Company Announcements

UMB Financial Corporation Reports Second Quarter 2020 Net Income of $60.5 Million

Second Quarter 2020 Highlights  

  • GAAP net income of $60.5 million, or $1.26 per diluted share; operating net income of $63.8 million, or $1.33 per diluted share.
  • Pre-tax, pre-provision (PTPP) income of $90.2 million, an increase of 7.6% from the linked quarter.
  • Total revenue increased 9.7% to $298.7 million, compared to the linked quarter.
  • Average loans, excluding Paycheck Protection Program (PPP) balances, increased 8.2% on a linked-quarter annualized basis.
  • Loans recorded under the PPP totaled $1.5 billion as of June 30, 2020.
  • Average deposits grew $2.0 billion to $22.8 billion compared to the first quarter of 2020.
  • GAAP book value per share of $57.84, a 14.5% increase, and tangible book value per share of $53.57, a 15.1% increase compared to a year ago.
  • Credit quality remained strong, with net charge-offs of just 0.15% of average loans, consistent with the company’s historical performance.

KANSAS CITY, Mo.--(BUSINESS WIRE)--Jul. 28, 2020-- UMB Financial Corporation (Nasdaq: UMBF), a financial services company, announced net income for the second quarter of 2020 of $60.5 million, or $1.26 per diluted share, compared to a net loss of $3.4 million in the first quarter of 2020 (linked quarter) and net income of $57.0 million, or $1.16 per diluted share, in the second quarter of 2019.

Net operating income, a non-GAAP financial measure reconciled to net income, the nearest comparable GAAP measure, later in this release, was $63.8 million, or $1.33 per diluted share, for the second quarter of 2020, compared to a net operating loss of $1.9 million for the linked quarter and net operating income of $57.2 million, or $1.17 per diluted share, for the second quarter of 2019. Pre-tax, pre-provision income (PTPP), a non-GAAP measure reconciled to net income before taxes, the nearest comparable GAAP measure, later in this release, was $90.2 million, or $1.88 per diluted share, for the second quarter of 2020, compared to $83.7 million, or $1.72 per diluted share, for the linked quarter, and $78.4 million, or $1.60 per diluted share, for the second quarter of 2019. These PTPP results represent increases of 7.6% on a linked-quarter basis and 15.0% compared to the second quarter of 2019.

Summary of quarterly financial results

 

UMB Financial Corporation

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2

 

 

Q1

 

 

Q2

 

 

 

2020

 

 

2020

 

 

2019

 

Net income (loss)

 

$

60,529

 

 

$

(3,439

)

 

$

56,959

 

Earnings (losses) per share (diluted)

 

 

1.26

 

 

 

(0.07

)

 

 

1.16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax, pre-provision income

 

 

90,152

 

 

 

83,746

 

 

 

78,425

 

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

 

 

1.88

 

 

 

1.72

 

 

 

1.60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating income (loss)

 

 

63,835

 

 

 

(1,881

)

 

 

57,245

 

Operating earnings (losses) per share (diluted)

 

 

1.33

 

 

 

(0.04

)

 

 

1.17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

0.87

%

 

 

(0.05

)%

 

 

0.98

%

Return on average equity

 

 

8.95

 

 

 

(0.51

)

 

 

9.46

 

Efficiency ratio

 

 

70.20

 

 

 

68.93

 

 

 

70.32

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

Operating return on average assets

 

 

0.91

%

 

 

(0.03

)%

 

 

0.99

%

Operating return on average equity

 

 

9.44

 

 

 

(0.28

)

 

 

9.51

 

Operating efficiency ratio

 

 

68.76

 

 

 

68.19

 

 

 

70.19

 

Summary of year-to-date financial results

 

UMB Financial Corporation

 

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

 

June

 

 

June

 

 

 

YTD

 

 

YTD

 

 

 

2020

 

 

2019

 

Net income

 

$

57,090

 

 

$

114,703

 

Earnings per share (diluted)

 

 

1.18

 

 

 

2.34

 

 

 

 

 

 

 

 

 

 

Pre-tax, pre-provision income

 

 

173,898

 

 

 

159,049

 

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

 

 

3.59

 

 

 

3.24

 

 

 

 

 

 

 

 

 

 

Net operating income

 

 

61,954

 

 

 

115,453

 

Operating earnings per share (diluted)

 

 

1.28

 

 

 

2.36

 

 

 

 

 

 

 

 

 

 

GAAP

 

 

 

 

 

 

 

 

Return on average assets

 

 

0.42

%

 

 

1.00

%

Return on average equity

 

 

4.22

 

 

 

9.95

 

Efficiency ratio

 

 

69.59

 

 

 

70.16

 

 

 

 

 

 

 

 

 

 

Non-GAAP

 

 

 

 

 

 

 

 

Operating return on average assets

 

 

0.46

%

 

 

1.01

%

Operating return on average equity

 

 

4.58

 

 

 

10.01

 

Operating efficiency ratio

 

 

68.49

 

 

 

69.98

 

“As the country continues to navigate its way through an uncertain economic environment, our second quarter results highlight the strength of our fortress balance sheet and the quality of our underwriting practices, as evidenced by just 15 basis points of net charge-offs. Additionally, we added $1.5 billion in loans under the Paycheck Protection Program (PPP) during the quarter,” said Mariner Kemper, chairman, president and chief executive officer. “Despite the unprecedented times, average loans, excluding PPP balances, increased 8.2% on a linked-quarter annualized basis. Finally, we launched our corporate citizenship report outlining some of our 2019 environmental, social and governance efforts, which has been a collaborative effort of listening to, and engaging with, our associates, customers, and communities.”

Summary of revenue

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2

 

 

Q1

 

 

Q2

 

 

CQ vs.

 

 

CQ vs.

 

 

 

2020

 

 

2020

 

 

2019

 

 

LQ

 

 

PY

 

Net interest income

 

$

178,229

 

 

$

173,941

 

 

$

166,414

 

 

$

4,288

 

 

$

11,815

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trust and securities processing

 

 

46,321

 

 

 

47,000

 

 

 

42,903

 

 

 

(679

)

 

 

3,418

 

Trading and investment banking

 

 

12,851

 

 

 

1,723

 

 

 

5,453

 

 

 

11,128

 

 

 

7,398

 

Service charges on deposit accounts

 

 

19,074

 

 

 

25,081

 

 

 

20,747

 

 

 

(6,007

)

 

 

(1,673

)

Insurance fees and commissions

 

 

533

 

 

 

259

 

 

 

465

 

 

 

274

 

 

 

68

 

Brokerage fees

 

 

5,753

 

 

 

9,860

 

 

 

7,077

 

 

 

(4,107

)

 

 

(1,324

)

Bankcard fees

 

 

12,916

 

 

 

16,545

 

 

 

16,439

 

 

 

(3,629

)

 

 

(3,523

)

Gains (losses) on sales of securities available for sale, net

 

 

4,006

 

 

 

1,227

 

 

 

(1,403

)

 

 

2,779

 

 

 

5,409

 

Other

 

 

19,002

 

 

 

(3,271

)

 

 

13,717

 

 

 

22,273

 

 

 

5,285

 

Total noninterest income

 

$

120,456

 

 

$

98,424

 

 

$

105,398

 

 

$

22,032

 

 

$

15,058

 

Total revenue

 

$

298,685

 

 

$

272,365

 

 

$

271,812

 

 

$

26,320

 

 

$

26,873

 

Net interest margin

 

 

2.79

%

 

 

2.97

%

 

 

3.19

%

 

 

 

 

 

 

 

 

Total noninterest income as a % of total revenue

 

 

40.33

 

 

 

36.14

 

 

 

38.78

 

 

 

 

 

 

 

 

 

Net interest income

  • Net interest income totaled $178.2 million, an increase of $4.3 million, or 2.5%, from the linked quarter, driven by a $1.5 billion, or 10.9%, increase in average loans, and an 8.7% increase in average earning assets. The increase in loan balances was primarily driven by the company’s participation in the PPP, which contributed $1.5 billion in balances. While new loan production during the quarter remained strong, this growth was negated by normalization of line utilization activity which spiked in the first quarter following the initial impact of the COVID-19 pandemic.
  • Net interest margin for the second quarter was 2.79%, a decrease of 18 basis points from the linked quarter, in large part due to lower short-term interest rates and a build-up of excess liquidity. Earning asset yields declined 57 basis points from the linked quarter, driven by declining yields in the loan portfolio due to recent reductions in short-term interest rates and an unfavorable earning asset mix shift driven by excess liquidity and, to a lesser extent, the impact of lower-yielding PPP loans. Federal funds and resell agreements, interest-bearing due from banks, and trading securities averaged $2.3 billion, an 11.4% increase from $2.1 billion in the linked quarter. The cost of interest-bearing liabilities decreased 58 basis points to 0.34%, driven by a 53-basis-point decline in the cost of interest-bearing deposits and lower borrowing costs. Net interest spread increased one basis point to 2.67 from the linked quarter and was five basis points lower than the second quarter of 2019.
  • On a year-over-year basis, net interest income increased $11.8 million, or 7.1%, driven by a $2.5 billion, or 19.6%, increase in average loans, and a $4.9 billion, or 22.7%, increase in earning assets.
  • Average deposits increased 9.4% on a linked-quarter basis and 21.3% compared to the second quarter of 2019. Average noninterest-bearing demand deposit balances increased 18.0% on a linked-quarter basis and 26.1% compared to the second quarter of 2019.

Noninterest income

  • Second quarter 2020 noninterest income increased $22.0 million, or 22.4%, on a linked-quarter basis, largely due to:
    • An increase of $24.8 million in company-owned life insurance income, reflecting the impact of higher market valuations of the underlying investments, recorded in other income. The increase in company-owned life insurance income is offset by a proportionate increase in deferred compensation expense as noted below.
    • An increase of $11.1 million in trading and investment banking, primarily driven by higher trading volumes, as well as an increase of $4.9 million in market valuation of investments in the company’s trading portfolio.
    • These increases were partially offset by the following decreases:
      • A decrease of $5.5 million in healthcare income, recorded in service charges on deposits, related to non-recurring customer transfer and conversion fees recorded in the first quarter.
      • A decrease of $4.1 million in brokerage fees, primarily driven by decreased 12b-1 income.
      • A decrease of $3.6 million in bankcard fees, primarily due to decreased interchange income.
  • Compared to the prior year, noninterest income in the second quarter of 2020 increased $15.1 million, or 14.3%, primarily driven by:
    • An increase of $8.9 million in company-owned life insurance, recorded in other income. The increase in company-owned life insurance income is offset by a proportionate increase in deferred compensation expense as noted below.
    • An increase of $7.4 million in trading and investment banking, primarily driven by higher trading volumes, as well as an increase of $1.1 million in market valuation of investments in the company’s trading portfolio.
    • An increase of $5.4 million in gains on sales of available-for-sale securities.
    • These increases were partially offset by the following decreases:
      • A decrease of $3.5 million in bankcard fees, primarily due to decreased interchange income.
      • A decrease of $1.3 million in brokerage fees, primarily due to decreased 12b-1 income.
      • A decrease of $1.0 million in equity earnings on alternative investments, recorded in other income.

Noninterest expense

Summary of noninterest expense

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2

 

 

Q1

 

 

Q2

 

 

CQ vs.

 

 

CQ vs.

 

 

 

2020

 

 

2020

 

 

2019

 

 

LQ

 

 

PY

 

Salaries and employee benefits

 

$

130,938

 

 

$

111,060

 

 

$

114,454

 

 

$

19,878

 

 

$

16,484

 

Occupancy, net

 

 

11,411

 

 

 

12,180

 

 

 

11,539

 

 

 

(769

)

 

 

(128

)

Equipment

 

 

21,502

 

 

 

21,241

 

 

 

18,824

 

 

 

261

 

 

 

2,678

 

Supplies and services

 

 

3,785

 

 

 

4,185

 

 

 

4,285

 

 

 

(400

)

 

 

(500

)

Marketing and business development

 

 

3,284

 

 

 

4,640

 

 

 

7,304

 

 

 

(1,356

)

 

 

(4,020

)

Processing fees

 

 

13,603

 

 

 

13,390

 

 

 

13,096

 

 

 

213

 

 

 

507

 

Legal and consulting

 

 

6,220

 

 

 

6,110

 

 

 

7,496

 

 

 

110

 

 

 

(1,276

)

Bankcard

 

 

4,549

 

 

 

4,860

 

 

 

4,701

 

 

 

(311

)

 

 

(152

)

Amortization of other intangible assets

 

 

1,658

 

 

 

1,734

 

 

 

1,251

 

 

 

(76

)

 

 

407

 

Regulatory fees

 

 

3,211

 

 

 

2,366

 

 

 

2,910

 

 

 

845

 

 

 

301

 

Other

 

 

8,372

 

 

 

6,853

 

 

 

7,527

 

 

 

1,519

 

 

 

845

 

Total noninterest expense

 

$

208,533

 

 

$

188,619

 

 

$

193,387

 

 

$

19,914

 

 

$

15,146

 

  • GAAP noninterest expense for the second quarter of 2020 was $208.5 million, an increase of $19.9 million, or 10.6%, from the linked quarter and an increase of $15.1 million, or 7.8%, from the second quarter of 2019. Expenses for the quarter included $4.0 million in non-recurring compensation and other costs tied to the company’s COVID-19 response.
  • The linked quarter increase in noninterest expense was driven by:
    • An increase of $19.9 million in salaries and employee benefits, largely driven by a $24.6 million increase in deferred compensation expense, which was offset by the increase in company-owned life insurance income noted above. This increase was partially offset by a decrease of $5.5 million in payroll taxes and profit sharing and 401(k) expense.
    • An increase of $1.5 million in other expense driven by operational losses in the second quarter.
    • These increases were partially offset by a decrease of $1.4 million in marketing and business development expense due to a decline in travel and entertainment expenses in the second quarter due to the pandemic.
  • The year-over-year increase in noninterest expense was driven by:
    • A $16.5 million increase in salaries and employee benefits, primarily due to increases of $9.8 million in deferred compensation expense, $3.5 million in bonus and commission expense, and $3.2 million in salary and wage expense, which included compensation expense tied to the company’s COVID-19 response. The increase in deferred compensation expense was offset by the increase in company-owned life insurance income noted above.
    • An increase of $2.7 million in equipment expense, due to investments in digital channel and integrated platform solutions to support business growth and the ongoing modernization of the company’s core systems.
    • These increases were partially offset by a decrease of $4.0 million in marketing and business development expense primarily due to a decline in travel and entertainment expense due to the pandemic.

Income taxes

  • The company’s effective tax rate was 11.3% for the six months ended June 30, 2020, compared to 15.5% for the same period in 2019. The decrease in the effective rate for 2020 is primarily attributable to a larger portion of income being earned from tax-exempt municipal securities.

Balance sheet

  • Average total assets for the second quarter of 2020 were $28.1 billion compared to $26.0 billion for the linked quarter and $23.3 billion for the same period in 2019.

Summary of average loans and leases - QTD Average

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2

 

 

Q1

 

 

Q2

 

 

CQ vs.

 

 

CQ vs.

 

 

 

2020

 

 

2020

 

 

2019

 

 

LQ

 

 

PY

 

Commercial and industrial

 

$

6,970,223

 

 

$

5,786,545

 

 

$

5,278,626

 

 

$

1,183,678

 

 

$

1,691,597

 

Specialty lending

 

 

471,571

 

 

 

510,316

 

 

 

682,306

 

 

 

(38,745

)

 

 

(210,735

)

Commercial real estate

 

 

5,435,428

 

 

 

5,181,036

 

 

 

4,696,665

 

 

 

254,392

 

 

 

738,763

 

Consumer real estate

 

 

1,528,501

 

 

 

1,414,025

 

 

 

1,241,078

 

 

 

114,476

 

 

 

287,423

 

Consumer

 

 

146,120

 

 

 

141,972

 

 

 

132,662

 

 

 

4,148

 

 

 

13,458

 

Credit cards

 

 

353,424

 

 

 

418,485

 

 

 

427,176

 

 

 

(65,061

)

 

 

(73,752

)

Leases and other

 

 

193,099

 

 

 

164,187

 

 

 

162,468

 

 

 

28,912

 

 

 

30,631

 

Total loans

 

$

15,098,366

 

 

$

13,616,566

 

 

$

12,620,981

 

 

$

1,481,800

 

 

$

2,477,385

 

  • Average loans for the second quarter of 2020 increased 10.9% on a linked-quarter basis and 19.6% compared to the second quarter of 2019, primarily due to the company’s participation in PPP, which had an average balance of $1.2 billion in the second quarter.

Summary of average securities - QTD Average

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2

 

 

Q1

 

 

Q2

 

 

CQ vs.

 

 

CQ vs.

 

 

 

2020

 

 

2020

 

 

2019

 

 

LQ

 

 

PY

 

Securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

$

31,150

 

 

$

49,638

 

 

$

256,949

 

 

$

(18,488

)

 

$

(225,799

)

U.S. Agencies

 

 

403,290

 

 

 

94,342

 

 

 

91,822

 

 

 

308,948

 

 

 

311,468

 

Mortgage-backed

 

 

4,284,374

 

 

 

4,133,118

 

 

 

3,926,164

 

 

 

151,256

 

 

 

358,210

 

State and political subdivisions

 

 

3,108,661

 

 

 

3,058,594

 

 

 

2,659,397

 

 

 

50,067

 

 

 

449,264

 

Corporates

 

 

98,089

 

 

 

188,257

 

 

 

84,910

 

 

 

(90,168

)

 

 

13,179

 

Commercial Paper

 

 

2,040

 

 

 

 

 

 

 

 

 

2,040

 

 

 

2,040

 

Total securities available for sale

 

$

7,927,604

 

 

$

7,523,949

 

 

$

7,019,242

 

 

$

403,655

 

 

$

908,362

 

Securities held to maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State and political subdivisions

 

$

1,100,843

 

 

$

1,108,716

 

 

$

1,128,526

 

 

$

(7,873

)

 

$

(27,683

)

Trading securities

 

 

37,816

 

 

 

48,102

 

 

 

61,565

 

 

 

(10,286

)

 

 

(23,749

)

Other securities

 

 

148,918

 

 

 

124,795

 

 

 

80,097

 

 

 

24,123

 

 

 

68,821

 

Total securities

 

$

9,215,181

 

 

$

8,805,562

 

 

$

8,289,430

 

 

$

409,619

 

 

$

925,751

 

  • Average securities available for sale increased 5.4% on a linked-quarter basis and 12.9% compared to the second quarter of 2019.

Summary of average deposits - QTD Average

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2

 

 

Q1

 

 

Q2

 

 

CQ vs.

 

 

CQ vs.

 

 

 

2020

 

 

2020

 

 

2019

 

 

LQ

 

 

PY

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

$

7,662,836

 

 

$

6,495,611

 

 

$

6,078,520

 

 

$

1,167,225

 

 

$

1,584,316

 

Interest-bearing demand and savings

 

 

14,160,722

 

 

 

13,232,370

 

 

 

11,740,634

 

 

 

928,352

 

 

 

2,420,088

 

Time deposits

 

 

957,007

 

 

 

1,097,780

 

 

 

966,719

 

 

 

(140,773

)

 

 

(9,712

)

Total deposits

 

$

22,780,565

 

 

$

20,825,761

 

 

$

18,785,873

 

 

$

1,954,804

 

 

$

3,994,692

 

Noninterest bearing deposits as % of total

 

 

33.64

%

 

 

31.19

%

 

 

32.36

%

 

 

 

 

 

 

 

 

  • Average deposits increased 9.4% on a linked-quarter basis and 21.3% compared to the second quarter of 2019.
  • Average noninterest-bearing demand deposits increased 18.0% on a linked-quarter basis to $7.7 billion.

Capital

Capital information

 

UMB Financial Corporation

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2020

 

 

March 31, 2020

 

 

June 30, 2019

 

Total equity

 

$

2,777,395

 

 

$

2,663,441

 

 

$

2,477,790

 

Book value per common share

 

 

57.84

 

 

 

55.33

 

 

 

50.50

 

Tangible book value per common share

 

 

53.57

 

 

 

51.04

 

 

 

46.56

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulatory capital:

 

 

 

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital

 

$

2,335,625

 

 

$

2,279,039

 

 

$

2,236,930

 

Tier 1 capital

 

 

2,335,625

 

 

 

2,279,039

 

 

 

2,236,930

 

Total capital

 

 

2,580,849

 

 

 

2,514,445

 

 

 

2,411,510

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulatory capital ratios:

 

 

 

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital ratio

 

 

11.92

%

 

 

11.90

%

 

 

12.65

%

Tier 1 risk-based capital ratio

 

 

11.92

 

 

 

11.90

 

 

 

12.65

 

Total risk-based capital ratio

 

 

13.17

 

 

 

13.12

 

 

 

13.63

 

Tier 1 leverage ratio

 

 

8.35

 

 

 

8.81

 

 

 

9.69

 

  • At June 30, 2020, the regulatory capital ratios presented in the foregoing table exceeded all “well-capitalized” regulatory thresholds.
  • The company did not execute any open market share repurchases during the second quarter, outside of the completion of the $30 million accelerated share repurchase program that was entered into in early March.

Asset Quality

Credit quality

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2

 

 

Q1

 

 

Q4

 

 

Q3

 

 

Q2

 

 

 

2020

 

 

2020

 

 

2019

 

 

2019

 

 

2019

 

Net charge-offs - Total loans

 

$

5,541

 

 

$

7,672

 

 

$

7,618

 

 

$

2,186

 

 

$

12,569

 

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

 

 

0.15

%

 

 

0.23

%

 

 

0.23

%

 

 

0.07

%

 

 

0.40

%

Loans over 90 days past due

 

$

4,588

 

 

$

2,211

 

 

$

2,069

 

 

$

2,466

 

 

$

1,825

 

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

 

 

0.03

%

 

 

0.02

%

 

 

0.02

%

 

 

0.02

%

 

 

0.01

%

Nonaccrual and restructured loans

 

$

82,245

 

 

$

97,029

 

 

$

56,347

 

 

$

71,838

 

 

$

53,395

 

Nonaccrual and restructured loans as a % of total loans

 

 

0.54

%

 

 

0.70

%

 

 

0.42

%

 

 

0.55

%

 

 

0.41

%

Provision for credit losses

 

$

21,500

 

 

$

88,000

 

 

$

2,000

 

 

$

7,500

 

 

$

11,000

 

  • Provision for credit losses for the second quarter totaled $21.5 million, a decrease of $66.5 million from the linked quarter, and an increase of $10.5 million from the second quarter of 2019.
  • Net charge-offs totaled $5.5 million, or 0.15%, of average loans, compared to $7.7 million, or 0.23%, of average loans in the linked quarter.
  • The reserve build during the second quarter reflects the continued impact of the adoption of the current expected credit losses (CECL) accounting standard on January 1, 2020, and changes to key macroeconomic variables due to the COVID-19 pandemic.

Dividend Declaration

At the company’s quarterly board meeting, the Board of Directors declared a $0.31 per share quarterly cash dividend, payable on October 1, 2020, to shareholders of record at the close of business on September 10, 2020.

Conference Call

The company plans to host a conference call to discuss its second quarter 2020 earnings results on Wednesday, July 29, 2020, 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 2020 Conference Call

A replay of the conference call may be heard through August 12, 2020 by calling (toll-free) 877-344-7529 or (international) 412-317-0088. The replay access code required for playback is 10145903. 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), 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, 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 from continuing operations, divided by the company’s average total shareholders’ equity for the relevant period. Operating ROA is calculated as net operating income from continuing operations, 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.

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, 2019, 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 third-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 third-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. The pandemic is also expected to have a significant impact on our CECL calculation and related provision under a new accounting standard that we were required to phase in beginning January 2020. The CECL calculation includes periodic estimates of the net amount expected to be collected over the contractual term of certain financial assets, and requires us to take into account, among other things, economic conditions forecasted over the life of the financial asset, including the current and anticipated effects of the pandemic. 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,

 

 

 

2020

 

 

2019

 

ASSETS

 

 

 

 

 

 

 

 

Loans

 

$

15,305,097

 

 

$

12,900,269

 

Allowance for credit losses on loans

 

 

(200,300

)

 

 

(102,092

)

Net loans

 

 

15,104,797

 

 

 

12,798,177

 

Loans held for sale

 

 

8,213

 

 

 

2,771

 

Securities:

 

 

 

 

 

 

 

 

Available for sale

 

 

8,483,624

 

 

 

7,176,351

 

Held to maturity, net of allowance for credit losses

 

 

1,111,625

 

 

 

1,112,773

 

Trading securities

 

 

51,383

 

 

 

81,381

 

Other securities

 

 

154,206

 

 

 

89,302

 

Total securities

 

 

9,800,838

 

 

 

8,459,807

 

Federal funds sold and resell agreements

 

 

1,347,643

 

 

 

283,603

 

Interest-bearing due from banks

 

 

1,714,478

 

 

 

876,551

 

Cash and due from banks

 

 

462,849

 

 

 

422,648

 

Premises and equipment, net

 

 

300,174

 

 

 

278,725

 

Accrued income

 

 

126,962

 

 

 

124,396

 

Goodwill

 

 

180,867

 

 

 

180,867

 

Other intangibles, net

 

 

24,181

 

 

 

12,425

 

Other assets

 

 

682,606

 

 

 

576,306

 

Total assets

 

$

29,753,608

 

 

$

24,016,276

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

$

8,633,603

 

 

$

6,524,428

 

Interest-bearing demand and savings

 

 

15,033,643

 

 

 

11,870,782

 

Time deposits under $250,000

 

 

546,089

 

 

 

610,711

 

Time deposits of $250,000 or more

 

 

246,069

 

 

 

394,309

 

Total deposits

 

 

24,459,404

 

 

 

19,400,230

 

Federal funds purchased and repurchase agreements

 

 

1,963,694

 

 

 

1,708,884

 

Short-term debt

 

 

15,000

 

 

 

 

Long-term debt

 

 

70,996

 

 

 

69,825

 

Accrued expenses and taxes

 

 

239,254

 

 

 

198,141

 

Other liabilities

 

 

227,865

 

 

 

161,406

 

Total liabilities

 

 

26,976,213

 

 

 

21,538,486

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Common stock

 

 

55,057

 

 

 

55,057

 

Capital surplus

 

 

1,081,713

 

 

 

1,065,301

 

Retained earnings

 

 

1,692,289

 

 

 

1,573,586

 

Accumulated other comprehensive income, net

 

 

284,262

 

 

 

62,617

 

Treasury stock

 

 

(335,926

)

 

 

(278,771

)

Total shareholders' equity

 

 

2,777,395

 

 

 

2,477,790

 

Total liabilities and shareholders' equity

 

$

29,753,608

 

 

$

24,016,276

 

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,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

140,004

 

 

$

161,838

 

 

$

291,030

 

 

$

319,099

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable interest

 

 

25,870

 

 

 

26,700

 

 

 

53,082

 

 

 

52,091

 

Tax-exempt interest

 

 

24,612

 

 

 

21,988

 

 

 

49,016

 

 

 

42,685

 

Total securities income

 

 

50,482

 

 

 

48,688

 

 

 

102,098

 

 

 

94,776

 

Federal funds and resell agreements

 

 

1,573

 

 

 

2,526

 

 

 

7,025

 

 

 

6,151

 

Interest-bearing due from banks

 

 

398

 

 

 

2,768

 

 

 

3,061

 

 

 

6,667

 

Trading securities

 

 

312

 

 

 

842

 

 

 

966

 

 

 

1,276

 

Total interest income

 

 

192,769

 

 

 

216,662

 

 

 

404,180

 

 

 

427,969

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

11,243

 

 

 

39,516

 

 

 

40,975

 

 

 

77,350

 

Federal funds and repurchase agreements

 

 

1,950

 

 

 

9,347

 

 

 

8,331

 

 

 

17,611

 

Other

 

 

1,347

 

 

 

1,385

 

 

 

2,704

 

 

 

2,726

 

Total interest expense

 

 

14,540

 

 

 

50,248

 

 

 

52,010

 

 

 

97,687

 

Net interest income

 

 

178,229

 

 

 

166,414

 

 

 

352,170

 

 

 

330,282

 

Provision for credit losses

 

 

21,500

 

 

 

11,000

 

 

 

109,500

 

 

 

23,350

 

Net interest income after provision for credit losses

 

 

156,729

 

 

 

155,414

 

 

 

242,670

 

 

 

306,932

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trust and securities processing

 

 

46,321

 

 

 

42,903

 

 

 

93,321

 

 

 

84,860

 

Trading and investment banking

 

 

12,851

 

 

 

5,453

 

 

 

14,574

 

 

 

11,034

 

Service charges on deposit accounts

 

 

19,074

 

 

 

20,747

 

 

 

44,155

 

 

 

42,028

 

Insurance fees and commissions

 

 

533

 

 

 

465

 

 

 

792

 

 

 

803

 

Brokerage fees

 

 

5,753

 

 

 

7,077

 

 

 

15,613

 

 

 

14,320

 

Bankcard fees

 

 

12,916

 

 

 

16,439

 

 

 

29,461

 

 

 

33,506

 

Gains (losses) on sales of securities available for sale, net

 

 

4,006

 

 

 

(1,403

)

 

 

5,233

 

 

 

(594

)

Other

 

 

19,002

 

 

 

13,717

 

 

 

15,731

 

 

 

26,823

 

Total noninterest income

 

 

120,456

 

 

 

105,398

 

 

 

218,880

 

 

 

212,780

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

130,938

 

 

 

114,454

 

 

 

241,998

 

 

 

230,486

 

Occupancy, net

 

 

11,411

 

 

 

11,539

 

 

 

23,591

 

 

 

23,282

 

Equipment

 

 

21,502

 

 

 

18,824

 

 

 

42,743

 

 

 

38,508

 

Supplies and services

 

 

3,785

 

 

 

4,285

 

 

 

7,970

 

 

 

8,158

 

Marketing and business development

 

 

3,284

 

 

 

7,304

 

 

 

7,924

 

 

 

12,217

 

Processing fees

 

 

13,603

 

 

 

13,096

 

 

 

26,993

 

 

 

25,228

 

Legal and consulting

 

 

6,220

 

 

 

7,496

 

 

 

12,330

 

 

 

13,129

 

Bankcard

 

 

4,549

 

 

 

4,701

 

 

 

9,409

 

 

 

9,046

 

Amortization of other intangible assets

 

 

1,658

 

 

 

1,251

 

 

 

3,392

 

 

 

2,578

 

Regulatory fees

 

 

3,211

 

 

 

2,910

 

 

 

5,577

 

 

 

5,800

 

Other

 

 

8,372

 

 

 

7,527

 

 

 

15,225

 

 

 

15,581

 

Total noninterest expense

 

 

208,533

 

 

 

193,387

 

 

 

397,152

 

 

 

384,013

 

Income before income taxes

 

 

68,652

 

 

 

67,425

 

 

 

64,398

 

 

 

135,699

 

Income tax expense

 

 

8,123

 

 

 

10,466

 

 

 

7,308

 

 

 

20,996

 

NET INCOME

 

$

60,529

 

 

$

56,959

 

 

$

57,090

 

 

$

114,703

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PER SHARE DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income – basic

 

$

1.26

 

 

$

1.17

 

 

$

1.18

 

 

$

2.35

 

Net income – diluted

 

 

1.26

 

 

 

1.16

 

 

 

1.18

 

 

 

2.34

 

Dividends

 

 

0.31

 

 

 

0.30

 

 

 

0.62

 

 

 

0.60

 

Weighted average shares outstanding – basic

 

 

47,991,283

 

 

 

48,777,732

 

 

 

48,340,579

 

 

 

48,745,124

 

Weighted average shares outstanding – diluted

 

48,077,810

 

 

 

49,039,692

 

 

 

48,491,526

 

 

 

49,018,787

 

 

Consolidated Statements of Comprehensive Income

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net income

 

$

60,529

 

 

$

56,959

 

 

$

57,090

 

 

$

114,703

 

Other comprehensive income, before tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains and losses on debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized holding gains and losses, net

 

 

84,885

 

 

 

107,484

 

 

 

249,001

 

 

 

213,918

 

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

 

 

(4,006

)

 

 

1,403

 

 

 

(5,233

)

 

 

594

 

Change in unrealized gains and losses on debt securities

 

 

80,879

 

 

 

108,887

 

 

 

243,768

 

 

 

214,512

 

Unrealized gains and losses on derivative hedges:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized gains and losses on derivative hedges, net

 

 

4,612

 

 

 

(3,061

)

 

 

19,137

 

 

 

(5,149

)

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

 

 

(514

)

 

 

20

 

 

 

254

 

 

 

15

 

Change in unrealized gains and losses on derivative hedges

 

 

4,098

 

 

 

(3,041

)

 

 

19,391

 

 

 

(5,134

)

Other comprehensive income, before tax

 

 

84,977

 

 

 

105,846

 

 

 

263,159

 

 

 

209,378

 

Income tax expense

 

 

(20,105

)

 

 

(25,590

)

 

 

(62,077

)

 

 

(50,979

)

Other comprehensive income

 

 

64,872

 

 

 

80,256

 

 

 

201,082

 

 

 

158,399

 

Comprehensive income

 

$

125,401

 

 

$

137,215

 

 

$

258,172

 

 

$

273,102

 

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 (Loss) Income

 

 

Treasury

Stock

 

 

Total

 

Balance - January 1, 2019

 

$

55,057

 

 

$

1,054,601

 

 

$

1,488,421

 

 

$

(95,782

)

 

$

(273,827

)

 

$

2,228,470

 

Total comprehensive income

 

 

 

 

 

 

 

 

114,703

 

 

 

158,399

 

 

 

 

 

 

273,102

 

Dividends ($0.60 per share)

 

 

 

 

 

 

 

 

(29,538

)

 

 

 

 

 

 

 

 

(29,538

)

Purchase of treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,114

)

 

 

(4,114

)

Forfeitures of equity awards, net of issuances

 

 

 

 

 

3,107

 

 

 

 

 

 

 

 

 

(2,503

)

 

 

604

 

Recognition of equity-based compensation

 

 

 

 

 

7,006

 

 

 

 

 

 

 

 

 

 

 

 

7,006

 

Sale of treasury stock

 

 

 

 

 

185

 

 

 

 

 

 

 

 

 

274

 

 

 

459

 

Exercise of stock options

 

 

 

 

 

402

 

 

 

 

 

 

 

 

 

1,399

 

 

 

1,801

 

Balance - June 30, 2019

 

$

55,057

 

 

$

1,065,301

 

 

$

1,573,586

 

 

$

62,617

 

 

$

(278,771

)

 

$

2,477,790

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Average Balances / Yields and Rates

 

UMB Financial Corporation

 

(tax - equivalent basis)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

 

Average

 

 

Average

 

 

Average

 

 

Average

 

 

 

Balance

 

 

Yield/Rate

 

 

Balance

 

 

Yield/Rate

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, net of unearned interest

 

$

15,098,366

 

 

 

3.73

%

 

$

12,620,981

 

 

 

5.14

%

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

5,069,290

 

 

 

2.05

 

 

 

4,502,680

 

 

 

2.38

 

Tax-exempt

 

 

4,108,075

 

 

 

3.05

 

 

 

3,725,185

 

 

 

2.99

 

Total securities

 

 

9,177,365

 

 

 

2.50

 

 

 

8,227,865

 

 

 

2.65

 

Federal funds and resell agreements

 

 

807,245

 

 

 

0.78

 

 

 

329,064

 

 

 

3.08

 

Interest bearing due from banks

 

 

1,492,798

 

 

 

0.11

 

 

 

450,032

 

 

 

2.47

 

Trading securities

 

 

37,816

 

 

 

3.79

 

 

 

61,565

 

 

 

6.07

 

Total earning assets

 

 

26,613,590

 

 

 

3.01

 

 

 

21,689,507

 

 

 

4.11

 

Allowance for credit losses

 

 

(195,373

)

 

 

 

 

 

 

(109,463

)

 

 

 

 

Other assets

 

 

1,717,808

 

 

 

 

 

 

 

1,690,423

 

 

 

 

 

Total assets

 

$

28,136,025

 

 

 

 

 

 

$

23,270,467

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

15,117,729

 

 

 

0.30

%

 

$

12,707,353

 

 

 

1.25

%

Federal funds and repurchase agreements

 

 

2,138,156

 

 

 

0.37

 

 

 

1,728,748

 

 

 

2.17

 

Borrowed funds

 

 

85,681

 

 

 

6.32

 

 

 

69,662

 

 

 

7.97

 

Total interest-bearing liabilities

 

 

17,341,566

 

 

 

0.34

 

 

 

14,505,763

 

 

 

1.39

 

Noninterest-bearing demand deposits

 

 

7,662,836

 

 

 

 

 

 

 

6,078,520

 

 

 

 

 

Other liabilities

 

 

411,964

 

 

 

 

 

 

 

271,890

 

 

 

 

 

Shareholders' equity

 

 

2,719,659

 

 

 

 

 

 

 

2,414,294

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

28,136,025

 

 

 

 

 

 

$

23,270,467

 

 

 

 

 

Net interest spread

 

 

 

 

 

 

2.67

%

 

 

 

 

 

 

2.72

%

Net interest margin

 

 

 

 

 

 

2.79

 

 

 

 

 

 

 

3.19

 

Average Balances / Yields and Rates

 

UMB Financial Corporation

 

(tax - equivalent basis)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

 

Average

 

 

Average

 

 

Average

 

 

Average

 

 

 

Balance

 

 

Yield/Rate

 

 

Balance

 

 

Yield/Rate

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, net of unearned interest

 

$

14,357,466

 

 

 

4.08

%

 

$

12,462,946

 

 

 

5.16

%

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

4,881,854

 

 

 

2.19

 

 

 

4,402,458

 

 

 

2.39

 

Tax-exempt

 

 

4,085,558

 

 

 

3.05

 

 

 

3,674,456

 

 

 

2.96

 

Total securities

 

 

8,967,412

 

 

 

2.58

 

 

 

8,076,914

 

 

 

2.65

 

Federal funds and resell agreements

 

 

1,015,720

 

 

 

1.39

 

 

 

424,712

 

 

 

2.92

 

Interest bearing due from banks

 

 

1,164,405

 

 

 

0.53

 

 

 

554,551

 

 

 

2.42

 

Trading securities

 

 

42,959

 

 

 

4.93

 

 

 

54,029

 

 

 

5.36

 

Total earning assets

 

 

25,547,962

 

 

 

3.28

 

 

 

21,573,152

 

 

 

4.11

 

Allowance for credit losses

 

 

(154,062

)

 

 

 

 

 

 

(107,465

)

 

 

 

 

Other assets

 

 

1,693,684

 

 

 

 

 

 

 

1,597,444

 

 

 

 

 

Total assets

 

$

27,087,584

 

 

 

 

 

 

$

23,063,131

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

14,723,895

 

 

 

0.56

%

 

$

12,729,813

 

 

 

1.23

%

Federal funds and repurchase agreements

 

 

2,084,271

 

 

 

0.80

 

 

 

1,642,140

 

 

 

2.16

 

Borrowed funds

 

 

78,164

 

 

 

6.96

 

 

 

69,539

 

 

 

7.91

 

Total interest-bearing liabilities

 

 

16,886,330

 

 

 

0.62

 

 

 

14,441,492

 

 

 

1.36

 

Noninterest-bearing demand deposits

 

 

7,079,224

 

 

 

 

 

 

 

6,028,259

 

 

 

 

 

Other liabilities

 

 

401,724

 

 

 

 

 

 

 

267,943

 

 

 

 

 

Shareholders' equity

 

 

2,720,306

 

 

 

 

 

 

 

2,325,437

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

27,087,584

 

 

 

 

 

 

$

23,063,131

 

 

 

 

 

Net interest spread

 

 

 

 

 

 

2.66

%

 

 

 

 

 

 

2.75

%

Net interest margin

 

 

 

 

 

 

2.88

 

 

 

 

 

 

 

3.19

 

Business Segment Information

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2020

 

 

 

Commercial Banking

 

 

Institutional Banking

 

 

Personal Banking

 

 

Total

 

Net interest income

 

$

113,085

 

 

$

28,129

 

 

$

37,015

 

 

$

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

 

 

55,759

 

 

 

17,366

 

 

 

(4,473

)

 

 

68,652

 

Income tax expense (benefit)

 

 

6,597

 

 

 

2,055

 

 

 

(529

)

 

 

8,123

 

Net income (loss)

 

$

49,162

 

 

$

15,311

 

 

$

(3,944

)

 

$

60,529

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2019

 

 

 

Commercial Banking

 

 

Institutional Banking

 

 

Personal Banking

 

 

Total

 

Net interest income

 

$

102,579

 

 

$

30,501

 

 

$

33,334

 

 

$

166,414

 

Provision for credit losses

 

 

9,306

 

 

 

181

 

 

 

1,513

 

 

 

11,000

 

Noninterest income

 

 

20,387

 

 

 

55,626

 

 

 

29,385

 

 

 

105,398

 

Noninterest expense

 

 

68,511

 

 

 

64,852

 

 

 

60,024

 

 

 

193,387

 

Income before taxes

 

 

45,149

 

 

 

21,094

 

 

 

1,182

 

 

 

67,425

 

Income tax expense

 

 

7,008

 

 

 

3,274

 

 

 

184

 

 

 

10,466

 

Net income

 

$

38,141

 

 

$

17,820

 

 

$

998

 

 

$

56,959

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2020

 

 

 

Commercial Banking

 

 

Institutional Banking

 

 

Personal Banking

 

 

Total

 

Net interest income

 

$

220,034

 

 

$

61,164

 

 

$

70,972

 

 

$

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

 

 

32,685

 

 

 

43,625

 

 

 

(11,912

)

 

 

64,398

 

Income tax expense (benefit)

 

 

3,709

 

 

 

4,951

 

 

 

(1,352

)

 

 

7,308

 

Net income (loss)

 

$

28,976

 

 

$

38,674

 

 

$

(10,560

)

 

$

57,090

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2019

 

 

 

Commercial Banking

 

 

Institutional Banking

 

 

Personal Banking

 

 

Total

 

Net interest income

 

$

202,393

 

 

$

62,252

 

 

$

65,637

 

 

$

330,282

 

Provision for credit losses

 

 

19,635

 

 

 

467

 

 

 

3,248

 

 

 

23,350

 

Noninterest income

 

 

43,568

 

 

 

111,476

 

 

 

57,736

 

 

 

212,780

 

Noninterest expense

 

 

135,331

 

 

 

130,249

 

 

 

118,433

 

 

 

384,013

 

Income before taxes

 

 

90,995

 

 

 

43,012

 

 

 

1,692

 

 

 

135,699

 

Income tax expense

 

 

14,079

 

 

 

6,655

 

 

 

262

 

 

 

20,996

 

Net income

 

$

76,916

 

 

$

36,357

 

 

$

1,430

 

 

$

114,703

 

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. Previously, the company had the following four business segments: Commercial Banking, Institutional Banking, Personal Banking, and Healthcare Services. 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, 2020.

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,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net income (GAAP)

 

$

60,529

 

 

$

56,959

 

 

$

57,090

 

 

$

114,703

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition expense

 

 

123

 

 

 

70

 

 

 

246

 

 

 

97

 

Severance expense

 

 

137

 

 

 

297

 

 

 

1,789

 

 

 

867

 

COVID-19 related expense

 

 

3,989

 

 

 

 

 

 

4,217

 

 

 

 

Tax-impact of adjustments (i)

 

 

(943

)

 

 

(81

)

 

 

(1,388

)

 

 

(214

)

Total Non-GAAP adjustments (net of tax)

 

 

3,306

 

 

 

286

 

 

 

4,864

 

 

 

750

 

Net operating income (Non-GAAP)

 

$

63,835

 

 

$

57,245

 

 

$

61,954

 

 

$

115,453

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - diluted (GAAP)

 

$

1.26

 

 

$

1.16

 

 

$

1.18

 

 

$

2.34

 

Acquisition expense

 

 

 

 

 

 

 

 

0.01

 

 

 

 

Severance expense

 

 

0.01

 

 

 

0.01

 

 

 

0.04

 

 

 

0.02

 

COVID-19 related expense

 

 

0.08

 

 

 

 

 

 

0.08

 

 

 

 

Tax-impact of adjustments (i)

 

 

(0.02

)

 

 

 

 

 

(0.03

)

 

 

 

Operating earnings per share - diluted (Non-GAAP)

 

$

1.33

 

 

$

1.17

 

 

$

1.28

 

 

$

2.36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

0.87

%

 

 

0.98

%

 

 

0.42

%

 

 

1.00

%

Return on average equity

 

 

8.95

 

 

 

9.46

 

 

 

4.22

 

 

 

9.95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating return on average assets

 

 

0.91

%

 

 

0.99

%

 

 

0.46

%

 

 

1.01

%

Operating return on average equity

 

 

9.44

 

 

 

9.51

 

 

 

4.58

 

 

 

10.01

 

(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,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Noninterest expense

 

$

208,533

 

 

$

193,387

 

 

$

397,152

 

 

$

384,013

 

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