UMB Financial Corporation Reports Second Quarter Net Income of $87.4 Million; Announces 15.6% Increase to Quarterly Cash Dividend | Financial Buzz

UMB Financial Corporation Reports Second Quarter Net Income of $87.4 Million; Announces 15.6% Increase to Quarterly Cash Dividend

UMB Financial Corporation (Nasdaq: UMBF), a financial services company, announced net income for the second quarter of 2021 of $87.4 million, or $1.79 per diluted share, compared to $92.6 million, or $1.91 per diluted share, in the first quarter of 2021 (linked quarter) and $60.5 million, or $1.26 per diluted share, in the second quarter of 2020.

Net operating income, a non-GAAP financial measure reconciled to net income, the nearest comparable GAAP measure, later in this release, was $87.6 million, or $1.80 per diluted share, for the second quarter of 2021, compared to $92.8 million, or $1.91 per diluted share, for the linked quarter and $63.8 million, or $1.33 per diluted share, for the second quarter of 2020. Pre-tax, pre-provision income on a fully tax equivalent basis (PTPP-FTE), a non-GAAP measure reconciled to the components of net income before taxes, the nearest comparable GAAP measure, later in this release, was $138.0 million, or $2.83 per diluted share, for the second quarter of 2021, compared to $108.7 million, or $2.24 per diluted share, for the linked quarter, and $96.8 million, or $2.01 per diluted share, for the second quarter of 2020. These PTPP-FTE results represent an increase of 26.9% on a linked-quarter basis and an increase of 42.6% compared to the second quarter of 2020.

Summary of quarterly financial results

 

UMB Financial Corporation

(unaudited, dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

Q2

 

Q1

 

Q2

 

 

2021

 

2021

 

2020

Net income (GAAP)

 

$

87,412

 

 

$

92,643

 

 

$

60,529

 

Earnings per share (diluted)

 

 

1.79

 

 

 

1.91

 

 

 

1.26

 

 

 

 

 

 

 

 

 

 

 

Pre-tax, pre-provision income (Non-GAAP)

 

 

131,322

 

 

 

102,066

 

 

 

90,152

 

Pre-tax, pre-provision earnings per share (diluted)

 

 

2.70

 

 

 

2.10

 

 

 

1.88

 

 

 

 

 

 

 

 

 

 

 

Pre-tax, pre-provision income – FTE (Non-GAAP)

 

 

137,951

 

 

 

108,744

 

 

 

96,756

 

Pre-tax, pre-provision earnings per share – FTE (diluted)

 

 

2.83

 

 

 

2.24

 

 

 

2.01

 

 

 

 

 

 

 

 

 

 

 

Net operating income (Non-GAAP)

 

 

87,634

 

 

 

92,780

 

 

 

63,835

 

Operating earnings per share (diluted)

 

 

1.80

 

 

 

1.91

 

 

 

1.33

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

1.02

%

 

 

1.14

%

 

 

0.87

%

Return on average equity

 

 

11.43

 

 

 

12.56

 

 

 

8.95

 

Efficiency ratio

 

 

60.41

 

 

 

66.46

 

 

 

70.20

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP

 

 

 

 

 

 

 

 

 

Operating return on average assets

 

 

1.03

%

 

 

1.14

%

 

 

0.91

%

Operating return on average equity

 

 

11.46

 

 

 

12.58

 

 

 

9.44

 

Operating efficiency ratio

 

 

60.33

 

 

 

66.40

 

 

 

68.76

 

Summary of year-to-date financial results

 

UMB Financial Corporation

(unaudited, dollars in thousands, except per share data)

 

June

 

June

 

 

YTD

 

YTD

 

 

2021

 

2020

Net income (GAAP)

 

$

180,055

 

 

$

57,090

 

Earnings per share (diluted)

 

 

3.70

 

 

 

1.18

 

 

 

 

 

 

 

 

Pre-tax, pre-provision income (Non-GAAP)

 

 

233,388

 

 

 

173,898

 

Pre-tax, pre-provision earnings per share (diluted)

 

 

4.80

 

 

 

3.59

 

 

 

 

 

 

 

 

Pre-tax, pre-provision income – FTE (Non-GAAP)

 

 

246,695

 

 

 

186,980

 

Pre-tax, pre-provision earnings per share – FTE (diluted)

 

 

5.08

 

 

 

3.86

 

 

 

 

 

 

 

 

Net operating income (Non-GAAP)

 

 

180,414

 

 

 

61,954

 

Operating earnings per share (diluted)

 

 

3.71

 

 

 

1.28

 

 

 

 

 

 

 

 

GAAP

 

 

 

 

 

 

Return on average assets

 

 

1.08

%

 

 

0.42

%

Return on average equity

 

 

11.98

 

 

 

4.22

 

Efficiency ratio

 

 

63.29

 

 

 

69.59

 

 

 

 

 

 

 

 

Non-GAAP

 

 

 

 

 

 

Operating return on average assets

 

 

1.08

%

 

 

0.46

%

Operating return on average equity

 

 

12.01

 

 

 

4.58

 

Operating efficiency ratio

 

 

63.21

 

 

 

68.49

 

“Our strong second quarter results demonstrated the benefits of our diverse business model and validates our investment thesis which includes above-peer loan growth, continued net interest income and strong fee income growth across all operating and interest rate environments,” said Mariner Kemper, chairman, president and chief executive officer. “During the second quarter, average loans, excluding PPP balances, increased 19.0% annualized on a linked-quarter basis. Noninterest income increased 20.8% from the prior quarter and 9.2% over the year-ago period. Our $24.0 million provision was higher than previous levels due to strong loan growth and elevated net charge-offs related to one commercial factoring relationship. Excluding this credit event, we would have had net recoveries in the quarter and the underlying asset quality of our loan portfolio remains strong. Nonperforming loan balances declined 24.1% from prior quarter-end. During the quarter, we monetized 3.5 million shares of our Tattooed Chef, Inc. (TTCF) holdings for net proceeds of approximately $72.8 million. Finally, we are excited to announce that our Board of Directors approved a five cent or 15.6% increase in the quarterly cash dividend to our shareholders.”

Summary of revenue

 

UMB Financial Corporation

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2

 

Q1

 

Q2

 

CQ vs.

 

CQ vs.

 

 

2021

 

2021

 

2020

 

LQ

 

PY

Net interest income

 

$

201,071

 

 

$

194,115

 

 

$

178,229

 

 

$

6,956

 

 

$

22,842

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trust and securities processing

 

 

53,863

 

 

 

54,834

 

 

 

46,321

 

 

 

(971

)

 

 

7,542

 

Trading and investment banking

 

 

8,670

 

 

 

9,356

 

 

 

12,851

 

 

 

(686

)

 

 

(4,181

)

Service charges on deposit accounts

 

 

22,592

 

 

 

21,976

 

 

 

19,074

 

 

 

616

 

 

 

3,518

 

Insurance fees and commissions

 

 

245

 

 

 

420

 

 

 

533

 

 

 

(175

)

 

 

(288

)

Brokerage fees

 

 

2,592

 

 

 

3,334

 

 

 

5,753

 

 

 

(742

)

 

 

(3,161

)

Bankcard fees

 

 

16,063

 

 

 

14,673

 

 

 

12,916

 

 

 

1,390

 

 

 

3,147

 

Investment securities gains (losses), net

 

 

15,455

 

 

 

(8,336

)

 

 

4,579

 

 

 

23,791

 

 

 

10,876

 

Other

 

 

12,109

 

 

 

12,640

 

 

 

18,429

 

 

 

(531

)

 

 

(6,320

)

Total noninterest income

 

$

131,589

 

 

$

108,897

 

 

$

120,456

 

 

$

22,692

 

 

$

11,133

 

Total revenue

 

$

332,660

 

 

$

303,012

 

 

$

298,685

 

 

$

29,648

 

 

$

33,975

 

Net interest income (FTE)

 

$

207,700

 

 

$

200,793

 

 

$

184,833

 

 

 

 

 

 

 

Net interest margin (FTE)

 

 

2.56

%

 

 

2.59

%

 

 

2.79

%

 

 

 

 

 

 

Total noninterest income as a % of total revenue

 

 

39.56

 

 

 

35.94

 

 

 

40.33

 

 

 

 

 

 

 

Net interest income

  • Net interest income totaled $201.1 million, which is an increase of $7.0 million as compared to the linked quarter. The positive impact from strong balance sheet growth was partially offset by the impacts of lower PPP income in the quarter. Average earning assets increased $1.1 billion, or 3.6%, driven in part by an increase in securities and loans, while interest-bearing liabilities increased $234.5 million, or 1.2%.
  • Net interest margin for the second quarter was 2.56%, a decrease of three basis points from the linked quarter, driven in large part by earning asset mix shift and lower market and reinvestment rates. Earning asset yields declined four basis points from the linked quarter, driven by a six-basis-point decline in both loan and securities yields and mix changes. The cost of interest-bearing liabilities decreased one basis point to 0.23%. Net interest spread decreased three basis points to 2.47% from the linked quarter and was 20 basis points lower than the second quarter of 2020.
  • On a year-over-year basis, net interest income increased $22.8 million, or 12.8%, driven by a $2.1 billion, or 23.0% increase in average securities, coupled with a $1.7 billion, or 11.4%, increase in average loans. These increases were driven by organic loan growth, excess liquidity, and the company’s PPP participation.
  • Average deposits increased 3.6% on a linked-quarter basis and 22.0% compared to the second quarter of 2020. Average noninterest-bearing demand deposit balances increased 9.7% on a linked-quarter basis and 39.7% compared to the second quarter of 2020.

Noninterest income

  • Second quarter 2021 noninterest income increased $22.7 million, or 20.8%, on a linked-quarter basis, largely due to:

    • An increase of $23.8 million in investment securities gains, primarily due to an increase of $23.3 million in gains on the company’s equity investment in TTCF.
    • An increase of $1.4 million in bankcard fees, primarily due to increased interchange income.
    • These increases were partially offset by decreases of $1.0 million in trust and securities processing income and $0.7 million in trading and investment banking income. The decrease in trust and securities processing income is primarily driven by the previously announced sale of Prairie Capital Management, LLC (PCM) in March 2021, offset by increased fund services income. The decline in trading and investment banking income is primarily due to decreased trading volume.
  • Compared to the prior year, noninterest income in the second quarter of 2021 increased $11.1 million, or 9.2%, primarily driven by:

    • An increase of $10.9 million in investment securities gains, primarily due to an increase of $14.2 million in gains on equity investments, partially offset by decreases of $2.7 million and $0.6 million in gains on the sale of available for sale securities and PCM-related equity earnings on alternative investments, respectively.
    • Increases of $6.7 million and $2.0 million in fund services income and corporate trust income, respectively, both recorded in trust and securities processing.
    • An increase of $3.5 million in service charges on deposits, driven by increased healthcare income related to customer transfer and conversion fees, and increased corporate service charges.
    • An increase of $2.5 million in derivative income, recorded in other income.
    • These increases were partially offset by a decrease of $9.8 million in the market value of company-owned life insurance, recorded in other income, and a decrease of $4.2 million in trading and investment banking, due to decreased trading volumes. The decrease in company-owned life insurance is offset by a proportionate decrease in deferred compensation expense as noted below.

Noninterest expense

Summary of noninterest expense

 

UMB Financial Corporation

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2

 

Q1

 

Q2

 

CQ vs.

 

CQ vs.

 

 

2021

 

2021

 

2020

 

LQ

 

PY

Salaries and employee benefits

 

$

120,415

 

$

127,681

 

$

130,938

 

$

(7,266

)

 

$

(10,523

)

Occupancy, net

 

 

12,296

 

 

 

11,935

 

 

 

11,411

 

 

 

361

 

 

 

885

 

Equipment

 

 

19,196

 

 

 

19,615

 

 

 

21,502

 

 

 

(419

)

 

 

(2,306

)

Supplies and services

 

 

3,469

 

 

 

3,492

 

 

 

3,785

 

 

 

(23

)

 

 

(316

)

Marketing and business development

 

 

4,797

 

 

 

2,345

 

 

 

3,284

 

 

 

2,452

 

 

 

1,513

 

Processing fees

 

 

16,501

 

 

 

15,417

 

 

 

13,603

 

 

 

1,084

 

 

 

2,898

 

Legal and consulting

 

 

8,147

 

 

 

5,755

 

 

 

6,220

 

 

 

2,392

 

 

 

1,927

 

Bankcard

 

 

4,529

 

 

 

4,956

 

 

 

4,549

 

 

 

(427

)

 

 

(20

)

Amortization of other intangible assets

 

 

1,157

 

 

 

1,380

 

 

 

1,658

 

 

 

(223

)

 

 

(501

)

Regulatory fees

 

 

2,769

 

 

 

2,546

 

 

 

3,211

 

 

 

223

 

 

 

(442

)

Other

 

 

8,062

 

 

 

5,824

 

 

 

8,372

 

 

 

2,238

 

 

 

(310

)

Total noninterest expense

 

$

201,338

 

 

$

200,946

 

 

$

208,533

 

 

$

392

 

 

$

(7,195

)

  • Noninterest expense for the second quarter of 2021 was $201.3 million, an increase of $0.4 million, or 0.2%, from the linked quarter and a decrease of $7.2 million, or 3.5%, from the second quarter of 2020.
  • The linked-quarter increase in noninterest expense was driven by:

    • Increases of $2.5 million, $2.4 million, and $1.1 million in marketing and business development expense, legal and consulting expense, and processing fees, respectively, due to timing of various marketing initiatives, legal costs, and timing of software projects.
    • Increases of $0.9 million in losses on sales of other real estate, $0.7 million in derivative expense, and $0.7 million in miscellaneous loan fee expense, all recorded in other noninterest expense.
    • These increases were offset by decreases of $5.7 million in payroll taxes, insurance and 401(k) expense, and $1.8 million in bonus and commission expense, both recorded in salary and employee benefits.
  • The year-over-year decrease in noninterest expense was driven by:

    • A decrease of $10.5 million in deferred compensation expense, recorded in salaries and employee benefits. The decrease in deferred compensation expense was offset by the decrease in company-owned life insurance income noted above.
    • A decrease of $2.1 million in software expense, recorded in equipment expense.
    • These decreases were partially offset by increases of $2.9 million in processing fees, $1.9 million in legal and professional expense, and $1.5 million in marketing and business development, due to timing of software projects, legal costs, and various marketing initiatives.

Income taxes

  • The company’s effective tax rate was 17.0% for the six months ended June 30, 2021, compared to 11.3% for the same period in 2020. The increase in the effective rate for 2021 is primarily attributable to a smaller portion of income being earned from tax-exempt municipal securities.

Balance sheet

  • Average total assets for the second quarter of 2021 were $34.3 billion compared to $33.1 billion for the linked quarter and $28.1 billion for the same period in 2020.

Summary of average loans and leases – QTD Average

UMB Financial Corporation

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2

 

Q1

 

Q2

 

CQ vs.

 

CQ vs.

 

 

2021

 

2021

 

2020

 

LQ

 

PY

Commercial and industrial

 

$

7,402,653

 

$

7,139,101

 

$

6,970,223

 

$

263,552

 

 

$

432,430

 

Specialty lending

 

 

505,687

 

 

 

502,585

 

 

 

471,571

 

 

 

3,102

 

 

 

34,116

 

Commercial real estate

 

 

6,165,780

 

 

 

5,971,047

 

 

 

5,435,428

 

 

 

194,733

 

 

 

730,352

 

Consumer real estate

 

 

2,068,663

 

 

 

1,970,767

 

 

 

1,528,501

 

 

 

97,896

 

 

 

540,162

 

Consumer

 

 

122,439

 

 

 

117,095

 

 

 

146,120

 

 

 

5,344

 

 

 

(23,681

)

Credit cards

 

 

386,032

 

 

 

362,051

 

 

 

353,424

 

 

 

23,981

 

 

 

32,608

 

Leases and other

 

 

166,420

 

 

 

183,447

 

 

 

193,099

 

 

 

(17,027

)

 

 

(26,679

)

Total loans

 

$

16,817,674

 

 

$

16,246,093

 

 

$

15,098,366

 

 

$

571,581

 

 

$

1,719,308

 

  • Average loans for the second quarter of 2021 increased 3.5% on a linked-quarter basis and 11.4% compared to the second quarter of 2020 primarily due to increased commercial and industrial and commercial real estate loans.

Summary of average securities – QTD Average

 

UMB Financial Corporation

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2

 

Q1

 

Q2

 

CQ vs.

 

CQ vs.

 

 

2021

 

2021

 

2020

 

LQ

 

PY

Securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

$

40,013

 

$

36,032

 

$

31,150

 

$

3,981

 

 

$

8,863

 

U.S. Agencies

 

 

94,794

 

 

 

95,494

 

 

 

403,290

 

 

 

(700

)

 

 

(308,496

)

Mortgage-backed

 

 

6,096,099

 

 

 

5,599,987

 

 

 

4,284,374

 

 

 

496,112

 

 

 

1,811,725

 

State and political subdivisions

 

 

3,565,443

 

 

 

3,552,945

 

 

 

3,108,661

 

 

 

12,498

 

 

 

456,782

 

Commercial Paper

 

 

 

 

 

 

 

 

2,040

 

 

 

 

 

 

(2,040

)

Corporates

 

 

127,581

 

 

 

83,271

 

 

 

98,089

 

 

 

44,310

 

 

 

29,492

 

Total securities available for sale

 

$

9,923,930

 

 

$

9,367,729

 

 

$

7,927,604

 

 

$

556,201

 

 

$

1,996,326

 

Securities held to maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State and political subdivisions

 

$

1,057,091

 

 

$

1,023,418

 

 

$

1,100,843

 

 

$

33,673

 

 

$

(43,752

)

Trading securities

 

 

21,409

 

 

 

17,540

 

 

 

37,816

 

 

 

3,869

 

 

 

(16,407

)

Other securities

 

 

302,981

 

 

 

308,297

 

 

 

148,918

 

 

 

(5,316

)

 

 

154,063

 

Total securities

 

$

11,305,411

 

 

$

10,716,984

 

 

$

9,215,181

 

 

$

588,427

 

 

$

2,090,230

 

  • Average securities available for sale increased 5.9% on a linked-quarter basis and 25.2% compared to the second quarter of 2020.

Summary of average deposits – QTD Average

UMB Financial Corporation

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2

 

Q1

 

Q2

 

CQ vs.

 

CQ vs.

 

 

2021

 

2021

 

2020

 

LQ

 

PY

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

$

10,701,656

 

 

$

9,753,680

 

 

$

7,662,836

 

 

$

947,976

 

 

$

3,038,820

 

Interest-bearing demand and savings

 

 

16,421,742

 

 

 

16,302,880

 

 

 

14,160,722

 

 

 

118,862

 

 

 

2,261,020

 

Time deposits

 

 

659,228

 

 

 

769,464

 

 

 

957,007

 

 

 

(110,236

)

 

 

(297,779

)

Total deposits

 

$

27,782,626

 

 

$

26,826,024

 

 

$

22,780,565

 

 

$

956,602

 

 

$

5,002,061

 

Noninterest bearing deposits as % of total

 

 

38.52

%

 

 

36.36

%

 

 

33.64

%

 

 

 

 

 

 

  • Average deposits increased 3.6% on a linked-quarter basis and 22.0% compared to the second quarter of 2020.
  • Average noninterest-bearing demand deposits increased 9.7% on a linked-quarter basis to $10.7 billion.

Capital

Capital information

 

UMB Financial Corporation

(unaudited, dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

June 30, 2021

 

March 31, 2021

 

June 30, 2020

Total equity

 

$

3,090,244

 

 

$

2,958,239

 

 

$

2,777,395

 

Book value per common share

 

 

63.92

 

 

 

61.24

 

 

 

57.84

 

Tangible book value per common share

 

 

59.96

 

 

 

57.26

 

 

 

53.57

 

 

 

 

 

 

 

 

 

 

 

Regulatory capital:

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital

 

$

2,730,062

 

 

$

2,660,102

 

 

$

2,335,625

 

Tier 1 capital

 

 

2,730,062

 

 

 

2,660,102

 

 

 

2,335,625

 

Total capital

 

 

3,172,878

 

 

 

3,102,333

 

 

 

2,580,849

 

 

 

 

 

 

 

 

 

 

 

Regulatory capital ratios:

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital ratio

 

 

11.91

%

 

 

12.25

%

 

 

11.92

%

Tier 1 risk-based capital ratio

 

 

11.91

 

 

 

12.25

 

 

 

11.92

 

Total risk-based capital ratio

 

 

13.84

 

 

 

14.28

 

 

 

13.17

 

Tier 1 leverage ratio

 

 

8.00

 

 

 

8.08

 

 

 

8.35

 

  • At June 30, 2021, the regulatory capital ratios presented in the foregoing table exceeded all “well-capitalized” regulatory thresholds.

Asset Quality

Credit quality

 

UMB Financial Corporation

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2

 

Q1

 

Q4

 

Q3

 

Q2

 

 

2021

 

2021

 

2020

 

2020

 

2020

Net charge-offs – Total loans

 

$

28,374

 

 

$

5,310

 

 

$

1,801

 

 

$

5,111

 

 

$

5,541

 

Net loan charge-offs as a % of total average loans

 

 

0.68

%

 

 

0.13

%

 

 

0.04

%

 

 

0.13

%

 

 

0.15

%

Loans over 90 days past due

 

$

1,265

 

 

$

1,773

 

 

$

1,952

 

 

$

1,372

 

 

$

4,588

 

Loans over 90 days past due as a % of total loans

 

 

0.01

%

 

 

0.01

%

 

 

0.01

%

 

 

0.01

%

 

 

0.03

%

Nonaccrual and restructured loans

 

$

58,219

 

 

$

76,706

 

 

$

87,823

 

 

$

93,695

 

 

$

82,245

 

Nonaccrual and restructured loans as a % of total loans

 

 

0.34

%

 

 

0.46

%

 

 

0.55

%

 

 

0.59

%

 

 

0.54

%

Provision for credit losses

 

$

24,000

 

 

$

(7,500

)

 

$

5,000

 

 

$

16,000

 

 

$

21,500

 

  • Provision for credit losses for the second quarter increased $31.5 million from the linked quarter and $2.5 million from the second quarter of 2020. This increase is driven by impacts to the Allowance for Credit Losses by a large charge-off during the second quarter, offset by the impacts of positive macro-economic metrics.
  • Net charge-offs for the second quarter totaled $28.4 million, or 0.68%, of average loans, compared to $5.3 million, or 0.13%, of average loans in the linked quarter, and $5.5 million, or 0.15%, of average loans for the second quarter of 2020.
  • The increase in net charge-offs in the second quarter of 2021 is due to a $31.9 million loss on one commercial relationship.

Dividend Declaration

At the company’s quarterly board meeting, the Board of Directors declared a $0.37 per share quarterly cash dividend, or an increase of 15.6%. This cash dividend will be payable on October 1, 2021, to shareholders of record at the close of business on September 10, 2021.

Conference Call

The company plans to host a conference call to discuss its second quarter 2021 earnings results on Wednesday, July 28, 2021, at 8:30 a.m. (CT).

Interested parties may access the call by dialing (toll-free) 877-267-8760 or (international) 412-542-4148 and requesting to join the UMB Financial call. The live call may also be accessed by visiting investorrelations.umb.com or by using the following link:

UMB Financial 2Q 2021 Conference Call

A replay of the conference call may be heard through August 11, 2021 by calling (toll-free) 877-344-7529 or (international) 412-317-0088. The replay access code required for playback is 10157858. The call replay may also be accessed at investorrelations.umb.com.

Non-GAAP Financial Information

In this release, we provide information about net operating income, operating earnings per share – diluted (operating EPS), operating return on average equity (operating ROE), operating return on average assets (operating ROA), operating noninterest expense, operating efficiency ratio, pre-tax, pre-provision income, pre-tax, pre-provision earnings per share – diluted (PTPP EPS), pre-tax, pre-provision income on a fully tax equivalent basis (PTPP-FTE), pre-tax, pre-provision FTE earnings per share – diluted (PTPP-FTE EPS), tangible shareholders’ equity, and tangible book value per share, all of which are non-GAAP financial measures. This information supplements the results that are reported according to generally accepted accounting principles in the United States (GAAP) and should not be viewed in isolation from, or as a substitute for, GAAP results. The differences between the non-GAAP financial measures – net operating income, operating EPS, operating ROE, operating ROA, operating noninterest expense, operating efficiency ratio, PTPP, PTPP EPS, PTPP-FTE, PTPP-FTE EPS, tangible shareholders’ equity, and tangible book value per share – and the nearest comparable GAAP financial measures are reconciled later in this release. The company believes that these non-GAAP financial measures and the reconciliations may be useful to investors because they adjust for acquisition-, severance-, and COVID-19 related items that management does not believe reflect the company’s fundamental operating performance. COVID-19 related expense includes hazard pay for branch associates, computer hardware expense to support associates working remotely, and additional equipment, cleaning, and janitorial supplies to protect the well-being of our associates and customers while on the company’s premises.

Net operating income for the relevant period is defined as GAAP net income, adjusted to reflect the impact of excluding expenses related to acquisitions, severance expense, COVID-19 related expense, and the cumulative tax impact of these adjustments.

Operating EPS (diluted) is calculated as earnings per share as reported, adjusted to reflect, on a per share basis, the impact of excluding the non-GAAP adjustments described above for the relevant period. Operating ROE is calculated as net operating income, divided by the company’s average total shareholders’ equity for the relevant period. Operating ROA is calculated as net operating income, divided by the company’s average assets for the relevant period. Operating noninterest expense for the relevant period is defined as GAAP noninterest expense, adjusted to reflect the pre-tax impact of non-GAAP adjustments described above. Operating efficiency ratio is calculated as the company’s operating noninterest expense, net of amortization of other intangibles, divided by the company’s total non-GAAP revenue (calculated as net interest income plus noninterest income, less gains on sales of securities available for sale, net).

Pre-tax, pre-provision income for the relevant period is defined as GAAP net income, adjusted to reflect the impact of excluding income tax and provision expenses.

Pre-tax, pre-provision income on a fully tax equivalent basis for the relevant period is defined as GAAP net interest income on a fully tax equivalent basis plus noninterest income, less noninterest expense.

Tangible shareholders’ equity for the relevant period is defined as GAAP shareholders’ equity, net of intangible assets. Tangible book value per share is defined as tangible shareholders’ equity divided by the Company’s total shares outstanding.

Forward-Looking Statements:

This press release contains, and our other communications may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “outlook,” “forecast,” “target,” “trend,” “plan,” “goal,” or other words of comparable meaning or future-tense or conditional verbs such as “may,” “will,” “should,” “would,” or “could.” Forward-looking statements convey our expectations, intentions, or forecasts about future events, circumstances, results, or aspirations. All forward-looking statements are subject to assumptions, risks, and uncertainties, which may change over time and many of which are beyond our control. You should not rely on any forward-looking statement as a prediction or guarantee about the future. Our actual future objectives, strategies, plans, prospects, performance, condition, or results may differ materially from those set forth in any forward-looking statement. Some of the factors that may cause actual results or other future events, circumstances, or aspirations to differ from those in forward-looking statements are described in our Annual Report on Form 10-K for the year ended December 31, 2020, our subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, or other applicable documents that are filed or furnished with the U.S. Securities and Exchange Commission (SEC). In addition to such factors that have been disclosed previously, the COVID-19 pandemic (the pandemic) may also cause actual results or other future events, circumstances, or aspirations to differ from our forward-looking statements. The pandemic has created a global public-health crisis that has resulted in widespread volatility and deteriorations in household, business, economic, and market conditions. It is currently adversely affecting the company and its customers, counterparties, employees, and first-party service providers, and the continued adverse impacts on our business, financial position, results of operations, and prospects could be significant. We are not able to accurately predict the extent of the impact of the pandemic on our capital, liquidity, and other financial positions and on our business, results of operations, and prospects at this time, and we believe it will depend on a number of evolving factors, including: (i) the duration, extent and severity of the pandemic; (ii) the response of governmental and non-governmental authorities to the pandemic, which is rapidly changing and not always coordinated or consistent across jurisdictions; (iii) the effect of the pandemic on our customers, counterparties, employees and first-party service providers, which may vary widely, and which is generally expected to increase our credit, counterparty, operational, and other risks; and (iv) the effect of the pandemic on economies and markets, which in turn could adversely affect, among other things, the origination of new loans and the performance of our existing loans. Any forward-looking statement should be evaluated in light of these considerations. Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except to the extent required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K, or other applicable document that is filed or furnished with the SEC.

About UMB:

UMB Financial Corporation (Nasdaq: UMBF) is a financial services company headquartered in Kansas City, Missouri. UMB offers commercial banking, which includes comprehensive deposit, lending and investment services, personal banking, which includes wealth management and financial planning services, and institutional banking, which includes asset servicing, corporate trust solutions, investment banking, and healthcare services. UMB operates branches throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas, and serves business and institutional clients nationwide. For more information, visit UMB.com, UMB Blog, UMB Facebook and UMB LinkedIn, or follow us on Twitter at @UMBBank. For information about UMB’s operations, approach and relief measures during the COVID-19 pandemic, please visit umb.com/COVID-19.

Consolidated Balance Sheets

 

UMB Financial Corporation

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

June 30,

 

 

2021

 

2020

ASSETS

 

 

 

 

 

 

Loans

 

$

16,910,790

 

 

$

15,305,097

 

Allowance for credit losses on loans

 

 

(200,563

)

 

 

(200,300

)

Net loans

 

 

16,710,227

 

 

 

15,104,797

 

Loans held for sale

 

 

5,303

 

 

 

8,213

 

Securities:

 

 

 

 

 

 

Available for sale

 

 

10,347,531

 

 

 

8,483,624

 

Held to maturity, net of allowance for credit losses

 

 

1,081,173

 

 

 

1,111,625

 

Trading securities

 

 

40,552

 

 

 

51,383

 

Other securities

 

 

254,315

 

 

 

154,206

 

Total securities

 

 

11,723,571

 

 

 

9,800,838

 

Federal funds sold and resell agreements

 

 

1,146,521

 

 

 

1,347,643

 

Interest-bearing due from banks

 

 

5,059,098

 

 

 

1,714,478

 

Cash and due from banks

 

 

469,883

 

 

 

462,849

 

Premises and equipment, net

 

 

281,011

 

 

 

300,174

 

Accrued income

 

 

131,188

 

 

 

126,962

 

Goodwill

 

 

174,518

 

 

 

180,867

 

Other intangibles, net

 

 

16,636

 

 

 

24,181

 

Other assets

 

 

901,059

 

 

 

682,606

 

Total assets

 

$

36,619,015

 

 

$

29,753,608

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Noninterest-bearing demand

 

$

12,513,031

 

 

$

8,633,603

 

Interest-bearing demand and savings

 

 

16,857,127

 

 

 

15,033,643

 

Time deposits under $250,000

 

 

430,713

 

 

 

546,089

 

Time deposits of $250,000 or more

 

 

247,600

 

 

 

246,069

 

Total deposits

 

 

30,048,471

 

 

 

24,459,404

 

Federal funds purchased and repurchase agreements

 

 

2,783,389

 

 

 

1,963,694

 

Short-term debt

 

 

 

 

 

15,000

 

Long-term debt

 

 

270,558

 

 

 

70,996

 

Accrued expenses and taxes

 

 

254,589

 

 

 

239,254

 

Other liabilities

 

 

171,764

 

 

 

227,865

 

Total liabilities

 

 

33,528,771

 

 

 

26,976,213

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Common stock

 

 

55,057

 

 

 

55,057

 

Capital surplus

 

 

1,098,139

 

 

 

1,081,713

 

Retained earnings

 

 

2,040,134

 

 

 

1,692,289

 

Accumulated other comprehensive income, net

 

 

223,107

 

 

 

284,262

 

Treasury stock

 

 

(326,193

)

 

 

(335,926

)

Total shareholders’ equity

 

 

3,090,244

 

 

 

2,777,395

 

Total liabilities and shareholders’ equity

 

$

36,619,015

 

 

$

29,753,608

 

Consolidated Statements of Income

 

UMB Financial Corporation

(unaudited, dollars in thousands except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2021

 

2020

 

2021

 

2020

INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

154,537

 

$

140,004

 

$

304,707

 

$

291,030

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

Taxable interest

 

 

29,780

 

 

 

25,870

 

 

 

56,942

 

 

 

53,082

 

Tax-exempt interest

 

 

24,743

 

 

 

24,612

 

 

 

49,707

 

 

 

49,016

 

Total securities income

 

 

54,523

 

 

 

50,482

 

 

 

106,649

 

 

 

102,098

 

Federal funds and resell agreements

 

 

2,552

 

 

 

1,573

 

 

 

5,373

 

 

 

7,025

 

Interest-bearing due from banks

 

 

833

 

 

 

398

 

 

 

1,536

 

 

 

3,061

 

Trading securities

 

 

189

 

 

 

312

 

 

 

348

 

 

 

966

 

Total interest income

 

 

212,634

 

 

 

192,769

 

 

 

418,613

 

 

 

404,180

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

6,574

 

 

 

11,243

 

 

 

13,372

 

 

 

40,975

 

Federal funds and repurchase agreements

 

 

1,779

 

 

 

1,950

 

 

 

3,665

 

 

 

8,331

 

Other

 

 

3,210

 

 

 

1,347

 

 

 

6,390

 

 

 

2,704

 

Total interest expense

 

 

11,563

 

 

 

14,540

 

 

 

23,427

 

 

 

52,010

 

Net interest income

 

 

201,071

 

 

 

178,229

 

 

 

395,186

 

 

 

352,170

 

Provision for credit losses

 

 

24,000

 

 

 

21,500

 

 

 

16,500

 

 

 

109,500

 

Net interest income after provision for credit losses

 

 

177,071

 

 

 

156,729

 

 

 

378,686

 

 

 

242,670

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

Trust and securities processing

 

 

53,863

 

 

 

46,321

 

 

 

108,697

 

 

 

93,321

 

Trading and investment banking

 

 

8,670

 

 

 

12,851

 

 

 

18,026

 

 

 

14,574

 

Service charges on deposit accounts

 

 

22,592

 

 

 

19,074

 

 

 

44,568

 

 

 

44,155

 

Insurance fees and commissions

 

 

245

 

 

 

533

 

 

 

665

 

 

 

792

 

Brokerage fees

 

 

2,592

 

 

 

5,753

 

 

 

5,926

 

 

 

15,613

 

Bankcard fees

 

 

16,063

 

 

 

12,916

 

 

 

30,736

 

 

 

29,461

 

Investment securities gains, net

 

 

15,455

 

 

 

4,579

 

 

 

7,119

 

 

 

8,099

 

Other

 

 

12,109

 

 

 

18,429

 

 

 

24,749

 

 

 

12,865

 

Total noninterest income

 

 

131,589

 

 

 

120,456

 

 

 

240,486

 

 

 

218,880

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

120,415

 

 

 

130,938

 

 

 

248,096

 

 

 

241,998

 

Occupancy, net

 

 

12,296

 

 

 

11,411

 

 

 

24,231

 

 

 

23,591

 

Equipment

 

 

19,196

 

 

 

21,502

 

 

 

38,811

 

 

 

42,743

 

Supplies and services

 

 

3,469

 

 

 

3,785

 

 

 

6,961

 

 

 

7,970

 

Marketing and business development

 

 

4,797

 

 

 

3,284

 

 

 

7,142

 

 

 

7,924

 

Processing fees

 

 

16,501

 

 

 

13,603

 

 

 

31,918

 

 

 

26,993

 

Legal and consulting

 

 

8,147

 

 

 

6,220

 

 

 

13,902

 

 

 

12,330

 

Bankcard

 

 

4,529

 

 

 

4,549

 

 

 

9,485

 

 

 

9,409

 

Amortization of other intangible assets

 

 

1,157

 

 

 

1,658

 

 

 

2,537

 

 

 

3,392

 

Regulatory fees

 

 

2,769

 

 

 

3,211

 

 

 

5,315

 

 

 

5,577

 

Other

 

 

8,062

 

 

 

8,372

 

 

 

13,886

 

 

 

15,225

 

Total noninterest expense

 

 

201,338

 

 

 

208,533

 

 

 

402,284

 

 

 

397,152

 

Income before income taxes

 

 

107,322

 

 

 

68,652

 

 

 

216,888

 

 

 

64,398

 

Income tax expense

 

 

19,910

 

 

 

8,123

 

 

 

36,833

 

 

 

7,308

 

NET INCOME

 

$

87,412

 

 

$

60,529

 

 

$

180,055

 

 

$

57,090

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PER SHARE DATA

 

 

 

 

 

 

 

 

 

 

 

 

Net income – basic

 

$

1.81

 

 

$

1.26

 

 

$

3.74

 

 

$

1.18

 

Net income – diluted

 

 

1.79

 

 

 

1.26

 

 

 

3.70

 

 

 

1.18

 

Dividends

 

 

0.32

 

 

 

0.31

 

 

 

0.64

 

 

 

0.62

 

Weighted average shares outstanding – basic

 

 

48,294,952

 

 

 

47,991,283

 

 

 

48,196,345

 

 

 

48,340,579

 

Weighted average shares outstanding – diluted

 

 

48,698,319

 

 

 

48,077,810

 

 

 

48,604,140

 

 

 

48,491,526

 

Consolidated Statements of Comprehensive Income

 

UMB Financial Corporation

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2021

 

2020

 

2021

 

2020

Net income

 

$

87,412

 

 

$

60,529

 

 

$

180,055

 

 

$

57,090

 

Other comprehensive income (loss), before tax:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains and losses on debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized holding gains and losses, net

 

 

76,335

 

 

 

84,885

 

 

 

(122,703

)

 

 

249,001

 

Less: Reclassification adjustment for gains included in net income

 

 

(1,300

)

 

 

(4,006

)

 

 

(4,020

)

 

 

(5,233

)

Change in unrealized gains and losses on debt securities

 

 

75,035

 

 

 

80,879

 

 

 

(126,723

)

 

 

243,768

 

Unrealized gains and losses on derivative hedges:

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized gains and losses on derivative hedges, net

 

 

(3,422

)

 

 

4,612

 

 

 

3,081

 

 

 

19,137

 

Less: Reclassification adjustment for (gains) losses included in net income

 

 

(877

)

 

 

(514

)

 

 

(1,719

)

 

 

254

 

Change in unrealized gains and losses on derivative hedges

 

 

(4,299

)

 

 

4,098

 

 

 

1,362

 

 

 

19,391

 

Other comprehensive income (loss), before tax

 

 

70,736

 

 

 

84,977

 

 

 

(125,361

)

 

 

263,159

 

Income tax (expense) benefit

 

 

(16,826

)

 

 

(20,105

)

 

 

30,128

 

 

 

(62,077

)

Other comprehensive income (loss)

 

 

53,910

 

 

 

64,872

 

 

 

(95,233

)

 

 

201,082

 

Comprehensive income

 

$

141,322

 

 

$

125,401

 

 

$

84,822

 

 

$

258,172

 

Consolidated Statements of Shareholders’ Equity

UMB Financial Corporation

(unaudited, dollars in thousands except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common

Stock

 

Capital

Surplus

 

Retained

Earnings

 

Accumulated

Other

Comprehensive

Income (Loss)

 

Treasury

Stock

 

Total

Balance – January 1, 2020

 

$

55,057

 

$

1,073,764

 

$

1,672,438

 

 

$

83,180

 

 

$

(277,999

)

 

$

2,606,440

 

Total comprehensive income

 

 

 

 

 

 

 

 

57,090

 

 

 

201,082

 

 

 

 

 

 

258,172

 

Dividends ($0.62 per share)

 

 

 

 

 

 

 

 

(30,200

)

 

 

 

 

 

 

 

 

(30,200

)

Purchase of treasury stock

 

 

 

 

 

615

 

 

 

 

 

 

 

 

 

(60,074

)

 

 

(59,459

)

Forfeitures of equity awards, net of issuances

 

 

 

 

 

676

 

 

 

 

 

 

 

 

 

(83

)

 

 

593

 

Recognition of equity-based compensation

 

 

 

 

 

6,109

 

 

 

 

 

 

 

 

 

 

 

 

6,109

 

Sale of treasury stock

 

 

 

 

 

120

 

 

 

 

 

 

 

 

 

201

 

 

 

321

 

Exercise of stock options

 

 

 

 

 

429

 

 

 

 

 

 

 

 

 

2,029

 

 

 

2,458

 

Cumulative effect adjustment

 

 

 

 

 

 

 

 

(7,039

)

 

 

 

 

 

 

 

 

(7,039

)

Balance – June 30, 2020

 

$

55,057

 

 

$

1,081,713

 

 

$

1,692,289

 

 

$

284,262

 

 

$

(335,926

)

 

$

2,777,395

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance – January 1, 2021

 

$

55,057

 

 

$

1,090,450

 

 

$

1,891,246

 

 

$

318,340

 

 

$

(338,145

)

 

$

3,016,948

 

Total comprehensive income (loss)

 

 

 

 

 

 

 

 

180,055

 

 

 

(95,233

)

 

 

 

 

 

84,822

 

Dividends ($0.64 per share)

 

 

 

 

 

 

 

 

(31,167

)

 

 

 

 

 

 

 

 

(31,167

)

Purchase of treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,088

)

 

 

(4,088

)

Issuances of equity awards, net of forfeitures

 

 

 

 

 

(4,122

)

 

 

 

 

 

 

 

 

4,817

 

 

 

695

 

Recognition of equity-based compensation

 

 

 

 

 

8,609

 

 

 

 

 

 

 

 

 

 

 

 

8,609

 

Sale of treasury stock

 

 

 

 

 

148

 

 

 

 

 

 

 

 

 

153

 

 

 

301

 

Exercise of stock options

 

 

 

 

 

3,054

 

 

 

 

 

 

 

 

 

11,070

 

 

 

14,124

 

Balance – June 30, 2021

 

$

55,057

 

 

$

1,098,139

 

 

$

2,040,134

 

 

$

223,107

 

 

$

(326,193

)

 

$

3,090,244

 

Average Balances / Yields and Rates

 

UMB Financial Corporation

(tax – equivalent basis)

 

 

 

 

 

 

 

 

 

 

 

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

2021

 

2020

 

 

Average

 

Average

 

Average

 

Average

 

 

Balance

 

Yield/Rate

 

Balance

 

Yield/Rate

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Loans, net of unearned interest

 

$

16,817,674

 

 

 

3.69

%

 

$

15,098,366

 

 

 

3.73

%

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

6,994,559

 

 

 

1.71

 

 

 

5,069,290

 

 

 

2.05

 

Tax-exempt

 

 

4,289,443

 

 

 

2.93

 

 

 

4,108,075

 

 

 

3.05

 

Total securities

 

 

11,284,002

 

 

 

2.17

 

 

 

9,177,365

 

 

 

2.50

 

Federal funds and resell agreements

 

 

1,110,433

 

 

 

0.92

 

 

 

807,245

 

 

 

0.78

 

Interest bearing due from banks

 

 

3,343,311

 

 

 

0.10

 

 

 

1,492,798

 

 

 

0.11

 

Trading securities

 

 

21,409

 

 

 

4.27

 

 

 

37,816

 

 

 

3.79

 

Total earning assets

 

 

32,576,829

 

 

 

2.70

 

 

 

26,613,590

 

 

 

3.01

 

Allowance for credit losses

 

 

(199,379

)

 

 

 

 

 

(195,373

)

 

 

 

Other assets

 

 

1,886,774

 

 

 

 

 

 

1,717,808

 

 

 

 

Total assets

 

$

34,264,224

 

 

 

 

 

$

28,136,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

17,080,970

 

 

 

0.15

%

 

$

15,117,729

 

 

 

0.30

%

Federal funds and repurchase agreements

 

 

2,744,516

 

 

 

0.26

 

 

 

2,138,156

 

 

 

0.37

 

Borrowed funds

 

 

270,305

 

 

 

4.76

 

 

 

85,681

 

 

 

6.32

 

Total interest-bearing liabilities

 

 

20,095,791

 

 

 

0.23

 

 

 

17,341,566

 

 

 

0.34

 

Noninterest-bearing demand deposits

 

 

10,701,656

 

 

 

 

 

 

7,662,836

 

 

 

 

Other liabilities

 

 

398,319

 

 

 

 

 

 

411,964

 

 

 

 

Shareholders’ equity

 

 

3,068,458

 

 

 

 

 

 

2,719,659

 

 

 

 

Total liabilities and shareholders’ equity

 

$

34,264,224

 

 

 

 

 

$

28,136,025

 

 

 

 

Net interest spread

 

 

 

 

 

2.47

%

 

 

 

 

 

2.67

%

Net interest margin

 

 

 

 

 

2.56

 

 

 

 

 

 

2.79

 

Average Balances / Yields and Rates

 

UMB Financial Corporation

(tax – equivalent basis)

 

 

 

 

 

 

 

 

 

 

 

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

2021

 

2020

 

 

Average

 

Average

 

Average

 

Average

 

 

Balance

 

Yield/Rate

 

Balance

 

Yield/Rate

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Loans, net of unearned interest

 

$

16,533,463

 

 

 

3.72

%

 

$

14,357,466

 

 

 

4.08

%

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

6,698,020

 

 

 

1.71

 

 

 

4,881,854

 

 

 

2.19

 

Tax-exempt

 

 

4,295,317

 

 

 

2.95

 

 

 

4,085,558

 

 

 

3.05

 

Total securities

 

 

10,993,337

 

 

 

2.20

 

 

 

8,967,412

 

 

 

2.58

 

Federal funds and resell agreements

 

 

1,375,689

 

 

 

0.79

 

 

 

1,015,720

 

 

 

1.39

 

Interest bearing due from banks

 

 

3,079,684

 

 

 

0.10

 

 

 

1,164,405

 

 

 

0.53

 

Trading securities

 

 

19,485

 

 

 

4.28

 

 

 

42,959

 

 

 

4.93

 

Total earning assets

 

 

32,001,658

 

 

 

2.72

 

 

 

25,547,962

 

 

 

3.28

 

Allowance for credit losses

 

 

(209,469

)

 

 

 

 

 

(154,062

)

 

 

 

Other assets

 

 

1,862,036

 

 

 

 

 

 

1,693,684

 

 

 

 

Total assets

 

$

33,654,225

 

 

 

 

 

$

27,087,584

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

17,076,681

 

 

 

0.16

%

 

$

14,723,895

 

 

 

0.56

%

Federal funds and repurchase agreements

 

 

2,632,567

 

 

 

0.28

 

 

 

2,084,271

 

 

 

0.80

 

Borrowed funds

 

 

269,942

 

 

 

4.77

 

 

 

78,164

 

 

 

6.96

 

Total interest-bearing liabilities

 

 

19,979,190

 

 

 

0.24

 

 

 

16,886,330

 

 

 

0.62

 

Noninterest-bearing demand deposits

 

 

10,230,287

 

 

 

 

 

 

7,079,224

 

 

 

 

Other liabilities

 

 

414,535

 

 

 

 

 

 

401,724

 

 

 

 

Shareholders’ equity

 

 

3,030,213

 

 

 

 

 

 

2,720,306

 

 

 

 

Total liabilities and shareholders’ equity

 

$

33,654,225

 

 

 

 

 

$

27,087,584

 

 

 

 

Net interest spread

 

 

 

 

 

2.48

%

 

 

 

 

 

2.66

%

Net interest margin

 

 

 

 

 

2.57

 

 

 

 

 

 

2.88

 

Business Segment Information

 

UMB Financial Corporation

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2021

 

 

Commercial

Banking

 

Institutional

Banking

 

Personal

Banking

 

Total

Net interest income

 

$

135,656

 

 

$

21,258

 

 

$

44,157

 

 

$

201,071

 

Provision for credit losses

 

 

22,009

 

 

 

147

 

 

 

1,844

 

 

 

24,000

 

Noninterest income

 

 

36,391

 

 

 

68,745

 

 

 

26,453

 

 

 

131,589

 

Noninterest expense

 

 

69,144

 

 

 

72,575

 

 

 

59,619

 

 

 

201,338

 

Income before taxes

 

 

80,894

 

 

 

17,281

 

 

 

9,147

 

 

 

107,322

 

Income tax expense

 

 

15,007

 

 

 

3,206

 

 

 

1,697

 

 

 

19,910

 

Net income

 

$

65,887

 

 

$

14,075

 

 

$

7,450

 

 

$

87,412

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2020

 

 

Commercial

Banking

 

Institutional

Banking

 

Personal

Banking

 

Total

Net interest income

 

$

113,095

 

$

28,124

 

$

37,010

 

 

$

178,229

Provision for credit losses

 

 

19,281

 

 

 

298

 

 

 

1,921

 

 

 

21,500

 

Noninterest income

 

 

24,078

 

 

 

66,488

 

 

 

29,890

 

 

 

120,456

 

Noninterest expense

 

 

62,123

 

 

 

76,953

 

 

 

69,457

 

 

 

208,533

 

Income (loss) before taxes

 

 

55,769

 

 

 

17,361

 

 

 

(4,478

)

 

 

68,652

 

Income tax expense (benefit)

 

 

6,597

 

 

 

2,055

 

 

 

(529

)

 

 

8,123

 

Net income (loss)

 

$

49,172

 

 

$

15,306

 

 

$

(3,949

)

 

$

60,529

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2021

 

 

Commercial

Banking

 

Institutional

Banking

 

Personal

Banking

 

Total

Net interest income

 

$

268,687

 

 

$

43,397

 

 

$

83,102

 

 

$

395,186

 

Provision for credit losses

 

 

13,827

 

 

 

367

 

 

 

2,306

 

 

 

16,500

 

Noninterest income

 

 

43,777

 

 

 

137,166

 

 

 

59,543

 

 

 

240,486

 

Noninterest expense

 

 

134,789

 

 

 

143,857

 

 

 

123,638

 

 

 

402,284

 

Income before taxes

 

 

163,848

 

 

 

36,339

 

 

 

16,701

 

 

 

216,888

 

Income tax expense

 

 

27,825

 

 

 

6,171

 

 

 

2,837

 

 

 

36,833

 

Net income

 

$

136,023

 

 

$

30,168

 

 

$

13,864

 

 

$

180,055

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2020

 

 

Commercial

Banking

 

Institutional

Banking

 

Personal

Banking

 

Total

Net interest income

 

$

220,044

 

 

$

61,159

 

 

$

70,967

 

 

$

352,170

 

Provision for credit losses

 

 

101,501

 

 

 

573

 

 

 

7,426

 

 

 

109,500

 

Noninterest income

 

 

35,318

 

 

 

128,440

 

 

 

55,122

 

 

 

218,880

 

Noninterest expense

 

 

121,166

 

 

 

145,406

 

 

 

130,580

 

 

 

397,152

 

Income (loss) before taxes

 

 

32,695

 

 

 

43,620

 

 

 

(11,917

)

 

 

64,398

 

Income tax expense (benefit)

 

 

3,709

 

 

 

4,951

 

 

 

(1,352

)

 

 

7,308

 

Net income (loss)

 

$

28,986

 

 

$

38,669

 

 

$

(10,565

)

 

$

57,090

 

The company has strategically aligned its operations into the following three reportable segments: Commercial Banking, Institutional Banking, and Personal Banking. Senior executive officers regularly evaluate business segment financial results produced by the company’s internal reporting system in deciding how to allocate resources and assess performance for individual business segments. The company’s reportable segments include certain corporate overhead, technology and service costs that are allocated based on methodologies that are applied consistently between periods. For comparability purposes, amounts in all periods are based on methodologies in effect at June 30, 2021.

Non-GAAP Financial Measures

Net operating income Non-GAAP reconciliations:

 

UMB Financial Corporation

(unaudited, dollars in thousands except per share data)

 

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2021

 

2020

 

2021

 

2020

Net income (GAAP)

 

$

87,412

 

 

$

60,529

 

 

$

180,055

 

 

$

57,090

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition expense

 

 

 

 

 

123

 

 

 

 

 

 

246

 

Severance expense

 

 

103

 

 

 

137

 

 

 

124

 

 

 

1,789

 

COVID-19 related expense

 

 

182

 

 

 

3,989

 

 

 

337

 

 

 

4,217

 

Tax-impact of adjustments (i)

 

 

(63

)

 

 

(943

)

 

 

(102

)

 

 

(1,388

)

Total Non-GAAP adjustments (net of tax)

 

 

222

 

 

 

3,306

 

 

 

359

 

 

 

4,864

 

Net operating income (Non-GAAP)

 

$

87,634

 

 

$

63,835

 

 

$

180,414

 

 

$

61,954

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share – diluted (GAAP)

 

$

1.79

 

 

$

1.26

 

 

$

3.70

 

 

$

1.18

 

Acquisition expense

 

 

 

 

 

 

 

 

 

 

 

0.01

 

Severance expense

 

 

 

 

 

0.01

 

 

 

 

 

 

0.04

 

COVID-19 related expense

 

 

0.01

 

 

 

0.08

 

 

 

0.01

 

 

 

0.08

 

Tax-impact of adjustments (i)

 

 

 

 

 

(0.02

)

 

 

 

 

 

(0.03

)

Operating earnings per share – diluted (Non-GAAP)

 

$

1.80

 

 

$

1.33

 

 

$

3.71

 

 

$

1.28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

1.02

%

 

 

0.87

%

 

 

1.08

%

 

 

0.42

%

Return on average equity

 

 

11.43

 

 

 

8.95

 

 

 

11.98

 

 

 

4.22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

Operating return on average assets

 

 

1.03

%

 

 

0.91

%

 

 

1.08

%

 

 

0.46

%

Operating return on average equity

 

 

11.46

 

 

 

9.44

 

 

 

12.01

 

 

 

4.58

 

 

(i) Calculated using the company’s marginal tax rate of 22.2%.

Operating noninterest expense and operating efficiency ratio Non-GAAP reconciliations:

 

UMB Financial Corporation

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2021

 

2020

 

2021

 

2020

Noninterest expense

 

$

201,338

 

 

$

208,533

 

 

$

402,284

 

 

$

397,152

 

Adjustments to arrive at operating noninterest expense (pre-tax):

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition expense

 

 

 

 

 

123

 

 

 

 

 

 

246

 

Severance expense

 

 

103

 

 

 

137

 

 

 

124

 

 

 

1,789

 

COVID-19 related expense

 

 

182

 

 

 

3,989

 

 

 

337

 

 

 

4,217

 

Total Non-GAAP adjustments (pre-tax)

 

 

285

 

 

 

4,249

 

 

 

461

 

 

 

6,252

 

Operating noninterest expense (Non-GAAP)

 

$

201,053

 

 

$

204,284

 

 

$

401,823

 

 

$

390,900

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense

 

$

201,338

 

 

$

208,533

 

 

$

402,284

 

 

$

397,152

 

Less: Amortization of other intangibles

 

 

1,157

 

 

 

1,658

 

 

 

2,537

 

 

 

3,392

 

Noninterest expense, net of amortization of other intangibles (Non-GAAP) (numerator A)

 

$

200,181

 

 

$

206,875

 

 

$

399,747

 

 

$

393,760

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating noninterest expense

 

$

201,053

 

 

$

204,284

 

 

$

401,823

 

 

$

390,900

 

Less: Amortization of other intangibles

 

 

1,157

 

 

 

1,658

 

 

 

2,537

 

 

 

3,392

 

Operating expense, net of amortization of other intangibles (Non-GAAP) (numerator B)

 

$

199,896

 

 

$

202,626

 

 

$

399,286

 

 

$

387,508

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

201,071

 

 

$

178,229

 

 

$

395,186

 

 

$

352,170

 

Noninterest income

 

 

131,589

 

 

 

120,456

 

 

 

240,486

 

 

 

218,880

 

Less: Gains on sales of securities available for sale, net

 

 

1,300

 

 

 

4,006

 

 

 

4,020

 

 

 

5,233

 

Total Non-GAAP Revenue (denominator A)

 

$

331,360

 

 

$

294,679

 

 

$

631,652

 

 

$

565,817

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Efficiency ratio (numerator A/denominator A)

 

 

60.41

%

 

 

70.20

%

 

 

63.29

%

 

 

69.59

%

Operating efficiency ratio (Non-GAAP) (numerator B/denominator A)

 

 

60.33

 

 

 

68.76

 

 

 

63.21

 

 

 

68.49

 

Pre-tax, pre-provision income non-GAAP reconciliations:

UMB Financial Corporation

(unaudited, dollars in thousands except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2021

 

2020

 

2021

 

2020

Net income before taxes (GAAP)

 

$

107,322

 

$

68,652

 

$

216,888

 

$

64,398

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

 

24,000

 

 

 

21,500

 

 

 

16,500

 

 

 

109,500

 

Pre-tax, pre-provision income (Non-GAAP)

 

$

131,322

 

 

$

90,152

 

 

$

233,388

 

 

$

173,898

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax earnings per share – diluted (GAAP)

 

$

2.20

 

 

$

1.43

 

 

$

4.46

 

 

$

1.33

 

Provision for credit losses

 

 

0.50

 

 

 

0.45

 

 

 

0.34

 

 

 

2.26

 

Pre-tax, pre-provision earnings per share – diluted (Non-GAAP)

 

$

2.70

 

 

$

1.88

 

 

$

4.80

 

 

$

3.59

 

Pre-tax, pre-provision income – FTE Non-GAAP reconciliations:

 

UMB Financial Corporation

(unaudited, dollars in thousands except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2021

 

2020

 

2021

 

2020

Net interest income

 

$

201,071

 

$

178,229

 

$

395,186

 

$

352,170

Adjustments to arrive at net interest income – FTE:

 

 

 

 

 

 

 

 

 

 

 

 

Tax equivalent interest

 

 

6,629

 

 

 

6,604

 

 

 

13,307

 

 

 

13,082

 

Net interest income – FTE

 

$

207,700

 

 

$

184,833

 

 

$

408,493

 

 

$

365,252

 

Noninterest income

 

 

131,589

 

 

 

120,456

 

 

 

240,486

 

 

 

218,880

 

Less: Noninterest expense

 

 

201,338

 

 

 

208,533

 

 

 

402,284

 

 

 

397,152

 

Pre-tax, pre-provision income – FTE (Non-GAAP)

 

$

137,951

 

 

$

96,756

 

 

$

246,695

 

 

$

186,980

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income earnings per share – diluted

 

$

4.13

 

 

$

3.71

 

 

$

8.13

 

 

$

7.26

 

Tax equivalent interest

 

 

0.13

 

 

 

0.14

 

 

 

0.28

 

 

 

0.27

 

Net interest income – FTE

 

 

4.26

 

 

 

3.85

 

 

 

8.41

 

 

 

7.53

 

Noninterest income

 

 

2.70

 

 

 

2.50

 

 

 

4.95

 

 

 

4.52

 

Less: Noninterest expense

 

 

4.13

 

 

 

4.34

 

 

 

8.28

 

 

 

8.19

 

Pre-tax, pre-provision income – FTE earnings per share – diluted (Non-GAAP)

 

$

2.83

 

 

$

2.01

 

 

$

5.08

 

 

$

3.86

 

Tangible book value non-GAAP reconciliations:

UMB Financial Corporation

(unaudited, dollars in thousands except share and per share data)

 

 

 

 

 

 

 

 

As of June 30,

 

 

2021

 

2020

Total shareholders’ equity (GAAP)

 

$

3,090,244

 

$

2,777,395

Less: Intangible assets

 

 

 

 

 

 

Goodwill

 

 

174,518

 

 

 

180,867

 

Other intangibles, net

 

 

16,636

 

 

 

24,181

 

Total intangibles, net

 

 

191,154

 

 

 

205,048

 

Total tangible shareholders’ equity (Non-GAAP)

 

$

2,899,090

 

 

$

2,572,347

 

 

 

 

 

 

 

 

Total shares outstanding

 

 

48,346,371

 

 

 

48,021,707

 

 

 

 

 

 

 

 

Ratio of total shareholders’ equity (book value) per share

 

$

63.92

 

 

$

57.84

 

Ratio of total tangible shareholders’ equity (tangible book value) per share (Non-GAAP)

 

 

59.96

 

 

 

53.57

 

 

Contacts

Media Contact: Stephanie Hague: 816.860.5088

Investor Relations Contact: Kay Gregory: 816.860.7106

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