UMB Financial Corporation Reports First Quarter 2020 Results

Apr 28, 2020 05:00 pm
KANSAS CITY, Mo. -- 

UMB Financial Corporation (Nasdaq: UMBF), a financial services company, announced results for the first quarter of 2020. "On a GAAP basis, we reported a net loss of $3.4 million, driven by the adoption of a new accounting standard on January 1, 2020, which resulted in significantly higher provision expense based on the possibility of future credit losses under the current environment created by the COVID-19 crisis,” said Mariner Kemper, chairman, president and chief executive officer. “Excluding this impact, business and financial results remained strong as demonstrated by a 5.6 percent increase in pre-tax pre-provision income, to $83.7 million, from the linked quarter. As many industry participants have noted, the ill-timed adoption of this new accounting standard has resulted in adding more undue volatility in this critical environment and rendered comparability of financial results across the banking industry extremely difficult.”

2020 First Quarter Highlights

  • Average loan balances increased $385 million, or 11.6 percent, on a linked-quarter annualized basis.
  • Average deposits grew $439 million to $20.8 billion compared to the fourth quarter of 2019.
  • GAAP book value per share of $55.33, a 15.5 percent increase, and tangible book value per share of $51.04, a 16.1 percent increase compared to a year ago.
  • Efficiency ratio improved to 68.93 percent compared to 70.00 percent a year ago.
  • Credit quality remained strong, with net charge-offs of just 0.23 percent of average loans, consistent with the company’s historical performance.

“As we, as a nation, navigate our way through this unprecedented and challenging time, I have never been prouder of how the banking industry and UMB associates have rallied in response to the COVID-19 crisis,” said Kemper. “Our deepest gratitude goes to all those at the frontline combating this crisis. We are humbled to be in a position to offer critical financial support and services to our clients as we all adapt to these global impacts. As we’ve worked through the CARES Act legislation and helped our customers navigate the Paycheck Protection Program during the past few weeks, I have been inspired by the enduring sense of service, duty and patriotic responsibility demonstrated by UMB associates. To date, we have processed more than 3,000 applications in excess of $1.4 billion as part of this program. Our capital and liquidity remain strong. Our legacy is built on being there for our customers and communities, and our history of prudent risk management gives us the strength and flexibility to serve our customers in their greatest hour of need.”

For the first quarter of 2020, the company recognized a net loss of $3.4 million, or $0.07 per diluted share, compared to net income of $66.5 million, or $1.35 per diluted share, in the fourth quarter of 2019 (linked quarter) and net income of $57.7 million, or $1.18 per diluted share, in the first quarter of 2019. The results for 2020 include significantly higher provision expense related to the implementation of the current expected credit losses (CECL) methodology for estimating allowance for credit losses, including the current and forecasted economic downturn related to the COVID-19 (coronavirus) pandemic.

Pre-tax, pre-provision income (PTPP), a non-GAAP measure which is reconciled to the nearest comparable GAAP measure later in this release, was $83.7 million, or $1.72 per diluted share, for the first quarter of 2020, compared to $79.3 million, or $1.61 per diluted share, for the linked quarter, and $80.6 million, or $1.65 per diluted share, for the first quarter of 2019. These PTPP results represent increases of 5.6 percent on a linked-quarter basis and 3.9 percent compared to the first quarter of 2019.

Summary of quarterly financial results

 

UMB Financial Corporation

 

(unaudited, dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1

 

 

Q4

 

 

Q1

 

 

 

2020

 

 

2019

 

 

2019

 

Net (loss) income

 

$

(3,439

)

 

$

66,515

 

 

$

57,744

 

(Losses) earnings per share (diluted)

 

 

(0.07

)

 

 

1.35

 

 

 

1.18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax, pre-provision income

 

 

83,746

 

 

 

79,268

 

 

 

80,624

 

Pre-tax, pre-provision earnings per share (diluted)

 

 

1.72

 

 

 

1.61

 

 

1.65

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating (loss) income

 

 

(1,881

)

 

 

67,038

 

 

 

58,208

 

Operating (losses) earnings per share (diluted)

 

 

(0.04

)

 

 

1.36

 

 

1.19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

(0.05

)%

 

 

1.05

%

 

 

1.02

%

Return on average equity

 

 

(0.51

)

 

 

10.15

 

 

 

10.48

 

Efficiency ratio

 

 

68.93

 

 

 

71.59

 

 

 

70.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

Operating return on average assets

 

 

(0.03

)%

 

 

1.06

%

 

 

1.03

%

Operating return on average equity

 

 

(0.28

)

 

 

10.23

 

 

 

10.56

 

Operating efficiency ratio

 

 

68.19

 

 

 

71.35

 

 

 

69.78

 

Summary of revenue

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1

 

 

Q4

 

 

Q1

 

 

CQ vs.

 

 

CQ vs.

 

 

 

2020

 

 

2019

 

 

2019

 

 

LQ

 

 

PY

 

Net interest income

 

$

173,941

 

 

$

172,363

 

 

$

163,868

 

 

$

1,578

 

 

$

10,073

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trust and securities processing

 

 

47,000

 

 

 

46,835

 

 

 

41,957

 

 

 

165

 

 

 

5,043

 

Trading and investment banking

 

 

1,723

 

 

 

6,720

 

 

 

5,581

 

 

 

(4,997

)

 

 

(3,858

)

Service charges on deposit accounts

 

 

25,081

 

 

 

20,100

 

 

 

21,281

 

 

 

4,981

 

 

 

3,800

 

Insurance fees and commissions

 

 

259

 

 

 

511

 

 

 

338

 

 

 

(252

)

 

 

(79

)

Brokerage fees

 

 

9,860

 

 

 

8,839

 

 

 

7,243

 

 

 

1,021

 

 

 

2,617

 

Bankcard fees

 

 

16,545

 

 

 

16,326

 

 

 

17,067

 

 

 

219

 

 

 

(522

)

Gains on sales of securities available for sale, net

 

 

1,227

 

 

 

755

 

 

 

809

 

 

 

472

 

 

 

418

 

Other

 

 

(3,271

)

 

 

10,269

 

 

 

13,106

 

 

 

(13,540

)

 

 

(16,377

)

Total noninterest income

 

$

98,424

 

 

$

110,355

 

 

$

107,382

 

 

$

(11,931

)

 

$

(8,958

)

Total revenue

 

$

272,365

 

 

$

282,718

 

 

$

271,250

 

 

$

(10,353

)

 

$

1,115

 

Net interest margin

 

 

2.97

%

 

 

3.02

%

 

 

3.20

%

 

 

 

 

 

 

 

 

Total noninterest income as a % of total revenue

 

 

36.14

 

 

 

39.03

 

 

 

39.59

 

 

 

 

 

 

 

 

 

Net interest income

  • Net interest income totaled $173.9 million, an increase of $1.6 million, or 0.9 percent, from linked quarter levels, driven by a $384.7 million, or 2.9 percent, increase in average loans, and a 4.3 percent increase in average earning assets. These benefits were offset by the impact of recent reductions in short-term interest rates on net interest margin.
  • Net interest spread of 2.67 percent for the first quarter represents an increase of one basis point as compared to the linked quarter despite a 150-basis-point reduction in short-term interest rates.
  • Net interest margin for the first quarter was 2.97 percent, down five basis points from the linked quarter, in large part due to lower short-term interest rates. Earning asset yields declined 18 basis points from the linked quarter, driven by declining yields in the loan portfolio due to recent reductions in short-term interest rates. The cost of interest-bearing liabilities decreased 19 basis points to 0.91 percent, driven by an 18-basis-point decline in the cost of interest-bearing deposits and lower borrowing costs.
  • On a year-over-year basis, the increase in net interest income was driven by a $1.3 billion, or 10.7 percent, increase in average loans, and a $0.8 billion, or 10.5 percent, increase in average investment securities. These benefits were partially offset by declining yields in the loan portfolio due to recent reductions in short-term interest rates.
  • Average deposits increased 2.2 percent on a linked-quarter basis and 11.2 percent compared to the first quarter of 2019. Average noninterest-bearing demand deposit balances increased 1.5 percent on a linked-quarter basis and 8.5 percent compared to the first quarter of 2019.

Noninterest income

  • First quarter 2020 noninterest income decreased $11.9 million, or 10.8 percent, on a linked-quarter basis, largely due to:
    • Decreases of $16.6 million in company-owned life insurance income, reflecting the impact of lower market valuations of the underlying investments, and $0.8 million in derivative income, both recorded in other income. The decrease in company-owned life insurance income is offset by a proportionate decrease in deferred compensation expense noted below.
    • A decrease of $5.0 million in trading and investment banking, primarily driven by a decrease of $3.5 million in market valuation of investments in the company’s trading portfolio due to the overall market decline in March.
    • These decreases were partially offset by the following increases:
      • An increase of $5.7 million in healthcare income, recorded in service charges on deposits, related to customer transfer and conversion fees recorded in the first quarter.
      • An increase of $1.0 million in brokerage fees, primarily driven by higher 12b-1 income.
      • An increase of $2.0 million in equity earnings on alternative investments and a $1.9 million gain on the sale of a building, both recorded in other income.
  • Compared to the prior year, noninterest income in the first quarter of 2020 decreased $9.0 million, or 8.3 percent, primarily driven by:
    • Decreases of $19.2 million in company-owned life insurance and $1.1 million in derivative income, both recorded in other income. The decrease in company-owned life insurance income is offset by a proportionate decrease in deferred compensation expense noted below.
    • A decrease of $3.9 million in trading and investment banking, primarily driven by a decrease of $4.3 million in market valuations of investments in the company’s trading portfolio due to the overall market decline in March.
    • These decreases were partially offset by the following increases:
      • An increase of $5.0 million in trust and securities processing, driven by an increase of $2.7 million in corporate trust income and $1.8 million in fund servicing revenue.
      • An increase of $3.8 million in service charges on deposits, largely driven by healthcare customer transfer and conversion fees recorded in the first quarter of 2020 in the company’s healthcare services business.
      • An increase of $2.6 million in brokerage fees, due to higher 12b-1 and money market income.
      • An increase of $1.9 million in equity earnings on alternative investments and a $1.9 million gain on sale of other assets, both recorded in other income.

Noninterest expense

Summary of noninterest expense

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1

 

 

Q4

 

 

Q1

 

 

CQ vs.

 

 

CQ vs.

 

 

 

2020

 

 

2019

 

 

2019

 

 

LQ

 

 

PY

 

Salaries and employee benefits

 

$

111,060

 

 

$

120,806

 

 

$

116,032

 

 

$

(9,746

)

 

$

(4,972

)

Occupancy, net

 

 

12,180

 

 

 

12,249

 

 

 

11,743

 

 

 

(69

)

 

 

437

 

Equipment

 

 

21,241

 

 

 

20,803

 

 

 

19,684

 

 

 

438

 

 

 

1,557

 

Supplies and services

 

 

4,185

 

 

 

6,280

 

 

 

3,873

 

 

 

(2,095

)

 

 

312

 

Marketing and business development

 

 

4,640

 

 

 

8,385

 

 

 

4,913

 

 

 

(3,745

)

 

 

(273

)

Processing fees

 

 

13,390

 

 

 

13,351

 

 

 

12,132

 

 

 

39

 

 

 

1,258

 

Legal and consulting

 

 

6,110

 

 

 

10,001

 

 

 

5,633

 

 

 

(3,891

)

 

 

477

 

Bankcard

 

 

4,860

 

 

 

4,061

 

 

 

4,345

 

 

 

799

 

 

 

515

 

Amortization of other intangible assets

 

 

1,734

 

 

 

1,593

 

 

 

1,327

 

 

 

141

 

 

 

407

 

Regulatory fees

 

 

2,366

 

 

 

2,940

 

 

 

2,890

 

 

 

(574

)

 

 

(524

)

Other

 

 

6,853

 

 

 

2,981

 

 

 

8,054

 

 

 

3,872

 

 

 

(1,201

)

Total noninterest expense

 

$

188,619

 

 

$

203,450

 

 

$

190,626

 

 

$

(14,831

)

 

$

(2,007

)

  • GAAP noninterest expense for the first quarter of 2020 was $188.6 million, a decrease of $14.8 million, or 7.3 percent, from the linked quarter and a decrease of $2.0 million, or 1.1 percent, from the first quarter of 2019.
  • The linked quarter decrease in noninterest expense was driven by:
    • A decrease of $9.7 million in salaries and employee benefits, largely driven by a $15.7 million decrease in deferred compensation expense, which is offset by the decrease in company-owned life insurance income noted above. Additionally, there was a decrease of $2.0 million in bonus and commission expense. These decreases were partially offset by a seasonal increase of $8.1 million in payroll taxes, insurance, and 401(k) expense recognized in the first quarter.
    • A decrease of $3.9 million in legal and consulting expense and $3.7 million in marketing and business development due to the timing of multiple projects.
    • A decrease of $2.1 million in supplies and services expense largely driven by a decline in postage expense related to reduced credit card campaign mailings in the first quarter of 2020.
    • These decreases were partially offset by an increase of $4.2 million in derivative expense, recorded in other expense.
  • The year-over-year decrease in noninterest expense was driven by:
    • A $5.0 million decrease in salaries and employee benefits, primarily due to a decrease of $15.5 million in employee benefits expense, offset by increases of $6.0 million in salary and wage expense and $4.5 million in bonus and commission expense. The decrease in employee benefits expense was primarily driven by a decrease of $18.0 million in deferred compensation expense, which is offset by the decrease in company-owned life insurance income noted above.
    • These decreases were partially offset by increases of $1.6 million in equipment expense and $1.3 million in processing fees due to investments in digital channel and integrated platform solutions to support business growth and the ongoing modernization of the company’s core systems.

Income taxes

  • The company recognized an income tax benefit of $0.8 million, or 19.2 percent, on a pre-tax loss of $4.3 million for the three months ended March 31, 2020, compared to income tax expense of $10.5 million, or 15.4 percent, on pre-tax income of $68.3 million for the same period in 2019. The amount of tax benefit recorded for the three months ended March 31, 2020 reflects management’s estimate of the annual effective tax rate applied to the year-to-date loss adjusted for the tax impact of items discrete to the quarter.

Balance sheet

  • Average total assets for the first quarter of 2020 were $26.0 billion compared to $25.1 billion for the linked quarter and $22.9 billion for the same period in 2019.

Summary of average loans and leases - QTD Average

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1

 

 

Q4

 

 

Q1

 

 

CQ vs.

 

 

CQ vs.

 

 

 

2020

 

 

2019

 

 

2019

 

 

LQ

 

 

PY

 

Commercial and industrial

 

$

5,786,545

 

 

$

5,451,880

 

 

$

5,117,882

 

 

$

334,665

 

 

$

668,663

 

Specialty lending

 

 

510,316

 

 

 

576,091

 

 

 

677,113

 

 

 

(65,775

)

 

 

(166,797

)

Commercial real estate

 

 

5,181,036

 

 

 

5,121,794

 

 

 

4,561,019

 

 

 

59,242

 

 

 

620,017

 

Consumer real estate

 

 

1,414,025

 

 

 

1,353,544

 

 

 

1,225,250

 

 

 

60,481

 

 

 

188,775

 

Consumer

 

 

141,972

 

 

 

135,526

 

 

 

145,100

 

 

 

6,446

 

 

 

(3,128

)

Credit cards

 

 

418,485

 

 

 

438,473

 

 

 

413,442

 

 

 

(19,988

)

 

 

5,043

 

Leases and other

 

 

164,187

 

 

 

154,576

 

 

 

163,348

 

 

 

9,611

 

 

 

839

 

Total loans

 

$

13,616,566

 

 

$

13,231,884

 

 

$

12,303,154

 

 

$

384,682

 

 

$

1,313,412

 

  • Average loans for the first quarter of 2020 increased 2.9 percent on a linked-quarter basis and 10.7 percent compared to the first quarter of 2019.

Summary of average securities - QTD Average

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1

 

 

Q4

 

 

Q1

 

 

CQ vs.

 

 

CQ vs.

 

 

 

2020

 

 

2019

 

 

2019

 

 

LQ

 

 

PY

 

Securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

$

49,638

 

 

$

220,830

 

 

$

256,672

 

 

$

(171,192

)

 

$

(207,034

)

U.S. Agencies

 

 

94,342

 

 

 

93,258

 

 

 

53,458

 

 

 

1,084

 

 

 

40,884

 

Mortgage-backed

 

 

4,133,118

 

 

 

3,967,051

 

 

 

3,841,449

 

 

 

166,067

 

 

 

291,669

 

State and political subdivisions

 

 

3,058,594

 

 

 

2,968,305

 

 

 

2,534,438

 

 

 

90,289

 

 

 

524,156

 

Corporates

 

 

188,257

 

 

 

184,503

 

 

 

6,424

 

 

 

3,754

 

 

 

181,833

 

Total securities available for sale

 

$

7,523,949

 

 

$

7,433,947

 

 

$

6,692,441

 

 

$

90,002

 

 

$

831,508

 

Securities held to maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State and political subdivisions

 

$

1,108,716

 

 

$

1,117,268

 

 

$

1,157,126

 

 

$

(8,552

)

 

$

(48,410

)

Trading securities

 

 

48,102

 

 

 

56,653

 

 

 

46,408

 

 

 

(8,551

)

 

 

1,694

 

Other securities

 

 

124,795

 

 

 

96,994

 

 

 

74,718

 

 

 

27,801

 

 

 

50,077

 

Total securities

 

$

8,805,562

 

 

$

8,704,862

 

 

$

7,970,693

 

 

$

100,700

 

 

$

834,869

 

  • Average securities available for sale increased 1.2 percent on a linked-quarter basis and increased 12.4 percent compared to the first quarter of 2019.

Summary of average deposits - QTD Average

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1

 

 

Q4

 

 

Q1

 

 

CQ vs.

 

 

CQ vs.

 

 

 

2020

 

 

2019

 

 

2019

 

 

LQ

 

 

PY

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

$

6,495,611

 

 

$

6,398,309

 

 

$

5,989,215

 

 

$

97,302

 

 

$

506,396

 

Interest-bearing demand and savings

 

 

13,232,370

 

 

 

12,959,948

 

 

 

11,698,351

 

 

 

272,422

 

 

 

1,534,019

 

Time deposits

 

 

1,097,780

 

 

 

1,028,293

 

 

 

1,034,763

 

 

 

69,487

 

 

 

63,017

 

Total deposits

 

$

20,825,761

 

 

$

20,386,550

 

 

$

18,722,329

 

 

$

439,211

 

 

$

2,103,432

 

Noninterest bearing deposits as % of total

 

 

31.19

%

 

 

31.38

%

 

 

31.99

%

 

 

 

 

 

 

 

 

  • Average deposits increased 2.2 percent on a linked-quarter basis and 11.2 percent compared to the first quarter of 2019.

Capital

Capital information

 

UMB Financial Corporation

 

(unaudited, dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,
2020

 

 

December 31,
2019

 

 

March 31,
2019

 

Total equity

 

$

2,663,441

 

 

$

2,606,440

 

 

$

2,350,843

 

Book value per common share

 

 

55.33

 

 

 

53.09

 

 

 

47.92

 

Tangible book value per common share

 

 

51.04

 

 

 

48.84

 

 

 

43.95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulatory capital:

 

 

 

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital

 

$

2,279,039

 

 

$

2,330,533

 

 

$

2,188,521

 

Tier 1 capital

 

 

2,279,039

 

 

 

2,330,533

 

 

 

2,188,521

 

Total capital

 

 

2,514,445

 

 

 

2,505,397

 

 

 

2,364,465

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulatory capital ratios:

 

 

 

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital ratio

 

 

11.90

%

 

 

12.33

%

 

 

12.70

%

Tier 1 risk-based capital ratio

 

 

11.90

 

 

 

12.33

 

 

 

12.70

 

Total risk-based capital ratio

 

 

13.12

 

 

 

13.26

 

 

 

13.72

 

Tier 1 leverage ratio

 

 

8.81

 

 

 

9.37

 

 

 

9.65

 

  • At March 31, 2020, the regulatory capital ratios presented in the foregoing table exceeded all “well-capitalized” regulatory thresholds.
  • The company has elected to adopt the option to use a five-year transition of the impact of CECL on regulatory capital, as allowed by the Interim Final Rule of the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation, for purposes of calculating its March 31, 2020 regulatory capital.
  • During and subsequent to the first quarter of 2020, approximately $55 million, or 1.0 million shares, were repurchased through a combination of open market activity and a $30 million accelerated share repurchase (ASR) program entered into in early March. The ASR will be completed during the second quarter. The company has no plans for additional repurchases at this time.

Asset Quality

Credit quality

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1

 

 

Q4

 

 

Q3

 

 

Q2

 

 

Q1

 

 

 

2020

 

 

2019

 

 

2019

 

 

2019

 

 

2019

 

Net charge-offs - Total loans

 

 $

7,672

 

 

 $

7,618

 

 

 $

2,186

 

 

 $

12,569

 

 

 $

12,324

 

Net loan charge-offs as a % of total average loans

 

 

0.23

%

 

 

0.23

%

 

 

0.07

%

 

 

0.40

%

 

 

0.41

%

Loans over 90 days past due

 

$

2,211

 

 

$

2,069

 

 

$

2,466

 

 

$

1,825

 

 

$

1,874

 

Loans over 90 days past due as a % of total loans

 

 

0.02

%

 

 

0.02

%

 

 

0.02

%

 

 

0.01

%

 

 

0.01

%

Nonaccrual and restructured loans

 

$

97,029

 

 

$

56,347

 

 

$

71,838

 

 

$

53,395

 

 

$

63,270

 

Nonaccrual and restructured loans as a % of total loans

 

 

0.70

%

 

 

0.42

%

 

 

0.55

%

 

 

0.41

%

 

 

0.50

%

Provision for credit losses

 

$

88,000

 

 

$

2,000

 

 

$

7,500

 

 

$

11,000

 

 

$

12,350

 

  • On January 1, 2020, the company adopted CECL, a new accounting standard that establishes an allowance for credit losses (ACL) on all financial assets. The ACL is based on an estimation of credit losses over the full remaining expected life with consideration to current and expected changes in key macroeconomic conditions.
  • At adoption on January 1, 2020, the company’s ACL increased by $9.0 million, or 8.9 percent. This increase in the ACL resulted in a $7.0 million decrease to retained earnings, net of deferred tax balances.
  • The subsequent increase in ACL and provision through March 31, 2020 largely reflects the impact of the current and forecasted deterioration of key macroeconomic variables related to the COVID-19 pandemic, and to a lesser extent, to cover net charge-offs, loan growth, and the impairment of one commercial loan transferred to nonaccrual status.
  • Provision for credit losses for the first quarter totaled $88.0 million, an increase of $86.0 million from the linked quarter, and $75.7 million from the first quarter of 2019. The provision expense for 2020 includes increased provision expense related to the implementation of CECL, coupled with the impact on various economic variables due to the COVID-19 pandemic.
  • Increased expense for credit loss provision under CECL resulted in a buildup of reserves which now stand at a strong 1.3 percent of assets at amortized cost.
  • Net charge-offs totaled $7.7 million, or 0.23 percent, of average loans, compared to $7.6 million, or 0.23 percent, of average loans in the linked quarter.

Dividend Declaration and Common Share Repurchase Authorization

At the company’s quarterly board meeting, the Board of Directors declared a $0.31 per share quarterly cash dividend, payable on July 1, 2020, to shareholders of record at the close of business on June 10, 2020.

As in prior years, the Board has approved the repurchase of up to 2,000,000 shares of the company’s common stock. Share repurchases may occur from time to time at any point until the regular meeting of the Board that immediately follows the 2021 annual meeting of the company’s shareholders. Shares acquired under the repurchase program may be available for reissuance or resale, including in connection with the company's compensation plans and dividend reinvestment plan. Under the repurchase program, the company may acquire the shares from time to time in open market or privately negotiated transactions, at the discretion of management.

Conference Call

The company plans to host a conference call to discuss its first quarter 2020 earnings results on Wednesday, April 29, 2020, 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 1Q 2020 Conference Call

A replay of the conference call may be heard through May 13, 2020 by calling (toll-free) 877-344-7529 or (international) 412-317-0088. The replay access code required for playback is 10141589. The call replay may also be accessed at investorrelations.umb.com.

Non-GAAP Financial Information

In this release, we provide information about net operating (loss) income, operating (losses) 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), 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, 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 cleaning and janitorial supplies to disinfect the company’s premises.

Net operating income for the relevant period is defined as GAAP net income, adjusted to reflect the impact of excluding expenses related to acquisitions, severance expense, COVID-19 related expense, and the cumulative tax impact of these adjustments.

Operating EPS (diluted) is calculated as earnings per share as reported, adjusted to reflect, on a per share basis, the impact of excluding the non-GAAP adjustments described above for the relevant period. Operating ROE is calculated as net operating income from continuing operations, divided by the company’s average total shareholders’ equity for the relevant period. Operating ROA is calculated as net operating income from continuing operations, divided by the company’s average assets for the relevant period. Operating noninterest expense for the relevant period is defined as GAAP noninterest expense, adjusted to reflect the pre-tax impact of non-GAAP adjustments described above. Operating efficiency ratio is calculated as the company’s operating noninterest expense, net of amortization of other intangibles, divided by the company’s total non-GAAP revenue (calculated as net interest income plus noninterest income, less gains on sales of securities available for sale, net).

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

Tangible shareholders’ equity for the relevant period is defined as GAAP shareholders’ equity, net of intangible assets. Tangible book value per share is defined as tangible shareholders’ equity divided by the Company’s total shares outstanding.

Forward-Looking Statements:

This press release contains, and our other communications may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “outlook,” “forecast,” “target,” “trend,” “plan,” “goal,” or other words of comparable meaning or future-tense or conditional verbs such as “may,” “will,” “should,” “would,” or “could.” Forward-looking statements convey our expectations, intentions, or forecasts about future events, circumstances, results, or aspirations. All forward-looking statements are subject to assumptions, risks, and uncertainties, which may change over time and many of which are beyond our control. You should not rely on any forward-looking statement as a prediction or guarantee about the future. Our actual future objectives, strategies, plans, prospects, performance, condition, or results may differ materially from those set forth in any forward-looking statement. Some of the factors that may cause actual results or other future events, circumstances, or aspirations to differ from those in forward-looking statements are described in our Annual Report on Form 10-K for the year ended December 31, 2019, our subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, or other applicable documents that are filed or furnished with the U.S. Securities and Exchange Commission (SEC). In addition to such factors that have been disclosed previously, the COVID-19 pandemic (the Pandemic) may also cause actual results or other future events, circumstances, or aspirations to differ from our forward-looking statements. The Pandemic has created a global public-health crisis that has resulted in widespread volatility and deteriorations in household, business, economic, and market conditions. It is currently adversely affecting the company and its customers, counterparties, employees, and third-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 third-party service providers, which may vary widely, and which is generally expected to increase our credit, operational, and other risks and (iv) the effect of the Pandemic on economies and markets, which in turn could adversely affect, among other things, the origination of new loans and the performance of our existing loans. The Pandemic is also expected to have a significant impact on our CECL calculation and related provision under a new accounting standard that we were required to phase in beginning January 2020. The CECL calculation includes periodic estimates of the net amount expected to be collected over the contractual term of certain financial assets, and requires us to take into account, among other things, economic conditions forecasted over the life of the financial asset, including the current and anticipated effects of the Pandemic. Any forward-looking statement should be evaluated in light of these considerations. Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except to the extent required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K, or other applicable document that is filed or furnished with the SEC.

About UMB:

UMB Financial Corporation (Nasdaq: UMBF) is a financial services company headquartered in Kansas City, Missouri. UMB offers commercial banking, which includes comprehensive deposit, lending and investment services, personal banking, which includes wealth management and financial planning services, and institutional banking, which includes asset servicing, corporate trust solutions, investment banking, and healthcare services. UMB operates branches throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas, and serves business and institutional clients nationwide. For more information, visit UMB.com, UMB Blog, UMB Facebook and UMB LinkedIn, or follow us on Twitter at @UMBBank. For information about UMB’s operations, approach and relief measures during the COVID-19 pandemic, please visit umb.com/COVID-19.

Consolidated Balance Sheets

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

March 31,

 

 

 

2020

 

 

2019

 

ASSETS

 

 

 

 

 

 

 

 

Loans

 

$

13,949,710

 

 

$

12,549,732

 

Allowance for credit losses on loans

 

 

(187,911

)

 

 

(103,661

)

Net loans

 

 

13,761,799

 

 

 

12,446,071

 

Loans held for sale

 

 

9,585

 

 

 

1,267

 

Securities:

 

 

 

 

 

 

 

 

Available for sale

 

 

7,639,451

 

 

 

6,891,869

 

Held to maturity, net of allowance for credit losses

 

 

1,110,925

 

 

 

1,147,947

 

Trading securities

 

 

61,177

 

 

 

56,025

 

Other securities

 

 

135,194

 

 

 

75,357

 

Total securities

 

 

8,946,747

 

 

 

8,171,198

 

Federal funds sold and resell agreements

 

 

784,750

 

 

 

264,772

 

Interest-bearing due from banks

 

 

1,109,254

 

 

 

1,113,470

 

Cash and due from banks

 

 

340,553

 

 

 

399,387

 

Premises and equipment, net

 

 

297,668

 

 

 

279,000

 

Accrued income

 

 

111,879

 

 

 

117,007

 

Goodwill

 

 

180,867

 

 

 

180,867

 

Other intangibles, net

 

 

25,839

 

 

 

13,676

 

Other assets

 

 

675,945

 

 

 

570,045

 

Total assets

 

$

26,244,886

 

 

$

23,556,760

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

$

7,269,520

 

 

$

6,448,422

 

Interest-bearing demand and savings

 

 

12,920,980

 

 

 

12,018,580

 

Time deposits under $250,000

 

 

595,128

 

 

 

591,405

 

Time deposits of $250,000 or more

 

 

389,892

 

 

 

306,808

 

Total deposits

 

 

21,175,520

 

 

 

19,365,215

 

Federal funds purchased and repurchase agreements

 

 

1,890,917

 

 

 

1,494,048

 

Short-term debt

 

 

15,000

 

 

 

 

Long-term debt

 

 

121,582

 

 

 

81,608

 

Accrued expenses and taxes

 

 

216,272

 

 

 

142,483

 

Other liabilities

 

 

162,154

 

 

 

122,563

 

Total liabilities

 

 

23,581,445

 

 

 

21,205,917

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Common stock

 

 

55,057

 

 

 

55,057

 

Capital surplus

 

 

1,073,089

 

 

 

1,060,630

 

Retained earnings

 

 

1,646,751

 

 

 

1,531,396

 

Accumulated other comprehensive income (loss), net

 

 

219,390

 

 

 

(17,639

)

Treasury stock

 

 

(330,846

)

 

 

(278,601

)

Total shareholders' equity

 

 

2,663,441

 

 

 

2,350,843

 

Total liabilities and shareholders' equity

 

$

26,244,886

 

 

$

23,556,760

 

Consolidated Statements of Income

 

UMB Financial Corporation

 

(unaudited, dollars in thousands except share and per share data)

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2020

 

 

2019

 

INTEREST INCOME

 

 

 

 

 

 

 

 

Loans

 

$

151,026

 

 

$

157,261

 

Securities:

 

 

 

 

 

 

 

 

Taxable interest

 

 

27,212

 

 

 

25,391

 

Tax-exempt interest

 

 

24,404

 

 

 

20,697

 

Total securities income

 

 

51,616

 

 

 

46,088

 

Federal funds and resell agreements

 

 

5,452

 

 

 

3,625

 

Interest-bearing due from banks

 

 

2,663

 

 

 

3,899

 

Trading securities

 

 

654

 

 

 

434

 

Total interest income

 

 

211,411

 

 

 

211,307

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

Deposits

 

 

29,732

 

 

 

37,834

 

Federal funds and repurchase agreements

 

 

6,381

 

 

 

8,264

 

Other

 

 

1,357

 

 

 

1,341

 

Total interest expense

 

 

37,470

 

 

 

47,439

 

Net interest income

 

 

173,941

 

 

 

163,868

 

Provision for credit losses

 

 

88,000

 

 

 

12,350

 

Net interest income after provision for credit losses

 

 

85,941

 

 

 

151,518

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

Trust and securities processing

 

 

47,000

 

 

 

41,957

 

Trading and investment banking

 

 

1,723

 

 

 

5,581

 

Service charges on deposit accounts

 

 

25,081

 

 

 

21,281

 

Insurance fees and commissions

 

 

259

 

 

 

338

 

Brokerage fees

 

 

9,860

 

 

 

7,243

 

Bankcard fees

 

 

16,545

 

 

 

17,067

 

Gains on sales of securities available for sale, net

 

 

1,227

 

 

 

809

 

Other

 

 

(3,271

)

 

 

13,106

 

Total noninterest income

 

 

98,424

 

 

 

107,382

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

111,060

 

 

 

116,032

 

Occupancy, net

 

 

12,180

 

 

 

11,743

 

Equipment

 

 

21,241

 

 

 

19,684

 

Supplies and services

 

 

4,185

 

 

 

3,873

 

Marketing and business development

 

 

4,640

 

 

 

4,913

 

Processing fees

 

 

13,390

 

 

 

12,132

 

Legal and consulting

 

 

6,110

 

 

 

5,633

 

Bankcard

 

 

4,860

 

 

 

4,345

 

Amortization of other intangible assets

 

 

1,734

 

 

 

1,327

 

Regulatory fees

 

 

2,366

 

 

 

2,890

 

Other

 

 

6,853

 

 

 

8,054

 

Total noninterest expense

 

 

188,619

 

 

 

190,626

 

(Loss) income before income taxes

 

 

(4,254

)

 

 

68,274

 

Income tax (benefit) expense

 

 

(815

)

 

 

10,530

 

NET (LOSS) INCOME

 

$

(3,439

)

 

$

57,744

 

 

 

 

 

 

 

 

 

 

PER SHARE DATA

 

 

 

 

 

 

 

 

Net (loss) income – basic

 

$

(0.07

)

 

$

1.19

 

Net (loss) income – diluted

 

 

(0.07

)

 

 

1.18

 

Dividends

 

 

0.31

 

 

 

0.30

 

Weighted average shares outstanding – basic

 

 

48,689,876

 

 

 

48,712,153

 

Weighted average shares outstanding – diluted

48,689,876

48,998,571

Consolidated Statements of Comprehensive Income

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2020

 

 

2019

 

Net (loss) income

 

$

(3,439

)

 

$

57,744

 

Other comprehensive income, before tax:

 

 

 

 

 

 

 

 

Unrealized gains and losses on debt securities:

 

 

 

 

 

 

 

 

Change in unrealized holding gains and losses, net

 

 

164,116

 

 

 

106,434

 

Less: Reclassification adjustment for gains included in net income

 

 

(1,227

)

 

 

(809

)

Change in unrealized gains and losses on debt securities

 

 

162,889

 

 

 

105,625

 

Unrealized gains and losses on derivative hedges:

 

 

 

 

 

 

 

 

Change in unrealized gains and losses on derivative hedges, net

 

 

14,525

 

 

 

(2,088

)

Less: Reclassification adjustment for losses (gains) included in net income

 

 

768

 

 

 

(5

)

Change in unrealized gains and losses on derivative hedges

 

 

15,293

 

 

 

(2,093

)

Other comprehensive income, before tax

 

 

178,182

 

 

 

103,532

 

Income tax expense

 

 

(41,972

)

 

 

(25,389

)

Other comprehensive income

 

 

136,210

 

 

 

78,143

 

Comprehensive income

 

$

132,771

 

 

$

135,887

 

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 (Loss) Income

 

 

Treasury

Stock

 

 

Total

 

Balance - January 1, 2019

 

$

55,057

 

 

$

1,054,601

 

 

$

1,488,421

 

 

$

(95,782

)

 

$

(273,827

)

 

$

2,228,470

 

Total comprehensive income

 

 

 

 

 

 

 

 

57,744

 

 

 

78,143

 

 

 

 

 

 

135,887

 

Dividends ($0.30 per share)

 

 

 

 

 

 

 

 

(14,769

)

 

 

 

 

 

 

 

 

(14,769

)

Purchase of treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,086

)

 

 

(4,086

)

Forfeitures of equity awards, net of issuances

 

 

 

 

 

2,383

 

 

 

 

 

 

 

 

 

(1,779

)

 

 

604

 

Recognition of equity-based compensation

 

 

 

 

 

3,289

 

 

 

 

 

 

 

 

 

 

 

 

3,289

 

Sale of treasury stock

 

 

 

 

 

100

 

 

 

 

 

 

 

 

 

161

 

 

 

261

 

Exercise of stock options

 

 

 

 

 

257

 

 

 

 

 

 

 

 

 

930

 

 

 

1,187

 

Balance - March 31, 2019

 

$

55,057

 

 

$

1,060,630

 

 

$

1,531,396

 

 

$

(17,639

)

 

$

(278,601

)

 

$

2,350,843

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - January 1, 2020

 

$

55,057

 

 

$

1,073,764

 

 

$

1,672,438

 

 

$

83,180

 

 

$

(277,999

)

 

$

2,606,440

 

Total comprehensive (loss) income

 

 

 

 

 

 

 

 

(3,439

)

 

 

136,210

 

 

 

 

 

 

132,771

 

Dividends ($0.31 per share)

 

 

 

 

 

 

 

 

(15,209

)

 

 

 

 

 

 

 

 

(15,209

)

Purchase of treasury stock

 

 

 

 

 

(4,500

)

 

 

 

 

 

 

 

 

(54,886

)

 

 

(59,386

)

Issuances of equity awards, net of forfeitures

 

 

 

 

 

521

 

 

 

 

 

 

 

 

 

72

 

 

 

593

 

Recognition of equity-based compensation

 

 

 

 

 

2,817

 

 

 

 

 

 

 

 

 

 

 

 

2,817

 

Sale of treasury stock

 

 

 

 

 

95

 

 

 

 

 

 

 

 

 

89

 

 

 

184

 

Exercise of stock options

 

 

 

 

 

392

 

 

 

 

 

 

 

 

 

1,878

 

 

 

2,270

 

Cumulative effect adjustment

 

 

 

 

 

 

 

 

(7,039

)

 

 

 

 

 

 

 

 

(7,039

)

Balance - March 31, 2020

 

$

55,057

 

 

$

1,073,089

 

 

$

1,646,751

 

 

$

219,390

 

 

$

(330,846

)

 

$

2,663,441

 

Average Balances / Yields and Rates

 

UMB Financial Corporation

 

(tax - equivalent basis)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

 

 

Average

 

 

Average

 

 

Average

 

 

Average

 

 

 

Balance

 

 

Yield/Rate

 

 

Balance

 

 

Yield/Rate

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, net of unearned interest

 

$

13,616,566

 

 

 

4.46

%

 

$

12,303,154

 

 

 

5.18

%

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

4,694,418

 

 

 

2.33

 

 

 

4,301,121

 

 

 

2.39

 

Tax-exempt

 

 

4,063,042

 

 

 

3.05

 

 

 

3,623,164

 

 

 

2.93

 

Total securities

 

 

8,757,460

 

 

 

2.67

 

 

 

7,924,285

 

 

 

2.64

 

Federal funds and resell agreements

 

 

1,224,196

 

 

 

1.79

 

 

 

521,422

 

 

 

2.82

 

Interest bearing due from banks

 

 

826,963

 

 

 

1.30

 

 

 

662,050

 

 

 

2.39

 

Trading securities

 

 

48,102

 

 

 

5.84

 

 

 

46,408

 

 

 

4.40

 

Total earning assets

 

 

24,473,287

 

 

 

3.58

 

 

 

21,457,319

 

 

 

4.10

 

Allowance for credit losses

 

 

(112,751

)

 

 

 

 

 

 

(105,444

)

 

 

 

 

Other assets

 

 

1,679,390

 

 

 

 

 

 

 

1,502,277

 

 

 

 

 

Total assets

 

$

26,039,926

 

 

 

 

 

 

$

22,854,152

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

14,330,150

 

 

 

0.83

%

 

$

12,733,114

 

 

 

1.21

%

Federal funds and repurchase agreements

 

 

2,030,385

 

 

 

1.26

 

 

 

1,554,570

 

 

 

2.16

 

Borrowed funds

 

 

111,591

 

 

 

4.89

 

 

 

82,416

 

 

 

6.60

 

Total interest-bearing liabilities

 

 

16,472,126

 

 

 

0.91

 

 

 

14,370,100

 

 

 

1.34

 

Noninterest-bearing demand deposits

 

 

6,495,611

 

 

 

 

 

 

 

5,989,215

 

 

 

 

 

Other liabilities

 

 

351,237

 

 

 

 

 

 

 

259,244

 

 

 

 

 

Shareholders' equity

 

 

2,720,952

 

 

 

 

 

 

 

2,235,593

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

26,039,926

 

 

 

 

 

 

$

22,854,152

 

 

 

 

 

Net interest spread

 

 

 

 

 

 

2.67

%

 

 

 

 

 

 

2.76

%

Net interest margin

 

 

 

 

 

 

2.97

 

 

 

 

 

 

 

3.20

 

Business Segment Information

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2020

 

 

 

Commercial Banking

 

 

Institutional Banking

 

 

Personal Banking

 

 

Total

 

Net interest income

 

$

106,948

 

 

$

33,036

 

 

$

33,957

 

 

$

173,941

 

Provision for credit losses

 

 

82,220

 

 

 

275

 

 

 

5,505

 

 

 

88,000

 

Noninterest income

 

 

11,240

 

 

 

61,952

 

 

 

25,232

 

 

 

98,424

 

Noninterest expense

 

 

59,043

 

 

 

68,453

 

 

 

61,123

 

 

 

188,619

 

(Loss) income before taxes

 

 

(23,075

)

 

 

26,260

 

 

 

(7,439

)

 

 

(4,254

)

Income tax (benefit) expense

 

 

(4,421

)

 

 

5,032

 

 

 

(1,426

)

 

 

(815

)

Net (loss) income

 

$

(18,654

)

 

$

21,228

 

 

$

(6,013

)

 

$

(3,439

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2019

 

 

 

Commercial Banking

 

 

Institutional Banking

 

 

Personal Banking

 

 

Total

 

Net interest income

 

$

99,814

 

 

$

31,752

 

 

$

32,302

 

 

$

163,868

 

Provision for credit losses

 

 

10,329

 

 

 

286

 

 

 

1,735

 

 

 

12,350

 

Noninterest income

 

 

23,181

 

 

 

55,850

 

 

 

28,351

 

 

 

107,382

 

Noninterest expense

 

 

66,820

 

 

 

65,398

 

 

 

58,408

 

 

 

190,626

 

Income before taxes

 

 

45,846

 

 

 

21,918

 

 

 

510

 

 

 

68,274

 

Income tax expense

 

 

7,071

 

 

 

3,380

 

 

 

79

 

 

 

10,530

 

Net income

 

$

38,775

 

 

$

18,538

 

 

$

431

 

 

$

57,744

 

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. Previously, the company had the following four business segments: Commercial Banking, Institutional Banking, Personal Banking, and Healthcare Services. 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 March 31, 2020.

Non-GAAP Financial Measures

Net operating income Non-GAAP reconciliations:

 

UMB Financial Corporation

 

(unaudited, dollars in thousands except per share data)

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Net (loss) income (GAAP)

 

$

(3,439

)

 

$

57,744

 

Adjustments:

 

 

 

 

 

 

 

 

Acquisition expense

 

 

123

 

 

 

27

 

Severance expense

 

 

1,652

 

 

 

570

 

COVID-19 related expense

 

 

228

 

 

 

 

Tax-impact of adjustments (i)

 

 

(445

)

 

 

(133

)

Total Non-GAAP adjustments (net of tax)

 

 

1,558

 

 

 

464

 

Net operating (loss) income (Non-GAAP)

 

$

(1,881

)

 

$

58,208

 

 

 

 

 

 

 

 

 

 

(Losses) earnings per share - diluted (GAAP)

 

$

(0.07

)

 

$

1.18

 

Acquisition expense

 

 

 

 

 

 

Severance expense

 

 

0.04

 

 

 

0.01

 

COVID-19 related expense

 

 

 

 

 

 

Tax-impact of adjustments (i)

 

 

(0.01

)

 

 

 

Operating (losses) earnings per share - diluted (Non-GAAP)

 

$

(0.04

)

 

$

1.19

 

 

 

 

 

 

 

 

 

 

GAAP

 

 

 

 

 

 

 

 

Return on average assets

 

 

(0.05

)%

 

 

1.02

%

Return on average equity

 

 

(0.51

)

 

 

10.48

 

 

 

 

 

 

 

 

 

 

Non-GAAP

 

 

 

 

 

 

 

 

Operating return on average assets

 

 

(0.03

)%

 

 

1.03

%

Operating return on average equity

 

 

(0.28

)

 

 

10.56

 

(i) Calculated using the company’s marginal tax rate of 22.2 percent.

Operating noninterest expense and operating efficiency ratio Non-GAAP reconciliations:

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Noninterest expense

 

$

188,619

 

 

$

190,626

 

Adjustments to arrive at operating noninterest expense (pre-tax):

 

 

 

 

 

 

 

 

Acquisition expense

 

 

123

 

 

 

27

 

Severance expense

 

 

1,652

 

 

 

570

 

COVID-19 related expense

 

 

228

 

 

 

 

Total Non-GAAP adjustments (pre-tax)

 

 

2,003

 

 

 

597

 

Operating noninterest expense (Non-GAAP)

 

$

186,616

 

 

$

190,029

 

 

 

 

 

 

 

 

 

 

Noninterest expense

 

$

188,619

 

 

$

190,626

 

Less: Amortization of other intangibles

 

 

1,734

 

 

 

1,327

 

Noninterest expense, net of amortization of other intangibles (Non-GAAP) (numerator A)

 

$

186,885

 

 

$

189,299

 

 

 

 

 

 

 

 

 

 

Operating noninterest expense

 

$

186,616

 

 

$

190,029

 

Less: Amortization of other intangibles

 

 

1,734

 

 

 

1,327

 

Operating expense, net of amortization of other intangibles (Non-GAAP) (numerator B)

 

$

184,882

 

 

$

188,702

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

173,941

 

 

$

163,868

 

Noninterest income

 

 

98,424

 

 

 

107,382

 

Less: Gains on sales of securities available for sale, net

 

 

1,227

 

 

 

809

 

Total Non-GAAP Revenue (denominator A)

 

$

271,138

 

 

$

270,441

 

 

 

 

 

 

 

 

 

 

Efficiency ratio (numerator A/denominator A)

 

 

68.93

%

 

 

70.00

%

Operating efficiency ratio (Non-GAAP) (numerator B/denominator A)

 

 

68.19

 

 

 

69.78

 

Pre-tax, pre-provision income non-GAAP reconciliation:

UMB Financial Corporation

 

(unaudited, dollars in thousands except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,
2020

 

 

December 31,
2019

 

 

March 31,
2019

 

Net (loss) income before taxes (GAAP)

 

$

(4,254

)

 

$

77,268

 

 

$

68,274

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

 

88,000

 

 

 

2,000

 

 

 

12,350

 

Pre-tax, pre-provision income (Non-GAAP)

 

$

83,746

 

 

$

79,268

 

 

$

80,624

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax (losses) earnings per share - diluted (GAAP)

 

$

(0.09

)

 

$

1.57

 

 

$

1.39

 

Provision for credit losses

 

 

1.81

 

 

 

0.04

 

 

 

0.26

 

Pre-tax, pre-provision earnings per share - diluted (Non-GAAP)

 

$

1.72

 

 

$

1.61

 

 

$

1.65

 

Tangible book value non-GAAP reconciliation:

UMB Financial Corporation

 

(unaudited, dollars in thousands except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

 

 

March 31,
2020

 

 

December 31,
2019

 

 

March 31,
2019

 

Total shareholders' equity (GAAP)

 

$

2,663,441

 

 

$

2,606,440

 

 

$

2,350,843

 

Less: Intangible assets

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

 

180,867

 

 

 

180,867

 

 

 

180,867

 

Other intangibles, net

 

 

25,839

 

 

 

27,597

 

 

 

13,676

 

Total intangibles, net

 

 

206,706

 

 

 

208,464

 

 

 

194,543

 

Total tangible shareholders' equity (Non-GAAP)

 

$

2,456,735

 

 

$

2,397,976

 

 

$

2,156,300

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shares outstanding

 

 

48,134,601

 

 

 

49,097,606

 

 

 

49,058,246

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of total shareholders' equity (book value) per share

 

$

55.33

 

 

$

53.09

 

 

$

47.92

 

Ratio of total tangible shareholders' equity (tangible book value) per share (Non-GAAP)

 

 

51.04

 

 

 

48.84

 

 

 

43.95

 

 

Media Contact: Stephanie Hague: 816.860.5088
Investor Relations Contact: Kay Gregory: 816.860.7106