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

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

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

Summary of quarterly financial results

UMB Financial Corporation

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

Q2

Q1

Q2

2021

2021

2020

Net income (GAAP)

$

87,412

$

92,643

$

60,529

Earnings per share (diluted)

1.79

1.91

1.26

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

131,322

102,066

90,152

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

2.70

2.10

1.88

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

137,951

108,744

96,756

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

2.83

2.24

2.01

Net operating income (Non-GAAP)

87,634

92,780

63,835

Operating earnings per share (diluted)

1.80

1.91

1.33

GAAP

Return on average assets

1.02

%

1.14

%

0.87

%

Return on average equity

11.43

12.56

8.95

Efficiency ratio

60.41

66.46

70.20

Non-GAAP

Operating return on average assets

1.03

%

1.14

%

0.91

%

Operating return on average equity

11.46

12.58

9.44

Operating efficiency ratio

60.33

66.40

68.76

Summary of year-to-date financial results

UMB Financial Corporation

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

June

June

YTD

YTD

2021

2020

Net income (GAAP)

$

180,055

$

57,090

Earnings per share (diluted)

3.70

1.18

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

233,388

173,898

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

4.80

3.59

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

246,695

186,980

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

5.08

3.86

Net operating income (Non-GAAP)

180,414

61,954

Operating earnings per share (diluted)

3.71

1.28

GAAP

Return on average assets

1.08

%

0.42

%

Return on average equity

11.98

4.22

Efficiency ratio

63.29

69.59

Non-GAAP

Operating return on average assets

1.08

%

0.46

%

Operating return on average equity

12.01

4.58

Operating efficiency ratio

63.21

68.49

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

Summary of revenue

UMB Financial Corporation

(unaudited, dollars in thousands)

Q2

Q1

Q2

CQ vs.

CQ vs.

2021

2021

2020

LQ

PY

Net interest income

$

201,071

$

194,115

$

178,229

$

6,956

$

22,842

Noninterest income:

Trust and securities processing

53,863

54,834

46,321

(971

)

7,542

Trading and investment banking

8,670

9,356

12,851

(686

)

(4,181

)

Service charges on deposit accounts

22,592

21,976

19,074

616

3,518

Insurance fees and commissions

245

420

533

(175

)

(288

)

Brokerage fees

2,592

3,334

5,753

(742

)

(3,161

)

Bankcard fees

16,063

14,673

12,916

1,390

3,147

Investment securities gains (losses), net

15,455

(8,336

)

4,579

23,791

10,876

Other

12,109

12,640

18,429

(531

)

(6,320

)

Total noninterest income

$

131,589

$

108,897

$

120,456

$

22,692

$

11,133

Total revenue

$

332,660

$

303,012

$

298,685

$

29,648

$

33,975

Net interest income (FTE)

$

207,700

$

200,793

$

184,833

Net interest margin (FTE)

2.56

%

2.59

%

2.79

%

Total noninterest income as a % of total revenue

39.56

35.94

40.33

Net interest income

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

Noninterest income

  • Second quarter 2021 noninterest income increased $22.7 million, or 20.8%, on a linked-quarter basis, largely due to:
    • An increase of $23.8 million in investment securities gains, primarily due to an increase of $23.3 million in gains on the company’s equity investment in TTCF.
    • An increase of $1.4 million in bankcard fees, primarily due to increased interchange income.
    • These increases were partially offset by decreases of $1.0 million in trust and securities processing income and $0.7 million in trading and investment banking income. The decrease in trust and securities processing income is primarily driven by the previously announced sale of Prairie Capital Management, LLC (PCM) in March 2021, offset by increased fund services income. The decline in trading and investment banking income is primarily due to decreased trading volume.
  • Compared to the prior year, noninterest income in the second quarter of 2021 increased $11.1 million, or 9.2%, primarily driven by:
    • An increase of $10.9 million in investment securities gains, primarily due to an increase of $14.2 million in gains on equity investments, partially offset by decreases of $2.7 million and $0.6 million in gains on the sale of available for sale securities and PCM-related equity earnings on alternative investments, respectively.
    • Increases of $6.7 million and $2.0 million in fund services income and corporate trust income, respectively, both recorded in trust and securities processing.
    • An increase of $3.5 million in service charges on deposits, driven by increased healthcare income related to customer transfer and conversion fees, and increased corporate service charges.
    • An increase of $2.5 million in derivative income, recorded in other income.
    • These increases were partially offset by a decrease of $9.8 million in the market value of company-owned life insurance, recorded in other income, and a decrease of $4.2 million in trading and investment banking, due to decreased trading volumes. The decrease in company-owned life insurance is offset by a proportionate decrease in deferred compensation expense as noted below.

Noninterest expense

Summary of noninterest expense

UMB Financial Corporation

(unaudited, dollars in thousands)

Q2

Q1

Q2

CQ vs.

CQ vs.

2021

2021

2020

LQ

PY

Salaries and employee benefits

$

120,415

$

127,681

$

130,938

$

(7,266

)

$

(10,523

)

Occupancy, net

12,296

11,935

11,411

361

885

Equipment

19,196

19,615

21,502

(419

)

(2,306

)

Supplies and services

3,469

3,492

3,785

(23

)

(316

)

Marketing and business development

4,797

2,345

3,284

2,452

1,513

Processing fees

16,501

15,417

13,603

1,084

2,898

Legal and consulting

8,147

5,755

6,220

2,392

1,927

Bankcard

4,529

4,956

4,549

(427

)

(20

)

Amortization of other intangible assets

1,157

1,380

1,658

(223

)

(501

)

Regulatory fees

2,769

2,546

3,211

223

(442

)

Other

8,062

5,824

8,372

2,238

(310

)

Total noninterest expense

$

201,338

$

200,946

$

208,533

$

392

$

(7,195

)

  • Noninterest expense for the second quarter of 2021 was $201.3 million, an increase of $0.4 million, or 0.2%, from the linked quarter and a decrease of $7.2 million, or 3.5%, from the second quarter of 2020.
  • The linked-quarter increase in noninterest expense was driven by:
    • Increases of $2.5 million, $2.4 million, and $1.1 million in marketing and business development expense, legal and consulting expense, and processing fees, respectively, due to timing of various marketing initiatives, legal costs, and timing of software projects.
    • Increases of $0.9 million in losses on sales of other real estate, $0.7 million in derivative expense, and $0.7 million in miscellaneous loan fee expense, all recorded in other noninterest expense.
    • These increases were offset by decreases of $5.7 million in payroll taxes, insurance and 401(k) expense, and $1.8 million in bonus and commission expense, both recorded in salary and employee benefits.
  • The year-over-year decrease in noninterest expense was driven by:
    • A decrease of $10.5 million in deferred compensation expense, recorded in salaries and employee benefits. The decrease in deferred compensation expense was offset by the decrease in company-owned life insurance income noted above.
    • A decrease of $2.1 million in software expense, recorded in equipment expense.
    • These decreases were partially offset by increases of $2.9 million in processing fees, $1.9 million in legal and professional expense, and $1.5 million in marketing and business development, due to timing of software projects, legal costs, and various marketing initiatives.

Income taxes

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

Balance sheet

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

Summary of average loans and leases - QTD Average

UMB Financial Corporation

(unaudited, dollars in thousands)

Q2

Q1

Q2

CQ vs.

CQ vs.

2021

2021

2020

LQ

PY

Commercial and industrial

$

7,402,653

$

7,139,101

$

6,970,223

$

263,552

$

432,430

Specialty lending

505,687

502,585

471,571

3,102

34,116

Commercial real estate

6,165,780

5,971,047

5,435,428

194,733

730,352

Consumer real estate

2,068,663

1,970,767

1,528,501

97,896

540,162

Consumer

122,439

117,095

146,120

5,344

(23,681

)

Credit cards

386,032

362,051

353,424

23,981

32,608

Leases and other

166,420

183,447

193,099

(17,027

)

(26,679

)

Total loans

$

16,817,674

$

16,246,093

$

15,098,366

$

571,581

$

1,719,308

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

Summary of average securities - QTD Average

UMB Financial Corporation

(unaudited, dollars in thousands)

Q2

Q1

Q2

CQ vs.

CQ vs.

2021

2021

2020

LQ

PY

Securities available for sale:

U.S. Treasury

$

40,013

$

36,032

$

31,150

$

3,981

$

8,863

U.S. Agencies

94,794

95,494

403,290

(700

)

(308,496

)

Mortgage-backed

6,096,099

5,599,987

4,284,374

496,112

1,811,725

State and political subdivisions

3,565,443

3,552,945

3,108,661

12,498

456,782

Commercial Paper

2,040

(2,040

)

Corporates

127,581

83,271

98,089

44,310

29,492

Total securities available for sale

$

9,923,930

$

9,367,729

$

7,927,604

$

556,201

$

1,996,326

Securities held to maturity:

State and political subdivisions

$

1,057,091

$

1,023,418

$

1,100,843

$

33,673

$

(43,752

)

Trading securities

21,409

17,540

37,816

3,869

(16,407

)

Other securities

302,981

308,297

148,918

(5,316

)

154,063

Total securities

$

11,305,411

$

10,716,984

$

9,215,181

$

588,427

$

2,090,230

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

Summary of average deposits - QTD Average

UMB Financial Corporation

(unaudited, dollars in thousands)

Q2

Q1

Q2

CQ vs.

CQ vs.

2021

2021

2020

LQ

PY

Deposits:

Noninterest-bearing demand

$

10,701,656

$

9,753,680

$

7,662,836

$

947,976

$

3,038,820

Interest-bearing demand and savings

16,421,742

16,302,880

14,160,722

118,862

2,261,020

Time deposits

659,228

769,464

957,007

(110,236

)

(297,779

)

Total deposits

$

27,782,626

$

26,826,024

$

22,780,565

$

956,602

$

5,002,061

Noninterest bearing deposits as % of total

38.52

%

36.36

%

33.64

%

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

Capital

Capital information

UMB Financial Corporation

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

June 30, 2021

March 31, 2021

June 30, 2020

Total equity

$

3,090,244

$

2,958,239

$

2,777,395

Book value per common share

63.92

61.24

57.84

Tangible book value per common share

59.96

57.26

53.57

Regulatory capital:

Common equity Tier 1 capital

$

2,730,062

$

2,660,102

$

2,335,625

Tier 1 capital

2,730,062

2,660,102

2,335,625

Total capital

3,172,878

3,102,333

2,580,849

Regulatory capital ratios:

Common equity Tier 1 capital ratio

11.91

%

12.25

%

11.92

%

Tier 1 risk-based capital ratio

11.91

12.25

11.92

Total risk-based capital ratio

13.84

14.28

13.17

Tier 1 leverage ratio

8.00

8.08

8.35

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

Asset Quality

Credit quality

UMB Financial Corporation

(unaudited, dollars in thousands)

Q2

Q1

Q4

Q3

Q2

2021

2021

2020

2020

2020

Net charge-offs - Total loans

$

28,374

$

5,310

$

1,801

$

5,111

$

5,541

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

0.68

%

0.13

%

0.04

%

0.13

%

0.15

%

Loans over 90 days past due

$

1,265

$

1,773

$

1,952

$

1,372

$

4,588

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

0.01

%

0.01

%

0.01

%

0.01

%

0.03

%

Nonaccrual and restructured loans

$

58,219

$

76,706

$

87,823

$

93,695

$

82,245

Nonaccrual and restructured loans as a % of total loans

0.34

%

0.46

%

0.55

%

0.59

%

0.54

%

Provision for credit losses

$

24,000

$

(7,500

)

$

5,000

$

16,000

$

21,500

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

Dividend Declaration

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

Conference Call

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

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

UMB Financial 2Q 2021 Conference Call

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

Non-GAAP Financial Information

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

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

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

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

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

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

Forward-Looking Statements:

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

About UMB:

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

Consolidated Balance Sheets

UMB Financial Corporation

(unaudited, dollars in thousands)

June 30,

2021

2020

ASSETS

Loans

$

16,910,790

$

15,305,097

Allowance for credit losses on loans

(200,563

)

(200,300

)

Net loans

16,710,227

15,104,797

Loans held for sale

5,303

8,213

Securities:

Available for sale

10,347,531

8,483,624

Held to maturity, net of allowance for credit losses

1,081,173

1,111,625

Trading securities

40,552

51,383

Other securities

254,315

154,206

Total securities

11,723,571

9,800,838

Federal funds sold and resell agreements

1,146,521

1,347,643

Interest-bearing due from banks

5,059,098

1,714,478

Cash and due from banks

469,883

462,849

Premises and equipment, net

281,011

300,174

Accrued income

131,188

126,962

Goodwill

174,518

180,867

Other intangibles, net

16,636

24,181

Other assets

901,059

682,606

Total assets

$

36,619,015

$

29,753,608

LIABILITIES

Deposits:

Noninterest-bearing demand

$

12,513,031

$

8,633,603

Interest-bearing demand and savings

16,857,127

15,033,643

Time deposits under $250,000

430,713

546,089

Time deposits of $250,000 or more

247,600

246,069

Total deposits

30,048,471

24,459,404

Federal funds purchased and repurchase agreements

2,783,389

1,963,694

Short-term debt

15,000

Long-term debt

270,558

70,996

Accrued expenses and taxes

254,589

239,254

Other liabilities

171,764

227,865

Total liabilities

33,528,771

26,976,213

SHAREHOLDERS' EQUITY

Common stock

55,057

55,057

Capital surplus

1,098,139

1,081,713

Retained earnings

2,040,134

1,692,289

Accumulated other comprehensive income, net

223,107

284,262

Treasury stock

(326,193

)

(335,926

)

Total shareholders' equity

3,090,244

2,777,395

Total liabilities and shareholders' equity

$

36,619,015

$

29,753,608

Consolidated Statements of Income

UMB Financial Corporation

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

Three Months Ended

Six Months Ended

June 30,

June 30,

2021

2020

2021

2020

INTEREST INCOME

Loans

$

154,537

$

140,004

$

304,707

$

291,030

Securities:

Taxable interest

29,780

25,870

56,942

53,082

Tax-exempt interest

24,743

24,612

49,707

49,016

Total securities income

54,523

50,482

106,649

102,098

Federal funds and resell agreements

2,552

1,573

5,373

7,025

Interest-bearing due from banks

833

398

1,536

3,061

Trading securities

189

312

348

966

Total interest income

212,634

192,769

418,613

404,180

INTEREST EXPENSE

Deposits

6,574

11,243

13,372

40,975

Federal funds and repurchase agreements

1,779

1,950

3,665

8,331

Other

3,210

1,347

6,390

2,704

Total interest expense

11,563

14,540

23,427

52,010

Net interest income

201,071

178,229

395,186

352,170

Provision for credit losses

24,000

21,500

16,500

109,500

Net interest income after provision for credit losses

177,071

156,729

378,686

242,670

NONINTEREST INCOME

Trust and securities processing

53,863

46,321

108,697

93,321

Trading and investment banking

8,670

12,851

18,026

14,574

Service charges on deposit accounts

22,592

19,074

44,568

44,155

Insurance fees and commissions

245

533

665

792

Brokerage fees

2,592

5,753

5,926

15,613

Bankcard fees

16,063

12,916

30,736

29,461

Investment securities gains, net

15,455

4,579

7,119

8,099

Other

12,109

18,429

24,749

12,865

Total noninterest income

131,589

120,456

240,486

218,880

NONINTEREST EXPENSE

Salaries and employee benefits

120,415

130,938

248,096

241,998

Occupancy, net

12,296

11,411

24,231

23,591

Equipment

19,196

21,502

38,811

42,743

Supplies and services

3,469

3,785

6,961

7,970

Marketing and business development

4,797

3,284

7,142

7,924

Processing fees

16,501

13,603

31,918

26,993

Legal and consulting

8,147

6,220

13,902

12,330

Bankcard

4,529

4,549

9,485

9,409

Amortization of other intangible assets

1,157

1,658

2,537

3,392

Regulatory fees

2,769

3,211

5,315

5,577

Other

8,062

8,372

13,886

15,225

Total noninterest expense

201,338

208,533

402,284

397,152

Income before income taxes

107,322

68,652

216,888

64,398

Income tax expense

19,910

8,123

36,833

7,308

NET INCOME

$

87,412

$

60,529

$

180,055

$

57,090

PER SHARE DATA

Net income – basic

$

1.81

$

1.26

$

3.74

$

1.18

Net income – diluted

1.79

1.26

3.70

1.18

Dividends

0.32

0.31

0.64

0.62

Weighted average shares outstanding – basic

48,294,952

47,991,283

48,196,345

48,340,579

Weighted average shares outstanding – diluted

48,698,319

48,077,810

48,604,140

48,491,526

Consolidated Statements of Comprehensive Income

UMB Financial Corporation

(unaudited, dollars in thousands)

Three Months Ended

Six Months Ended

June 30,

June 30,

2021

2020

2021

2020

Net income

$

87,412

$

60,529

$

180,055

$

57,090

Other comprehensive income (loss), before tax:

Unrealized gains and losses on debt securities:

Change in unrealized holding gains and losses, net

76,335

84,885

(122,703

)

249,001

Less: Reclassification adjustment for gains included in net income

(1,300

)

(4,006

)

(4,020

)

(5,233

)

Change in unrealized gains and losses on debt securities

75,035

80,879

(126,723

)

243,768

Unrealized gains and losses on derivative hedges:

Change in unrealized gains and losses on derivative hedges, net

(3,422

)

4,612

3,081

19,137

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

(877

)

(514

)

(1,719

)

254

Change in unrealized gains and losses on derivative hedges

(4,299

)

4,098

1,362

19,391

Other comprehensive income (loss), before tax

70,736

84,977

(125,361

)

263,159

Income tax (expense) benefit

(16,826

)

(20,105

)

30,128

(62,077

)

Other comprehensive income (loss)

53,910

64,872

(95,233

)

201,082

Comprehensive income

$

141,322

$

125,401

$

84,822

$

258,172

Consolidated Statements of Shareholders' Equity

UMB Financial Corporation

(unaudited, dollars in thousands except per share data)

Common
Stock

Capital
Surplus

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Treasury
Stock

Total

Balance - January 1, 2020

$

55,057

$

1,073,764

$

1,672,438

$

83,180

$

(277,999

)

$

2,606,440

Total comprehensive income

57,090

201,082

258,172

Dividends ($0.62 per share)

(30,200

)

(30,200

)

Purchase of treasury stock

615

(60,074

)

(59,459

)

Forfeitures of equity awards, net of issuances

676

(83

)

593

Recognition of equity-based compensation

6,109

6,109

Sale of treasury stock

120

201

321

Exercise of stock options

429

2,029

2,458

Cumulative effect adjustment

(7,039

)

(7,039

)

Balance - June 30, 2020

$

55,057

$

1,081,713

$

1,692,289

$

284,262

$

(335,926

)

$

2,777,395

Balance - January 1, 2021

$

55,057

$

1,090,450

$

1,891,246

$

318,340

$

(338,145

)

$

3,016,948

Total comprehensive income (loss)

180,055

(95,233

)

84,822

Dividends ($0.64 per share)

(31,167

)

(31,167

)

Purchase of treasury stock

(4,088

)

(4,088

)

Issuances of equity awards, net of forfeitures

(4,122

)

4,817

695

Recognition of equity-based compensation

8,609

8,609

Sale of treasury stock

148

153

301

Exercise of stock options

3,054

11,070

14,124

Balance - June 30, 2021

$

55,057

$

1,098,139

$

2,040,134

$

223,107

$

(326,193

)

$

3,090,244

Average Balances / Yields and Rates

UMB Financial Corporation

(tax - equivalent basis)

(unaudited, dollars in thousands)

Three Months Ended June 30,

2021

2020

Average

Average

Average

Average

Balance

Yield/Rate

Balance

Yield/Rate

Assets

Loans, net of unearned interest

$

16,817,674

3.69

%

$

15,098,366

3.73

%

Securities:

Taxable

6,994,559

1.71

5,069,290

2.05

Tax-exempt

4,289,443

2.93

4,108,075

3.05

Total securities

11,284,002

2.17

9,177,365

2.50

Federal funds and resell agreements

1,110,433

0.92

807,245

0.78

Interest bearing due from banks

3,343,311

0.10

1,492,798

0.11

Trading securities

21,409

4.27

37,816

3.79

Total earning assets

32,576,829

2.70

26,613,590

3.01

Allowance for credit losses

(199,379

)

(195,373

)

Other assets

1,886,774

1,717,808

Total assets

$

34,264,224

$

28,136,025

Liabilities and Shareholders' Equity

Interest-bearing deposits

$

17,080,970

0.15

%

$

15,117,729

0.30

%

Federal funds and repurchase agreements

2,744,516

0.26

2,138,156

0.37

Borrowed funds

270,305

4.76

85,681

6.32

Total interest-bearing liabilities

20,095,791

0.23

17,341,566

0.34

Noninterest-bearing demand deposits

10,701,656

7,662,836

Other liabilities

398,319

411,964

Shareholders' equity

3,068,458

2,719,659

Total liabilities and shareholders' equity

$

34,264,224

$

28,136,025

Net interest spread

2.47

%

2.67

%

Net interest margin

2.56

2.79

Average Balances / Yields and Rates

UMB Financial Corporation

(tax - equivalent basis)

(unaudited, dollars in thousands)

Six Months Ended June 30,

2021

2020

Average

Average

Average

Average

Balance

Yield/Rate

Balance

Yield/Rate

Assets

Loans, net of unearned interest

$

16,533,463

3.72

%

$

14,357,466

4.08

%

Securities:

Taxable

6,698,020

1.71

4,881,854

2.19

Tax-exempt

4,295,317

2.95

4,085,558

3.05

Total securities

10,993,337

2.20

8,967,412

2.58

Federal funds and resell agreements

1,375,689

0.79

1,015,720

1.39

Interest bearing due from banks

3,079,684

0.10

1,164,405

0.53

Trading securities

19,485

4.28

42,959

4.93

Total earning assets

32,001,658

2.72

25,547,962

3.28

Allowance for credit losses

(209,469

)

(154,062

)

Other assets

1,862,036

1,693,684

Total assets

$

33,654,225

$

27,087,584

Liabilities and Shareholders' Equity

Interest-bearing deposits

$

17,076,681

0.16

%

$

14,723,895

0.56

%

Federal funds and repurchase agreements

2,632,567

0.28

2,084,271

0.80

Borrowed funds

269,942

4.77

78,164

6.96

Total interest-bearing liabilities

19,979,190

0.24

16,886,330

0.62

Noninterest-bearing demand deposits

10,230,287

7,079,224

Other liabilities

414,535

401,724

Shareholders' equity

3,030,213

2,720,306

Total liabilities and shareholders' equity

$

33,654,225

$

27,087,584

Net interest spread

2.48

%

2.66

%

Net interest margin

2.57

2.88

Business Segment Information

UMB Financial Corporation

(unaudited, dollars in thousands)

Three Months Ended June 30, 2021

Commercial
Banking

Institutional
Banking

Personal
Banking

Total

Net interest income

$

135,656

$

21,258

$

44,157

$

201,071

Provision for credit losses

22,009

147

1,844

24,000

Noninterest income

36,391

68,745

26,453

131,589

Noninterest expense

69,144

72,575

59,619

201,338

Income before taxes

80,894

17,281

9,147

107,322

Income tax expense

15,007

3,206

1,697

19,910

Net income

$

65,887

$

14,075

$

7,450

$

87,412

Three Months Ended June 30, 2020

Commercial
Banking

Institutional
Banking

Personal
Banking

Total

Net interest income

$

113,095

$

28,124

$

37,010

$

178,229

Provision for credit losses

19,281

298

1,921

21,500

Noninterest income

24,078

66,488

29,890

120,456

Noninterest expense

62,123

76,953

69,457

208,533

Income (loss) before taxes

55,769

17,361

(4,478

)

68,652

Income tax expense (benefit)

6,597

2,055

(529

)

8,123

Net income (loss)

$

49,172

$

15,306

$

(3,949

)

$

60,529

Six Months Ended June 30, 2021

Commercial
Banking

Institutional
Banking

Personal
Banking

Total

Net interest income

$

268,687

$

43,397

$

83,102

$

395,186

Provision for credit losses

13,827

367

2,306

16,500

Noninterest income

43,777

137,166

59,543

240,486

Noninterest expense

134,789

143,857

123,638

402,284

Income before taxes

163,848

36,339

16,701

216,888

Income tax expense

27,825

6,171

2,837

36,833

Net income

$

136,023

$

30,168

$

13,864

$

180,055

Six Months Ended June 30, 2020

Commercial
Banking

Institutional
Banking

Personal
Banking

Total

Net interest income

$

220,044

$

61,159

$

70,967

$

352,170

Provision for credit losses

101,501

573

7,426

109,500

Noninterest income

35,318

128,440

55,122

218,880

Noninterest expense

121,166

145,406

130,580

397,152

Income (loss) before taxes

32,695

43,620

(11,917

)

64,398

Income tax expense (benefit)

3,709

4,951

(1,352

)

7,308

Net income (loss)

$

28,986

$

38,669

$

(10,565

)

$

57,090

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

Non-GAAP Financial Measures

Net operating income Non-GAAP reconciliations:

UMB Financial Corporation

(unaudited, dollars in thousands except per share data)

Three Months Ended
June 30,

Six Months Ended
June 30,

2021

2020

2021

2020

Net income (GAAP)

$

87,412

$

60,529

$

180,055

$

57,090

Adjustments:

Acquisition expense

123

246

Severance expense

103

137

124

1,789

COVID-19 related expense

182

3,989

337

4,217

Tax-impact of adjustments (i)

(63

)

(943

)

(102

)

(1,388

)

Total Non-GAAP adjustments (net of tax)

222

3,306

359

4,864

Net operating income (Non-GAAP)

$

87,634

$

63,835

$

180,414

$

61,954

Earnings per share - diluted (GAAP)

$

1.79

$

1.26

$

3.70

$

1.18

Acquisition expense

0.01

Severance expense

0.01

0.04

COVID-19 related expense

0.01

0.08

0.01

0.08

Tax-impact of adjustments (i)

(0.02

)

(0.03

)

Operating earnings per share - diluted (Non-GAAP)

$

1.80

$

1.33

$

3.71

$

1.28

GAAP

Return on average assets

1.02

%

0.87

%

1.08

%

0.42

%

Return on average equity

11.43

8.95

11.98

4.22

Non-GAAP

Operating return on average assets

1.03

%

0.91

%

1.08

%

0.46

%

Operating return on average equity

11.46

9.44

12.01

4.58

 

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

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

UMB Financial Corporation

(unaudited, dollars in thousands)

Three Months Ended
June 30,

Six Months Ended
June 30,

2021

2020

2021

2020

Noninterest expense

$

201,338

$

208,533

$

402,284

$

397,152

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

Acquisition expense

123

246

Severance expense

103

137

124

1,789

COVID-19 related expense

182

3,989

337

4,217

Total Non-GAAP adjustments (pre-tax)

285

4,249

461

6,252

Operating noninterest expense (Non-GAAP)

$

201,053

$

204,284

$

401,823

$

390,900

Noninterest expense

$

201,338

$

208,533

$

402,284

$

397,152

Less: Amortization of other intangibles

1,157

1,658

2,537

3,392

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

$

200,181

$

206,875

$

399,747

$

393,760

Operating noninterest expense

$

201,053

$

204,284

$

401,823

$

390,900

Less: Amortization of other intangibles

1,157

1,658

2,537

3,392

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

$

199,896

$

202,626

$

399,286

$

387,508

Net interest income

$

201,071

$

178,229

$

395,186

$

352,170

Noninterest income

131,589

120,456

240,486

218,880

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

1,300

4,006

4,020

5,233

Total Non-GAAP Revenue (denominator A)

$

331,360

$

294,679

$

631,652

$

565,817

Efficiency ratio (numerator A/denominator A)

60.41

%

70.20

%

63.29

%

69.59

%

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

60.33

68.76

63.21

68.49

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

UMB Financial Corporation

(unaudited, dollars in thousands except per share data)

Three Months Ended
June 30,

Six Months Ended
June 30,

2021

2020

2021

2020

Net income before taxes (GAAP)

$

107,322

$

68,652

$

216,888

$

64,398

Adjustments:

Provision for credit losses

24,000

21,500

16,500

109,500

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

$

131,322

$

90,152

$

233,388

$

173,898

Pre-tax earnings per share - diluted (GAAP)

$

2.20

$

1.43

$

4.46

$

1.33

Provision for credit losses

0.50

0.45

0.34

2.26

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

$

2.70

$

1.88

$

4.80

$

3.59

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

UMB Financial Corporation

(unaudited, dollars in thousands except per share data)

Three Months Ended
June 30,

Six Months Ended
June 30,

2021

2020

2021

2020

Net interest income

$

201,071

$

178,229

$

395,186

$

352,170

Adjustments to arrive at net interest income - FTE:

Tax equivalent interest

6,629

6,604

13,307

13,082

Net interest income - FTE

$

207,700

$

184,833

$

408,493

$

365,252

Noninterest income

131,589

120,456

240,486

218,880

Less: Noninterest expense

201,338

208,533

402,284

397,152

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

$

137,951

$

96,756

$

246,695

$

186,980

Net interest income earnings per share - diluted

$

4.13

$

3.71

$

8.13

$

7.26

Tax equivalent interest

0.13

0.14

0.28

0.27

Net interest income - FTE

4.26

3.85

8.41

7.53

Noninterest income

2.70

2.50

4.95

4.52

Less: Noninterest expense

4.13

4.34

8.28

8.19

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

$

2.83

$

2.01

$

5.08

$

3.86

Tangible book value non-GAAP reconciliations:

UMB Financial Corporation

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

As of June 30,

2021

2020

Total shareholders' equity (GAAP)

$

3,090,244

$

2,777,395

Less: Intangible assets

Goodwill

174,518

180,867

Other intangibles, net

16,636

24,181

Total intangibles, net

191,154

205,048

Total tangible shareholders' equity (Non-GAAP)

$

2,899,090

$

2,572,347

Total shares outstanding

48,346,371

48,021,707

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

$

63.92

$

57.84

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

59.96

53.57

Contacts:

Media Contact: Stephanie Hague: 816.860.5088
Investor Relations Contact: Kay Gregory: 816.860.7106

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