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UMB Financial in Kansas City, Mo., announced that its president has resigned. Peter deSilva also vacated his post at chief operating officer, the $18.6 billion-asset company said in a press release Monday.
November 2 -
UMB Financial in Kansas City, Mo., reported lower third-quarter profit, due to weaker revenue from its Scout Funds arm and merger costs.
October 28 -
UMB Financial in Kansas City, Mo., saw second-quarter profit decline as lower revenue from its Scout Investments subsidiary reduced fee income.
July 29
Sometimes yesterday's great idea becomes today's goat.
UMB Financial in Kansas City, Mo., rode fee-income gains from the expansion of its Scout Investments asset management unit to some strong quarters, and President Peter deSilva received many of the attaboys.
But the unit's production has waned lately in the current economic environment, exposing overspending at the overall company — and that shift may have cost deSilva, 53, his job.
The $18 billion-asset company
UMB, which did not respond to a request for comment, gave no explanation for the changes. However, industry observers said they reflect the heightened pressure on UMB to control costs. It
"This is going to be a long haul," said Chris McGratty, an analyst with Keefe, Bruyette & Woods.
UMB's quarterly fee income fell by 14% from a year earlier, to $109 million, largely reflecting weak conditions in the equity markets.
Advisory fee income from Scout Investments decreased 45%, or $10.4 million, from a year earlier. That loss had a dual impact because the unit's past success had allowed UMB to spend more freely on operations. Its efficiency ratio of 81% is far worse than its peer group's 60% efficiency at midyear, according to the latest available statistics from the Federal Deposit Insurance Corp.
"Scout has been able to cover up for the inefficiencies," McGratty said. UMB was left exposed once that unit "hit a snag."
Overall profit fell 37% from a year earlier, to $22.5 million. Earnings per share of 46 cents missed the average estimate of analysts polled by Bloomberg by 22 cents.
In response, UMB announced plans to
"We're operating … with a deeper commitment and a greater sense of urgency around operating more efficiently," Kemper said during an Oct. 28 conference call to discuss quarterly results. "We're laser-focused on being lean and mean."
UMB has waged battles against costs before, including a downsizing of its branch network. In the last decade it has purged about 30% of its branches, Peyton Green, an analyst at Piper Jaffray, wrote in a recent note to clients. UMB also consolidated certain consumer and institutional banking functions during the second quarter, Green said.
DeSilva's legacy at UMB was the growth of the Scout investment business. He joined UMB Financial in 2004, shortly before Kemper became the sixth member of the
During his time at UMB, deSilva oversaw Scout's expansion into
DeSilva "represented one of the first outside, professional hires" at UMB, Green said.
Some analysts said it would be short-sighted to entirely blame the UMB's recent woes on declines in its advisory business. The company has also seen its commercial banking margins tighten in the low-rate environment.
UMB may envision itself as an investment business, "but it's a bank," Green said.
DeSilva's resignation — which the company insisted with analysts was voluntary — could help lower overhead. DeSilva earned a nearly $670,000 salary last year, based on
Still, UMB is losing an executive with years of experience helping run the company. DeSilva, who is also a vice chairman, is scheduled to leave in January.
"It will be hard to replace the knowledge" deSilva brought to the company, said John Rodis, an analyst at FIG Partners. His "background on the investment side will be missed."