UMB Financial Corporation Reports Third Quarter Net Income of $94.5 Million

Rhea-AI Summary

UMB Financial Corporation (Nasdaq: UMBF) reported a GAAP net income of $94.5 million for Q3 2021, equating to $1.94 per diluted share, marking an increase from $87.4 million in Q2 2021 and $73.1 million in Q3 2020. Average loans rose 6.5% to $16.8 billion, while average deposits jumped 22.0% to $29.4 billion. However, pre-tax, pre-provision income declined 16.4% from the previous quarter. The company declared a $0.37 dividend per share for payment on January 3, 2022.

Positive

• GAAP net income increased 8.7% from Q2 2021 to $94.5 million.
• Average loans increased 6.5% to $16.8 billion, showcasing strong performance.
• Average deposits rose 22.0% year-over-year to $29.4 billion, indicating strong liquidity.
• Net charge-offs remained low at 0.07%, highlighting strong asset quality.

Negative

• Pre-tax, pre-provision income decreased 16.4% from Q2 2021.
• Noninterest income declined by 18.0% on a linked-quarter basis, primarily due to decreased securities gains.

Third quarter 2021 Financial Highlights (all comparisons to prior year unless otherwise noted)

• GAAP net income of $94.5 million, or $1.94 per diluted share; net operating income of $95.1 million, or $1.95 per diluted share.
• Pre-tax, pre-provision (PTPP) income of $108.8 million, an increase of $9.4 million.
• Quarterly average loan balances increased $1.0 billion, or 6.5%.
• Excluding Paycheck Protection Program (PPP) balances, average loans increased 15.3% on a linked-quarter, annualized basis.
• Quarterly average deposits grew 22.0% to $29.4 billion.

KANSAS CITY, Mo.--(BUSINESS WIRE)-- UMB Financial Corporation (Nasdaq: UMBF), a financial services company, announced net income for the third quarter of 2021 of $94.5 million, or $1.94 per diluted share, compared to $87.4 million, or $1.79 per diluted share, in the second quarter of 2021 (linked quarter) and $73.1 million, or $1.52 per diluted share, in the third 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 $95.1 million, or $1.95 per diluted share, for the third quarter of 2021, compared to $87.6 million, or $1.80 per diluted share, for the linked quarter and $76.4 million, or $1.59 per diluted share, for the third 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 $115.3 million, or $2.37 per diluted share, for the third quarter of 2021, compared to $138.0 million, or $2.83 per diluted share, for the linked quarter, and $106.2 million, or $2.21 per diluted share, for the third quarter of 2020. These PTPP-FTE results represent a decrease of 16.4% on a linked-quarter basis and an increase of 8.6% compared to the third quarter of 2020.

Summary of quarterly financial results		UMB Financial Corporation
(unaudited, dollars in thousands, except per share data)
		Q3				Q2				Q3
		2021				2021				2020
Net income (GAAP)		$	94,467			$	87,412			$	73,092
Earnings per share (diluted)			1.94				1.79				1.52
Pre-tax, pre-provision income (Non-GAAP)			108,803				131,322				99,385
Pre-tax, pre-provision earnings per share (diluted)			2.23				2.70				2.07
Pre-tax, pre-provision income - FTE (Non-GAAP)			115,347				137,951				106,182
Pre-tax, pre-provision earnings per share - FTE (diluted)			2.37				2.83				2.21
Net operating income (Non-GAAP)			95,112				87,634				76,434
Operating earnings per share (diluted)			1.95				1.80				1.59
GAAP
Return on average assets			1.04	%			1.02	%			0.99	%
Return on average equity			11.89				11.43				10.23
Efficiency ratio			65.62				60.41				66.14
Non-GAAP
Operating return on average assets			1.05	%			1.03	%			1.03	%
Operating return on average equity			11.97				11.46				10.70
Operating efficiency ratio			65.36				60.33				64.69

Summary of year-to-date financial results		UMB Financial Corporation
(unaudited, dollars in thousands, except per share data)		September				September
		YTD				YTD
		2021				2020
Net income (GAAP)		$	274,522			$	130,182
Earnings per share (diluted)			5.64				2.69
Pre-tax, pre-provision income (Non-GAAP)			342,191				273,283
Pre-tax, pre-provision earnings per share (diluted)			7.03			5.65
Pre-tax, pre-provision income - FTE (Non-GAAP)			362,042				293,162
Pre-tax, pre-provision earnings per share - FTE (diluted)			7.44			6.06
Net operating income (Non-GAAP)			275,526				138,388
Operating earnings per share (diluted)			5.66				2.86
GAAP
Return on average assets			1.07	%			0.62	%
Return on average equity			11.95				6.30
Efficiency ratio			64.06				68.40
Non-GAAP
Operating return on average assets			1.07	%			0.66	%
Operating return on average equity			11.99				6.69
Operating efficiency ratio			63.93				67.18

“Our market share gains continue to differentiate us from our peers as evidenced in our third quarter 2021 results,” said Mariner Kemper, chairman, president and chief executive officer. “Excluding PPP, average loans increased 15.3% on a linked quarter annualized basis, driven by solid performance in commercial and industrial lending, as well as in both commercial and residential real estate. Asset quality remained strong in the quarter, with net charge offs of just seven basis points and a $5.0 million reduction in provision for credit losses. Additionally, on a year-to-date basis, total revenue increased 9.8% compared to 2020 despite a challenging interest rate environment, highlighting the resilience of our business model.”

Summary of revenue		UMB Financial Corporation
(unaudited, dollars in thousands)
		Q3				Q2				Q3				CQ vs.				CQ vs.
		2021				2021				2020				LQ				PY
Net interest income		$	209,765			$	201,071			$	184,384			$	8,694			$	25,381
Noninterest income:
Trust and securities processing			56,914				53,863				50,552				3,051				6,362
Trading and investment banking			5,936				8,670				8,678				(2,734	)			(2,742	)
Service charges on deposit accounts			19,881				22,592				19,650				(2,711	)			231
Insurance fees and commissions			285				245				259				40				26
Brokerage fees			2,899				2,592				4,819				307				(1,920	)
Bankcard fees			17,198				16,063				15,295				1,135				1,903
Investment securities (losses) gains, net			(3,510	)			15,455				(475	)			(18,965	)			(3,035	)
Other			8,304				12,109				14,218				(3,805	)			(5,914	)
Total noninterest income		$	107,907			$	131,589			$	112,996			$	(23,682	)		$	(5,089	)
Total revenue		$	317,672			$	332,660			$	297,380			$	(14,988	)		$	20,292
Net interest income (FTE)		$	216,309			$	207,700			$	191,181
Net interest margin (FTE)			2.52	%			2.56	%			2.73	%
Total noninterest income as a % of total revenue			33.97				39.56				38.00

Net interest income

• Net interest income totaled $209.8 million, which is an increase of $8.7 million as compared to the linked quarter. The benefit from growth in average earning assets was partially offset by reduced income from PPP loans. Average earning assets increased $1.5 billion, or 4.7%, driven by an increase in liquidity and investment securities, while interest-bearing liabilities increased $799.2 million, or 4.0%.
• Net interest margin for the third quarter was 2.52%, a decrease of four basis points from the linked quarter, driven in large part by earning asset mix shift. Earning asset yields declined five basis points from the linked quarter, driven by a three-basis-point decline in securities yields and mix changes. The cost of interest-bearing liabilities decreased one basis point to 0.22%. Net interest spread decreased four basis points to 2.43% from the linked quarter and was 20 basis points lower than the third quarter of 2020.
• On a year-over-year basis, net interest income increased $25.4 million, or 13.8%, driven by a $2.1 billion, or 21.3% increase in average securities, coupled with a $1.0 billion, or 6.5%, increase in average loans. These increases were driven by organic loan growth, excess liquidity, and the company’s PPP participation.
• Average deposits increased 5.9% on a linked-quarter basis and 22.0% compared to the third quarter of 2020. Average noninterest-bearing demand deposit balances increased 6.5% on a linked-quarter basis and 38.0% compared to the third quarter of 2020.

Noninterest income

• Third quarter 2021 noninterest income decreased $23.7 million, or 18.0%, on a linked-quarter basis, largely due to:
  • A decrease of $19.0 million in investment securities gains, driven by a mark-to-market decline of $13.2 million on the company’s marketable investments, primarily in Tattooed Chef, Inc. (TTCF), as well as $5.6 million in lower gains on other equity investments that benefited the prior quarter.
  • A decrease of $3.5 million in derivative income, recorded in other income.
  • Decreases of $2.7 million in both trading and investment banking and service charges on deposits due to lower trading volume and reduced healthcare income related to customer transfer and conversion fees realized in the prior quarter, respectively.
  • These decreases were offset by increases of $3.1 million in trust and securities processing income and $1.1 million in bankcard fees. The increase in trust and securities processing income is primarily driven by increases of $2.6 million in fund services income and $0.3 million in trust services income. The increase in bankcard income is due to increased interchange income and reduced rebates expense.
• Compared to the prior year, noninterest income in the third quarter of 2021 decreased $5.1 million, or 4.5%, primarily driven by:
  • A decrease of $4.0 million and $3.4 million in company-owned life insurance income and derivative income, respectively, 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.
  • A decrease of $3.0 million in investment securities gains, primarily due to mark-to-market valuations on the company’s equity investment in TTCF.
  • A $2.7 million decrease in trading and investment banking due to decreased trading volumes.
  • These decreases were offset by an increase of $6.4 million in trust and securities processing income and an increase of $1.1 million in bank-owned life insurance, recorded in other income. The increase in trust and securities processing was driven by increases of $7.2 million and $1.3 million in fund services income and corporate trust income, respectively, partially offset by a decrease of $2.2 million trust services income.

Noninterest expense

Summary of noninterest expense		UMB Financial Corporation
(unaudited, dollars in thousands)
		Q3			Q2			Q3			CQ vs.				CQ vs.
		2021			2021			2020			LQ				PY
Salaries and employee benefits		$	124,986		$	120,415		$	124,194		$	4,571			$	792
Occupancy, net			12,207			12,296			12,027			(89	)			180
Equipment			19,701			19,196			20,968			505				(1,267	)
Supplies and services			3,379			3,469			3,442			(90	)			(63	)
Marketing and business development			4,863			4,797			3,038			66				1,825
Processing fees			16,562			16,501			12,812			61				3,750
Legal and consulting			7,646			8,147			7,244			(501	)			402
Bankcard			4,795			4,529			4,834			266				(39	)
Amortization of other intangible assets			1,110			1,157			1,524			(47	)			(414	)
Regulatory fees			3,186			2,769			2,309			417				877
Other			10,434			8,062			5,603			2,372				4,831
Total noninterest expense		$	208,869		$	201,338		$	197,995		$	7,531			$	10,874

• Noninterest expense for the third quarter of 2021 was $208.9 million, an increase of $7.5 million, or 3.7%, from the linked quarter and an increase of $10.9 million, or 5.5%, from the third quarter of 2020.
• The linked-quarter increase in noninterest expense was driven by:
  • An increase of $4.6 million in salaries and employee benefits, driven primarily by increased bonus expense from higher company performance.
  • An increase of $2.7 million in operational losses, recorded in other expense.
• The year-over-year increase in noninterest expense was driven by:
  • An increase of $3.8 million in processing fees, due to timing of software projects.
  • Increases of $3.0 million in operational losses and $1.3 million in charitable contributions expense, both recorded in other expense.
  • Increases of $1.2 million in travel and entertainment expense and $0.7 million in advertising expense, both recorded in marketing and business development.
  • An increase of $0.8 million in salary and benefit expense, driven by an increase of $4.5 million in salary and bonus expense, partially offset by a decrease of $3.7 million in employee benefit expense. The decline in employee benefit expense was primarily driven by a decrease of $2.7 million in deferred compensation expense. The decrease in deferred compensation expense was offset by the decrease in company-owned life insurance income noted above.

Income taxes

• The company’s effective tax rate was 17.0% for the nine months ended September 30, 2021, compared to 11.9% for the same period in 2020. The increase in the effective tax 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 third quarter of 2021 were $35.9 billion compared to $34.3 billion for the linked quarter and $29.5 billion for the same period in 2020.

Summary of average loans and leases - QTD Average								UMB Financial Corporation
(unaudited, dollars in thousands)
		Q3			Q2			Q3			CQ vs.				CQ vs.
		2021			2021			2020			LQ				PY
Commercial and industrial		$	7,097,248		$	7,402,653		$	7,043,780		$	(305,405	)		$	53,468
Specialty lending			486,021			505,687			456,847			(19,666	)			29,174
Commercial real estate			6,285,348			6,165,780			5,744,344			119,568				541,004
Consumer real estate			2,178,010			2,068,663			1,755,249			109,347				422,761
Consumer			115,702			122,439			150,814			(6,737	)			(35,112	)
Credit cards			400,189			386,032			371,444			14,157				28,745
Leases and other			194,235			166,420			209,238			27,815				(15,003	)
Total loans		$	16,756,753		$	16,817,674		$	15,731,716		$	(60,921	)		$	1,025,037

• Average loans for the third quarter of 2021 decreased 0.4% on a linked-quarter basis and increased 6.5% compared to the third quarter of 2020 primarily due to the company’s participation in the PPP. Excluding PPP balances, average loans increased 3.8% on a linked-quarter basis.

Summary of average securities - QTD Average		UMB Financial Corporation
(unaudited, dollars in thousands)
		Q3			Q2			Q3			CQ vs.				CQ vs.
		2021			2021			2020			LQ				PY
Securities available for sale:
U.S. Treasury		$	17,903		$	40,013		$	30,881		$	(22,110	)		$	(12,978	)
U.S. Agencies			94,049			94,794			242,504			(745	)			(148,455	)
Mortgage-backed			6,766,619			6,096,099			4,829,586			670,520				1,937,033
State and political subdivisions			3,530,031			3,565,443			3,407,508			(35,412	)			122,523
Commercial Paper			—			—			3,478			—				(3,478	)
Corporates			158,326			127,581			58,866			30,745				99,460
Total securities available for sale		$	10,566,928		$	9,923,930		$	8,572,823		$	642,998			$	1,994,105
Securities held to maturity:
State and political subdivisions		$	1,073,133		$	1,057,091		$	1,085,297		$	16,042			$	(12,164	)
Trading securities			25,392			21,409			32,894			3,983				(7,502	)
Other securities			262,453			302,981			156,816			(40,528	)			105,637
Total securities		$	11,927,906		$	11,305,411		$	9,847,830		$	622,495			$	2,080,076

• Average securities available for sale increased 6.5% on a linked-quarter basis and 23.3% compared to the third quarter of 2020.

Summary of average deposits - QTD Average						UMB Financial Corporation
(unaudited, dollars in thousands)
		Q3				Q2				Q3				CQ vs.				CQ vs.
		2021				2021				2020				LQ				PY
Deposits:
Noninterest-bearing demand		$	11,400,143			$	10,701,656			$	8,260,170			$	698,487			$	3,139,973
Interest-bearing demand and savings			17,376,135				16,421,742				15,125,267				954,393				2,250,868
Time deposits			651,727				659,228				741,750				(7,501	)			(90,023	)
Total deposits		$	29,428,005			$	27,782,626			$	24,127,187			$	1,645,379			$	5,300,818
Noninterest bearing deposits as % of total			38.74	%			38.52	%			34.24	%

• Average deposits increased 5.9% on a linked-quarter basis and 22.0% compared to the third quarter of 2020.
• Average noninterest-bearing demand deposits increased 6.5% on a linked-quarter basis to $11.4 billion.

Capital

Capital information		UMB Financial Corporation
(unaudited, dollars in thousands, except per share data)
		September 30, 2021				June 30, 2021				September 30, 2020
Total equity		$	3,112,840			$	3,090,244			$	2,854,180
Book value per common share			64.37				63.92				59.43
Tangible book value per common share			60.44				59.96				55.19
Regulatory capital:
Common equity Tier 1 capital		$	2,811,117			$	2,730,062			$	2,402,785
Tier 1 capital			2,811,117				2,730,062				2,402,785
Total capital			3,248,869				3,172,878				2,854,598
Regulatory capital ratios:
Common equity Tier 1 capital ratio			12.26	%			11.91	%			11.93	%
Tier 1 risk-based capital ratio			12.26				11.91				11.93
Total risk-based capital ratio			14.17				13.84				14.17
Tier 1 leverage ratio			7.87				8.00				8.19

• At September 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)
		Q3				Q2				Q1				Q4				Q3
		2021				2021				2021				2020				2020
Net charge-offs - Total loans		$	3,127			$	28,374			$	5,310			$	1,801			$	5,111
Net loan charge-offs as a % of total average loans			0.07	%			0.68	%			0.13	%			0.04	%			0.13	%
Loans over 90 days past due		$	2,319			$	1,265			$	1,773			$	1,952			$	1,372
Loans over 90 days past due as a % of total loans			0.01	%			0.01	%			0.01	%			0.01	%			0.01	%
Nonaccrual and restructured loans		$	96,536			$	58,219			$	76,706			$	87,823			$	93,695
Nonaccrual and restructured loans as a % of total loans			0.59	%			0.34	%			0.46	%			0.55	%			0.59	%
Provision for credit losses		$	(5,000	)		$	24,000			$	(7,500	)		$	5,000			$	16,000

• Provision for credit losses for the third quarter decreased $29.0 million from the linked quarter and $21.0 million from the third quarter of 2020. Provision expense in the second quarter of 2021 included the impact to the Allowance for Credit Losses (ACL) of a large charge-off, offset by the impacts of positive macro-economic metrics. The decline in provision expense in the third quarter represents a release of ACL based on positive macro-economic data and portfolio credit metrics.
• Net charge-offs for the third quarter totaled $3.1 million, or 0.07%, of average loans, compared to $28.4 million, or 0.68%, of average loans in the linked quarter, and $5.1 million, or 0.13%, of average loans for the third quarter of 2020.

Dividend Declaration

At the company’s quarterly board meeting, the Board of Directors declared a $0.37 per share quarterly cash dividend, payable on January 3, 2022, to shareholders of record at the close of business on December 10, 2021.

Conference Call

The company plans to host a conference call to discuss its third quarter 2021 earnings results on Wednesday, October 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 3Q 2021 Conference Call

A replay of the conference call may be heard through November 10, 2021 by calling (toll-free) 877-344-7529 or (international) 412-317-0088. The replay access code required for playback is 10160723. 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).

PTPP income for the relevant period is defined as GAAP net income, adjusted to reflect the impact of excluding income tax and provision expenses.

PTPP-FTE 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)
		September 30,
		2021				2020
ASSETS
Loans		$	16,469,463			$	15,950,177
Allowance for credit losses on loans			(194,156	)			(211,688	)
Net loans			16,275,307				15,738,489
Loans held for sale			4,645				10,978
Securities:
Available for sale			11,162,690				8,719,246
Held to maturity, net of allowance for credit losses			1,087,308				1,067,501
Trading securities			68,882				49,154
Other securities			274,645				159,994
Total securities			12,593,525				9,995,895
Federal funds sold and resell agreements			1,092,104				1,101,313
Interest-bearing due from banks			5,739,267				1,613,675
Cash and due from banks			426,843				440,659
Premises and equipment, net			273,378				295,090
Accrued income			122,798				132,574
Goodwill			174,518				180,867
Other intangibles, net			15,526				22,657
Other assets			836,374				718,775
Total assets		$	37,554,285			$	30,250,972
LIABILITIES
Deposits:
Noninterest-bearing demand		$	13,189,739			$	8,752,882
Interest-bearing demand and savings			17,461,390				15,298,562
Time deposits under $250,000			415,068				491,378
Time deposits of $250,000 or more			169,613				195,085
Total deposits			31,235,810				24,737,907
Federal funds purchased and repurchase agreements			2,500,340				1,929,004
Short-term debt			—				15,000
Long-term debt			271,049				269,044
Accrued expenses and taxes			249,567				255,720
Other liabilities			184,679				190,117
Total liabilities			34,441,445				27,396,792
SHAREHOLDERS' EQUITY
Common stock			55,057				55,057
Capital surplus			1,102,818				1,085,375
Retained earnings			2,116,568				1,750,389
Accumulated other comprehensive income, net			164,307				299,103
Treasury stock			(325,910	)			(335,744	)
Total shareholders' equity			3,112,840				2,854,180
Total liabilities and shareholders' equity		$	37,554,285			$	30,250,972

Consolidated Statements of Income		UMB Financial Corporation
(unaudited, dollars in thousands except share and per share data)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2021				2020				2021			2020
INTEREST INCOME
Loans		$	159,242			$	142,441			$	463,949		$	433,471
Securities:
Taxable interest			33,307				26,393				90,249			79,475
Tax-exempt interest			24,458				25,377				74,165			74,393
Total securities income			57,765				51,770				164,414			153,868
Federal funds and resell agreements			2,389				2,248				7,762			9,273
Interest-bearing due from banks			1,699				299				3,235			3,360
Trading securities			231				259				579			1,225
Total interest income			221,326				197,017				639,939			601,197
INTEREST EXPENSE
Deposits			6,741				9,284				20,113			50,259
Federal funds and repurchase agreements			1,596				1,730				5,261			10,061
Other			3,224				1,619				9,614			4,323
Total interest expense			11,561				12,633				34,988			64,643
Net interest income			209,765				184,384				604,951			536,554
Provision for credit losses			(5,000	)			16,000				11,500			125,500
Net interest income after provision for credit losses			214,765				168,384				593,451			411,054
NONINTEREST INCOME
Trust and securities processing			56,914				50,552				165,611			143,873
Trading and investment banking			5,936				8,678				23,962			23,252
Service charges on deposit accounts			19,881				19,650				64,449			63,805
Insurance fees and commissions			285				259				950			1,051
Brokerage fees			2,899				4,819				8,825			20,432
Bankcard fees			17,198				15,295				47,934			44,756
Investment securities (losses) gains, net			(3,510	)			(475	)			3,609			7,624
Other			8,304				14,218				33,053			27,083
Total noninterest income			107,907				112,996				348,393			331,876
NONINTEREST EXPENSE
Salaries and employee benefits			124,986				124,194				373,082			366,192
Occupancy, net			12,207				12,027				36,438			35,618
Equipment			19,701				20,968				58,512			63,711
Supplies and services			3,379				3,442				10,340			11,412
Marketing and business development			4,863				3,038				12,005			10,962
Processing fees			16,562				12,812				48,480			39,805
Legal and consulting			7,646				7,244				21,548			19,574
Bankcard			4,795				4,834				14,280			14,243
Amortization of other intangible assets			1,110				1,524				3,647			4,916
Regulatory fees			3,186				2,309				8,501			7,886
Other			10,434				5,603				24,320			20,828
Total noninterest expense			208,869				197,995				611,153			595,147
Income before income taxes			113,803				83,385				330,691			147,783
Income tax expense			19,336				10,293				56,169			17,601
NET INCOME		$	94,467			$	73,092			$	274,522		$	130,182
PER SHARE DATA
Net income – basic		$	1.96			$	1.52			$	5.69		$	2.70
Net income – diluted			1.94				1.52				5.64			2.69
Dividends			0.37				0.31				1.01			0.93
Weighted average shares outstanding – basic			48,319,414				47,947,056				48,237,819			48,208,447
Weighted average shares outstanding – diluted			48,742,883				48,068,438				48,658,290			48,352,145

Consolidated Statements of Comprehensive Income		UMB Financial Corporation
(unaudited, dollars in thousands)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2021				2020				2021				2020
Net income		$	94,467			$	73,092			$	274,522			$	130,182
Other comprehensive (loss) income, before tax:
Unrealized gains and losses on debt securities:
Change in unrealized holding gains and losses, net			(75,717	)			20,975				(198,420	)			269,976
Less: Reclassification adjustment for gains included in net income			(1,058	)			(311	)			(5,078	)			(5,544	)
Change in unrealized gains and losses on debt securities			(76,775	)			20,664				(203,498	)			264,432
Unrealized gains and losses on derivative hedges:
Change in unrealized gains and losses on derivative hedges, net			432				(122	)			3,513				19,015
Less: Reclassification adjustment for gains included in net income			(831	)			(1,123	)			(2,550	)			(869	)
Change in unrealized gains and losses on derivative hedges			(399	)			(1,245	)			963				18,146
Other comprehensive (loss) income, before tax			(77,174	)			19,419				(202,535	)			282,578
Income tax benefit (expense)			18,374				(4,578	)			48,502				(66,655	)
Other comprehensive (loss) income			(58,800	)			14,841				(154,033	)			215,923
Comprehensive income		$	35,667			$	87,933			$	120,489			$	346,105

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			—			—				130,182				215,923				—				346,105
Dividends ($0.93 per share)			—			—				(45,192	)			—				—				(45,192	)
Purchase of treasury stock			—			615				—				—				(60,180	)			(59,565	)
Forfeitures of equity awards, net of issuances			—			565				—				—				43				608
Recognition of equity-based compensation			—			9,834				—				—				—				9,834
Sale of treasury stock			—			158				—				—				311				469
Exercise of stock options			—			439				—				—				2,081				2,520
Cumulative effect adjustment			—			—				(7,039	)			—				—				(7,039	)
Balance - September 30, 2020		$	55,057		$	1,085,375			$	1,750,389			$	299,103			$	(335,744	)		$	2,854,180
Balance - January 1, 2021		$	55,057		$	1,090,450			$	1,891,246			$	318,340			$	(338,145	)		$	3,016,948
Total comprehensive income (loss)			—			—				274,522				(154,033	)			—				120,489
Dividends ($1.01 per share)			—			—				(49,200	)			—				—				(49,200	)
Purchase of treasury stock			—			—				—				—				(4,269	)			(4,269	)
Issuances of equity awards, net of forfeitures			—			(4,374	)			—				—				5,069				695
Recognition of equity-based compensation			—			13,401				—				—				—				13,401
Sale of treasury stock			—			223				—				—				214				437
Exercise of stock options			—			3,118				—				—				11,221				14,339
Balance - September 30, 2021		$	55,057		$	1,102,818			$	2,116,568			$	164,307			$	(325,910	)		$	3,112,840

Average Balances / Yields and Rates		UMB Financial Corporation
(tax - equivalent basis)
(unaudited, dollars in thousands)
		Three Months Ended September 30,
		2021								2020
		Average				Average				Average				Average
		Balance				Yield/Rate				Balance				Yield/Rate
Assets
Loans, net of unearned interest		$	16,756,753				3.77	%		$	15,731,716				3.60	%
Securities:
Taxable			7,662,106				1.72				5,478,397				1.92
Tax-exempt			4,240,408				2.90				4,336,539				2.95
Total securities			11,902,514				2.14				9,814,936				2.37
Federal funds and resell agreements			1,092,266				0.87				1,177,590				0.76
Interest bearing due from banks			4,345,422				0.16				1,087,838				0.11
Trading securities			25,392				4.30				32,894				3.54
Total earning assets			34,122,347				2.65				27,844,974				2.91
Allowance for credit losses			(203,144	)							(211,221	)
Other assets			1,953,337								1,846,919
Total assets		$	35,872,540							$	29,480,672
Liabilities and Shareholders' Equity
Interest-bearing deposits		$	18,027,862				0.15	%		$	15,867,017				0.23	%
Federal funds and repurchase agreements			2,596,326				0.24				1,964,161				0.35
Borrowed funds			270,795				4.72				115,943				5.56
Total interest-bearing liabilities			20,894,983				0.22				17,947,121				0.28
Noninterest-bearing demand deposits			11,400,143								8,260,170
Other liabilities			425,385								431,528
Shareholders' equity			3,152,029								2,841,853
Total liabilities and shareholders' equity		$	35,872,540							$	29,480,672
Net interest spread							2.43	%							2.63	%
Net interest margin							2.52								2.73

Average Balances / Yields and Rates		UMB Financial Corporation
(tax - equivalent basis)
(unaudited, dollars in thousands)
		Nine Months Ended September 30,
		2021								2020
		Average				Average				Average				Average
		Balance				Yield/Rate				Balance				Yield/Rate
Assets
Loans, net of unearned interest		$	16,608,711				3.74	%		$	14,818,893				3.91	%
Securities:
Taxable			7,022,914				1.72				5,082,153				2.09
Tax-exempt			4,276,813				2.93				4,169,829				3.02
Total securities			11,299,727				2.18				9,251,982				2.51
Federal funds and resell agreements			1,280,177				0.81				1,070,071				1.16
Interest bearing due from banks			3,506,727				0.12				1,140,965				0.39
Trading securities			21,475				4.28				39,580				4.55
Total earning assets			32,716,817				2.70				26,321,491				3.15
Allowance for credit losses			(207,338	)							(173,254	)
Other assets			1,892,516								1,742,652
Total assets		$	34,401,995							$	27,890,889
Liabilities and Shareholders' Equity
Interest-bearing deposits		$	17,397,225				0.15	%		$	15,107,688				0.44	%
Federal funds and repurchase agreements			2,620,354				0.27				2,043,942				0.66
Borrowed funds			270,230				4.76				90,849				6.36
Total interest-bearing liabilities			20,287,809				0.23				17,242,479				0.50
Noninterest-bearing demand deposits			10,624,524								7,475,746
Other liabilities			418,397								411,547
Shareholders' equity			3,071,265								2,761,117
Total liabilities and shareholders' equity		$	34,401,995							$	27,890,889
Net interest spread							2.47	%							2.65	%
Net interest margin							2.55								2.82

Business Segment Information		UMB Financial Corporation
(unaudited, dollars in thousands)
		Three Months Ended September 30, 2021
		Commercial Banking				Institutional Banking			Personal Banking				Total
Net interest income		$	143,935			$	21,203		$	44,627			$	209,765
Provision for credit losses			(5,720	)			172			548				(5,000	)
Noninterest income			16,523				65,551			25,833				107,907
Noninterest expense			74,359				73,354			61,156				208,869
Income before taxes			91,819				13,228			8,756				113,803
Income tax expense			15,601				2,248			1,487				19,336
Net income		$	76,218			$	10,980		$	7,269			$	94,467
		Three Months Ended September 30, 2020
		Commercial Banking				Institutional Banking			Personal Banking				Total
Net interest income		$	122,362			$	23,375		$	38,647			$	184,384
Provision for credit losses			14,032				193			1,775				16,000
Noninterest income			22,464				62,688			27,844				112,996
Noninterest expense			65,175				69,667			63,153				197,995
Income before taxes			65,619				16,203			1,563				83,385
Income tax expense			8,100				2,000			193				10,293
Net income		$	57,519			$	14,203		$	1,370			$	73,092
		Nine Months Ended September 30, 2021
		Commercial Banking				Institutional Banking			Personal Banking				Total
Net interest income		$	412,622			$	64,599		$	127,730			$	604,951
Provision for credit losses			8,107				539			2,854				11,500
Noninterest income			60,294				202,718			85,381				348,393
Noninterest expense			209,144				217,211			184,798				611,153
Income before taxes			255,665				49,567			25,459				330,691
Income tax expense			43,427				8,419			4,323				56,169
Net income		$	212,238			$	41,148		$	21,136			$	274,522
		Nine Months Ended September 30, 2020
		Commercial Banking				Institutional Banking			Personal Banking				Total
Net interest income		$	342,406			$	84,534		$	109,614			$	536,554
Provision for credit losses			115,533				766			9,201				125,500
Noninterest income			57,782				191,128			82,966				331,876
Noninterest expense			186,341				215,073			193,733				595,147
Income (loss) before taxes			98,314				59,823			(10,354	)			147,783
Income tax expense (benefit)			11,709				7,125			(1,233	)			17,601
Net income (loss)		$	86,605			$	52,698		$	(9,121	)		$	130,182

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 September 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 September 30,								Nine Months Ended September 30,
		2021				2020				2021				2020
Net income (GAAP)		$	94,467			$	73,092			$	274,522			$	130,182
Adjustments:
Acquisition expense			—				78				—				324
Severance expense			639				2,859				763				4,648
COVID-19 related expense			190				1,358				527				5,575
Tax-impact of adjustments (i)			(184	)			(953	)			(286	)			(2,341	)
Total Non-GAAP adjustments (net of tax)			645				3,342				1,004				8,206
Net operating income (Non-GAAP)		$	95,112			$	76,434			$	275,526			$	138,388
Earnings per share - diluted (GAAP)		$	1.94			$	1.52			$	5.64			$	2.69
Acquisition expense			—				—				—				0.01
Severance expense			0.01				0.06				0.02				0.10
COVID-19 related expense			—				0.03				0.01				0.11
Tax-impact of adjustments (i)			—				(0.02	)			(0.01	)			(0.05	)
Operating earnings per share - diluted (Non-GAAP)		$	1.95			$	1.59			$	5.66			$	2.86
GAAP
Return on average assets			1.04	%			0.99	%			1.07	%			0.62	%
Return on average equity			11.89				10.23				11.95				6.30
Non-GAAP
Operating return on average assets			1.05	%			1.03	%			1.07	%			0.66	%
Operating return on average equity			11.97				10.70				11.99				6.69

(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 September 30,								Nine Months Ended September 30,
		2021				2020				2021				2020
Noninterest expense		$	208,869			$	197,995			$	611,153			$	595,147
Adjustments to arrive at operating noninterest expense (pre-tax):
Acquisition expense			—				78				—				324
Severance expense			639				2,859				763				4,648
COVID-19 related expense			190				1,358				527				5,575
Total Non-GAAP adjustments (pre-tax)			829				4,295				1,290				10,547
Operating noninterest expense (Non-GAAP)		$	208,040			$	193,700			$	609,863			$	584,600
Noninterest expense		$	208,869			$	197,995			$	611,153			$	595,147
Less: Amortization of other intangibles			1,110				1,524				3,647				4,916
Noninterest expense, net of amortization of other intangibles (Non-GAAP) (numerator A)		$	207,759			$	196,471			$	607,506			$	590,231
Operating noninterest expense		$	208,040			$	193,700			$	609,863			$	584,600
Less: Amortization of other intangibles			1,110				1,524				3,647				4,916
Operating expense, net of amortization of other intangibles (Non-GAAP) (numerator B)		$	206,930			$	192,176			$	606,216			$	579,684
Net interest income		$	209,765			$	184,384			$	604,951			$	536,554
Noninterest income			107,907				112,996				348,393				331,876
Less: Gains on sales of securities available for sale, net			1,058				311				5,078				5,544
Total Non-GAAP Revenue (denominator A)		$	316,614			$	297,069			$	948,266			$	862,886
Efficiency ratio (numerator A/denominator A)			65.62	%			66.14	%			64.06	%			68.40	%
Operating efficiency ratio (Non-GAAP) (numerator B/denominator A)			65.36				64.69				63.93				67.18

Pre-tax, pre-provision income non-GAAP reconciliations:		UMB Financial Corporation
(unaudited, dollars in thousands except per share data)
		Three Months Ended September 30,							Nine Months Ended September 30,
		2021				2020			2021			2020
Net income before taxes (GAAP)		$	113,803			$	83,385		$	330,691		$	147,783
Adjustments:
Provision for credit losses			(5,000	)			16,000			11,500			125,500
Pre-tax, pre-provision income (Non-GAAP)		$	108,803			$	99,385		$	342,191		$	273,283
Pre-tax earnings per share - diluted (GAAP)		$	2.33			$	1.74		$	6.79		$	3.06
Provision for credit losses			(0.10	)			0.33			0.24			2.59
Pre-tax, pre-provision earnings per share - diluted (Non-GAAP)		$	2.23			$	2.07		$	7.03		$	5.65

Pre-tax, pre-provision income - FTE Non-GAAP reconciliations:		UMB Financial Corporation
(unaudited, dollars in thousands except per share data)
		Three Months Ended September 30,						Nine Months Ended September 30,
		2021			2020			2021			2020
Net interest income		$	209,765		$	184,384		$	604,951		$	536,554
Adjustments to arrive at net interest income - FTE:
Tax equivalent interest			6,544			6,797			19,851			19,879
Net interest income - FTE		$	216,309		$	191,181		$	624,802		$	556,433
Noninterest income			107,907			112,996			348,393			331,876
Less: Noninterest expense			208,869			197,995			611,153			595,147
Pre-tax, pre-provision income - FTE (Non-GAAP)		$	115,347		$	106,182		$	362,042		$	293,162
Net interest income earnings per share - diluted		$	4.30		$	3.84		$	12.43		$	11.10
Tax equivalent interest			0.14			0.14			0.41			0.41
Net interest income - FTE			4.44			3.98			12.84			11.51
Noninterest income			2.22			2.35			7.16			6.86
Less: Noninterest expense			4.29			4.12			12.56			12.31
Pre-tax, pre-provision income - FTE earnings per share - diluted (Non-GAAP)		$	2.37		$	2.21		$	7.44		$	6.06

Tangible book value non-GAAP reconciliations:		UMB Financial Corporation
(unaudited, dollars in thousands except share and per share data)
		As of September 30,
		2021			2020
Total shareholders' equity (GAAP)		$	3,112,840		$	2,854,180
Less: Intangible assets
Goodwill			174,518			180,867
Other intangibles, net			15,526			22,657
Total intangibles, net			190,044			203,524
Total tangible shareholders' equity (Non-GAAP)		$	2,922,796		$	2,650,656
Total shares outstanding			48,355,373			48,028,679
Ratio of total shareholders' equity (book value) per share		$	64.37		$	59.43
Ratio of total tangible shareholders' equity (tangible book value) per share (Non-GAAP)			60.44			55.19

 

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Media Contact: Stephanie Hague: 816.860.5088

Investor Relations Contact: Kay Gregory: 816.860.7106

Source: UMB Financial Corporation

FAQ

What were UMB Financial's earnings for Q3 2021?

UMB Financial reported a GAAP net income of $94.5 million, or $1.94 per diluted share, for Q3 2021.

How much did UMB Financial's average loans increase in Q3 2021?

Average loans increased by 6.5%, reaching $16.8 billion.

What is the dividend declared by UMB Financial in Q3 2021?

UMB Financial declared a $0.37 per share cash dividend, payable on January 3, 2022.

How did UMB Financial's average deposits perform in Q3 2021?

Average deposits grew by 22.0% year-over-year to $29.4 billion.

What was the pre-tax, pre-provision income for UMB Financial in Q3 2021?

The pre-tax, pre-provision income was $108.8 million, a decrease of 16.4% from the previous quarter.