UMB Financial Corporation Reports Fourth Quarter Net Income of $156.3 Million and Record Full-Year Earnings of $286.5 Million

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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%.

  • Quarterly average deposits grew 22.5% to $25.0 billion.

  • Noninterest income increased 106.9% and comprised 54.0% of revenue.

  • Credit quality remained strong, with net charge-offs of just 0.04% of average loans, consistent with the companys historical performance.

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 companys 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 UMBs consistent prioritiesdelivering 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 companys 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.

Noninterest income

  • Fourth quarter 2020 noninterest income increased $115.3 million, or 102.0%, on a linked-quarter basis, largely due to:

    • An increase of $113.5 million in investment securities gains, primarily due to the $108.8 million gain on the companys 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.

  • Compared to the prior year, noninterest income in the fourth quarter of 2020 increased $117.9 million, or 106.9%, primarily driven by:

    • An increase of $113.3 million in investment securities gains, primarily due to the $108.8 million gain on the companys 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.

    • Increases of $2.5 million in fund services income and $1.4 million in corporate trust revenue, both recorded in trust and securities processing.

    • An increase of $3.0 million in trading and investment banking due to increased trading volume.

    • 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.

    • These increases were partially offset by a decrease of $4.9 million in brokerage fees, primarily driven by lower 12b-1 income.

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.

  • The linked-quarter increase in noninterest expense was driven by:

    • 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.

    • An increase of $5.1 million in salaries and employee benefits, largely driven by increased bonus expense due to higher company performance.

    • 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.

    • 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 companys core systems.

  • The year-over-year increase in noninterest expense was driven by:

    • 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.

    • 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.

    • 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.

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 companys 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:

    • An increase of $118.4 million in investment securities gains, primarily driven by the $108.8 million gain on the companys 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.

    • Increases of $10.6 million in fund services income and $7.2 million in corporate trust revenue, both recorded in trust and securities processing.

    • An increase of $9.5 million in trading and investment banking due to increased trading volume.

    • These increases were partially offset by the following decreases:

      • A $6.9 million decline in brokerage fees, primarily driven by lower 12b-1 income.

      • A $6.2 million decrease in bankcard income, due to lower interchange revenue.

  • Full-year noninterest expense increased $43.1 million, or 5.5%, primarily due to:

    • 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 companys COVID-19 response.

    • 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.

    • 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 companys core systems.

    • 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.

Income taxes

  • The companys 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 companys 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

UMB Financial Corporation

(dollars in thousands)

December 31,

2020

2019

(unaudited)

(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

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)

Common

Stock

Capital

Surplus

Retained

Earnings

Accumulated
Other
Comprehensive
(Loss) Income

Treasury

Stock

Total

Balance - January 1, 2019

$

55,057

$

1,054,601

$

1,488,421

$

(95,782

)

$

(273,827

)

$

2,228,470

Total comprehensive income

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

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