UMB Financial Corporation Reports First Quarter Net Income of $92.6 Million

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First Quarter 2021 Financial Highlights (all comparisons to prior year)

  • GAAP net income of $92.6 million, or $1.91 per diluted share; net operating income of $92.8 million, or $1.91 per diluted share.
  • Pre-tax, pre-provision (PTPP) income of $102.1 million, an increase of $18.3 million.
  • Quarterly average loan balances increased $2.6 billion, or 19.3%.
  • Quarterly average deposits grew 28.8% to $26.8 billion.
  • Noninterest income increased 10.6% and comprised 35.9% of revenue.
  • Credit quality remained strong, with net charge-offs of just 0.13% of average loans, consistent with the company's historical performance.

UMB Financial Corporation UMBF, a financial services company, announced net income for the first quarter of 2021 of $92.6 million, or $1.91 per diluted share, compared to net income of $156.3 million, or $3.24 per diluted share, in the fourth quarter of 2020 (linked quarter) and net loss of $3.4 million, or $0.07 per diluted share, in the first 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 $92.8 million, or $1.91 per diluted share, for the first quarter of 2021, compared to $157.4 million, or $3.26 per diluted share, for the linked quarter and net operating loss of $1.9 million, or $0.04 per diluted share, for the first 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 $108.7 million, or $2.24 per diluted share, for the first quarter of 2021, compared to $202.9 million, or $4.20 per diluted share, for the linked quarter, and $90.2 million, or $1.85 per diluted share, for the first quarter of 2020. These PTPP-FTE results represent a decrease of 46.4% on a linked-quarter basis and an increase of 20.5% compared to the first quarter of 2020.

Net income comparisons to the linked quarter were primarily impacted by an $108.8 million pre-tax gain recognized in the prior period on the company's equity investment in Tattooed Chef, Inc. (TTCF), and a subsequent $16.1 million pre-tax mark-to-market loss on those investments in the current period. Net income comparisons to the first quarter of 2020 were primarily impacted by the significantly higher provision expense in the prior period related to the implementation of the current expected credit loss (CECL) methodology for estimating allowance for credit losses as well as the $16.1 million pre-tax mark-to-market adjustment on TTCF shares.

Summary of quarterly financial results

UMB Financial Corporation

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

 

Q1

 

Q4

 

Q1

 

2021

 

2020

 

2020

Net income (loss) (GAAP)

$

92,643

 

$

156,320

 

$

(3,439

)

Earnings (losses) per share (diluted)

 

1.91

 

 

3.24

 

 

(0.07

)

 

 

 

 

 

 

 

 

 

 

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

 

102,066

 

 

196,107

 

 

83,746

 

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

 

2.10

 

 

4.06

 

1.72

 

 

 

 

 

 

 

 

 

 

 

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

 

108,744

 

 

202,946

 

 

90,224

 

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

 

2.24

 

 

4.20

 

1.85

 

 

 

 

 

 

 

 

 

 

 

Net operating income (loss) (Non-GAAP)

 

92,780

 

 

157,405

 

 

(1,881

)

Operating earnings (losses) per share (diluted)

 

1.91

 

 

3.26

 

 

(0.04

)

 

 

 

 

 

 

 

 

 

 

GAAP

 

 

 

 

 

 

 

 

 

Return on average assets

 

1.14

%

 

2.03

%

 

(0.05

)%

Return on average equity

 

12.56

 

 

21.18

 

 

(0.51

)

Efficiency ratio

 

66.46

 

 

53.44

 

 

68.93

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP

 

 

 

 

 

 

 

 

 

Operating return on average assets

 

1.14

%

 

2.05

%

 

(0.03

)%

Operating return on average equity

 

12.58

 

 

21.33

 

 

(0.28

)

Operating efficiency ratio

 

66.40

 

 

53.11

 

 

68.19

 

 

"Our team continued to deliver and execute on core tenets that differentiate our story and value proposition for our shareholders," said Mariner Kemper, chairman, president and chief executive officer. "During the first quarter, we saw optimistic signs of an improving operating environment. Strong balance sheet growth funded by a growing core deposit base, robust fee income generation from our diversified business lines, and solid asset quality metrics drove our strong financial results. Average loans, excluding Paycheck Protection Program (PPP) balances, increased 8.4% annualized on a linked-quarter basis. Net charge-offs averaged just 13 basis points of loans, while levels of non-performing assets and delinquencies improved from the end of the prior period. The 19-basis-point decline in net interest margin on a linked-quarter basis was due in part to excess liquidity as well as seasonal inflows in some of our businesses, which had approximately a 16 basis-point impact to our margin."

Summary of revenue

UMB Financial Corporation

(unaudited, dollars in thousands)

 

 

Q1

 

Q4

 

Q1

 

CQ vs.

 

CQ vs.

 

2021

 

2020

 

2020

 

LQ

 

PY

Net interest income

$

194,115

 

$

194,675

 

$

173,941

 

$

(560

)

$

20,174

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trust and securities processing

 

54,834

 

 

50,773

 

 

47,000

 

 

4,061

 

 

7,834

 

Trading and investment banking

 

9,356

 

 

9,693

 

 

1,723

 

 

(337

)

 

7,633

 

Service charges on deposit accounts

 

21,976

 

 

20,074

 

 

25,081

 

 

1,902

 

 

(3,105

)

Insurance fees and commissions

 

420

 

 

318

 

 

259

 

 

102

 

 

161

 

Brokerage fees

 

3,334

 

 

3,918

 

 

9,860

 

 

(584

)

 

(6,526

)

Bankcard fees

 

14,673

 

 

15,788

 

 

16,545

 

 

(1,115

)

 

(1,872

)

Investment securities (losses) gains, net

 

(8,336

)

 

113,010

 

 

3,520

 

 

(121,346

)

 

(11,856

)

Other

 

12,640

 

 

14,716

 

 

(5,564

)

 

(2,076

)

 

18,204

 

Total noninterest income

$

108,897

 

$

228,290

 

$

98,424

 

$

(119,393

)

$

10,473

 

Total revenue

$

303,012

 

$

422,965

 

$

272,365

 

$

(119,953

)

$

30,647

 

Net interest income (FTE)

$

200,793

 

$

201,514

 

$

180,419

 

 

 

 

 

 

 

Net interest margin (FTE)

 

2.59

%

 

2.78

%

 

2.97

%

 

 

 

 

 

 

Total noninterest income as a % of total revenue

 

35.94

 

 

53.97

 

 

36.14

 

 

 

 

 

 

 

 

Net interest income

  • Net interest income totaled $194.1 million, which is a decrease of $0.6 million as compared to the linked quarter. The positive impact from strong balance sheet growth was reduced by the impacts of lower loan fees and PPP income in the quarter. Average earning assets increased $2.6 billion, or 8.9%, driven primarily by an increase in excess liquidity, while interest-bearing liabilities increased $1.6 billion, or 8.8%.
  • Net interest margin for the first quarter was 2.59%, a decrease of 19 basis points from the linked quarter, driven in part from the impacts of excess liquidity. Earning asset yields declined 21 basis points from the linked quarter, while the cost of interest-bearing liabilities decreased three basis points to 0.24%, driven by a four-basis-point decline in the cost of interest-bearing deposits. Net interest spread decreased 18 basis points to 2.50% from the linked quarter and was 16 basis points lower than the first quarter of 2020.
  • On a year-over-year basis, net interest income increased $20.2 million, or 11.6%, driven by a $2.6 billion, or 19.3%, increase in average loans, and a $1.9 billion, or 22.2%, increase in average securities. These increases were driven by organic loan growth, excess liquidity, and the company's PPP participation.
  • Average deposits increased 7.5% on a linked-quarter basis and 28.8% compared to the first quarter of 2020. Average noninterest-bearing demand deposit balances increased 9.0% on a linked-quarter basis and 50.2% compared to the first quarter of 2020.

Noninterest income

  • First quarter 2021 noninterest income decreased $119.4 million, or 52.3%, on a linked-quarter basis, largely due to:
    • A decrease of $121.3 million in investment securities gains, primarily due to a decrease of $124.9 million in gains on the company's investment in TTCF, partially offset by increases of $1.4 million in equity earnings on alternative investments and $1.3 million in gains on sales of available for sale securities.
    • Decreases of $4.4 million in company-owned life insurance income and $1.1 million in derivative income, 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.
    • These decreases were partially offset by increases of $2.6 million and $1.0 million in fund services income and trust services income, respectively, both recorded in trust and securities processing, an increase of $1.7 million in healthcare income, recorded in service charges on deposits, and an increase in other income of $4.3 million due to the gain on sale of Prairie Capital Management, LLC (PCM).
  • Compared to the prior year, noninterest income in the first quarter of 2021 increased $10.5 million, or 10.6%, primarily driven by:
    • An increase of $18.2 million in other income, driven by an increase of $15.0 million in company-owned life insurance and a gain of $4.3 million on the sale of PCM. The increase in company-owned life insurance is offset by a proportionate increase in deferred compensation expense as noted below.
    • An increase of $7.8 million in trust and securities processing, driven by increases of $5.0 million in fund services income, $1.6 million in trust services income, and $1.2 million in corporate trust revenue.
    • An increase of $7.6 million in trading and investment banking due to increased trading volume.
    • These increases were partially offset by the following decreases:
      • A decrease of $11.9 million in investment securities gains due to the $16.1 million mark-to-market loss on the company's investment in TTCF, during the first quarter of 2021, partially offset by increased gains on sales of available for sale securities and equity earnings on alternative investments.
      • A decrease of $6.5 million in brokerage fees, primarily driven by lower 12b-1 income.
      • A decrease of $3.1 million in service charges on deposits, driven by reduced healthcare income related to customer transfer and conversion fees.

Noninterest expense

Summary of noninterest expense

UMB Financial Corporation

(unaudited, dollars in thousands)

 

 

Q1

 

Q4

 

Q1

 

CQ vs.

 

CQ vs.

 

2021

 

2020

 

2020

 

LQ

 

PY

Salaries and employee benefits

$

127,681

$

129,272

$

111,060

$

(1,591

)

$

16,621

 

Occupancy, net

 

11,935

 

11,858

 

12,180

 

77

 

 

(245

)

Equipment

 

19,615

 

22,008

 

21,241

 

(2,393

)

 

(1,626

)

Supplies and services

 

3,492

 

4,125

 

4,185

 

(633

)

 

(693

)

Marketing and business development

 

2,345

 

3,717

 

4,640

 

(1,372

)

 

(2,295

)

Processing fees

 

15,417

 

14,408

 

13,390

 

1,009

 

 

2,027

 

Legal and consulting

 

5,755

 

10,191

 

6,110

 

(4,436

)

 

(355

)

Bankcard

 

4,956

 

4,711

 

4,860

 

245

 

 

96

 

Amortization of other intangible assets

 

1,380

 

1,601

 

1,734

 

(221

)

 

(354

)

Regulatory fees

 

2,546

 

2,393

 

2,366

 

153

 

 

180

 

Other

 

5,824

 

22,574

 

6,853

 

(16,750

)

 

(1,029

)

Total noninterest expense

$

200,946

$

226,858

$

188,619

$

(25,912

)

$

12,327

 

 
  • Noninterest expense for the first quarter of 2021 was $200.9 million, a decrease of $25.9 million, or 11.4%, from the linked quarter and an increase of $12.3 million, or 6.5%, from the first quarter of 2020.
  • The linked-quarter decrease in noninterest expense was driven by:
    • Decreases of $14.2 million in operational losses, $1.0 million in derivative expense, $0.9 million in charitable contributions expense, and $0.9 million in losses on other real estate owned, all recorded in other noninterest expense.
    • A decrease of $2.4 million in software expense, recorded in equipment expense.
    • Decreases of $2.3 million in consulting expense and $2.1 million in legal expense, both recorded in legal and professional expense, due to timing of multiple technology initiatives and legal work performed on various matters.
    • Decreases of $8.4 million in bonus and commission expense, $1.9 million in deferred compensation expense, and $1.0 million in salary and wage expense, all recorded in salaries and employee benefits. These decreases were partially offset by a seasonal increase of $9.6 million in payroll taxes, insurance, and 401(k) expense recognized in the first quarter. The decrease in deferred compensation expense was offset by the decrease in company-owned life insurance income noted above.
  • The year-over-year increase in noninterest expense was driven by:
    • An increase of $16.6 million in salaries and employee benefits, primarily due to increased deferred compensation expense. The increase in deferred compensation expense was offset by the increase in company-owned life insurance income noted above.
    • These increases were partially offset by a decrease of $2.3 million in marketing and development expense, primarily due to a decline in travel and entertainment expense due to the pandemic, and a decrease of $1.3 million in software expense, recorded in equipment expense.

Income taxes

  • The company recognized income tax expense of $16.9 million, or 15.4%, on pre-tax income of $109.6 million for the three months ended March 31, 2021, compared to an income tax benefit of $0.8 million, or 19.2%, on a pre-tax loss of $4.3 million for the same period in 2020. The amount of tax expense recorded for the three months ended March 31, 2021 reflects management's estimate of the annual effective tax rate applied to the year-to-date income adjusted for the tax impact of items discrete to the quarter.

Balance sheet

  • Average total assets for the first quarter of 2021 were $33.1 billion compared to $30.6 billion for the linked quarter and $26.0 billion for the same period in 2020.

Summary of average loans and leases - QTD Average

UMB Financial Corporation

(unaudited, dollars in thousands)

 

 

Q1

 

Q4

 

Q1

 

CQ vs.

 

CQ vs.

 

2021

 

2020

 

2020

 

LQ

 

PY

Commercial and industrial

$

7,139,101

$

7,079,646

$

5,786,545

$

59,455

 

$

1,352,556

 

Specialty lending

 

502,585

 

506,225

 

510,316

 

(3,640

)

 

(7,731

)

Commercial real estate

 

5,971,047

 

5,847,439

 

5,181,036

 

123,608

 

 

790,011

 

Consumer real estate

 

1,970,767

 

1,903,892

 

1,414,025

 

66,875

 

 

556,742

 

Consumer

 

117,095

 

128,350

 

141,972

 

(11,255

)

 

(24,877

)

Credit cards

 

362,051

 

382,166

 

418,485

 

(20,115

)

 

(56,434

)

Leases and other

 

183,447

 

193,363

 

164,187

 

(9,916

)

 

19,260

 

Total loans

$

16,246,093

$

16,041,081

$

13,616,566

$

205,012

 

$

2,629,527

 

 
  • Average loans for the first quarter of 2021 increased 1.3% on a linked-quarter basis and 19.3% compared to the first quarter of 2020 due to increased commercial real estate and consumer real estate loans and the company's PPP participation, which had an average balance of $1.3 billion in the first quarter.

Summary of average securities - QTD Average

UMB Financial Corporation

(unaudited, dollars in thousands)

 

 

Q1

 

Q4

 

Q1

 

CQ vs.

 

CQ vs.

 

2021

 

2020

 

2020

 

LQ

 

PY

Securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

$

36,032

$

30,778

$

49,638

$

5,254

 

$

(13,606

)

U.S. Agencies

 

95,494

 

96,082

 

94,342

 

(588

)

 

1,152

 

Mortgage-backed

 

5,599,987

 

5,053,821

 

4,133,118

 

546,166

 

 

1,466,869

 

State and political subdivisions

 

3,552,945

 

3,600,704

 

3,058,594

 

(47,759

)

 

494,351

 

Corporates

 

83,271

 

76,870

 

188,257

 

6,401

 

 

(104,986

)

Total securities available for sale

$

9,367,729

$

8,858,255

$

7,523,949

$

509,474

 

$

1,843,780

 

Securities held to maturity:

 

 

 

 

 

 

 

 

 

 

 

 

State and political subdivisions

$

1,023,418

$

1,045,640

$

1,108,716

$

(22,222

)

$

(85,298

)

Trading securities

 

17,540

 

29,659

 

48,102

 

(12,119

)

 

(30,562

)

Other securities

 

308,297

 

267,445

 

124,795

 

40,852

 

 

183,502

 

Total securities

$

10,716,984

$

10,200,999

$

8,805,562

$

515,985

 

$

1,911,422

 

 
  • Average securities available for sale increased 5.8% on a linked-quarter basis and 24.5% compared to the first quarter of 2020.

Summary of average deposits - QTD Average

UMB Financial Corporation

(unaudited, dollars in thousands)

 

 

Q1

 

Q4

 

Q1

 

CQ vs.

 

CQ vs.

 

2021

 

2020

 

2020

 

LQ

 

PY

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

$

9,753,680

 

$

8,947,389

 

$

6,495,611

 

$

806,291

$

3,258,069

 

Interest-bearing demand and savings

 

16,302,880

 

 

15,250,236

 

 

13,232,370

 

 

1,052,644

 

3,070,510

 

Time deposits

 

769,464

 

 

767,755

 

 

1,097,780

 

 

1,709

 

(328,316

)

Total deposits

$

26,826,024

 

$

24,965,380

 

$

20,825,761

 

$

1,860,644

$

6,000,263

 

Noninterest bearing deposits as % of total

 

36.36

%

 

35.84

%

 

31.19

%

 

 

 

 

 

 
  • Average deposits increased 7.5% on a linked-quarter basis and 28.8% compared to the first quarter of 2020.
  • Average noninterest-bearing demand deposits increased 9.0% on a linked-quarter basis to $9.8 billion.

Capital

Capital information

UMB Financial Corporation

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

 

 

March 31,
2021

 

December 31,
2020

 

March 31,
2020

Total equity

$

2,958,239

 

$

3,016,948

 

$

2,663,441

 

Book value per common share

 

61.24

 

 

62.84

 

 

55.33

 

Tangible book value per common share

 

57.26

 

 

58.64

 

 

51.04

 

 

 

 

 

 

 

 

 

 

 

Regulatory capital:

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital

$

2,660,102

 

$

2,547,634

 

$

2,279,039

 

Tier 1 capital

 

2,660,102

 

 

2,547,634

 

 

2,279,039

 

Total capital

 

3,102,333

 

 

3,002,545

 

 

2,514,445

 

 

 

 

 

 

 

 

 

 

 

Regulatory capital ratios:

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital ratio

 

12.25

%

 

12.10

%

 

11.90

%

Tier 1 risk-based capital ratio

 

12.25

 

 

12.10

 

 

11.90

 

Total risk-based capital ratio

 

14.28

 

 

14.26

 

 

13.12

 

Tier 1 leverage ratio

 

8.08

 

 

8.37

 

 

8.81

 

 
  • At March 31, 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)

 

 

Q1

 

Q4

 

Q3

 

Q2

 

Q1

 

2021

 

2020

 

2020

 

2020

 

2020

Net charge-offs - Total loans

$

5,310

 

$

1,801

 

$

5,111

 

$

5,541

 

$

7,672

 

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

 

0.13

%

 

0.04

%

 

0.13

%

 

0.15

%

 

0.23

%

Loans over 90 days past due

$

1,773

 

$

1,952

 

$

1,372

 

$

4,588

 

$

2,211

 

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

 

0.01

%

 

0.01

%

 

0.01

%

 

0.03

%

 

0.02

%

Nonaccrual and restructured loans

$

76,706

 

$

87,823

 

$

93,695

 

$

82,245

 

$

97,029

 

Nonaccrual and restructured loans as a % of total loans

 

0.46

%

 

0.55

%

 

0.59

%

 

0.54

%

 

0.70

%

Provision for credit losses

$

(7,500

)

$

5,000

 

$

16,000

 

$

21,500

 

$

88,000

 

 
  • Provision for credit losses for the first quarter decreased $12.5 million from the linked quarter and $95.5 million from the first quarter of 2020.
  • Provision expense in 2020 included increased expense related to the impact on various economic variables due to the COVID-19 pandemic. The decline in the first quarter of 2021 represents a release of Allowance for Credit Losses based on positive macro-economic data and portfolio credit metrics.
  • Net charge-offs for the first quarter totaled $5.3 million, or 0.13%, of average loans, compared to $1.8 million, or 0.04%, of average loans in the linked quarter, and $7.7 million, or 0.23%, of average loans for the first quarter of 2020.

Conference Call
The company plans to host a conference call to discuss its first quarter earnings results on Wednesday, April 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:

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UMB Financial 1Q 2021 Conference Call

A replay of the conference call may be heard through May 12, 2021 by calling (toll-free) 877-344-7529 or (international) 412-317-0088. The replay access code required for playback is 10153930. 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 (loss), operating earnings (losses) 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 (loss), 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 (loss) 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 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)

 

 

March 31,

 

2021

 

2020

ASSETS

 

 

 

 

 

 

Loans

$

16,497,385

 

$

13,949,710

 

Allowance for credit losses on loans

 

(202,814

)

 

(187,911

)

Net loans

 

16,294,571

 

 

13,761,799

 

Loans held for sale

 

10,275

 

 

9,585

 

Securities:

 

 

 

 

 

 

Available for sale

 

9,753,392

 

 

7,639,451

 

Held to maturity, net of allowance for credit losses

 

1,039,711

 

 

1,110,925

 

Trading securities

 

29,099

 

 

61,177

 

Other securities

 

298,209

 

 

135,194

 

Total securities

 

11,120,411

 

 

8,946,747

 

Federal funds sold and resell agreements

 

1,629,813

 

 

784,750

 

Interest-bearing due from banks

 

3,860,763

 

 

1,109,254

 

Cash and due from banks

 

387,230

 

 

340,553

 

Premises and equipment, net

 

286,068

 

 

297,668

 

Accrued income

 

131,533

 

 

111,879

 

Goodwill

 

174,518

 

 

180,867

 

Other intangibles, net

 

17,793

 

 

25,839

 

Other assets

 

756,414

 

 

675,945

 

Total assets

$

34,669,389

 

$

26,244,886

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Noninterest-bearing demand

$

11,604,415

 

$

7,269,520

 

Interest-bearing demand and savings

 

16,011,812

 

 

12,920,980

 

Time deposits under $250,000

 

457,290

 

 

595,128

 

Time deposits of $250,000 or more

 

207,275

 

 

389,892

 

Total deposits

 

28,280,792

 

 

21,175,520

 

Federal funds purchased and repurchase agreements

 

2,759,818

 

 

1,890,917

 

Short-term debt

 

 

 

15,000

 

Long-term debt

 

270,074

 

 

70,668

 

Accrued expenses and taxes

 

239,001

 

 

216,272

 

Other liabilities

 

161,465

 

 

213,068

 

Total liabilities

 

31,711,150

 

 

23,581,445

 

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

 

 

 

Common stock

 

55,057

 

 

55,057

 

Capital surplus

 

1,093,667

 

 

1,073,089

 

Retained earnings

 

1,968,318

 

 

1,646,751

 

Accumulated other comprehensive income, net

 

169,197

 

 

219,390

 

Treasury stock

 

(328,000

)

 

(330,846

)

Total shareholders' equity

 

2,958,239

 

 

2,663,441

 

Total liabilities and shareholders' equity

$

34,669,389

 

$

26,244,886

 

 

Consolidated Statements of Income

UMB Financial Corporation

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

 

Three Months Ended

 

March 31,

 

2021

 

2020

INTEREST INCOME

 

 

 

 

 

 

Loans

$

150,170

 

$

151,026

 

Securities:

 

 

 

 

 

 

Taxable interest

 

27,162

 

 

27,212

 

Tax-exempt interest

 

24,964

 

 

24,404

 

Total securities income

 

52,126

 

 

51,616

 

Federal funds and resell agreements

 

2,821

 

 

5,452

 

Interest-bearing due from banks

 

703

 

 

2,663

 

Trading securities

 

159

 

 

654

 

Total interest income

 

205,979

 

 

211,411

 

INTEREST EXPENSE

 

 

 

 

 

 

Deposits

 

6,798

 

 

29,732

 

Federal funds and repurchase agreements

 

1,886

 

 

6,381

 

Other

 

3,180

 

 

1,357

 

Total interest expense

 

11,864

 

 

37,470

 

Net interest income

 

194,115

 

 

173,941

 

Provision for credit losses

 

(7,500

)

 

88,000

 

Net interest income after provision for credit losses

 

201,615

 

 

85,941

 

NONINTEREST INCOME

 

 

 

 

 

 

Trust and securities processing

 

54,834

 

 

47,000

 

Trading and investment banking

 

9,356

 

 

1,723

 

Service charges on deposit accounts

 

21,976

 

 

25,081

 

Insurance fees and commissions

 

420

 

 

259

 

Brokerage fees

 

3,334

 

 

9,860

 

Bankcard fees

 

14,673

 

 

16,545

 

Investment securities (losses) gains, net

 

(8,336

)

 

3,520

 

Other

 

12,640

 

 

(5,564

)

Total noninterest income

 

108,897

 

 

98,424

 

NONINTEREST EXPENSE

 

 

 

 

 

 

Salaries and employee benefits

 

127,681

 

 

111,060

 

Occupancy, net

 

11,935

 

 

12,180

 

Equipment

 

19,615

 

 

21,241

 

Supplies and services

 

3,492

 

 

4,185

 

Marketing and business development

 

2,345

 

 

4,640

 

Processing fees

 

15,417

 

 

13,390

 

Legal and consulting

 

5,755

 

 

6,110

 

Bankcard

 

4,956

 

 

4,860

 

Amortization of other intangible assets

 

1,380

 

 

1,734

 

Regulatory fees

 

2,546

 

 

2,366

 

Other

 

5,824

 

 

6,853

 

Total noninterest expense

 

200,946

 

 

188,619

 

Income (loss) before income taxes

 

109,566

 

 

(4,254

)

Income tax expense (benefit)

 

16,923

 

 

(815

)

NET INCOME (LOSS)

$

92,643

 

$

(3,439

)

 

 

 

 

 

 

 

PER SHARE DATA

 

 

 

 

 

 

Net income (loss) – basic

$

1.93

 

$

(0.07

)

Net income (loss) – diluted

 

1.91

 

 

(0.07

)

Dividends

 

0.32

 

 

0.31

 

Weighted average shares outstanding – basic

 

48,096,643

 

 

48,689,876

 

Weighted average shares outstanding – diluted

48,520,752

 

48,689,876

 

 

Consolidated Statements of Comprehensive Income

UMB Financial Corporation

(unaudited, dollars in thousands)

 

 

Three Months Ended

 

March 31,

 

2021

 

2020

Net income (loss)

$

92,643

 

$

(3,439

)

Other comprehensive (loss) income, before tax:

 

 

 

 

 

 

Unrealized gains and losses on debt securities:

 

 

 

 

 

 

Change in unrealized holding gains and losses, net

 

(199,038

)

 

164,116

 

Less: Reclassification adjustment for gains included in net income

 

(2,720

)

 

(1,227

)

Change in unrealized gains and losses on debt securities

 

(201,758

)

 

162,889

 

Unrealized gains and losses on derivative hedges:

 

 

 

 

 

 

Change in unrealized gains and losses on derivative hedges, net

 

6,503

 

 

14,525

 

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

 

(842

)

 

768

 

Change in unrealized gains and losses on derivative hedges

 

5,661

 

 

15,293

 

Other comprehensive (loss) income, before tax

 

(196,097

)

 

178,182

 

Income tax benefit (expense)

 

46,954

 

 

(41,972

)

Other comprehensive (loss) income

 

(149,143

)

 

136,210

 

Comprehensive (loss) income

$

(56,500

)

$

132,771

 

 

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 (loss) income

 

 

 

 

(3,439

)

 

136,210

 

 

 

 

132,771

 

Dividends ($0.31 per share)

 

 

 

 

(15,209

)

 

 

 

 

 

(15,209

)

Purchase of treasury stock

 

 

(4,500

)

 

 

 

 

 

(54,886

)

 

(59,386

)

Forfeitures of equity awards, net of issuances

 

 

521

 

 

 

 

 

 

72

 

 

593

 

Recognition of equity-based compensation

 

 

2,817

 

 

 

 

 

 

 

 

2,817

 

Sale of treasury stock

 

 

95

 

 

 

 

 

 

89

 

 

184

 

Exercise of stock options

 

 

392

 

 

 

 

 

 

1,878

 

 

2,270

 

Cumulative effect adjustment

 

 

 

 

(7,039

)

 

 

 

 

 

(7,039

)

Balance - March 31, 2020

$

55,057

$

1,073,089

 

$

1,646,751

 

$

219,390

 

$

(330,846

)

$

2,663,441

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - January 1, 2021

$

55,057

$

1,090,450

 

$

1,891,246

 

$

318,340

 

$

(338,145

)

$

3,016,948

 

Total comprehensive income (loss)

 

 

 

 

92,643

 

 

(149,143

)

 

 

 

(56,500

)

Dividends ($0.32 per share)

 

 

 

 

(15,571

)

 

 

 

 

 

(15,571

)

Purchase of treasury stock

 

 

 

 

 

 

 

 

(4,027

)

 

(4,027

)

Issuances of equity awards, net of forfeitures

 

 

(4,043

)

 

 

 

 

 

4,738

 

 

695

 

Recognition of equity-based compensation

 

 

4,457

 

 

 

 

 

 

 

 

4,457

 

Sale of treasury stock

 

 

65

 

 

 

 

 

 

86

 

 

151

 

Exercise of stock options

 

 

2,738

 

 

 

 

 

 

9,348

 

 

12,086

 

Balance - March 31, 2021

$

55,057

$

1,093,667

 

$

1,968,318

 

$

169,197

 

$

(328,000

)

$

2,958,239

 

 

Average Balances / Yields and Rates

UMB Financial Corporation

(tax - equivalent basis)

 

(unaudited, dollars in thousands)

 

 

Three Months Ended March 31,

 

2021

 

2020

 

Average

 

Average

 

Average

 

Average

 

Balance

 

Yield/Rate

 

Balance

 

Yield/Rate

Assets

 

 

 

 

 

 

 

 

 

 

Loans, net of unearned interest

$

16,246,093

 

3.75

%

$

13,616,566

 

4.46

%

Securities:

 

 

 

 

 

 

 

 

 

 

Taxable

 

6,398,188

 

1.72

 

 

4,694,418

 

2.33

 

Tax-exempt

 

4,301,256

 

2.98

 

 

4,063,042

 

3.05

 

Total securities

 

10,699,444

 

2.23

 

 

8,757,460

 

2.67

 

Federal funds and resell agreements

 

1,643,894

 

0.70

 

 

1,224,196

 

1.79

 

Interest bearing due from banks

 

2,823,771

 

0.10

 

 

826,963

 

1.30

 

Trading securities

 

17,540

 

4.30

 

 

48,102

 

5.84

 

Total earning assets

 

31,430,742

 

2.74

 

 

24,473,287

 

3.58

 

Allowance for credit losses

 

(219,672

)

 

 

 

(112,751

)

 

 

Other assets

 

1,841,224

 

 

 

 

1,679,390

 

 

 

Total assets

$

33,052,294

 

 

 

$

26,039,926

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

$

17,072,344

 

0.16

%

$

14,330,150

 

0.83

%

Federal funds and repurchase agreements

 

2,519,373

 

0.30

 

 

2,030,385

 

1.26

 

Borrowed funds

 

269,576

 

4.78

 

 

70,647

 

7.73

 

Total interest-bearing liabilities

 

19,861,293

 

0.24

 

 

16,431,182

 

0.92

 

Noninterest-bearing demand deposits

 

9,753,680

 

 

 

 

6,495,611

 

 

 

Other liabilities

 

445,777

 

 

 

 

392,181

 

 

 

Shareholders' equity

 

2,991,544

 

 

 

 

2,720,952

 

 

 

Total liabilities and shareholders' equity

$

33,052,294

 

 

 

$

26,039,926

 

 

 

Net interest spread

 

 

 

2.50

%

 

 

 

2.66

%

Net interest margin

 

 

 

2.59

 

 

 

 

2.97

 

 

Business Segment Information

UMB Financial Corporation

(unaudited, dollars in thousands)

 

 

Three Months Ended March 31, 2021

 

Commercial
Banking

 

Institutional
Banking

 

Personal
Banking

 

Total

Net interest income

$

133,032

 

$

22,138

$

38,945

 

$

194,115

 

Provision for credit losses

 

(8,182

)

 

220

 

462

 

 

(7,500

)

Noninterest income

 

7,385

 

 

68,421

 

33,091

 

 

108,897

 

Noninterest expense

 

65,645

 

 

71,282

 

64,019

 

 

200,946

 

Income before taxes

 

82,954

 

 

19,057

 

7,555

 

 

109,566

 

Income tax expense

 

12,813

 

 

2,943

 

1,167

 

 

16,923

 

Net income

$

70,141

 

$

16,114

$

6,388

 

$

92,643

 

 

 

 

Three Months Ended March 31, 2020

 

Commercial
Banking

 

Institutional
Banking

 

Personal
Banking

 

Total

Net interest income

$

106,948

 

$

33,036

$

33,957

 

$

173,941

 

Provision for credit losses

 

82,220

 

 

275

 

5,505

 

 

88,000

 

Noninterest income

 

11,240

 

 

61,952

 

25,232

 

 

98,424

 

Noninterest expense

 

59,043

 

 

68,453

 

61,123

 

 

188,619

 

(Loss) income before taxes

 

(23,075

)

 

26,260

 

(7,439

)

 

(4,254

)

Income tax (benefit) expense

 

(4,421

)

 

5,032

 

(1,426

)

 

(815

)

Net (loss) income

$

(18,654

)

$

21,228

$

(6,013

)

$

(3,439

)

 

 

 

 

 

 

 

 

 

 

 

 

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 March 31, 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 March 31,

 

2021

 

2020

Net income (loss) (GAAP)

$

92,643

 

$

(3,439

)

Adjustments:

 

 

 

 

 

 

Acquisition expense

 

 

 

123

 

Severance expense

 

21

 

 

1,652

 

COVID-19 related expense

 

155

 

 

228

 

Tax-impact of adjustments (i)

 

(39

)

 

(445

)

Total Non-GAAP adjustments (net of tax)

 

137

 

 

1,558

 

Net operating income (loss) (Non-GAAP)

$

92,780

 

$

(1,881

)

 

 

 

 

 

 

 

Earnings (losses) per share - diluted (GAAP)

$

1.91

 

$

(0.07

)

Acquisition expense

 

 

 

 

Severance expense

 

 

 

0.04

 

COVID-19 related expense

 

 

 

 

Tax-impact of adjustments (i)

 

 

 

(0.01

)

Operating earnings (losses) per share - diluted (Non-GAAP)

$

1.91

 

$

(0.04

)

 

 

 

 

 

 

 

GAAP

 

 

 

 

 

 

Return on average assets

 

1.14

%

 

(0.05

)%

Return on average equity

 

12.56

 

 

(0.51

)

 

 

 

 

 

 

 

Non-GAAP

 

 

 

 

 

 

Operating return on average assets

 

1.14

%

 

(0.03

)%

Operating return on average equity

 

12.58

 

 

(0.28

)

(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 March 31,

 

2021

 

2020

Noninterest expense

$

200,946

 

$

188,619

 

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

 

 

 

 

 

 

Acquisition expense

 

 

 

123

 

Severance expense

 

21

 

 

1,652

 

COVID-19 related expense

 

155

 

 

228

 

Total Non-GAAP adjustments (pre-tax)

 

176

 

 

2,003

 

Operating noninterest expense (Non-GAAP)

$

200,770

 

$

186,616

 

 

 

 

 

 

 

 

Noninterest expense

$

200,946

 

$

188,619

 

Less: Amortization of other intangibles

 

1,380

 

 

1,734

 

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

$

199,566

 

$

186,885

 

 

 

 

 

 

 

 

Operating noninterest expense

$

200,770

 

$

186,616

 

Less: Amortization of other intangibles

 

1,380

 

 

1,734

 

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

$

199,390

 

$

184,882

 

 

 

 

 

 

 

 

Net interest income

$

194,115

 

$

173,941

 

Noninterest income

 

108,897

 

 

98,424

 

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

 

2,720

 

 

1,227

 

Total Non-GAAP Revenue (denominator A)

$

300,292

 

$

271,138

 

 

 

 

 

 

 

 

Efficiency ratio (numerator A/denominator A)

 

66.46

%

 

68.93

%

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

 

66.40

 

 

68.19

 

 

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

UMB Financial Corporation

(unaudited, dollars in thousands except per share data)

 

 

Three Months Ended March 31,

 

2021

 

2020

Net income (loss) before taxes (GAAP)

$

109,566

 

$

(4,254

)

Adjustments:

 

 

 

 

 

 

Provision for credit losses

 

(7,500

)

 

88,000

 

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

$

102,066

 

$

83,746

 

 

 

 

 

 

 

 

Pre-tax earnings (losses) per share - diluted (GAAP)

$

2.26

 

$

(0.09

)

Provision for credit losses

 

(0.16

)

 

1.81

 

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

$

2.10

 

$

1.72

 

 

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

UMB Financial Corporation

(unaudited, dollars in thousands except per share data)

 

 

Three Months Ended March 31,

 

2021

 

2020

Net interest income

$

194,115

$

173,941

Adjustments to arrive at net interest income - FTE:

 

 

 

 

Tax equivalent interest

 

6,678

 

6,478

Net interest income - FTE

$

200,793

$

180,419

Noninterest income

 

108,897

 

98,424

Less: Noninterest expense

 

200,946

 

188,619

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

$

108,744

$

90,224

 

 

 

 

 

Net interest income earnings per share - diluted

$

4.00

$

3.57

Tax equivalent interest

 

0.14

 

0.13

Net interest income - FTE

 

4.14

 

3.70

Noninterest income

 

2.24

 

2.02

Less: Noninterest expense

 

4.14

 

3.87

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

$

2.24

$

1.85

Tangible book value non-GAAP reconciliations:

UMB Financial Corporation

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

 

 

As of March 31,

 

2021

 

2020

Total shareholders' equity (GAAP)

$

2,958,239

$

2,663,441

Less: Intangible assets

 

 

 

 

Goodwill

 

174,518

 

180,867

Other intangibles, net

 

17,793

 

25,839

Total intangibles, net

 

192,311

 

206,706

Total tangible shareholders' equity (Non-GAAP)

$

2,765,928

$

2,456,735

 

 

 

 

 

Total shares outstanding

 

48,302,634

 

48,134,601

 

 

 

 

 

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

$

61.24

$

55.33

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

 

57.26

 

51.04

 

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