looking at the loan growth, the CRE Construction growth remains Pretty impressive. I'm just wondering how much of that is contractual as some of these loans start to fund up on schedule and What that pipeline looks like over the next couple of quarters?

Speaker 3

It's a mix.

Speaker 5

A lot of the funding we've seen Certainly, our deals that we approved over the last 6 12 months that are now hitting the construction base, there's still activity. We're still seeing loan demand For multifamily and for industrial, albeit it's probably slowed a little bit, but there's still demand, still seeing activity. So It's a to answer your question specifically in terms of funding though, it's a mix of what we've approved over the last 6 to 12 months. And then there's stuff coming in.

Speaker 7

Okay. And then just on the construction Components specifically, any ill effects from the broader environment? Are you hearing that borrowers are taking more of a wait and see approach, whether it's rates or just economic uncertainty? I guess any kind of color you can provide on Some of the early stage building conversations you're having.

Speaker 2

I think it will echo the comments Smarter, as Tom said, which is that there's plenty of opportunity. The mix is changing, right? So Multifamily and industrial remain very strong while obviously office and other categories are winning significantly. So With the higher interest rate environment and a low supply, housing supply in the marketplace, there's Still very strong interest and demand for multifamily. There are pockets in the country where that isn't the case.

Speaker 2

There are places where There's over investment, there are places where people are building Class A when the need is Class B etcetera. So we pay attention to those issues to stay away from problems, but there is strong demand that we understand for multifamily And industrial continues to be strong because there's a real need for last mile distribution and tilt up buildings to support The Amazonification of America and delivery and then all of the businesses that either support Amazon Or compete with Amazon. So there's a pretty significant build out underway that we believe and understand still to support the way consumers receive delivery of goods in America. So we think those two things Continue to present strong high quality opportunities for us. The real shift in our Both going forward in the environment we're in, with excess liquidity going from the system We're more focused on making sure we reserve our capital for customers and people who do business with us and are willing With their deposits and broaden their relationship with us.

Speaker 2

So that would be the only difference as you think about The landscape of opportunity, we still see quite a bit of opportunity and really, really about us honing in that and making sure that we're observing that For people who really want to deepen their relationships with us.

Speaker 7

Great. Thanks for that. And then just last for me. On the expense side, appreciate the guide for 4th quarter. Maybe as we look into 2024 and again parlaying on Chris' question, how much leverage is there on the expense base in order Drive positive operating leverage.

Speaker 7

Should we expect expenses to grind higher through 2024? Or is there confidence that those can be Fairly well maintained and be a positive source of operating leverage.

Speaker 2

We certainly think we can continue to maintain At a minimum, maintain what we've been able to accomplish. It's too early to tell what else and we don't give any guidance. But There's always room to improve and to be better, I would think at any company and we continue to look for those opportunities To do business, I would say to do business smarter and we're always looking for those opportunities and I think we'll forever uncover them.

Speaker 7

Great. Thanks for the question.

Speaker 3

Thanks, Steve.

Operator

We have a follow-up question from Nathan Race at Piper Sandler. Your line is open.

Speaker 4

Yes. Thanks for taking the follow-up. Just Kind of curious thinking about how you guys are thinking about the margin trajectory next year in a higher for longer rate environment. Obviously, you're seeing less Pressure on the index deposits under that scenario, and you have some kind of lagging repricing in terms of the duration of the portfolio in and of itself on the loan side of things. So any kind of preliminary thoughts on how you guys are thinking about the margin and NII trajectory next year under those Frameworks?

Speaker 2

I appreciate the opportunity to make our case for our investment thesis. Yes. We do believe that under a higher for longer scenario, if the Fed stops, which that would be the scenario where we would Anticipate and under that scenario, the deposits the pressure on the deposits would alleviate And new and repricing credit would continue to add value along with the roll off of the investment portfolio into higher yielding assets. So That is the expectation if the Fed does stop.

Speaker 4

Okay, great. And I know it's difficult to predict future provision impacts under CECL. But just kind of any thoughts Kind of how you guys are thinking about providing for growth and assuming you're not really seeing any material credit issues on the horizon?

Speaker 3

Yes. That's a $1,000,000 question, Nate. So as you've seen in the last few quarters, given our credit quality, most of our provision really Came from both macroeconomic variables changing in this past quarter because Moody's moved towards more of a soft landing, our provision was low compared and then our charge So it really depends on what level of loan growth that we have and what happens to the macroeconomic variables. As Mariner said, we have 13% decline in quarter over quarter on our past watch loans and 6% in our classifieds. So from a portfolio health perspective, There's not a lot of pressure.

Speaker 3

But as we've said, the magic math that we have to work sometimes is trying to get our coverage ratio at or close to 1%, Right. That's kind of what we would like entering any kind of cycle, whether it's good or bad.

Speaker 4

Got it. So it sounds like absent material macro deterioration, the expectation is for you guys to build a reserve close to 1% over the next few quarters Just in support of loan growth and assuming charge offs

Speaker 3

Yes. We're at 97 basis points. We're within spitting business, and we're at 97 basis points coverage. So I'd say

Speaker 4

Got it. And then just one last one. I know you guys don't pay a ton of attention to end of period balances, but I was Little surprised to see the non interest bearing, attrition accelerate versus last quarter. Any thoughts on kind of when that could bottom based on what you see in terms of client spending and so forth?

Speaker 3

So if you look at what happened, as you said in the script, our commercial DDA balance, that's what you're alluding to, the cash You said that actually was up 1% on an average basis. And the decline in the 3rd quarter DDA We're more episodic because of some of our corporate trust deals. There's always a seasonal build up and tax payments go out. So we know and it's very predictable from that So I would say on the commercial side, things are fairly stabilized. Again, it's really as we said, We think we're approaching the bottom in terms of our 32% DDA to total deposits, which was the cycle low from last time.

Speaker 3

But that's the to your earlier question, that's the biggest x factor on what can change our margin or net interest income Current from here.

Speaker 2

Yes. I mean, I would none of us know, right? But I would just suggest that if the Fed is done and the way our Income statement is working and our customer base works. We've said this all summer long. We would go through this first because our customers were largely commercial.

Speaker 2

We've seen that. We think that's largely done and we predicted that because the last time we'll be in at 32, That's done. We're 32 today. So from here, your guess is as good as ours. Using the history And the behavioral patterns, it seems as though we're near the bottom on that shift.

Speaker 4

Okay, great. And then just in terms of overall deposit expectations, average deposits were flat in the quarter. Just curious based on what you guys see in terms of your Pipeline, how you're thinking about overall deposit growth expectations over the next several quarters?

Speaker 2

We continue to have a strong pipeline. This all comes down to cost at the end of the day. We have A very, very strong ability, I think in a way that most banks our size don't To tap deposits, it's really about paying market rates for them and then really it's about asset demand liabilities, it's about our disciplined approach to pricing assets, not just the deposits. And so we don't concern ourselves too much with the ability to grow our deposits. We just have to make sure that we're disciplined on the way we manage assets and liabilities and making sure which we've been able to do today As we bring on loans, we feel very comfortable about our ability to price them appropriately to maintain And of our respectable margin spread.

Speaker 4

Okay, great. I Appreciate you guys taking the follow ups. Thanks again.

Speaker 2

Thanks. Yes, I might just remind everybody before we're done just It's been a you start in April with the way the world look and you look and then you get to where we are now. We feel pretty good about our Where we sit and just want to remind you a couple of things. I said a moment ago, you and me said early on in the summer and spring that we would get to Likely get to 32% on non interest bearing total and that's about where we sit here now. We said we would Go through the margin trouble early and then while others were seeing the declines we flatten out on a linked quarter basis you've seen us Flatten out margin on a linked quarter basis.

Speaker 2

We continue to tell you we're going to have outsized loan growth. We continue to have outsized loan growth. We continue to tell the Street about our ability over time to manage asset quality. And while everybody's asset quality looks good right now, ours looks good in the last cycle. So we continue to have excellent asset quality.

Speaker 2

We've had the best 5 quarters Together, we've had in our history from an asset quality standpoint and we have the same management team, managing credit We've seen through the last few cycles, we're still on top of credit this cycle and we expect that we'll continue to manage Our company the way we always have. And lastly, we're one of the few banks this quarter on a linked quarter basis to show reduction in expenses 3.4% in our case. And so really across the board, everything that we can control, We control and have performed. And any business, every once in a while for geopolitical reasons or otherwise, Their input costs go up and it's a business job to manage how you pass on those costs or you become more efficient. And we're doing our job and we're pleased with our results and we hope you are as well.

Speaker 1

Thanks, Sarah. Thanks everyone for joining us today. And if you have any follow-up questions, you can always reach us at 816-860 7106. Thank you, and have a great day. I'll turn it back to the operator for closing the call.

Operator

Ladies and gentlemen, today's call has now concluded. We'd like to thank you for your participation. You may now disconnect your lines.

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Earnings Conference Call
UMB Financial Q3 2023
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