A company that is usually pretty quiet, UMB Financial Corp., has been quite busy of late.
Since Oct. 28 the $7 billion-asset UMB has announced the opening of a bank in Arizona, the activation of dozens of automated teller machines in Walgreens stores in Oklahoma and Colorado, and the hiring of two executives to run newly created private-banking and small-business units.
J. Mariner Kemper, UMB's chairman and chief executive, said the moves are all part of the Kansas City, Mo.-based company's strategy to position itself for "better organic growth." UMB is not much of an acquirer - it has bought two small banks in the last 10 years - and Mr. Kemper said its aim is to win new customers by building on what it has.
"Small-business banking is a very profitable channel in our industry, so we built it. We did not have private banking, so we went out and built it," he said in an interview Friday.
It is too soon to tell if the moves will pay off, but so far investors seem to like what they are seeing; UMB's stock is up more than 17% since the end of the second quarter and was trading at close to its 52-week high late Monday.
Troy L. Ward, an analyst for A.G. Edwards & Sons Inc. in St. Louis, said UMB has a reputation as being conservative - its loan-to-deposit ratio is among the lowest in the country for banking companies its size. That is not likely to change as long as UMB is run by the Kemper family, but its recent actions signal a "cultural shift for UMB," Mr. Ward said. "They're more performance- and shareholder-driven than they were five years ago."
Mr. Kemper, 33, took over UMB in May 2004, succeeding R. Crosby Kemper 3d, his older brother, who had run the company since 2000. He is the latest in a line of Kempers to run what is now UMB since W.T. Kemper - Mariner's great-grandfather - bought a predecessor bank during World War I.
R. Crosby Kemper Sr. became president in 1919. R. Crosby Kemper Jr. was the company's president from 1959 to 2000, when he became senior chairman. He retired in October 2004, after 54 years with UMB.
UMB operates five separately chartered banks in seven states - Missouri, Oklahoma, Nebraska, Illinois, Colorado, Kansas, and, most recently, Arizona.
Under Mariner Kemper, UMB has looked for ways to become leaner while at the same time repositioning its retail network and offering new products, and bringing in new blood to market them.
On the retail side, the company said earlier this year that it was closing 10 branches and that 102 employees had taken early retirement.
However, it recently bought a branch in Kansas City from the $768 million-asset Pulaski Financial Corp. of St. Louis to expand its coverage of the city. It said last week that it had activated more than 100 new ATMs in Oklahoma and Colorado, and that it had opened a separately chartered bank in Phoenix, where it had operated a loan production office since April 2004.
Analysts say the recent changes should help UMB's performance ratios. Though its earnings were up nearly 33% through the first nine months of 2005, to $41.4 million, it returns on equity and assets - 6.68% and 0.79%, respectively - are still well below industry averages.
Analysts and company executives said that they expect the biggest boost to come from its emphasis on small-business and private banking.
Peter deSilva, UMB Financial's president and chief operating officer and the CEO of UMB Bank, said that though the company makes small-business loans, it has never had a dedicated small-business lending unit. Ditto for private banking, which was part of the trust department.
"We think that with the right products and services packaged in the right way we can get more business," said Mr. deSilva, who is the first non-Kemper to run UMB Bank.
Katherine A. Hunter is the company's new senior vice president of small-business banking and Dana Abraham as its senior vice president of private banking.
Ms. Hunter came from UMB's chief rival, the $14 billion-asset Commerce Bancshares Inc. of Kansas City, where she was a vice president in the corporate banking division. Ms. Abraham was a senior vice president of premier banking and investments at Bank of America.
Ms. Hunter, who started a month ago but whose appointment was not announced until last week, said UMB would improve its service for small business by using credit scoring to shorten the loan decision process, doing more Small Business Administration loans, and packaging accounts and services in ways that are friendly to small businesses.
"They're looking for commercial products with a business purpose, but they are looking for something that is easy to understand, very straightforward, very quick," she said.
For example, UMB will now offer a package that includes an operating account and a payroll account, online banking, free bill pay, a check card, and a credit card, all tied to having a minimum balance. If the accounts fall under the minimum balance, then there is a fee. Ms. Hunter said the structure is simple for businesses to understand, but at the same time meets their needs.
In addition, Ms. Hunter plans to hire staff dedicated to small-business customers and said she would work with market presidents and branch managers to find customers through their contacts.
On the private-banking side, Mr. deSilva said the goal is to make sure wealthy clients, such as top executives of UMB's large commercial borrowers, have a "concierge" who can explain all of UMB's services.
"They'll have to reach into the organization and pull some subject-matter experts along, but they are the single point of contact," Mr. deSilva said of the private bankers.
Mr. deSilva said UMB already has an active private-banking practice in Kansas City but wants to expand private banking to all its markets. Ms. Abraham, who started Nov. 1, will be in charge of this expansion.
Peyton Green, an analyst with First Horizon National Corp.'s FTN Midwest Research Securities Corp. in Cleveland, said that Mariner Kemper is clearly putting his stamp on the company. When he took over as chairman and CEO of the holding company in May 2004 (he had been the chairman of UMB Bank Colorado), Mr. Kemper said that increasing commercial lending would be a top priority.
Mr. Green said that creating a stand-alone small-business unit "will help drive accountability. Middle-market lenders will be middle-market lenders, and they won't get bogged down by business that would be better handled by someone focusing on small business."
