UMB Financial Corporation

10/26/2021 | Press release | Distributed by Public on 10/26/2021 14:18

UMB Financial Corporation Reports Third Quarter Net Income of $94.5 Million - Form 8-K

UMB Financial Corporation Reports Third Quarter Net Income of $94.5 Million

Third quarter 2021 Financial Highlights (all comparisons to prior year unless otherwise noted)

GAAP net income of $94.5 million, or $1.94 per diluted share; net operating income of $95.1 million, or $1.95 per diluted share.

Pre-tax, pre-provision (PTPP) income of $108.8 million, an increase of $9.4 million.

Quarterly average loan balances increased $1.0 billion, or 6.5%.

Excluding Paycheck Protection Program (PPP) balances, average loans increased 15.3% on a linked-quarter, annualized basis.

Quarterly average deposits grew 22.0% to $29.4 billion.

KANSAS CITY, Mo. (October 26, 2021) - UMB Financial Corporation (Nasdaq: UMBF), afinancial services company, announced net income for the third quarter of 2021 of $94.5 million, or $1.94 per diluted share, compared to $87.4 million, or $1.79 per diluted share, in the second quarter of 2021 (linked quarter) and $73.1 million, or $1.52 per diluted share, in the third 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 $95.1 million, or $1.95 per diluted share, for the third quarter of 2021, compared to $87.6 million, or $1.80 per diluted share, for the linked quarter and $76.4 million, or $1.59 per diluted share, for the third 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 $115.3 million, or $2.37 per diluted share, for the third quarter of 2021, compared to $138.0 million, or $2.83 per diluted share, for the linked quarter, and $106.2 million, or $2.21 per diluted share, for the third quarter of 2020. These PTPP-FTE results represent a decrease of 16.4% on a linked-quarter basis and an increase of 8.6% compared to the third quarter of 2020.

Summary of quarterly financial results

UMB Financial Corporation

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

Q3

Q2

Q3

2021

2021

2020

Net income (GAAP)

$

94,467

$

87,412

$

73,092

Earnings per share (diluted)

1.94

1.79

1.52

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

108,803

131,322

99,385

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

2.23

2.70

2.07

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

115,347

137,951

106,182

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

2.37

2.83

2.21

Net operating income (Non-GAAP)

95,112

87,634

76,434

Operating earnings per share (diluted)

1.95

1.80

1.59

GAAP

Return on average assets

1.04

%

1.02

%

0.99

%

Return on average equity

11.89

11.43

10.23

Efficiency ratio

65.62

60.41

66.14

Non-GAAP

Operating return on average assets

1.05

%

1.03

%

1.03

%

Operating return on average equity

11.97

11.46

10.70

Operating efficiency ratio

65.36

60.33

64.69

Summary of year-to-date financial results

UMB Financial Corporation

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

September

September

YTD

YTD

2021

2020

Net income (GAAP)

$

274,522

$

130,182

Earnings per share (diluted)

5.64

2.69

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

342,191

273,283

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

7.03

5.65

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

362,042

293,162

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

7.44

6.06

Net operating income (Non-GAAP)

275,526

138,388

Operating earnings per share (diluted)

5.66

2.86

GAAP

Return on average assets

1.07

%

0.62

%

Return on average equity

11.95

6.30

Efficiency ratio

64.06

68.40

Non-GAAP

Operating return on average assets

1.07

%

0.66

%

Operating return on average equity

11.99

6.69

Operating efficiency ratio

63.93

67.18

"Our market share gains continue to differentiate us from our peers as evidenced in our third quarter 2021 results," said Mariner Kemper, chairman, president and chief executive officer. "Excluding PPP, average loans increased 15.3% on a linked quarter annualized basis, driven by solid performance in commercial

and industrial lending, as well as in both commercial and residential real estate. Asset quality remained strong in the quarter, with net charge offs of just seven basis points and a $5.0 million reduction in provision for credit losses. Additionally, on a year-to-date basis, total revenue increased 9.8% compared to 2020 despite a challenging interest rate environment, highlighting the resilience of our business model."

Summary of revenue

UMB Financial Corporation

(unaudited, dollars in thousands)

Q3

Q2

Q3

CQ vs.

CQ vs.

2021

2021

2020

LQ

PY

Net interest income

$

209,765

$

201,071

$

184,384

$

8,694

$

25,381

Noninterest income:

Trust and securities processing

56,914

53,863

50,552

3,051

6,362

Trading and investment banking

5,936

8,670

8,678

(2,734

)

(2,742

)

Service charges on deposit accounts

19,881

22,592

19,650

(2,711

)

231

Insurance fees and commissions

285

245

259

40

26

Brokerage fees

2,899

2,592

4,819

307

(1,920

)

Bankcard fees

17,198

16,063

15,295

1,135

1,903

Investment securities (losses) gains, net

(3,510

)

15,455

(475

)

(18,965

)

(3,035

)

Other

8,304

12,109

14,218

(3,805

)

(5,914

)

Total noninterest income

$

107,907

$

131,589

$

112,996

$

(23,682

)

$

(5,089

)

Total revenue

$

317,672

$

332,660

$

297,380

$

(14,988

)

$

20,292

Net interest income (FTE)

$

216,309

$

207,700

$

191,181

Net interest margin (FTE)

2.52

%

2.56

%

2.73

%

Total noninterest income as a % of total revenue

33.97

39.56

38.00

Net interest income

Net interest income totaled $209.8 million, which is an increase of $8.7 million as compared to the linked quarter. The benefit from growth in average earning assets was partially offset by reduced income from PPP loans. Average earning assets increased $1.5 billion, or 4.7%, driven by an increase in liquidity and investment securities, while interest-bearing liabilities increased $799.2 million, or 4.0%.

Net interest margin for the third quarter was 2.52%, a decrease of four basis points from the linked quarter, driven in large part by earning asset mix shift. Earning asset yields declined five basis points from the linked quarter, driven by a three-basis-point decline in securities yields and mix changes. The cost of interest-bearing liabilities decreased one basis point to 0.22%. Net interest spread decreased four basis points to 2.43% from the linked quarter and was 20 basis points lower than the third quarter of 2020.

On a year-over-year basis, net interest income increased $25.4 million, or 13.8%, driven by a $2.1 billion, or 21.3% increase in average securities, coupled with a $1.0 billion, or 6.5%, increase in average loans. These increases were driven by organic loan growth, excess liquidity, and the company's PPP participation.

Average deposits increased 5.9% on a linked-quarter basis and 22.0% compared to the third quarter of 2020. Average noninterest-bearing demand deposit balances increased 6.5% on a linked-quarter basis and 38.0% compared to the third quarter of 2020.

Noninterest income

Third quarter 2021 noninterest income decreased $23.7 million, or 18.0%, on a linked-quarter basis, largely due to:

o

A decrease of $19.0 million in investment securities gains, driven by a mark-to-market decline of $13.2 million on the company's marketable investments, primarily in Tattooed Chef, Inc. (TTCF), as well as $5.6 million in lower gains on other equity investments that benefited the prior quarter.

o

A decrease of $3.5 million in derivative income, recorded in other income.

o

Decreases of $2.7 million in both trading and investment banking and service charges on deposits due to lower trading volume and reduced healthcare income related to customer transfer and conversion fees realized in the prior quarter, respectively.

o

These decreases were offset by increases of $3.1 million in trust and securities processing income and $1.1 million in bankcard fees. The increase in trust and securities processing income is primarily driven by increases of $2.6 million in fund services income and $0.3 million in trust services income. The increase in bankcard income is due to increased interchange income and reduced rebates expense.

Compared to the prior year, noninterest income in the third quarter of 2021 decreased $5.1 million, or 4.5%, primarily driven by:

o

A decrease of $4.0 million and $3.4 million in company-owned life insurance income and derivative income, respectively, both recorded in other income. The decrease in company-owned life insurance is offset by a proportionate decrease in deferred compensation expense as noted below.

o

A decrease of $3.0 million in investment securities gains, primarily due to mark-to-market valuations on the company's equity investment in TTCF.

o

A $2.7 million decrease in trading and investment banking due to decreased trading volumes.

o

These decreases were offset by an increase of $6.4 million in trust and securities processing income and an increase of $1.1 million in bank-owned life insurance, recorded in other income. The increase in trust and securities processing was driven by increases of $7.2 million and $1.3 million in fund services income and corporate trust income, respectively, partially offset by a decrease of $2.2 million trust services income.

Noninterest expense

Summary of noninterest expense

UMB Financial Corporation

(unaudited, dollars in thousands)

Q3

Q2

Q3

CQ vs.

CQ vs.

2021

2021

2020

LQ

PY

Salaries and employee benefits

$

124,986

$

120,415

$

124,194

$

4,571

$

792

Occupancy, net

12,207

12,296

12,027

(89

)

180

Equipment

19,701

19,196

20,968

505

(1,267

)

Supplies and services

3,379

3,469

3,442

(90

)

(63

)

Marketing and business development

4,863

4,797

3,038

66

1,825

Processing fees

16,562

16,501

12,812

61

3,750

Legal and consulting

7,646

8,147

7,244

(501

)

402

Bankcard

4,795

4,529

4,834

266

(39

)

Amortization of other intangible assets

1,110

1,157

1,524

(47

)

(414

)

Regulatory fees

3,186

2,769

2,309

417

877

Other

10,434

8,062

5,603

2,372

4,831

Total noninterest expense

$

208,869

$

201,338

$

197,995

$

7,531

$

10,874

Noninterest expense for the third quarter of 2021 was $208.9 million, an increase of $7.5 million, or 3.7%, from the linked quarter and an increase of $10.9 million, or 5.5%, from the third quarter of 2020.

The linked-quarter increase in noninterest expense was driven by:

o

An increase of $4.6 million in salaries and employee benefits, driven primarily by increased bonus expense from higher company performance.

o

An increase of $2.7 million in operational losses, recorded in other expense.

The year-over-year increase in noninterest expense was driven by:

o

An increase of $3.8 million in processing fees, due to timing of software projects.

o

Increases of $3.0 million in operational losses and $1.3 million in charitable contributions expense, both recorded in other expense.

o

Increases of $1.2 million in travel and entertainment expense and $0.7 million in advertising expense, both recorded in marketing and business development.

o

An increase of $0.8 million in salary and benefit expense, driven by an increase of $4.5 million in salary and bonus expense, partially offset by a decrease of $3.7 million in employee benefit expense. The decline in employee benefit expense was primarily driven by a decrease of $2.7 million in deferred compensation expense. The decrease in deferred compensation expense was offset by the decrease in company-owned life insurance income noted above.

Income taxes

The company's effective tax rate was 17.0% for the nine months ended September 30, 2021, compared to 11.9% for the same period in 2020. The increase in the effective tax 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 third quarter of 2021 were $35.9 billion compared to $34.3 billion for the linked quarter and $29.5 billion for the same period in 2020.

Summary of average loans and leases - QTD Average

UMB Financial Corporation

(unaudited, dollars in thousands)

Q3

Q2

Q3

CQ vs.

CQ vs.

2021

2021

2020

LQ

PY

Commercial and industrial

$

7,097,248

$

7,402,653

$

7,043,780

$

(305,405

)

$

53,468

Specialty lending

486,021

505,687

456,847

(19,666

)

29,174

Commercial real estate

6,285,348

6,165,780

5,744,344

119,568

541,004

Consumer real estate

2,178,010

2,068,663

1,755,249

109,347

422,761

Consumer

115,702

122,439

150,814

(6,737

)

(35,112

)

Credit cards

400,189

386,032

371,444

14,157

28,745

Leases and other

194,235

166,420

209,238

27,815

(15,003

)

Total loans

$

16,756,753

$

16,817,674

$

15,731,716

$

(60,921

)

$

1,025,037

Average loans for the third quarter of 2021 decreased 0.4% on a linked-quarter basis and increased 6.5% compared to the third quarter of 2020 primarily due to the company's participation in the PPP. Excluding PPP balances, average loans increased 3.8% on a linked-quarter basis.

Summary of average securities - QTD Average

UMB Financial Corporation

(unaudited, dollars in thousands)

Q3

Q2

Q3

CQ vs.

CQ vs.

2021

2021

2020

LQ

PY

Securities available for sale:

U.S. Treasury

$

17,903

$

40,013

$

30,881

$

(22,110

)

$

(12,978

)

U.S. Agencies

94,049

94,794

242,504

(745

)

(148,455

)

Mortgage-backed

6,766,619

6,096,099

4,829,586

670,520

1,937,033

State and political subdivisions

3,530,031

3,565,443

3,407,508

(35,412

)

122,523

Commercial Paper

-

-

3,478

-

(3,478

)

Corporates

158,326

127,581

58,866

30,745

99,460

Total securities available for sale

$

10,566,928

$

9,923,930

$

8,572,823

$

642,998

$

1,994,105

Securities held to maturity:

State and political subdivisions

$

1,073,133

$

1,057,091

$

1,085,297

$

16,042

$

(12,164

)

Trading securities

25,392

21,409

32,894

3,983

(7,502

)

Other securities

262,453

302,981

156,816

(40,528

)

105,637

Total securities

$

11,927,906

$

11,305,411

$

9,847,830

$

622,495

$

2,080,076

Average securities available for sale increased 6.5% on a linked-quarter basis and 23.3% compared to the third quarter of 2020.

Summary of average deposits - QTD Average

UMB Financial Corporation

(unaudited, dollars in thousands)

Q3

Q2

Q3

CQ vs.

CQ vs.

2021

2021

2020

LQ

PY

Deposits:

Noninterest-bearing demand

$

11,400,143

$

10,701,656

$

8,260,170

$

698,487

$

3,139,973

Interest-bearing demand and savings

17,376,135

16,421,742

15,125,267

954,393

2,250,868

Time deposits

651,727

659,228

741,750

(7,501

)

(90,023

)

Total deposits

$

29,428,005

$

27,782,626

$

24,127,187

$

1,645,379

$

5,300,818

Noninterest bearing deposits as % of total

38.74

%

38.52

%

34.24

%

Average deposits increased 5.9% on a linked-quarter basis and 22.0% compared to the third quarter of 2020.

Average noninterest-bearing demand deposits increased 6.5% on a linked-quarter basis to $11.4 billion.

Capital

Capital information

UMB Financial Corporation

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

September 30, 2021

June 30, 2021

September 30, 2020

Total equity

$

3,112,840

$

3,090,244

$

2,854,180

Book value per common share

64.37

63.92

59.43

Tangible book value per common share

60.44

59.96

55.19

Regulatory capital:

Common equity Tier 1 capital

$

2,811,117

$

2,730,062

$

2,402,785

Tier 1 capital

2,811,117

2,730,062

2,402,785

Total capital

3,248,869

3,172,878

2,854,598

Regulatory capital ratios:

Common equity Tier 1 capital ratio

12.26

%

11.91

%

11.93

%

Tier 1 risk-based capital ratio

12.26

11.91

11.93

Total risk-based capital ratio

14.17

13.84

14.17

Tier 1 leverage ratio

7.87

8.00

8.19

At September 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)

Q3

Q2

Q1

Q4

Q3

2021

2021

2021

2020

2020

Net charge-offs - Total loans

$

3,127

$

28,374

$

5,310

$

1,801

$

5,111

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

0.07

%

0.68

%

0.13

%

0.04

%

0.13

%

Loans over 90 days past due

$

2,319

$

1,265

$

1,773

$

1,952

$

1,372

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

0.01

%

0.01

%

0.01

%

0.01

%

0.01

%

Nonaccrual and restructured loans

$

96,536

$

58,219

$

76,706

$

87,823

$

93,695

Nonaccrual and restructured loans as a % of total loans

0.59

%

0.34

%

0.46

%

0.55

%

0.59

%

Provision for credit losses

$

(5,000

)

$

24,000

$

(7,500

)

$

5,000

$

16,000

Provision for credit losses for the third quarter decreased $29.0 million from the linked quarter and $21.0 million from the third quarter of 2020. Provision expense in the second quarter of 2021 included the impact to the Allowance for Credit Losses (ACL) of a large charge-off, offset by the impacts of positive macro-economic metrics. The decline in provision expense in the third quarter represents a release of ACL based on positive macro-economic data and portfolio credit metrics.

Net charge-offs for the third quarter totaled $3.1 million, or 0.07%, of average loans, compared to $28.4 million, or 0.68%, of average loans in the linked quarter, and $5.1 million, or 0.13%, of average loans for the third quarter of 2020.

Dividend Declaration

At the company's quarterly board meeting, the Board of Directors declared a $0.37 per share quarterly cash dividend, payable on January 3, 2022, to shareholders of record at the close of business on December 10, 2021.

Conference Call

The company plans to host a conference call to discuss its third quarter 2021 earnings results on Wednesday, October 27, 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 3Q 2021 Conference Call

A replay of the conference call may be heard through November 10, 2021 by calling (toll-free)

877-344-7529 or (international) 412-317-0088. The replay access code required for playback is 10160723. 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).

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

PTPP-FTE 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)

September 30,

2021

2020

ASSETS

Loans

$

16,469,463

$

15,950,177

Allowance for credit losses on loans

(194,156

)

(211,688

)

Net loans

16,275,307

15,738,489

Loans held for sale

4,645

10,978

Securities:

Available for sale

11,162,690

8,719,246

Held to maturity, net of allowance for credit losses

1,087,308

1,067,501

Trading securities

68,882

49,154

Other securities

274,645

159,994

Total securities

12,593,525

9,995,895

Federal funds sold and resell agreements

1,092,104

1,101,313

Interest-bearing due from banks

5,739,267

1,613,675

Cash and due from banks

426,843

440,659

Premises and equipment, net

273,378

295,090

Accrued income

122,798

132,574

Goodwill

174,518

180,867

Other intangibles, net

15,526

22,657

Other assets

836,374

718,775

Total assets

$

37,554,285

$

30,250,972

LIABILITIES

Deposits:

Noninterest-bearing demand

$

13,189,739

$

8,752,882

Interest-bearing demand and savings

17,461,390

15,298,562

Time deposits under $250,000

415,068

491,378

Time deposits of $250,000 or more

169,613

195,085

Total deposits

31,235,810

24,737,907

Federal funds purchased and repurchase agreements

2,500,340

1,929,004

Short-term debt

-

15,000

Long-term debt

271,049

269,044

Accrued expenses and taxes

249,567

255,720

Other liabilities

184,679

190,117

Total liabilities

34,441,445

27,396,792

SHAREHOLDERS' EQUITY

Common stock

55,057

55,057

Capital surplus

1,102,818

1,085,375

Retained earnings

2,116,568

1,750,389

Accumulated other comprehensive income, net

164,307

299,103

Treasury stock

(325,910

)

(335,744

)

Total shareholders' equity

3,112,840

2,854,180

Total liabilities and shareholders' equity

$

37,554,285

$

30,250,972

Consolidated Statements of Income

UMB Financial Corporation

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

Three Months Ended

Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020

INTEREST INCOME

Loans

$

159,242

$

142,441

$

463,949

$

433,471

Securities:

Taxable interest

33,307

26,393

90,249

79,475

Tax-exempt interest

24,458

25,377

74,165

74,393

Total securities income

57,765

51,770

164,414

153,868

Federal funds and resell agreements

2,389

2,248

7,762

9,273

Interest-bearing due from banks

1,699

299

3,235

3,360

Trading securities

231

259

579

1,225

Total interest income

221,326

197,017

639,939

601,197

INTEREST EXPENSE

Deposits

6,741

9,284

20,113

50,259

Federal funds and repurchase agreements

1,596

1,730

5,261

10,061

Other

3,224

1,619

9,614

4,323

Total interest expense

11,561

12,633

34,988

64,643

Net interest income

209,765

184,384

604,951

536,554

Provision for credit losses

(5,000

)

16,000

11,500

125,500

Net interest income after provision for credit losses

214,765

168,384

593,451

411,054

NONINTEREST INCOME

Trust and securities processing

56,914

50,552

165,611

143,873

Trading and investment banking

5,936

8,678

23,962

23,252

Service charges on deposit accounts

19,881

19,650

64,449

63,805

Insurance fees and commissions

285

259

950

1,051

Brokerage fees

2,899

4,819

8,825

20,432

Bankcard fees

17,198

15,295

47,934

44,756

Investment securities (losses) gains, net

(3,510

)

(475

)

3,609

7,624

Other

8,304

14,218

33,053

27,083

Total noninterest income

107,907

112,996

348,393

331,876

NONINTEREST EXPENSE

Salaries and employee benefits

124,986

124,194

373,082

366,192

Occupancy, net

12,207

12,027

36,438

35,618

Equipment

19,701

20,968

58,512

63,711

Supplies and services

3,379

3,442

10,340

11,412

Marketing and business development

4,863

3,038

12,005

10,962

Processing fees

16,562

12,812

48,480

39,805

Legal and consulting

7,646

7,244

21,548

19,574

Bankcard

4,795

4,834

14,280

14,243

Amortization of other intangible assets

1,110

1,524

3,647

4,916

Regulatory fees

3,186

2,309

8,501

7,886

Other

10,434

5,603

24,320

20,828

Total noninterest expense

208,869

197,995

611,153

595,147

Income before income taxes

113,803

83,385

330,691

147,783

Income tax expense

19,336

10,293

56,169

17,601

NET INCOME

$

94,467

$

73,092

$

274,522

$

130,182

PER SHARE DATA

Net income - basic

$

1.96

$

1.52

$

5.69

$

2.70

Net income - diluted

1.94

1.52

5.64

2.69

Dividends

0.37

0.31

1.01

0.93

Weighted average shares outstanding - basic

48,319,414

47,947,056

48,237,819

48,208,447

Weighted average shares outstanding - diluted

48,742,883

48,068,438

48,658,290

48,352,145

Consolidated Statements of Comprehensive Income

UMB Financial Corporation

(unaudited, dollars in thousands)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020

Net income

$

94,467

$

73,092

$

274,522

$

130,182

Other comprehensive (loss) income, before tax:

Unrealized gains and losses on debt securities:

Change in unrealized holding gains and losses, net

(75,717

)

20,975

(198,420

)

269,976

Less: Reclassification adjustment for gains included in net income

(1,058

)

(311

)

(5,078

)

(5,544

)

Change in unrealized gains and losses on debt securities

(76,775

)

20,664

(203,498

)

264,432

Unrealized gains and losses on derivative hedges:

Change in unrealized gains and losses on derivative hedges, net

432

(122

)

3,513

19,015

Less: Reclassification adjustment for gains included in net income

(831

)

(1,123

)

(2,550

)

(869

)

Change in unrealized gains and losses on derivative hedges

(399

)

(1,245

)

963

18,146

Other comprehensive (loss) income, before tax

(77,174

)

19,419

(202,535

)

282,578

Income tax benefit (expense)

18,374

(4,578

)

48,502

(66,655

)

Other comprehensive (loss) income

(58,800

)

14,841

(154,033

)

215,923

Comprehensive income

$

35,667

$

87,933

$

120,489

$

346,105

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

-

-

130,182

215,923

-

346,105

Dividends ($0.93 per share)

-

-

(45,192

)

-

-

(45,192

)

Purchase of treasury stock

-

615

-

-

(60,180

)

(59,565

)

Forfeitures of equity awards, net of issuances

-

565

-

-

43

608

Recognition of equity-based compensation

-

9,834

-

-

-

9,834

Sale of treasury stock

-

158

-

-

311

469

Exercise of stock options

-

439

-

-

2,081

2,520

Cumulative effect adjustment

-

-

(7,039

)

-

-

(7,039

)

Balance - September 30, 2020

$

55,057

$

1,085,375

$

1,750,389

$

299,103

$

(335,744

)

$

2,854,180

Balance - January 1, 2021

$

55,057

$

1,090,450

$

1,891,246

$

318,340

$

(338,145

)

$

3,016,948

Total comprehensive income (loss)

-

-

274,522

(154,033

)

-

120,489

Dividends ($1.01 per share)

-

-

(49,200

)

-

-

(49,200

)

Purchase of treasury stock

-

-

-

-

(4,269

)

(4,269

)

Issuances of equity awards, net of forfeitures

-

(4,374

)

-

-

5,069

695

Recognition of equity-based compensation

-

13,401

-

-

-

13,401

Sale of treasury stock

-

223

-

-

214

437

Exercise of stock options

-

3,118

-

-

11,221

14,339

Balance - September 30, 2021

$

55,057

$

1,102,818

$

2,116,568

$

164,307

$

(325,910

)

$

3,112,840

Average Balances / Yields and Rates

UMB Financial Corporation

(tax - equivalent basis)

(unaudited, dollars in thousands)

Three Months Ended September 30,

2021

2020

Average

Average

Average

Average

Balance

Yield/Rate

Balance

Yield/Rate

Assets

Loans, net of unearned interest

$

16,756,753

3.77

%

$

15,731,716

3.60

%

Securities:

Taxable

7,662,106

1.72

5,478,397

1.92

Tax-exempt

4,240,408

2.90

4,336,539

2.95

Total securities

11,902,514

2.14

9,814,936

2.37

Federal funds and resell agreements

1,092,266

0.87

1,177,590

0.76

Interest bearing due from banks

4,345,422

0.16

1,087,838

0.11

Trading securities

25,392

4.30

32,894

3.54

Total earning assets

34,122,347

2.65

27,844,974

2.91

Allowance for credit losses

(203,144

)

(211,221

)

Other assets

1,953,337

1,846,919

Total assets

$

35,872,540

$

29,480,672

Liabilities and Shareholders' Equity

Interest-bearing deposits

$

18,027,862

0.15

%

$

15,867,017

0.23

%

Federal funds and repurchase agreements

2,596,326

0.24

1,964,161

0.35

Borrowed funds

270,795

4.72

115,943

5.56

Total interest-bearing liabilities

20,894,983

0.22

17,947,121

0.28

Noninterest-bearing demand deposits

11,400,143

8,260,170

Other liabilities

425,385

431,528

Shareholders' equity

3,152,029

2,841,853

Total liabilities and shareholders' equity

$

35,872,540

$

29,480,672

Net interest spread

2.43

%

2.63

%

Net interest margin

2.52

2.73

Average Balances / Yields and Rates

UMB Financial Corporation

(tax - equivalent basis)

(unaudited, dollars in thousands)

Nine Months Ended September 30,

2021

2020

Average

Average

Average

Average

Balance

Yield/Rate

Balance

Yield/Rate

Assets

Loans, net of unearned interest

$

16,608,711

3.74

%

$

14,818,893

3.91

%

Securities:

Taxable

7,022,914

1.72

5,082,153

2.09

Tax-exempt

4,276,813

2.93

4,169,829

3.02

Total securities

11,299,727

2.18

9,251,982

2.51

Federal funds and resell agreements

1,280,177

0.81

1,070,071

1.16

Interest bearing due from banks

3,506,727

0.12

1,140,965

0.39

Trading securities

21,475

4.28

39,580

4.55

Total earning assets

32,716,817

2.70

26,321,491

3.15

Allowance for credit losses

(207,338

)

(173,254

)

Other assets

1,892,516

1,742,652

Total assets

$

34,401,995

$

27,890,889

Liabilities and Shareholders' Equity

Interest-bearing deposits

$

17,397,225

0.15

%

$

15,107,688

0.44

%

Federal funds and repurchase agreements

2,620,354

0.27

2,043,942

0.66

Borrowed funds

270,230

4.76

90,849

6.36

Total interest-bearing liabilities

20,287,809

0.23

17,242,479

0.50

Noninterest-bearing demand deposits

10,624,524

7,475,746

Other liabilities

418,397

411,547

Shareholders' equity

3,071,265

2,761,117

Total liabilities and shareholders' equity

$

34,401,995

$

27,890,889

Net interest spread

2.47

%

2.65

%

Net interest margin

2.55

2.82

Business Segment Information

UMB Financial Corporation

(unaudited, dollars in thousands)

Three Months Ended September 30, 2021

Commercial Banking

Institutional Banking

Personal Banking

Total

Net interest income

$

143,935

$

21,203

$

44,627

$

209,765

Provision for credit losses

(5,720

)

172

548

(5,000

)

Noninterest income

16,523

65,551

25,833

107,907

Noninterest expense

74,359

73,354

61,156

208,869

Income before taxes

91,819

13,228

8,756

113,803

Income tax expense

15,601

2,248

1,487

19,336

Net income

$

76,218

$

10,980

$

7,269

$

94,467

Three Months Ended September 30, 2020

Commercial Banking

Institutional Banking

Personal Banking

Total

Net interest income

$

122,362

$

23,375

$

38,647

$

184,384

Provision for credit losses

14,032

193

1,775

16,000

Noninterest income

22,464

62,688

27,844

112,996

Noninterest expense

65,175

69,667

63,153

197,995

Income before taxes

65,619

16,203

1,563

83,385

Income tax expense

8,100

2,000

193

10,293

Net income

$

57,519

$

14,203

$

1,370

$

73,092

Nine Months Ended September 30, 2021

Commercial Banking

Institutional Banking

Personal Banking

Total

Net interest income

$

412,622

$

64,599

$

127,730

$

604,951

Provision for credit losses

8,107

539

2,854

11,500

Noninterest income

60,294

202,718

85,381

348,393

Noninterest expense

209,144

217,211

184,798

611,153

Income before taxes

255,665

49,567

25,459

330,691

Income tax expense

43,427

8,419

4,323

56,169

Net income

$

212,238

$

41,148

$

21,136

$

274,522

Nine Months Ended September 30, 2020

Commercial Banking

Institutional Banking

Personal Banking

Total

Net interest income

$

342,406

$

84,534

$

109,614

$

536,554

Provision for credit losses

115,533

766

9,201

125,500

Noninterest income

57,782

191,128

82,966

331,876

Noninterest expense

186,341

215,073

193,733

595,147

Income (loss) before taxes

98,314

59,823

(10,354

)

147,783

Income tax expense (benefit)

11,709

7,125

(1,233

)

17,601

Net income (loss)

$

86,605

$

52,698

$

(9,121

)

$

130,182

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 September 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 September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Net income (GAAP)

$

94,467

$

73,092

$

274,522

$

130,182

Adjustments:

Acquisition expense

-

78

-

324

Severance expense

639

2,859

763

4,648

COVID-19 related expense

190

1,358

527

5,575

Tax-impact of adjustments (i)

(184

)

(953

)

(286

)

(2,341

)

Total Non-GAAP adjustments (net of tax)

645

3,342

1,004

8,206

Net operating income (Non-GAAP)

$

95,112

$

76,434

$

275,526

$

138,388

Earnings per share - diluted (GAAP)

$

1.94

$

1.52

$

5.64

$

2.69

Acquisition expense

-

-

-

0.01

Severance expense

0.01

0.06

0.02

0.10

COVID-19 related expense

-

0.03

0.01

0.11

Tax-impact of adjustments (i)

-

(0.02

)

(0.01

)

(0.05

)

Operating earnings per share - diluted (Non-GAAP)

$

1.95

$

1.59

$

5.66

$

2.86

GAAP

Return on average assets

1.04

%

0.99

%

1.07

%

0.62

%

Return on average equity

11.89

10.23

11.95

6.30

Non-GAAP

Operating return on average assets

1.05

%

1.03

%

1.07

%

0.66

%

Operating return on average equity

11.97

10.70

11.99

6.69

(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 September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Noninterest expense

$

208,869

$

197,995

$

611,153

$

595,147

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

Acquisition expense

-

78

-

324

Severance expense

639

2,859

763

4,648

COVID-19 related expense

190

1,358

527

5,575

Total Non-GAAP adjustments (pre-tax)

829

4,295

1,290

10,547

Operating noninterest expense (Non-GAAP)

$

208,040

$

193,700

$

609,863

$

584,600

Noninterest expense

$

208,869

$

197,995

$

611,153

$

595,147

Less: Amortization of other intangibles

1,110

1,524

3,647

4,916

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

$

207,759

$

196,471

$

607,506

$

590,231

Operating noninterest expense

$

208,040

$

193,700

$

609,863

$

584,600

Less: Amortization of other intangibles

1,110

1,524

3,647

4,916

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

$

206,930

$

192,176

$

606,216

$

579,684

Net interest income

$

209,765

$

184,384

$

604,951

$

536,554

Noninterest income

107,907

112,996

348,393

331,876

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

1,058

311

5,078

5,544

Total Non-GAAP Revenue (denominator A)

$

316,614

$

297,069

$

948,266

$

862,886

Efficiency ratio (numerator A/denominator A)

65.62

%

66.14

%

64.06

%

68.40

%

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

65.36

64.69

63.93

67.18

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

UMB Financial Corporation

(unaudited, dollars in thousands except per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Net income before taxes (GAAP)

$

113,803

$

83,385

$

330,691

$

147,783

Adjustments:

Provision for credit losses

(5,000

)

16,000

11,500

125,500

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

$

108,803

$

99,385

$

342,191

$

273,283

Pre-tax earnings per share - diluted (GAAP)

$

2.33

$

1.74

$

6.79

$

3.06

Provision for credit losses

(0.10

)

0.33

0.24

2.59

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

$

2.23

$

2.07

$

7.03

$

5.65

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

UMB Financial Corporation

(unaudited, dollars in thousands except per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Net interest income

$

209,765

$

184,384

$

604,951

$

536,554

Adjustments to arrive at net interest income - FTE:

Tax equivalent interest

6,544

6,797

19,851

19,879

Net interest income - FTE

$

216,309

$

191,181

$

624,802

$

556,433

Noninterest income

107,907

112,996

348,393

331,876

Less: Noninterest expense

208,869

197,995

611,153

595,147

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

$

115,347

$

106,182

$

362,042

$

293,162

Net interest income earnings per share - diluted

$

4.30

$

3.84

$

12.43

$

11.10

Tax equivalent interest

0.14

0.14

0.41

0.41

Net interest income - FTE

4.44

3.98

12.84

11.51

Noninterest income

2.22

2.35

7.16

6.86

Less: Noninterest expense

4.29

4.12

12.56

12.31

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

$

2.37

$

2.21

$

7.44

$

6.06

Tangible book value non-GAAP reconciliations:

UMB Financial Corporation

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

As of September 30,

2021

2020

Total shareholders' equity (GAAP)

$

3,112,840

$

2,854,180

Less: Intangible assets

Goodwill

174,518

180,867

Other intangibles, net

15,526

22,657

Total intangibles, net

190,044

203,524

Total tangible shareholders' equity (Non-GAAP)

$

2,922,796

$

2,650,656

Total shares outstanding

48,355,373

48,028,679

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

$

64.37

$

59.43

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

60.44

55.19