8-K
UMB FINANCIAL CORP (UMBF)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): 1/26/2021
UMB FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Commission File Number: 001-38481
| Missouri | 43-0903811 |
|---|---|
| (State or other jurisdiction of | (IRS Employer |
| incorporation) | Identification No.) |
1010 Grand Blvd., Kansas City, MO 64106
(Address of principal executive offices, including zip code)
(816) 860-7000
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13c-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities Registered Pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $1.00 Par Value | UMBF | The NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02Results of Operations and Financial Condition
On January 26, 2021, UMB Financial Corporation (the “Company”) issued a press release announcing the financial results for the Company for the quarter and year ended December 31, 2020. A copy of the press release is attached as Exhibit 99.1 and the information is hereby incorporated by reference herein.
The information contained in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 hereto, is being furnished and shall not be deemed to be “filed” with the Securities and Exchange Commission (“SEC”) for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section and is not incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference to this Current Report on Form 8-K in such a filing.
Item 7.01 Regulation FD Disclosure
On January 26, 2021, the Company announced in the same press release that the Board of Directors of the Company (the “Board”) had declared a quarterly dividend of $0.32 per share that is payable on April 1, 2021 to shareholders of record of the Company as of the close of business on March 10, 2021.
The Company is furnishing a copy of materials that will be used in the Company’s shareholder conference call at 8:30 a.m. (CT) on January 27, 2021. A copy of the materials is attached as Exhibit 99.2 and will be available on the Company’s website at www.umb.com. The materials are dated January 26, 2021, and the Company disclaims any obligation to correct or update any of the materials in the future.
The information provided under Item 7.01 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 hereto, is being furnished and is not deemed to be “filed” with the SEC for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section and is not incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference to this Current Report on Form 8-K in such a filing.
Item 9.01 Financial Statements and Exhibits
| 99.1 | Press Release announcing financial results for quarter and year ended December 31, 2020, and announcing dividend declaration. |
|---|---|
| 99.2 | Investor Presentation Materials, dated January 26, 2021. |
| 104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| UMB FINANCIAL CORPORATION | |
|---|---|
| By: | /s/ Ram Shankar |
| Ram Shankar<br><br><br>Chief Financial Officer |
Date: January 26, 2021
umbf-ex991_6.htm
Exhibit 99.1
UMB Financial Corporation News Release
1010 Grand Boulevard
Kansas City, MO 64106
816.860.7000
umb.com
//FOR IMMEDIATE RELEASE//
Media Contact: Stephanie Hague: 816.860.5088
Investor Relations Contact: Kay Gregory: 816.860.7106
UMB Financial Corporation Reports Fourth Quarter Net Income of $156.3 Million and Record Full-Year Earnings of $286.5 million
Fourth Quarter 2020 Financial Highlights (all comparisons to prior year)
| • | GAAP net income of $156.3 million, or $3.24 per diluted share; net operating income of $157.4 million, or $3.26 per diluted share. |
|---|---|
| • | Pre-tax, pre-provision (PTPP) income of $196.1 million, an increase of $116.8 million. |
| --- | --- |
| • | Quarterly average loan balances increased $2.8 billion, or 21.2%. |
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| • | Quarterly average deposits grew 22.5% to $25.0 billion. |
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| • | Noninterest income increased 106.9% and comprised 54.0% of revenue. |
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| • | Credit quality remained strong, with net charge-offs of just 0.04% of average loans, consistent with the company’s historical performance. |
| --- | --- |
KANSAS CITY, Mo. (January 26, 2021) – UMB Financial Corporation (Nasdaq: UMBF), a financial services company, announced net income for the fourth quarter of 2020 of $156.3 million, or $3.24 per diluted share, compared to $73.1 million, or $1.52 per diluted share, in the third quarter of 2020 (linked quarter) and $66.5 million, or $1.35 per diluted share, in the fourth quarter of 2019. For the year ended December 31, 2020, net income was $286.5 million, or $5.93 per diluted share, which is an increase of 17.6% compared to $243.6 million, or $4.96 per diluted share, for the year ended December 31, 2019. Results for the fourth quarter and full-year 2020 include a pre-tax gain of $108.8 million on the company’s investment in Tattooed Chef, Inc.
Net operating income, a non-GAAP financial measure reconciled to net income, the nearest comparable GAAP measure, later in this release, was $157.4 million, or $3.26 per diluted share, for the fourth quarter of 2020, compared to $76.4 million, or $1.59 per diluted share, for the linked quarter and $67.0 million, or $1.36 per diluted share, for the fourth quarter of 2019. 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 $202.9 million, or $4.20 per diluted share, for the fourth quarter of 2020, compared to $106.2 million, or $2.21 per diluted share, for the linked quarter, and $85.7 million, or $1.74 per diluted share, for the fourth quarter of 2019. These PTPP-FTE results represent increases of 91.1% on a linked-quarter basis and 136.7% compared to the fourth quarter of 2019.
| Summary of quarterly financial results | UMB Financial Corporation | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (unaudited, dollars in thousands, except per share data) | |||||||||
| Q4 | Q3 | Q4 | |||||||
| 2020 | 2020 | 2019 | |||||||
| Net income (GAAP) | $ | 156,320 | $ | 73,092 | $ | 66,515 | |||
| Earnings per share (diluted) | 3.24 | 1.52 | 1.35 | ||||||
| Pre-tax, pre-provision income (Non-GAAP) | 196,107 | 99,385 | 79,268 | ||||||
| Pre-tax, pre-provision earnings per share (diluted) | 4.06 | 2.07 | 1.61 | ||||||
| Pre-tax, pre-provision income - FTE (Non-GAAP) | 202,946 | 106,182 | 85,723 | ||||||
| Pre-tax, pre-provision earnings per share - FTE (diluted) | 4.20 | 2.21 | 1.74 | ||||||
| Net operating income (Non-GAAP) | 157,405 | 76,434 | 67,038 | ||||||
| Operating earnings per share (diluted) | 3.26 | 1.59 | 1.36 | ||||||
| GAAP | |||||||||
| Return on average assets | 2.03 | % | 0.99 | % | 1.05 | % | |||
| Return on average equity | 21.18 | 10.23 | 10.15 | ||||||
| Efficiency ratio | 53.44 | 66.14 | 71.59 | ||||||
| Non-GAAP | |||||||||
| Operating return on average assets | 2.05 | % | 1.03 | % | 1.06 | % | |||
| Operating return on average equity | 21.33 | 10.70 | 10.23 | ||||||
| Operating efficiency ratio | 53.11 | 64.69 | 71.35 | ||||||
| Summary of year-to-date financial results | UMB Financial Corporation | ||||||||
| --- | --- | --- | --- | --- | --- | --- | |||
| (unaudited, dollars in thousands, except per share data) | December | December | |||||||
| YTD | YTD | ||||||||
| 2020 | 2019 | ||||||||
| Net income (GAAP) | $ | 286,502 | $ | 243,600 | |||||
| Earnings per share (diluted) | 5.93 | 4.96 | |||||||
| Pre-tax, pre-provision income (Non-GAAP) | 469,390 | 318,815 | |||||||
| Pre-tax, pre-provision earnings per share (diluted) | 9.71 | 6.49 | |||||||
| Pre-tax, pre-provision income - FTE (Non-GAAP) | 496,108 | 342,791 | |||||||
| Pre-tax, pre-provision earnings per share - FTE (diluted) | 10.26 | 6.98 | |||||||
| Net operating income (Non-GAAP) | 295,793 | 245,016 | |||||||
| Operating earnings per share (diluted) | 6.12 | 4.99 | |||||||
| GAAP | |||||||||
| Return on average assets | 1.00 | % | 1.02 | % | |||||
| Return on average equity | 10.21 | 9.94 | |||||||
| Efficiency ratio | 63.49 | 70.66 | |||||||
| Non-GAAP | |||||||||
| Operating return on average assets | 1.04 | % | 1.03 | % | |||||
| Operating return on average equity | 10.55 | 9.99 | |||||||
| Operating efficiency ratio | 62.56 | 70.49 |
“2020 was a testament to the spirit of UMB’s consistent priorities—delivering the Unparalleled Customer Experience (TUCE), caring for our communities and managing through the adversity of an uncertain and
unprecedented operating environment,” said Mariner Kemper, chairman, president and chief executive officer. “Credit quality remains solid, with net charge-offs of just 0.13% of average loans for 2020, while average loan balances, excluding Paycheck Protection Program (PPP) loans, increased 10.4% from 2019. For the full year, our pre-tax, pre-provision income was $469.4 million, an increase of 47.2% compared to 2019. The biggest driver of this outperformance was a gain of $108.8 million in the fourth quarter from our successful investment in Tattooed Chef, Inc.”
Fourth Quarter 2020 earnings discussion
| Summary of revenue | UMB Financial Corporation | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (unaudited, dollars in thousands) | |||||||||||||||
| Q4 | Q3 | Q4 | CQ vs. | CQ vs. | |||||||||||
| 2020 | 2020 | 2019 | LQ | PY | |||||||||||
| Net interest income | $ | 194,675 | $ | 184,384 | $ | 172,363 | $ | 10,291 | $ | 22,312 | |||||
| Noninterest income: | |||||||||||||||
| Trust and securities processing | 50,773 | 50,552 | 46,835 | 221 | 3,938 | ||||||||||
| Trading and investment banking | 9,693 | 8,678 | 6,720 | 1,015 | 2,973 | ||||||||||
| Service charges on deposit accounts | 20,074 | 19,650 | 20,100 | 424 | (26 | ) | |||||||||
| Insurance fees and commissions | 318 | 259 | 511 | 59 | (193 | ) | |||||||||
| Brokerage fees | 3,918 | 4,819 | 8,839 | (901 | ) | (4,921 | ) | ||||||||
| Bankcard fees | 15,788 | 15,295 | 16,326 | 493 | (538 | ) | |||||||||
| Investment securities gains (losses), net | 113,010 | (475 | ) | (308 | ) | 113,485 | 113,318 | ||||||||
| Other | 14,716 | 14,218 | 11,332 | 498 | 3,384 | ||||||||||
| Total noninterest income | $ | 228,290 | $ | 112,996 | $ | 110,355 | $ | 115,294 | $ | 117,935 | |||||
| Total revenue | $ | 422,965 | $ | 297,380 | $ | 282,718 | $ | 125,585 | $ | 140,247 | |||||
| Net interest income (FTE) | $ | 201,514 | $ | 191,181 | $ | 178,818 | |||||||||
| Net interest margin (FTE) | 2.78 | % | 2.73 | % | 3.02 | % | |||||||||
| Total noninterest income as a % of total revenue | 53.97 | 38.00 | 39.03 |
Net interest income
| • | Net interest income totaled $194.7 million, an increase of $10.3 million, or 5.6%, from the linked quarter, driven by an increase of $1.0 billion, or 3.7%, in average earning assets and the acceleration of PPP loan origination fees from payoffs. The increase in average earning assets was driven by an increase of $356 million in investment securities and an increase of $309 million in loan balances. |
|---|---|
| • | Net interest margin for the fourth quarter was 2.78%, an increase of five basis points from the linked quarter. Earning asset yields increased four basis points from the linked quarter, driven by origination fee income from the payoff of PPP loan balances during the fourth quarter. The cost of interest-bearing liabilities decreased one basis point to 0.27%, driven by a three-basis-point decline in the cost of interest-bearing deposits and lower borrowing costs. Net interest spread increased five basis points to 2.68% from the linked quarter and was two basis points higher than the fourth quarter of 2019. |
| --- | --- |
| • | On a year-over-year basis, net interest income increased $22.3 million, or 12.9%, driven by a $2.8 billion, or 21.2%, increase in average loans, and a $1.5 billion, or 17.6%, increase in average securities. These increases were driven by organic loan growth, excess liquidity, and the company’s PPP participation. |
| --- | --- |
| • | Average deposits increased 3.5% on a linked-quarter basis and 22.5% compared to the fourth quarter of 2019. Average noninterest-bearing demand deposit balances increased 8.3% on a linked-quarter basis and 39.8% compared to the fourth quarter of 2019. |
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Noninterest income
| • | Fourth quarter 2020 noninterest income increased $115.3 million, or 102.0%, on a linked-quarter basis, largely due to: |
|---|---|
| o | An increase of $113.5 million in investment securities gains, primarily due to the $108.8 million gain on the company’s investment in Tattooed Chef, Inc., recorded in the fourth quarter of 2020, an increase of $2.4 million in equity earnings on alternative investments, and an increase of $1.1 million in gains on sales of available for sale securities. |
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| • | Compared to the prior year, noninterest income in the fourth quarter of 2020 increased $117.9 million, or 106.9%, primarily driven by: |
| --- | --- |
| o | An increase of $113.3 million in investment securities gains, primarily due to the $108.8 million gain on the company’s investment in Tattooed Chef, Inc., an increase of $1.1 million in equity earnings on alternative investments, and an increase of $0.7 million on sales of available for sale securities. |
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| o | Increases of $2.5 million in fund services income and $1.4 million in corporate trust revenue, both recorded in trust and securities processing. |
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| o | An increase of $3.0 million in trading and investment banking due to increased trading volume. |
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| o | Increases of $2.8 million in company-owned life insurance and $0.5 million in bank-owned life insurance, both recorded in other income. The increase in company-owned life insurance is offset by a proportionate increase in deferred compensation expense as noted below. |
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| o | These increases were partially offset by a decrease of $4.9 million in brokerage fees, primarily driven by lower 12b-1 income. |
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Noninterest expense
| Summary of noninterest expense | UMB Financial Corporation | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (unaudited, dollars in thousands) | ||||||||||||
| Q4 | Q3 | Q4 | CQ vs. | CQ vs. | ||||||||
| 2020 | 2020 | 2019 | LQ | PY | ||||||||
| Salaries and employee benefits | $ | 129,272 | $ | 124,194 | $ | 120,806 | $ | 5,078 | $ | 8,466 | ||
| Occupancy, net | 11,858 | 12,027 | 12,249 | (169 | ) | (391 | ) | |||||
| Equipment | 22,008 | 20,968 | 20,803 | 1,040 | 1,205 | |||||||
| Supplies and services | 4,125 | 3,442 | 6,280 | 683 | (2,155 | ) | ||||||
| Marketing and business development | 3,717 | 3,038 | 8,385 | 679 | (4,668 | ) | ||||||
| Processing fees | 14,408 | 12,812 | 13,351 | 1,596 | 1,057 | |||||||
| Legal and consulting | 10,191 | 7,244 | 10,001 | 2,947 | 190 | |||||||
| Bankcard | 4,711 | 4,834 | 4,061 | (123 | ) | 650 | ||||||
| Amortization of other intangible assets | 1,601 | 1,524 | 1,593 | 77 | 8 | |||||||
| Regulatory fees | 2,393 | 2,309 | 2,940 | 84 | (547 | ) | ||||||
| Other | 22,574 | 5,603 | 2,981 | 16,971 | 19,593 | |||||||
| Total noninterest expense | $ | 226,858 | $ | 197,995 | $ | 203,450 | $ | 28,863 | $ | 23,408 | ||
| • | GAAP noninterest expense for the fourth quarter of 2020 was $226.9 million, an increase of $28.9 million, or 14.6%, from the linked quarter and an increase of $23.4 million, or 11.5%, from the fourth quarter of 2019. | |||||||||||
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| • | The linked-quarter increase in noninterest expense was driven by: | |||||||||||
| --- | --- | |||||||||||
| o | Increases of $14.3 million in operational losses, $1.2 million in charitable contributions expense, and $0.9 million in losses on other real estate owned, all recorded in other noninterest expense. | |||||||||||
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| o | An increase of $5.1 million in salaries and employee benefits, largely driven by increased bonus expense due to higher company performance. | |||||||||||
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| o | Increases of $1.8 million in consulting expense and $1.1 million in legal expense, both recorded in legal and professional expense, due to timing of multiple technology initiatives and legal work performed on various matters. | |||||||||||
| --- | --- | |||||||||||
| o | An increase of $1.6 million in processing fees, $1.0 million in equipment expense, and $0.7 million in supplies and services expense, due to investments in the digital channel and integrated platform solutions to support business growth and the ongoing modernization of the company’s core systems. | |||||||||||
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| • | The year-over-year increase in noninterest expense was driven by: | |||||||||||
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| o | A $13.1 million increase in operational losses, $1.2 million in charitable contributions expense, and $4.4 million in derivative expense, all recorded in other noninterest expense. | |||||||||||
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| o | An $8.5 million increase in salaries and employee benefits, primarily due to increased bonus expense due to higher company performance and an increase of $1.8 million in deferred compensation expense. The increase in deferred compensation expense was offset by the increase in company-owned life insurance income noted above. | |||||||||||
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| o | These increases were partially offset by a decrease of $4.7 million in marketing and development expense, primarily due to a decline in travel and entertainment expense due to the pandemic. | |||||||||||
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Full year 2020 earnings discussion
| • | Net interest income increased $60.3 million, or 9.0%, year-over-year due to a $4.7 billion increase in earning assets, primarily driven by organic loan growth and the company’s PPP participation, partially offset by the impact of lower short-term and long-term interest rates. In 2020, average loan balances increased $2.4 billion and average securities increased $1.2 billion. Average interest-bearing liabilities increased $2.6 billion, while the cost of interest-bearing liabilities declined 85 basis points. |
|---|---|
| • | Full-year noninterest income increased $133.4 million, or 31.3%, due to: |
| --- | --- |
| o | An increase of $118.4 million in investment securities gains, primarily driven by the $108.8 million gain on the company’s investment in Tattooed Chef, Inc., an increase in gains on sales of available for sale securities of $3.8 million, and a $3.1 million increase in equity earnings on alternative investments. |
| --- | --- |
| o | Increases of $10.6 million in fund services income and $7.2 million in corporate trust revenue, both recorded in trust and securities processing. |
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| o | An increase of $9.5 million in trading and investment banking due to increased trading volume. |
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| o | These increases were partially offset by the following decreases: |
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| ▪ | A $6.9 million decline in brokerage fees, primarily driven by lower 12b-1 income. |
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| ▪ | A $6.2 million decrease in bankcard income, due to lower interchange revenue. |
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| • | Full-year noninterest expense increased $43.1 million, or 5.5%, primarily due to: |
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| o | A $34.0 million increase in salary and employee benefit expense driven primarily by increased bonus and sales commission expense tied to business volumes, revenue growth, and overall company performance, as well as increased compensation expense tied to the company’s COVID-19 response. |
| --- | --- |
| o | A $12.9 million increase in operational losses, an increase of $1.3 million in charitable contributions expense, and an increase of $1.2 million in derivative expense, all recorded in other noninterest expense. |
| --- | --- |
| o | An increase of $6.6 million in equipment expense, primarily due to investments in digital channel and integrated platform solutions to support business growth and the ongoing modernization of the company’s core systems. |
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| o | These increases were partially offset by a decrease of $11.6 million in marketing and development expense primarily due to a decline in travel and entertainment expense due to the pandemic. |
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Income taxes
| • | The company’s effective tax rate was 15.5% for the year ended December 31, 2020, compared to 14.8% for the same period in 2019. The increase in the effective tax rate for 2020 is primarily attributable to a smaller portion of pre-tax income being earned from tax-exempt municipal securities. |
|---|
Balance sheet
| • | Average total assets for the fourth quarter of 2020 were $30.6 billion compared to $29.5 billion for the linked quarter and $25.1 billion for the same period in 2019. | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Summary of average loans and leases - QTD Average | UMB Financial Corporation | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| (unaudited, dollars in thousands) | ||||||||||||||
| Q4 | Q3 | Q4 | CQ vs. | CQ vs. | ||||||||||
| 2020 | 2020 | 2019 | LQ | PY | ||||||||||
| Commercial and industrial | $ | 7,079,646 | $ | 7,043,780 | $ | 5,451,880 | $ | 35,866 | $ | 1,627,766 | ||||
| Specialty lending | 506,225 | 456,847 | 576,091 | 49,378 | (69,866 | ) | ||||||||
| Commercial real estate | 5,847,439 | 5,744,344 | 5,121,794 | 103,095 | 725,645 | |||||||||
| Consumer real estate | 1,903,892 | 1,755,249 | 1,353,544 | 148,643 | 550,348 | |||||||||
| Consumer | 128,350 | 150,814 | 135,526 | (22,464 | ) | (7,176 | ) | |||||||
| Credit cards | 382,166 | 371,444 | 438,473 | 10,722 | (56,307 | ) | ||||||||
| Leases and other | 193,363 | 209,238 | 154,576 | (15,875 | ) | 38,787 | ||||||||
| Total loans | $ | 16,041,081 | $ | 15,731,716 | $ | 13,231,884 | $ | 309,365 | $ | 2,809,197 | ||||
| • | Average loans for the fourth quarter of 2020 increased 2.0% on a linked-quarter basis and 21.2% compared to the fourth quarter of 2019 due to increased commercial real estate and consumer real estate loans and the company’s PPP participation, which had an average balance of $1.4 billion in the fourth quarter. | |||||||||||||
| --- | --- | |||||||||||||
| Summary of average securities - QTD Average | UMB Financial Corporation | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| (unaudited, dollars in thousands) | ||||||||||||||
| Q4 | Q3 | Q4 | CQ vs. | CQ vs. | ||||||||||
| 2020 | 2020 | 2019 | LQ | PY | ||||||||||
| Securities available for sale: | ||||||||||||||
| U.S. Treasury | $ | 30,778 | $ | 30,881 | $ | 220,830 | $ | (103 | ) | $ | (190,052 | ) | ||
| U.S. Agencies | 96,082 | 242,504 | 93,258 | (146,422 | ) | 2,824 | ||||||||
| Mortgage-backed | 5,053,821 | 4,829,586 | 3,967,051 | 224,235 | 1,086,770 | |||||||||
| State and political subdivisions | 3,600,704 | 3,407,508 | 2,968,305 | 193,196 | 632,399 | |||||||||
| Commercial Paper | — | 3,478 | — | (3,478 | ) | — | ||||||||
| Corporates | 76,870 | 58,866 | 184,503 | 18,004 | (107,633 | ) | ||||||||
| Total securities available for sale | $ | 8,858,255 | $ | 8,572,823 | $ | 7,433,947 | $ | 285,432 | $ | 1,424,308 | ||||
| Securities held to maturity: | ||||||||||||||
| State and political subdivisions | $ | 1,045,640 | $ | 1,085,297 | $ | 1,117,268 | $ | (39,657 | ) | $ | (71,628 | ) | ||
| Trading securities | 29,659 | 32,894 | 56,653 | (3,235 | ) | (26,994 | ) | |||||||
| Other securities | 267,445 | 156,816 | 96,994 | 110,629 | 170,451 | |||||||||
| Total securities | $ | 10,200,999 | $ | 9,847,830 | $ | 8,704,862 | $ | 353,169 | $ | 1,496,137 | ||||
| • | Average securities available for sale increased 3.3% on a linked-quarter basis and 19.2% compared to the fourth quarter of 2019. | |||||||||||||
| --- | --- | |||||||||||||
| Summary of average deposits - QTD Average | UMB Financial Corporation | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (unaudited, dollars in thousands) | ||||||||||||||
| Q4 | Q3 | Q4 | CQ vs. | CQ vs. | ||||||||||
| 2020 | 2020 | 2019 | LQ | PY | ||||||||||
| Deposits: | ||||||||||||||
| Noninterest-bearing demand | $ | 8,947,389 | $ | 8,260,170 | $ | 6,398,309 | $ | 687,219 | $ | 2,549,080 | ||||
| Interest-bearing demand and savings | 15,250,236 | 15,125,267 | 12,959,948 | 124,969 | 2,290,288 | |||||||||
| Time deposits | 767,755 | 741,750 | 1,028,293 | 26,005 | (260,538 | ) | ||||||||
| Total deposits | $ | 24,965,380 | $ | 24,127,187 | $ | 20,386,550 | $ | 838,193 | $ | 4,578,830 | ||||
| Noninterest bearing deposits as % of total | 35.84 | % | 34.24 | % | 31.38 | % | ||||||||
| • | Average deposits increased 3.5% on a linked-quarter basis and 22.5% compared to the fourth quarter of 2019. | |||||||||||||
| --- | --- | |||||||||||||
| • | Average noninterest-bearing demand deposits increased 8.3% on a linked-quarter basis to $8.9 billion. | |||||||||||||
| --- | --- |
Capital
| Capital information | UMB Financial Corporation | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (unaudited, dollars in thousands, except per share data) | |||||||||
| December 31, 2020 | September 30, 2020 | December 31, 2019 | |||||||
| Total equity | $ | 3,016,948 | $ | 2,854,180 | $ | 2,606,440 | |||
| Book value per common share | 62.84 | 59.43 | 53.09 | ||||||
| Tangible book value per common share | 58.64 | 55.19 | 48.84 | ||||||
| Regulatory capital: | |||||||||
| Common equity Tier 1 capital | $ | 2,547,634 | $ | 2,402,785 | $ | 2,330,533 | |||
| Tier 1 capital | 2,547,634 | 2,402,785 | 2,330,533 | ||||||
| Total capital | 3,002,545 | 2,854,598 | 2,505,397 | ||||||
| Regulatory capital ratios: | |||||||||
| Common equity Tier 1 capital ratio | 12.10 | % | 11.93 | % | 12.33 | % | |||
| Tier 1 risk-based capital ratio | 12.10 | 11.93 | 12.33 | ||||||
| Total risk-based capital ratio | 14.26 | 14.17 | 13.26 | ||||||
| Tier 1 leverage ratio | 8.37 | 8.19 | 9.37 | ||||||
| • | At December 31, 2020, 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) | |||||||||||||||
| Q4 | Q3 | Q2 | Q1 | Q4 | |||||||||||
| 2020 | 2020 | 2020 | 2020 | 2019 | |||||||||||
| Net charge-offs - Total loans | $ | 1,801 | $ | 5,111 | $ | 5,541 | $ | 7,672 | $ | 7,618 | |||||
| Net loan charge-offs as a % of total average loans | 0.04 | % | 0.13 | % | 0.15 | % | 0.23 | % | 0.23 | % | |||||
| Loans over 90 days past due | $ | 1,952 | $ | 1,372 | $ | 4,588 | $ | 2,211 | $ | 2,069 | |||||
| Loans over 90 days past due as a % of total loans | 0.01 | % | 0.01 | % | 0.03 | % | 0.02 | % | 0.02 | % | |||||
| Nonaccrual and restructured loans | $ | 87,823 | $ | 93,695 | $ | 82,245 | $ | 97,029 | $ | 56,347 | |||||
| Nonaccrual and restructured loans as a % of total loans | 0.55 | % | 0.59 | % | 0.54 | % | 0.70 | % | 0.42 | % | |||||
| Provision for credit losses | $ | 5,000 | $ | 16,000 | $ | 21,500 | $ | 88,000 | $ | 2,000 | |||||
| • | Provision for credit losses for the fourth quarter totaled $5.0 million, a decrease of $11.0 million from the linked quarter, and an increase of $3.0 million from the fourth quarter of 2019. | ||||||||||||||
| --- | --- | ||||||||||||||
| • | Net charge-offs for the fourth quarter totaled $1.8 million, or 0.04%, of average loans, compared to $5.1 million, or 0.13%, of average loans in the linked quarter. | ||||||||||||||
| --- | --- |
Dividend Declaration
At the company’s quarterly board meeting, the Board of Directors declared a $0.32 per share quarterly cash dividend, payable on April 1, 2021, to shareholders of record at the close of business on March 10, 2021.
Conference Call
The company plans to host a conference call to discuss its fourth quarter and full-year 2020 earnings results on Wednesday, January 27, 2021, at 8:30 a.m. (CT).
Interested parties may access the call by dialing (toll-free) 877-267-8760 or (international) 412-542-4148 and requesting to join the UMB Financial call. The live call may also be accessed by visiting investorrelations.umb.com or by using the following link:
UMB Financial 4Q 2020 Conference Call
A replay of the conference call may be heard through February 10, 2021 by calling (toll-free)
877-344-7529 or (international) 412-317-0088. The replay access code required for playback is 10150814 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 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.
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, 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 fourth-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 fourth-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 adopt in 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 | |||||
|---|---|---|---|---|---|
| (dollars in thousands) | |||||
| 2019 | |||||
| (audited) | |||||
| ASSETS | |||||
| Loans | 16,103,651 | $ | 13,431,722 | ||
| Allowance for credit losses on loans | (215,973 | ) | (101,788 | ) | |
| Net loans | 15,887,678 | 13,329,934 | |||
| Loans held for sale | 6,708 | 7,803 | |||
| Securities: | |||||
| Available for sale | 9,299,688 | 7,447,362 | |||
| Held to maturity, net of allowance for credit losses | 1,012,004 | 1,116,102 | |||
| Trading securities | 35,020 | 45,618 | |||
| Other securities | 296,053 | 108,420 | |||
| Total securities | 10,642,765 | 8,717,502 | |||
| Federal funds sold and resell agreements | 1,650,335 | 1,578,345 | |||
| Interest-bearing due from banks | 3,110,042 | 1,225,491 | |||
| Cash and due from banks | 430,638 | 472,958 | |||
| Premises and equipment, net | 293,095 | 300,334 | |||
| Accrued income | 139,892 | 124,508 | |||
| Goodwill | 180,867 | 180,867 | |||
| Other intangibles, net | 21,056 | 27,597 | |||
| Other assets | 764,428 | 596,016 | |||
| Total assets | 33,127,504 | $ | 26,561,355 | ||
| LIABILITIES | |||||
| Deposits: | |||||
| Noninterest-bearing demand | 9,879,970 | $ | 6,944,465 | ||
| Interest-bearing demand and savings | 16,295,186 | 13,432,415 | |||
| Time deposits under 250,000 | 477,748 | 611,587 | |||
| Time deposits of 250,000 or more | 398,347 | 614,777 | |||
| Total deposits | 27,051,251 | 21,603,244 | |||
| Federal funds purchased and repurchase agreements | 2,315,497 | 1,896,508 | |||
| Long-term debt | 269,595 | 70,372 | |||
| Accrued expenses and taxes | 319,676 | 232,200 | |||
| Other liabilities | 154,537 | 152,591 | |||
| Total liabilities | 30,110,556 | 23,954,915 | |||
| SHAREHOLDERS' EQUITY | |||||
| Common stock | 55,057 | 55,057 | |||
| Capital surplus | 1,090,450 | 1,073,764 | |||
| Retained earnings | 1,891,246 | 1,672,438 | |||
| Accumulated other comprehensive income, net | 318,340 | 83,180 | |||
| Treasury stock | (338,145 | ) | (277,999 | ) | |
| Total shareholders' equity | 3,016,948 | 2,606,440 | |||
| Total liabilities and shareholders' equity | 33,127,504 | $ | 26,561,355 |
All values are in US Dollars.
| Consolidated Statements of Income | UMB Financial Corporation | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (dollars in thousands except share and per share data) | |||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (audited) | ||||||||||||
| INTEREST INCOME | |||||||||||||||
| Loans | $ | 152,486 | $ | 156,503 | $ | 585,957 | $ | 637,845 | |||||||
| Securities: | |||||||||||||||
| Taxable interest | 26,226 | 26,996 | 105,701 | 106,053 | |||||||||||
| Tax-exempt interest | 25,427 | 24,177 | 99,820 | 90,064 | |||||||||||
| Total securities income | 51,653 | 51,173 | 205,521 | 196,117 | |||||||||||
| Federal funds and resell agreements | 2,567 | 4,875 | 11,840 | 13,843 | |||||||||||
| Interest-bearing due from banks | 384 | 2,765 | 3,744 | 12,882 | |||||||||||
| Trading securities | 202 | 504 | 1,427 | 2,205 | |||||||||||
| Total interest income | 207,292 | 215,820 | 808,489 | 862,892 | |||||||||||
| INTEREST EXPENSE | |||||||||||||||
| Deposits | 7,955 | 35,698 | 58,214 | 154,192 | |||||||||||
| Federal funds and repurchase agreements | 1,726 | 6,629 | 11,787 | 32,553 | |||||||||||
| Other | 2,936 | 1,130 | 7,259 | 5,242 | |||||||||||
| Total interest expense | 12,617 | 43,457 | 77,260 | 191,987 | |||||||||||
| Net interest income | 194,675 | 172,363 | 731,229 | 670,905 | |||||||||||
| Provision for credit losses | 5,000 | 2,000 | 130,500 | 32,850 | |||||||||||
| Net interest income after provision for credit losses | 189,675 | 170,363 | 600,729 | 638,055 | |||||||||||
| NONINTEREST INCOME | |||||||||||||||
| Trust and securities processing | 50,773 | 46,835 | 194,646 | 176,913 | |||||||||||
| Trading and investment banking | 9,693 | 6,720 | 32,945 | 23,466 | |||||||||||
| Service charges on deposit accounts | 20,074 | 20,100 | 83,879 | 82,748 | |||||||||||
| Insurance fees and commissions | 318 | 511 | 1,369 | 1,634 | |||||||||||
| Brokerage fees | 3,918 | 8,839 | 24,350 | 31,261 | |||||||||||
| Bankcard fees | 15,788 | 16,326 | 60,544 | 66,727 | |||||||||||
| Investment securities gains (losses), net | 113,010 | (308 | ) | 120,634 | 2,245 | ||||||||||
| Other | 14,716 | 11,332 | 41,799 | 41,776 | |||||||||||
| Total noninterest income | 228,290 | 110,355 | 560,166 | 426,770 | |||||||||||
| NONINTEREST EXPENSE | |||||||||||||||
| Salaries and employee benefits | 129,272 | 120,806 | 495,464 | 461,445 | |||||||||||
| Occupancy, net | 11,858 | 12,249 | 47,476 | 47,771 | |||||||||||
| Equipment | 22,008 | 20,803 | 85,719 | 79,086 | |||||||||||
| Supplies and services | 4,125 | 6,280 | 15,537 | 18,699 | |||||||||||
| Marketing and business development | 3,717 | 8,385 | 14,679 | 26,257 | |||||||||||
| Processing fees | 14,408 | 13,351 | 54,213 | 52,198 | |||||||||||
| Legal and consulting | 10,191 | 10,001 | 29,765 | 31,504 | |||||||||||
| Bankcard | 4,711 | 4,061 | 18,954 | 17,750 | |||||||||||
| Amortization of other intangible assets | 1,601 | 1,593 | 6,517 | 5,506 | |||||||||||
| Regulatory fees | 2,393 | 2,940 | 10,279 | 11,489 | |||||||||||
| Other | 22,574 | 2,981 | 43,402 | 27,155 | |||||||||||
| Total noninterest expense | 226,858 | 203,450 | 822,005 | 778,860 | |||||||||||
| Income before income taxes | 191,107 | 77,268 | 338,890 | 285,965 | |||||||||||
| Income tax expense | 34,787 | 10,753 | 52,388 | 42,365 | |||||||||||
| NET INCOME | $ | 156,320 | $ | 66,515 | $ | 286,502 | $ | 243,600 | |||||||
| PER SHARE DATA | |||||||||||||||
| Net income – basic | $ | 3.26 | $ | 1.36 | $ | 5.95 | $ | 4.99 | |||||||
| Net income – diluted | 3.24 | 1.35 | 5.93 | 4.96 | |||||||||||
| Dividends | 0.32 | 0.31 | 1.25 | 1.21 | |||||||||||
| Weighted average shares outstanding – basic | 47,927,358 | 48,828,509 | 48,137,791 | 48,779,263 | |||||||||||
| Weighted average shares outstanding – diluted | 48,264,097 | 49,187,291 | 48,343,750 | 49,089,877 | |||||||||||
| Consolidated Statements of Comprehensive Income | UMB Financial Corporation | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||
| (dollars in thousands) | |||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (audited) | ||||||||||||
| Net income | $ | 156,320 | $ | 66,515 | $ | 286,502 | $ | 243,600 | |||||||
| Other comprehensive income (loss), before tax: | |||||||||||||||
| Unrealized gains and losses on debt securities: | |||||||||||||||
| Change in unrealized holding gains and losses, net | 25,576 | (14,209 | ) | 295,552 | 253,891 | ||||||||||
| Less: Reclassification adjustment for gains included in net income | (1,436 | ) | (755 | ) | (6,980 | ) | (3,218 | ) | |||||||
| Change in unrealized gains and losses on debt securities | 24,140 | (14,964 | ) | 288,572 | 250,673 | ||||||||||
| Unrealized gains and losses on derivative hedges: | |||||||||||||||
| Change in unrealized gains and losses on derivative hedges, net | 1,964 | (2,700 | ) | 20,979 | (15,318 | ) | |||||||||
| Less: Reclassification adjustment for (gains) losses included in net income | (1,036 | ) | 728 | (1,905 | ) | 1,023 | |||||||||
| Change in unrealized gains and losses on derivative hedges | 928 | (1,972 | ) | 19,074 | (14,295 | ) | |||||||||
| Other comprehensive income (loss), before tax | 25,068 | (16,936 | ) | 307,646 | 236,378 | ||||||||||
| Income tax (expense) benefit | (5,831 | ) | 4,095 | (72,486 | ) | (57,416 | ) | ||||||||
| Other comprehensive income (loss) | 19,237 | (12,841 | ) | 235,160 | 178,962 | ||||||||||
| Comprehensive income | $ | 175,557 | $ | 53,674 | $ | 521,662 | $ | 422,562 | |||||||
| Consolidated Statements of Shareholders' Equity | UMB Financial Corporation | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (dollars in thousands except per share data) | |||||||||||||||
| (audited) | Capital<br><br><br>Surplus | Retained<br><br><br>Earnings | Accumulated Other Comprehensive (Loss) Income | Treasury<br><br><br>Stock | Total | ||||||||||
| Balance - January 1, 2019 | 55,057 | $ | 1,054,601 | $ | 1,488,421 | $ | (95,782 | ) | $ | (273,827 | ) | $ | 2,228,470 | ||
| Total comprehensive income | — | — | 243,600 | 178,962 | — | 422,562 | |||||||||
| Dividends (1.21 per share) | — | — | (59,583 | ) | — | — | (59,583 | ) | |||||||
| Purchase of treasury stock | — | — | — | — | (4,496 | ) | (4,496 | ) | |||||||
| Forfeitures of equity awards, net of issuances | — | 3,820 | — | — | (3,204 | ) | 616 | ||||||||
| Recognition of equity-based compensation | — | 14,234 | — | — | — | 14,234 | |||||||||
| Sale of treasury stock | — | 344 | — | — | 487 | 831 | |||||||||
| Exercise of stock options | — | 765 | — | — | 3,041 | 3,806 | |||||||||
| Balance - December 31, 2019 | 55,057 | $ | 1,073,764 | $ | 1,672,438 | $ | 83,180 | $ | (277,999 | ) | $ | 2,606,440 | |||
| (unaudited) | |||||||||||||||
| Balance - January 1, 2020 | 55,057 | $ | 1,073,764 | $ | 1,672,438 | $ | 83,180 | $ | (277,999 | ) | $ | 2,606,440 | |||
| Total comprehensive income | — | — | 286,502 | 235,160 | — | 521,662 | |||||||||
| Dividends (1.25 per share) | — | — | (60,655 | ) | — | — | (60,655 | ) | |||||||
| Purchase of treasury stock | — | 616 | — | — | (64,382 | ) | (63,766 | ) | |||||||
| Forfeitures of equity awards, net of issuances | — | 624 | — | — | (16 | ) | 608 | ||||||||
| Recognition of equity-based compensation | — | 14,512 | — | — | — | 14,512 | |||||||||
| Sale of treasury stock | — | 201 | — | — | 414 | 615 | |||||||||
| Exercise of stock options | — | 733 | — | — | 3,838 | 4,571 | |||||||||
| Cumulative effect adjustment | — | — | (7,039 | ) | — | — | (7,039 | ) | |||||||
| Balance - December 31, 2020 | 55,057 | $ | 1,090,450 | $ | 1,891,246 | $ | 318,340 | $ | (338,145 | ) | $ | 3,016,948 |
All values are in US Dollars.
| Average Balances / Yields and Rates | UMB Financial Corporation | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (tax - equivalent basis) | ||||||||||||
| (unaudited, dollars in thousands) | ||||||||||||
| Three Months Ended December 31, | ||||||||||||
| 2020 | 2019 | |||||||||||
| Average | Average | Average | Average | |||||||||
| Balance | Yield/Rate | Balance | Yield/Rate | |||||||||
| Assets | ||||||||||||
| Loans, net of unearned interest | $ | 16,041,081 | 3.78 | % | $ | 13,231,884 | 4.69 | % | ||||
| Securities: | ||||||||||||
| Taxable | 5,776,606 | 1.81 | 4,654,669 | 2.30 | ||||||||
| Tax-exempt | 4,394,734 | 2.91 | 3,993,540 | 3.04 | ||||||||
| Total securities | 10,171,340 | 2.28 | 8,648,209 | 2.64 | ||||||||
| Federal funds and resell agreements | 1,186,939 | 0.86 | 893,954 | 2.16 | ||||||||
| Interest bearing due from banks | 1,443,979 | 0.11 | 633,328 | 1.73 | ||||||||
| Trading securities | 29,659 | 3.21 | 56,653 | 4.09 | ||||||||
| Total earning assets | 28,872,998 | 2.95 | 23,464,028 | 3.76 | ||||||||
| Allowance for credit losses | (217,923 | ) | (109,967 | ) | ||||||||
| Other assets | 1,930,559 | 1,716,962 | ||||||||||
| Total assets | $ | 30,585,634 | $ | 25,071,023 | ||||||||
| Liabilities and Shareholders' Equity | ||||||||||||
| Interest-bearing deposits | $ | 16,017,991 | 0.20 | % | $ | 13,988,241 | 1.01 | % | ||||
| Federal funds and repurchase agreements | 1,963,865 | 0.35 | 1,661,285 | 1.58 | ||||||||
| Borrowed funds | 274,279 | 4.26 | 70,225 | 6.38 | ||||||||
| Total interest-bearing liabilities | 18,256,135 | 0.27 | 15,719,751 | 1.10 | ||||||||
| Noninterest-bearing demand deposits | 8,947,389 | 6,398,309 | ||||||||||
| Other liabilities | 446,572 | 353,848 | ||||||||||
| Shareholders' equity | 2,935,538 | 2,599,115 | ||||||||||
| Total liabilities and shareholders' equity | $ | 30,585,634 | $ | 25,071,023 | ||||||||
| Net interest spread | 2.68 | % | 2.66 | % | ||||||||
| Net interest margin | 2.78 | 3.02 | ||||||||||
| Average Balances / Yields and Rates | UMB Financial Corporation | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (tax - equivalent basis) | ||||||||||||
| (unaudited, dollars in thousands) | ||||||||||||
| Year Ended December 31, | ||||||||||||
| 2020 | 2019 | |||||||||||
| Average | Average | Average | Average | |||||||||
| Balance | Yield/Rate | Balance | Yield/Rate | |||||||||
| Assets | ||||||||||||
| Loans, net of unearned interest | $ | 15,126,110 | 3.87 | % | $ | 12,764,623 | 5.00 | % | ||||
| Securities: | ||||||||||||
| Taxable | 5,256,715 | 2.01 | 4,524,955 | 2.34 | ||||||||
| Tax-exempt | 4,226,363 | 2.99 | 3,796,983 | 3.00 | ||||||||
| Total securities | 9,483,078 | 2.45 | 8,321,938 | 2.64 | ||||||||
| Federal funds and resell agreements | 1,099,447 | 1.08 | 535,393 | 2.59 | ||||||||
| Interest bearing due from banks | 1,218,919 | 0.31 | 584,756 | 2.20 | ||||||||
| Trading securities | 37,086 | 4.28 | 52,306 | 4.79 | ||||||||
| Total earning assets | 26,964,640 | 3.10 | 22,259,016 | 3.98 | ||||||||
| Allowance for credit losses | (184,482 | ) | (107,422 | ) | ||||||||
| Other assets | 1,787,979 | 1,633,031 | ||||||||||
| Total assets | $ | 28,568,137 | $ | 23,784,625 | ||||||||
| Liabilities and Shareholders' Equity | ||||||||||||
| Interest-bearing deposits | $ | 15,336,492 | 0.38 | % | $ | 13,172,181 | 1.17 | % | ||||
| Federal funds and repurchase agreements | 2,023,813 | 0.58 | 1,657,283 | 1.96 | ||||||||
| Borrowed funds | 136,957 | 5.30 | 69,809 | 7.51 | ||||||||
| Total interest-bearing liabilities | 17,497,262 | 0.44 | 14,899,273 | 1.29 | ||||||||
| Noninterest-bearing demand deposits | 7,845,667 | 6,132,187 | ||||||||||
| Other liabilities | 420,247 | 301,318 | ||||||||||
| Shareholders' equity | 2,804,961 | 2,451,847 | ||||||||||
| Total liabilities and shareholders' equity | $ | 28,568,137 | $ | 23,784,625 | ||||||||
| Net interest spread | 2.66 | % | 2.69 | % | ||||||||
| Net interest margin | 2.81 | 3.12 | ||||||||||
| Business Segment Information | UMB Financial Corporation | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||
| (unaudited, dollars in thousands) | ||||||||||||
| Three Months Ended December 31, 2020 | ||||||||||||
| Commercial Banking | Institutional Banking | Personal Banking | Total | |||||||||
| Net interest income | $ | 133,019 | $ | 22,322 | $ | 39,334 | $ | 194,675 | ||||
| Provision for credit losses | 3,891 | 116 | 993 | 5,000 | ||||||||
| Noninterest income | 131,630 | 63,746 | 32,914 | 228,290 | ||||||||
| Noninterest expense | 85,942 | 71,562 | 69,354 | 226,858 | ||||||||
| Income before taxes | 174,816 | 14,390 | 1,901 | 191,107 | ||||||||
| Income tax expense | 31,821 | 2,620 | 346 | 34,787 | ||||||||
| Net income | $ | 142,995 | $ | 11,770 | $ | 1,555 | $ | 156,320 | ||||
| Three Months Ended December 31, 2019 | ||||||||||||
| Commercial Banking | Institutional Banking | Personal Banking | Total | |||||||||
| Net interest income | $ | 105,479 | $ | 33,734 | $ | 33,150 | $ | 172,363 | ||||
| Provision for credit losses | 558 | 251 | 1,191 | 2,000 | ||||||||
| Noninterest income | 19,167 | 62,326 | 28,862 | 110,355 | ||||||||
| Noninterest expense | 65,567 | 71,552 | 66,331 | 203,450 | ||||||||
| Income (loss) before taxes | 58,521 | 24,257 | (5,510 | ) | 77,268 | |||||||
| Income tax expense (benefit) | 8,144 | 3,376 | (767 | ) | 10,753 | |||||||
| Net income (loss) | $ | 50,377 | $ | 20,881 | $ | (4,743 | ) | $ | 66,515 | |||
| Year Ended December 31, 2020 | ||||||||||||
| Commercial Banking | Institutional Banking | Personal Banking | Total | |||||||||
| Net interest income | $ | 475,425 | $ | 106,856 | $ | 148,948 | $ | 731,229 | ||||
| Provision for credit losses | 119,424 | 882 | 10,194 | 130,500 | ||||||||
| Noninterest income | 189,412 | 254,874 | 115,880 | 560,166 | ||||||||
| Noninterest expense | 272,283 | 286,635 | 263,087 | 822,005 | ||||||||
| Income (loss) before taxes | 273,130 | 74,213 | (8,453 | ) | 338,890 | |||||||
| Income tax expense (benefit) | 42,223 | 11,472 | (1,307 | ) | 52,388 | |||||||
| Net income (loss) | $ | 230,907 | $ | 62,741 | $ | (7,146 | ) | $ | 286,502 | |||
| Year Ended December 31, 2019 | ||||||||||||
| Commercial Banking | Institutional Banking | Personal Banking | Total | |||||||||
| Net interest income | $ | 412,232 | $ | 126,591 | $ | 132,082 | $ | 670,905 | ||||
| Provision for credit losses | 26,159 | 975 | 5,716 | 32,850 | ||||||||
| Noninterest income | 81,609 | 232,444 | 112,717 | 426,770 | ||||||||
| Noninterest expense | 267,345 | 268,423 | 243,092 | 778,860 | ||||||||
| Income (loss) before taxes | 200,337 | 89,637 | (4,009 | ) | 285,965 | |||||||
| Income tax expense (benefit) | 29,679 | 13,280 | (594 | ) | 42,365 | |||||||
| Net income (loss) | $ | 170,658 | $ | 76,357 | $ | (3,415 | ) | $ | 243,600 |
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. Prior to 2020, 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 December 31, 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 December 31, | Year Ended December 31, | |||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||
| Net income (GAAP) | $ | 156,320 | $ | 66,515 | $ | 286,502 | $ | 243,600 | ||||
| Adjustments: | ||||||||||||
| Acquisition expense | — | 100 | 324 | 268 | ||||||||
| Severance expense | 109 | 572 | 4,757 | 1,552 | ||||||||
| COVID-19 related expense | 1,286 | — | 6,861 | — | ||||||||
| Tax-impact of adjustments (i) | (310 | ) | (149 | ) | (2,651 | ) | (404 | ) | ||||
| Total Non-GAAP adjustments (net of tax) | 1,085 | 523 | 9,291 | 1,416 | ||||||||
| Net operating income (Non-GAAP) | $ | 157,405 | $ | 67,038 | $ | 295,793 | $ | 245,016 | ||||
| Earnings per share - diluted (GAAP) | $ | 3.24 | $ | 1.35 | $ | 5.93 | $ | 4.96 | ||||
| Acquisition expense | — | — | 0.01 | — | ||||||||
| Severance expense | — | 0.01 | 0.10 | 0.03 | ||||||||
| COVID-19 related expense | 0.03 | — | 0.14 | — | ||||||||
| Tax-impact of adjustments (i) | (0.01 | ) | — | (0.06 | ) | — | ||||||
| Operating earnings per share - diluted (Non-GAAP) | $ | 3.26 | $ | 1.36 | $ | 6.12 | $ | 4.99 | ||||
| GAAP | ||||||||||||
| Return on average assets | 2.03 | % | 1.05 | % | 1.00 | % | 1.02 | % | ||||
| Return on average equity | 21.18 | 10.15 | 10.21 | 9.94 | ||||||||
| Non-GAAP | ||||||||||||
| Operating return on average assets | 2.05 | % | 1.06 | % | 1.04 | % | 1.03 | % | ||||
| Operating return on average equity | 21.33 | 10.23 | 10.55 | 9.99 |
(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 December 31, | Year Ended December 31, | |||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||
| Noninterest expense | $ | 226,858 | $ | 203,450 | $ | 822,005 | $ | 778,860 | ||||
| Adjustments to arrive at operating noninterest expense (pre-tax): | ||||||||||||
| Acquisition expense | — | 100 | 324 | 268 | ||||||||
| Severance expense | 109 | 572 | 4,757 | 1,552 | ||||||||
| COVID-19 related expense | 1,286 | — | 6,861 | — | ||||||||
| Total Non-GAAP adjustments (pre-tax) | 1,395 | 672 | 11,942 | 1,820 | ||||||||
| Operating noninterest expense (Non-GAAP) | $ | 225,463 | $ | 202,778 | $ | 810,063 | $ | 777,040 | ||||
| Noninterest expense | $ | 226,858 | $ | 203,450 | $ | 822,005 | $ | 778,860 | ||||
| Less: Amortization of other intangibles | 1,601 | 1,593 | 6,517 | 5,506 | ||||||||
| Noninterest expense, net of amortization of other intangibles (Non-GAAP) (numerator A) | $ | 225,257 | $ | 201,857 | $ | 815,488 | $ | 773,354 | ||||
| Operating noninterest expense | $ | 225,463 | $ | 202,778 | $ | 810,063 | $ | 777,040 | ||||
| Less: Amortization of other intangibles | 1,601 | 1,593 | 6,517 | 5,506 | ||||||||
| Operating expense, net of amortization of other intangibles (Non-GAAP) (numerator B) | $ | 223,862 | $ | 201,185 | $ | 803,546 | $ | 771,534 | ||||
| Net interest income | $ | 194,675 | $ | 172,363 | $ | 731,229 | $ | 670,905 | ||||
| Noninterest income | 228,290 | 110,355 | 560,166 | 426,770 | ||||||||
| Less: Gains on sales of securities available for sale, net | 1,436 | 755 | 6,980 | 3,218 | ||||||||
| Total Non-GAAP Revenue (denominator A) | $ | 421,529 | $ | 281,963 | $ | 1,284,415 | $ | 1,094,457 | ||||
| Efficiency ratio (numerator A/denominator A) | 53.44 | % | 71.59 | % | 63.49 | % | 70.66 | % | ||||
| Operating efficiency ratio (Non-GAAP) (numerator B/denominator A) | 53.11 | 71.35 | 62.56 | 70.49 | ||||||||
| Pre-tax, pre-provision income non-GAAP reconciliations: | UMB Financial Corporation | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| (unaudited, dollars in thousands except per share data) | ||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||
| Net income before taxes (GAAP) | $ | 191,107 | $ | 77,268 | $ | 338,890 | $ | 285,965 | ||||
| Adjustments: | ||||||||||||
| Provision for credit losses | 5,000 | 2,000 | 130,500 | 32,850 | ||||||||
| Pre-tax, pre-provision income (Non-GAAP) | $ | 196,107 | $ | 79,268 | $ | 469,390 | $ | 318,815 | ||||
| Pre-tax earnings per share - diluted (GAAP) | $ | 3.96 | $ | 1.57 | $ | 7.01 | $ | 5.82 | ||||
| Provision for credit losses | 0.10 | 0.04 | 2.70 | 0.67 | ||||||||
| Pre-tax, pre-provision earnings per share - diluted (Non-GAAP) | $ | 4.06 | $ | 1.61 | $ | 9.71 | $ | 6.49 | ||||
| Pre-tax, pre-provision income - FTE Non-GAAP reconciliations: | UMB Financial Corporation | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| (unaudited, dollars in thousands except per share data) | ||||||||||||
| Three Months Ended | ||||||||||||
| December 31, | September 30, | December 31, | Year Ended December 31, | |||||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | ||||||||
| Net interest income | $ | 194,675 | $ | 184,384 | $ | 172,363 | $ | 731,229 | $ | 670,905 | ||
| Adjustments to arrive at net interest income - FTE: | ||||||||||||
| Tax equivalent interest | 6,839 | 6,797 | 6,455 | 26,718 | 23,976 | |||||||
| Net interest income - FTE | $ | 201,514 | $ | 191,181 | $ | 178,818 | $ | 757,947 | $ | 694,881 | ||
| Noninterest income | 228,290 | 112,996 | 110,355 | 560,166 | 426,770 | |||||||
| Less: Noninterest expense | 226,858 | 197,995 | 203,450 | 822,005 | 778,860 | |||||||
| Pre-tax, pre-provision income - FTE (Non-GAAP) | $ | 202,946 | $ | 106,182 | $ | 85,723 | $ | 496,108 | $ | 342,791 | ||
| Net interest income earnings per share - diluted | $ | 4.03 | $ | 3.84 | $ | 3.51 | $ | 15.12 | $ | 13.67 | ||
| Tax equivalent interest | 0.14 | 0.14 | 0.13 | 0.55 | 0.49 | |||||||
| Net interest income - FTE | 4.17 | 3.98 | 3.64 | 15.67 | 14.16 | |||||||
| Noninterest income | 4.73 | 2.35 | 2.24 | 11.59 | 8.69 | |||||||
| Less: Noninterest expense | 4.70 | 4.12 | 4.14 | 17.00 | 15.87 | |||||||
| Pre-tax, pre-provision income - FTE earnings per share - diluted (Non-GAAP) | $ | 4.20 | $ | 2.21 | $ | 1.74 | $ | 10.26 | $ | 6.98 | ||
| Tangible book value non-GAAP reconciliations: | UMB Financial Corporation | |||||||||||
| --- | --- | --- | --- | --- | ||||||||
| (unaudited, dollars in thousands except share and per share data) | ||||||||||||
| As of | ||||||||||||
| December 31, 2020 | December 31, 2019 | |||||||||||
| Total shareholders' equity (GAAP) | $ | 3,016,948 | $ | 2,606,440 | ||||||||
| Less: Intangible assets | ||||||||||||
| Goodwill | 180,867 | 180,867 | ||||||||||
| Other intangibles, net | 21,056 | 27,597 | ||||||||||
| Total intangibles, net | 201,923 | 208,464 | ||||||||||
| Total tangible shareholders' equity (Non-GAAP) | $ | 2,815,025 | $ | 2,397,976 | ||||||||
| Total shares outstanding | 48,006,386 | 49,097,606 | ||||||||||
| Ratio of total shareholders' equity (book value) per share | $ | 62.84 | $ | 53.09 | ||||||||
| Ratio of total tangible shareholders' equity (tangible book value) per share (Non-GAAP) | 58.64 | 48.84 |
Fourth Quarter 2020 January 26, 2021 UMB Financial Exhibit 99.2
2 Cautionary Notice about Forward-Looking Statements This presentation of UMB Financial Corporation (the “company,” “our,” “us,” or “we”) 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, our 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, 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 current expected credit loss (CECL) calculation and related provision under a new accounting standard that we were required to adopt in 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 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.
3 Corporate Snapshot Allowance for credit losses for loans only, excludes ACL related to HTM securities. Corporate Trust / Investment Banking Division Fund Services Asset-based lending Accounts receivable financing Healthcare Services Prairie Capital Management Private Wealth Management / Personal Trust
91 banking centers 232 ATMs Our Footprint UMB Bank Presence Twin Cities - MN Salt Lake City - UT UMB Financial Corporation Headquarters Recent Expansion Markets
Highlights – 4Q 2020 4 (1) Non-GAAP measure. See reconciliation and additional information on slide 39.
5 Earnings Summary – 4Q 2020 The Company adopted ASU 2016-13 as of 1/1/2020. See additional information on slides 30-31. Non-GAAP measure. See reconciliation and additional information on slide 39. Non-GAAP measure. See reconciliation and additional information on slide 41. Non-GAAP measure. See reconciliation and additional information on slide 43. $ in thousands, except share and per share data; unaudited
6 Earnings Summary – FY 2020 $ in thousands, except share and per share data; unaudited The Company adopted ASU 2016-13 as of 1/1/2020. See additional information on slides 30-31. Non-GAAP measure. See reconciliation and additional information on slide 39. Non-GAAP measure. See reconciliation and additional information on slide 41. Non-GAAP measure. See reconciliation and additional information on slide 43.
7 Noninterest Income – 4Q 2020 4th Quarter ‘20 Drivers Noninterest income increased $115.3MM, or 102%, compared to 3Q’20, primarily driven by:
A $108.8MM gain on the investment in Tattooed Chef, Inc.; An increase of $2.4MM in equity earnings on alternative investments, An increase of $1.1MM in gains on sales of AFS securities; and $1MM in higher trading and investment banking income.
8 Noninterest Income Composition – 4Q 2020
9 Noninterest Income – FY 2020 2020 Noninterest Income Drivers Noninterest income increased $133.4MM, or 31.3%, compared to 2019, primarily driven by:
A $108.8MM gain on the investment in Tattooed Chef, Inc.; An increase of $3.8MM in gains on sales of AFS securities; An increase of $3.1MM in equity earnings on alternative investments; Increases of $10.6MM in asset servicing income and $7.2MM in corporate revenue in the trust and securities processing line; and $9.5MM in higher trading and investment banking income due to improved trading volume. Partially offset by: A $6.9MM decline in brokerage fees, primarily driven by lower 12b-1 income; and A $6.2MM decrease in bankcard income, due to lower interchange revenue.
10 Noninterest Income Composition – FY 2020
11 Card Purchase Trends Purchase Volume & Interchange Revenue (1) Percentages less than 5% have been omitted.
12 Noninterest Expense – 4Q 2020 4th Quarter ‘20 Drivers Operating noninterest expense, which excludes the impact of acquisition expense, severance expense and COVID-19 related expense, was $225.5 million for the fourth quarter of 2020, an increase of $31.8 million, or 16.4 percent, compared to the linked quarter, and an increase of $22.7 million, or 11.2 percent, compared to the fourth quarter of 2019. See slide 42 for a reconciliation of this non-GAAP financial measure. Noninterest expense increased $28.9MM, or 14.6%, compared to 3Q’20. Key highlights: Some items not expected to repeat, including approximately $15MM in operating losses and other expenses for a few unrelated matters proactive approach in 4Q to opportunistically resolve some outstanding matters that otherwise might have taken place in future quarters, resulting in favorable and expeditious outcomes. typical to our business, however timing and impact outsized in 4Q. Higher performance- and volume-related bonus and sales commissions and higher expense tied to our COVID-19 response; $900k increase in deferred compensation expense, offset by a similar increase in income from company-owned life insurance; and $1.2MM in additional charitable contributions.
13 Noninterest Expense – FY 2020 Operating noninterest expense, which excludes the impact of acquisition expense, severance expense and COVID-19 related expense, was $810.1 million for 2020, an increase of $33.0 million, or 4.2 percent, compared to 2019. See slide 42 for a reconciliation of this non-GAAP financial measure. Noninterest expense increased $43.1MM, or 5.5%, compared to 2019, driven largely by:
A $34.0MM increase in salary and employee benefit expense, which included additional performance- and volume-related bonus and sales commissions and increased compensation expense tied to our COVID-19 response; A $12.9MM increase in operational losses (in “other” expense.); $6.6MM higher equipment expense related to investments in digital channel and integrated platform solutions; $1.3MM in additional charitable contributions (in “other” expense.); and An increase of $1.2MM in derivative expense (in “other” expense.) Partially offset by: a decrease of $11.6MM in marketing and development expense due to reduced travel and entertainment costs. 2020 Expense Drivers
Balance Sheet
15 Select Balance Sheet Items $ in thousands, average balances; unaudited Three Months Ended Other average earning assets include taxable and tax-exempt securities, trading securities, federal funds and resell agreements and interest bearing due from banks.
16 Strong Capital Position Capital Ratio Trends (%) These ratios are reflective of the Company’s election to utilize the 5-year regulatory capital phase-in of the adoption of ASU 2016-13 under inter-agency guidance. (1) (1)
Deposit Trends and Composition At December 31, 2020 Deposits by Type Deposits by Line of Business Non-Interest Bearing Interest-Bearing MMDA & Savings Time Deposits Interest-Bearing Performance Commercial Personal Institutional Commercial – Regional Banking 36% Personal – Consumer & Private Wealth 24% Commercial – Specialty Banking – 2% Inst. – Corp. Trust & Inv. Banking 11% Inst. – Healthcare Svcs. 9% Inst. – Other 18% 17 Average Deposit Growth & Cost
18 High Quality Investment Portfolio Securities Held to Maturity $1.0 billion at December 31, 2020 Securities Available for Sale $9.3 billion at December 31, 2020 Average Balance: $8.9 billion Average Yield: 2.22% Duration: 61 months Average Balance: $1.0 billion Average Yield: 2.93% Duration: 69 months Total Portfolio
Average Yield: 2.28%
Duration: 62 months Net of allowance for credit losses for securities held to maturity. (1)
19 Securities Portfolio Statistics AFS Portfolio Activity (1) Roll off includes cash flow from maturities, calls or amortizations of securities and excludes roll off related to non-core purchases. (2) Purchased amount is presented net of purchases made related to sales and excludes amounts related to non-core purchases. (3) Purchase amounts shown for these periods have been adjusted from prior presentations to include core purchases made in excess of roll off that were previously excluded.
Growth of Diversified Loan Portfolio Average Loans & Yields 20 5-yr CAGR: 12.4% (2015-2020) 15-yr CAGR: 11.1% (2005-2020)
KS-2% 21 Loan Portfolio Composition At December 31, 2020 * Includes C&I, leases and commercial credit card. Loans by Type Loans by Geography Kansas City CO St Louis AZ 9% TX 11% Greater MO 6% NE-2% OK-2% Commercial * Commercial Real Estate Residential Real Estate Consumer 2% Construction PPP Loans MN-1%
22 Quarterly Loan Activity Commercial Banking Line Draws & Utilization Trends
23 Commercial & Industrial Loan Portfolio C&I Portfolio Statistics (1) C&I Industry Diversification (2) Oil & Gas Average loan size: $4.6 million Considerations Internal limits on loan size and projects per sponsor Concentration guidelines for all lending verticals, monitored for changing conditions Includes commercial & industrial loans and leases; Excludes commercial credit card balances and PPP loans. Industries as a percentage of C&I portfolio. PPP loans are excluded from the denominator when calculating percentages of total loans. (3)
Industries as a percentage of investment CRE and construction portfolio. PPP loans are excluded from the denominator when calculating percentages of total loans. Concentrations are calculated using tier 1 capital for UMB Bank, n.a. plus an adjusted ACL, per regulatory guidelines. 24 Commercial Real Estate – Disciplined Expansion Construction / Land Dev. 13% Owner-Occupied 29% Investment CRE 49% $5.9B Farmland 8% Total Portfolio:
Average Loan-to-value: 62%
Recourse: 92% Regulatory Concentrations
Total non-farmland CRE / Total RBC: 139%
Construction & Development Loans / Total RBC: 30% Select Property Types / Avg. LTV:
Office / 64%
Multifamily / 61%
Hotel / 56%
Industrial / 66%
Retail / 61%
Sr. Living / 65%
Student Housing / 65% At December 31, 2020 Resi. Construction = 1% of total Investment CRE Statistics Investment CRE / Construction Portfolio (1) (3)
Exposure to Sensitive Industries We analyzed our portfolios in each category for specific characteristics based on what is currently known, such as guarantees, recourse, liquidity positions and hedging strategies that provide protection, as well as those which may carry more risk if the current environment is prolonged. This “more impacted subset” are balances that we’re monitoring more closely. PPP loans are excluded from the denominator when calculating percentages of total loans. Oil & Gas
Oil & gas have shown continued price stability
Long-term relationships with seasoned operators
Multiple clients well-hedged against commodity prices
Continue to monitor service sector 25 6.6% 93.4% $975M All Other Loans $13.9B (2) Note: We removed multifamily CRE, with 12/31/20 balances of $603 million, from the sensitive industries list after monitoring it for several quarters. The majority of this portfolio is comprised of high-quality class A properties which are performing well.
Asset Quality
Loan Risk Profile – 4Q 2020 27 At June 30 2020 Total past due and accruing amounts include loans 30-89 days past due of $9.9 million and loans > 90 days past due of $1.9 million. Held-to-maturity securities are presented gross of allowance for credit losses. (2)
Modification Trends 28 Modifications on loans only; excludes modifications on held-to-maturity securities of $15.8 million at 6/30/20 and $9.0 million at 9/30/20. Percentages are modifications on loans as percentage of total loans excluding PPP balances. Remaining loan modifications / deferrals of $68 million at 12/31/20 95% reduction in modified loan balances compared to 6/30/20 (1)
29 Net Charge-Off History Loan categories for disclosure were updated in Q1 2020 with the adoption of ASU 2016-13. In prior periods, net charge-offs for “Commercial Loans” included C&I, commercial credit card, asset-based and factoring loans. Net charge-offs for “Other” included consumer credit cards, all real-estate related loans, consumer loans and DDA.
CECL: Conservative & Prudent Reserve Build $ in millions Commercial & Industrial and Commercial Real Estate loan portfolios accounted for 85% of the allowance 4Q’20 provision expense of $5.0MM is 2.8x 4Q’20 NCOs Total loan reserves to nonperforming loans is 2.5x Elected 5-year regulatory capital phase-in under inter-agency guidance 30
Changes to Allowance Under CECL – YTD 2020 Allowance for Credit Losses ($ in millions) 31 ACL balance after the CECL day-one adjustment of $9.0 million. Portfolio changes represent the change in loan balances, portfolio characteristics, credit quality and net charge-offs. (1) (2)
32 Peer Source for all charts: S&P Global; current as of 01/22/21 *Industry NCO/Avg Loans source: FDIC Quarterly Banking Profile Well-Positioned for the Current Environment Excess Liquidity Long-Term History of Quality Credit Metrics Leading Fee Income Strong Capital Position Net Charge-offs / Average Loans Liquidity to deploy in favorable operating environments Capital provides flexibility in downturns Fee income provides a revenue buffer in low-rate environments Unwavering underwriting standards Loans / Deposits 100% 50% Total Risk-Based Capital Ratio $272.4 $298.7 $282.7 $423.0 $297.4
33 Long-Term Value Creation (1) Tangible book value per share is a non-GAAP measure. See reconciliation on slide 43. *All publicly-traded banks with data reported for both 2005 and 2020; **UMB traditional peer group (15 banks); ***KBW Nasdaq Regional Bank Index (50 banks). Source: S&P Global; current as of 01/22/21 15-Year Compounded Annual Growth Rates 2005 – 2020 KRX*** (1)
Dividend increase = 228.9% 34 Returning Capital to Our Shareholders Annual Dividends Declared 2000 - 2020 (1) Dividends adjusted for 2-for-1 stock split in 2006. (1)
35 Our Continued Response to COVID-19 Operational Readiness Associates Communities Customers Maintaining business continuity protocol and executive-level pandemic task force Increased and strengthened network capacity Early move to drive-through only branches to protect associates and customers; now seeing customers on-site by appointment to ensure safety Implemented remote working arrangements for ~80% of our staff; measured return to the office beginning in second quarter 2021 Enhanced cleaning and disinfecting, reconfiguration of workspace to allow social distancing, re-thinking common space in facilities, addition of plexiglass dividers in lobbies to protect customers and associates Founding member of the KC Regional COVID-19 Response and Recovery Fund with a $100,000 contribution Made a $200,000 investment in equity2, the first impact investment in E2 Notes More than $150,000 in community response and relief across the footprint, including: Small Business Resource Program in St. Louis COVID-19 Small Business Emergency Relief Program in Denver Revive Dallas Small Business Relief Fund CHES Inc’s Home Retention Program in KC UMB’s matching gift program builds on associates’ generosity Improved social distancing for those whose roles require them to work onsite utilizing various sites across our footprint Supplemented compensation through 2Q’20 and added additional PTO days for those initially unable to work remotely Provided lunch throughout summer 2020 from local restaurants for associates on site Added easier access to our associate assistance fund for associates impacted by the crisis Expanded health insurance coverage for COVID-19 testing and access to telehealth services Initial Assistance Offered a 90-day moratorium on initiating foreclosure on mortgages and home equity lines and loans Offered six-month term loan payment deferral option for current small business customers Ongoing Efforts Options for consumer loan and mortgage deferment or modifications on an individual, customized basis Access to additional credit lines extended on a case-by-case basis Option to increase mobile deposit limits upon request Ongoing Efforts (continued) Individualized credit card repayment and deferral options, as well as a balance transfer opportunity Augmented relief program to ensure bank fees did not reduce stimulus proceeds for eligible customers Booked approximately 5,300 accounts for over $1.5 billion in funded loans in the 2020 Paycheck Protection Program Now accepting forgiveness applications from prior rounds Supporting customers and community partners through the latest round of PPP funding.
Our Commitment to Corporate Citizenship Inclusion & Diversity Community Impact Efficient & Sensible Resource Use Strong Corporate Governance As we all navigate a global pandemic and an increasingly polarized environment, we are engaging our associates, customers and communities through pro-active outreach and dialogue. Associate volunteerism and corporate philanthropy help build strong community partnerships. 580 nonprofit organizations had UMB volunteers in 2019
1,052 volunteer days off used in 2019
More than $2.5 million in donations and sponsorships in 2019
$75,000 donated to nonprofits through the UMB Foundation matching gift program Ongoing conversations and events to foster dialogue, break down barriers and educate
8 business resource groups with nearly 20% associate participation
Diverse panel hiring approach
2019 new hires were 33.1% people of color, 47.4% women and 4.7% veterans We want our company to be as diverse as the world we live in. UMB recognizes the undeniable importance of sustainable business practices. Effective governance programs help achieve business goals and drive stakeholder value. 13-person board of directors, with 11 independent members
Deliberate selection and nomination criteria which includes diversity standards in the board hiring process
Robust risk oversight with distinct risk management committees: enterprise risk, asset and liability, and credit.
Closely analyzed and competitive compensation practices 64 UMB buildings operate with energy-efficient lighting programs
More than 183,000 kilowatt hours generated from solar panels
More than 10% reduction in printer impressions in 2019 vs. 2018
27,000 pounds of co-mingled recycling Read our Corporate Citizenship Report at UMB.com/CorporateCitizenship
Non-GAAP Reconciliations
38 Non-GAAP Reconciliations In this presentation, we provide information about pre-tax pre-provision income, pre-tax, pre-provision income on a fully tax equivalent basis (PTPP-FTE), net operating income, operating earnings per share-diluted (operating EPS-diluted), operating return on average equity (operating ROE), operating return on average assets (operating ROA), operating noninterest expense, operating efficiency ratio, pre-tax, pre-provision earnings per share-diluted (PTPP EPS), pre-tax, pre-provision FTE earnings per share – diluted (PTPP-FTE EPS), tangible shareholders’ equity, tangible assets, tangible common equity ratio 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 and the nearest comparable GAAP financial measures are reconciled on the next 5 slides. 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.
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 expense. 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. 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 diluted 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 (which is calculated as net interest income plus noninterest income, less gains on sales of securities available for sale, net). Tangible book value per share is defined as the Company’s total shareholders’ equity, net of intangible assets, divided by the Company’s total shares outstanding. Tangible common equity ratio is calculated as the Company’s total shareholders’ equity, net of intangible assets, divided by the Company’s total assets, net of intangible assets.
39 Non-GAAP Reconciliations Pre-Tax, Pre-Provision Income
40 Non-GAAP Reconciliations Pre-Tax, Pre-Provision Income on a Fully Tax Equivalent Basis
41 Non-GAAP Reconciliations (1) Calculated using the Company's marginal tax rate of 22.2%. Net Operating Income
42 Non-GAAP Reconciliations Operating Noninterest Expense & Efficiency Ratio
43 Non-GAAP Reconciliations Tangible Common Equity Ratio Tangible Book Value Share count for December 31, 2005 adjusted for Company’s 2-for-1 stock split on May 31, 2006.