• UMB Financial Corporation
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  • UMB Financial Corporation Reports Third Quarter Income from Continuing Operations of $57.8 Million or $1.16 per Diluted Share
    Company Release - 10/23/2018 17:00

    KANSAS CITY, Mo.--(BUSINESS WIRE)-- UMB Financial Corporation (Nasdaq: UMBF), a financial holding company, announced income from continuing operations for the third quarter 2018 of $57.8 million, or $1.16 per diluted share, compared to $55.4 million, or $1.11 per diluted share, in the second quarter 2018 (linked quarter) and $48.9 million, or $0.98 per diluted share, in the third quarter 2017. The reported GAAP income from continuing operations represents increases of 4.4 percent on a linked-quarter basis and 18.4 percent compared to the third quarter 2017.

    Net operating income from continuing operations, a non-GAAP financial measure reconciled to income from continuing operations, the nearest comparable GAAP measure, later in this release, was $58.0 million, or $1.16 per diluted share, for the third quarter 2018, compared to $56.1 million, or $1.12 per diluted share, for the linked quarter and $48.9 million, or $0.98 per diluted share, for the third quarter 2017. These results represent increases of 3.5 percent on a linked-quarter basis and 18.6 percent compared to the third quarter 2017.

       
    Summary of quarterly financial results     UMB Financial Corporation
    (unaudited, dollars in thousands, except per share data)
    Q3     Q2     Q3
    201820182017
    Income from continuing operations $ 57,849 $ 55,424 $ 48,872
    Loss from discontinued operations           (730 )
    Net income 57,849 55,424 48,142
     
    Earnings per share from continuing operations (diluted) 1.16 1.11 0.98
    Losses per share from discontinued operations (diluted)           (0.01 )
    Earnings per share (diluted) 1.16 1.11 0.97
     
    Net operating income from continuing operations 58,024 56,079 48,927
    Operating earnings per share from continuing operations (diluted) 1.16 1.12 0.98
     

    GAAP - continuing operations

    Return on average assets 1.11 % 1.08 % 0.95 %
    Return on average equity 10.32 10.18 9.17
    Efficiency ratio 71.27 70.21 70.07
     

    Non-GAAP - continuing operations

    Operating return on average assets 1.11 % 1.09 % 0.96 %
    Operating return on average equity 10.35 10.30 9.18
    Operating efficiency ratio 71.18 69.88 70.03
     
    Summary of year-to-date financial results         UMB Financial Corporation
    (unaudited, dollars in thousands, except per share data)         September     September
    YTDYTD
    20182017
    Income from continuing operations $ 170,806 $ 135,619
    Loss from discontinued operations   (747 )   (475 )
    Net income 170,059 135,144
     
    Earnings per share from continuing operations (diluted) 3.41 2.72
    Losses per share from discontinued operations (diluted)   (0.01 )   (0.01 )
    Earnings per share (diluted) 3.40 2.71
     
    Net operating income from continuing operations 173,165 136,155
    Operating earnings per share from continuing operations (diluted) 3.47 2.73
     

    GAAP - continuing operations

    Return on average assets 1.10 % 0.89 %
    Return on average equity 10.43 8.82
    Efficiency ratio 70.09 71.20
     

    Non-GAAP - continuing operations

    Operating return on average assets 1.12 % 0.90 %
    Operating return on average equity 10.57 8.85
    Operating efficiency ratio 69.69 71.09
     

    “Highlights for the third quarter 2018 included strong loan growth, with average balances increasing 9.6 percent on a linked-quarter annualized basis, and 7.4 percent compared to the third quarter 2017,” said Mariner Kemper, chairman and chief executive officer. “This compares to 4.0 percent growth on a linked-quarter annualized basis for the industry, per Federal Reserve data. In addition, average deposits for the quarter increased 5.4 percent compared to the third quarter of 2017, driven by continued growth in asset servicing and healthcare balances, and our recent deposit campaigns.”

    Discussion of results from continuing operations

    Summary of revenue     UMB Financial Corporation
    (unaudited, dollars in thousands)    
    Q3     Q2     Q3     CQ vs.     CQ vs.
    201820182017LQPY
    Net interest income $ 150,490 $ 150,226 $ 140,858 $ 264 $ 9,632
    Noninterest income:
    Trust and securities processing 43,425 42,845 45,060 580 (1,635 )
    Trading and investment banking 3,711 4,653 4,453 (942 ) (742 )
    Service charges on deposit accounts 20,927 20,722 21,510 205 (583 )
    Insurance fees and commissions 339 340 425 (1 ) (86 )
    Brokerage fees 6,402 6,291 5,815 111 587
    Bankcard fees 16,838 17,184 17,427 (346 ) (589 )
    Gains on sales of securities available for sale, net 211 228 2,390 (17 ) (2,179 )
    Other   9,032     8,026     7,226     1,006     1,806  
    Total noninterest income $ 100,885   $ 100,289   $ 104,306   $ 596   $ (3,421 )
    Total revenue $ 251,375   $ 250,515   $ 245,164   $ 860   $ 6,211  
    Net interest margin 3.18 % 3.24 % 3.16 %
    Total noninterest income as a % of total revenue 40.13 40.03 42.55
     

    Following the enactment of the Tax Cuts and Jobs Act, beginning in the first quarter of 2018, net interest margin is computed using net interest income adjusted to a fully taxable equivalent (FTE) basis assuming a statutory federal income tax rate of 21 percent and, where applicable, state income taxes; prior period net interest margins are computed using the then-statutory federal income tax rate of 35 percent and, where applicable, state income taxes.

    Net interest income

    • Net interest income totaled $150.5 million and increased modestly from linked quarter levels, impacted by a 2.4 percent, or $274.1 million, increase in average loans and one additional day of net interest income. These impacts were offset by increases in cost of certain interest-bearing deposits driven by the cumulative effect of recent increases in short-term rates and recent deposit campaigns.
    • Earning asset yields improved 10 basis points from the linked quarter primarily due to earning asset mix changes and improved loan yields of 13 basis points to 4.87 percent, in part driven by favorable re-pricing from recent increases in short-term interest rates. The cost of interest-bearing liabilities increased 24 basis points to 1.07 percent, driven by a 25-basis point increase in cost of interest-bearing deposits. Total cost of deposits, including noninterest-bearing deposits, was 62 basis points, an increase of 17 basis points from the linked quarter.
    • On a year-over-year basis, the increase in net interest income was driven by a 7.4 percent, or $807.4 million, increase in average loans as well as higher average loan yields, which increased 54 basis points from one year ago, primarily driven by higher short-term interest rates, volume, and mix changes.

    Noninterest income

    • Third quarter 2018 noninterest income increased $0.6 million, or 0.6 percent, on a linked quarter basis, largely due to:
      • A $1.0 million increase in derivative income recorded in other income.
      • An increase in trust and securities processing due to a $0.4 million increase in wealth management revenue.
      • These impacts were partially offset by a decrease of $0.9 million in trading and investment banking due to decreased bond trading volume.
    • Noninterest income in the third quarter of 2018 decreased $3.4 million, or 3.3 percent, compared to the same quarter in 2017 primarily driven by:
      • A $2.2 million decrease in gains on available-for-sale securities.
      • A $2.3 million decline in fund servicing revenue due to customer repricing and losses, which was partially offset by an increase of $1.0 million in corporate trust income, both recorded in trust and securities processing.
      • A $0.7 million decrease in trading and investment banking income due to decreased trading volume.
      • These impacts were partially offset by an increase of $0.7 million in 12b-1 fees recorded in brokerage fee income, and an increase of $0.7 million in derivative income recorded in other income.

    Noninterest expense

    Summary of Noninterest expense     UMB Financial Corporation
    (unaudited, dollars in thousands)    
    Q3     Q2     Q3     CQ vs.     CQ vs.
    201820182017LQPY
    Salaries and employee benefits $ 102,956 $ 104,175 $ 99,749 $ (1,219 ) $ 3,207
    Occupancy, net 11,628 10,813 11,285 815 343
    Equipment 18,533 18,842 17,880 (309 ) 653
    Supplies and services 4,528 4,146 4,076 382 452
    Marketing and business development 6,671 6,184 5,056 487 1,615
    Processing fees 12,331 11,537 11,151 794 1,180
    Legal and consulting 8,470 6,460 5,844 2,010 2,626
    Bankcard 4,407 4,165 5,130 242 (723 )
    Amortization of other intangible assets 1,385 1,485 1,715 (100 ) (330 )
    Regulatory fees 3,337 3,772 3,798 (435 ) (461 )
    Other   6,139   5,639   6,137   500     2  
    Total noninterest expense $ 180,385 $ 177,218 $ 171,821 $ 3,167   $ 8,564  
    • GAAP noninterest expense for the third quarter of 2018 was $180.4 million, an increase of $3.2 million, or 1.8 percent, from the linked quarter and $8.6 million, or 5.0 percent, from the third quarter of 2017.
    • On a non-GAAP basis, operating noninterest expense (as reconciled later in this release) was $180.2 million for the third quarter 2018, an increase of $3.8 million, or 2.1 percent, compared to the linked quarter, and $8.4 million, or 4.9 percent, compared to the third quarter 2017.
    • The linked quarter increase in noninterest expense was driven by:
      • A $1.9 million increase in consulting expense incurred in conjunction with the company’s ongoing investments in digital channel and integrated platform solutions to support business growth and the continued modernization of its core systems.
      • Increased processing fees expense of $0.8 million, primarily related to larger asset servicing transaction volumes as new customers were added.
      • These impacts were partially offset by a $1.2 million decline in salaries and employee benefits, largely driven by lower medical insurance expense as compared the second quarter of 2018.
    • The year-over-year increase in noninterest expense was driven by:
      • A $3.2 million increase in salaries and employee benefits, comprised of a $1.9 million increase in salary and wage expense and a $1.2 million increase in bonus and commission expense.
      • A $2.9 million increase in consulting expense due to investments in digital channel and integrated platform solutions to support business growth and the continued ongoing modernization of the company’s core systems.
      • A $1.3 million increase in advertising expense related to timing of multiple projects and campaigns, including recent deposit promotions.
      • Increased processing fees expense of $1.2 million partially attributed to larger asset servicing transaction volumes as new customers were added.

    Income Taxes

    • The company’s effective tax rate was 14.2 percent for the nine months ended September 30, 2018, compared to 21.4 percent for the same period in 2017. The decrease is primarily a result of the Tax Cuts and Jobs Act, which lowered the federal corporate income tax rate to 21 percent from 35 percent, effective January 1, 2018. The decrease is also attributable to a discrete tax benefit of $3.0 million related to provision-to-return adjustments.

    Balance Sheet

    • Average total assets for the third quarter 2018 were $20.7 billion compared to $20.6 billion for the linked quarter, and $20.3 billion for the same period in 2017.
    Summary of average loans and leases - QTD Average     UMB Financial Corporation
    (unaudited, dollars in thousands)    
    Q3     Q2     Q3     CQ vs.     CQ vs.
    201820182017LQPY
    Commercial $ 4,717,530 $ 4,478,829 $ 4,539,302 $ 238,701 $ 178,228
    Asset-based loans 382,672 336,710 278,479 45,962 104,193
    Factoring loans 264,414 231,035 173,876 33,379 90,538
    Commercial credit card 199,730 191,009 174,892 8,721 24,838
    Real estate - construction 814,053 823,169 782,898 (9,116 ) 31,155
    Real estate - commercial 3,701,072 3,711,417 3,284,871 (10,345 ) 416,201
    Real estate - residential 688,097 669,177 603,865 18,920 84,232
    Real estate - HELOC 566,460 596,025 668,340 (29,565 ) (101,880 )
    Consumer credit card 222,223 230,971 239,529 (8,748 ) (17,306 )
    Consumer other 152,894 153,427 140,344 (533 ) 12,550
    Leases   9,407   22,679   24,758   (13,272 )   (15,351 )
    Total loans $ 11,718,552 $ 11,444,448 $ 10,911,154 $ 274,104   $ 807,398  
     
    • Average loans for the third quarter 2018 increased 2.4 percent on a linked-quarter basis and 7.4 percent compared to third quarter 2017.
    Summary of average securities - QTD Average     UMB Financial Corporation
    (unaudited, dollars in thousands)    
    Q3     Q2     Q3     CQ vs.     CQ vs.
    201820182017LQPY
    Securities available for sale:
    U.S.Treasury $ 38,044 $ 37,982 $ 47,216 $ 62 $ (9,172 )
    U.S. Agencies 198 2,946 22,743 (2,748 ) (22,545 )
    Mortgage-backed 3,590,703 3,679,835 3,564,974 (89,132 ) 25,729
    State and political subdivisions 2,290,906 2,330,454 2,536,281 (39,548 ) (245,375 )
    Corporates 718 1,476 21,848 (758 ) (21,130 )
    Commercial Paper     7,138     (7,138 )    
    Total securities available for sale $ 5,920,569 $ 6,059,831 $ 6,193,062 $ (139,262 ) $ (272,493 )
    Securities held to maturity:
    State and political subdivisions 1,205,007 1,228,849 1,283,258 (23,842 ) (78,251 )
    Trading securities 45,476 45,538 49,396 (62 ) (3,920 )
    Other securities   65,962   66,345   64,294   (383 )   1,668  
    Total securities $ 7,237,014 $ 7,400,563 $ 7,590,010 $ (163,549 ) $ (352,996 )
     
    • Average securities available for sale decreased 2.3 percent on a linked-quarter basis and 4.4 percent compared to the third quarter of 2017 driven by the ongoing reinvestment of cash flows from such securities to partially fund growth in the loan portfolio.
    Summary of average deposits - QTD Average     UMB Financial Corporation
    (unaudited, dollars in thousands)        
    Q3Q2     Q3     CQ vs.     CQ vs.
    201820182017LQPY
    Deposits:
    Noninterest-bearing demand $ 5,547,880 $ 5,666,364 $ 5,728,145 $ (118,484 ) $ (180,265 )
    Interest-bearing demand and savings 9,954,008 9,768,015 8,789,217 185,993 1,164,791
    Time deposits   1,030,411     1,032,000     1,162,383     (1,589 )   (131,972 )
    Total deposits $ 16,532,299   $ 16,466,379   $ 15,679,745   $ 65,920   $ 852,554  
    Noninterest bearing deposits as % of total 33.56 % 34.41 % 36.53 %
     
    • Average deposits increased 5.4 percent compared to the third quarter of 2017, in part driven by recent deposit campaigns.

    Capital

    Capital information     UMB Financial Corporation
    (unaudited, dollars in thousands, except per share data)    

    September 30,
    2018

       

        June 30,    
    2018

       

    September 30,
    2017

    Total equity $ 2,203,464 $ 2,201,812 $ 2,101,543
    Book value per common share 44.20 43.96 42.15
     
    Regulatory capital:
    Common equity Tier 1 capital $ 2,175,700 $ 2,145,617 $ 1,893,842
    Tier 1 capital 2,175,700 2,145,617 1,893,842
    Total capital 2,348,731 2,315,483 2,062,928
     
    Regulatory capital ratios:
    Common equity Tier 1 capital ratio 13.47 % 13.56 % 12.18 %
    Tier 1 risk-based capital ratio 13.47 13.56 12.18
    Total risk-based capital ratio 14.54 14.63 13.26
    Tier 1 leverage ratio 10.58 10.50 9.43
     
    • At September 30, 2018, the company’s risk-based 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
    20182018201820172017
    Net charge-offs - Commercial loans $ 624 $ 6,137 $ 6,847 $ 2,248 $ 8,961
    Net charge-offs (recoveries) - Real estate loans 408 1,035 1,512 (242 ) 238
    Net charge-offs - Consumer credit card loans 1,632 1,786 1,849 1,612 1,635
    Net charge-offs - Consumer other loans 82 46 94 167 74
    Net charge-offs - Total loans 2,746 9,004 10,302 3,785 10,908
    Net loan charge-offs as a % of total average loans 0.09 % 0.32 % 0.37 % 0.14 % 0.40 %
    Loans over 90 days past due $ 1,927 $ 2,883 $ 5,650 $ 3,091 $ 2,088
    Loans over 90 days past due as a % of total loans 0.02 % 0.02 % 0.05 % 0.03 % 0.02 %
    Nonaccrual and restructured loans $ 50,568 $ 56,030 $ 67,604 $ 59,142 $ 54,231
    Nonaccrual and restructured loans as a % of total loans 0.42 % 0.48 % 0.59 % 0.52 % 0.49 %
    Provision for loan losses $ 5,750 $ 7,000 $ 10,000 $ 6,000 $ 11,500
     

    Dividend Declaration

    At the company’s quarterly board meeting, the Board of Directors declared a $0.30 per share quarterly cash dividend, an increase of 3.4 percent or $0.01 per share. The cash dividend will be payable on January 2, 2019, to shareholders of record at the close of business on December 10, 2018.

    Accelerated Share Repurchase

    The company has entered into an agreement with Bank of America Merrill Lynch (BAML) to repurchase an aggregate of $50 million of the company’s common stock through an accelerated share repurchase (ASR). The company will receive an initial delivery of shares representing approximately 85 percent of the expected total to be repurchased. The final number of shares repurchased and delivered under the ASR will be based on the volume weighted average share price of the company’s common stock during the term of the transaction. The final settlement of the transactions under the ASR is expected to occur no later than the end of the first quarter of 2019 and may be accelerated at the option of BAML. The ASR is part of the company’s authorization to repurchase up to two million shares of the company’s common stock, which was announced April 24, 2018.

    Conference Call

    The company plans to host a conference call to discuss its third quarter 2018 earnings results on Wednesday, October 24, 2018, 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 the investor relations area of umbfinancial.com or by using the following the link:

    UMB Financial 3Q 2018 Conference Call

    A replay of the conference call may be heard through November 7, 2018, by calling (toll-free) 877-344-7529 or (international) 412-317-0088. The replay access code required for playback is 10124649. The call replay may also be accessed at umbfinancial.com by visiting the investor relations area.

    Non-GAAP Financial Information

    In this release, we provide information about net operating income from continuing operations (net operating income), operating earnings per share from continuing operations - diluted (operating EPS), operating return on average equity (operating ROE), operating return on average assets (operating ROA), operating noninterest expense, and operating efficiency ratio, 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, and operating efficiency ratio – 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- and severance-related items and divestiture costs that management does not believe reflect the company’s fundamental operating performance.

    Net operating income for the relevant period is defined as GAAP net income, adjusted to reflect the impact of excluding expenses related to acquisitions and divestitures, severance 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).

    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, 2017, 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). 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, Mo. UMB offers personal banking, commercial banking, healthcare services and institutional banking, which includes services to mutual funds and alternative-investment entities and registered investment advisors. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas. For more information, visit UMB.com, UMB Financial.com, UMB Blog or follow us on Twitter at @UMBBank, UMB Facebook and UMB LinkedIn.

           
    Consolidated Balance Sheets         UMB Financial Corporation
    (unaudited, dollars in thousands)
    September 30,
    2018     2017
    ASSETS
    Loans $ 11,964,724 $ 10,997,028
    Allowance for loan losses   (101,302 )   (98,389 )
    Net loans 11,863,422 10,898,639
    Loans held for sale 2,222 4,525
    Investment Securities:
    Available for sale 5,932,741 5,848,960
    Held to maturity 1,199,114 1,276,252
    Trading securities 81,159 60,660
    Other securities   65,252     63,543
    Total investment securities 7,278,266 7,249,415
    Federal funds sold and resell agreements 206,412 244,436
    Interest-bearing due from banks 668,990 221,856
    Cash and due from banks 348,700 366,169
    Premises and equipment, net 277,123 277,454
    Accrued income 104,012 103,076
    Goodwill 180,867 180,867
    Other intangibles, net 16,335 23,477
    Other assets 516,011 655,846
    Discontinued assets - goodwill and other intangibles, net       53,743
    Total assets $ 21,462,360   $ 20,279,503
     
    LIABILITIES
    Deposits:
    Noninterest-bearing demand $ 5,757,353 $ 5,812,117
    Interest-bearing demand and savings 10,938,839 9,063,079
    Time deposits under $250,000 594,705 576,035
    Time deposits of $250,000 or more   445,807     548,373
    Total deposits 17,736,704 15,999,604
    Federal funds purchased and repurchase agreements 1,192,985 1,856,837
    Long-term debt 78,523 76,071
    Accrued expenses and taxes 171,548 193,978
    Other liabilities   79,136     51,470
    Total liabilities   19,258,896     18,177,960
     
    SHAREHOLDERS' EQUITY
    Common stock 55,057 55,057
    Capital surplus 1,054,801 1,042,022
    Retained earnings 1,477,732 1,239,865
    Accumulated other comprehensive loss, net (155,641 ) (22,668 )
    Treasury stock   (228,485 )   (212,733 )
    Total shareholders' equity   2,203,464     2,101,543
    Total liabilities and shareholders' equity $ 21,462,360   $ 20,279,503
     
     
    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,
    2018     20172018     2017
    INTEREST INCOME
    Loans $ 143,947 $ 119,132 $ 405,231 $ 338,416
    Securities:
    Taxable interest 20,263 17,720 60,566 55,351
    Tax-exempt interest   18,281   18,893     55,274     54,372  
    Total securities income 38,544 36,613 115,840 109,723
    Federal funds and resell agreements 665 1,008 2,455 2,638
    Interest-bearing due from banks 1,513 753 4,149 1,884
    Trading securities   428   389     1,567     1,135  
    Total interest income   185,097   157,895     529,242     453,796  
    INTEREST EXPENSE
    Deposits 25,792 10,181 57,961 23,982
    Federal funds and repurchase agreements 7,524 5,811 18,922 14,274
    Other   1,291   1,045     3,721     2,973  
    Total interest expense   34,607   17,037     80,604     41,229  
    Net interest income 150,490 140,858 448,638 412,567
    Provision for loan losses   5,750   11,500     22,750     35,000  
    Net interest income after provision for loan losses   144,740   129,358     425,888     377,567  
    NONINTEREST INCOME
    Trust and securities processing 43,425 45,060 130,272 132,412
    Trading and investment banking 3,711 4,453 12,465 18,168
    Service charges on deposit accounts 20,927 21,510 63,554 66,316
    Insurance fees and commissions 339 425 980 1,584
    Brokerage fees 6,402 5,815 19,046 17,081
    Bankcard fees 16,838 17,427 52,145 55,413
    Gains on sales of securities available for sale, net 211 2,390 578 4,138
    Other   9,032   7,226     27,659     22,417  
    Total noninterest income   100,885   104,306     306,699     317,529  
    NONINTEREST EXPENSE
    Salaries and employee benefits 102,956 99,749 315,099 306,174
    Occupancy, net 11,628 11,285 33,394 33,314
    Equipment 18,533 17,880 56,201 53,318
    Supplies and services 4,528 4,076 12,434 12,962
    Marketing and business development 6,671 5,056 17,889 14,929
    Processing fees 12,331 11,151 35,029 31,093
    Legal and consulting 8,470 5,844 18,774 17,361
    Bankcard 4,407 5,130 13,198 15,066
    Amortization of other intangible assets 1,385 1,715 4,432 5,685
    Regulatory fees 3,337 3,798 10,014 11,702
    Other   6,139   6,137     17,015     20,966  
    Total noninterest expense   180,385   171,821     533,479     522,570  
    Income before income taxes 65,240 61,843 199,108 172,526
    Income tax expense   7,391   12,971     28,302     36,907  
    Income from continuing operations   57,849   48,872     170,806     135,619  
    Discontinued Operations
    Loss from discontinued operations before income taxes (1,030 ) (917 ) (722 )
    Income tax benefit     (300 )   (170 )   (247 )
    Loss from discontinued operations     (730 )   (747 )   (475 )
    NET INCOME $ 57,849 $ 48,142   $ 170,059   $ 135,144  
     
    PER SHARE DATA
    Basic:
    Income from continuing operations $ 1.17 $ 0.99 $ 3.45 $ 2.76
    Loss from discontinued operations     (0.01 )   (0.01 )   (0.01 )
    Net income – basic 1.17 0.98 3.44 2.75
    Diluted:
    Income from continuing operations 1.16 0.98 3.41 2.72
    Loss from discontinued operations     (0.01 )   (0.01 )   (0.01 )
    Net income - diluted 1.16 0.97 3.40 2.71
    Dividends 0.290 0.255 0.870 0.765
    Weighted average shares outstanding - basic 49,473,157 49,283,322 49,482,087 49,221,629
    Weighted average shares outstanding - diluted 49,912,084 49,833,141 49,952,984 49,838,619
     
     
    Consolidated Statements of Comprehensive Income     UMB Financial Corporation
    (unaudited, dollars in thousands)    
    Three Months Ended     Nine Months Ended
    September 30,September 30,
    2018     20172018     2017
    Net income $ 57,849 $ 48,142 $ 170,059 $ 135,144
    Other comprehensive (loss) income, net of tax:
    Unrealized gains and losses on debt securities:
    Change in unrealized holding gains and losses, net (36,331 ) 5,064 (133,013 ) 62,646
    Less: Reclassification adjustment for gains included in net income   (211 )   (2,390 )   (578 )   (4,138 )
    Change in unrealized gains and losses on debt securities during the period (36,542 ) 2,674 (133,591 ) 58,508
    Change in unrealized gains and losses on derivative hedges 1,162 (169 ) 4,274 (1,080 )
    Income tax benefit (expense)   8,698     (1,548 )   32,250     (22,554 )
    Other comprehensive (loss) income before reclassifications (26,682 ) 957 (97,067 ) 34,874
    Amounts reclassified from accumulated other comprehensive income           (13,049 )    
    Net current-period other comprehensive (loss) income   (26,682 )   957     (110,116 )   34,874  
    Comprehensive income $ 31,167   $ 49,099   $ 59,943   $ 170,018  
     
     
    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

       

    Treasury
    Stock

        Total
    Balance - January 1, 2017 $ 55,057 $ 1,033,419 $ 1,142,887 $ (57,542 ) $ (211,437 ) $ 1,962,384
    Total comprehensive income 135,144 34,874 170,018
    Cash dividends ($0.765 per share) (38,166 ) (38,166 )
    Purchase of treasury stock (14,369 ) (14,369 )
    Issuance of equity awards (3,364 ) 3,835 471
    Recognition of equity-based compensation 9,576 9,576
    Sale of treasury stock 468 381 849
    Exercise of stock options       1,923             8,857     10,780  
    Balance - September 30, 2017 $ 55,057   $ 1,042,022   $ 1,239,865   $ (22,668 ) $ (212,733 ) $ 2,101,543  
    Balance - January 1, 2018 $ 55,057 $ 1,046,095 $ 1,338,110 $ (45,525 ) $ (212,206 ) $ 2,181,531
    Total comprehensive income (loss) 170,059 (110,116 ) 59,943
    Reclassification of certain tax effects 12,917 12,917
    Cash dividends ($0.870 per share) (43,499 ) (43,499 )
    Purchase of treasury stock (26,417 ) (26,417 )
    Issuance of equity awards (2,004 ) 2,499 495
    Recognition of equity-based compensation 8,469 8,469
    Sale of treasury stock 409 406 815
    Exercise of stock options 1,832 7,233 9,065
    Cumulative effect adjustments           145             145  
    Balance - September 30, 2018 $ 55,057   $ 1,054,801   $ 1,477,732   $ (155,641 ) $ (228,485 ) $ 2,203,464  
     
     
    Average Balances / Yields and Rates     UMB Financial Corporation
    (tax - equivalent basis)    
    (unaudited, dollars in thousands)
    Three Months Ended September 30,
    2018     2017
    Average     AverageAverage     Average
    BalanceYield/RateBalanceYield/Rate
    Assets
    Loans, net of unearned interest $ 11,718,552 4.87 % $ 10,911,154 4.33 %
    Securities:
    Taxable 3,760,332 2.14 3,794,074 1.85
    Tax-exempt   3,431,206   2.67     3,746,540   3.06  
    Total securities 7,191,538 2.39 7,540,614 2.46
    Federal funds and resell agreements 101,223 2.61 190,036 2.10
    Interest bearing due from banks 322,882 1.86 254,702 1.17
    Trading securities   45,476   4.35     49,396   3.95  
    Total earning assets 19,379,671 3.89 18,945,902 3.52
    Allowance for loan losses (99,289 ) (99,954 )
    Other assets   1,469,283     1,467,273  
    Total assets $ 20,749,665   $ 20,313,221  
     
    Liabilities and Shareholders' Equity
    Interest-bearing deposits $ 10,984,419 0.93 % $ 9,951,600 0.41 %
    Federal funds and repurchase agreements 1,733,884 1.72 2,234,666 1.03
    Borrowed funds   78,764 6.50     76,159   5.44  
    Total interest-bearing liabilities 12,797,067 1.07 12,262,425 0.55
    Noninterest-bearing demand deposits 5,547,880 5,728,145
    Other liabilities 179,775 207,417
    Shareholders' equity   2,224,943     2,115,234  
    Total liabilities and shareholders' equity $ 20,749,665   $ 20,313,221  
    Net interest spread 2.82 % 2.97 %
    Net interest margin 3.18 3.16
     
     
    Average Balances / Yields and Rates     UMB Financial Corporation
    (tax - equivalent basis)    
    (unaudited, dollars in thousands)
    Nine Months Ended September 30,
    2018     2017
    Average     AverageAverage     Average
    BalanceYield/RateBalanceYield/Rate
    Assets
    Loans, net of unearned interest $ 11,484,757 4.72 % $ 10,762,401 4.20 %
    Securities:
    Taxable 3,830,164 2.11 3,995,441 1.85
    Tax-exempt   3,519,060   2.66     3,625,727   3.07  
    Total securities 7,349,224 2.37 7,621,168 2.43
    Federal funds and resell agreements 122,961 2.67 192,817 1.83
    Interest bearing due from banks 336,144 1.65 271,799 0.93
    Trading securities   45,206   5.21     61,604   3.06  
    Total earning assets 19,338,292 3.76 18,909,789 3.42
    Allowance for loan losses (100,856 ) (96,181 )
    Other assets   1,467,036     1,474,177  
    Total assets $ 20,704,472   $ 20,287,785  
     
    Liabilities and Shareholders' Equity
    Interest-bearing deposits $ 10,831,775 0.72 % $ 9,777,717 0.33 %
    Federal funds and repurchase agreements 1,678,108 1.51 2,321,144 0.82
    Borrowed funds   78,770   6.32     76,192   5.22  
    Total interest-bearing liabilities 12,588,653 0.86 12,175,053 0.45
    Noninterest-bearing demand deposits 5,753,237 5,853,905
    Other liabilities 172,560 203,037
    Shareholders' equity   2,190,022     2,055,790  
    Total liabilities and shareholders' equity $ 20,704,472   $ 20,287,785  
    Net interest spread 2.90 % 2.97 %
    Net interest margin 3.20 3.12
     
     
    Business Segment Information     UMB Financial Corporation
    (unaudited, dollars in thousands)    
    Three Months Ended September 30, 2018

    Commercial
    Banking

       

    Institutional
    Banking

       

    Personal
    Banking

       

    Healthcare
    Services

        Total
    Net interest income $ 94,633 $ 15,293 $ 31,145 $ 9,419 $ 150,490
    Provision for loan losses 4,062 355 1,333 5,750
    Noninterest income 20,831 43,169 28,266 8,619 100,885
    Noninterest expense   64,083   47,081   56,648   12,573   180,385
    Income before taxes 47,319 11,026 1,430 5,465 65,240
    Income tax expense   5,381   1,241   160   609   7,391
    Income from continuing operations $ 41,938 $ 9,785 $ 1,270 $ 4,856 $ 57,849
    Average assets $ 9,838,000 $ 3,920,000 $ 4,791,000 $ 2,201,000 $ 20,750,000
     
    Three Months Ended September 30, 2017

    Commercial
    Banking

    Institutional
    Banking

    Personal
    Banking

    Healthcare
    Services

    Total
    Net interest income $ 89,386 $ 12,763 $ 30,675 $ 8,034 $ 140,858
    Provision for loan losses 9,565 313 1,622 11,500
    Noninterest income 21,094 46,405 28,261 8,546 104,306
    Noninterest expense   60,620   44,727   56,127   10,347   171,821
    Income before taxes 40,295 14,128 1,187 6,233 61,843
    Income tax expense   8,454   2,965   244   1,308   12,971
    Income from continuing operations $ 31,841 $ 11,163 $ 943 $ 4,925 $ 48,872
    Average assets $ 9,710,000 $ 3,582,000 $ 5,072,000 $ 1,949,000 20,313,000
     
    Nine Months Ended September 30, 2018

    Commercial
    Banking

    Institutional
    Banking

    Personal
    Banking

    Healthcare
    Services

    Total
    Net interest income $ 279,521 $ 47,351 $ 93,220 $ 28,546 $ 448,638
    Provision for loan losses 17,179 1,027 4,544 22,750
    Noninterest income 60,606 131,999 87,700 26,394 306,699
    Noninterest expense   189,096   141,499   165,945   36,939   533,479
    Income before taxes 133,852 36,824 10,431 18,001 199,108
    Income tax expense   19,032   5,227   1,484   2,559   28,302
    Income from continuing operations $ 114,820 $ 31,597 $ 8,947 $ 15,442 $ 170,806
    Average assets $ 9,788,000 $ 3,895,000 $ 4,853,000 $ 2,168,000 20,704,000
     
    Nine Months Ended September 30, 2017

    Commercial
    Banking

    Institutional
    Banking

    Personal
    Banking

    Healthcare
    Services

    Total
    Net interest income $ 261,497 $ 36,731 $ 91,484 $ 22,855 $ 412,567
    Provision for loan losses 28,500 1,101 5,399 35,000
    Noninterest income 62,014 140,232 87,932 27,351 317,529
    Noninterest expense   185,825   136,086   168,760   31,899   522,570
    Income before taxes 109,186 39,776 5,257 18,307 172,526
    Income tax expense   23,297   8,437   1,273   3,900   36,907
    Income from continuing operations $ 85,889 $ 31,339 $ 3,984 $ 14,407 $ 135,619
    Average assets $ 9,723,000 $ 3,457,000 $ 5,233,000 $ 1,875,000 20,288,000
     

    The company has strategically aligned its operations into the following four reportable segments: Commercial Banking, Institutional Banking, Personal Banking, and Healthcare Services.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 two business segments: Bank and Asset Servicing. 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, 2018.

    Non-GAAP Financial Measures     UMB Financial Corporation
    Net operating income Non-GAAP reconciliations:    
    (unaudited, dollars in thousands except per share data)

    Three Months Ended
    September 30,

       

    Nine Months Ended
    September 30,

    2018     20172018     2017
    Income from continuing operations (GAAP) $ 57,849 $ 48,872 170,806 $ 135,619
    Adjustments:
    Acquisition and divestiture expense (income) 3 5 (3 ) 22
    Severance expense 221 80 3,035 815
    Tax-impact of adjustments (i)   (49 )   (30 )   (673 )   (301 )
    Total Non-GAAP adjustments (net of tax)   175     55     2,359     536  
    Net operating income from continuing operations (Non-GAAP) $ 58,024   $ 48,927   $ 173,165   $ 136,155  
     
    Earnings per share from continuing operations - diluted (GAAP) $ 1.16 $ 0.98 $ 3.41 $ 2.72
    Acquisition and divestiture expense (income)
    Severance expense 0.07 0.02
    Tax-impact of adjustments (i)           (0.01 )   (0.01 )
    Operating earnings per share from continuing operations - diluted (Non-GAAP) $ 1.16   $ 0.98   $ 3.47   $ 2.73  
     
    GAAP
    Return on average assets 1.11 % 0.95 % 1.10 % 0.89 %
    Return on average equity 10.32 9.17 10.43 8.82
     
    Non-GAAP
    Operating return on average assets 1.11 % 0.96 % 1.12 % 0.90 %
    Operating return on average equity 10.35 9.18 10.57 8.85
    (i)   Calculated using the company’s marginal tax rate of 22.2% for periods beginning after December 31, 2017 as a result of the Tax Cuts and Jobs Act. The prior periods were calculated using the company’s marginal tax rate of 36.0%.
     
     
    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,

    2018     20172018     2017
    Noninterest expense $ 180,385 $ 171,821 $ 533,479 $ 522,570
    Adjustments to arrive at operating noninterest expense (pre-tax):    
    Acquisition and divestiture expense (income) 3 5 (3 ) 22
    Severance expense   221     80     3,035     815  
    Total Non-GAAP adjustments (pre-tax)   224     85     3,032     837  
    Operating noninterest expense (Non-GAAP) $ 180,161   $ 171,736   $ 530,447   $ 521,733  
     
    Noninterest expense $ 180,385 $ 171,821 $ 533,479 $ 522,570
    Less: Amortization of other intangibles   1,385     1,715     4,432     5,685  
    Noninterest expense, net of amortization of other intangibles (Non-GAAP) (numerator A) $ 179,000   $ 170,106   $ 529,047   $ 516,885  
     
    Operating noninterest expense $ 180,161 $ 171,736 $ 530,447 $ 521,733
    Less: Amortization of other intangibles   1,385     1,715     4,432     5,685  
    Operating expense, net of amortization of other intangibles (Non-GAAP) (numerator B) $ 178,776   $ 170,021   $ 526,015   $ 516,048  
     
    Net interest income $ 150,490 $ 140,858 $ 448,638 $ 412,567
    Noninterest income 100,885 104,306 306,699 317,529
    Less: Gains on sales of securities available for sale, net   211     2,390     578     4,138  
    Total Non-GAAP Revenue (denominator A) $ 251,164   $ 242,774   $ 754,759   $ 725,958  
     
    Efficiency ratio (numerator A/denominator A) 71.27 % 70.07 % 70.09 % 71.20 %

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

    71.18

    70.03

    69.69

    71.09

    UMB Financial Corporation
    Media Contact:
    Stephanie Hague, 816-860-5088
    or
    Investor Relations Contact:
    Kay Gregory, 816-860-7106

    Source: UMB Financial Corporation