Earnings Call Transcript - UMBF Q1 2021

Operator, Operator

Good day and welcome to the UMB Financial First Quarter 2021 Financial Results Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Kay Gregory, Investor Relations. Please go ahead.

Kay Gregory, Investor Relations

Good morning and welcome to our first quarter 2021 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. Before we begin, let me remind you that today's presentation contains forward-looking statements, all of which are subject to assumptions, risks and uncertainties, including the currently unknown potential impacts of the COVID-19 crisis. These risks are included in our SEC filings and are summarized on Page 42 of our presentation. Actual results and other future circumstances may differ from those set forth in any forward-looking statement. Forward-looking statements speak only as of today, and 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'll turn the call over to Mariner Kemper.

Mariner Kemper, President and CEO

Thank you, Kay, and thanks to everyone for joining us today. I hope you and your families remain safe and healthy. First quarter was a great start to 2021. We had strong balance sheet growth supported by stable diverse funding sources, continued fee income momentum and solid asset quality metrics, all core elements of our investment thesis delivered on a consistent basis. Consumer sentiment is slowly returning to more normalized levels, and our customers remain cautiously optimistic. Modified loan balances are now close to zero, and we've seen debit and credit card spending returning to pre-pandemic levels. Operationally, it's status quo, as most of our non-branch associates remain remote. The majority of our branches reopened with regular hours earlier this month and traffic continues to be normal as expected. Turning to our first quarter results. Net income was $92.6 million or $1.91 per share. And pretax pre-provision income on an FTE basis was $108.7 million or $2.24 per share. You may have noticed our quarterly deck has been updated with a refreshed look and additional information. We listened to the feedback from many of you and have a concise quarterly financial section, followed by more detail on our various businesses, showing metrics and drivers in each. And a longer-term view of metrics supporting our investment thesis is included for those who may not know our story as well. Slide 17 shows the primary drivers behind our results. And I'll provide some high-level comments, then turn it over to Ram for more detail. Net interest income was essentially flat from the fourth quarter as the positive impact from strong balance sheet growth was mitigated by lower loan fees and PPP income as well as the day count in the quarter. On a year-over-year basis, net interest income increased 11.6% despite a challenging interest rate environment. Our track record of relative outperformance in asset growth and the opportunities we see to continue bode well for our ability to grow net interest income over time as we gain market share in many of our underpenetrated markets and verticals. Fee income for the quarter was impacted largely by swings in investment security gains and losses. In the first quarter, the valuation of our position in Tattooed Chef drove a $16.1 million mark-to-market unrealized loss compared to the $108.8 million fourth quarter gain. Excluding market fluctuations, there were some bright spots as we continue to focus on growth in fee income. Trust and Securities Processing income increased 8% from the fourth quarter and nearly 17% on a year-over-year basis. The businesses that drive that line have experienced solid growth, benefiting from both market appreciation and new sales activity. In fund services, assets under administration now stand at $345 billion compared to $252 billion a year ago. Specialty Corporate Trust launched internationally during the quarter, opening an office in Dublin, which is a top economic center for structured finance. We're excited about the potential for growth this adds to our aviation trust business as well as opportunities to expand our offerings in other business lines. We are also eagerly anticipating the potential for increased spending related to the proposed infrastructure bill, which could be a great opportunity for both our underwriting and corporate trustee business. Our Investor Solutions team continues to focus on growth in fintech clients with opportunities to provide FDIC suite and passive custody services, among others. We added four fintech relationships in 2020 and have an active pipeline. And we're seeing some traction from recent investments in our private wealth space, where we've added reporting and trading capabilities for a variety of investment types. During the quarter, we brought on a new CIO for our family office business and look forward to developments there. On the digital front, we've seen increasing use of our online account opening and mobile offering. 20% of non-mortgage loan applications and 22% of new retail deposit accounts were initiated online in the first quarter. General engagement with online banking is up nearly 16% from the first quarter last year, which shows that people are using our digital tools to track, monitor and transact their accounts. After several years of investing in customer-facing applications, our digital capabilities are competitive, and we are now focusing on growth and penetration. And while we've added new delivery channels as industry dynamics have shifted, we haven't forgotten the importance of connecting with our customers. Moving to the balance sheet. We once again posted strong loan growth with an 8.4% linked-quarter annualized increase in average balances, excluding PPP. Slide 23 is a snapshot of our diverse loan portfolio, followed by quarterly loan activity. In CRE, we're seeing traction in our expansion markets. Growth in C&I came from a variety of industries this quarter, including materials and commodities, technology, and commercial services. Additionally, our success in building our mortgage capabilities has continued as evidenced by the nearly 7% increase in average residential mortgage loans from the fourth quarter of 2020, which are included in the consumer real estate line on the balance sheet. New originations for the quarter were $689 million outside of PPP balance changes with payoffs and paydowns of 3% of loans. Looking into the second quarter, we see a robust pipeline in both C&I and CRE despite some uncertainty related to the COVID trends and the status of reopening in various markets. Given what we know today, it's reasonable to expect our strong momentum and market opportunities should continue. Our core deposit growth continued, driven by our institutional business, along with the seasonal buildup of public funds and the impact of the recent stimulus payments. Average balances increased 7.5% on a linked-quarter basis and 28.8% compared to the first quarter of 2020. DDA growth helped drive the cost of total deposits to just 10 basis points, leading to a total funding cost of 16 basis points. Our average loan-to-deposit ratio, while typically much lower than our peers, was 61% for the quarter. Our differentiated customer base, which drives diverse sources of funding and revenue, comes with larger deposit balances. Ram will provide more detail about how we're managing our liquidity position in this environment. On Slide 25, we've updated our exposure to sensitive industries. As we've moved further through the pandemic, we've adjusted this list to reflect both the characteristics of our portfolio and the evolving outlook for various categories. Changes this quarter include the removal of oil and gas based on our borrower performance and stabilizing oil prices, and of student housing CRE where industry occupancy levels are improving. Loans in the three remaining categories totaled $1.4 billion or 9.2% of loans, excluding PPP. After our typical analysis of mitigating factors, including strong sponsors and guarantors, we feel that approximately $765 million or 5.1% of loans could possibly carry more risk in a prolonged crisis. As always, we remain in close contact with these borrowers. At the bottom of the page, you'll see that our modified loan balances have continued to decline, ending the quarter at just $14 million, under 0.5% of loans. On the credit front, net charge-offs averaged just 13 basis points of loans, while levels of non-performing assets improved from the end of the prior period. As we noted last quarter, improving macroeconomic conditions and the continued quality of our loan portfolio drove the $7.5 million negative provision. As the economic backdrop continues to normalize and business conditions improve, additional releases may be warranted. Total allowance for credit losses on loans stands at $202.8 million with an allowance to loan coverage of 1.23%. Excluding PPP loans, that coverage is 1.34%. To wrap up, I'm pleased with our first quarter performance, and I'm excited about the opportunity we see in the remainder of 2021 and beyond. Our 2020 corporate citizenship report has just been published and is available on our website. It highlights our continued efforts and actions related to environmental, social, and corporate governance issues. We continually adapt to find the right balance of implementing sustainable business practices, building diverse teams, meeting obligations, and using our resources to do good. This balance has helped guide our response to the COVID-19 crisis. Now I'll turn it over to Ram for a few comments.

Ram Shankar, CFO

Thank you, Mariner. Net interest income of $194 million was comparable to the prior quarter and included approximately $13 million in loan income from PPP balances. On a linked-quarter basis, NII levels were flat as the benefits from earning asset growth were mitigated by the impact of 2 fewer days as well as lower loan fees. Loan yields were 3.75% compared to 3.78% in the fourth quarter, and total earning asset yields decreased 21 basis points to 2.74% due largely to the $1.8 billion of increased liquidity. Our Fed account, reversed repo, and cash balances averaged $4.5 billion in the first quarter, comprising 14% of average earning assets and yielded 32 basis points compared to $2.6 billion or 9% of earning assets and 45 basis points in the fourth quarter. The excess liquidity buildup reflects seasonal inflows from our public funds and other businesses as well as the benefits from federal stimulus programs. The 19 basis points decline in net interest margin on a linked-quarter basis was driven largely by excess liquidity. If those balances had remained consistent with the prior quarter, our reported net interest margin would have been 16 basis points higher. Additionally, if the liquidity levels were consistent with historical averages from pre-pandemic levels, our margin would be approximately 30 basis points higher. As Mariner mentioned, our business model makes our experience unique. The seasonality of funding from our municipal clients and large institutional volumes, including in our aviation trust business, adds variability to our liquidity positions. Besides funding loan growth opportunities, we continue to deploy a portion of this liquidity as well as cash flows from our securities portfolio to increase our AFS portfolio footings as evidenced by the $2 billion increase in these balances from last year. During the quarter alone, we purchased $1.3 billion of securities that yielded 1.42%. Given the excess money supply in the system, our near-term focus will remain on deploying these funds prudently and patiently with a focus to increase net interest income. Looking ahead, the margin trajectory will largely depend on the levels of liquidity, pace and timing of PPP forgiveness and reinvestment rates on cash flows in the securities portfolio. Overall, we would expect some modest margin pressure in the second quarter. Noninterest income was $108.9 million for the first quarter and contained a $16.1 million pretax loss on the valuation of our TTCF investment, which was partially offset by mark-to-market gains on equity and other holdings and $4.3 million in gain from the previously noted sale of Prairie Capital Management at the end of March. Additionally, COLI income decreased $4.4 million with its typical offset in reduced compensation expense. The details of our various fee income lines are shown on Slide 21. Mariner commented on some of the growth opportunities we have seen in several of those businesses. On the expense side, we saw a reduction of $25.9 million from the elevated levels we discussed in the fourth quarter. Legal and consulting expenses moderated from the prior quarter, and incentive compensation declined, partially offset by the seasonal increase in FICA, insurance and 401(k) expense. The tax rate was 15.4% for the quarter. For the full year 2021, we anticipate it will be approximately between 15% to 17%. We continue to maintain strong capital ratios with our total risk-based capital at 14.28%, CET1 ratio at 12.25% and leverage ratio at 8.08%. Our tangible book value per share increased 12.2% during the last 12 months to $57.26 at March 31. That concludes our prepared remarks, and I'll now turn it back to the operator to begin the Q&A portion of the call.

Operator, Operator

And the first question comes from Ebrahim Poonawala with Bank of America.

Ebrahim Poonawala, Analyst

I guess just the first question, Ram, sticking with net interest income, one, to clarify your guidance for modest pressure in 2Q is, I'm assuming, for the GAAP margin. And secondarily, just talk to us in terms of how you're thinking about cash deployment. Do you see some of the deposit liquidity leaving the bank? And if not, like, do you expect to operate with these elevated liquidity levels in the near term? Just give us your thought process around managing liquidity versus investing in the bond book.

Mariner Kemper, President and CEO

It's Mariner. I'll begin with some general background, and then Ram will discuss our deployment strategies and ongoing initiatives. First, I'd like to highlight that the entire industry is currently dealing with excess liquidity due to stimulus funding and the PPP. We have a significant amount of liquidity on hand. UMB, specifically, also maintains a substantial institutional business that is contributing to this excess liquidity. Notably, as we track this situation, it's not only persisting but is also increasing. We've experienced a year-over-year deposit growth of 30%, which is challenging to manage. This sets the stage for our discussion. People frequently ask what we're doing regarding this liquidity, as if we aren't taking action. However, it's important to note that we also have industry-leading loan growth. Overall, I believe we’re successfully deploying this liquidity, yet it remains a challenging task. We have several plans in place, and I'll have Ram elaborate on our future strategies.

Ram Shankar, CFO

Yes, Ebrahim. As mentioned in my prepared comments, we have been quite active in utilizing this liquidity, which is reflected in our balance sheet. Our available-for-sale portfolio has increased by approximately $2 billion compared to last year. In the first quarter alone, we purchased around $1.3 billion in securities, including mortgage-backed securities and some municipal bonds. We are actively deploying this liquidity and exploring other opportunities since a portion of it will likely remain with us for the next 6 to 8 quarters. We are acquiring bonds beyond what our cash flows from our securities portfolio provide. Additionally, consistent with our UMB culture, we are considering investment options such as buying small pools of mortgage loans, typically around $100 million to $150 million. We are also engaging in tri-party reverse repos and, when possible, investing $25 million to $50 million in diversified pools of subordinated debt from other banks. We are continually assessing our options to ensure much of this liquidity is not just sitting idle at the Fed account earning 10 basis points. Regarding your first question, to clarify, we expect some slight pressure on GAAP margin in the second quarter. However, we are confident that our loan growth and the strategic deployment of our securities portfolio will lead to strong net interest income, which supports our investment thesis as outlined in our investor deck.

Mariner Kemper, President and CEO

Yes. I said that last quarter, I mean, it's NII right now. I mean in this interest rate environment, we really feel like it should focus on our ability to grow earnings through NII.

Ebrahim Poonawala, Analyst

Understood. So I guess the message is the $180.7 million in ex-PPP NII, that should be headed higher from here. And Ram, do you have the details on the remaining PPP fees and just any sense of the breakdown of round 1 versus 2, how the forgiveness proceeds?

Ram Shankar, CFO

So we have another $25 million of unrecognized revenues from PPP 1 and PPP 2 left. Again, the calendar of when we get to recognize this will depend on the forgiveness process. Obviously, we have about $10 million left on our PPP 1, so that's probably coming through in calendar year 2021. At this point, it's too early to say about this PPP 2. We did originate about $420 million as part of the PPP 2 program that you'll see on our balance sheet.

Ebrahim Poonawala, Analyst

Got it. Moving on to Mariner, revenue growth, particularly above-average loan growth, has been a key differentiator for UMB. However, loan production levels, as shown in one of your slides, declined year-over-year and reached their lowest point in the last five quarters. Is there a reason for that? Does it indicate that borrowers are adopting a cautious approach? Based on your current insights, do you anticipate core loan growth to remain in the high single-digit to low double-digit range for the year?

Mariner Kemper, President and CEO

I'm trying to indicate that the growth is around 25.

Ebrahim Poonawala, Analyst

Slide 24.

Mariner Kemper, President and CEO

Slide 24, you're seeing...

Ebrahim Poonawala, Analyst

It says gross loan production is down year-over-year.

Mariner Kemper, President and CEO

I believe this is primarily a matter of timing. We are still experiencing growth overall, and there isn't much to add to that narrative. The main challenge we face in our commercial and industrial business is lower utilization, which presents a significant opportunity moving forward. As the economy stabilizes and normalizes, we expect to recover about 4 percentage points of our usual utilization rate. Although this topic has been widely discussed, it represents untapped earnings potential and growth. However, we are compensating for this decline across various regions and sectors. The fluctuations are more related to timing on a year-over-year comparison. As I mentioned in my earlier comments, the second quarter appears to be strong.

Ebrahim Poonawala, Analyst

Got it. And then just one last one, if I may. In terms of capital deployment, talk to us. I mean you talked about some fintech partnerships. You've previously talked about bank M&A. Give us a sense of where your mind's at in terms of ability to deploy capital inorganically.

Mariner Kemper, President and CEO

Yes. I'm not sure I can answer that.

James Rine, CEO of UMB Bank

Ebrahim, this is Jim Rine. On the fintech side, those who continue to be partnerships where we'll offer our banking as a service products and open up our balance sheet and services for those companies where we'll do the bank-in-a-box type model, offer FDIC sweep or account services and debit cards, etc., so that will provide the additional fee income and partnerships with those folks versus looking to acquire unless the opportunity is right.

Ebrahim Poonawala, Analyst

And do you break down the contribution from these partnerships or the kind of the fintech fees or deposits?

Mariner Kemper, President and CEO

We do not make that public separately from the roll-up.

Operator, Operator

The next question comes from Jared Shaw with Wells Fargo.

Timur Braziler, Analyst

It's actually Timur Braziler filling in for Jared. Maybe first on expenses, great quarter for expense run rate. And if I recall correctly, I think there was a little bit over $9 million of seasonal payroll expense in the quarter. As we look ahead, does all of that fall through to the bottom line in the second quarter as some of that rolls off? Or are there going to be investments made that are going to offset some of that reduction?

Mariner Kemper, President and CEO

Tom, why don't you take that?

Thomas Terry, Chief Credit Officer

Yes. Look, like we said last quarter, Timur, right, our expense run rate is about $200 million, $202 million. Any particular quarter, it goes up and down. But you are right, there are some seasonal increases that are typical to the first quarter like FICA, so that can decrease by $3 million to $4 million as you go into the second quarter. And then a large part of our expense base, as I've said before, is also variable rate in nature like bonus and commission. So when bond trading or other business activity is really strong, that can also skew our expense from one quarter to another quarter. The one thing that I would say in terms of looking ahead, right, we announced the sale of Prairie Capital Management. And annually, that's about $15 million of expenses. So you'll see that recede starting the second quarter. So as you think about expenses going forward, I would model it that way as well.

Timur Braziler, Analyst

Okay. That's good color. And then maybe if I could just follow up on Ebrahim's question on loan growth. It's been a couple of quarters now where the conversation has been about growing balances and underrepresented markets. I'm just wondering, a, how much more runway there is there? And then b, in the back end of the year as some of the more traditional pipelines come back online, should we expect to see growth accelerate from here? Or is this kind of a good level to see loan growth going forward for a longer period of time?

Mariner Kemper, President and CEO

Yes. So what I'd say about that is that it's much longer than a couple of quarters. We've got kind of a decade of close to double-digit loan growth behind us. And we don't really expect anything different in the future than what we see in the past. The commentary about that penetration is there's a pretty big long-term runway across our footprint as you think about penetration. So almost every market we're in outside of Kansas City is larger by population and business activities than Kansas City, and we have very low market share in almost all of them. So through just pure execution and having the right teams on the ground, we've got a really long runway really across the board, both geographically and vertically.

James Rine, CEO of UMB Bank

This is Jim Rine. And what that means is it's not dependent on the economy. Generally, we're taking market share, which is someone else's client. So when we are obtaining market share, we're taking business that's already there that is not necessarily dependent upon the current economic activity. So as we grow our market share in those particular markets, it doesn't have anything to do with the economy. It has to do with our sales efforts.

Operator, Operator

The next question comes from Chris McGratty with KBW.

Chris McGratty, Analyst

Ram, I’ll start with you. For the $15 million in expenses from Prairie, could you also provide the revenue run rate that we need to remove for modeling purposes?

Ram Shankar, CFO

Yes. If you look at the last couple of years, it's averaged about $16 million to $18 million, mostly in fees. All of it is fees.

Chris McGratty, Analyst

$16 million, $18 million a year, yes.

Ram Shankar, CFO

The net contribution is anywhere from $2 million to $3 million.

Chris McGratty, Analyst

Yes. Got it. Okay. And then just kind of putting the pieces together with the constructive outlook on revenue and the good expense quarter. I mean you had positive operating leverage last year. Is that kind of the base case for this year given where we are economically?

Mariner Kemper, President and CEO

I think so. I mean, generally, it's hard to tell. There are a lot of moving parts, but I guess what I'd say is we do feel strongly that we've got our expenses under control, and we do feel pretty strong about our revenue profile. So absent any headwinds or challenges to come our way that we do feel like some level of operating leverage is reasonable to expect.

Ram Shankar, CFO

Yes, I would agree with that.

Chris McGratty, Analyst

Okay. On the topic of credit, we've observed that many banks have reduced their reserves due to improvements in the economy. How should I think about the possibility of further releases, particularly in relation to the lowest point we reached last year with CECL?

Mariner Kemper, President and CEO

So this is Mariner. We're being very careful and cautious about this because we believe the reserves are necessary for our business, which is inherently risky. We are closely monitoring the situation. In our methodology, we consider both qualitative and quantitative factors. The quantitative aspects are driven by the performance and growth of our loan portfolio, as well as Moody's insights regarding economic activity and unemployment. That component will remain consistent. Additionally, we will incorporate some qualitative elements to account for other uncertainties, ensuring that our reserves adequately protect us and our shareholders. Given our current trajectory, it is reasonable to expect another reserve release in the second quarter. However, we are not ready to provide specific guidance on the size or details of that release.

Chris McGratty, Analyst

That's great. And lastly, I want to confirm that I saw the announcement regarding the buyback, which I know you approve every year. However, I'm trying to reconcile this with what you mentioned last quarter, Mariner. It seems like buybacks are still at the bottom of your list of priorities regarding capital today.

Mariner Kemper, President and CEO

Absolutely. Our top focus is to grow shareholder value and invest in growth. That's our primary priority.

Operator, Operator

The next question comes from Nathan Race with Piper Sandler.

Nathan Race, Analyst

The growth on the institutional fee income side has been pretty impressive over the last few quarters. Just trying to get a sense of kind of that growth rate on the Asset Servicing and Corporate Trust side of things, if it's sustainable, kind of near the rates that we've seen recently or if you guys are expecting somewhat of an acceleration just based on some of the pieces that have been put in place recently.

Mariner Kemper, President and CEO

I'll take that, start with it and then Jim can jump in. But what I would say about fund services, with all the liquidity that's in the system right now and what has happened with interest rates, the pursuit of return has been pretty accelerated, which has driven a lot of activity in the alternatives and privates over the last few years. I don't see that slowing down, and our fund servicing business is set up. We are one of the largest and most successful players in the private and alternative space. And so what you've seen is us benefit from that activity and liquidity and the move from public investing to private investing, we don't see that slowing down. We expect to continue to be a major recipient of that shift in the way money is being invested. Along with that, you have the democratization of private investing, which has gone much further downstream into the spectrum of who can invest in privates. So all that bodes really well in the fund space for the privates and alternatives. So that's what I say is the backdrop for our fund services business. Pipeline is very strong. Technology platform is great. We're efficient. We've got a top-flight team. We've been able to pick off people from all our competitors. And because of all the consolidation in that business, it sort of put a lot of our competitors on the sideline. So we're very excited about what's happening in fund services. In our Corporate Trust business, we are continuing to consolidate and are well-positioned for the future. I believe that when the infrastructure bill passes, we will be able to operate on a national scale through both our Corporate Trust and Public Finance divisions, handling underwriting, sales, and escrow trustee services across the country. We have established offices in New York and are conducting business in Florida, New York, New Jersey, and Los Angeles, dealing with large projects worth hundreds of millions of dollars, which represents a significant shift from the smaller deals we managed before opening coastal offices. We are now positioned among the top three largest trustees and paying agents in the country, and we are seeking consolidation opportunities in this sector. Additionally, we are excited about our specialty aviation business, especially as the economy begins to recover and Boeing's issues are resolved. This shift will lead to increased buying and selling of aircraft globally. With our office in Dublin, we can now operate in 70 more countries than before, as Ireland is recognized as a hub for structured finance. This greatly enhances our global business opportunities. Our bankruptcy trustee business is also performing very well, having recently recorded our first $2 million quarter. We are enthusiastic about our growth in this area. Regarding our Investor Solutions business, which was previously mature and dependent on wirehouses and brokerage firms, we are seeing renewed growth by extending our services to fintech companies. Our recent partnerships with four new fintech clients are also highlighted in our presentation. As for our wealth business and institutional matters, I will pause there since we've discussed that already.

James Rine, CEO of UMB Bank

I want to emphasize that as interest rates have decreased, we've observed a decline in 12b-1 fees. However, when rates rise again, this segment will contribute positively as those fees return. We've also been expanding our traditional fee income. As rates increase, we can expect to see a return of 12b-1 fees. Mariner covered all the key points regarding this, and I have nothing further to add besides the anticipation of additional growth as interest rates improve.

Mariner Kemper, President and CEO

I always steal Jim's thunder.

Nathan Race, Analyst

Got it. That's great color. I appreciate that and all the other details in the updated slide deck as well. Perhaps you're changing gears and just going back to the M&A discussion. Just curious, with the stock still near all-time highs and obviously having a strong currency to affect transactions going forward, if you're feeling more or less optimistic on the acquisition front on a holding perspective looking forward over the course of 2021 here.

Mariner Kemper, President and CEO

I'm not sure, you might ask that.

James Rine, CEO of UMB Bank

Yes, I mean if you talk about just the industry backdrop, deals are getting done. So pricing seems to be getting some consistency, and there seems to be some foundation being built for deals to get done. So we'd like to think so. We hope so. But again, we don't do ticker tape deals. We're not going to dig deep into something that has some hair on it just to get something done. We're going to keep to our guidelines, keep within the rails of doing good quality, high-quality deals which have to build relationships, see what happens.

Operator, Operator

As we have no further questions, this concludes our question-and-answer session. I would now like to turn the conference back over to management for any closing remarks.

Mariner Kemper, President and CEO

Yes. This is Mariner. We didn't really discuss wealth management, but we're very enthusiastic about our wealth management business. We had a strong quarter and focused mainly on institutional fees, but our wealth segment performed exceptionally well with new business. I mentioned in our prepared comments that we've launched our family office business, which we believe offers something unique. We've brought in an excellent CIO from the private investing side at Northern Trust, who led their institutional segment. We are thrilled about our wealth offering, especially considering our long-standing reputation as a trusted partner with institutional capital. We're excited about how this complements our commercial business and the future opportunities that lie ahead. That's all I wanted to add. We appreciate everyone's time.

Kay Gregory, Investor Relations

Thank you. Thanks, Mariner, and thanks, everyone, for joining us today. As always, you can contact Investor Relations at 816-860-7106. We appreciate your interest and time, and have a great day.

Operator, Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.