Second quarter 2021 Financial Highlights
(all comparisons to prior year unless otherwise noted)
- GAAP net income of $87.4 million, or $1.79 per diluted share;
net operating income of $87.6 million, or $1.80 per diluted
share.
- Pre-tax, pre-provision (PTPP) income of $131.3 million, an
increase of $41.2 million.
- Quarterly average loan balances increased $1.7 billion, or
11.4%.
- Excluding Paycheck Protection Program (PPP) balances, average
loans increased 19.0% on a linked-quarter, annualized basis.
- Quarterly average deposits grew 22.0% to $27.8 billion.
- Noninterest income increased 9.2% and comprised 39.6% of
revenue.
- Board of Directors increased quarterly cash dividend by 15.6%
to $0.37 per share.
UMB Financial Corporation (Nasdaq: UMBF), a financial services
company, announced net income for the second quarter of 2021 of
$87.4 million, or $1.79 per diluted share, compared to $92.6
million, or $1.91 per diluted share, in the first quarter of 2021
(linked quarter) and $60.5 million, or $1.26 per diluted share, in
the second quarter of 2020.
Net operating income, a non-GAAP financial measure reconciled to
net income, the nearest comparable GAAP measure, later in this
release, was $87.6 million, or $1.80 per diluted share, for the
second quarter of 2021, compared to $92.8 million, or $1.91 per
diluted share, for the linked quarter and $63.8 million, or $1.33
per diluted share, for the second quarter of 2020. Pre-tax,
pre-provision income on a fully tax equivalent basis (PTPP-FTE), a
non-GAAP measure reconciled to the components of net income before
taxes, the nearest comparable GAAP measure, later in this release,
was $138.0 million, or $2.83 per diluted share, for the second
quarter of 2021, compared to $108.7 million, or $2.24 per diluted
share, for the linked quarter, and $96.8 million, or $2.01 per
diluted share, for the second quarter of 2020. These PTPP-FTE
results represent an increase of 26.9% on a linked-quarter basis
and an increase of 42.6% compared to the second quarter of
2020.
Summary of quarterly financial
results
UMB Financial
Corporation
(unaudited, dollars in thousands, except
per share data)
Q2
Q1
Q2
2021
2021
2020
Net income (GAAP)
$
87,412
$
92,643
$
60,529
Earnings per share (diluted)
1.79
1.91
1.26
Pre-tax, pre-provision income
(Non-GAAP)
131,322
102,066
90,152
Pre-tax, pre-provision earnings per share
(diluted)
2.70
2.10
1.88
Pre-tax, pre-provision income - FTE
(Non-GAAP)
137,951
108,744
96,756
Pre-tax, pre-provision earnings per share
- FTE (diluted)
2.83
2.24
2.01
Net operating income (Non-GAAP)
87,634
92,780
63,835
Operating earnings per share (diluted)
1.80
1.91
1.33
GAAP
Return on average assets
1.02
%
1.14
%
0.87
%
Return on average equity
11.43
12.56
8.95
Efficiency ratio
60.41
66.46
70.20
Non-GAAP
Operating return on average assets
1.03
%
1.14
%
0.91
%
Operating return on average equity
11.46
12.58
9.44
Operating efficiency ratio
60.33
66.40
68.76
Summary of year-to-date financial
results
UMB Financial
Corporation
(unaudited, dollars in thousands, except
per share data)
June
June
YTD
YTD
2021
2020
Net income (GAAP)
$
180,055
$
57,090
Earnings per share (diluted)
3.70
1.18
Pre-tax, pre-provision income
(Non-GAAP)
233,388
173,898
Pre-tax, pre-provision earnings per share
(diluted)
4.80
3.59
Pre-tax, pre-provision income - FTE
(Non-GAAP)
246,695
186,980
Pre-tax, pre-provision earnings per share
- FTE (diluted)
5.08
3.86
Net operating income (Non-GAAP)
180,414
61,954
Operating earnings per share (diluted)
3.71
1.28
GAAP
Return on average assets
1.08
%
0.42
%
Return on average equity
11.98
4.22
Efficiency ratio
63.29
69.59
Non-GAAP
Operating return on average assets
1.08
%
0.46
%
Operating return on average equity
12.01
4.58
Operating efficiency ratio
63.21
68.49
“Our strong second quarter results demonstrated the benefits of
our diverse business model and validates our investment thesis
which includes above-peer loan growth, continued net interest
income and strong fee income growth across all operating and
interest rate environments,” said Mariner Kemper, chairman,
president and chief executive officer. “During the second quarter,
average loans, excluding PPP balances, increased 19.0% annualized
on a linked-quarter basis. Noninterest income increased 20.8% from
the prior quarter and 9.2% over the year-ago period. Our $24.0
million provision was higher than previous levels due to strong
loan growth and elevated net charge-offs related to one commercial
factoring relationship. Excluding this credit event, we would have
had net recoveries in the quarter and the underlying asset quality
of our loan portfolio remains strong. Nonperforming loan balances
declined 24.1% from prior quarter-end. During the quarter, we
monetized 3.5 million shares of our Tattooed Chef, Inc. (TTCF)
holdings for net proceeds of approximately $72.8 million. Finally,
we are excited to announce that our Board of Directors approved a
five cent or 15.6% increase in the quarterly cash dividend to our
shareholders.”
Summary of revenue
UMB Financial
Corporation
(unaudited, dollars in thousands)
Q2
Q1
Q2
CQ vs.
CQ vs.
2021
2021
2020
LQ
PY
Net interest income
$
201,071
$
194,115
$
178,229
$
6,956
$
22,842
Noninterest income:
Trust and securities processing
53,863
54,834
46,321
(971
)
7,542
Trading and investment banking
8,670
9,356
12,851
(686
)
(4,181
)
Service charges on deposit accounts
22,592
21,976
19,074
616
3,518
Insurance fees and commissions
245
420
533
(175
)
(288
)
Brokerage fees
2,592
3,334
5,753
(742
)
(3,161
)
Bankcard fees
16,063
14,673
12,916
1,390
3,147
Investment securities gains (losses),
net
15,455
(8,336
)
4,579
23,791
10,876
Other
12,109
12,640
18,429
(531
)
(6,320
)
Total noninterest income
$
131,589
$
108,897
$
120,456
$
22,692
$
11,133
Total revenue
$
332,660
$
303,012
$
298,685
$
29,648
$
33,975
Net interest income (FTE)
$
207,700
$
200,793
$
184,833
Net interest margin (FTE)
2.56
%
2.59
%
2.79
%
Total noninterest income as a % of total
revenue
39.56
35.94
40.33
Net interest income
- Net interest income totaled $201.1 million, which is an
increase of $7.0 million as compared to the linked quarter. The
positive impact from strong balance sheet growth was partially
offset by the impacts of lower PPP income in the quarter. Average
earning assets increased $1.1 billion, or 3.6%, driven in part by
an increase in securities and loans, while interest-bearing
liabilities increased $234.5 million, or 1.2%.
- Net interest margin for the second quarter was 2.56%, a
decrease of three basis points from the linked quarter, driven in
large part by earning asset mix shift and lower market and
reinvestment rates. Earning asset yields declined four basis points
from the linked quarter, driven by a six-basis-point decline in
both loan and securities yields and mix changes. The cost of
interest-bearing liabilities decreased one basis point to 0.23%.
Net interest spread decreased three basis points to 2.47% from the
linked quarter and was 20 basis points lower than the second
quarter of 2020.
- On a year-over-year basis, net interest income increased $22.8
million, or 12.8%, driven by a $2.1 billion, or 23.0% increase in
average securities, coupled with a $1.7 billion, or 11.4%, increase
in average loans. These increases were driven by organic loan
growth, excess liquidity, and the company’s PPP participation.
- Average deposits increased 3.6% on a linked-quarter basis and
22.0% compared to the second quarter of 2020. Average
noninterest-bearing demand deposit balances increased 9.7% on a
linked-quarter basis and 39.7% compared to the second quarter of
2020.
Noninterest income
- Second quarter 2021 noninterest income increased $22.7 million,
or 20.8%, on a linked-quarter basis, largely due to:
- An increase of $23.8 million in investment securities gains,
primarily due to an increase of $23.3 million in gains on the
company’s equity investment in TTCF.
- An increase of $1.4 million in bankcard fees, primarily due to
increased interchange income.
- These increases were partially offset by decreases of $1.0
million in trust and securities processing income and $0.7 million
in trading and investment banking income. The decrease in trust and
securities processing income is primarily driven by the previously
announced sale of Prairie Capital Management, LLC (PCM) in March
2021, offset by increased fund services income. The decline in
trading and investment banking income is primarily due to decreased
trading volume.
- Compared to the prior year, noninterest income in the second
quarter of 2021 increased $11.1 million, or 9.2%, primarily driven
by:
- An increase of $10.9 million in investment securities gains,
primarily due to an increase of $14.2 million in gains on equity
investments, partially offset by decreases of $2.7 million and $0.6
million in gains on the sale of available for sale securities and
PCM-related equity earnings on alternative investments,
respectively.
- Increases of $6.7 million and $2.0 million in fund services
income and corporate trust income, respectively, both recorded in
trust and securities processing.
- An increase of $3.5 million in service charges on deposits,
driven by increased healthcare income related to customer transfer
and conversion fees, and increased corporate service charges.
- An increase of $2.5 million in derivative income, recorded in
other income.
- These increases were partially offset by a decrease of $9.8
million in the market value of company-owned life insurance,
recorded in other income, and a decrease of $4.2 million in trading
and investment banking, due to decreased trading volumes. The
decrease in company-owned life insurance is offset by a
proportionate decrease in deferred compensation expense as noted
below.
Noninterest expense
Summary of noninterest expense
UMB Financial
Corporation
(unaudited, dollars in thousands)
Q2
Q1
Q2
CQ vs.
CQ vs.
2021
2021
2020
LQ
PY
Salaries and employee benefits
$
120,415
$
127,681
$
130,938
$
(7,266
)
$
(10,523
)
Occupancy, net
12,296
11,935
11,411
361
885
Equipment
19,196
19,615
21,502
(419
)
(2,306
)
Supplies and services
3,469
3,492
3,785
(23
)
(316
)
Marketing and business development
4,797
2,345
3,284
2,452
1,513
Processing fees
16,501
15,417
13,603
1,084
2,898
Legal and consulting
8,147
5,755
6,220
2,392
1,927
Bankcard
4,529
4,956
4,549
(427
)
(20
)
Amortization of other intangible
assets
1,157
1,380
1,658
(223
)
(501
)
Regulatory fees
2,769
2,546
3,211
223
(442
)
Other
8,062
5,824
8,372
2,238
(310
)
Total noninterest expense
$
201,338
$
200,946
$
208,533
$
392
$
(7,195
)
- Noninterest expense for the second quarter of 2021 was $201.3
million, an increase of $0.4 million, or 0.2%, from the linked
quarter and a decrease of $7.2 million, or 3.5%, from the second
quarter of 2020.
- The linked-quarter increase in noninterest expense was driven
by:
- Increases of $2.5 million, $2.4 million, and $1.1 million in
marketing and business development expense, legal and consulting
expense, and processing fees, respectively, due to timing of
various marketing initiatives, legal costs, and timing of software
projects.
- Increases of $0.9 million in losses on sales of other real
estate, $0.7 million in derivative expense, and $0.7 million in
miscellaneous loan fee expense, all recorded in other noninterest
expense.
- These increases were offset by decreases of $5.7 million in
payroll taxes, insurance and 401(k) expense, and $1.8 million in
bonus and commission expense, both recorded in salary and employee
benefits.
- The year-over-year decrease in noninterest expense was driven
by:
- A decrease of $10.5 million in deferred compensation expense,
recorded in salaries and employee benefits. The decrease in
deferred compensation expense was offset by the decrease in
company-owned life insurance income noted above.
- A decrease of $2.1 million in software expense, recorded in
equipment expense.
- These decreases were partially offset by increases of $2.9
million in processing fees, $1.9 million in legal and professional
expense, and $1.5 million in marketing and business development,
due to timing of software projects, legal costs, and various
marketing initiatives.
Income taxes
- The company’s effective tax rate was 17.0% for the six months
ended June 30, 2021, compared to 11.3% for the same period in 2020.
The increase in the effective rate for 2021 is primarily
attributable to a smaller portion of income being earned from
tax-exempt municipal securities.
Balance sheet
- Average total assets for the second quarter of 2021 were $34.3
billion compared to $33.1 billion for the linked quarter and $28.1
billion for the same period in 2020.
Summary of average loans and leases -
QTD Average
UMB Financial
Corporation
(unaudited, dollars in thousands)
Q2
Q1
Q2
CQ vs.
CQ vs.
2021
2021
2020
LQ
PY
Commercial and industrial
$
7,402,653
$
7,139,101
$
6,970,223
$
263,552
$
432,430
Specialty lending
505,687
502,585
471,571
3,102
34,116
Commercial real estate
6,165,780
5,971,047
5,435,428
194,733
730,352
Consumer real estate
2,068,663
1,970,767
1,528,501
97,896
540,162
Consumer
122,439
117,095
146,120
5,344
(23,681
)
Credit cards
386,032
362,051
353,424
23,981
32,608
Leases and other
166,420
183,447
193,099
(17,027
)
(26,679
)
Total loans
$
16,817,674
$
16,246,093
$
15,098,366
$
571,581
$
1,719,308
- Average loans for the second quarter of 2021 increased 3.5% on
a linked-quarter basis and 11.4% compared to the second quarter of
2020 primarily due to increased commercial and industrial and
commercial real estate loans.
Summary of average securities - QTD
Average
UMB Financial
Corporation
(unaudited, dollars in thousands)
Q2
Q1
Q2
CQ vs.
CQ vs.
2021
2021
2020
LQ
PY
Securities available for sale:
U.S. Treasury
$
40,013
$
36,032
$
31,150
$
3,981
$
8,863
U.S. Agencies
94,794
95,494
403,290
(700
)
(308,496
)
Mortgage-backed
6,096,099
5,599,987
4,284,374
496,112
1,811,725
State and political subdivisions
3,565,443
3,552,945
3,108,661
12,498
456,782
Commercial Paper
—
—
2,040
—
(2,040
)
Corporates
127,581
83,271
98,089
44,310
29,492
Total securities available for sale
$
9,923,930
$
9,367,729
$
7,927,604
$
556,201
$
1,996,326
Securities held to maturity:
State and political subdivisions
$
1,057,091
$
1,023,418
$
1,100,843
$
33,673
$
(43,752
)
Trading securities
21,409
17,540
37,816
3,869
(16,407
)
Other securities
302,981
308,297
148,918
(5,316
)
154,063
Total securities
$
11,305,411
$
10,716,984
$
9,215,181
$
588,427
$
2,090,230
- Average securities available for sale increased 5.9% on a
linked-quarter basis and 25.2% compared to the second quarter of
2020.
Summary of average deposits - QTD
Average
UMB Financial
Corporation
(unaudited, dollars in thousands)
Q2
Q1
Q2
CQ vs.
CQ vs.
2021
2021
2020
LQ
PY
Deposits:
Noninterest-bearing demand
$
10,701,656
$
9,753,680
$
7,662,836
$
947,976
$
3,038,820
Interest-bearing demand and savings
16,421,742
16,302,880
14,160,722
118,862
2,261,020
Time deposits
659,228
769,464
957,007
(110,236
)
(297,779
)
Total deposits
$
27,782,626
$
26,826,024
$
22,780,565
$
956,602
$
5,002,061
Noninterest bearing deposits as % of
total
38.52
%
36.36
%
33.64
%
- Average deposits increased 3.6% on a linked-quarter basis and
22.0% compared to the second quarter of 2020.
- Average noninterest-bearing demand deposits increased 9.7% on a
linked-quarter basis to $10.7 billion.
Capital
Capital information
UMB Financial
Corporation
(unaudited, dollars in thousands, except
per share data)
June 30, 2021
March 31, 2021
June 30, 2020
Total equity
$
3,090,244
$
2,958,239
$
2,777,395
Book value per common share
63.92
61.24
57.84
Tangible book value per common share
59.96
57.26
53.57
Regulatory capital:
Common equity Tier 1 capital
$
2,730,062
$
2,660,102
$
2,335,625
Tier 1 capital
2,730,062
2,660,102
2,335,625
Total capital
3,172,878
3,102,333
2,580,849
Regulatory capital ratios:
Common equity Tier 1 capital ratio
11.91
%
12.25
%
11.92
%
Tier 1 risk-based capital ratio
11.91
12.25
11.92
Total risk-based capital ratio
13.84
14.28
13.17
Tier 1 leverage ratio
8.00
8.08
8.35
- At June 30, 2021, the regulatory capital ratios presented in
the foregoing table exceeded all “well-capitalized” regulatory
thresholds.
Asset Quality
Credit quality
UMB Financial
Corporation
(unaudited, dollars in thousands)
Q2
Q1
Q4
Q3
Q2
2021
2021
2020
2020
2020
Net charge-offs - Total loans
$
28,374
$
5,310
$
1,801
$
5,111
$
5,541
Net loan charge-offs as a % of total
average loans
0.68
%
0.13
%
0.04
%
0.13
%
0.15
%
Loans over 90 days past due
$
1,265
$
1,773
$
1,952
$
1,372
$
4,588
Loans over 90 days past due as a % of
total loans
0.01
%
0.01
%
0.01
%
0.01
%
0.03
%
Nonaccrual and restructured loans
$
58,219
$
76,706
$
87,823
$
93,695
$
82,245
Nonaccrual and restructured loans as a %
of total loans
0.34
%
0.46
%
0.55
%
0.59
%
0.54
%
Provision for credit losses
$
24,000
$
(7,500
)
$
5,000
$
16,000
$
21,500
- Provision for credit losses for the second quarter increased
$31.5 million from the linked quarter and $2.5 million from the
second quarter of 2020. This increase is driven by impacts to the
Allowance for Credit Losses by a large charge-off during the second
quarter, offset by the impacts of positive macro-economic
metrics.
- Net charge-offs for the second quarter totaled $28.4 million,
or 0.68%, of average loans, compared to $5.3 million, or 0.13%, of
average loans in the linked quarter, and $5.5 million, or 0.15%, of
average loans for the second quarter of 2020.
- The increase in net charge-offs in the second quarter of 2021
is due to a $31.9 million loss on one commercial relationship.
Dividend Declaration
At the company’s quarterly board meeting, the Board of Directors
declared a $0.37 per share quarterly cash dividend, or an increase
of 15.6%. This cash dividend will be payable on October 1, 2021, to
shareholders of record at the close of business on September 10,
2021.
Conference Call
The company plans to host a conference call to discuss its
second quarter 2021 earnings results on Wednesday, July 28, 2021,
at 8:30 a.m. (CT).
Interested parties may access the call by dialing (toll-free)
877-267-8760 or (international) 412-542-4148 and requesting to join
the UMB Financial call. The live call may also be accessed by
visiting investorrelations.umb.com or by using the following
link:
UMB Financial 2Q 2021 Conference Call
A replay of the conference call may be heard through August 11,
2021 by calling (toll-free) 877-344-7529 or (international)
412-317-0088. The replay access code required for playback is
10157858. The call replay may also be accessed at
investorrelations.umb.com.
Non-GAAP Financial
Information
In this release, we provide information about net operating
income, operating earnings per share - diluted (operating EPS),
operating return on average equity (operating ROE), operating
return on average assets (operating ROA), operating noninterest
expense, operating efficiency ratio, pre-tax, pre-provision income,
pre-tax, pre-provision earnings per share – diluted (PTPP EPS),
pre-tax, pre-provision income on a fully tax equivalent basis
(PTPP-FTE), pre-tax, pre-provision FTE earnings per share – diluted
(PTPP-FTE EPS), tangible shareholders’ equity, and tangible book
value per share, all of which are non-GAAP financial measures. This
information supplements the results that are reported according to
generally accepted accounting principles in the United States
(GAAP) and should not be viewed in isolation from, or as a
substitute for, GAAP results. The differences between the non-GAAP
financial measures – net operating income, operating EPS, operating
ROE, operating ROA, operating noninterest expense, operating
efficiency ratio, PTPP, PTPP EPS, PTPP-FTE, PTPP-FTE EPS, tangible
shareholders’ equity, and tangible book value per share – and the
nearest comparable GAAP financial measures are reconciled later in
this release. The company believes that these non-GAAP financial
measures and the reconciliations may be useful to investors because
they adjust for acquisition-, severance-, and COVID-19 related
items that management does not believe reflect the company’s
fundamental operating performance. COVID-19 related expense
includes hazard pay for branch associates, computer hardware
expense to support associates working remotely, and additional
equipment, cleaning, and janitorial supplies to protect the
well-being of our associates and customers while on the company’s
premises.
Net operating income for the relevant period is defined as GAAP
net income, adjusted to reflect the impact of excluding expenses
related to acquisitions, severance expense, COVID-19 related
expense, and the cumulative tax impact of these adjustments.
Operating EPS (diluted) is calculated as earnings per share as
reported, adjusted to reflect, on a per share basis, the impact of
excluding the non-GAAP adjustments described above for the relevant
period. Operating ROE is calculated as net operating income,
divided by the company’s average total shareholders’ equity for the
relevant period. Operating ROA is calculated as net operating
income, divided by the company’s average assets for the relevant
period. Operating noninterest expense for the relevant period is
defined as GAAP noninterest expense, adjusted to reflect the
pre-tax impact of non-GAAP adjustments described above. Operating
efficiency ratio is calculated as the company’s operating
noninterest expense, net of amortization of other intangibles,
divided by the company’s total non-GAAP revenue (calculated as net
interest income plus noninterest income, less gains on sales of
securities available for sale, net).
Pre-tax, pre-provision income for the relevant period is defined
as GAAP net income, adjusted to reflect the impact of excluding
income tax and provision expenses.
Pre-tax, pre-provision income on a fully tax equivalent basis
for the relevant period is defined as GAAP net interest income on a
fully tax equivalent basis plus noninterest income, less
noninterest expense.
Tangible shareholders’ equity for the relevant period is defined
as GAAP shareholders’ equity, net of intangible assets. Tangible
book value per share is defined as tangible shareholders’ equity
divided by the Company’s total shares outstanding.
Forward-Looking
Statements:
This press release contains, and our other communications may
contain, forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements
can be identified by the fact that they do not relate strictly to
historical or current facts. Forward-looking statements often use
words such as “believe,” “expect,” “anticipate,” “intend,”
“estimate,” “project,” “outlook,” “forecast,” “target,” “trend,”
“plan,” “goal,” or other words of comparable meaning or
future-tense or conditional verbs such as “may,” “will,” “should,”
“would,” or “could.” Forward-looking statements convey our
expectations, intentions, or forecasts about future events,
circumstances, results, or aspirations. All forward-looking
statements are subject to assumptions, risks, and uncertainties,
which may change over time and many of which are beyond our
control. You should not rely on any forward-looking statement as a
prediction or guarantee about the future. Our actual future
objectives, strategies, plans, prospects, performance, condition,
or results may differ materially from those set forth in any
forward-looking statement. Some of the factors that may cause
actual results or other future events, circumstances, or
aspirations to differ from those in forward-looking statements are
described in our Annual Report on Form 10-K for the year ended
December 31, 2020, our subsequent Quarterly Reports on Form 10-Q or
Current Reports on Form 8-K, or other applicable documents that are
filed or furnished with the U.S. Securities and Exchange Commission
(SEC). In addition to such factors that have been disclosed
previously, the COVID-19 pandemic (the pandemic) may also cause
actual results or other future events, circumstances, or
aspirations to differ from our forward-looking statements. The
pandemic has created a global public-health crisis that has
resulted in widespread volatility and deteriorations in household,
business, economic, and market conditions. It is currently
adversely affecting the company and its customers, counterparties,
employees, and first-party service providers, and the continued
adverse impacts on our business, financial position, results of
operations, and prospects could be significant. We are not able to
accurately predict the extent of the impact of the pandemic on our
capital, liquidity, and other financial positions and on our
business, results of operations, and prospects at this time, and we
believe it will depend on a number of evolving factors, including:
(i) the duration, extent and severity of the pandemic; (ii) the
response of governmental and non-governmental authorities to the
pandemic, which is rapidly changing and not always coordinated or
consistent across jurisdictions; (iii) the effect of the pandemic
on our customers, counterparties, employees and first-party service
providers, which may vary widely, and which is generally expected
to increase our credit, counterparty, operational, and other risks;
and (iv) the effect of the pandemic on economies and markets, which
in turn could adversely affect, among other things, the origination
of new loans and the performance of our existing loans. Any
forward-looking statement should be evaluated in light of these
considerations. Any forward-looking statement made by us or on our
behalf speaks only as of the date that it was made. We do not
undertake to update any forward-looking statement to reflect the
impact of events, circumstances, or results that arise after the
date that the statement was made, except to the extent required by
applicable securities laws. You, however, should consult further
disclosures (including disclosures of a forward-looking nature)
that we may make in any subsequent Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, Current Report on Form 8-K, or other
applicable document that is filed or furnished with the SEC.
About UMB:
UMB Financial Corporation (Nasdaq: UMBF) is a financial services
company headquartered in Kansas City, Missouri. UMB offers
commercial banking, which includes comprehensive deposit, lending
and investment services, personal banking, which includes wealth
management and financial planning services, and institutional
banking, which includes asset servicing, corporate trust solutions,
investment banking, and healthcare services. UMB operates branches
throughout Missouri, Illinois, Colorado, Kansas, Oklahoma,
Nebraska, Arizona and Texas, and serves business and institutional
clients nationwide. For more information, visit UMB.com, UMB Blog,
UMB Facebook and UMB LinkedIn, or follow us on Twitter at @UMBBank.
For information about UMB’s operations, approach and relief
measures during the COVID-19 pandemic, please visit
umb.com/COVID-19.
Consolidated Balance Sheets
UMB Financial
Corporation
(unaudited, dollars in thousands)
June 30,
2021
2020
ASSETS
Loans
$
16,910,790
$
15,305,097
Allowance for credit losses on loans
(200,563
)
(200,300
)
Net loans
16,710,227
15,104,797
Loans held for sale
5,303
8,213
Securities:
Available for sale
10,347,531
8,483,624
Held to maturity, net of allowance for
credit losses
1,081,173
1,111,625
Trading securities
40,552
51,383
Other securities
254,315
154,206
Total securities
11,723,571
9,800,838
Federal funds sold and resell
agreements
1,146,521
1,347,643
Interest-bearing due from banks
5,059,098
1,714,478
Cash and due from banks
469,883
462,849
Premises and equipment, net
281,011
300,174
Accrued income
131,188
126,962
Goodwill
174,518
180,867
Other intangibles, net
16,636
24,181
Other assets
901,059
682,606
Total assets
$
36,619,015
$
29,753,608
LIABILITIES
Deposits:
Noninterest-bearing demand
$
12,513,031
$
8,633,603
Interest-bearing demand and savings
16,857,127
15,033,643
Time deposits under $250,000
430,713
546,089
Time deposits of $250,000 or more
247,600
246,069
Total deposits
30,048,471
24,459,404
Federal funds purchased and repurchase
agreements
2,783,389
1,963,694
Short-term debt
—
15,000
Long-term debt
270,558
70,996
Accrued expenses and taxes
254,589
239,254
Other liabilities
171,764
227,865
Total liabilities
33,528,771
26,976,213
SHAREHOLDERS' EQUITY
Common stock
55,057
55,057
Capital surplus
1,098,139
1,081,713
Retained earnings
2,040,134
1,692,289
Accumulated other comprehensive income,
net
223,107
284,262
Treasury stock
(326,193
)
(335,926
)
Total shareholders' equity
3,090,244
2,777,395
Total liabilities and shareholders'
equity
$
36,619,015
$
29,753,608
Consolidated Statements of
Income
UMB Financial
Corporation
(unaudited, dollars in thousands except
share and per share data)
Three Months Ended
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
INTEREST INCOME
Loans
$
154,537
$
140,004
$
304,707
$
291,030
Securities:
Taxable interest
29,780
25,870
56,942
53,082
Tax-exempt interest
24,743
24,612
49,707
49,016
Total securities income
54,523
50,482
106,649
102,098
Federal funds and resell agreements
2,552
1,573
5,373
7,025
Interest-bearing due from banks
833
398
1,536
3,061
Trading securities
189
312
348
966
Total interest income
212,634
192,769
418,613
404,180
INTEREST EXPENSE
Deposits
6,574
11,243
13,372
40,975
Federal funds and repurchase
agreements
1,779
1,950
3,665
8,331
Other
3,210
1,347
6,390
2,704
Total interest expense
11,563
14,540
23,427
52,010
Net interest income
201,071
178,229
395,186
352,170
Provision for credit losses
24,000
21,500
16,500
109,500
Net interest income after provision for
credit losses
177,071
156,729
378,686
242,670
NONINTEREST INCOME
Trust and securities processing
53,863
46,321
108,697
93,321
Trading and investment banking
8,670
12,851
18,026
14,574
Service charges on deposit accounts
22,592
19,074
44,568
44,155
Insurance fees and commissions
245
533
665
792
Brokerage fees
2,592
5,753
5,926
15,613
Bankcard fees
16,063
12,916
30,736
29,461
Investment securities gains, net
15,455
4,579
7,119
8,099
Other
12,109
18,429
24,749
12,865
Total noninterest income
131,589
120,456
240,486
218,880
NONINTEREST EXPENSE
Salaries and employee benefits
120,415
130,938
248,096
241,998
Occupancy, net
12,296
11,411
24,231
23,591
Equipment
19,196
21,502
38,811
42,743
Supplies and services
3,469
3,785
6,961
7,970
Marketing and business development
4,797
3,284
7,142
7,924
Processing fees
16,501
13,603
31,918
26,993
Legal and consulting
8,147
6,220
13,902
12,330
Bankcard
4,529
4,549
9,485
9,409
Amortization of other intangible
assets
1,157
1,658
2,537
3,392
Regulatory fees
2,769
3,211
5,315
5,577
Other
8,062
8,372
13,886
15,225
Total noninterest expense
201,338
208,533
402,284
397,152
Income before income taxes
107,322
68,652
216,888
64,398
Income tax expense
19,910
8,123
36,833
7,308
NET INCOME
$
87,412
$
60,529
$
180,055
$
57,090
PER SHARE DATA
Net income – basic
$
1.81
$
1.26
$
3.74
$
1.18
Net income – diluted
1.79
1.26
3.70
1.18
Dividends
0.32
0.31
0.64
0.62
Weighted average shares outstanding –
basic
48,294,952
47,991,283
48,196,345
48,340,579
Weighted average shares outstanding –
diluted
48,698,319
48,077,810
48,604,140
48,491,526
Consolidated Statements of Comprehensive Income
UMB Financial
Corporation
(unaudited, dollars in thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
Net income
$
87,412
$
60,529
$
180,055
$
57,090
Other comprehensive income (loss), before
tax:
Unrealized gains and losses on debt
securities:
Change in unrealized holding gains and
losses, net
76,335
84,885
(122,703
)
249,001
Less: Reclassification adjustment for
gains included in net income
(1,300
)
(4,006
)
(4,020
)
(5,233
)
Change in unrealized gains and losses on
debt securities
75,035
80,879
(126,723
)
243,768
Unrealized gains and losses on derivative
hedges:
Change in unrealized gains and losses on
derivative hedges, net
(3,422
)
4,612
3,081
19,137
Less: Reclassification adjustment for
(gains) losses included in net income
(877
)
(514
)
(1,719
)
254
Change in unrealized gains and losses on
derivative hedges
(4,299
)
4,098
1,362
19,391
Other comprehensive income (loss), before
tax
70,736
84,977
(125,361
)
263,159
Income tax (expense) benefit
(16,826
)
(20,105
)
30,128
(62,077
)
Other comprehensive income (loss)
53,910
64,872
(95,233
)
201,082
Comprehensive income
$
141,322
$
125,401
$
84,822
$
258,172
Consolidated Statements of
Shareholders' Equity
UMB Financial
Corporation
(unaudited, dollars in thousands except
per share data)
Common Stock
Capital Surplus
Retained Earnings
Accumulated Other
Comprehensive Income (Loss)
Treasury Stock
Total
Balance - January 1, 2020
$
55,057
$
1,073,764
$
1,672,438
$
83,180
$
(277,999
)
$
2,606,440
Total comprehensive income
—
—
57,090
201,082
—
258,172
Dividends ($0.62 per share)
—
—
(30,200
)
—
—
(30,200
)
Purchase of treasury stock
—
615
—
—
(60,074
)
(59,459
)
Forfeitures of equity awards, net of
issuances
—
676
—
—
(83
)
593
Recognition of equity-based
compensation
—
6,109
—
—
—
6,109
Sale of treasury stock
—
120
—
—
201
321
Exercise of stock options
—
429
—
—
2,029
2,458
Cumulative effect adjustment
—
—
(7,039
)
—
—
(7,039
)
Balance - June 30, 2020
$
55,057
$
1,081,713
$
1,692,289
$
284,262
$
(335,926
)
$
2,777,395
Balance - January 1, 2021
$
55,057
$
1,090,450
$
1,891,246
$
318,340
$
(338,145
)
$
3,016,948
Total comprehensive income (loss)
—
—
180,055
(95,233
)
—
84,822
Dividends ($0.64 per share)
—
—
(31,167
)
—
—
(31,167
)
Purchase of treasury stock
—
—
—
—
(4,088
)
(4,088
)
Issuances of equity awards, net of
forfeitures
—
(4,122
)
—
—
4,817
695
Recognition of equity-based
compensation
—
8,609
—
—
—
8,609
Sale of treasury stock
—
148
—
—
153
301
Exercise of stock options
—
3,054
—
—
11,070
14,124
Balance - June 30, 2021
$
55,057
$
1,098,139
$
2,040,134
$
223,107
$
(326,193
)
$
3,090,244
Average Balances / Yields and
Rates
UMB Financial
Corporation
(tax - equivalent basis)
(unaudited, dollars in thousands)
Three Months Ended June
30,
2021
2020
Average
Average
Average
Average
Balance
Yield/Rate
Balance
Yield/Rate
Assets
Loans, net of unearned interest
$
16,817,674
3.69
%
$
15,098,366
3.73
%
Securities:
Taxable
6,994,559
1.71
5,069,290
2.05
Tax-exempt
4,289,443
2.93
4,108,075
3.05
Total securities
11,284,002
2.17
9,177,365
2.50
Federal funds and resell agreements
1,110,433
0.92
807,245
0.78
Interest bearing due from banks
3,343,311
0.10
1,492,798
0.11
Trading securities
21,409
4.27
37,816
3.79
Total earning assets
32,576,829
2.70
26,613,590
3.01
Allowance for credit losses
(199,379
)
(195,373
)
Other assets
1,886,774
1,717,808
Total assets
$
34,264,224
$
28,136,025
Liabilities and Shareholders'
Equity
Interest-bearing deposits
$
17,080,970
0.15
%
$
15,117,729
0.30
%
Federal funds and repurchase
agreements
2,744,516
0.26
2,138,156
0.37
Borrowed funds
270,305
4.76
85,681
6.32
Total interest-bearing liabilities
20,095,791
0.23
17,341,566
0.34
Noninterest-bearing demand deposits
10,701,656
7,662,836
Other liabilities
398,319
411,964
Shareholders' equity
3,068,458
2,719,659
Total liabilities and shareholders'
equity
$
34,264,224
$
28,136,025
Net interest spread
2.47
%
2.67
%
Net interest margin
2.56
2.79
Average Balances / Yields and
Rates
UMB Financial
Corporation
(tax - equivalent basis)
(unaudited, dollars in thousands)
Six Months Ended June
30,
2021
2020
Average
Average
Average
Average
Balance
Yield/Rate
Balance
Yield/Rate
Assets
Loans, net of unearned interest
$
16,533,463
3.72
%
$
14,357,466
4.08
%
Securities:
Taxable
6,698,020
1.71
4,881,854
2.19
Tax-exempt
4,295,317
2.95
4,085,558
3.05
Total securities
10,993,337
2.20
8,967,412
2.58
Federal funds and resell agreements
1,375,689
0.79
1,015,720
1.39
Interest bearing due from banks
3,079,684
0.10
1,164,405
0.53
Trading securities
19,485
4.28
42,959
4.93
Total earning assets
32,001,658
2.72
25,547,962
3.28
Allowance for credit losses
(209,469
)
(154,062
)
Other assets
1,862,036
1,693,684
Total assets
$
33,654,225
$
27,087,584
Liabilities and Shareholders'
Equity
Interest-bearing deposits
$
17,076,681
0.16
%
$
14,723,895
0.56
%
Federal funds and repurchase
agreements
2,632,567
0.28
2,084,271
0.80
Borrowed funds
269,942
4.77
78,164
6.96
Total interest-bearing liabilities
19,979,190
0.24
16,886,330
0.62
Noninterest-bearing demand deposits
10,230,287
7,079,224
Other liabilities
414,535
401,724
Shareholders' equity
3,030,213
2,720,306
Total liabilities and shareholders'
equity
$
33,654,225
$
27,087,584
Net interest spread
2.48
%
2.66
%
Net interest margin
2.57
2.88
Business Segment Information
UMB Financial
Corporation
(unaudited, dollars in thousands)
Three Months Ended June 30,
2021
Commercial Banking
Institutional Banking
Personal Banking
Total
Net interest income
$
135,656
$
21,258
$
44,157
$
201,071
Provision for credit losses
22,009
147
1,844
24,000
Noninterest income
36,391
68,745
26,453
131,589
Noninterest expense
69,144
72,575
59,619
201,338
Income before taxes
80,894
17,281
9,147
107,322
Income tax expense
15,007
3,206
1,697
19,910
Net income
$
65,887
$
14,075
$
7,450
$
87,412
Three Months Ended June 30,
2020
Commercial Banking
Institutional Banking
Personal Banking
Total
Net interest income
$
113,095
$
28,124
$
37,010
$
178,229
Provision for credit losses
19,281
298
1,921
21,500
Noninterest income
24,078
66,488
29,890
120,456
Noninterest expense
62,123
76,953
69,457
208,533
Income (loss) before taxes
55,769
17,361
(4,478
)
68,652
Income tax expense (benefit)
6,597
2,055
(529
)
8,123
Net income (loss)
$
49,172
$
15,306
$
(3,949
)
$
60,529
Six Months Ended June 30,
2021
Commercial Banking
Institutional Banking
Personal Banking
Total
Net interest income
$
268,687
$
43,397
$
83,102
$
395,186
Provision for credit losses
13,827
367
2,306
16,500
Noninterest income
43,777
137,166
59,543
240,486
Noninterest expense
134,789
143,857
123,638
402,284
Income before taxes
163,848
36,339
16,701
216,888
Income tax expense
27,825
6,171
2,837
36,833
Net income
$
136,023
$
30,168
$
13,864
$
180,055
Six Months Ended June 30,
2020
Commercial Banking
Institutional Banking
Personal Banking
Total
Net interest income
$
220,044
$
61,159
$
70,967
$
352,170
Provision for credit losses
101,501
573
7,426
109,500
Noninterest income
35,318
128,440
55,122
218,880
Noninterest expense
121,166
145,406
130,580
397,152
Income (loss) before taxes
32,695
43,620
(11,917
)
64,398
Income tax expense (benefit)
3,709
4,951
(1,352
)
7,308
Net income (loss)
$
28,986
$
38,669
$
(10,565
)
$
57,090
The company has strategically aligned its operations into the
following three reportable segments: Commercial Banking,
Institutional Banking, and Personal Banking. Senior executive
officers regularly evaluate business segment financial results
produced by the company’s internal reporting system in deciding how
to allocate resources and assess performance for individual
business segments. The company’s reportable segments include
certain corporate overhead, technology and service costs that are
allocated based on methodologies that are applied consistently
between periods. For comparability purposes, amounts in all periods
are based on methodologies in effect at June 30, 2021.
Non-GAAP Financial Measures
Net operating income Non-GAAP
reconciliations:
UMB Financial
Corporation
(unaudited, dollars in thousands except
per share data)
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Net income (GAAP)
$
87,412
$
60,529
$
180,055
$
57,090
Adjustments:
Acquisition expense
—
123
—
246
Severance expense
103
137
124
1,789
COVID-19 related expense
182
3,989
337
4,217
Tax-impact of adjustments (i)
(63
)
(943
)
(102
)
(1,388
)
Total Non-GAAP adjustments (net of
tax)
222
3,306
359
4,864
Net operating income (Non-GAAP)
$
87,634
$
63,835
$
180,414
$
61,954
Earnings per share - diluted (GAAP)
$
1.79
$
1.26
$
3.70
$
1.18
Acquisition expense
—
—
—
0.01
Severance expense
—
0.01
—
0.04
COVID-19 related expense
0.01
0.08
0.01
0.08
Tax-impact of adjustments (i)
—
(0.02
)
—
(0.03
)
Operating earnings per share - diluted
(Non-GAAP)
$
1.80
$
1.33
$
3.71
$
1.28
GAAP
Return on average assets
1.02
%
0.87
%
1.08
%
0.42
%
Return on average equity
11.43
8.95
11.98
4.22
Non-GAAP
Operating return on average assets
1.03
%
0.91
%
1.08
%
0.46
%
Operating return on average equity
11.46
9.44
12.01
4.58
(i) Calculated using the company’s
marginal tax rate of 22.2%.
Operating noninterest expense and
operating efficiency ratio Non-GAAP reconciliations:
UMB Financial
Corporation
(unaudited, dollars in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Noninterest expense
$
201,338
$
208,533
$
402,284
$
397,152
Adjustments to arrive at operating
noninterest expense (pre-tax):
Acquisition expense
—
123
—
246
Severance expense
103
137
124
1,789
COVID-19 related expense
182
3,989
337
4,217
Total Non-GAAP adjustments (pre-tax)
285
4,249
461
6,252
Operating noninterest expense
(Non-GAAP)
$
201,053
$
204,284
$
401,823
$
390,900
Noninterest expense
$
201,338
$
208,533
$
402,284
$
397,152
Less: Amortization of other
intangibles
1,157
1,658
2,537
3,392
Noninterest expense, net of amortization
of other intangibles (Non-GAAP) (numerator A)
$
200,181
$
206,875
$
399,747
$
393,760
Operating noninterest expense
$
201,053
$
204,284
$
401,823
$
390,900
Less: Amortization of other
intangibles
1,157
1,658
2,537
3,392
Operating expense, net of amortization of
other intangibles (Non-GAAP) (numerator B)
$
199,896
$
202,626
$
399,286
$
387,508
Net interest income
$
201,071
$
178,229
$
395,186
$
352,170
Noninterest income
131,589
120,456
240,486
218,880
Less: Gains on sales of securities
available for sale, net
1,300
4,006
4,020
5,233
Total Non-GAAP Revenue (denominator A)
$
331,360
$
294,679
$
631,652
$
565,817
Efficiency ratio (numerator A/denominator
A)
60.41
%
70.20
%
63.29
%
69.59
%
Operating efficiency ratio (Non-GAAP)
(numerator B/denominator A)
60.33
68.76
63.21
68.49
Pre-tax, pre-provision income non-GAAP
reconciliations:
UMB Financial
Corporation
(unaudited, dollars in thousands except
per share data)
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Net income before taxes (GAAP)
$
107,322
$
68,652
$
216,888
$
64,398
Adjustments:
Provision for credit losses
24,000
21,500
16,500
109,500
Pre-tax, pre-provision income
(Non-GAAP)
$
131,322
$
90,152
$
233,388
$
173,898
Pre-tax earnings per share - diluted
(GAAP)
$
2.20
$
1.43
$
4.46
$
1.33
Provision for credit losses
0.50
0.45
0.34
2.26
Pre-tax, pre-provision earnings per share
- diluted (Non-GAAP)
$
2.70
$
1.88
$
4.80
$
3.59
Pre-tax, pre-provision income - FTE
Non-GAAP reconciliations:
UMB Financial
Corporation
(unaudited, dollars in thousands except
per share data)
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Net interest income
$
201,071
$
178,229
$
395,186
$
352,170
Adjustments to arrive at net interest
income - FTE:
Tax equivalent interest
6,629
6,604
13,307
13,082
Net interest income - FTE
$
207,700
$
184,833
$
408,493
$
365,252
Noninterest income
131,589
120,456
240,486
218,880
Less: Noninterest expense
201,338
208,533
402,284
397,152
Pre-tax, pre-provision income - FTE
(Non-GAAP)
$
137,951
$
96,756
$
246,695
$
186,980
Net interest income earnings per share -
diluted
$
4.13
$
3.71
$
8.13
$
7.26
Tax equivalent interest
0.13
0.14
0.28
0.27
Net interest income - FTE
4.26
3.85
8.41
7.53
Noninterest income
2.70
2.50
4.95
4.52
Less: Noninterest expense
4.13
4.34
8.28
8.19
Pre-tax, pre-provision income - FTE
earnings per share - diluted (Non-GAAP)
$
2.83
$
2.01
$
5.08
$
3.86
Tangible book value non-GAAP
reconciliations:
UMB Financial
Corporation
(unaudited, dollars in thousands except
share and per share data)
As of June 30,
2021
2020
Total shareholders' equity (GAAP)
$
3,090,244
$
2,777,395
Less: Intangible assets
Goodwill
174,518
180,867
Other intangibles, net
16,636
24,181
Total intangibles, net
191,154
205,048
Total tangible shareholders' equity
(Non-GAAP)
$
2,899,090
$
2,572,347
Total shares outstanding
48,346,371
48,021,707
Ratio of total shareholders' equity (book
value) per share
$
63.92
$
57.84
Ratio of total tangible shareholders'
equity (tangible book value) per share (Non-GAAP)
59.96
53.57
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210727005159/en/
Media Contact: Stephanie Hague: 816.860.5088 Investor Relations
Contact: Kay Gregory: 816.860.7106
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