UMB Financial Corporation Reports First Quarter Net Income of $92.6 Million

Rhea-AI Summary

UMB Financial Corporation (Nasdaq: UMBF) reported a first-quarter 2021 net income of $92.6 million, or $1.91 per diluted share, down from $156.3 million in Q4 2020, yet improved compared to a net loss of $3.4 million in Q1 2020. The net interest income was $194.1 million, a slight decrease from the prior quarter but an increase of 11.6% year-over-year. Noninterest income fell significantly by 52.3% due to reduced investment securities gains. Overall, the company's average loans rose by 8.4% on a linked-quarter basis.

Positive

• Net income of $92.6 million in Q1 2021, up from a net loss of $3.4 million in Q1 2020.
• Average loans increased by 8.4% on a linked-quarter basis.
• Net interest income rose by 11.6% year-over-year.

Negative

• Net income decreased by 40.7% compared to Q4 2020.
• Noninterest income declined by 52.3% on a linked-quarter basis.
• Pre-tax, pre-provision income decreased by 46.4% quarter-over-quarter.

UMB Financial Corporation (Nasdaq: UMBF), a financial services company, announced net income for the first quarter of 2021 of $92.6 million, or $1.91 per diluted share, compared to net income of $156.3 million, or $3.24 per diluted share, in the fourth quarter of 2020 (linked quarter) and net loss of $3.4 million, or $0.07 per diluted share, in the first 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 $92.8 million, or $1.91 per diluted share, for the first quarter of 2021, compared to $157.4 million, or $3.26 per diluted share, for the linked quarter and net operating loss of $1.9 million, or $0.04 per diluted share, for the first 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 $108.7 million, or $2.24 per diluted share, for the first quarter of 2021, compared to $202.9 million, or $4.20 per diluted share, for the linked quarter, and $90.2 million, or $1.85 per diluted share, for the first quarter of 2020. These PTPP-FTE results represent a decrease of 46.4% on a linked-quarter basis and an increase of 20.5% compared to the first quarter of 2020.

Net income comparisons to the linked quarter were primarily impacted by an $108.8 million pre-tax gain recognized in the prior period on the company’s equity investment in Tattooed Chef, Inc. (TTCF), and a subsequent $16.1 million pre-tax mark-to-market loss on those investments in the current period. Net income comparisons to the first quarter of 2020 were primarily impacted by the significantly higher provision expense in the prior period related to the implementation of the current expected credit loss (CECL) methodology for estimating allowance for credit losses as well as the $16.1 million pre-tax mark-to-market adjustment on TTCF shares.

Summary of quarterly financial results		UMB Financial Corporation
(unaudited, dollars in thousands, except per share data)
		Q1				Q4				Q1
		2021				2020				2020
Net income (loss) (GAAP)		$	92,643			$	156,320			$	(3,439	)
Earnings (losses) per share (diluted)			1.91				3.24				(0.07	)
Pre-tax, pre-provision income (Non-GAAP)			102,066				196,107				83,746
Pre-tax, pre-provision earnings per share (diluted)			2.10				4.06			1.72
Pre-tax, pre-provision income - FTE (Non-GAAP)			108,744				202,946				90,224
Pre-tax, pre-provision earnings per share - FTE (diluted)			2.24				4.20			1.85
Net operating income (loss) (Non-GAAP)			92,780				157,405				(1,881	)
Operating earnings (losses) per share (diluted)			1.91				3.26				(0.04	)
GAAP
Return on average assets			1.14	%			2.03	%			(0.05	)%
Return on average equity			12.56				21.18				(0.51	)
Efficiency ratio			66.46				53.44				68.93
Non-GAAP
Operating return on average assets			1.14	%			2.05	%			(0.03	)%
Operating return on average equity			12.58				21.33				(0.28	)
Operating efficiency ratio			66.40				53.11				68.19

“Our team continued to deliver and execute on core tenets that differentiate our story and value proposition for our shareholders,” said Mariner Kemper, chairman, president and chief executive officer. “During the first quarter, we saw optimistic signs of an improving operating environment. Strong balance sheet growth funded by a growing core deposit base, robust fee income generation from our diversified business lines, and solid asset quality metrics drove our strong financial results. Average loans, excluding Paycheck Protection Program (PPP) balances, increased 8.4% annualized on a linked-quarter basis. Net charge-offs averaged just 13 basis points of loans, while levels of non-performing assets and delinquencies improved from the end of the prior period. The 19-basis-point decline in net interest margin on a linked-quarter basis was due in part to excess liquidity as well as seasonal inflows in some of our businesses, which had approximately a 16 basis-point impact to our margin.”

Summary of revenue		UMB Financial Corporation
(unaudited, dollars in thousands)
		Q1				Q4				Q1				CQ vs.				CQ vs.
		2021				2020				2020				LQ				PY
Net interest income		$	194,115			$	194,675			$	173,941			$	(560	)		$	20,174
Noninterest income:
Trust and securities processing			54,834				50,773				47,000				4,061				7,834
Trading and investment banking			9,356				9,693				1,723				(337	)			7,633
Service charges on deposit accounts			21,976				20,074				25,081				1,902				(3,105	)
Insurance fees and commissions			420				318				259				102				161
Brokerage fees			3,334				3,918				9,860				(584	)			(6,526	)
Bankcard fees			14,673				15,788				16,545				(1,115	)			(1,872	)
Investment securities (losses) gains, net			(8,336	)			113,010				3,520				(121,346	)			(11,856	)
Other			12,640				14,716				(5,564	)			(2,076	)			18,204
Total noninterest income		$	108,897			$	228,290			$	98,424			$	(119,393	)		$	10,473
Total revenue		$	303,012			$	422,965			$	272,365			$	(119,953	)		$	30,647
Net interest income (FTE)		$	200,793			$	201,514			$	180,419
Net interest margin (FTE)			2.59	%			2.78	%			2.97	%
Total noninterest income as a % of total revenue			35.94				53.97				36.14

Net interest income

• Net interest income totaled $194.1 million, which is a decrease of $0.6 million as compared to the linked quarter. The positive impact from strong balance sheet growth was reduced by the impacts of lower loan fees and PPP income in the quarter. Average earning assets increased $2.6 billion, or 8.9%, driven primarily by an increase in excess liquidity, while interest-bearing liabilities increased $1.6 billion, or 8.8%.
• Net interest margin for the first quarter was 2.59%, a decrease of 19 basis points from the linked quarter, driven in part from the impacts of excess liquidity. Earning asset yields declined 21 basis points from the linked quarter, while the cost of interest-bearing liabilities decreased three basis points to 0.24%, driven by a four-basis-point decline in the cost of interest-bearing deposits. Net interest spread decreased 18 basis points to 2.50% from the linked quarter and was 16 basis points lower than the first quarter of 2020.
• On a year-over-year basis, net interest income increased $20.2 million, or 11.6%, driven by a $2.6 billion, or 19.3%, increase in average loans, and a $1.9 billion, or 22.2%, increase in average securities. These increases were driven by organic loan growth, excess liquidity, and the company’s PPP participation.
• Average deposits increased 7.5% on a linked-quarter basis and 28.8% compared to the first quarter of 2020. Average noninterest-bearing demand deposit balances increased 9.0% on a linked-quarter basis and 50.2% compared to the first quarter of 2020.

Noninterest income

• First quarter 2021 noninterest income decreased $119.4 million, or 52.3%, on a linked-quarter basis, largely due to:
  • A decrease of $121.3 million in investment securities gains, primarily due to a decrease of $124.9 million in gains on the company’s investment in TTCF, partially offset by increases of $1.4 million in equity earnings on alternative investments and $1.3 million in gains on sales of available for sale securities.
  • Decreases of $4.4 million in company-owned life insurance income and $1.1 million in derivative income, both recorded in other income. The decrease in company-owned life insurance is offset by a proportionate decrease in deferred compensation expense as noted below.
  • These decreases were partially offset by increases of $2.6 million and $1.0 million in fund services income and trust services income, respectively, both recorded in trust and securities processing, an increase of $1.7 million in healthcare income, recorded in service charges on deposits, and an increase in other income of $4.3 million due to the gain on sale of Prairie Capital Management, LLC (PCM).
• Compared to the prior year, noninterest income in the first quarter of 2021 increased $10.5 million, or 10.6%, primarily driven by:
  • An increase of $18.2 million in other income, driven by an increase of $15.0 million in company-owned life insurance and a gain of $4.3 million on the sale of PCM. The increase in company-owned life insurance is offset by a proportionate increase in deferred compensation expense as noted below.
  • An increase of $7.8 million in trust and securities processing, driven by increases of $5.0 million in fund services income, $1.6 million in trust services income, and $1.2 million in corporate trust revenue.
  • An increase of $7.6 million in trading and investment banking due to increased trading volume.
  • These increases were partially offset by the following decreases:
    • A decrease of $11.9 million in investment securities gains due to the $16.1 million mark-to-market loss on the company’s investment in TTCF, during the first quarter of 2021, partially offset by increased gains on sales of available for sale securities and equity earnings on alternative investments.
    • A decrease of $6.5 million in brokerage fees, primarily driven by lower 12b-1 income.
    • A decrease of $3.1 million in service charges on deposits, driven by reduced healthcare income related to customer transfer and conversion fees.

Noninterest expense

Summary of noninterest expense		UMB Financial Corporation
(unaudited, dollars in thousands)
		Q1			Q4			Q1			CQ vs.				CQ vs.
		2021			2020			2020			LQ				PY
Salaries and employee benefits		$	127,681		$	129,272		$	111,060		$	(1,591	)		$	16,621
Occupancy, net			11,935			11,858			12,180			77				(245	)
Equipment			19,615			22,008			21,241			(2,393	)			(1,626	)
Supplies and services			3,492			4,125			4,185			(633

FAQ

What was UMBF's net income for Q1 2021?

UMB Financial Corporation reported a net income of $92.6 million for Q1 2021.

How does UMBF's Q1 2021 net income compare to Q4 2020?

In Q1 2021, UMBF's net income of $92.6 million decreased from $156.3 million in Q4 2020.

What was the change in net interest income for UMBF in Q1 2021?

UMB Financial Corporation's net interest income for Q1 2021 was $194.1 million, which is a decrease of $0.6 million from the linked quarter.

How much did UMBF's noninterest income fall in Q1 2021?

Noninterest income for UMB Financial Corporation fell by 52.3% in Q1 2021 compared to Q4 2020.

What was the impact on UMBF's pre-tax, pre-provision income in Q1 2021?

UMB Financial Corporation's pre-tax, pre-provision income decreased by 46.4% from the previous quarter.