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UMB Financial Corporation Reports Third Quarter 2016 Earnings of $41.9 million, or $0.85 per Diluted Share

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KANSAS CITY, Mo.--(BUSINESS WIRE)--

UMB Financial Corporation (Nasdaq: UMBF), a diversified financial holding company, announced earnings for the third quarter 2016 of $41.9 million or $0.85 per diluted share, compared to $37.5 million or $0.76 per diluted share in the second quarter 2016 (linked quarter) and $22.5 million or $0.46 per diluted share during the third quarter 2015. Year-to-date earnings as of September 30, 2016, were $115.9 million or $2.36 per diluted share, compared to $86.4 million or $1.84 per diluted share for the nine month period ended September 30, 2015.

Net operating income, a non-GAAP financial measure which is reconciled to the nearest comparable GAAP measure later in this release, was $43.0 million or $0.87 per diluted share for the third quarter 2016, compared to $39.5 million or $0.80 per diluted share for the linked quarter and $26.1 million or $0.53 per diluted share for the third quarter 2015. Year-to-date net operating income as of September 30, 2016, was $121.2 million or $2.46 per diluted share, compared to $89.1 million or $1.89 per diluted share for the nine month period ended September 30, 2015.

     
Summary of financial results             UMB Financial Corporation
(unaudited, dollars in thousands, except per share data)
Q3 Q2 Q3
2016       2016       2015  

GAAP

Net income $ 41,946

 

$

37,518

 

$

22,451
Earnings per share (diluted) 0.85 0.76 0.46
Return on average assets 0.85 % 0.78 % 0.49 %
Return on average equity 8.25 7.62 4.72
Efficiency ratio 70.23 % 73.61 % 80.79 %
 

Non-GAAP

Net operating income $ 42,985

 

$

39,466

 

$

26,116
Operating earnings per share (diluted) 0.87 0.80 0.53
Operating return on average assets 0.87 % 0.82 % 0.57 %
Operating return on average equity 8.46 8.02 5.49
Operating efficiency ratio 69.58 % 72.38 % 78.25 %
 

"Our strong results reflect double-digit revenue growth, driven by continued loan growth, higher loan yields, and improved noninterest income, compared to the third quarter 2015," said Mariner Kemper, chairman and chief executive officer. "During the same period, operating expenses declined approximately one percent as we continued to execute on efficiency initiatives, as evidenced by our improved performance metrics."

                       
Summary of revenue                             UMB Financial Corporation
(unaudited, dollars in thousands)
Q3 Q2 Q3 CQ vs. CQ vs.
2016 2016         2015         LQ         PY
 
Net interest income (GAAP) $ 124,765 $ 121,210 $ 109,895 $ 3,555 $ 14,870
Noninterest income:
Trust and securities processing 60,218 59,745 65,182 473 (4,964 )
Trading and investment banking 6,114 5,638 2,969 476 3,145
Service charges on deposit accounts 21,832 22,420 21,663 (588 ) 169
Insurance fees and commisions 698 1,160 480 (462 ) 218
Brokerage fees 4,712 4,262 2,958 450 1,754
Bankcard fees 17,086 17,534 17,624 (448 ) (538 )
Gains on sales of securities available for sale, net 2,978 2,598 101 380 2,877
Equity earnings (losses) on alternative investments 1,594 978 (5,032 ) 616 6,626
Other 6,716           7,112           3,153           (396 )         3,563  
Total noninterest income $ 121,948       $   121,447       $   109,098       $   501       $   12,850  
                                         
Total Revenue $ 246,713       $   242,657       $   218,993       $   4,056       $   27,720  
 
Net interest margin (FTE) 2.87

%

 

2.86

%

 

2.73

%

 

 
Total noninterest income as a % of total revenue 49.4

 

%

50.0

 

%

49.8

 

%

 

Net interest income

  • On a linked quarter basis, the increase in net interest income was driven by an increase in average loans of $294.4 million, higher average loan yields, and an extra day of interest income. The average loan yields increased four basis points to 3.86 percent.
  • On a year-over-year basis, the increase in net interest income was driven by growth in average loans of $1.2 billion and higher average loan yields, which increased ten basis points from a year ago.
  • For the third quarter 2016, average earning assets stood at $18.4 billion, an increase of 1.6 percent over the linked quarter and 9.1 percent over the third quarter 2015.

Noninterest income

  • Third quarter 2016 noninterest income remained flat as compared to the linked quarter and represented 49.4 percent of total revenue.
  • The improvement in noninterest income over the same quarter in 2015 was driven by increases in equity earnings on alternative investments due to improvements in the valuation of the underlying Prairie Capital Management (PCM) fund investments, an increase in trading and investment banking fees, increases in gains on sales of securities available for sale, an increase in brokerage fees driven by corporate debt underwriting fees and 12b-1 income, and a $3.5 million increase in the fair value of company-owned life insurance recorded in other noninterest income.
  • Trust and securities processing income decreased year-over-year primarily due to a $4.7 million, or 36.5 percent, decrease in advisory fee income from the Scout Funds.
   
Summary of Noninterest expense           UMB Financial Corporation
(unaudited, dollars in thousands)            
Q3       Q2       Q3       CQ vs.       CQ vs.
2016       2016       2015       LQ       PY
 
Salaries and employee benefits $ 109,369 $ 108,997 $ 104,733 $ 372 $ 4,636
Occupancy, net 11,394 11,139 11,748 255 (354 )
Equipment 16,231 17,032 17,228 (801 ) (997 )
Supplies and services 4,624 4,719 5,371 (95 ) (747 )
Marketing and business development 5,332 6,313 5,766 (981 ) (434 )
Processing fees 11,264 11,464 12,795 (200 ) (1,531 )
Legal and consulting 4,450 4,937 8,648 (487 ) (4,198 )
Bankcard 5,015 5,369 5,266 (354 ) (251 )
Amortization of other intangible assets 2,992 3,145 3,483 (153 ) (491 )
Regulatory fees 3,370 3,692 3,176 (322 ) 194
Other 5,742       8,536       7,065       (2,794 )       (1,323 )
Total noninterest expense $ 179,783     $ 185,343     $ 185,279     $ (5,560 )     $ (5,496 )
 

Noninterest expense

  • On a non-GAAP basis, operating noninterest expense, which excludes the impact of acquisition expenses and other items as reconciled later in this release, was $178.2 million for the third quarter 2016, a decrease of $4.0 million, or 2.2 percent, compared to the linked quarter, and $1.4 million, or 0.8 percent, compared to the third quarter 2015.
  • Severance related to previously disclosed efficiency initiatives, Marquette-related severance, and other acquisition-related expenses totaled $1.6 million in the third quarter 2016, compared to $3.0 million for the linked quarter and $5.8 million for same quarter last year.
  • On a linked quarter basis, the decrease in other noninterest expense was driven by a $1.8 million decline in operational losses.
  • The decrease in noninterest expense compared to the third quarter 2015 was primarily driven by:
    • lower legal and consulting fees driven by a $1.9 million decrease in legal-related acquisition expenses;
    • decreased processing fees paid to distributors of the Scout Funds;
    • a $1.1 million decrease in off-balance sheet commitment reserves in other noninterest expense; and
    • Offset by increased salaries and employee benefits due to $3.5 million of deferred compensation plan fair value increases, and $2.0 million in volume-related bonus and commission expense driven by increased company performance, partially offset by a decrease of $1.8 million in Marquette-related severance.
  • The company's effective tax rate decreased to 22.2 percent for the third quarter 2016, compared to 25.4 percent for the linked quarter. The decrease is primarily attributable to an increase in federal tax credits and a larger portion of income earned from excludable life insurance policy gains.

Balance Sheet

  • Average total assets for the third quarter 2016 were $19.7 billion compared to $18.1 billion for the same period in 2015, an increase of $1.6 billion, or 8.7 percent.
           
Summary of loans and leases                       UMB Financial Corporation
(unaudited, dollars in thousands)        
September 30, June 30, September 30, CQ vs. CQ vs.
2016       2016       2015       LQ       PY
 
Period End:
Commercial $ 4,438,579 $ 4,444,137 $ 4,087,413 $ (5,558 ) $ 351,166
Asset-based 236,566 223,339 218,666 13,227 17,900
Factoring 107,762 101,327 105,978 6,435 1,784
Commercial credit card 165,434 145,359 143,726 20,075 21,708
Real estate - construction 682,705 531,776 367,117 150,929 315,588
Real estate - commercial 3,010,569 2,985,194 2,491,879 25,375 518,690
Real estate - residential 511,132 478,638 474,435 32,494 36,697
Real estate - HELOC 721,847 741,703 719,039 (19,856 ) 2,808
Consumer credit card 262,751 270,353 284,338 (7,602 ) (21,587 )
Consumer other 124,620 124,863 113,149 (243 ) 11,471
Leases 31,529       36,577       40,386       (5,048 )       (8,857 )
Total loans $ 10,293,494     $ 10,083,266     $ 9,046,126     $ 210,228       $ 1,247,368  
 
  • Average loans at September 30, 2016, increased 3.0 percent, on a linked-quarter basis, and 14.0 percent, compared to third quarter 2015.
           
Summary of securities                       UMB Financial Corporation
(unaudited, dollars in thousands)        
September 30, June 30, September 30, CQ vs. CQ vs.
2016       2016       2015       LQ       PY
 
Securities available for sale:
U.S. Treasury $ 249,526 $ 363,337 $ 352,568 $ (113,811 ) $ (103,042 )
U.S. Agencies 289,440 421,625 712,483 (132,185 ) (423,043 )
Mortgage-backed 3,362,296 3,600,175 3,415,575 (237,879 ) (53,279 )
State and political subdivisions 2,327,220 2,305,979 2,110,684 21,241 216,536
Corporates 67,205       80,063       80,435       (12,858 )       (13,230 )
Total securities available for sale 6,295,687 6,771,179 6,671,745 (475,492 ) (376,058 )
Securities held to maturity:
State and political subdivisions 1,009,117 880,600 588,478 128,517 420,639
Trading securities 58,062 56,311 23,699 1,751 34,363
Other securities 66,853       66,300       68,371       553         (1,518 )
Total securities $ 7,429,719     $ 7,774,390     $ 7,352,293     $ (344,671 )     $ 77,426  
 
  • Total securities available for sale decreased 7.0 percent on a linked-quarter basis and 5.6 percent compared to September 30, 2015, demonstrating success in rotating earning assets into loans.
  • The growth in the company's held to maturity securities portfolio is attributed to increased activity in private placement bonds, primarily used to refinance existing revenue bonds in the healthcare and education sectors.
                   
Summary of deposits               UMB Financial Corporation
(unaudited, dollars in thousands)
September 30, June 30, September 30, CQ vs. CQ vs.
2016       2016       2015       LQ       PY
Deposits:
Noninterest-bearing demand $ 6,008,326 $ 6,233,492 $ 6,257,944 $ (225,166 ) $ (249,618 )
Interest-bearing demand and savings 8,288,670 8,270,416 7,547,822 18,254 740,848
Time deposits under $250,000 658,541 695,629 661,877 (37,088 ) (3,336 )
Time deposits of $250,000 or more 422,712         449,156         593,916         (26,444 )       (171,204 )
Total deposits $ 15,378,249       $ 15,648,693       $ 15,061,559       $ (270,444 )     $ 316,690  
 
Non-interest bearing deposits as % of total deposits 39.07 % 39.83 % 41.55 %
 
  • The cost of interest-bearing liabilities for the third quarter was 25 basis points, and total cost of funds including noninterest-bearing deposits was 17 basis points.
       
Capital information             UMB Financial Corporation
(unaudited, dollars in thousands, except per share data)
September 30, June 30, September 30,
2016       2016       2015  
 
Total equity $ 2,024,628 $ 2,003,141 $ 1,900,857
Book value per common share 40.86 40.44 38.56
 
Regulatory capital:
Common equity Tier 1 capital $ 1,749,738 $ 1,709,986 $ 1,642,555
Tier 1 capital 1,749,738 1,709,833 1,659,024
Total capital 1,909,583 1,864,389 1,789,183
 
Regulatory capital ratios:
Common equity Tier 1 capital ratio 11.75

%

 

 

11.65

%

 

 

12.39 %
Tier 1 risk-based capital ratio 11.75 11.65 12.51
Total risk-based capital ratio 12.82 12.70 13.50
Tier 1 leverage ratio 8.99 8.91 9.27
 
           
Credit quality                       UMB Financial Corporation
(unaudited, dollars in thousands)      
Q3 Q2 Q1 Q4 Q3
2016       2016       2016     2015       2015
 

Net charge-offs (recoveries) - Commercial loans

$ 5,538 $ (59 ) $ 2,586 $ 178 $ 636

Net (recoveries) charge-offs - Real estate loans

(67 ) 1,164 1,301 (50 ) (65 )
Net charge-offs - Consumer credit card loans 1,658 1,575 1,781 1,628 1,524
Net charge-offs - Consumer other loans 133 52 77 130 97
Net charge-offs - Total loans 7,262 2,732 5,745 1,886 2,192
Net loan charge-offs as a % of total average loans 0.28

%

 

0.11

%

 

0.24

%

 

0.08

%

 

0.10

%

 

Loans over 90 days past due $ 2,678 $ 4,700 $ 3,334 $ 7,324 $ 2,552
Loans over 90 days past due as a % of total loans 0.03

%

 

0.05

%

 

0.03

%

 

0.08

%

 

0.03

%

 

Nonperforming loans $ 79,607 $ 58,423 $ 54,933 $ 61,152 $ 49,955
Nonperforming loans as a % of total loans 0.77

%

 

0.58

%

 

0.57

%

 

0.65

%

 

0.55

%

 

Provision for loan losses $ 13,000 $ 7,000 $ 5,000 $ 5,000 $ 2,500
 
  • Nonperforming loans, defined as restructured loans on nonaccrual and all other nonaccrual loans, increased $21.2 million from the linked quarter driven primarily by the migration of two traditional commercial credits to non-performing status.
  • Provision for loan losses increased $6.0 million from the linked quarter, consistent with our methodology which considers the inherent risk in our loan portfolio, as well as other qualitative factors, such as macroeconomic conditions. Loan growth, increased impaired loans, and increased net charge-offs impacted the reserve this quarter.

Efficiency Initiatives

In 2015, the company announced efficiency initiatives with cost savings expected to be recognized as follows: $6.8 million in 2015, $22.6 million in 2016, and annualized savings of $32.9 million in 2017 and beyond. As an update, the company recognized $9.5 million of these cost savings in 2015, $15.0 million year-to-date 2016, and expects to recognize an additional $8.4 million in the remainder of 2016 and early 2017.

Dividend Declaration

At the company's quarterly board meeting, the Board of Directors declared a $0.255 per share cash dividend, which represents a 4.1 percent increase over the previous dividend amount. The dividend is payable on Jan. 3, 2017, to shareholders of record at the close of business on Dec. 9, 2016.

Conference Call

The company plans to host a conference call to discuss its third quarter 2016 earnings results on Wednesday, Oct. 26, 2016, at 8:30 a.m. (CT).

Interested parties may access the call by dialing (toll-free) 877-267-8760 or (U.S.) 412-542-4148 and requesting to join the UMB Financial call. The live call can also be accessed by visiting the investor relations area of umbfinancial.com or by using the following the link:

UMB Financial 3Q 2016 Conference Call

A replay of the conference call may be heard through Nov. 9, 2016, by calling (toll-free) 877-344-7529 or (U.S.) 412-317-0088. The replay pass code required for playback is 10093649. The call replay may also be accessed via the company's website umbfinancial.com by visiting the investor relations area.

Non-GAAP Financial Information

In this release, we provide information about net operating income, operating earnings per share (operating EPS), operating return on average equity (operating ROE), operating return on average assets (operating ROA), operating noninterest expense, and operating efficiency ratio, all of which are non-GAAP financial measures. This information supplements the results that are reported according to generally accepted accounting principles (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 and operating efficiency ratio—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- and severance-related items that management does not believe reflect the company's fundamental operating performance.

Net operating income for the relevant period is defined as GAAP net income, adjusted to reflect the impact of excluding the following: (i) fair value adjustments on contingent consideration for the acquisitions of Prairie Capital Management, LLC (PCM) and Reams Asset Management Company (Reams), (ii) expenses related to the acquisition of Marquette Financial Companies (Marquette), (iii) non-acquisition related severance expense and (iv) the tax impact of the previous adjustments. The company believes that the financial impact of excluding non-acquisition related severance expense will be immaterial in the near future. It is excluded from certain non-GAAP financial measures as it has an unusually large impact on the company's financial statements.

Operating EPS (basic and diluted) is calculated as earnings per share as report, adjusted to reflect, on a per share basis, the impact of excluding the non-GAAP adjustments described in clauses (i)-(iv) 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 in clauses (i)-(iii) 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 revenue

(tax equivalent net interest income plus noninterest income less gains on sales of securities available for sale, net).

Forward-Looking Statements:

This 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—such as our statements about expected cost savings and other results of efficiency initiatives and our statements about the intent to make strategic investments. 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, 2015, 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). 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. 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 diversified financial holding company headquartered in Kansas City, Mo., offering complete banking services, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas, as well as two national specialty-lending businesses. Subsidiaries of the holding company include companies that offer services to mutual funds and alternative-investment entities and registered investment advisors that offer equity and fixed income strategies to institutions and individual investors. For more information, visit umb.com, umbfinancial.com, blog.umb.com or follow us on Twitter at @UMBBank, Facebook at facebook.com/UMBBank and LinkedIn at linkedin.com/company/umb-bank.

   
Non-GAAP Financial Measures        

UMB Financial Corporation

 
Net operating income non-GAAP reconciliation:    
(unaudited, dollars in thousands, except share and per share data)
       
Three Months Ended Nine Months Ended
September 30, September 30,
  2016       2015       2016       2015  
Net income (GAAP) $ 41,946 $ 22,451 $ 115,867 $ 86,430
Adjustments:
Fair value adjustments on contingent consideration (i) - (59) 67 (3,477)
Acquisition expenses (ii) 435 4,856 4,473 6,409
Non-acquisition severance expense (iii) 1,189 930 3,761 1,283
Tax-impact of adjustments (iv)   (585)       (2,062)       (2,988)       (1,517)  
Total Non-GAAP adjustments (net of tax)   1,039       3,665       5,313       2,698  
Net operating income (Non-GAAP) $ 42,985     $ 26,116     $ 121,180     $ 89,128  
 
Earnings per share as reported - diluted $ 0.85 $ 0.46 $ 2.36 $ 1.84
Fair value adjustments on contingent consideration (i) - - - (0.07)
Acquisition expenses (ii) 0.01 0.09 0.09 0.12
Non-acquisition severance expense (iii) 0.02 0.02 0.07 0.03
Tax-impact of adjustments (iv)   (0.01)       (0.04)       (0.06)       (0.03)  
Operating earnings per share - diluted $ 0.87     $ 0.53     $ 2.46     $ 1.89  
 

GAAP

Return on average assets 0.85 % 0.49 % 0.79 % 0.66 %
Return on average equity 8.25 4.72 7.81 6.53
 

Non-GAAP

Operating return on average assets 0.87 % 0.57 % 0.83 % 0.68 %
Operating return on average equity 8.46 5.49 8.17 6.73
 
   
Operating noninterest expense and operating efficiency ratio non-GAAP reconciliation:       UMB Financial Corporation  
(unaudited, dollars in thousands except share and per share data)    
    Three Months Ended Nine Months Ended
September 30, September 30,
  2016       2015       2016       2015  
Noninterest expense $ 179,783     $ 185,279 $ 545,570 $ 521,656
Adjustments to arrive at operating noninterest expense (pre-tax):
Fair value adjustments on contingent consideration (i) - (59) 67 (3,477)
Acquisition expenses (ii) 435 4,856 4,473 6,409
Non-acquisition severance expense (iii)   1,189       930       3,761       1,283  
Total Non-GAAP adjustments (pre-tax)   1,624       5,727       8,301       4,215  
Operating noninterest expense $ 178,159     $ 179,552     $ 537,269     $ 517,441  
 
Noninterest expense $ 179,783 $ 185,279 $ 545,570 $ 521,656
Less: Amortization of other intangibles   2,992       3,483       9,363       8,807  
Noninterest expense, net of amortization of other intangibles (numerator A) $ 176,791     $ 181,796     $ 536,207     $ 512,849  
 
Operating noninterest expense $ 178,159 $ 179,552 $ 537,269 $ 517,441
Less: Amortization of other intangibles   2,992       3,483       9,363       8,807  
Operating expense, net of amortization of other intangibles (numerator B) $ 175,167     $ 176,069     $ 527,906     $ 508,634  
 
Net interest income (tax equivalent) (v) $ 132,765 $ 116,024 $ 386,190 $ 314,886
Noninterest income 121,948 109,098 359,745 353,855
Less: Gains on sales of securities available for sale, net   2,978       101       8,509       8,404  
Total (denominator A) $ 251,735     $ 225,021     $ 737,426     $ 660,337  
 
Efficiency ratio (numerator A/denominator A) 70.23 % 80.79 % 72.71 % 77.66 %
Operating efficiency ratio (numerator B/denominator A) 69.58 78.25 71.59 77.03
(i) Represents fair value adjustments to contingent consideration for the acquisitions of PCM and Reams.
(ii) Represents expenses related to the acquisition of Marquette.
(iii) Represents non-acquisition severance expense related to UMB-legacy employees as management excludes severance expense from its internal evaluation of company performance. Severance expense for Marquette-legacy employees is included in item (ii).
(iv) Calculated using the company's marginal tax rate of 36%.
(v) Tax-exempt interest income has been adjusted to a tax equivalent basis. The amount of such adjustment was an addition to net interest income of $8.0 million and $6.2 million for the three months ended September 30, 2016 and 2015, respectively and $22.3 million and $17.3 million for the nine months ended September 30, 2016 and 2015, respectively.
 
   
Consolidated Balance Sheets       UMB Financial Corporation
(unaudited, dollars in thousands)    
September 30,

Assets

  2016       2015
 
Loans $ 10,293,494 $ 9,046,126
Allowance for loan losses   (90,404)       (78,030)
Net loans   10,203,090       8,968,096
Loans held for sale 11,880 1,013
Investment securities:
Available for sale 6,295,687 6,671,745
Held to maturity 1,009,117 588,478
Trading securities 58,062 23,699
Other securities   66,853       68,371
Total investment securities   7,429,719       7,352,293
Federal funds and resell agreements 244,891 98,762
Interest-bearing due from banks 453,189 847,077
Cash and due from banks 354,184 339,592
Premises and equipment, net 287,267 281,704
Accrued income 93,016 87,863
Goodwill 228,396 227,962
Other intangibles, net 37,419 50,065
Other assets   383,095       343,538
Total assets $ 19,726,146     $ 18,597,965
 
 

Liabilities

Deposits:
Noninterest-bearing demand $ 6,008,326 $ 6,257,944
Interest-bearing demand and savings 8,288,670 7,547,822
Time deposits under $250,000 658,541 661,877
Time deposits of $250,000 or more   422,712       593,916
Total deposits   15,378,249       15,061,559
Federal funds and repurchase agreements 2,021,123 1,342,600
Short-term debt - 5,000
Long-term debt 75,418 83,534
Accrued expenses and taxes 163,221 168,716
Other liabilities   63,507       35,699
Total liabilities   17,701,518       16,697,108
 

Shareholders' Equity

Common stock 55,057 55,057
Capital surplus 1,028,869 1,015,383
Retained earnings 1,112,613 1,016,206
Accumulated other comprehensive income 42,512 26,530
Treasury stock   (214,423)       (212,319)
Total shareholders' equity   2,024,628       1,900,857
Total liabilities and shareholders' equity $ 19,726,146     $ 18,597,965
 
           
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,

Interest Income

  2016       2015       2016       2015
Loans $ 98,820 $ 84,686 $ 283,313 $ 220,314
Securities:
Taxable interest 17,012 18,498 55,221 56,469
Tax-exempt interest 14,797       11,320       41,377       31,842
Total securities income 31,809 29,818 96,598 88,311
Federal funds and resell agreements 790 175 1,939 377
Interest-bearing due from banks 445 475 1,772 1,761
Trading securities 174       75       399       303
Total interest income 132,038       115,229       384,021       311,066
 

Interest Expense

Deposits 4,626 3,863 12,817 10,433
Federal funds and repurchase agreements 1,894 427 4,750 1,389
Other 753       1,044       2,587       1,631
Total interest expense 7,273       5,334       20,154       13,453
Net interest income 124,765 109,895 363,867 297,613
Provision for loan losses 13,000       2,500       25,000       10,500
Net interest income after provision for loan losses 111,765       107,395       338,867       287,113
 

Noninterest Income

Trust and securities processing 60,218 65,182 179,448 199,862
Trading and investment banking 6,114 2,969 16,382 14,659
Service charges on deposits 21,832 21,663 65,713 64,829
Insurance fees and commissions 698 480 3,355 1,636
Brokerage fees 4,712 2,958 13,159 8,748
Bankcard fees 17,086 17,624 52,636 51,842
Gains on sale of securities available for sale, net 2,978 101 8,509 8,404

Equity earnings (loss) on alternative investments

1,594 (5,032) 2,191 (6,999)
Other 6,716       3,153       18,352       10,874
Total noninterest income 121,948       109,098       359,745       353,855
 

Noninterest Expense

Salaries and employee benefits 109,369 104,733 325,216 302,855
Occupancy, net 11,394 11,748 33,505 32,070
Equipment 16,231 17,228 49,545 46,810
Supplies, postage and telephone 4,624 5,371 14,292 14,299
Marketing and business development 5,332 5,766 16,086 16,914
Processing fees 11,264 12,795 34,190 38,232
Legal and consulting 4,450 8,648 14,186 18,943
Bankcard 5,015 5,266 16,199 14,987
Amortization of other intangibles 2,992 3,483 9,363 8,807
Regulatory fees 3,370 3,176 10,491 8,805
Other 5,742       7,065       22,497       18,934
Total noninterest expense 179,783 185,279 545,570 521,656
Income before income taxes 53,930 31,214 153,042 119,312
Income tax provision 11,984       8,763       37,175       32,882
Net income $ 41,946     $ 22,451     $ 115,867     $ 86,430
 

Per Share Data

Net income - basic $ 0.86 $ 0.46 $ 2.37 $ 1.85
Net income – diluted 0.85 0.46 2.36 1.84
Dividends 0.245 0.235 0.735 0.705
 
Weighted average shares outstanding 48,849,251 48,577,282 48,792,419 46,619,428
Weighted average shares outstanding – diluted 49,284,280 49,036,332 49,162,200 47,080,009
   
Consolidated Statements of Comprehensive Income     UMB Financial Corporation
(unaudited, dollars in thousands)        
Three Months Ended

September 30,

Nine Months Ended

September 30,

2016     2015     2016     2015
Net Income $ 41,946     $ 22,451 $ 115,867 $ 86,430
Other comprehensive income, net of tax:
Unrealized gains (losses) on securities:

Change in unrealized holding (losses) gains, net

(16,946) 46,166 90,639 33,289
Less: Reclassifications adjustment for gains included in net income   (2,978)       (101)       (8,509)       (8,404)

Change in unrealized (losses) gains on securities during the period

(19,924) 46,065 82,130 24,885
Change in unrealized losses on derivatives   (643)       -       (7,677)       -

Income tax benefit (expense)

  7,784       (17,394)       (28,223)       (9,361)

Other comprehensive (loss) income

  (12,783)       28,671       46,230       15,524
Comprehensive income $ 29,163     $ 51,122     $ 162,097     $ 101,954
 
       
Consolidated Statements of Shareholders' Equity               UMB Financial Corporation
(unaudited, dollars in thousands, except per share data)        
        Accumulated
Other
Common Capital Retained Comprehensive Treasury
  Stock       Surplus       Earnings       Income (Loss)       Stock       Total
Balance - January 1, 2015 $ 55,057 $ 894,602 $ 963,911 $ 11,006 $ (280,818) $ 1,643,758
Total comprehensive income - - 86,430 15,524 - 101,954
Cash dividends ($0.705 per share) - - (34,135) - - (34,135)
Purchase of treasury stock - - - - (6,172) (6,172)
Issuance of equity awards - (4,180) 4,639 459
Recognition of equity based compensation - 9,030 - - - 9,030
Net tax benefit related to equity compensation plans - 732 - - - 732
Sale of treasury stock - 475 - - 315 790
Exercise of stock options - 2,089 - - 2,615 4,704
Common stock issuance   -       112,635       -       -       67,102       179,737
Balance – September 30, 2015 $ 55,057     $ 1,015,383     $ 1,016,206     $ 26,530     $ (212,319)     $ 1,900,857
 
 
Balance - January 1, 2016 $ 55,057 $ 1,019,889 $ 1,033,990 $ (3,718) $ (211,524) $ 1,893,694
Total comprehensive income - - 115,867 46,230 - 162,097
Cash dividends ($0.735 per share) - - (36,388) - - (36,388)
Purchase of treasury stock - - - - (14,189) (14,189)
Issuance of equity awards - (3,373) - - 3,802 429
Recognition of equity based compensation - 8,253 - - - 8,253
Sale of treasury stock - 362 - - 474 836
Exercise of stock options - 2,400 - - 7,014 9,414
Cumulative effect adjustment   -       1,338       (856)       -       -       482
Balance – September 30, 2016 $ 55,057     $ 1,028,869     $ 1,112,613     $ 42,512     $ (214,423)     $ 2,024,628
 
       
Average Balances / Yields and Rates               UMB Financial Corporation  
(tax - equivalent basis)        
(unaudited, dollars in thousands) Three Months Ended September 30,
  2016       2015
Average Average Average Average

Assets

  Balance     Yield/Rate         Balance     Yield/Rate  
Loans, net of unearned interest $ 10,181,819 3.86 % $ 8,933,775 3.76 %
Securities:
Taxable 4,449,485 1.52 4,750,122 1.54
Tax-exempt 3,158,966     2.86 2,557,629     2.70
Total securities 7,608,451 2.08 7,307,751 1.95
Federal funds and resell agreements 217,287 1.45 83,048 0.84
Interest-bearing due from banks 314,619 0.56 481,575 0.39
Trading securities 51,280     1.75 36,171     1.04
Total earning assets 18,373,456 3.03 16,842,320 2.86
Allowance for loan losses (86,368) (78,419)
Other assets   1,405,152   1,356,548
Total assets $ 19,692,240 $ 18,120,449
 
 

Liabilities and Shareholders' Equity

Interest-bearing deposits $ 9,431,253 0.20 % $ 8,532,814 0.18 %
Federal funds and repurchase agreements 2,261,863 0.33 1,634,394 0.10
Borrowed funds 82,340     3.64 88,468     4.68
Total interest-bearing liabilities 11,775,456 0.25 10,255,676 0.21
Noninterest-bearing demand deposits 5,690,838 5,800,870
Other liabilities 203,953 176,040
Shareholders' equity   2,021,993   1,887,863
Total liabilities and shareholders' equity $ 19,692,240 $ 18,120,449
Net interest spread 2.78 % 2.65 %
Net interest margin 2.87 2.73
 
         
Average Balances / Yields and Rates               UMB Financial Corporation
(tax - equivalent basis)      
(unaudited, dollars in thousands) Nine Months Ended September 30,
  2016       2015
Average     Average Average     Average

Assets

  Balance     Yield/Rate         Balance     Yield/Rate  
Loans, net of unearned interest $ 9,874,298 3.83 % $ 8,163,984 3.61 %
Securities:
Taxable 4,650,111 1.59 4,864,016 1.55
Tax-exempt 2,984,538     2.85 2,407,653     2.72
Total securities 7,634,649 2.08 7,271,669 1.94
Federal funds and resell agreements 181,854 1.42 62,326 0.81
Interest-bearing due from banks 425,155 0.56 665,667 0.35
Trading securities 39,588     1.70 34,507     1.51
Total earning assets 18,155,544 2.99 16,198,153 2.71
Allowance for loan losses (82,975) (77,560)
Other assets   1,415,325   1,339,262
Total assets $ 19,487,894 $ 17,459,855
 
 

Liabilities and Shareholders' Equity

Interest-bearing deposits $ 9,392,435 0.18 % $ 8,023,331 0.17 %
Federal funds and repurchase agreements 2,041,369 0.31 1,686,766 0.11
Borrowed funds 88,621     3.90 49,169     4.43
Total interest-bearing liabilities 11,522,425 0.23 9,759,266 0.18
Noninterest-bearing demand deposits 5,809,398 5,655,878
Other liabilities 174,873 274,845
Shareholders' equity   1,981,198   1,769,866
Total liabilities and shareholders' equity $ 19,487,894 $ 17,459,855
Net interest spread 2.76 % 2.53 %
Net interest margin 2.84 2.60
 
 
Business Segment Information UMB Financial Corporation
(unaudited, dollars in thousands)
    Three Months Ended September 30, 2016
Bank    

Institutional
Investment
Management

   

Asset
Servicing

      Total
Net interest income $ 121,963     $ -     $ 2,802     $ 124,765
Provision for loan losses 13,000 - - 13,000
Noninterest income 80,454 19,413 22,081 121,948
Noninterest expense   142,836       16,874       20,073       179,783
Income before taxes 46,581 2,539 4,810 53,930
Income tax expense   10,427       519       1,038       11,984
Net income $ 36,154     $ 2,020     $ 3,772     $ 41,946
 
Average assets $ 18,384,000 $ 61,000 $ 1,247,000 $ 19,692,000
 
   
Three Months Ended September 30, 2015
Bank    

Institutional
Investment
Management

   

Asset
Servicing

    Total
Net interest income $ 108,424     $ 49     $ 1,422     $ 109,895
Provision for loan losses 2,500 - - 2,500
Noninterest income 65,207 21,398 22,493 109,098
Noninterest expense   149,269       16,495       19,515       185,279
Income before taxes 21,862 4,952 4,400 31,214
Income tax expense   6,120       1,409       1,234       8,763
Net income $ 15,742     $ 3,543     $ 3,166     $ 22,451
-
Average assets $ 17,045,000 $ 66,000 $ 1,009,000 $ 18,120,000
 
   
Nine Months Ended September 30, 2016
Bank    

Institutional
Investment
Management

   

Asset
Servicing

      Total
Net interest income $ 355,847     $ -     $ 8,020     $ 363,867
Provision for loan losses 25,000 - - 25,000
Noninterest income 235,915 56,965 66,865 359,745
Noninterest expense   431,594       52,993       60,983       545,570
Income before taxes 135,168 3,972 13,902 153,042
Income tax expense   32,928       899       3,348       37,175
Net income $ 102,240     $ 3,073     $ 10,554     $ 115,867
 
Average assets $ 18,147,000 $ 62,000 $ 1,279,000 $ 19,488,000
 
   
Nine Months Ended September 30, 2015
Bank    

Institutional
Investment
Management

   

Asset
Servicing

      Total
Net interest income $ 294,210     $ 27     $ 3,376     $ 297,613
Provision for loan losses 10,500 - - 10,500
Noninterest income 210,695 74,182 68,978 353,855
Noninterest expense   407,997       52,799       60,860       521,656
Income before taxes 86,408 21,410 11,494 119,312
Income tax expense   23,859       5,899       3,124       32,882
Net income $ 62,549     $ 15,511     $ 8,370     $ 86,430
 
Average assets $ 16,419,000 $ 71,000 $ 970,000 $ 17,460,000
 

UMB Financial Corporation
Media Contact:
Heather Miller, 303-521-0861
or
Investor Relations Contact:
Kay Gregory, 816-860-7106

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