Umb Financial Corp 8-K/A, filed Apr 14, 2025
Umb Financial Corp (UMBF)
About this 8-K/A
Umb Financial Corp filed this 8-K/A on April 14, 2025, reporting on events of January 31, 2025.
Items reported
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 2)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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EXPLANATORY NOTE
On February 3, 2025, UMB Financial Corporation, a Missouri corporation (“UMB” or the “Company”), filed a Current Report on Form 8-K (the “Initial Form 8-K”) in connection with (a) the completion on January 31, 2025 of the previously announced merger (the “Merger”) between UMB and Heartland Financial USA, Inc., a Delaware corporation (“HTLF”), pursuant to the Agreement and Plan of Merger, dated as of April 28, 2024 (the “Merger Agreement”), by and among the Company, HTLF and Blue Sky Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of the Company.
In the Initial Form 8-K, UMB stated its intention to file the historical financial statements of HTLF and the pro forma financial information required by parts (a) and (b) of Item 9.01 of Form 8-K not later than 71 calendar days after the date that the Initial Form 8-K was required to be filed with the SEC. On April 11, 2025, pursuant to the instructions to Item 9.01 of Form 8-K, UMB filed Amendment No. 1 to the Current Report on Form 8-K/A (“Amendment No. 1”), which amended the Initial Form 8-K in order to provide the required financial information. The purpose of this Amendment No. 2 to the Current Report on Form 8-K/A is to amend the pro forma financial information filed as Exhibit 99.2 to Amendment No. 1 to correct the value of certain acquired assets previously misallocated to goodwill and to provide more information on certain purchase adjustments. The Initial Form 8-K, as amended by Amendment No. 1, otherwise remains the same and the Items therein are hereby incorporated by reference into this Current Report on Form 8-K/A.
| Item 9.01. | Financial Statements and Exhibits. |
(a) Pro Forma Financial Information
The following unaudited pro forma combined financial information is filed as Exhibit 99.1 hereto and is incorporated herein by reference.
| • | Unaudited pro forma condensed combined balance sheet as of December 31, 2024; |
| • | Unaudited pro forma condensed combined statement of income for the year ended December 31, 2024; and |
| • | Notes to the unaudited pro forma combined financial information. |
The unaudited pro forma condensed combined financial information is not intended to represent or be indicative of the Company’s consolidated results of operations or financial position that would have been reported had the Merger been completed as of the dates presented, and should not be taken as a representation of the Company’s future consolidated results of operations or financial condition. The pro forma adjustments are based on available information and certain assumptions that management believes are reasonable under the circumstances.
(b) Exhibits
| Exhibit No. | Description of Exhibits | |
| 99.1 | The unaudited pro forma condensed combined balance sheet as of December 31, 2024, and the unaudited pro forma condensed combined statement of income for the year ended December 31, 2024, together with the notes thereto. | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL) | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: April 14, 2025 |
UMB FINANCIAL CORPORATION | |||||
| By: | /s/ Ram Shankar | |||||
| Name: | Ram Shankar | |||||
| Title: | Chief Financial Officer | |||||
EXHIBIT 99.1
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
Introduction
UMB Financial Corporation (“UMB” or the “Company”) is providing the following unaudited pro forma condensed combined financial data to aid stockholders in their analysis of the financial aspects of (i) the merger (the “Merger”) between UMB and Heartland Financial USA, Inc. (“HTLF”), pursuant to the Agreement and Plan of Merger, dated as of April 28, 2024, by and among UMB, HTLF and Blue Sky Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of UMB and (ii) the forward sale agreement by and between UMB and Bank of America, N.A. (the “forward purchaser”), dated as of April 28, 2024 and the additional forward sale agreement by and between UMB and the forward purchaser, dated as of April 30, 2024 (together, the “forward sale agreement”). The unaudited pro forma condensed combined financial data has been prepared in accordance with Article 11 of Regulation S-X and should be read in conjunction with the accompanying notes.
The unaudited pro forma condensed combined balance sheet as of December 31, 2024 combines the audited consolidated balance sheet of UMB as of December 31, 2024 with the audited consolidated balance sheet of HTLF as of December 31, 2024, giving effect to the Merger and the forward sale agreement as if the Merger had been consummated and the forward sale agreement had been fully physically settled on December 31, 2024.
The unaudited pro forma condensed combined statement of income for the year ended December 31, 2024 combines the audited consolidated statement of income of UMB for the year ended December 31, 2024 with the audited consolidated statement of income of HTLF for the year ended December 31, 2024, giving effect to the Merger and forward sale agreement as if the Merger had been consummated and the forward sale agreement had been fully physically settled on January 1, 2024.
The unaudited pro forma condensed combined financial data was derived from, and should be read in conjunction with, the following historical financial statements and the accompanying notes:
| • | The historical audited consolidated financial statements of UMB as of and for the year ended December 31, 2024 included in our Annual Report on Form 10-K for the year ended December 31, 2024; and |
| • | The historical audited consolidated financial statements of HTLF as of and for the year ended December 31, 2024 filed as Exhibit 99.1 to this Current Report on Form 8-K/A. |
The foregoing historical financial statements have been prepared in accordance with GAAP. The unaudited pro forma condensed combined financial data has been prepared based on the aforementioned historical financial statements and the assumptions and adjustments as described in the notes to the unaudited pro forma condensed combined financial data. The pro forma adjustments reflect transaction accounting adjustments related to the Merger and the forward sale agreement, both of which are discussed in further detail below. Amounts presented reflect the accounting for the acquisition of HTLF by UMB. The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and do not purport to represent the combined company’s consolidated results of operations or consolidated financial position that would actually have occurred had the Merger been consummated and the forward sale agreement been fully physically settled on the dates assumed or to project the combined company’s consolidated results of operations or consolidated financial position for any future date or period.
The unaudited pro forma condensed combined financial data appearing below also does not consider any potential effects of changes in market conditions on revenues or expense efficiencies, among other factors. In addition, as explained in more detail in the accompanying notes, the preliminary allocation of the pro forma purchase price reflected in the unaudited pro forma condensed combined financial data is subject to adjustment and may vary significantly from the actual purchase price allocation that will be recorded upon completion of the Merger.
Accounting for the Merger
The acquisition of HTLF has been accounted for using the purchase method of accounting. The total purchase price has been allocated to the tangible and intangible assets and liabilities acquired based on their respective fair values.
Forward sale agreement
On April 28, 2024, the Company entered into an underwriting agreement (the “underwriting agreement”) with BofA Securities, Inc. and Morgan Stanley & Co. LLC, as representatives for the underwriters named therein (collectively, the “underwriters”), the forward purchaser, and BofA Securities, Inc. as forward seller (the “forward seller”), relating to the registered public offering and sale by the forward seller of 2,800,000 shares of the Company’s common stock, par value $1.00 per share (“common stock”). On April 30, 2024, the underwriters exercised in full their option to purchase an additional 420,000 shares of common stock pursuant to the underwriting agreement. In connection with the forward sale agreement, the forward purchaser or its affiliate borrowed from third parties an aggregate of 3,220,000 shares of common stock. Such borrowed shares of common stock were delivered by the forward seller for sale by the underwriters in the offering.
The Company did not receive any proceeds from the sale of the shares of common stock sold by the forward seller to the underwriters. On March 14, 2025, the Company physically settled the forward sale agreement (by the delivery of shares of common stock) and received proceeds, before expenses, of approximately $235.1 million.
Basis of Pro Forma Presentation
The historical financial data of UMB and HTLF has been adjusted to give pro forma effect to the transaction accounting required for the Merger and the forward sale agreement. The adjustments in the unaudited pro forma condensed combined financial data have been identified and presented to provide relevant information necessary to evaluate the financial overview of the combined company upon closing of the Merger and full physical settlement of the forward sale agreement for approximately $235.1 million.
The unaudited pro forma condensed combined financial data is not necessarily indicative of what the combined company’s balance sheet or statement of income would have been had the Merger been completed and the forward sale agreement been fully physically settled as of the dates indicated, nor do they purport to project the future financial position or operating results of the combined company. The unaudited pro forma condensed combined financial data is presented for illustrative purposes only and does not reflect the costs of any integration activities or cost savings or synergies that may be achieved as a result of the Merger. HTLF and UMB have not had any historical material relationship prior to the Merger. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.
Unaudited Pro Forma Condensed Combined Balance Sheet
As of December 31, 2024
(in thousands)
| UMB Historical |
HTLF Historical |
Transaction Adjustments |
Combined Pro Formas |
|||||||||||||||||
| ASSETS |
||||||||||||||||||||
| Loans |
25,642,301 | 11,155,866 | (353,060 | ) | (A | ) | 35,440,521 | |||||||||||||
| (520,547 | ) | (B | ) | |||||||||||||||||
| (484,039 | ) | (C | ) | |||||||||||||||||
| Allowance for credit losses on loans |
(259,089 | ) | (96,500 | ) | 34,374 | (C | ) | (383,252 | ) | |||||||||||
| (62,037 | ) | (F | ) | |||||||||||||||||
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|
|||||||||||||
| Net loans |
25,383,212 | 11,059,366 | (1,385,309 | ) | 35,057,269 | |||||||||||||||
| Loans held for sale |
2,756 | — | 2,756 | |||||||||||||||||
| Securities: |
||||||||||||||||||||
| Available for sale |
7,774,334 | 3,560,358 | 11,334,692 | |||||||||||||||||
| Held to maturity, net of allowance for credit losses |
5,376,267 | 837,390 | 520,547 | (B | ) | 6,669,999 | ||||||||||||||
| (64,205 | ) | (C | ) | |||||||||||||||||
| Trading securities |
28,533 | 28,533 | ||||||||||||||||||
| Other securities / Other investments at cost |
471,018 | 67,890 | 538,908 | |||||||||||||||||
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|
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|
|
|
|||||||||||||
| Total securities |
13,650,152 | 4,465,638 | 456,342 | 18,572,132 | ||||||||||||||||
| Federal funds sold and securities purchased under agreements to resell |
545,000 | 545,000 | ||||||||||||||||||
| Interest-bearing due from banks |
7,986,270 | 7,986,270 | ||||||||||||||||||
| Interest bearing deposits with other banks and other short-term investments |
— | 206,138 | 206,138 | |||||||||||||||||
| Cash and due from banks |
573,175 | 174,686 | 235,141 | (D | ) | 768,002 | ||||||||||||||
| (215,000 | ) | (E | ) | |||||||||||||||||
| Time deposits in other financial institutions |
— | 800 | 800 | |||||||||||||||||
| Premises and equipment, net |
221,773 | 143,930 | 25,328 | (C | ) | 391,031 | ||||||||||||||
| Premises and equipment held for sale |
— | 8,952 | 8,952 | |||||||||||||||||
| Other real estate, net |
— | 4,291 | 4,291 | |||||||||||||||||
| Accrued income |
246,095 | 246,095 | ||||||||||||||||||
| Goodwill |
207,385 | 576,005 | 743,026 | (C | ) | 1,526,416 | ||||||||||||||
| Other intangibles, net |
63,647 | 12,823 | 511,021 | (C | ) | 587,491 | ||||||||||||||
| Cash surrender value on life insurance |
— | 201,298 | 201,298 | |||||||||||||||||
| Other assets |
1,530,199 | 436,490 | 353,060 | (A | ) | 2,319,749 | ||||||||||||||
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|
|||||||||||||
| Total assets |
50,409,664 | 17,290,417 | 723,609 | 68,423,690 | ||||||||||||||||
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| LIABILITIES |
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| Deposits |
||||||||||||||||||||
| Noninterest-bearing demand |
13,617,167 | 3,773,753 | 17,390,920 | |||||||||||||||||
| Interest-bearing demand and savings |
27,397,195 | 9,249,071 | 36,646,266 | |||||||||||||||||
| Time deposits under $250,000 |
969,132 | 969,132 | ||||||||||||||||||
| Time deposits of $250,000 or more |
1,158,535 | 1,158,535 | ||||||||||||||||||
| Time deposits |
— | 1,613,792 | (3,502 | ) | (C | ) | 1,610,290 | |||||||||||||
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|
|
|||||||||||||
| Total deposits |
43,142,029 | 14,636,616 | (3,502 | ) | 57,775,143 | |||||||||||||||
| Federal funds purchased and repurchase agreements |
2,609,715 | 2,609,715 | ||||||||||||||||||
| Borrowings |
— | 73,819 | 73,819 | |||||||||||||||||
| Short-term debt |
— | — | ||||||||||||||||||
| Long-term debt |
385,292 | 298,661 | (20,643 | ) | (C | ) | 663,310 | |||||||||||||
| Accrued expenses and taxes |
368,457 | 368,457 | ||||||||||||||||||
| Deposits held for sale |
— | — | — | |||||||||||||||||
| Deferred tax liabilities |
— | 83,933 | (C | ) | 83,933 | |||||||||||||||
| Other liabilities |
437,630 | 437,630 | ||||||||||||||||||
| Accrued expenses and other liabilities |
— | 203,526 | 203,526 | |||||||||||||||||
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|||||||||||||
| Total liabilities |
46,943,123 | 15,212,622 | 59,788 | 62,215,533 | ||||||||||||||||
| SHAREHOLDER’S EQUITY |
||||||||||||||||||||
| Series E Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock |
— | 110,705 | 110,705 | |||||||||||||||||
| Common stock |
55,057 | 42,901 | (19,292 | ) | (C | ) | 78,666 | |||||||||||||
| Capital surplus |
1,145,638 | 1,102,084 | 1,547,114 | (C | ) | 3,861,892 | ||||||||||||||
| 67,056 | (D | ) | ||||||||||||||||||
| Retained earnings |
3,174,948 | 1,253,255 | (1,253,255 | ) | (C | ) | 2,897,911 | |||||||||||||
| (215,000 | ) | (E | ) | |||||||||||||||||
| (62,037 | ) | (F | ) | |||||||||||||||||
| Accumulated other comprehensive loss, net |
(573,050 | ) | (431,150 | ) | 431,150 | (C | ) | (573,050 | ) | |||||||||||
| Treasury stock, at cost |
(336,052 | ) | 168,085 | (D | ) | (167,967 | ) | |||||||||||||
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| Total shareholder’s equity |
3,466,541 | 2,077,795 | 663,821 | 6,208,157 | ||||||||||||||||
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| Total liabilities and stockholders’ equity |
50,409,664 | 17,290,417 | 723,609 | 68,423,690 | ||||||||||||||||
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Please refer to the notes to the unaudited pro forma condensed combined financial data.
Unaudited Pro Forma Condensed Combined Statement of Income
For the Twelve Months Ended December 31, 2024
(in thousands except share and per share data)
| UMB Historical |
HTLF Historical |
Transaction Adjustments |
Combined Pro Formas |
|||||||||||||||||
| INTEREST INCOME |
||||||||||||||||||||
| Loans |
1,612,948 | 764,516 | 120,115 | (AA | ) | 2,497,579 | ||||||||||||||
| Securities: |
||||||||||||||||||||
| Taxable interest |
257,562 | 187,877 | 445,439 | |||||||||||||||||
| Tax-exempt interest |
99,375 | 23,179 | 122,554 | |||||||||||||||||
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| Total securities income |
356,937 | 211,056 | — | 567,993 | ||||||||||||||||
| Federal funds and resell agreements |
17,628 | — | 17,628 | |||||||||||||||||
| Interest-bearing due from banks |
182,145 | 182,145 | ||||||||||||||||||
| Interest on interest bearing deposits in other financial |
— | 16,136 | 16,136 | |||||||||||||||||
| Trading securities |
1,351 | 1,351 | ||||||||||||||||||
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| Total interest income |
2,171,009 | 991,708 | 120,115 | 3,282,832 | ||||||||||||||||
| INTEREST EXPENSE |
||||||||||||||||||||
| Deposits |
982,302 | 327,353 | 3,502 | (AA | ) | 1,313,157 | ||||||||||||||
| Federal funds and repurchase agreements |
106,558 | 106,558 | ||||||||||||||||||
| Borrowings |
— | 28,820 | 28,820 | |||||||||||||||||
| Term debt |
— | 22,328 | 2,325 | (AA | ) | 24,653 | ||||||||||||||
| Other |
81,257 | 81,257 | ||||||||||||||||||
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| Total interest expense |
1,170,117 | 378,501 | 5,827 | 1,554,445 | ||||||||||||||||
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| Net interest income |
1,000,892 | 613,207 | 114,288 | 1,728,387 | ||||||||||||||||
| Provision for credit losses |
61,050 | 53,436 | 62,037 | (CC | ) | 176,523 | ||||||||||||||
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| Net interest income after provision for credit losses |
939,842 | 559,771 | 52,251 | 1,551,864 | ||||||||||||||||
| NONINTEREST INCOME |
||||||||||||||||||||
| Trust and securities processing |
290,571 | 290,571 | ||||||||||||||||||
| Trading and investment banking |
24,226 | 24,226 | ||||||||||||||||||
| Service charges on deposit accounts |
84,512 | 67,253 | 151,765 | |||||||||||||||||
| Loan servicing income |
— | 456 | 456 | |||||||||||||||||
| Trust fees |
— | 21,213 | 21,213 | |||||||||||||||||
| Insurance fees and commissions |
1,257 | 1,257 | ||||||||||||||||||
| Brokerage fees |
61,564 | 61,564 | ||||||||||||||||||
| Brokerage fees and insurance commissions |
— | 3,318 | 3,318 | |||||||||||||||||
| Capital market fee |
— | 6,887 | 6,887 | |||||||||||||||||
| Bankcard fees |
87,797 | 87,797 | ||||||||||||||||||
| Investment securities (losses) gains, net |
10,720 | (21,144 | ) | (10,424 | ) | |||||||||||||||
| Unrealized (loss) gain on equity securities, net |
— | 539 | 539 | |||||||||||||||||
| Net gains on sale of loans held for sale |
— | 104 | 104 | |||||||||||||||||
| Income on bank owned life insurance |
— | 4,837 | 4,837 | |||||||||||||||||
| Other |
67,470 | 9,490 | 76,960 | |||||||||||||||||
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| Total noninterest income |
628,117 | 92,953 | — | 721,070 | ||||||||||||||||
| NONINTEREST EXPENSE |
||||||||||||||||||||
| Salaries and employee benefits |
593,913 | 253,337 | 4,206 | (DD | ) | 851,456 | ||||||||||||||
| Occupancy, net |
47,539 | 25,949 | 73,488 | |||||||||||||||||
| Equipment |
63,406 | 8,674 | 72,080 | |||||||||||||||||
| Supplies and services |
14,845 | 14,845 | ||||||||||||||||||
| Marketing and business development / Advertising expense |
28,439 | 7,050 | 35,489 | |||||||||||||||||
| Processing Fees |
117,899 | 117,899 | ||||||||||||||||||
| Legal and consulting |
46,207 | 46,207 | ||||||||||||||||||
| Bankcard |
44,265 | 44,265 | ||||||||||||||||||
| Amortization and other intangible assets |
7,705 | 5,591 | 93,554 | (AA | ) | 106,850 | ||||||||||||||
| Regulatory fees |
31,904 | 31,904 | ||||||||||||||||||
| Professional fees |
— | 67,457 | 67,457 | |||||||||||||||||
| FDIC insurance assessments |
— | 14,741 | 14,741 | |||||||||||||||||
| Other real estate and loan collection expenses |
— | 1,493 | 1,493 | |||||||||||||||||
| (Gain) on sales/valuations of assets, net |
— | (25,171 | ) | (25,171 | ) | |||||||||||||||
| Acquisition, integration and restructuring costs |
— | 10,227 | 215,000 | (BB | ) | 225,227 | ||||||||||||||
| Partnership investment in tax credit projects |
— | 6,148 | 6,148 | |||||||||||||||||
| Other |
30,564 | 57,260 | 87,824 | |||||||||||||||||
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| Total noninterest expense |
1,026,686 | 432,756 | 312,760 | 1,772,202 | ||||||||||||||||
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| Income before income taxes |
541,273 | 219,968 | (260,509 | ) | 500,732 | |||||||||||||||
| Income tax expense |
100,030 | 48,367 | (54,707 | ) | (EE | ) | 93,690 | |||||||||||||
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| NET INCOME |
441,243 | 171,601 | (205,802 | ) | 407,042 | |||||||||||||||
| Preferred dividends |
— | (8,050 | ) | (8,050 | ) | |||||||||||||||
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| NET INCOMEAVAILABLE TO COMMON STOCKHOLDERS |
441,243 | 163,551 | (205,802 | ) | 398,992 | |||||||||||||||
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| PER SHAREDATA |
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| Net income- basic |
9.05 | 3.81 | 5.28 | |||||||||||||||||
| Net income- diluted |
8.99 | 3.79 | 5.25 | |||||||||||||||||
| Dividends |
1.57 | 1.20 | 2.77 | |||||||||||||||||
| Weighted average shares outstanding – basic |
48,747,814 | 42,942,000 | 75,576,893 | |||||||||||||||||
| Weighted average shares outstanding – diluted |
49,056,956 | 43,149,000 | 75,999,885 | |||||||||||||||||
Please refer to the notes to the unaudited pro forma condensed combined financial data.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
1. Basis of Presentation
The pro forma adjustments have been prepared as if the Merger had been consummated and the forward sale agreement had been fully physically settled for approximately $235.1 million on December 31, 2024, in the case of the unaudited pro forma condensed combined balance sheet, and, in the case of the unaudited pro forma condensed combined statement of income, as if the Merger had been consummated and the forward sale agreement had been fully physically settled on January 1, 2024, the beginning of the earliest period presented in the unaudited pro forma condensed combined statement of income.
The unaudited pro forma condensed combined financial data has been prepared assuming the purchase method of accounting in accordance with GAAP. Under this method, HTLF’s assets and liabilities as of the date of the Merger are recorded at their respective fair values and added to those of UMB. Any difference between the purchase price for HTLF and the fair value of the identifiable net assets acquired (including intangibles) will be recorded as goodwill. The goodwill resulting from the acquisition will not be amortized to expense, but instead will be reviewed for impairment at least annually. The pro formas are based on preliminary accounting conclusions and are subject to potential revisions with further analysis.
The pro forma adjustments represent management’s estimates based on information available as of the date of this filing and are subject to change as additional information becomes available and additional analyses are performed. UMB management considers this basis of presentation to be reasonable under the circumstances.
One-time direct and incremental transaction costs anticipated to be incurred prior to, or concurrent with, the closing of the Merger will be expensed as incurred under ASC 805 and are assumed to be cash settled.
UMB has performed a preliminary review of HTLF’s and UMB’s accounting policies, and no material impacts are expected to be required as a result of the review performed.
2. Adjustments to the Unaudited Pro Forma Condensed Combined Balance Sheet as of December 31, 2024
The adjustments included in the unaudited pro forma condensed combined balance sheet as of December 31, 2024 are as follows:
| (A) | Reflects the sale of $353.1 million in loans held by HTLF to a third party subsequent to the balance sheet date but prior to the closing of the Merger, resulting in increase in other assets. |
| (B) | Reflects the reclassification of $520.5 million in revenue bonds classified as loans by HTLF, which were reclassed to held to maturity securities. |
| (C) | Reflects the purchase price allocation adjustments to record HTLF’s assets and liabilities at estimated fair value based on the consideration conveyed. |
The preliminary purchase price was allocated among the identified assets to be acquired, based on a preliminary analysis. Goodwill is expected to be recognized as a result of the acquisition, which represents the excess fair value of consideration over the fair value of the underlying net assets of HTLF. This was considered appropriate based on the determination that the Merger would be accounted for as a business acquisition under ASC 805. The deferred tax assets represent the deferred tax impact associated with the incremental differences in book and tax basis created from the preliminary purchase price allocation. Deferred taxes associated with estimated fair value adjustments were calculated using an estimated tax rate of 21%. The estimates of fair value are based upon preliminary valuation assumptions believed to be reasonable but which are inherently uncertain and unpredictable; and, as a result, actual results may differ from estimates and the difference may be material, including any impacts from subsequent additional balance sheet actions that occurred prior to the closing of the Merger.
| Net Assets Identified |
Fair Value (in thousands) |
|||
| Loans |
9,798,220 | |||
| Allowance for credit losses on loans |
(62,126 | ) | ||
| Available for sale |
3,560,358 | |||
| Held to maturity, net of allowance for credit losses |
1,293,732 | |||
| Other securities / Other investments at cost |
67,890 | |||
| Interest bearing deposits with other banks and other short-term investments |
206,138 | |||
| Cash and due from banks |
174,686 | |||
| Time deposits in other financial institutions |
800 | |||
| Premises and equipment, net |
169,258 | |||
| Premises and equipment held for sale |
8,952 | |||
| Other real estate, net |
4,291 | |||
| Goodwill |
1,319,031 | |||
| Other intangibles, net (2) |
523,844 | |||
| Cash surrender value on life insurance |
201,298 | |||
| Other assets |
789,550 | |||
| Deferred tax liabilities |
(83,933 | ) | ||
| Noninterest-bearing demand |
(3,773,753 | ) | ||
| Interest-bearing demand and savings |
(9,249,071 | ) | ||
| Time deposits |
(1,610,290 | ) | ||
| Borrowings |
(73,819 | ) | ||
| Long-term debt |
(278,018 | ) | ||
| Accrued expenses and other liabilities |
(203,526 | ) | ||
|
|
|
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| Total Fair Value |
2,783,510 | |||
| Consideration Conveyed | (in thousands except exchange ratio and stock price) |
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| Shares to HTLF common stockholders |
23,609,079 | |||
| UMB stock price |
117.90 | (1) | ||
|
|
|
|||
| Total preliminary purchase price consideration |
2,783,510 | |||
|
|
|
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| (1) | Reflects closing price of UMB’s common stock as of January 31, 2025. |
| (2) | Other intangible assets were comprised of the following: |
| Asset type |
Fair value |
Useful Life |
Valuation methodology | |||||||
| Wealth customer relationships |
$ | 26.0 | 7 years | Multi-period excess earnings | ||||||
| Core deposit intangible (“CDI”) |
474.1 | 10 years | Net cost savings | |||||||
| Purchased credit card relationships (“PCCR”) |
10.9 | 3 years | Multi-period excess earnings | |||||||
|
|
|
|||||||||
| Total other intangible assets |
$ | 511.0 | ||||||||
| (D) | Represents the receipt of approximately $235.1 million from the forward purchaser and the issuance of 3,220,000 shares, in accordance with the terms of the forward sale agreement. |
| (E) | Reflects nonrecurring transaction costs of $215.0 million expected to be incurred as a result of the Merger and the forward sale agreement. This amount is comprised of investment banking fees, technology conversion fees, severance and related costs, contract breakage fees, legal fees, issuance costs, accounting and audit fees, and other related costs. The nonrecurring expense is reflected at adjustment (BB). |
| (F) | Reflects the recognition of an allowance for loan losses on HTLF’s loans; this adjustment relates to loans that are not considered to be purchase credit deteriorated (“PCD”) assets. The nonrecurring expense is reflected at adjustment (CC). |
3. Adjustments and Assumptions to the Unaudited Pro Forma Condensed Combined Statement of Income for the Year ended December 31, 2024
| (AA) | Reflects the pro forma impacts related to the purchase price allocation discussed at adjustment (A). This includes the following impacts: |
| 1) | Interest income related to Loans. Reflects an increase in interest income related to loans due to the reduced fair value of loans per the purchase price allocation. |
| 2) | Interest expense related to Time deposits. Reflects an increase in interest expense related to time deposits due to the increase in fair value of this liability per the purchase price allocation. |
| 3) | Interest expense related to Long-term debt. Reflects an increase in interest expense related to long-term debt due to the reduced fair value of this liability per the purchase price allocation. |
| 4) | Amortization expense. Reflects an increase in amortization expense related to CDI, calculated using the sum of years’ digits method and an amortization period of 10 years, and customer relationships and PCCR, calculated using the straight line method and an amortization period of 7 years and 3 years, respectively. |
| (BB) | Reflects the recognition of nonrecurring expenses related to estimated transaction costs in the amount of $215.0 million, which are primarily comprised of investment banking fees, technology conversion fees, severance and related costs, contract breakage fees, legal fees, issuance costs, accounting and audit fees, and other related costs. The related balance sheet adjustment is reflected at adjustment (E). |
| (CC) | Reflects the recognition of nonrecurring expenses related to the provision for credit losses. The related balance sheet adjustment is reflected at adjustment (F). |
| (DD) | Reflects stock compensation expense expected to be recorded on a recurring basis over the two years following the closing of the Merger. The stock compensation expense was calculated on a straight-line basis. These awards vest over two years following issuance; thus, the issuance of these awards did not result in any new dilutive or antidilutive shares as of closing. |
| (EE) | Reflects the tax impact of all pro forma adjustments for the year ended December 31, 2024, calculated using the statutory rate of 21%. |
4. Earnings per Share Information
The pro forma weighted average shares calculations have been performed for the year ended December 31, 2024 using the historical weighted average shares outstanding, and the issuance of additional shares in connection with the Merger and the forward sale agreement, assuming they occurred, and the forward sale agreement was fully physically settled on January 1, 2024. As the Merger and the forward sale agreement are being reflected as if they had occurred, and the forward sale agreement was fully physically settled at the beginning of the period presented, the calculation of weighted average shares outstanding for both basic and diluted earnings per share assumes that the shares issuable relating to the Merger and the forward sale agreement have been outstanding for the entire periods presented.
Pro forma net income per share—basic and diluted
(in thousands except share and per share amounts)
| For the Year Ended December 31, 2024 |
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| Numerator |
||||
| Pro forma net income |
407,042 | |||
| Less: Preferred dividends |
(8,050 | ) | ||
|
|
|
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| Net earnings available to common stockholders |
398,992 | |||
| Denominator |
||||
| Pro forma weighted average shares of common stock outstanding -basic |
75,576,893 | |||
|
|
|
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| Pro forma basic earnings per share |
5.28 | |||
|
|
|
|||
| Add: Dilutive effect of stock options and restricted stock |
422,992 | |||
|
|
|
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| Pro forma weighted average shares of common stock outstanding - |
75,999,885 | |||
|
|
|
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| Pro forma diluted earnings per share |
5.25 | |||
|
|
|
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The above calculations exclude the following potential common stock from the computation of diluted net earnings per share attributable to common shareholders of the combined company for the period indicated because including them would have had an antidilutive effect:
| As of December 31, 2024 |
||||
| Outstanding stock options and RSUs of UMB |
— | |||
| Stock units of HTLF |
— | (1) | ||
| Stock options of HTLF |
29,150 | (1) | ||
| (1) | HTLF stock units are presented as adjusted using the Exchange Ratio. |