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UMB Financial CEO Mariner Kemper on the bank’s outlook and the impact of low interest rates and regulations on the financial sector and consumers.
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Talking about financials -- we've already been talk about Morgan Stanley JPMorgan Goldman's about sex but which ones.
Make the best investments for you -- see how the major players are doing so far this year while the financial sector -- that holds mostly the large financials.
It's up 8% so far this year that's better than the S&P five -- five and a half percent gain but not great especially considering.
The first quarter was very very strong for financials.
If you think smaller ago.
Look at the regional banking ETF it's up 10% so far this year.
Slightly better than the big guys now over the past 52 weeks -- financials ETF down nearly 10%.
While that regional bank index is up more than 6%.
Here's a look at some of the top performing regional names there so far this year Michigan based citizens republic up more than 440%.
California based CVB financial another strong performer up about 8% year to date.
And take a look at this one UMB financial is a regional bank -- shares already up 30%.
So far this year.
Do you guys know we're going with us well that's up.
She peered out of Fox Business explicit is UMB financial chairman and CEO mariner Kemper good to have you back on the programs -- ridiculous.
To what do you attribute the success of this stock this company.
During a fairy rough time globally.
Well earnings were up almost 50% in the first quarter.
And I'd say mostly -- attribute that to the fact we've been able to diversify away from just being dependent on net interest margin.
We've got several large businesses that are non banking we've got an institutional money management business we've got to fund servicing business we've got a health care business.
And these businesses allow us to diversify sixty more than 6% of our revenue comes from non interest income.
OK so your bank but there are other opportunities you were Smart enough to diversify for all of that.
Tell me about your loan business are you -- yeah loans were up ten point 4% in the first quarter.
The world was coming -- and asking for loans -- that was part of the issue and nobody had any money because that word that couldn't pay it back.
Well I think the actual demand is still tepid our loan growth has been from market share gains mainly I think the economy is still relatively soft.
If you look at our utilization rates on the commercial side in the first quarter there were -- 28 point 9%.
Which is down from pre crisis levels so cash levels are still building its consumer level and the commercial level.
And so we're really seeing this from markets -- We were just talking about the Fed and that Operation Twist which is -- different way of adding liquidity to the market but.
We have record low interest rates -- going on a couple of years now.
Most people thought that'll stimulate banks to borrow to lands that hasn't come to fruition -- low interest rates becoming a headwind vs a -- went.
I certainly believe they are -- I think we're punishing -- you know particular the retirement level individual in this country.
Who's really being forced look at alternatives forced into the equity markets when they should be living off the fixed income.
You know I that's I think it's it's a damaging the consumer the only benefit really is the low interest cost for the national debt.
And didn't certainly didn't encourage lending.
There's so much anger toward the larger banks and now of course JPMorgan had a loss which it can shoulder it can stomach certainly but -- Of course more regulation is on the way.
From a standpoint of a regional bank should we have never gotten rid of Glass-Steagall.
Which separated commercial banks from investment.
-- -- I think there's a strong arguments he made for that.
I think it's we're too far down the path the other way -- -- -- around the banks -- to go back on the out of the banks have gotten too big too intertwined.
They got bigger so I think this problem -- we're trying to solve actually no worse so JPMorgan now over a trillion dollars in assets.
I think this too tightly woven was really.
The need and and and what's going on Washington.
Taught another leading to claw that back but I certainly would say that there's an argument we made -- Glass-Steagall could be reverse.
Well we didn't get into any trouble for the several decades over which Glass-Steagall preside -- so I think that that's.
That there there's arguments he made but I do believe that it's really not about more regulation and -- we don't need more regulation when -- political will we need leadership.
You know we had 36 recession since the mid eighteen hundreds.
And they've been answered with reform and regulation every single time what happens ten years later.
The right back into another crisis -- really need leadership to stand in front of the bus of progress at the -- time.
Yesterday representative Eric Cantor the Republican from Virginia.
In an interview with Fox Business started to make noises where are on Charlie Gasparino said see what he said he's setting the stage to break up the big banks.
What do you think that comes to -- Well in.
I don't see I don't think it's likely cause I don't think it's likely.
You could make the argument that they are too big that that is too hard to manage.
There's too much going on how -- one person one management team manage all those things you make that argument I don't think we're gonna unwind that I think what we need to do is focus on.
Moving forward.
You know and and and coming out of this -- and stuff.
Looking for people to blame -- look in the cloth things back.
Well one things move forward that's your stock year to date up about 30% but over the past five years up 27%.
It's been a good bad and we -- -- the best of luck.
Well thank you very much it'd be -- -- again welcome -- -- -- there is UMB financial chairman.
