UMB Financial Corp (UMBF) 2011 Q3 法說會逐字稿

Ladies and gentlemen thank you for standing by. Welcome to the UMB Financial third quarter earnings results conference call on the 26th of October, 2011. (Inaudible) today is a recorded presentation. All participants will be in a listen-only mode. After the presentation there will be an opportunity to ask questions. (Operator Instructions)

I will now hand the conference over to Kay McMillan. Please go ahead, madam.

Good morning, everyone, and thank you for joining us for our conference call and webcast regarding our third quarter 2011 financial results.

Before we begin, let me remind you that our comments in this conference call contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements rely on a number of assumptions concerning future events and are subject to risks and uncertainties which could cause actual results to differ materially from those indicated in our statements made during this call.

While management of UMB believes our assumptions are reasonable, UMB cautions that material changes in interest rates, the equity markets, general economic conditions as they relate to the Company's loan and fee-based customers, competition in the financial services industry, the ability to integrate acquisitions, and other risks and uncertainties, which are detailed in our filings with the Securities and Exchange Commission, may cause actual results to differ materially from those discussed in this call. UMB has no duty to update such statements and undertakes no obligation to update or supplement forward-looking statements that become untrue because of new information, future events or otherwise.

By now, we hope most of you on the call or listening via webcast have had a chance to review our earnings and dividends releases, which were issued last evening. If not, you'll find them on our website at UMB.com.

On the call today are Mariner Kemper, Chairman and Chief Executive Officer; Peter deSilva, President and Chief Operating Officer; and Mike Hagedorn, our Chief Financial Officer. The agenda for today's call is as follows. Mariner will provide high-level commentary on our results, and Mike will review the details of our third quarter financials. Then Peter will review key fee income business drivers. Following that, we'll be happy to answer your questions.

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

Thank you, Kay. Welcome, everyone, and thank you for joining us today.

For the third quarter, we generated net income of $26 million on record total revenue of $180 million, and diluted EPS was $0.64 per share. We're extremely pleased with this 14.2% increase over the third quarter of 2010, as it continues to demonstrate our ability to grow the Company through the strength of our business model and investments in several areas. I'm very pleased with our performance again this quarter and believe that we are well positioned in this economic climate.

Accelerating fee business growth continues to drive our results. Non-interest income was the primary driver behind this increase in total revenue and net income this quarter. Non-interest income increased 12.1% to $101 million, led by growth in trust and securities processing revenue. Later in the call, Mike will provide additional detail.

For the third quarter, non-interest income was 56.1% of total revenue and represents 72% of our non-interest expense. Although expenses grew 6.7% this quarter compared to the third quarter of 2010, non-interest income grew faster. We continually look for ways to maximize efficiencies. During this third quarter, our efficiency ratio decreased slightly from 75.7% to 75.4% over the same period last year.

As you know, over the past several years, we've made acquisitions and are continually looking for ways to optimize those investments in order to leverage and gain efficiencies.

The most significant drivers of expense increase were salaries and benefits of $5.9 million or 8.5% due to higher based salaries, commission and employee benefits. Of this increase in salary and benefit expense, approximately $1.7 million, or 28.3%, is related to salary and benefits from acquisitions.

Through a combination of associates brought on board by acquisitions and new hires, we have 85 more full-time equivalent associates than we did as of September 30, 2010. We believe investments such as these, and progress made on our other growth strategies, are how we will continue to gain operating leverage across our business.

In a separate press release yesterday, we announced an increase in our quarterly cash dividend of $0.01 per share to $0.205 per share payable in January. This represents a 5.1% increase and the 11th dividend increase since July of 2003,with a total quarterly dividend increase of 105%. During the same period, the industry reported a median dividend decrease of 29.5%.

Another strategy is to deploy capital effectively. To that end, we repurchased nearly 137,000 shares in the third quarter. The average purchase price was $36.89 for a total cash outlay of $5 million.

Growing loans and deposits continued to fuel our growth. Net loans for the third quarter grew 4.3%. Compared to the industry, the 1,715 regulated depositories that announced third quarter results as of October 25 reported a median decrease in loan balances of 1.1%. The fact that we posted loan growth for six consecutive quarters, and 10 out of the last 15 quarters since the beginning of 2008, demonstrates our unique ability to acquire new customers and grow loans in all economic climates.

Loans grew year-over-year in spite of the $51.5 million runoff in our indirect auto-lending portfolio, which we exited in August of 2007. Contributing to our third quarter loan growth, C&I and commercial real estate loan balances increased more than $180 million on a combined basis when compared to the same period last year. Commercial loan balances were $2.1 billion at the end of the quarter, and commercial real estate balances were $1.3 billion. As a reminder, our CRE loans are primarily owner-occupied real estate and are underwritten similarly to how we underwrite all commercial loans.

C&I lending has been a core competency of our business for nearly 100 years. We believe it takes time to develop those relationships and our pipeline reflects our expertise in relationship management matched with sound underwriting principles.

Our credit quality continues to be a bright spot in the industry, demonstrated by overall non-performing loans as a percentage of total loans at 0.42%, and net charge-offs of 0.34%. We're proud of our underwriting practices and believe these metrics further differentiate us from our peers.

Although loans have increased every quarter for the past six quarters, our customers continue to hold cash and wait to invest in their businesses, caused in large part by continued economic uncertainty. At September 30, commercial loan commitments had increased 17.1% compared to the same point in time a year ago, and 7.4% on a linked-quarter basis, but our utilization rates fell to 26.6% from 31.6% a year ago.

In our Consumer Lending business, home equity lines of credit increased to $512.2 million, an increase of more than 8%. Utilization in this portfolio remains approximately 48% borrowed. The HELOC delinquency rate was 0.29% in the third quarter, compared to an industry average of just over 3%.

Turning to our credit card portfolio -- commercial credit card balances increased 19.8% to $104 million, while consumer balances dipped slightly to $321 million. Card net charge-offs for the quarter were 3.3%, well below the industry average of 8.2% recorded in the second quarter of 2011.

Later in the call, Mike will discuss deposit growth in detail, as it continues to be a significant contributor to earning asset growth for the quarter.

In closing, I'm pleased to report that UMB continues to make great gains in deposit share growth across our footprint, including reaching the top bank status in the Kansas City metropolitan area according to the official FDIC Market Share Report released two weeks ago. Since 2007, prior to the economic crisis, UMB's market share has increased from 7.5% to 13.4%, making UMB the fastest-growing bank in Kansas City. We became the first bank in Kansas City to surpass $5.5 billion in deposits since the FDIC began keeping records in 1994. I'm incredibly pleased with this performance and all of our associates who have helped us achieve this fantastic result.

With that, I'll turn the conference call over to Mike Hagedorn, who will discuss the balance sheet and income statement in further detail. Mike?

Thanks, Mariner, and welcome, everyone.

Looking at our balance sheet for the quarter, I'd like to first mention the growth we've seen in average shareholder equity, which was $1.2 billion, a 7.8% increase from a year ago. Since the beginning of 2008, equity has increased by 31.4%. we are especially pleased with this growth, since it was achieved without any dilutive capital actions.

The increase on our balance sheet continues to be driven primarily by growth in deposits. As you know, we typically have a seasonal influx of public funds in the fourth quarter which started approximately $300 million higher than last year. These balances remain about $150 million higher than normal. In a typical year, these deposits would have nearly run off the balance sheet by third quarter, but the rate environment and less attractive yield opportunities for public funds have resulted in additional funds remaining in deposit and repo accounts.

When combined with increases in deposits from institutional customers, this resulted in a 14.2% increase in average deposits for the third quarter. Non-interest-bearing deposits comprised 38.5% of our total deposits, which puts us in the top 3% of the industry according to S&L Financial. Our high percentage of free funds is a competitive advantage and is reflected in our low overall cost of funds. This advantage will be even more important when rates begin to rise.

Loan balances increased again, as Mariner mentioned, but utilization rates fell this quarter, and the remaining deposits were invested in quality securities. The average balances in our investment portfolio grew 10.8% to $5.7 billion. As we've discussed on previous calls, we continue to position our portfolio for a rising interest rate environment, which is challenging, given the current interest rate environment.

We ended the quarter with $12.1 billion in total assets, compared to $11.3 billion at the end of the third quarter last year. End-of-period net loan balances were $4.7 billion, an increase of 4.3% compared to the third quarter 2010.

On a related note, allowance for loan losses is $72.9 million, and allowance as a percent of total loans is now 1.53% compared to 1.59% a year ago. Additionally, our allowance for loan loss coverage is more than 3.5 times the amount of non-performing loans, while the median industry allowance reported for the second quarter would cover just over half of non-performing loans.

Activity in the investment portfolio during the quarter included roll-off of $289 million in core portfolio securities at an average yield of 2.54%. In turn, we purchased $593 million of securities at an average yield of 2.17%. These purchases added modest duration to the portfolio. The average life is now 33.84 months. Over the next three months, $351 million of core investments, with an average yield of 2.64%, will mature. Over the next 12 months, $1.3 billion of core investments with an average yield of 2.4% will mature. Additionally, 73% of our total loan portfolio is expected to reprice or mature in the next 12 months.

As we've discussed previously, the components of our capital have shifted slightly, impacted by our acquisitions with goodwill and intangibles increasing relative to tier-one capital. We remain well capitalized with tier-one leverage and total risk-based capital ratios of 11.32%, 6.76% and 12.37% respectively.

Reviewing other financial highlights, return on average assets was 0.85%, essentially flat when compared to the third quarter 2010. Return on average equity was 8.81%, an increase from 8.31% a year ago.

Turning to the income statement for the third quarter 2011, net income was $26 million, or $0.64 per diluted share. Total revenue increased 6.9% to $180 million for the quarter. Net interest income for the quarter was virtually unchanged, up 0.9% to $79.1 million. Although average earning assets increased by 10.1%, the changing mix resulted in a lower overall yield of 3.21% versus 3.56% a year ago. Year-over-year, average net interest margin decreased 25 basis points to 2.98%.

Provision expense decreased by $3.21 million -- $3.2 million or 41.6% compared to the third quarter 2010. As we've discussed in several prior quarters' calls, our provision expense is a reflection of our consistent methodology, which considers the inherent risk in our loan portfolio, as well as other qualitative factors.

As Mariner mentioned, non-interest income increased 12.1% to $101 million, comparing favorably to $90.1 million for the third quarter 2010. The increase in non-interest income was driven largely by a 30.3% increase in trust and securities processing revenue, which for the quarter was $51.9 million, compared to $39.8 million for the third quarter of 2010.

Within this category, advisory fee income from the Scout Funds increased 30.8% to $15.9 million. Fund accounting and administration income increased 7.8% to $17 million, and income from personal and institutional wealth management increased more than 200% to $16.7 million. Another factor contributing to the growth in non-interest income was an 9.1% increase in bankcard fees, which Peter will discuss later in the call.

For the third quarter of 2010, consumer NSF/OD income was 27.5% lower than a year ago at $3.9 million and represented 20.5% of our total deposit service charges. This impact is reflective of Reg E changes that were in effect for part of the third quarter of 2010.

With that, I'll turn the call over to Peter to discuss the business drivers behind this quarter's results.

Thanks, Mike, and good morning, everyone. As you've seen in our press release, our results continue to demonstrate the long-term value of our diversified business model. To add additional context to our results, I'd like to discuss the sources and drivers of our fee income, beginning first with our asset management and asset servicing businesses. As noted in previous calls, revenue in these areas is largely dependent on three key drivers -- first, new business; second, mutual fund and separate account flows; and third, equity and fixed-income market performance.

Our Asset Management businesses have grown nicely over the past year. We ended the quarter with total company assets under management of $26.2 billion, an increase of 58.6% over the third quarter of 2010. The increase, as a reminder, is due primarily to the acquisition of Reams Asset Management, which closed in December of last year.

Total assets in Scout Mutual Funds stood at $8.2 billion in the third quarter. Scout Fixed Income separately managed accounts had $10.3 billion in assets under management, and Scout Equity separately managed accounts totaled $509 million in assets at quarter end.

Net flows into the Scout Equity and Fixed Income Mutual Funds for the quarter were $211.2 million compared with $228 million in the third quarter of last year. Our year-to-date net fund flows totaled more than $1 billion against an industry backdrop of nearly $60 billion in equity outflows. Our mid-cap fund was a primary driver of flows for the quarter, adding over $220 million, while Separate Account flows were driven primarily by our fixed income strategies.

As you know, the equity markets have suffered some of their worst performance since the end of 2008, with the S&P down almost 14% and the MSCI World Index down more than 16% during the quarter. This continued volatility has taken its toll on our asset under management levels, with a negative market impact of $1.5 billion year-to-date and nearly $2 billion versus third quarter of 2010. Since October 1, much of that downdraft has indeed been recovered.

Our growth strategy within Scout Investments is to launch targeted new products as appropriate to round out our product offerings. Last quarter, we announced the launch of the Scout Global Equity Fund, which combines the strength and stock selection capabilities of Scout's five equity teams.

On September 30, we added another new fund, the Scout Unconstrained Bond Fund, which allows us to pursue investment opportunities in the markets over the long term without the constraints of a particular benchmark. The fund's absolute fixed-income return focus provides investors with an alternative strategy for the bond portion of their portfolios, particularly during periods of market volatility.

Turning to our Asset Management businesses for individuals, total personal assets under management stood at $7.2 billion for the third quarter, an increase of 3% or $206 million from a year ago. Comprising the $7.2 billion is $5 billion in assets under management within our traditional Trust and Personal Wealth Management business and $2.2 billion in assets managed by Prairie Capital.

Turning now to asset servicing, UMB Fund Services ended the quarter with $181.1 billion in assets under administration, an increase of 4.7% over third quarter 2010. Growth in assets under administration was limited due to the equity market headwinds discussed earlier, but administration and custody revenue for the quarter increased $1.3 million or 7.8% when compared to just a year ago.

In our Corporate Trust business, assets under administration finished the quarter at $11.4 billion, or virtually flat from levels during the same period a year ago. This business continues to be challenged from low money market yields and a limited volume of new municipal offerings coming to market. To combat these pressures, we continue to diversify the business and strengthen existing client relationships while building new ones.

Our company includes several other more traditional fee-based businesses as well, and these areas within UMB Bank continue to provide a key source of core funding and revenue growth.

Looking at our credit card businesses, there are two important metrics we track. First, we track revenue from bankcard fees, which are comprised primarily of interchange revenue, and second, we look at the underlying purchase volume that drives this revenue. Bankcard fees increased 9.1% over the third quarter of 2010 to $15.9 million. Debit and credit card interchange was $14.6 million of that total.

As you know, the Durbin Amendment went into effect October 1. We expect the annualized impact on our debit card revenue to be approximately $9.1 million.

Card purchase volume drives the remaining -- drives the revenue in our card businesses, and for the third quarter, purchase volume across our entire suite of card products increased 20.4% to $1.3 billion, when compared to the same period last year. We group purchase volume into four major categories -- commercial credit, consumer credit, consumer debit and healthcare debit.

At the end of the third quarter, deposits in our Healthcare Services Custody accounts stood at $317.6 million, an increase of 33.6% compared to the third quarter of 2010. Total FSA and HSA accounts were $2 million, representing a 49.9% increase from just one year ago. While today, these comprise a relatively small percentage of deposits and revenue, we're excited about the opportunities in this business and continue to invest in its capabilities.

UMB is known for strong credit quality and the quality of our card portfolio is no exception. Credit card quality remains superior to industry averages and has improved over the past several quarters, with delinquency rates dropping to 1.77% from 2.51% a year ago. As Mariner mentioned, total credit card charge-offs were 2.7% of card balances for the third quarter versus 3.8% in the third quarter of 2010. According to Fitch Rating Services, second quarter 2011 industry credit card charge-offs averaged 8.2%, more than double our credit card charge-off rate.

Finally, our private banking and wealth advisor teams continue to deepen relationships with our existing client base. Private banking deposits at the end of September increased 79%, and private banking loans increased 18% when compared to the third quarter of 2010. Deposits attributed to consumer and private banking stood at $4.5 billion at September 30 and represented 47% of the Company's total deposits. Overall, deposits from consumers increased 8.3%.

With that, I'll hand the call back over to Mariner, who will close our prepared remarks and will open the line for your questions. Mariner?

Thank you, Peter. We appreciate your interest in UMB and hope that you find value in listening to our quarterly conference call.

We believe that among our peers, our diversified business model presents a unique investment opportunity. We've been very focused the past several years on making acquisitions that round out our offerings in the asset management, asset servicing and banking businesses to ensure our competitive advantage. We are pleased with their contribution to the bottom line and look to gain higher operating leverage from them going forward.

In spite of the economic and political headwinds facing our industry this quarter, I'm pleased with our 14.2% increase in our earnings this quarter, as it was achieved through improvements in many of our business drivers and not by purposely shrinking the balance sheet or by taking significant gains or provision reductions. We did it the old-fashioned way -- we earned it.

That wraps up our prepared remarks. I'd like to thank you all again for being on the call, and I'll turn it back over to the conference call operator now to open it up for your questions.

Thank you, sir. (Operator Instructions). The first question comes from Chris McGratty from KBW. Please go ahead.

Good morning, guys.

Hi, Chris.

Hi, Chris.

Just a question on the delta in the fee income (inaudible) gains, security gains. It was down about 3% in the quarter and maybe, Mike, how much of it was just directly attributable to the markets and the weakness we saw? And obviously, we saw quite a rebound this quarter, but how much of that was just market-sensitive declines?

Yes, good morning. It is obviously part of what's going on in fee income. I can't give you the exact number that's due directly to market impact. I don't know if Peter has that either, but that is more of an impact that we're watching as things move forward for us because obviously, more of the revenues come from (inaudible) depending on the equity markets, and for that matter, the fixed-income markets as well with Reams.

Yes, just to give you a data point that might help you a little bit, if you go back to the change in assets related to the market, Q3 '11 to Q3 '10, it's about $1.9 billion. So you can run some quick math off of that and figure out the fee income that's related to that.

Okay. And then on the size of the balance sheet, it came down a bit in the past quarter and the margins are stable. Mike, what's the -- kind of what's the outlook for just the overall size of the balance sheet?

Yes, the reason you see that slight decline is one depositor that went off-balance sheet in repo second quarter to third quarter, so that's mostly the decline. Going forward, our expectations are the same as they've been for all of my tenure as CFO and that is that public funds will drive, at their peak, somewhere between $1.1 billion and probably $1.3 billion of increased deposits starting later in the fourth quarter and continuing on through the first quarter of 2012.

Okay. And lastly, any change in how I should think about the tax rate or what do you -- what should I be using for 2012?

Yes, I think that as the municipal portfolio is larger, mostly driven, as we talked about, by the larger deposit base, and while loan growth for us relative to the industry was very good, still a lot of that deposit growth is going in the investment portfolio. I think we'll have a slightly smaller effective tax rate going forward, all things being equal.

(Inaudible) was roughly 34 this quarter, so a little bit lower than that?

Yes, we would expect something in the neighborhood of 28% to 29%. That's our plan right now.

Okay. Thank you.

Thank you. The next question comes from Jay Daniel from Eagle Asset Management. Please go ahead.

Hi, there. I just wanted to confirm something that I wrote down as you were speaking and make sure I got the numbers correct. I think you said you have $14.6 million in debit and credit interchange revenues in the quarter, and you said you expected $9.1 million per year in lost debit card revenue due to the Durbin Amendment, and there was no effect whatsoever in the third quarter. Have I got that correct?

it's $9.1 on an annualized basis going forward, just debit, on a go-forward basis and all your other numbers you reference are accurate.

Okay. Thanks very much. I appreciate it.

Yes.

Thank you. The next question comes from Peyton Green from Sterne, Agee. Please go ahead.

Yes, good morning -- a question on the expense side. It seems like the other expense line in the personnel lines moved pretty meaningfully on a linked-quarter basis from second quarter to third quarter. So I was just wondering if there was anything in particular in the other line that caused it to jump so much?

Yes, keep in mind that as we disclosed, that salary and benefits were up $5.9 million or 8.5%, but of that, on a linked-quarter basis, it's only up 2.7%. So actually, I would say on a linked-quarter basis, it's much better than it is on a quarter-over-quarter basis, and of that, almost $6 million on a quarter-over-quarter basis, 28% or $1.7 million is due to the acquisitions.

Okay. And then what about the other expense, because it was up meaningfully on a linked-quarter basis.

Yes, there's nothing remarkable. Most of them are volume-based expenses related to revenue, so there's nothing else remarkable. The biggest driver is the salaries and benefits.

Okay. And volume based on what, because if the asset management business was down -- I'm just trying to understand what volume would be driving that number.

Can you repeat that question? The first part of it kind of cut out.

Sure, okay. If the asset management balances were down, what volumes are necessarily driving the other expense side?

On expenses, well, there's some legal costs related to the settlement. Now, that -- the settlement costs were recognized in the second quarter, but some of those costs carry over into the third quarter.

It's a hodge-podge; there's nothing else, nothing material, no one material item. It's a hodge -- it's just a -- it's several different things.

Okay. And then going forward, I mean, as the equity markets remain difficult, certainly the fixed-income business has been accommodative, but how would you expect your kind of inherent expense growth to be when you balance out your financial services offerings and your commercial bank offerings, should we expect to see growth because of one business or both businesses? What's your outlook for growing?

We obviously -- as we've been telling you, we expect to control expenses against -- ultimately to get the leverage out of the investments we made going forward. We don't expect our expense growth to outpace our revenue growth, if that's what you're asking.

I don't think there's anything remarkable you should be expecting going forward on the expense side. I mean, we've made the investments; we're nurturing these investments; we're growing these investments. We -- I think it's -- I don't want to say it's business as usual, but we're trying to driver leverage off of the investments that we've made.

Okay. No, I'm just curious because certainly, the third quarter is a very difficult one from a market perspective, no doubt about it, but when you have net interest income down and non-interest income down and expenses up, I'm just trying to understand if that's a transitory issue or if you would expect to make it up in the future.

As you know, in the asset management business, you have an immediate impact to your revenue when markets move around, both positive and negative, and some of the expenses are fixed. And so it takes a little longer to move those and if we believe we're going to have a long, long period of a market downdraft, we may take different actions.

Okay, great. Thank you.

Thank you. The next question comes from John Rodis from FIG Partners. Please go ahead.

Good morning, guys.

Hey.

How you doing, Mariner?

Good.

Just a follow-up question for you, Mike. I think you mentioned that the drop in deposits was primarily driven by one client and just kind of going off the numbers, I guess the drop in deposits was about $500 million. Was that roughly the size of the one client or --

That would be roughly the size. You're right on the nose.

Yep.

And that was done for a risk-management perspective.

Yes, it was on purpose.

: Yes. We just felt that having one customer on-balance sheet and being that large of a portion of our funding, it made sense to take some of it off-balance sheet.

Okay. That makes sense. And then, Mike, can you just go back over you comments you made as far as expected year-end growth and seasonal year-end growth in deposits to what you were looking for?

Sure. Right now, we don't expect anything different, other than potentially deposits that hang around longer, especially if rates continue to stay lower. I would say that, but right now, what we're seeing is that we would have a balance sheet that would grow somewhere in the neighborhood of $1.1 billion to $1.3 billion and of course, that moves.

It'll mostly come in later in the fourth quarter and continue through the early part of the first quarter of 2012 and hopefully, by March or so, the vast bulk of that is off-balance sheet, but much unlike we've seen in the past, we've seen some of that money in 2011 hang around longer and that very well could happen again in 2012.

This activity is pretty much like clockwork for us though. It happens year-in and year-out just like that.

Yep, okay. Thanks, guys.

Thank you. We have a follow-up question from Peyton Green from Sterne, Agee. Please go ahead.

Yes, just one follow-up. Certainly, the loan growth has been very consistent for the last six quarters and I just wondered maybe if you could comment a little bit on what you're seeing from customers. We haven't really heard anybody say that their customers are getting off their hands necessarily yet and starting to borrow again. It would seem to me to be market share related in your case.

And then separately, the outlook for M&A opportunities across your business lines, I know in the past, you all certainly made some good-sized acquisitions in the non-interest areas that added and rounded out to your product line. Where would you see opportunities going forward? Thank you.

I'll take that. I would say on the loan side, it's similar to what we said to you the last couple of quarters. It is mostly market share gains related to taking business from other institutions. We certainly don't see economic activity driving our loan growth for sure. As I mentioned on the call, our utilization rates on the commercial side have actually come down quite a bit from 31% down to 26 -- north of 26%.

And so we are definitely seeing those kinds of market share type gains and opportunities through basically dislocation in the industry and building a pipeline over many, many years -- a deep, robust pipeline that we're able to take advantage of, and continue to see that opportunity. The pipeline continues to be strong. We still feel like we're going to continue to see market share gains, so I guess that's what I'd say about your first question.

The -- what was the second question? Can you do that again?

Acquisitions.

Oh, acquisitions -- for those of you on the call who've heard us talk about that before, including yourself, Peyton, I would say we have the same answers we've had in the past, which is on the banking front, we're probably more of a premium payer than a discount buyer, and those two, we're holding onto. Good banks these days are waiting for a better environment, so we're having to wait for them. And as it relates to FDIC-assisted type deals, we don't need to change our risk profile to grow this company.

And, Peyton, in the non-bank space, we feel pretty good about what we've done over the last couple of years, and while we're always interested in looking, we feel pretty good as we've rounded out our product and our distribution capabilities pretty well over the last year.

Okay. And I guess my only question is I just didn't know if there was something that -- if you were seeing more opportunities to maybe deepen your scale and your existing set of businesses, or were you focused more organically on that?

Well, like Peter said on the fee-based side, we feel like we've completed the complement of offerings and rounded out the businesses on the fee-based side. We don't really see anything there that we need to do strategically. We keep our eye out for opportunistic situations there, but strategically, we feel like we've done our work there.

And on the bank front, like I said, there are markets that we're in that we would like to make acquisitions in over time to broaden our footprint and broaden our base in some of our key markets. We need to wait for the good banks to be ready to sell again.

: Sure. Okay, great. Thank you for the color.

Thank you.

Thank you. (Operator Instructions). There appear to be no further questions. Please continue.

Thank you very much for your interest in UMB. This call can be accessed via a replay at our website beginning in about two hours and it will run through November 9. And as always, you can contact UMB Investor Relations with any follow-up questions by calling 816-860-7106. Again, we appreciate your interest and time.

Thank you. This concludes the UMB Financial third quarter earnings results conference call. Thank you for participating. You may now disconnect.