UMB Financial Corporation (UMBF) Q1 2012 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the UMB Financial First Quarter 2012 Financial Results Conference Call. During today’s presentation all parties will be in a listen-only mode. Following the presentation the conference will be open for questions. [Operator Instructions] This conference is also being recorded today Wednesday, April 25 of 2012. I would now like to turn the conference over to our host for today Ms. Kay McMillan, please go ahead ma’am.

Good morning everyone and thank you for joining us for our conference call regarding our first quarter 2012 financial results. Before we begin, let me remind you that our comments in this conference call contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities 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 management of UMB believes our assumptions are reasonable, UMB cautions that material changes in interest rates, the equity markets, general economic conditions as they relate to the company’s loan and fee-based business 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 Securities and Exchange Commission 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 may become untrue because of new information, future events or otherwise. By now we hope most of you on the call who are listening via webcast have had a chance to review our earnings release which was issued yesterday, if not you will 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, Mike will review the details of our financials then Peter will review key fee income business drivers and following that will be happy to answer your questions. Now, I’ll turn the call over to Mariner Kemper.

Thank you, Kay. Welcome everyone and thank you for joining us today. I am very pleased to talk to you about our first quarter results. Not only did we see an improvement over the same period last year, but once again achieved record net income, which increased by 50.2% to $46.4 million, this equates to $1.15 per diluted share earned on record total quarterly revenue of $211.4 million. Non-interest income increased 22.8% to $132.3 million for the quarter and the primary driver behind this increase in total revenue and net income compared to the same period a year ago. Fortunately, we do not have to rely entirely on spread income to grow the company and are pleased that non-interest income comprised 62.6% of total revenue in the first quarter. As this is our first call to discuss 2012 results, I’d like to share our priorities for the year. These will sound familiar as we continue to execute on our strategies by sticking to our proven business model and doing what we believe is right to grow our business. First, we will focus on quality through a strong balance sheet, solid credit metrics, low cost funding and effective risk management. Second, we’ll emphasize diversity in both revenue and earnings. Third, we are committed to growth through accelerated fee business loans, improved sales leverage and maximized efficiency. And fourth, we continue to look for the most effective way to deploy capital. Before I go into further detail on the financial results, I’d like to announce a realignment of our segments to better reflect how we run our business. We will provide detail on 4 distinct business segments. Institutional investment management which is our Scout Investment business, asset servicing which is our UMB fund services business, payment solutions which represents our card business, institutional cash management and healthcare services, and our bank which is largely comprised of commercial banking, consumer banking and asset management. These reporting changes more visibly, give more visibility into the key areas of our company and will help you better understand the performance of our various lines of business. Later on the call, Mike will provide additional detail on our financial results both at the holding company level and by segment. And Peter will discuss with you the drivers affecting these businesses. First, I’d like to share a few highlights from the quarter. In a time when loan growth continues to be difficult to come by for the industry, I’m proud to report that once again ended the period with increase loan balances. Net loans at the end of March 31 were 10.4% higher than the prior year, compared to the industry the more than 1500 regulated depositories that had announced first quarter results as of April 23 reported a median decrease in loan balances of 0.38%. We’ve now posted loan growth for eight consecutive quarters. Within commercial lending, C&I loan balances were $2.5 billion, up 21% from just over $2 billion a year ago, while commercial loan commitments had increased 17.6% as of March 31 compared to the same period point in time a year ago. Utilization rates fell to 28.9% from 30.2%. However, on a linked-quarter basis our utilization rates improved by 2.8% from 26% at the end of 2011. Commercial real estate balances were $1.4 billion, a 5.3% increase from the first quarter of 2011. We continue to see competitive pricing pressure and some loosening of terms and conditions within our market, but one of our strengths is our low cost funding which allows us to - the ability to effectively compete for the very best loans. For credit quality, UMB remains strong and continues to differentiate us from our peers. Overall non-performing loans as a percent of total loans were 0.50% and net charge-offs year-to-date were 0.24%. Turning to the income statement for a moment, we saw improvement in our operating leverage in the first quarter with extensive growing at 4.7%, while revenue in non-interest income grew 13.5% and 22.8%, respectively. We continually look for ways to maximize efficiencies, but because we view ourselves as a growth company we also seek opportunities to make investments in people and technology. We believe investments such as these and progress made on our other growth strategies will positively impact our results over the long run. For the first quarter, our efficiency ratio was 69.1% improved from 71.1% in the same period of last year. On a linked-quarter basis, we saw an improvement of 8.9 points from 78% in the fourth quarter of 2011. With that I’ll turn the call over to Mike Hagedorn, who will discuss our financial results in further detail.

Thanks Mariner and welcome everyone. First, I will review our holding company financials and then provide a more detailed summary of our new segment reporting. Picking up where Mariner left off in his discussion of the balance sheet our average deposits increased by 8.4% to $10.3 billion. As you know we typically experience a seasonal influx of public funds in the fourth quarter. These balances peak in mid-January and then gradually decrease through March. This year the first quarter averages were more $400 million higher than in the fourth quarter of 2011. The rate environment and less attractive yield opportunities have resulted in additional funds remaining in fed funds and repo accounts. Until rates improve we expect to see this trend continue. Average non-interest bearing deposits comprised nearly 39% of our total deposits, which puts us in the top 3% of the industry according to SNL Financial. We believe that our high percentage of free funds has a competitive advantage and is reflected in our low overall cost of funds, which was 0.29% for the first quarter versus 0.37% a year ago. This advantage will be even more important when rates begin to rise. Allowance for loan losses is $73.5 million and allowance as a percent of total loans is now 1.43% compared to 1.56% a year ago. Our allowance for loan loss coverage is nearly 3x the amount of non-performing loans, while the median industry allowance reported for the fourth quarter would cover just over half of non-performing loans. The average balance in our investment portfolio increased 8.7% to $6.2 billion and activity during the first quarter included the roll-off of $439 million in core portfolio securities at an average yield of 2.28%. In turn, we purchased $1.3 billion of securities at an average yield of 1.77%. These purchases lengthen the portfolio duration slightly to 32.45 months. The average life is now 36.06 months, up from 32.82 months in the fourth quarter of 2011. Over the next 3 months $390 million of core investments with an average yield of 2.45% will mature. Over the next 12 months $1.4 billion of core investments with an average yield of 2.37% will mature. Additionally, 73% of our total loan portfolio is expected to re-price or mature in the next 12 months. The components of our capital continue to shift slightly with goodwill and intangibles resulting from our acquisitions increasing relative to Tier 1 capital. We remained well capitalized with Tier 1 leverage and total risk-based capital ratios of 11.34%, 6.66% and 12.32%, respectively. Yesterday our Board declared $0.205 quarterly cash dividend payable on July 2, 2012. The board of directors also authorized the repurchase of up to $2 million shares of the company’s common stock during the next 12 months. Average shareholder equity was $1.2 billion, a 12.8% increase. Since the beginning of 2008 average equity has increased by 38.8%. We have grown equity without any diluted capital actions and we’ve been able to deploy it effectively to make acquisitions. Further total shareholder return from April 2006 to April 2012 was 45%. For the same period returns from the S&P 500 and SNL U.S. Bank Index were 18.7% and negative 49.5%, respectively. Reviewing other financial highlights, return on average assets was 1.4% for the quarter up from 0.99% in first quarter of 2011. Return on average equity for the first quarter was 15.4%, an increase from 11.63% a year ago. Turning to the income statement for the first quarter 2012, net interest income was virtually unchanged, up 0.8% to $79.1 million. Although average earning assets increased by 5.8%, the changing mix resulted in a lower overall yield of 2.94% versus 3.16% for the first quarter 2011. Average net interest margin for the quarter decreased 15 basis points to 2.75%. Provision expense decreased by $2.6 million or 36.6% compared to the first quarter 2011. As Mariner mentioned non-interest income increased 22.8% to $132.3 million comparing favorably to $107.8 million for the first quarter 2011. The increase in non-interest income was driven largely by first a 5.8% increase in trust and securities processing revenue, which I will describe in more detail in the segment discussion; second, by $16.5 million gain on the sale of investment securities; and third, by an $8.2 million adjustment in contingent consideration liabilities on acquisitions. As we’ve discussed previously we harvest gains when interest rates in the economy make this a prudent decision. This is part of our overall intentional approach to managing the investment portfolio. The quality of our portfolio allows us to periodically take gains to help offset lower margin associated with holding shorter duration securities. In effect, we trade one type of risk for another by supplementing what we lose in net interest margin with gains. Additionally the cash flows resolving from the sales have been reinvested at higher rates. As we discussed last quarter, we have earn out agreements on many of our larger acquisitions and accounting standards require that we review and potentially adjust our liabilities related to these earn outs. There are 3 variables that affect these adjustments. One, the recalculation of liabilities using actual results instead of estimates; two, expected future performance; and three, the discount rate used in the analysis. The adjustment mentioned above was due to the adoption of ASU 2011-04 fair value measurements. Earn out liabilities are analyzed on a quarterly basis and you should expect us to have future adjustments either up or down throughout the earn out period. Now I’ll review the results of our 4 segments. Looking first at institutional investment management, net income before tax was $9.1 million, an increase of 97.3% when compared to $4.6 million in the first quarter of 2011. Total non-interest income in this segment increased by 27.5% to $26.2 million and non-interest expense increased by 7.1% to $17 million compared to the first quarter a year ago. The pre-tax profit margin for institutional investment management was 35% for the first quarter. Asset servicing reported net income before tax for the quarter of $3.9 million compared to $2.5 million in the first quarter last year, a 55.6% increase. Total non-interest income for the segment increased by 16.4% to $20.2 million and non-interest expense increased by 8.6% to $16.7 million compared to the first quarter a year ago. The pre-tax profit margin for asset servicing was 19% for the first quarter. Payment Solutions had net income before tax of $8.9 million for the quarter compared to $7.1 million a year ago, an increase of 26.4%. Total non-interest income for the segment increased by 20% to $15.6 million and non-interest expense increased by 11.2% to $14.8 million compared to a year ago. The pretax profit margin for payment solutions was 34% for the first quarter. The bank posted net income before tax of $43 million for the quarter compared to $29.4 million a year ago, an increase of 46.4%. Total non-interest income for the segment increased by 23.7% to $70.3 million and net interest income was up less than 1% to $68.1 million. As a reminder, this $16.5 million of security gains impact non-interest income in this segment. Non-interest expense for the bank increased by 2.7% to $93.4 million compared to a year ago. The pretax profit margin for the bank was 31% for the quarter. 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 you’ve seen in our press release, our results continue to demonstrate the long-term value of being a growth-oriented organization with a diverse business mix. 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 segments. I’ll begin with Institutional Investment Management, which is comprised the Scout investments, equity and fixed income mutual funds, and separately managed investment accounts. Revenue in this segment is driven by mutual fund and separately managed account net flows, equity and fixed income market performance and previously committed new business conversions. All 3 areas were strong this quarter and contributed to the 35% pretax profit margin Mike discussed earlier. Scout ended the quarter with $22.7 billion in assets under management. This represents an increase of nearly 14% over the first quarter of 2011. Assets in Scout mutual funds closed the quarter at $10.2 billion. Scout’s fixed income separately managed accounts ended the quarter with $11.8 billion in assets under management and Scout equity separately managed accounts totaled $662 million at quarter’s end. We achieved record net flows for the quarter, with $340.1 million in the Scout funds and $1.2 billion in our separately managed accounts for total net inflows of $1.5 billion. This compares to inflows of $576 million in the first quarter of last year. The midcap fund and our low duration fixed income strategy were the primary drivers of the strong net flows. Equity market performance was strong during the quarter providing a $1.4 billion boost to Scout’s assets under management. Investment performance continues to be strong across our primary strategies. And in March, 2 of our funds received Lipper Awards. Scout strong investment performance and diversified distribution efforts have been keys in bringing in new business. During the quarter, Scout won its first mandate with an international client to manage a sub-advised midcap strategy for a large European bank. Our Asset Servicing segment represented by UMB Fund Services that is the primary drivers of revenue in this segment, our new business, transaction volumes and our clients’ funds and asset valuations. Our fees are based on a variety of factors depending on individual client agreements. These agreements can include basis points on assets administered, transaction fees, core account fees or a combination of these pricing conventions. UMB Fund Services offers a broad array of services and turn key products that position it well versus its competitors. Having a complete suite of mutual fund services, hedge fund services, and managed account services it’s unusual for a provider of our size. Our turn key products give us the ability to provide any investment manager with an easy way to launch and grow their investment products. One example is the Investment Managers Series Trust, which just surpassed the $2 billion mark in net assets in March. The trust, which was launched in 2007, has experienced a rapid acceleration in growth recently due to a combination of asset growth and the addition of new funds to that trust. Now it took more than 3 years to reach the $1 billion mark in mid-2011, it took only about 7 months to reach the $2 billion asset mark. Asset servicing ended the quarter with $227 billion in assets under administration, an increase of 11.7% over the first quarter of 2011. In our Payment Solutions segment, which includes cards, healthcare and institutional cash management, there are a number of important business drivers including overall credit and debit card purchase volume, card interchange, HSA deposits, FSA and HSA accounts, and ACH wire and check transactions. We grew card purchase volume into 4 major categories, commercial credit, consumer credit, consumer debit, and healthcare debit. For the first quarter purchase volume across our entire suite of card products increased 16.8% to $1.5 billion when compared to the same period last year. Healthcare debit spending comprised almost 45% of this total volume and increased to 33.2% over the first quarter of 2011. Bank card fees were 2% higher than the same quarter last year. As we disclosed previously, we expect the full year impact of the Durbin amendment to be approximately $9.1 million. However, increased volumes are helping to offset the reduction in debit interchange rates. For the quarter, interchange revenue $15.3 million, an increase of 3.8% from a year ago. Debit card interchange comprised just over 30% of that total and interchange from our healthcare cards was about half of our debit card interchange. At the end of the first quarter deposits in our healthcare services custody accounts stood at $385.6 million, an increase of 37.1% compared to the first quarter of 2011. Flexible spending arrangements and health savings accounts totaled 2.3 million representing a 29.7% increase from one year ago. We had another strong quarter in this business and it continues to be reliable, strategic and low cost source of deposit and a growing source of debit card interchange for UMB. As Mariner mentioned earlier, UMB is known for strong credit quality and the quality of our card portfolio is no exception. The card credit quality remains superior to industry averages and has improved over the past several quarters with delinquency rates dropping to 1.45% from 2% a year ago. Total credit card charge-offs were 2.4% of card balances for the first quarter versus 3% in the first quarter of 2011. According to fixed rating services, fourth quarter 2011 industry credit card charge-offs averaged 6.1% or about 2.5x, our credit card charge-off rate. The final and largest segment I will cover today is our bank represented by our commercial banking, consumer banking and asset management businesses. Mariner covered the highlights of our commercial lending business and the strong organic loan growth there. Our commercial lenders remain outwardly focused continuing to generate new business primarily through increased market share. This is evidenced by the 11% increase in the average loan portfolio per officer this quarter as compared to first quarter of 2011. In consumer banking, we reported an increase of 12.5% in home equity line of credit balances, which now stand at $539.4 million. In the past 4 years, outstanding balances in HELOC have increased by over 100%. Portfolio utilization remains at approximately 49% borrowed. The HELOC delinquency rate was 0.28% in the first quarter compared to an industry average of 2.8% at year end. Small business banking, another part of our consumer business continues to show strong performance. Deposits in this area increased by 21.3% to $466.8 million and loan balances increased by 27.3% to $120.1 million when compared to the first quarter of last year. Our bank asset management business consists of individual wealth management, private banking, corporate trust and banking services. This includes our bond trading, investment banking and correspondent banking businesses. Assets under management for individuals and institutions stood at $8.6 billion at March 31, an increase of 4.2% or $349 million from a year ago. Comprising the $8.6 billion is $5.6 billion in assets under management within our investment and wealth management group and $3 billion in assets managed by private capital. Our private banking and wealth advisor teams continue to deepen relationships with our existing client base. Private banking deposits at quarter end increased 61% to $877 million and loans increased to 33% to $187 million when compared to the first quarter of 2011. Private banking is a strong contributor to growth in our HELOC and our mortgage product sales. With that I like to hand the call back over to Mariner, who will close our prepared remarks and open the line for your questions. Mariner?

Thank you, Peter. In closing we are pleased to report a great quarter for UMB. We believe there is a strong correlation between our operating results and highly engaged associates, who deliver the unparalleled customer experience every day. In the past 5 years, net income has grown from $74.2 million to $106.5 million and associate engagement has grown from 73% to 84%, while customer satisfaction is at its highest level at 87%. Both our associate engagement and customer satisfaction scores are at world-class levels and I couldn’t be more proud of those results. We appreciate your interest in us and for attending today’s call. With that I’ll turn it back over to the operator who will open up the line for questions. Thank you.

For those of you listening we have some technical difficulties, if you can still hear us wait a moment please.

Pardon me, ladies and gentlemen. [Operator Instructions] And our first question comes from the line from Chris McGratty from KBW. Please go ahead sir.

Just the question on the fee income, obviously the level and the mixes is quite above peers. I’m just wondering Mariner, what’s the - how much of it is directly tied to market performance and is the revenue priced in the current quarter is there any of the lag basis, obviously market has been strong this year.

I’m going to ask Peter to take that, that’s a business, that’s mostly Scout Investments so I would let him answer that portion.

The first topic if you look at our fee income overall it is a broad mix of things that not all the indexed to equity markets, our payment solutions business of course is indexed to transaction volumes and other types of things. Certainly our fund services business and the Scout Investments business is along with some part of the bank platforms business is indeed indexed to offer the end fixed income markets. The markets were up strongly during the quarter, the S&P was up over 10% and as an example in the case of Scout our assets were up about $3 billion for the quarter and it was a $1.5 billion attributed to flows and a $1.5 billion attributed to new business, I’m sorry to market appreciation. And so it’s hard to say but because we have fixed income in equity in our portfolios we can’t just look at the S&P and say it’s up 10% so we’re going to be up 10%, you’ve got also look at the floor market since we have a lot of floor market exposure as well. But there is a way to look at it I suppose but it’s one that you’re going to be imprecise because of the mix of our overall assets.

Correlated but not tightly correlated.

But in the case of Scout, what I told you was exactly right, it was about a $1.5 billion in flows and a $1.5 billion due to market appreciation so.

Fair enough. The trade and investment banking line was obviously the very strong quarter, can you just elaborate what’s, what type of revenues are in that exactly and kind of the outlook?

Yes you’re talking about the trading income?

Yes it was 9, 7 in the corner.

Yes, it was - the biggest part that goes through there in total is our investment banking group, our bond sales group that’s the line item on the income statement that they use. I think from memory that’s about $6 million I think, 2/3, Yes it’s about 2/3, that’s what’s driving it.

Great. And then just last on the tax rate, what should we be using going forward?

Yes the tax rate on an effective basis the tax rate probably seems lower than what you’re seeing with competitors but the rationale for that is that tax-exempt municipal security income is making up a much larger portion of our revenue and hence our bottom line. And so we expect that to continue, so I think the tax rate you’re seeing in the first quarter will be close to what I go forward rate will be for a while.

And our next question comes from the line of Matt Olney with Stephens Incorporated.

So Mike, on the institutional investment management business I believe you said in the prepared remarks that the pretax profit margin was about 35% in the first quarter. First off, did I hear that right and second of all has there been any change in that over the last few quarters and what are your thoughts on that margin going forward?

That is the right - you heard that right, it is and that’s a scalable business and those are mostly competitive margins and it’s expected to hold.

Yes and as we go forward we continue to make investments in the business.

Yes.

Obviously, we’ve got some new products that we will be launching later this year. We continue to build out our distribution system by hiring and adding people as we need to. So I think those margins are probably in the ballpark, but it’s - we are going to continue invest in the business.

And as Peter said, you have the assets and administrations are under management essentially being split into 2 buckets, market actions roughly half and half is net flows. Who knows what happens with market action, but with the net flows our expectation is that those would stick and so that’s going to pay us additional revenue in the forward or the future quarters.

Okay, all right that’s helpful. And then switching gears, you mentioned the reauthorization of this topic, purchase plan, how should we think about this? Is this is a message that the acquisition efforts could slow somewhat or it’s just a message to investors that you think the stock price is a good value here or how should we be reading this?

It’s a very neutral message. We had an authorization in place as long as I’ve been here. I guess it’s ultimately just to give us the flexibility to do so if we deem it appropriate, so I wouldn’t read much into it at all.

Okay. And then the increase utilization rates in the first quarter, great to see that. Can you give us any more color as to what type of borrower is utilizing these lines and maybe what type of borrower is still on the sidelines that doesn’t want to utilize it, does at the line?

Well, I would say that what you’re seeing in our - well this is Mariner, what you’re seeing in our loan growth is still market share gains largely and the evidence of that would really be our utilization rates, while they are up on a linked-quarter basis, they are still down, still depressed from pre-crisis periods if you will. And so I would say that while we are seeing some improvement in sort of the organic side of our business, a good majority of the growth you’re seeing is in commercial and commercial real estate for sure and still a lot of that’s market share gain at the end of March utilization rates were 28.9%. And so that’s pretty low for us, but we’re still gaining - we are still seeing our loan growth from new business.

[Operator Instructions] And our next question comes from the line of Peyton Green with Sterne, Agee.

Just to make sure I heard this right, you mentioned that the institutional asset management business posted a pretax profit of $9.1 million, which was up 97% year-over-year on referring growth or non-interest income growth of 27.5%.

Correct.

Okay, so there’s the operating leverage answer, okay. And then on these segments is there any holding company offset that we should know about that gets us down to the consolidated number?

Yes, so you will notice if you compare it to our prior segment disclosures we had a treasury and other category.

Okay.

And we don’t have that anymore, so when you look at these 4 segments we are literally pushing down every cost, every investment security, manager’s margin mismatch that we have, everything is pushed down in to those 4 segments.

Okay, so everything is transferred across the lines and so what you do, what you get, okay.

Yes.

Great and then I think Peter you mentioned that the institutional asset management business want to mid-cap international product mandate.

It was a mid-cap mandate, it’s a domestic mid-cap mandate from an international bank, a European bank.

Okay and I mean how big would you expect that to be?

I really don’t want to disclose that, it has the potential to be sizeable I’ll just leave it at that.

Okay. And when was that announced?

That was funded in the last 45 days.

There were press releases about it, I mean it was…

Yes, not the size but it was funded in the last 45 days.

Yes.

Okay so it’s not necessarily in the March AUM I think as that would be going forward is that…

It’ll be in the, it’s in the Q1 ending figures, yes, that’s correct. Now it’s not a product that, that’s going to sit idle it should continue to grow as it flows into the product overtime.

Okay, so there was some benefit in the first quarter, but it should continue to increase. And then, maybe if looking from kind of a 10,000 or 15,000 foot view I mean if you could compare or contrast the sales build out in the institutional asset management business or even the asset servicing or payment solutions businesses compared to where they were maybe a year or 18 months ago and what kind of that would lead you to believe about the outlook?

You mean in terms of what we’ve - how we built our sales force or just the environment in general?

How you built yours and kind of what you’re seeing versus maybe contempt, what you were contemplating 18 months ago when you really made the investment like or cost most probably in businesses?

All right. I would just say nothing has really changed, we’ve maintained a very positive outlook on all those businesses and are investing in a like fashion.

Yes I mean if you think about Scout we’ve made investments in the intermediary channel and the sub advisory market and the insurance market some of those are beginning to pay off for us, some of those would be a little further down the road and the payment solutions business. We’ve haven’t really added any new healthcare sales individuals, we feel good about the coverage we have nationally in that business, institutional cash management, we’ve again feel good about the sales team we have on the ground there maybe overtime might add a little bit more strength there, but overall we feel good about that. So this has been an ongoing series of investments we’ve been making and we’ll continue to make to ensure that we can cover the full, the full country in the case of our national businesses, which a lot of those payment solution, investment management businesses really are, they are national - nationally scope…

And they’re all, all very scalable on the fixed basis expenses, so we should be able to get leverage with the investments we’ve made that has been made.

Okay, but I guess what I mean it seemed to me like 18 months, 24 months, because you were really making sure that you were getting all the businesses positioned, and now it seem like you are having more success on the sales front and that it would seem like the outlook is brighter for new sales so to speak that would have been even 12 or 18 months ago.

Yes I mean mostly investments have been made.

Okay.

I think that’s right and pipelines will vary from time to time, but there is some strength in a lot of these pipelines right now.

[Operator Instructions] On part of the management there are no additional questions in the queue, please continue.

Thank you very much for your interest in UMB this call can be accessed via replay at our website beginning in about 2 hours and it will run through May 9. And as always you can contact UMB Investor Relations with any follow-up questions by calling (816) 860-7106. Again we appreciate your interest and time. Thank you.

Thank you ladies and gentlemen this does conclude the UMB Financial first quarter 2012 financial results conference call. If you would like to listen to replay of today’s call you may dial (303) 590-3030 or the toll free number of 1(800) 406-7325 and enter the access code of 4529910. Thank you again for your participation and you may now disconnect.