Kay Gregory - VP, IR Mariner Kemper - President and CEO Ram Shankar - CFO Michael Hagedorn - CEO of UMB Bank.

Ebrahim Poonawala - Bank of America Merrill Lynch Kelly Motta - KBW Timur Braziler - Wells Fargo Securities Matt Olney - Stephens Inc Robert Beauregard - Global Alpha Capital Management.

Good day, and welcome to the UMB Financial Second Quarter 2018 Financial Results Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Kay Gregory. Please go ahead..

Welcome and thank you for joining us today. On the call today are Mariner Kemper, President and CEO; Ram Shankar, CFO; and Mike Hagedorn, CEO of UMB Bank. Before we begin, let me remind you that today's presentation contains forward-looking statements, all of which are subject to some assumptions, risks and uncertainties.

Actual results and other future circumstances or aspirations may differ from those set forth in the new forward-looking statement. Details about factors that may cause them to differ is contained in our SEC filings.

Forward-looking statements made speak only as of today and we undertake no obligation to update them except to the extent required by applicable securities laws. Our earnings materials are available on our website at umbfinancial.com in the Investors section.

Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measure have been included in the release and on Slides 32 and 33 of the supporting materials. All earnings per share metrics discussed in this call are on a diluted share basis for continuing operations. Now I'll turn the call over to Mariner Kemper..

Thank you, Kay. Welcome, everyone, and thanks for joining us to discuss our second quarter 2018 results. For the quarter, we earned $56.1 million or $1.12 per share on an operating basis and $55.4 million or $1.11 per share on a GAAP basis.

Highlights include net interest income and margin expansion and a growing loan portfolio with yield improvement and positive year-over-year operating leverage. Net interest income grew 1.6% and margin expanded by 5 basis points to 3.24 on a linked-quarter basis.

We accomplished this growth as robust calling efforts while maintaining our strong underwriting standards and pricing discipline. Quarter end loan balances of $11.6 billion for the second-quarter represent a year-over-year increase of 7.2%. H8 data for the quarter reported total year-over-year loan growth of 4.3% for the industry.

Compared to the first quarter, our average loans increased 5.6% on an annualized basis with yield improvement of 21 basis points. Topline loan production for the quarter was very strong at $635 million surpassing first quarter production of $520 million despite the fact that some of the active deals at the end of the prior quarter were pushed out.

We continue to have a strong pipeline, and given what we know today, third quarter topline production looks to be as good as some of the better quarter’s we’ve seen over the past several years.

Credit quality remains solid as well, with net charge-offs of 0.32% of average loans, compared to 0.37% in the first quarter, and nonperforming loans of 0.48% of total loans, down from 0.59%.

Unlike the first two quarters of the year, where we identified a couple of credit issues that impacted our reported charge-offs and nonperforming, we aren’t seeing similar issues at this point. Given the characteristics of our loan book and what we currently know, we’d expect our credit quality to further improve.

While our non-interest income declined from the linked quarter, I am pleased with our performance on operating leverage, driven primarily by nearly flat expense growth.

Finally, we are at an interesting point in the interest rate cycle with the magnitude of increases becoming meaningful enough that deposit pricing changes have gone from one-off request to increase published rates.

This is to be expected and we will continue to be competitive with our deposit pricing to maintain the raw material needed to fund our asset generation opportunities and to defend and grow our market share. Now, I’ll turn the call over to Ram, for a more detailed discussion of the drivers behind our results.

Then Mike will cover some of the details on the segments before we open it up to your questions.

Ram?.

Thanks, Mariner. For the second quarter, net interest income was $150.2 million, representing a 9.3% increase year-over-year and 1.6% on a linked quarter basis. The benefits from makeshift on both sides of the balance sheet and the expanding loan yields were partially offset by higher interest costs and deposits.

We continue to benefit from the impact of higher short-term interest rates on our predominantly variable rate loan portfolio, but the impact this quarter was partially offset by increases to rates and deposit products across all lines of business.

In the 11 quarters since the Fed started increasing rates, our total earning asset yields have expanded by about 100 basis points after adjusting for the effective tax rate change to 3.79% or a 64% cumulative asset beta.

During the same period, our total cost of funds including DDA has risen 44 basis points from 0.13% to 0.57% or a 28% cumulative beta, resulting in NIM expansion of approximately 58 basis points.

During the quarter, our cost of interest-bearing deposits and total cost of deposits increased 16 basis points and 12 basis points respectively, impacted by pricing changes and a continued mix shift from DDA driven both by higher ECR rates and lower corporate cash levels.

Non-interest bearing deposits represented 34.4% of total average deposits for the second quarter compared to 36.1% last quarter. Similar to what others in the industry have experienced, our cycle to date deposit betas have remained fairly favorable.

However, as Mariner mentioned, we are approaching an inflection point where deposit costs may be more impacted more by changes in short-term rates. We still expect our betas over this interest rate cycle to conform to historical levels assumed in our interest rate models.

However, just of the betas in the last 75 basis points are right moves, were higher than the first hundred basis point increase, we would expect the next hundred basis point rate increase to have an accelerated impact on interest-bearing deposit cost.

In our consumer business, our approach to retain and grow households and improve share in our underpenetrated markets include attractive and longer-term duration promotions. In healthcare services, we continue to leverage our early mover advantage and are focused on growing market share.

While betas have remained near zero thus for the cycle, the impact of higher interest rates, increased competition from traditional and nontraditional participants and industry consolidations will likely result in higher interest expense paid to our partners.

On the earning asset side, repricing in our variable rate loan book, along with reinvestment of cash flow from our securities portfolio at high rates will also continue to drive earning asset betas higher. Net, net we expect our margin for the upcoming quarter to be relatively stable compared to second quarter levels.

Turning to balance sheet highlights on slide 10, total average deposits decreased 1.7% to $16.5 billion as linked quarter increases in asset servicing and healthcare deposit were offset by decreased commercial and institutional deposits and the seasonal decline in public funds.

Our average loan-to-deposit ratio for the second quarter was just under 70%, up from 67% in the first quarter. Looking again on loan balances, slide 11 showed the strong production that Mariner mentioned along with payoff and paydown details.

Topline production for the quarter was $635 million, total payoff and paiddowns of $419 million for the quarter represented 3.6% of loans slightly below our average levels over recent quarters. Slide 14 shows the composition of our investment portfolio.

The average balance in our AFS portfolio decreased $127.4 million on a linked quarter basis as the average yield increased four basis points to 2.13%. During the quarter, we reinvested approximately 60% of the roll-off deploying the remainder into funding loans.

This is a part of our active balance sheet management positioning earnings assets to help counter higher liability cost. Moving back to the income statement, slide 18 shows noninterest income of $100.3 million for the second quarter, a reduction of $5.2 million or 5%, compared to the first quarter.

Drivers include a decline of $1.8 million in equity earnings on alternative investments and $1.1 million in the fair value of company owned life insurance, both included in other noninterest income. Both of these are market-driven revenues and have near equal offsets in noninterest expense.

Additionally, the deposit service charge line item included a $1.2 million reduction related to a repricing of a large broker-dealer customer contract in the institutional banking segment, which allows us to maintain a significant relationship.

Finally, trust and securities processing revenue was impacted by $1.3 million decline in asset servicing revenue, also part of institutional banking segment. Mike will provide more detail in the segment discussion.

Slide 20 contains detailed drivers of the changes in noninterest expense, which on a non-GAAP operating basis increased $2.5 million or 1.4% compared to the first quarter to $176.4 million.

As I noted on last quarter’s call, we saw increased legal, consulting and business development expense related to the technology and growth investments offset by lower FICA, payroll taxes, and 401(k) expense. We continue -- we continue to anticipate increases in performance related incentive compensation over time.

Now, I’ll turn it over to Mike for a few segment results and drivers.

Mike?.

Thanks Ram. The segment disclosures begin on Slide 21, and I'll start with the Commercial Banking segment, which provided 67% of the company's pretax income for the quarter.

Linked quarter noninterest income in the segment was impacted by $1.1 million increase in card rebate and reward expense recorded as an offset to bankcard fees due to higher card spending volume and reduction of 521,000 and derivative income related to new customer swaps.

Commercial real estate and construction lending once again lead in terms of loan production for the quarter with industrial, medical and office projects among the top categories.

The CRE environment remains competitive and although the high cost of construction is impacting the industry we continue to see strong development activity in our core markets. Our pipeline has remained consistent over the past several quarters and asset quality has been stable.

Our national lending platforms factoring in asset-based lending have represented nearly 23% of our loan growth over the past year. In our factoring business, both the commercial finance, and transportation finance portfolios have benefited from the turnaround in the general economy.

A significant amount of our growth has come from funding acquisitions and financing companies that have outgrown their bank lines. The trucking industry is experiencing a strong year with tight freight capacity driving increased shipping rates.

Institutional banking, which consists of investor solutions, asset servicing, corporate trust, distress debt, investment banking and public finance posted pretax net income of $11.8 million for the quarter, and was impacted by the reductions in deposit service charges and find servicing revenue that Ram mentioned earlier.

In asset servicing, industry consolidation, along with the move to passive investing, has created increased competition. Noninterest income in the second quarter, specifically in trust and securities processing was impacted by the exit of one large customer.

The recent move to align our asset servicing business with our other institutional banking functions has brought a renewed growth focus and changes that include two separate teams with resources targeted to both the alternative investment and registered fund markets.

We’ve realigned territories, added four seasoned sales professionals, updated our incentive structure and launched a new targeted marketing campaign. We continue to aggressively pursue new clients ranging from startups to larger established funds and our teams have closed 77 new deals year-to-date.

We are seeing traction from these changes and have an active pipeline. Additionally, the strategic infrastructure and technology investments we’re making in asset servicing will further build our capabilities in all product lines including exchange traded funds, private equity, alternative investments and registered fund business.

Turning to healthcare services, on slide 28, HSA deposits increased 1.9% during the second quarter and 24.9% year-over-year. These deposits now represent 14.1% of total UMB deposits. We continue to see movement into our HSA saver program and investment assets have increased by more than 70% during the past 12 months.

Slide 30 shows the historical growth trends compared to industry averages. Finally, slide 31 depicts purchase volume and interchange revenue across our various card products. Healthcare related card purchase volume continues to represent nearly 60% of total cards spend.

With that, I’ll conclude our prepared remarks and turn it back over to the operator who will open up the line for questions..

[Operator Instructions]. Our first question comes from Ebrahim Poonawala of Bank of America Merrill Lynch. Please go ahead..

Good morning, guys..

Good morning, Ebrahim..

I think this first question in terms of I was listening to your comments Mike around the Asset Servicing Business. When I look back, going back to the last three or four years just sequentially I think that business has remained kind of in that $20 million, $22 million quarterly revenue run rate.

As you would look at that business today just competitively in terms of the larger players, like are you taking a deeper look in terms of the clients’ mix that you are servicing and a need to maybe restructure that a little bit in terms of where you compete in what might be a more sweet spot for someone like UMB.

Just any thoughts around that would be helpful?.

Yes, I’m going to start here and then Mike will chime in. Yes, I mean certainly the way that our business is structured we have a big part of our business is helping the smaller, the smaller businesses and so there is a lot of turn in that and there’s a lot of expense in setting that stuff up really on.

Mike mentioned in his comments that we’re beefing up our efforts and our sales teams and we’ve also invested in a new platform technology to close out some of the broader gaps on the larger end of the client segments.

So we are definitely going to pursue slightly larger and more mature accounts, where the revenue comes earlier on in the cycle and we’re having some success there already. Mike mentioned the 77 clients, like we’ve sold more business year-to-date than we did at last year. So the business is actually in pretty good shape.

We feel pretty good about its’ prospects. We would again like I said, we’ve invested in new platform technology should allow us to do more things than we’ve been able to do in the past. So I don’t know if you want to add to that Mike..

Yes, the only thing I know Ebrahim is that the majority of the reduction in revenue in this business was one remaining account that was the very largest account where they decided to combine their service providers with one large entity that they already had business with.

So they were dissatisfied with the service that we were providing them, quite to the contrary, they just decided to consolidate and that was kind of the one last legacy account at that size. As Miller points out, one of our competitive advantages, yes, there is a sweet spot in asset servicing around who we serviced.

But we also need to make sure that we have the ability to grow with those funds as they grow as well and that’s about the investments that we’re making. And then lastly, just to remind you, all my comments are in a post scout world. So scout used to be in that revenue mix as well and obviously is no longer..

So we get great client satisfaction for us and we’re up more this year than the last year. So all is good on that front..

Got it. And just moving to Ram, I’m not sure if I heard you correctly. I think did you mention that you expect the margin to remain flat quarter-over-quarter in 2Q.

And so like if you just can get in terms of your expectations around loan to deposit sort of trend going forward and what the rate sensitivity is to any incremental or additional rate hikes?.

Yes, just to recap on what I said on the prepared comments Ebrahim, I said margin for the third quarter should be stable relative to second quarter. Obviously different dynamics going on both the asset side and the liability side, right.

On the earning asset side we still have 60% of our loans being variable rate that get the benefit from short term rates. If you look at our slide there we also have the positive impact of roll on, roll off even in our securities portfolio.

For the next 12 months, the average roll-off rate is about 2% and what we are buying today is close to 3 ¼, so that should continue to benefit. On the average side, and then I’ll go by some of the comments on the prepared side, yes the betas have started to inflect a little bit.

Mariner talked about the active pipeline especially looking to the third quarter, and as we turn our spigots of deposit growth, we'll expect to use both new deposit growth as well as roll-outs from our securities, cash flows from our securities to fund that loan growth..

Got it, that’s helpful. And just one last question, tangible common equity close to 10%. I know we’ve talked about looking at deals, but any thoughts around deploying some of that capital towards buy back if you had to, if there was continued weakness in the stock relative to what you’re seeing to them..

Well as you said before Ebrahim, we’re active; we are very active in the M&A space. We would like to do a bank deal and there’s nothing really new around our efforts there. I do active calling, building relationships, we have a M&A team doing their job.

So we continue to look for deal that’s culturally fit and to extent that we can get on that and that's where the best use of our capital is and certainly if we don't see deals materialized, we have other options..

Got it. Thanks for taking my questions..

Thank you..

Our next question comes from Chris McGratty of KBW. Please go ahead..

Good morning, Chris.

Chris, are you there?.

Chris, does the line muted on your end?.

Let's see this kind of questions we can have..

Our next question will now come from Kelly Motta of KBW. Please go ahead..

Hey, Kelly..

And one moment we seem to be experiencing a technical error. Kelly Motta, your line is now open. Thank you for holding..

Hi.

Can you hear me now?.

Yes. Thanks. Good morning, Kelly..

You mentioned the change in the posted deposit rates during the quarter.

Do you have about when that change occurred?.

There was no specific date, it just the kind of the evolution of rate changing and reacting to the market and making sure that we're remaining competitive with the marketplace to maintain our current relationships..

Okay. Thank you. And then in terms of loan growth, it was mid single-digits this quarter and payoffs were fine.

Do you think this is kind of looking to the back half of the year a good assumption for the remainder or do you see growth picking up?.

Yes. So in my prepared comments I said that we expect the third quarter to be stronger than the second quarter. So our pipeline looks to be as good as any quarter we've had in the last several years..

Yes. One of the big that Mariner mentioned was some of the deals from the second quarter got pushed into the third quarter as well. So, that should even out for – between the comparisons between the two quarters..

And also as we stare at the quarter today payoffs and paydowns look to be slightly lower than they have been in for the last couple of quarters..

Great. Thank you very much..

[Operator Instructions]. And our next question comes from Jared Shaw of Wells Fargo Securities. Please go ahead..

Hi. Good morning. This is actually Timur Braziler filling in for Jared. Just one follow-up on the deposit question; just looking at the projected growth for the back end of the year and taking that in combination with using some of the securities roll-off to help fund loans.

I guess how should we be thinking about loan funding for the remainder of the year? Is that going to be primarily from the deposit portfolio with a slight increase in -- or slight benefit from securities roll-off? Or is that going to be mostly securities with some slight benefit from deposits picking up?.

Hey, Timur, this is Ram. It's going to be a combination of all of that, right. So deposit growth, obviously are our raw material, that's where our focus is. And then we're also has been on this balance sheet rotation strategy for a while.

So we will use some of these cash flows like in the past quarter we've used 60% of the cash flows from the securities book to buybacks securities, so 40% went to funding the loan, so we'll kind of maintain that kind of trajectory going forward. So it’s a combination of all of those that you mentioned.

Obviously, given the pipeline and the earning asset potential we have especially on the loan growth side we would like to continue to fund that. Obviously, we have a big advantage with our industry loan-to-deposit ratio as well. That gives us a lot of dry powder to continue funding this pipeline..

And then I'll just add to that. This is Mike. As we look forward to fund our growth and first I would caution everybody not focus on end of period balances. There could be a lot of volatility in those, including public funds. We're in the second quarter historically. That's been the low point for the year.

And due to our industry low loan-to-deposit ratio that Ram just mentioned we didn't see in the second quarter the need to be as aggressive in deposit pricing, but due to the expected third quarter growth that Mariner just mentioned, we do expect to be more aggressive in deposit gathering activities..

And as we talk in the past, there's a lot of triggers, lots of large relationships and avenues to pursue to do those..

Okay. That's helpful color. Thank you. And then just maybe following up on Ebrahim's question, looking at the broader fee income environment you had the renegotiation of one contract that negatively impacted numbers this quarter. You have the higher card reward balances.

I'm guess, as we're looking out into the back end of the year kind of how our fee income trending? Is there additional risk because there's going to be more renegotiation on the broker dealer side? And maybe talk to card reward trajectory there?.

This is Mike. Let me start with card reward. As a reminder we had an adjustment to our card reward programs because of the change in systems that we used to calculate the future liability of those reward programs last year.

So what you're saying from year-over-year perspective, the current period is a more accurate, if you will, reflection of the ongoing run rate in that business. So it's not a reduction year-over-year. It's more of an adjustment..

And the repricing item is actually one product, one client, no one else, so there's nothing else to happen in the repricing piece of that. And on the kind of the other general trends around -- so the loss of account in fund services, again that was the last of its kind. They had more business with another provider than they did with us.

We were likely to lose that anyway. So that business, again as we talked earlier, year to-date sales were more, up more this year than they were last year. So, managed income trends, we have little bit of a noise in the second quarter, but we feel definitely very good about the trends and the direction of all of those businesses.

Another thing I would note, I think its important directionally is bonds trading, which is a business that has been strong for us historically, is off, right year to-date and that's because of market dynamics.

When infrastructure spending and the bond market stabilizes we stays poised with latent earning power and that particular space to be leader in sort of infrastructure spending, underwriting, sales, escrow work and so that's kind of a latent earnings power we have in the back half of the year. And we – I can't tell you when that's going to happen.

But I think everyone believes spending going to have to pickup again, projects going to need to get done at some point. So, I point you that also..

And I would just add one comment of bond trading, Mariner is 100% right, you guys understand the industry headwinds that exist there. We have been investing over the last nine to 12 months in our ability to underwrite in this space as well both from a public standpoint and a corporate standpoint.

So this is just what we sell product wise, but also our ability to be in front end and generate new business and that's another driver of growth that we have historically not really had..

With offices now in Dallas and New York and so we're poised for that activity handsomely..

Okay. Thank you. And if I could just squeeze one more in there, just maybe looking at the HAS space, really impressive growth on a year-over-year basis.

I'm just wondering how much of that is coming from increased existing balances of customers more greatly utilize the product versus bringing on new relationships?.

Yes. Clearly the driver that is flatter. It is -- we have mostly a wholesale model, about three quarters of its wholesale. So when our partners sign up new employers or large insurance companies we're the recipient on the back end of those deposits. So that's the biggest driver..

Okay, great. Thank you..

Our next question comes from Matt Olney of Stephens Inc. Please go ahead..

Hey, Matt..

Hey, great. Thanks. Good morning guys.

I hopped on a few minutes late so I apologize if you cover this, but on the operating expenses what's the outlook for that in the back half of the year?.

Without giving any specific guidance Matt, one of the comments that I made is, it's kind of lower right now because of performance-based incentives. So as you know as we've talked about the large preponderance of our competition is based on variable, right? So they have tightened revenues.

So to the earlier question if bond trading income is down the commission related to that are down too. So there's some variability in our expense trajectory and forecast. So obviously we're focused diligently on operating leverage, positive operating leverage is big. So it depends on what happens on the revenue side..

But independent to that, we tell them pretty steady and don't expect anything to be unusual in our expense management..

Correct..

You've seen already..

Okay. Good. And then I appreciate some of the discussion on the loan growth. It sounds like the pipelines remains great. Hopefully that the paydown and payoff flow in the third quarter, I assume most that's around commercial real estate as far as kind of the optimism.

From that perspective what do you seeing on the C&I side right now?.

We see without giving specifics, we've seen growth across all of the categories, CRE is certainly leading the path just because the deal size, size – deal by deal there are just larger deals, but we are – we have an C&I pipeline without committing those exact dollars to you, it look goods as does out – as do the other categories..

I'll just add, I think in the second quarter we probably seen a loan committee, more C&I deals than in prior quarter. So it seems like our team is uncovering those opportunities and our message and how we go to market resonate, so that's a good sign..

We'd say that most of our loan growth on the C&I side is not related to economic activity.

However, just market share gains and reps and transaction-based activity, there'll still be a lot of M&A activity in the C&I space, so benefit from those transaction is taking place things like that, but economic activity is really -- has not really been driving that for some time..

Okay. And then on the excess capital discussion Mariner you talked about M&A a few minutes ago.

Could you try to help us out and talk about your preference between bank M&A and fee income M&A and given the industry pricing dynamics where do you see more opportunity for UMBF on the M&A front?.

Well, I think – so these will be similar comments I've made in the past. The bank deals can be accretive quicker. We have lot of history and comfort in doing them. We can see the impact faster. There's opportunity obviously for building synergies et cetera. So it remains the priority to do bank deal.

We also think that it is important in the environment we are in, to spread our costs over a big organization. So we're just – we remain putting that as a priority over the others. However we continue to look across the broad because you just happen to know what is going to come across and how time is going to work and things like that.

So we don't want to lose good opportunities whether it's in fund services or whether it's a healthcare-oriented opportunity or further consolidation in our institutional banking businesses or whatever might be. So, we're active across all of it. It just banking does remain a priority and you mentioned pricing and pricing is what it is.

So it does gives you pause and we won't do deals that don't make sense. But we just remain active looking as we have been..

Okay. Very good. Thank you, guys..

Thanks Matt..

Our next question comes from Robert Beauregard of Global Alpha Capital Management. Please go ahead..

Yes. Good morning.

Can you hear me well?.

Yes. Go ahead Robert..

Good morning, guys. My first question is related to the healthcare savings account business and the disconnect I see between certainly banking analyst and either healthcare or technology analyst that covers some of your publicly traded peers.

And I wanted to know if you have any strategy to surface that value or certainly make banking analyst more aware of the valuation of that businesses?.

Let me take a stab at that, Rob, it's Mariner, I think you might be – I think what you're asking and I'll pause and see if I got you right.

But are you kind of getting at similar conversations that have taken place in the past around some of the parts and whether or not our HSA business has been valued high enough within our overall valuation, is that's the question?.

That is a question, I look at health equity which is on slide 30 is just about twice the size but has a 5 billion U.S. market cap right now and is up 80% year to-date, but doesn't get covered by the same group of analysts that cover your stock.

So, I'm sort of puzzled by the lack of enthusiasm of some of the analyst covering the UMB with regards to the value of that business that has been growing nicely?.

Well, I understand your point. We can do – we do our best to educate the marketplace, maybe you can go on road for us and educate them about it. But it's an important part of our business. I think one of the things that get disconnected as people talk about it is the value of deposits and how it's buried with our organization, we don't really see.

It needs to all to stay together really to have the kind of that it has to us. So anywhere we agree with you, it is a stable business and I don't know really what else tell you, I understand what your question is but that's up for the….

I understand the value of the deposits for the bank, but do you -- like is there a way to do with spin-off in two different entities, they could still be related when it comes to where the deposits and how the deposits get used, but I'm pretty sure it was a separate entity with its own listing that you would surface the value.

We've seen that many times with other companies..

Yes. Maybe we can take that offline with you sometime explain a little bit more to you, but what I will tell you just high-level its more complex than that. Its hard to pull it apart and disconnect it..

Okay. The other question is with sort of in line with the previous question on efficiency ratio you have. We take year on year certainly nice improvement.

Do you have a number in mind if we were to look in 12 months time what this efficiency ratio could be?.

Sorry, we don't really give guidance there. We continue to believe that we can improve upon it, but we don't really give any guidance there, sorry..

And third question maybe my last one is with the home equity line, just do you think the decrease utilization is with rates or is there is something else that's driving people not to use that equity line of credit?.

That's 100% credit related..

Yes. It's aligned with the tax changes to..

Okay.

So you still expect that to continue to decrease going forward or you see it pretty stable now?.

I would say in the second market, it should be challenged. But in the first we do a lot of first in private wealth. And I think that will still grow..

Okay. Thanks for my question guys..

Thanks..

This concludes our question and answer session. I would like to turn the conference back over to Kay Gregory for any closing remarks..

Thank you for joining us today. This call can be access via replay at our website and will run through August 10. As always, you can contact UMB Investor Relations at 816-860-7106 with any follow-up questions. Again we appreciate your interest and time. Thank you and have a great day..

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