John Armstrong

John Armstrong from RBC Capital Markets inquired about the specific drivers behind UMB Financial's strong commercial loan growth in the quarter and sought details on the contributions from the Heartland acquisition. He also asked about the increase in non-performing loans (NPLs) and the timeline for resolving acquired credits.

Answer

Chairman and CEO Mariner Kemper stated that growth was broad-based across all markets and verticals, with 50% from new customer acquisition and market share gains, highlighting strong energy and M&A family office transactional work. President and CEO of UMB Bank, Jim Rine, added that the HDL Life acquisition, particularly franchise lending and California ag business, contributed to growth, noting it's still early for full Heartland benefits. Regarding NPLs, Jim Rine clarified that the increase was due to one fully secured credit with no anticipated loss, and Chief Credit Officer Tom Terry emphasized that the company expects historical net charge-off norms to remain consistent.

John Armstrong asked for a tighter range on Huntington Bancshares' expected first-quarter 2026 expenses and early 2026 expenses to better understand the setup. He also questioned the materiality of revenue-producing initiatives embedded in the expense guide and the extent of Veritex and Cadence revenue synergies included in the current guidance.

Answer

CFO Zachary Wasserman declined to provide quarterly expense guidance, reiterating the focus on achieving 150-200 basis points of positive operating leverage for the full year and highlighting the significant marginal profitability from Cadence. He stated that very little of the revenue synergies from Veritex and Cadence are currently baked into the guidance, with more details to be provided later in the quarter, and noted continued investment in digital technology, marketing, and talent.

John Armstrong asked about the drivers behind the strong loan growth in the quarter, whether pipelines are changing, and the company's overall reserve level goals given stable credit quality.

Answer

Kevin Hester, President and Chief Lending Officer, attributed loan growth to a mix of fully funded larger loans and a stable rate environment. Christopher Poulton, President of Centennial Commercial Finance Group, noted timing shifts in loan closings and payoffs. Chairman John Allison expressed satisfaction with loan growth and reiterated a preference for a 2% reserve level, emphasizing preparedness for future uncertainties.