UMB Financial Corp (UMBF) 2013 Q1 法說會逐字稿

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the UMB Financial conference call. During today's presentation, all parties will be in listen-only mode. Following the presentation, the conference will be open for questions.

(Operator Instructions)

I'd now like to turn the conference over to our host, Miss Kay McMillan.

Good morning, everyone, and thank you for joining us for our conference call and webcast regarding our first-quarter 2013 financial results.

Before we begin, let me remind you that our comments in this conference call contain forward-look statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities and 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 actual results to differ materially from those indicated in our statements made during this call.

While the Management of UMB believes our assumptions are reasonable, UMB cautions that material changes in interest rates; equity markets; general economic positions 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 SEC, 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 are 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; 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 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.

Good morning, everyone, and thank you for joining us on this conference call in our 100th year. I'm pleased to report the results for the first quarter show strong performance by our business units. Net income was $34.9 million, or $0.87 per diluted share, earned on total quarterly revenue of $204 million and return on average equity of 11.05%. Although net income declined 24.6% from the same period a year ago, it increased 65.9% from the previous quarter.

Net interest income for the first quarter was flat compared to the same period a year ago, an accomplishment in this sluggish economy. And non-interest income was down 8.5% to $121 million. When you take into consideration the gains on sales securities and the accounting change for contingent consideration liabilities on acquisitions, these items overshadow the positive improvement in trusts and securities processing income, which increased 13.9% from the same period a year ago to $62.3 million, a record for the Company. Non-interest income was 60.4% of total revenue for the quarter.

Later in the call, Mike and Peter will provide more detail on our financial results and drivers, however, I'd like to highlight a couple of items for you now. Part of the change in non-interest income was because we recognized just $5.9 million in gains on the sale of securities available for sale in the first quarter, compared to $16.5 million in the same period a year ago. We also recognize a $8.2 million adjustment in the first quarter of 2012 due to the adoption of new accounting guidance.

Further, associate compensation, equipment, and processing fees drove the 6% increase in noninterest expense compared to the same period a year ago, which combined with our income results, drove an efficiency ratio of 73.46%. On a linked-quarter basis, expenses declined 4.8%. We remain focused on improving operating leverage over the long run. And when taking into consideration revenue and expense that are directly related to our Business's performance, I'm pleased with these results.

As mentioned earlier, trust and securities processing income increased 13.9% from the same period a year ago. Scout Investments and fund services contributed significantly to the increase in revenue. Another growth area within noninterest income was bank card fees, which increased 11.6%, driven primarily by increased health care debit and commercial credit card interchange fees.

Turning to the balance sheet, average net loans at March 31, 2013, were 15.1% higher than a year ago. On a linked-quarter basis, this is an increase of 6.9%. We're pleased to note that this is our 12th consecutive quarter of loan growth and 5th consecutive quarter of year-over-year double-digit loan growth.

Utilization remains fairly consistent at 29.8% for the quarter, compared to the industry of more than 1,500 regulated financial institutions that had announced results as of April 22, 2013, reported an increase in loan balances of just 1.3%. I believe our reputation and focus on sound credit quality continue to drive our performance. Loan growth continues to come primarily from increased market share. We continue to see growth in all of our markets led by Kansas City in terms of actual balances, followed by Denver and St. Louis. In regions where we have smaller market share, we continue to perform strongly, as well.

In terms of loan type, at March 31, C&I lending was the primary driver of growth with loan balances up to $3.2 billion, an increase of $710.6 million, or 28.7%. Commercial real estate loan balances also increased. CRE balances at the end of the first quarter were $1.4 billion, a 5.9% increase over the same period a year ago. For the first quarter, our average loan to deposit ratio was 48%, essentially flat from a period -- same period last year.

In our ongoing effort to improve our earning asset yield, we have relaunched our equipment leasing special, renewed our emphasis on agribusiness lending, and expanded CRE lending. We also are keeping more residential real estate loans on our books for our private wealth management clients, specifically through a 15-year fixed mortgage product launched in the fourth quarter of last year. Balances in this category were up to $28 million, or 14%, for the first quarter compared to the same time a year ago.

As you've come to expect, our underwriting standards remain the same, even as we expand the diversity of our loan portfolio. Strong credit quality is a cornerstone of UMB. It serves us well and differentiates us from our peers. Overall, nonperforming loans as a percent of total loans were 0.46%, and net charge-offs year-to-date were 0.25%.

Our goal is to replace investment securities that roll off the investment portfolio with high quality, higher yielding loans. Pricing remains competitive, but because we enjoy low-cost funding, we are able to compete with other banks that are dependent on spread income for growth. C&I lending is a relationship business. And we are fortunate to have the best lenders and relationship managers in the business.

Before turning the call over to Mike, let me remind you that our priorities for the year remain the same as last year. First, we focus on quality through a strong balance sheet, solid credit metrics and low cost funding, and effective risk management. Our second strategy is to deliver profitable, sustainable growth. Third, is to maintain diversified revenue streams. And fourth, we continue to focus on capital management. We remain committed to our proven business model and doing what we believe is right to grow our Business. We've built this Company to perform in all business cycles. With that, I'll turn the call over to Mike Hagedorn, who will discuss our financial results in further detail.

Mike?

Thanks, Mariner, and good morning, everyone.

This morning I will review our Company's financials and provide a more detailed summary of our 4 business segments. During the first quarter our average balance sheet grew 11.2% and average earning assets increased 11.9% to $13.7 billion. The average balance in our investment portfolio for the quarter was $6.9 billion, 12.4% higher than the first quarter a year ago. The average yield on securities was 1.98%, an increase of two basis points from last quarter and a decrease of 28 basis points from the first quarter of 2012.

Activity during the first quarter included the roll off of $413 million in core portfolio securities at an average yield of 1.98%. In turn, we purchased $679 million of securities at an average yield of 1.31%. The average life is now 43 months, up from 40 months last quarter. The average life in the first quarter of 2012 was 36 months. Continued changes in the portfolio, along with some modifications to our modeling inputs and tools, lengthen the duration slightly to 40 months from 37 months on a linked-quarter basis.

Over the next three months, $344 million of core investments with an average yield of 1.94% will cash flow. And over the next 12 months, $1.4 billion of core investments with an average yield of 1.84% will cash flow. Additionally, 71% of our total loan portfolio is expected to reprice or mature, in the next 12 months and 60% will reprice, mature, or amortize net quarter. The securities mix in our portfolio remained approximately the same as the fourth quarter 2012. Mortgage-backed securities comprised 48% of the portfolio and municipal securities are at 28%.

Allowance for loan losses is $69.9 million and balances as a percent of total loans is now 1.16% compared to 1.43% a year ago. Although our allowance as a percent of loans has decreased, we believe this level is appropriate given the high quality of our loan portfolio and the history of charge-offs. Our coverage is more than 2.5 times the amount of nonperforming loans, while the median industry allowance reported for the fourth quarter would have covered just 66% of nonperforming loans. We remain well capitalized with Tier I leverage and total risk-based capital ratios of 10.92%, 6.6%, and 11.74% respectively.

Looking at the liabilities side of the balance sheet, average deposits for the quarter increased 13% to $11.6 billion. Average noninterest-bearing deposits comprised nearly 40% of our total deposits, which puts us in the top 4% of the industry according to SNL Financial. Our high percentage of free funds is a competitive advantage and is reflected in our low cost of funds. Our overall cost of funds was 21 basis points for the first quarter, versus 29 basis points a year ago. If you factor in free funds, this brings the number down to just 13 basis points.

As you know, we have a substantial public fund business that typically results in a seasonal influx of deposits beginning in the fourth quarter and usually peaking in the first quarter. Public fund balances remain slightly higher than what we've seen in prior years. We currently estimate additional balances of $200 million than the same period a year ago. Average shareholder equity was $1.3 billion, a 5.7% increase from the same period a year ago. Additionally, total shareholder return over the past five years was 30.7%. For the same period, returns from the S&P 500 and SNL US Bank Index were 32.6% and negative 20.3% respectively.

Reviewing other financial highlights, return on average assets was 0.96% for the quarter, down from 1.4% in the first quarter of 2012. Return on average equity for the first quarter was 11.05%, compared to 15.37% a year ago.

By now, you will have seen that yesterday we filed a Shelf Registration Statement on Form S-3 with the Securities and Exchange Commission. The registration statement, when declared effective by the SEC, will allow the Company to issue common stock, preferred stock, depository shares, warrants, or debt securities. Although we currently have no specific plans to offer additional securities, the Shelf Registration continues to provide capital flexibility in the event an opportunity should arise.

Turning to the income statement for the first quarter 2013, net interest income was virtually unchanged up less than 1% to $79.5 million. As I mentioned, average earning asset balances increased 11.9%. However, the changing mix resulted in a lower overall yield of 2.64%, down 30 basis points from 2.94% for the first quarter of 2012. Average net margin for the quarter decreased to 26 basis points to 2.51%.

Provision expense decreased $2.5 million, or 55.6%, compared to the first quarter 2012. As we've discussed in several prior quarter 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.

Noninterest income decreased 8.5% to $121 million, a decline compared to $132.3 million for the first quarter 2012. The decrease in noninterest income was driven largely by a 64.4% decrease in gains on the sale of securities, which for the quarter was $5.9 million, compared to $16.5 million for the first quarter 2012. For the first quarter of '12, we also recognized $8.2 million in contingent consideration liabilities due to the adoption of new accounting guidance. On a very positive note, revenue and trust and securities processing, service charges on deposits, and bank card fees, all increased for the first quarter of 2013, demonstrating the strength of our fee businesses. Detail on those businesses follow later in our call.

For the first quarter 2013, noninterest expense increased 6% or $8.5 million to $150.4 million. This increase was driven primarily by higher salary and benefit expense of $3.8 million. Other expense increased $2.6 million, primarily due to a $3.5 million fair value adjustment related to our earn-out agreements mainly due to the final payment of our acquisition of JD Clark & Company. In the same period in 2012, these adjustments totaled $1.2 million. We will continue to monitor these liabilities and will likely have some future adjustments on our remaining acquisitions, either up or down throughout the earn-out periods.

Now, we'll review the results of our 4 business segments. Pete will provide more detail on the drivers in those segments later in the call. Looking first at Institutional Investment Management, for the first quarter, noninterest income was $28.6 million, an increase of 9.3%, versus $26.1 million in the first quarter of 2012. Noninterest expense increased 10% to $19 million, compared to the first quarter a year ago. Net income before tax was $9.6 million, an increase of 7.3%, when compared to $8.9 million in the first quarter of 2012. The pre-tax profit margin for Institutional Investment Management declined slightly from 34.2% in the first quarter of 2012 to 33.6 %.

Moving to Asset Servicing for the first quarter, total noninterest income for the segment was unchanged at $20.3 million. Noninterest expense increased 18.7% to $19.9 million compared to the first quarter 2012. The majority of the contingent liability adjustment impacts expenses in this segment. Net income before tax decreased $2.7 million to $1 million for the quarter and resulted in the pretax profit margin for Asset Servicing, going from, or resulting in 4.9% for the first quarter, declining from 18.3% a year ago.

In Payment Solutions for the first quarter, total noninterest income increased 20.7% to $19.4 million. Net interest income increased 7.7% to $11.5 million. And noninterest expense increased 35.4% to $20.1 million compared to the first quarter of 2012. As a reminder, in the fourth quarter of 2012, we assumed the First Data Resources check in ACH Processing business for institutional broker dealers. Expense increase was primarily salary and benefit expense for these newly added positions. Net income before tax was $9.2 million, a decrease of 1.7% from a year ago. And the pretax profit margin for Payment Solutions was 29.7% for the first quarter of 2013, compared to 34.9% for the first quarter 2012.

Finally, our fourth segment, the Bank, for the first quarter had total noninterest income declining to $52.7 million from $69.9 million due primarily to last year's gains on the sale of securities. Net interest income for this segment fell slightly from $68 million in the first quarter of 2012 to $67.3 million this quarter. Noninterest expense decreased 1.7% to $91.4 million compared to $93.1 million a year ago. Net income before tax was $28.3 million for the quarter, compared to $42.9 million a year ago. And the pretax profit margin for the Bank was 23.6% for the quarter compared to 31.1% for the first quarter 2012.

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

Thank you, Mike, and good morning, everyone.

As Mariner mentioned earlier, fee income represented 60.4% of total revenue this quarter. This gives us an advantage in an industry where the median level of fee income to total revenue was 19.5% in the fourth quarter, according to SNL Financial. 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 operating segments.

Let me begin with the Institutional Investment Management segment which is comprised of Scout Investments, equity and fixed income mutual funds, and separately managed investment accounts. Revenue in this segment is driven by average advisory fees paid on mutual fund and separately managed account assets. The mix of those assets, net flows and equity and fixed income market performance. For the quarter, the S&P 500 increased 10.6% and the MSCI EFA increased 5.3%. Positive financial markets, along with strong performance and solid net flows, combined to contribute to another good quarter for Scout.

At quarter end, assets under management stood at $25.7 billion, an increase of 13.6% compared to the first quarter of 2012. Scout mutual funds closed the period with assets of $12.1 billion. Scout fixed income separately managed accounts totalled $11.4 billion. And Scout equity separately managed accounts totalled $2.3 billion in assets under management. As we discussed last quarter, Scout was awarded its largest ever equity mandate from a large insurance company to sub-advise two mid-cap accounts. These accounts were funded during the first quarter.

We look at our flows separated by equity and fixed income across all of Scout products, including the Scout funds and separate accounts. In the first quarter, Scout equity strategies posted $1.4 billion in net flows. Net flows for the Scout equity mutual funds were $170 million, with positive flows of $181 million to the Scout International Fund. First quarter net flows for the equity mutual funds takes into consideration the $50 million in outflows associated with the closure of the Scout Stock Fund.

Scout separately managed equity accounts had net flows of $1.3 billion for the first quarter, reflecting the large mid-cap mandate I mentioned earlier. The improvement in the equity market during the quarter positively impacted Scout's equity assets under management by $590 million. Scout's fixed income strategies experienced net flows of $138.9 million for the first quarter. The Scout fixed income funds had net inflows of $161 million, led by the Scout unconstrained bond fund. Scout fixed income separately managed accounts experienced a modest $22 million in net outflows during the quarter. Market action had a net positive impact of $44 million on assets in our fixed income fund and separately managed accounts during the quarter.

Our Asset Servicing segment is comprised of UMB Fund Services. As a reminder, the primary drivers of revenue in this segment are new business, transaction volumes in our clients' funds and accounts, and overall asset valuation. Our fees are based on a variety of factors depending on client agreement, including basis points on assets administered, transaction fees, or per account fees. Asset Servicing ended the quarter with $165.4 billion in assets under administration, compared to $156 billion at the end of 2012, and $227 billion in the first quarter of 2012.

We are pleased with the performance of this business segment, especially the JD Clark & Company acquisition for which we completed the final earn-out period this quarter. To facilitate the continued growth in that business, we recently named long-time UMB Fund Services leader Lonnie Macdonald as President. We are confident that Lonnie will continue to drive the Company's future.

In our Payment Solutions segment, there are a number of important business drivers, including overall credit and debit card purchase volume and the resulting card interchange. HSA deposits, FSA and HSA accounts, and ACH wire and check transaction volumes drive this segment. We drew card purchase volume into 4 major categories; commercial credit; consumer credit; consumer debit; and health care debit. For the first quarter, purchase volume across our entire suite of interchange generating card products increased 13.2% to $1.8 billion when compared to the first quarter of 2012.

For the quarter, interchange revenue was $16.6 million, an increase of 8.3% over the prior year. Increased purchase volumes contributed to the increased revenue in this segment, in addition to revenue from the acquisition of the First Data Resources Check and ACH Processing business acquired in the fourth quarter of 2012. Spending by our commercial credit card customers increased 7% during the first quarter, when compared to a year ago, and represented 17% of total card spending. Purchase volume in this area has grown consistently. And commercial credit cards provide the largest portion of our interchange revenue, representing more than 40% of our total interchange dollars.

Moving now to Healthcare Services, deposits in our custody accounts stood at $572 million at quarter end, an increase of 48.3% compared to the first quarter of 2012. Total number of flexible spending arrangements and health savings accounts increased by 36% from a year ago to $3.1 million. We had another strong quarter in this business with purchase volumes of $881 million, an increase of 29% over the same period last year and more than double the purchase volume in the fourth quarter.

Interchange revenue from health care card purchases increased 36.5% over last year to $3.2 million. Healthcare Services continues to be a reliable, strategic, and low-cost source of deposits and a funding source of revenue from several streams, including account and transaction fees, card interchange, net interest margin, and investment management fees.

The final segment I'll cover today is our Bank, represented by our commercial banking, consumer banking and private wealth and institutional asset management areas. Mariner covered the highlights of our Commercial Banking business and the strong loan growth there. In consumer banking, we reported an increase of 4.3% in home equity lines of credit balances, which now stand at $563 million. Since first quarter 2008, home equity line commitments have increased nearly 60%, and outstanding balances have risen 50% or at a compounded annual growth rate of 8.5%. Portfolio utilization was approximately 47% at quarter end.

The HELOC delinquency rate was 0.25% in the first quarter, compared to an industry average of 2.8% at the end of the fourth quarter. Assets under management for individuals and institutions stood at $10 billion at March 31, an increase of 15.4% from a year ago. Comprising the $2 million, $6.8 billion in assets under management within our Bank asset management groups, and $3.2 billion in assets managed by capital management.

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

Thank you, Peter.

As you all know, I'm incredibly proud of this Company, especially as we celebrate our 100th year anniversary this month. To mark this milestone, we will be opening the market on the NASDAQ tomorrow morning and look forward to seeing many of you at our Investor Day in New York to be held at the NASDAQ market site.

Thanks for your interest. And I'll turn it over for your questions to the conference call operator.

We will now begin the question-and-answer session.

(Operator Instruction)

And our first questions comes from Matt Olney with Stephens. Please go ahead.

This is actually Tyler Stafford in for Matt. Congrats on the quarter. I guess, first, when I look at your core earnings in 2012, and then again in 1Q '13, it appears 1Q starts off really strong and then gradually declines throughout the year. Can you maybe remind us if there's any inherent seasonality across the business segments? Or maybe a revenue or expense mismatch?

Mike, you want to take that?

Yes. I think the seasonality obviously you'll see is in net interest margin as a result of the public fund business in the first quarter. But, typically in the fourth quarter, we see higher expenses, too. And you saw that in the fourth quarter of '12. So those would probably be the two biggest items I'd point out.

Okay. Thanks. Switching gears a bit, and this is probably a few quarters too early to be talking about this, but I was just curious as to your thoughts on UMB in the context of a rising interest rate environment? And obviously an increase in rates would benefit the Bank considering the loan makeup. But I guess, specifically, can you talk about the potential impact of rising rates on asset management businesses?

Overall, I think for those of you that have been watching our Company for a while know that we're highly sensitive to a raising rate environment to the positive. We are prepared very well for raising rate environment and should benefit handsomely from that. As it relates to asset management business and its impact, Peter, you want to take that?

Yes. Just a thought or two on that. Clearly with over $11 billion in fixed income, that's an area we're watching closely and preparing for rising rates somewhere down the road. What we are seeing right now is a rotation within the fixed income categories, not a rotation out of fixed income exclusively. And I suspect that will continue for some period of time. If you look at the good flows that the equity funds and the equity industry had during the quarter, much of it came from money markets. And the flows that were predicted out of bond funds has not started yet. So that's the only real impact that we're monitoring right now. Our equity flows will be driven by, you know, sentiment in the markets and where markets go when rates start to rise, which we can't really predict.

Obviously, a lot of this is debatable. You could have a rotation out of equity as rates rise and savers aren't punished. There are a lot of variables here, but we are generally poised very well for all raising rates scenarios.

Okay. Thanks. That helps. Appreciate it, guys.

Our next question comes from Peyton Green with Stern, Agee.

Question with regard to the loan growth, that's about as strong as you ever reported. I was just wondering Mariner, you highlighted that the pipeline was in great shape coming out of the fourth quarter. How does it look going forward?

We continue to maintain a strong pipeline.

Was there anything that happened this quarter to, I mean, is there any reason why the loan growth was so significantly better this quarter compared to the past?

No, I wouldn't say so, Peyton. I think the real answer is we are laser-focused with a very strong team, pretty nice footprint with, you know, outside of Kansas City, we've got a pretty low market share. So it's all opportunity, all execution, and we're just, I think, lucky to have one of the best teams in the business.

Okay. And then I know one of the goals for this year is to post improved operating leverage from the multitude of investments that you've made over the past several years. The first quarter this year was very good like the first quarter of last year. How good do you feel about prospects going forward?

I'm sorry, will you do that again? Related to -- we talking about loans or just in general?

Just in general. Just general operating leverages as you manage the collection of businesses. Do you feel better about getting improved operating leverage this year?

I would say, as I've been saying, we are committed to and feel good about our prospects for continuing to reduce expense growth. So we feel good about that. And if you look at, you know, quarter-over-quarter, if you look at pretax profit margins in all of our non-bank businesses, they are all expanding. So we are seeing the leverage. We are seeing expense reduction. Almost all expanding, Payments is not expanding. But the two big drivers, Scout and Fund Services are both expanding from a pretax margin perspective. And so we're seeing that. And we are seeing expense reduction on a year-over-year basis. So we continue to feel good about our prospects in doing such.

This is Mike. Don't lose sight of the fact, also, that as we reported this morning, this is the last earn-out payment on JD Clark. So those negative adjustments, they've tended to be negative, at least for that acquisition, are no longer going to be part of the equation. So that is going to help operating leverage as well.

Okay. And then also, in terms of the Asset Management business, the win that you all got on the institutional side, which was certainly a big one. How does the pipeline for that business look? I know it's hard to gauge. But just it's been 2 to 2.5 years of building the sales force and attacking on the market with good solid performance on a consistent basis. How do you feel about gaining share this year?

Well, activity is strong. The pipeline continues to be strong, both in Scout, both in the fixed income side and on the equity side. You know, like every pipeline, there's lots of things in there we're going to ultimately convert and some we probably won't. But we feel very, very good about the pipelines on both the equity and fixed income side at this point in time.

You might touch on the hires and staffing.

We just hired a new head of sales to really direct our sales efforts on both the fixed income and the equity side. We continue to expand the sales force as we see fit. But our story, our leverage distribution model through the very large pension funds and the platforms and such, continues to work for us, Peyton. And we feel quite comfortable we're going to get our fair share as we go along.

Okay. Great. And then, Mike, for you, on the equipment and occupancy side, are there any major investment initiatives or software, technology issues that'll cause that line to go up over the course of the year that might take away some of the operating leverage in the quarter?

Yes. We're making investments as we do all the time in technology. And I would say it's more -- think about it more like this, that there is some lumpiness in that line item relative to when the depreciation for existing stuff comes off the books and new stuff comes on. So we're constantly investing. So from time to time, sure, it could go up.

Okay. But no big things necessarily this year?

No.

Okay. All right. Great. Thank you.

Our next question comes from Christopher McGratty with KBW.

Good morning. It's John Barber filling in for Chris. Could you help us with the expense run rate going forward? What are some of the moving pieces we should be focused on and some of the more variable items?

Well, obviously the most variable one would be compensation and FTE levels. So if you look at the fourth quarter as we talked about, FTR added I think a little more than 70 new FTEs. So you have to consider that, when you especially do the first quarter '12 to first quarter of '13 comparison. So that would probably be the first one. You know, the second one would be the processing related to expenses that we have. For instance, bank card volume, more volume is going to drive higher bank card processing fees. We see that in the Asset Servicing business, the Asset Management business as well. So if you see those expenses going up, you should likely see the revenue on the other side as well.

Okay. That's helpful. How should we think about the stock buy-back plan? Is that something we should be incorporating in our models?

You know, we've been improving that every year consistently. And we look at repurchases in the context of our overall capital planning every year. So there's no specific plan.

Okay. Thank you. Mike, in the earnings release, you talked about balancing, you know, NII versus maintaining asset sensitivity. It seems like a new disclosure. Should we think about that as potentially a balance sheet restructuring in the cards? Or is it more just normal ALCO management?

I think it's normal. But I do think Mariner talked about this in his prepared remarks. That it's more of a subtle rebalancing, if you will. Assuming that we're able to execute on our strategy, you saw our loan growth this quarter and all of the last several years. In fact, we've had loan growth for each of the last three years. To the extent that we can replace the roll-off in the investment portfolio with loans, that will continue.

Okay. Thank you. And the last one I had was what's a good effective tax rate to use going forward?

Yes. The bias is going to be slightly down from even where we're at today. I know that might sound a little strange, but we have two large low-income housing tax credits coming online in 2013, so it will come down a little bit.

Okay. Thanks for taking my questions.

I'm showing no further questions in the queue at this time. Please continue.

Thank you, everyone, for your interest in UMB today. This call may be accessed via a replay at our website beginning in about two hours. It will run through May 8. As always, you can contact UMB Investor Relations for follow-up questions by calling 816-860-7106. Again, we appreciate your time and interest. Thank you.

Ladies and gentlemen, this concludes the conference call. We would like to thank you for your participation. You may now disconnect.