UMB Financial Corp (UMBF) 2012 Q1 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the UMB Financial First Quarter 2012 Financial Results Conference Call. During today's presentation, all parties will be in listen-only mode. Following the presentation, the conference will be opened for questions. (Operator instructions.) This conference is also being recorded today, Wednesday, April 25, 2012.

I would now like to turn the conference over to our host for today, Ms. Kay McMillan. Please go ahead, ma'am.

Good morning everyone, and thank you for joining us for our conference call regarding our first quarter 2012 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 '95.

Such forward looking statements rely on a number of assumptions concerning future events and are subject to risks and uncertainties which could cause actually 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 business 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 may 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 release, which was issued yesterday. If not, you'll find it 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, Mike Hagedorn, our Chief Financial Officer.

The agenda for today's call is as follows. Mariner will provide high-level commentary on our results, Mike will review the details of our financials, then Peter will review key fee income business drivers, and 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. I'm very pleased to talk to you about our first quarter results. Not only did we see an improvement over the same period last year but once again achieved record net income, which increased by 50.2% to $46.4 million. This equates to a $1.15 per diluted share earned on record total quarterly revenue of $211.4 million. Non-interest income increased 22.8% to $132.3 million for the quarter and the primary driver behind this increase in total revenue and net income compared to the same period a year ago. Fortunately, we do not have to rely entirely on spread income to grow the Company and are pleased that non-interest income comprised 62.6% of total revenue in the first quarter.

As this is our first call to discuss 2012 results, I'd like to share our priorities for the year. These will sound familiar as we continue to execute on our strategies by sticking to our proven business model and doing what we believe is right to grow our business.

First, we will focus on quality through a strong balance sheet, solid credit metrics, low-cost funding, and effective risk management. Second, we'll emphasize diversity in both revenue and earnings. Third, we are committed to growth through accelerated fee business, loans, improved sales leverage, and maximized efficiencies. And fourth, we continue to look for the most effective way to deploy capital.

Before I go into further detail on the financial results, I'd like to announce a realignment of our segments to better reflect how we run our business. We will provide detail on four distinct business segments, institutional investment management, which is our scout investment business, asset servicing, which is our UMB fund services business, payment solutions, which represents our card business, institutional cash management, and healthcare services, and our bank, which is largely comprised of commercial banking, consumer banking, and asset management. These reporting changes more visibly -- give more visibility into the key areas of our Company and will help you better understand the performance of our various lines of business. Later in the call Mike will provide additional detail on our financial results, both at the Holding Company level and by segment, and Peter will discuss with you the drivers affecting these businesses.

First, I'd like to share a few highlights from the quarter. In a time when loan growth continues to be difficult to come by for the industry, I'm proud to report that once again ended the period with increased loan balances. Net loans at the end of March 31st were 10.4% higher than the prior year. Compared to the industry, the more than 1,500 regulated depositories that had announced first quarter results as of April 23rd reported a median decrease in loan balances of 0.38%. We've now posted loan growth for eight consecutive quarters.

Within commercial lending, C&I loan balances were $2.5 billion, up 21% from just over $2 billion a year ago. While commercial loan commitment had increased 17.6% as of March 31st compared to the same period -- point in time a year ago, utilization rates fell to 28.9% from 30.2%. However, on a linked quarter basis, our utilization rate improved by 2.8% from 26% at the end of 2011.

Commercial real estate balances were $1.4 billion, a 5.3% increase from the first quarter of 2011. We continue to see competitive pricing pressure and some loosening of terms and conditions within our market, but one of our strengths is our low-cost funding, which allows us to -- the ability to effectively compete for the very best loans. Credit quality at UMB remains strong and continues to differentiate us from our peers. Overall non-performing loans as a percent of total loans were 0.50% and net charge-offs year-to-date were 0.24%.

Turning to the income statement for a moment, we saw improvement in our operating leverage in the first quarter with expenses growing at 4.7% while revenue and non-interest income grew 13.5% and 22.8% respectively. We continually look for ways to maximize efficiencies, but because we view ourselves as a growth company, we also seek opportunity to make investments in people and technology. We believe investments such as these and progress made on our other growth strategies will positively impact our results over the long run.

For the first quarter our efficiency ratio was 69.1%, improved from 71.1% in the same period last year. On a linked quarter basis we saw an improvement of 8.9 points from 78 in the fourth quarter of 2011. With that, I'll turn the call over to Mike Hagedorn who will discuss our financial results in further detail.

Thanks, Mariner, and welcome everyone. First I will review our Holding Company's financials and then provide a more detailed summary of our new segment reporting. Picking up where Mariner left off in his discussion of the balance sheet, our average deposits increased by 8.4% to $10.3 billion. As you know, we typically experience a seasonal influx of public funds in the fourth quarter. These balances peak in mid-January and then gradually decrease through March. This year the first quarter averages were more than $400 million higher than in the fourth quarter of 2011.

The rate environment and less attractive yield opportunities have resulted in additional funds remaining in fed funds and repo accounts. Until rates improve, we expect to see this trend continue. Average non-interest-bearing deposits comprised nearly 39% of our total deposits, which puts us in the top 3% of the industry according to SNL Financial. We believe that our high percentage of free funds is a competitive advantage and is reflected in our low overall cost of funds, which was 0.29% for the first quarter versus 0.37% a year ago. This advantage will be even more important when rates begin to rise.

Allowance for loan losses is $73.5 million and allowance as a percent of total loans is now 1.43% compared to 1.56% a year ago. Our allowance for loan loss coverage is nearly three times the amount of non-performing loans while the median industry allowance reported for the fourth quarter would cover just over half of non-performing loans.

The average balance in our investment portfolio increased 8.7% to $6.2 billion and activity during the first quarter included the roll off of $439 million in core portfolio securities at an average yield of 2.28%. In turn, we purchased $1.3 billion of securities at an average yield of 1.77%. These purchases lengthened the portfolio duration slightly to 32.45 months. The average life is now 36.06 months, up from 32.82 months in the fourth quarter 2011.

Over the next three months, $390 million of core investments with an average yield of 2.45% will mature. Over the next 12 months $1.4 billion of core investments with an average yield of 2.37% will mature. Additionally 73% of our total loan portfolio is expected to reprice or mature in the next 12 months.

The components of our capital continue to shift slightly with goodwill and intangibles resulting from our acquisitions increasing relative to tier one capital. We remain well capitalized with tier one leverage and total risk-based capital ratios of 11.34%, 6.66%, and 12.32% respectively.

Yesterday our Board declared a $0.205 quarterly cash dividend payable on July 2, 2012. The Board of Directors also authorized the repurchase of up to 2 million shares of the Company's common stock during the next 12 months. Average shareholder equity was $1.2 billion, a 12.8% increase. Since the beginning of 2008, average equity has increased by 38.8%. We have grown equity without any dilutive capital actions, and we've been able to deploy it effectively to make acquisitions. Further, total shareholder return from April 2006 to April 2012 was 45%. For the same period, returns from the S&P 500 and SNL US Bank Index were 18.7% and negative 49.5% respectively.

Reviewing other financial highlights, return on average assets was 1.4% for the quarter, up from 0.99% in first quarter 2011. Return on average equity for the first quarter was 15.4%, an increase from 11.63% a year ago.

Turning to the income statement for the first quarter 2012, net interest income was virtually unchanged, up 0.8% to $79.1 million. Although average earning assets increased by 5.8%, the changing mix resulted in a lower overall yield of 2.94% versus 3.16% for the first quarter 2011. Average net interest margin for the quarter decreased 15 basis points to 2.75%. Provision expense decreased by $2.6 million, or 36.6% compared to the first quarter 2011.

As Mariner mentioned, non-interest income increased 22.8% to $132.3 million comparing favorably to $107.8 million for the first quarter 2011. The increase in non-interest income was driven largely by first a 5.8% increase in trust and securities processing revenue, which I will describe in more detail in the segment discussion, second, by a $16.5 million gain on the sale of investment securities, and third, by an $8.2 million adjustment in contingent consideration liabilities on acquisitions.

As we've discussed previously, we harvest gains when interest rates and the economy make this a prudent decision. This is part of our overall intentional approach to managing the investment portfolio. The quality of our portfolio allows us to periodically take gains to help offset lower margin associated with holding shorter-duration securities. In effect, we trade one type of risk for another by supplementing what we lose in net interest margin with gains. Additionally, the cash flows resulting from these sales have been reinvested at higher rates.

As we discussed last quarter, we have earn out agreements on many of our larger acquisitions and accounting standards require that we review and potentially adjust our liabilities related to these earn outs. There are three variables that affect these adjustments. One, the recalculation of liabilities using actual results instead of estimates, two, expected future performance, and three, the discount rate used in the analysis. The adjustment mentioned above was due to the adoption of ASU 2011-4 Fair Value Measurements. Earn out liabilities are analyzed on a quarterly basis, and you should expect us to have future adjustments, either up or down, throughout the earn out period.

Now I will review the results of our four segments. Looking first at institutional investment management, net income before tax was $9.1 million, an increase of 97.3% when compared to $4.6 million in the first quarter of 2011. Total non-interest income in this segment increased by 27.5% to $26.2 million, and non-interest expense increased by 7.1% to $17 million compared to the first quarter a year ago. The pre-tax profit margin for institutional investment management was 35% for the first quarter.

Asset servicing reported net income before tax for the quarter of $3.9 million compared to $2.5 million in the first quarter last year, a 55.6% increase. Total non-interest income for the segment increased by 16.4% to $20.2 million and non-interest expense increased by 8.6% to $16.7 million compared to the first quarter a year ago. The pre-tax profit margin for asset servicing was 19% for the first quarter.

Payment solutions had net income before tax of $8.9 million for the quarter compared to $7.1 million a year ago, an increase of 26.4%. Total non-interest income for the segment increased by 20% to $15.6 million and non-interest expense increased by 11.2% to $14.8 million compared to a year ago. The pre-tax profit margin for payment solutions was 34% for the first quarter.

The bank posted net income before tax of $43 million for the quarter compared to $29.4 million a year ago, an increased of 46.4%. Total non-interest income for the segment increased by 23.7% to $70.3 million and net interest income was up less than 1% to $68.1 million. As a reminder, the $16.5 million of security gains impact non-interest income in this segment. Non-interest expense for the bank increased by 2.7% to $93.4 million compared to a year ago. The pre-tax profit margin for the bank was 31% for the quarter.

With that I'll turn the call over to Peter to discuss the drivers behind our business results.

Thank you, Mike. Good morning everyone. As you've seen in our press release, our results continue to demonstrate the long-term value of being a growth-oriented organization with a diverse business mix. To provide additional context to our results, I'd like to discuss the primary drivers of our fee income and highlight some of the developments in each of our segments.

I'll begin with institutional investment management, which is comprised of scout investments, equity and fixed income mutual funds, and separately managed investment accounts. Revenue in this segment is driven by mutual fund and separately managed account net flows, equity and fixed income market performance, and previously committed new business conversions. All three areas were strong this quarter and contributed to the 35% pre-tax profit margin Mike discussed earlier.

Scout ended the quarter with $22.7 billion in assets under management. This represents an increase of nearly 14% over the first quarter of 2011. Assets in scout mutual funds closed the quarter at $10.2 billion. Scout fixed income separately managed accounts ended the quarter with $11.8 billion in assets under management, and scout equity separately managed accounts totaled $662 million at quarter's end.

We achieved record net flows for the quarter with $340.1 million in the scout funds and $1.2 billion in our separately managed accounts for total net inflows of $1.5 billion. This compares to inflows of $576 million in the first quarter of last year. The midcap fund and our low-duration fixed income strategy were the primary drivers of the strong net flows.

Equity market performance was strong during the quarter providing a $1.4 billion boost to scout's assets under management. Investment performance continues to be strong across our primary strategies, and in March two of our funds received Lipper awards. Scout's strong investment performance and diversified distribution efforts have been key in bringing in new business. During the quarter, scout won its first mandate with an international client to manage a sub-advised midcap strategy for a large European bank.

Our asset servicing segment represented by UMB Fund Services. The primary drivers of revenue in this segment are new business, transaction volumes in our clients' funds, and asset valuations. Our fees are based on a variety of factors depending on individual client agreements. These agreements can include basis points on assets administered, transaction fees, per-account fees, or a combination of these pricing conventions.

UMB Fund Services offers a broad array of services and turnkey products that position it well versus its competitors. Having a complete suite of mutual fund services, hedge fund services, and managed account services is unusual for a provider of our size. Our turnkey products give us the ability to provide any investment manager with an easy way to launch and grow their investment products. One example is the Investment Manager Series Trust, which just surpassed the $2 billion mark in net assets in March. The trust, which was launched in 2007, has experienced a rapid acceleration in growth recently due to a combination of asset growth and the addition of new funds to that trust. While it took more than three years to reach the $1 billion mark in mid 2011, it took only about seven months to reach the $2 billion asset mark. Asset servicing ended the quarter with $227 billion in assets under administration, an increase of 11.7% over the first quarter of 2011.

In our payment solution segment, which includes cards, healthcare, and institutional cash management, there are a number of important business drivers including overall credit and debit card purchase volume, card interchange, HSA deposits, FSA and HSA accounts, and ACH wire and check transactions.

We group card purchase volume into four major categories, commercial credit, consumer credit, consumer debit, and healthcare debit. For the first quarter, purchase volume across our entire suite of card products increased 16.8% to $1.5 billion when compared to the same period last year. Healthcare debit spending comprised almost 45% of this total volume and increased 33.2% over the first quarter of 2011.

Bankcard fees were 2% higher than the same quarter last year. As we disclosed previously, we expect the full-year impact of the Durbin Amendment to be approximately $9.1 million. However, increased volumes are helping to offset the reduction in debit interchange rates. For the quarter, interchange revenue was $15.3 million, an increase of 3.8% from a year ago. Debit card interchange comprised just over 30% of that total, and interchange from our healthcare cards was about half of our debit card interchange.

At the end of the first quarter, deposits in our healthcare services custody accounts stood at $385.6 million, an increase of 37.1% compared to the first quarter of 2011. Flexible spending arrangements and health savings accounts totaled $2.3 million, representing a 29.7% increased from one year ago. We had another strong quarter in this business, and it continues to be a reliable, strategic, and low-cost source of deposit and a growing source of debit card interchange for UMB.

As Mariner mentioned earlier, UMB is known for strong credit quality, and the quality of our card portfolio is no exception. Card credit quality remains superior to industry averages and is improved over the past several quarters with delinquency rates dropping to 1.45% from 2% a year ago. Total credit card charge offs were 2.4% of card balances for the first quarter versus 3% in the first quarter of 2011. According to Fitch Rating Services, fourth quarter 2011 industry's credit card charge-offs averaged 6.1% or about two-and-a-half times our credit card charge-off rate.

The final and largest segment I'll cover today is our bank represented by our commercial banking, consumer banking, and asset management businesses. Mariner covered the highlights of our commercial lending business and the strong organic loan growth there. Our commercial lenders remain outwardly focused, continuing to generate new business primarily through increased market share. This is evident by the 11% increase in the average loan portfolio per officer this quarter as compared to first quarter of 2011.

In consumer banking we reported an increased of 12.5% in home equity line of credit balances, which now stand at $539.4 million. In the past four years, outstanding balances in HELOCs have increased by over 100%. Portfolio utilization remains at approximately 49% borrowed. The HELOC delinquency rate was 0.28% in the first quarter compared to an industry average of 2.8% at yearend.

Small business banking, another part of our consumer business, continues to show strong performance. Deposits in this area increased by 21.3% to $466.8 million, and loan balances increased by 27.3% to $120.1 million when compared to the first quarter of last year.

Our bank asset management business consists of individual wealth management, private banking, corporate trust, and banking services. This includes our bond trading, investment banking, and correspondent banking business. Assets under management for individuals and institutions stood at $8.6 billion at March 31, an increase of 4.2% or $349 million from a year ago. Comprised in the $8.6 billion is $5.6 billion in assets under management within our investment and wealth management group and $3 billion in assets managed by Prairie Capital.

Our private banking and wealth advisory teams continue to deepen relationships with our existing client base. Private banking deposits at quarter end increased 61% to $877 million and loans increased 33% to $187 million when compared to the first quarter of 2011. Private banking is a strong contributor to growth in our HELOC and our mortgage product sales.

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

Thank you, Peter. In closing, we are pleased to report a great quarter for UMB. We believe there's a strong correlation between our operating results and highly engaged associates who deliver the unparalleled customer experience every day. In the past five years, net income has grown from $74.2 million to $106.5 million, and associated engagement has grown from 73% to 84%, while customer satisfaction is at its highest level at 87%.

Both our associate engagement and customer satisfaction scores are at world-class levels, and I couldn't be more proud of those results. We appreciate your interest in us and for attending today's call. With that, I'll turn it back over to the operator who will open up the line for questions. Thank you.

For those of you listening, we are having technical difficulties. If you can still hear us, wait a moment please.

Pardon me, ladies and gentlemen. (Operator instructions.) Our first question comes from the line of Chris McGratty with KBW. Please go ahead, sir.

Good morning guys.

Good morning.

Just a question on the fee income. Obviously the level and the mix is quite about peers. Just wondering, Mariner, what's the -- how much of it is directly tied to market performance and is the revenue priced in the current quarter or is there any of a lag basis? Obviously markets have been strong this year.

I'm going to ask Peter to take that. That business -- that's mostly scout investment, so I'll let him answer as that reports to him.

Hey, Chris. How are you doing?

Good.

First off, look at our fee income overall, it is a broad mix of things that are not all indexed to equity markets. Our payments solution business of course is indexed to transaction volumes and other types of things. Certainly our fund services business and the scout investment business, along with some part of the bank platform's business is indeed indexed equity and fixed income markets.

The markets were up strongly during the quarter. The S&P was up over 10%. And as an example in the case of scout, our assets were up about $3 billion for the quarter, and it was $1.5 billion attributed to flows and $1.5 billion attributed to new business. I'm sorry, to market appreciation.

And so it's hard to say, but because we have fixed income and equity in our portfolios, you can't just look at the S&P and say it's up 10% so we're going to be up 10%. You've got to also look at the foreign markets since we have a lot of foreign market exposure as well.

But there is a way to look at it I suppose, but it's one that you're going to be imprecise because of the mix of our overall -- our overall assets.

Correlated but not tightly correlated.

But in the case of scout, what I told you was exactly right. It's about $1.5 billion in flows and about $1.5 billion due to market appreciation.

Fair enough. The trading investment banking line was obviously very strong this quarter. Can you just elaborate what's -- what type of revenues are in that exactly and kind of the outlook?

Yes. You're talking about the trading income?

Yes. It was nine -- nine seven in the quarter.

Yes. It was. You know the biggest part that goes through there in total is our investment banking group, our bond sales group. That's the line item on the income statement that they use. I think from memory that's about $6 million I think, two-thirds. It's about two-thirds. That's what's driving it.

Great. And then just last on the tax rate. What should we be using going forward?

Yes, the tax rate -- on an affective basis, the tax rate probably seems lower than what you're seeing with competitors, but the rationale for that is that tax-exempt municipal security income is making up a much larger portion of our revenue and hence our bottom line, and so we expect that to continue. So I think the tax rate you're seeing in the first quarter will be close to what our go-forward rate will be for a while.

Great. Thank you very much.

Yes.

Thanks, Chris.

Thank you. And our next question comes from the line of Matt Olney with Stephens Incorporated. Please go ahead.

Hey, good morning guys.

Good morning.

Hey. First off, thank you for the new disclosures. I think this helps tremendously, and I'll read the transcript later on today and try to get more of the details, but I know that's a lot of information for you guys so we appreciate that.

So Mike, on the institutional investment management business, I believe you said in the prepared remarks that the pre-tax profit margin was about 35% in the first quarter. First off, did I hear that right? And second of all, has there been any change in that over the last few quarters and what are your thoughts on that margin going forward?

That is -- that is the right -- you heard that right. That's a scalable business, and as our market competitive margins and it's expecting to hold.

And as we go forward we continue to make investments in the business. Obviously we've got some new products we'll be launching later this year. We continue to build out our distribution system by hiring and adding people as we need to. And so I think those margins are probably in the ballpark, but we are going to continue to invest in the business.

And as Peter said, you have the assets under administration, or under management essentially being split into two buckets. Market action is roughly half, and half is net flows. Who knows what happens with market action. But with the net flows, our expectation is that those would stick, and so that's going to pay us additional revenue in the future quarters.

Okay. All right. That's helpful. And then switching gears, you mentioned the reauthorization of the stock repurchase plan. How should we think about this? Is this a message that the -- that the acquisition efforts could slow somewhat or just a message to investors that you think the stock price is a good value here or how should we be reading this?

It's a very neutral message. We've had an authorization in place as long as I've been here. It's ultimately just to give us the flexibility to do so if we deem it appropriate, so I wouldn't read much into it at all.

Okay. And then the increased utilization rates in the first quarter. Great to see that. Can you give us any more color as to what type of borrower is utilizing these lines and maybe what type of borrower is still on the sidelines that doesn't want to utilize the lines?

Well I would say that what you're seeing in our loan -- this is Mariner. What you're seeing in our loan growth is still market share gains largely, and the evidence of that would really be our utilization rates. While they are up on a linked -- linked quarter basis, they're still down, still depressed from pre-crisis periods if you will.

And so I would say that while we are seeing some improvement in sort of the organic side of our business, a good majority of the growth you're seeing is in commercial and commercial real estate for sure, and still a lot of that is market share gain.

At the end of March utilization rates were 28.9%, and so that's pretty low for us. So we're still getting -- still seeing our loan growth from new business.

Okay. Those are my questions. Thanks guys.

Thanks, Matt.

Thank you. (Operator instructions.) And our next question comes from the line of Peyton Green with Sterne, Agee. Please go ahead.

Okay. Good morning. Congratulations on a great quarter, and thank you very much for the improved disclosure on the business lines.

Just to make sure I heard this right, you mentioned that the institutional asset management business posted a pre-tax profit of $9.1 million, which was up 97% year-over-year on revenue growth on non-interest income growth of 27.5%?

Correct. That's correct.

Okay. So there's the operating leverage answer. Okay. And then on the segments, is there any Holding Company offset that we should know about that gets it down to the consolidated number?

Yes, so you'll notice if you compare it to our prior segment disclosures, we had a treasury and other category.

Okay.

And we don't have that anymore, so when you look at these four segments, we are literally pushing down every cost, every investment, security, net interest margin mismatch that we have. Everything is pushed down to those four segments.

Okay. So everything just transferred across the lines, and so what you see is what you get?

Yes. Yes.

Okay. Great. And then I think Peter you mentioned that the institutional asset managed business won a midcap international product mandate?

It was a -- it was a midcap mandate. It's a domestic midcap mandate from an international bank, a European bank.

Oh. Okay. And I mean how big would you expect that to be?

I really don't want to disclose that. It has the potential to be sizable. I'll just leave it at that.

Okay. And did -- when was that announced?

Oh, that was funded in the last 45 days. There were press releases about it, not the size though. But it was funded in the last 45 days.

Okay. So it's not necessarily in the March AUM figures? It would be going forward? Is that --

It'll be -- it's in the Q1 ending figures. Yes. That's correct. Now it's not a product that's going to sit idle. It should continue to grow as it flows into the product over time.

Right. Okay. So there was some benefit in the first quarter, but it should continue to increase. And then maybe if -- looking from kind of a 10,000-foot or 15,000-foot view, if you could compare or contrast the sales build out in the institutional asset management business or even the asset servicing or payment solutions businesses compared to where they were maybe a year or 18 months ago and what kind of that would lead you to believe about the outlook?

You mean in terms of what we -- how we built our sales force or just the environment in general?

How you've built yours and kind of what you're seeing versus maybe what you were contemplating 18 months ago when you really made the investment across multiple of these businesses?

I would just say nothing's really changed. We've maintained a very positive outlook on all of those businesses and are investing in a like fashion.

Yes, I mean if you think about scout, we've made investments in the intermediary channel, in the subadvisory market, in the insurance market. Some of those are beginning to pay off for us. Some of those will be a little further down the road.

In the payment solutions business we haven't really added any -- any new healthcare sales individuals. We feel good about the coverage we have nationally in that -- in that business. Institutional cash management we again feel good about the sales team we have on the ground there. Maybe over time might add a little bit more strength there, but overall we feel good about that.

So this has been an ongoing series of investments we've been making and will continue to make to ensure that we can cover the full -- the full country in the case our national businesses, which a lot of those, payment solution, investment management businesses really are. They are national -- nationally scoped and they're all very scalable based on the fixed base of expenses. So we should be able to get leverage with the investments we've been made -- that have been made.

Okay. But I guess what I'm -- it seemed to me like 18 months or 24 months ago you were really making sure that you were getting all the businesses positioned, and now it would seem like you're having more success on the sales front and that it would seem like the outlook is brighter for new sales so to speak than it would have been even 12 or 18 months ago.

Most of the investments have been made.

Okay.

And pipelines will vary from time to time, but there's some strength in a lot of these pipelines right now.

Okay. Great. Thank you very much.

Thank you.

Thanks, Peyton.

Thank you. (Operator instructions.) Pardon me management, there are no additional questions in the queue. 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 May 9th. 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.

Thank you. Ladies and gentlemen, this does conclude the UMB Financial First Quarter 2012 Financial Results Conference Call. If you would like to listen to a replay of today's call, you may dial 303-590-3030 or the toll-free number of 1-800-406-7325 and enter the access code of 4529910. Thank you again for your participation, and you may now disconnect.