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Published on 8/11/2017 in the Prospect News Investment Grade Daily.

S&P revises UMB Financial outlook

S&P said it revised its outlook on UMB Financial Corp. and UMB Bank NA, to negative from stable, and affirmed its A-/A-2 issuer credit rating on UMB and A/A-1 issuer credit rating on UMB Bank.

The agency said the negative outlook reflects UMB's accelerated growth in commercial real estate and construction lending in the past several years, which has led to a higher credit risk profile.

“We believe this rapid growth could reduce the positive performance differential from which UMB has historically benefited and that supports the current ratings relative to lower rated peers,” S&P said in a news release.

“Specifically, we see the potential for higher loan losses should the rapid growth in commercial real estate and construction lending persist.”

The agency said the affirmation reflects the company's solid franchise and reasonably good business diversity. In addition, UMB's risk-adjusted capital remains strong, with a risk-adjusted capital ratio of close to 11% by S&P’s estimate, and its assessment of funding and liquidity is unchanged.

The negative outlook reflects the agency’s view that the company's credit risk profile is incrementally less conservative today than it has been historically. Specifically, S&P believes that rapid growth of commercial real estate and construction lending could produce higher loan losses.


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