UMB Financial Corporation (NASDAQ:UMBF) Q3 2023 Earnings Conference Call October 25, 2023 9:30 AM ET

Company Participants

Kay Gregory - IR

Mariner Kemper - President and CEO

Ram Shankar - CFO

Tom Terry - Chief Credit Officer

Conference Call Participants

Nathan Race - Piper Sandler

Chris McGratty - KBW

Timur Braziler - Wells Fargo Securities

Nathan Race - Piper Sandler

Operator

Hello, and welcome to today's UMB Financial Third Quarter 2023 Financial Results Conference Call. My name is Elliot, and I'll be coordinating your call today. [Operator Instructions]

I would now like to hand over to Kay Gregory, Investor Relations. The floor is yours. Please go ahead.

Kay Gregory

Good morning, and welcome to our third quarter 2023 call. Mariner Kemper, President and CEO; and Ram Shankar, CFO, will share a few comments about our results. Jim Rine, CEO of UMB Bank and Tom Terry, Chief Credit Officer will also be available for the question-and-answer session.

Today's presentation contains forward-looking statements, which are subject to assumptions, risks and uncertainties. These risks are included in our SEC filings and are summarized on Slide 46 of our presentation. Actual results may differ from those set forth in forward-looking statements, which speak only as of today. We undertake no obligation to update them except to the extent required by securities laws. All earnings per share metrics discussed on this call are on a diluted share basis, our presentation materials and press release are available online at investorrelations.umb.com.

Now I will turn the call over to Mariner Kemper.

Mariner Kemper

Thank you, Kay. Good morning. I'm happy to be here with you today to share the details of our strong third quarter performance. Our results reflect a strong disciplined loan growth, stable deposits, continued momentum in many of our fee-generating businesses, expense control, stable margin and solid asset quality.

I continue to be extremely proud of the long track record and prudent underwriting that has produced these asset quality metrics, our loan portfolio remains healthy with 8 basis points net charge-offs for the third quarter and just 6 basis points year-to-date.

Nonperforming loans, improved 7 basis points from 9 basis points prior quarter. Provision for credit losses was $5 million for the quarter compared to $13 million in the second quarter, driven largely by changes in macroeconomic variables and general improvement in the watch and classified categories.

The average charge-off ratio for the five quarter period, shown in our deck is the lowest in our history, impressive considering the 18% increase in average loan balances during that same time period. We saw improvement in the levels of both pass-watch loans and classified loans, which declined 13% and 6% respectively. From the second quarter. Our watch list levels fluctuate from time to time as we manage the book and historically we've seen very little migration to loss.