First Quarter 2023 Financial
Highlights
- GAAP net income of $92.4 million, or $1.90 per diluted
share.
- Average loans increased 19.3% on a linked-quarter, annualized
basis.
- Average deposits grew 2.4% on a linked-quarter, annualized
basis.
- Diverse deposit base with approximately 55% of deposit
relationships spanning ten or more years.
- At March 31, 2023, uninsured deposits represented 66.6% of
total deposits. When adjusted to exclude affiliate and
collateralized deposits, uninsured deposits were 43.1% of total
deposits.
- Within our commercial deposits, no one sector represents more
than 5% of quarterly average deposits.
- Strong risk-based capital ratios and liquidity positions.
- Noninterest income increased 5.3% as compared to the first
quarter of 2022, equal to 35.0% of total revenue.
- Credit quality remained strong, with net charge-offs of just
0.09% of average loans and nonperforming loans of 0.07% of total
loans.
UMB Financial Corporation (Nasdaq: UMBF), a financial services
company, announced net income for the first quarter of 2023 of
$92.4 million, or $1.90 per diluted share, compared to $100.2
million, or $2.06 per diluted share, in the fourth quarter of 2022
(linked quarter) and $106.0 million, or $2.17 per diluted share, in
the first quarter of 2022.
Net operating income, a non-GAAP financial measure reconciled
later in this release to net income, the nearest comparable GAAP
measure, was $92.8 million, or $1.91 per diluted share, for the
first quarter of 2023, compared to $101.1 million, or $2.07 per
diluted share, for the linked quarter and $106.1 million, or $2.17
per diluted share, for the first quarter of 2022. Operating
pre-tax, pre-provision income (operating PTPP), a non-GAAP measure
reconciled later in this release to the components of net income
before taxes, the nearest comparable GAAP measure, was $135.4
million, or $2.78 per diluted share, for the first quarter of 2023,
compared to $134.1 million, or $2.75 per diluted share, for the
linked quarter, and $119.4 million, or $2.44 per diluted share, for
the first quarter of 2022. These operating PTPP results represent
increases of 1.0% on a linked-quarter basis and 13.4%, compared to
the first quarter of 2022.
“Comments made publicly about the health of the banking
industry, driven by the mistaken presumption that the drivers of
the failure of two banks would apply to other banks generally, did
a great disservice not only to UMB, but to regional banks as a
whole,” said Mariner Kemper, chairman, president and chief
executive officer. “Despite the challenging environment resulting
from this flawed and exaggerated crisis of confidence created by
certain market participants, we had a strong first quarter, with
average deposit growth of 2.4% and average loan growth of 19.3%, on
a linked-quarter annualized basis. We had continued momentum in our
fee businesses, and credit quality remains strong, with net charge
offs of just 0.09% of average loans. Nonperforming loans further
improved from year-end, and were just 0.07% of loans at March 31.”
Mr. Kemper continued, “Our business model is built to withstand
difficult economic environments and crises. Our deposit base is
diverse across multiple lines of businesses and reflects long
tenured and deeply entrenched relationships, with more than 55% of
our customers having banked with us for ten years or more. Our
regulatory capital ratios are above peer median, and our liquidity
levels are strong, including many contingent sources. Despite
conjectures in the aftermath of Silicon Valley Bank’s failure, not
every bank, including UMB, needs to sell investment securities at a
loss.”
First Quarter 2023 earnings discussion
Summary of quarterly financial
results
UMB Financial
Corporation
(unaudited, dollars in thousands, except
per share data)
Q1
Q4
Q1
2023
2022
2022
Net income (GAAP)
$
92,437
$
100,173
$
105,963
Earnings per share (diluted)
1.90
2.06
2.17
Operating pre-tax, pre-provision income
(Non-GAAP)
135,369
134,054
119,400
Operating pre-tax, pre-provision earnings
per share (diluted)
2.78
2.75
2.44
Operating pre-tax, pre-provision income -
FTE (Non-GAAP)
141,924
140,717
125,799
Operating pre-tax, pre-provision earnings
per share - FTE (diluted)
2.91
2.89
2.57
Net operating income (Non-GAAP)
92,836
101,092
106,073
Operating earnings per share (diluted)
1.91
2.07
2.17
GAAP
Return on average assets
0.97
%
1.06
%
1.10
%
Return on average equity
13.76
15.16
14.65
Efficiency ratio
63.12
63.72
63.98
Non-GAAP
(i)
Operating return on average assets
0.98
%
1.07
%
1.10
%
Operating return on average equity
13.82
15.30
14.67
Operating return on average tangible
equity excluding AOCI
12.21
12.85
14.99
Operating efficiency ratio
62.98
63.39
63.93
(i) See Non-GAAP reconciliation
later in this release.
Summary of revenue
UMB Financial
Corporation
(unaudited, dollars in thousands)
Q1
Q4
Q1
CQ vs.
CQ vs.
2023
2022
2022
LQ
PY
Net interest income
$
241,696
$
245,166
$
210,355
$
(3,470
)
$
31,341
Noninterest income:
Trust and securities processing
62,359
59,207
59,528
3,152
2,831
Trading and investment banking
5,308
5,251
5,440
57
(132
)
Service charges on deposit accounts
21,159
19,758
24,642
1,401
(3,483
)
Insurance fees and commissions
274
459
259
(185
)
15
Brokerage fees
13,676
13,332
3,456
344
10,220
Bankcard fees
18,172
19,597
16,635
(1,425
)
1,537
Investment securities losses, net
(5,324
)
(409
)
(522
)
(4,915
)
(4,802
)
Other
14,576
8,302
14,240
6,274
336
Total noninterest income
$
130,200
$
125,497
$
123,678
$
4,703
$
6,522
Total revenue
$
371,896
$
370,663
$
334,033
$
1,233
$
37,863
Net interest income (FTE)
$
248,251
$
251,829
$
216,754
Net interest margin (FTE)
2.76
%
2.83
%
2.35
%
Total noninterest income as a % of total
revenue
35.0
33.9
37.0
Net interest income
- First quarter 2023 net interest income totaled $241.7 million,
a decrease of $3.5 million, or 1.4% from the linked quarter, driven
by the impact of fewer days in the first quarter, as well as higher
interest costs primarily driven by unfavorable mix shift in the
composition of liabilities, partially offset by continued growth in
average loans.
- Average earning assets increased $1.2 billion, or 3.3% from the
linked quarter, largely driven by an increase of $976.9 million in
average loans, an increase of $398.3 million in interest-bearing
due from banks, partially offset by a decrease of $204.9 million in
federal funds sold and resell agreements.
- Average interest-bearing liabilities increased $1.6 billion, or
7.2% from the linked quarter, primarily driven by increases of
$803.5 million in borrowed funds and $723.6 million in
interest-bearing deposits. Average noninterest-bearing deposits
decreased $535.1 million, or 4.3% as compared to the linked
quarter.
- Net interest margin for the first quarter was 2.76%, a decrease
of seven basis points from the linked quarter, driven by increased
cost of interest-bearing liabilities, partially offset by the
benefit of free funds and earning asset mix changes. The cost of
interest-bearing liabilities increased 69 basis points to 2.91%.
Total cost of funds increased 51 basis points from the linked
quarter to 1.92%. Average loan yields increased 53 basis points
while earning asset yields increased 42 basis points from the
linked quarter.
- On a year-over-year basis, net interest income increased $31.3
million, or 14.9%, driven by a $3.9 billion, or 22.5%, increase in
average loans, favorable mix shift in earning assets, and benefit
from higher interest rates, partially offset by higher cost of
interest-bearing liabilities.
- Compared to the first quarter of 2022, average earning assets
decreased $1.0 billion, or 2.7%, largely driven by a decrease of
$3.8 billion in interest-bearing due from banks and a decrease of
$814.6 million in federal funds sold and resell agreements,
partially offset by the increase in average loans noted above.
- Average deposits decreased 3.1% compared to the first quarter
of 2022. Average noninterest-bearing demand deposit balances
decreased 15.0% compared to the first quarter of 2022, driven by
expected migration to rate-bearing deposit categories in a higher
interest rate environment. Demand deposit balances comprised 37.8%
of total deposits, compared to 39.7% in the linked quarter and
43.0% in the first quarter of 2022.
- Average borrowed funds increased $803.5 million as compared to
the linked quarter and $928.6 million as compared to the first
quarter of 2022, driven by short-term borrowings with the Federal
Home Loan Bank and the Federal Reserve Discount Window.
Noninterest income
- First quarter 2023 noninterest income increased $4.7 million,
or 3.7%, on a linked-quarter basis, largely due to:
- Increases of $4.0 million in company-owned life insurance
income and $1.8 million in derivative income, both recorded in
other income. The increase in company-owned life insurance is
offset by a proportionate increase in deferred compensation expense
as noted below.
- Increases of $1.8 million in corporate trust income, $0.9
million in fund services income and $0.5 million in trust income,
all recorded in trust and securities processing.
- These increases were partially offset by a decrease of $4.9
million in investment securities gains, largely driven by an
impairment loss on an available-for-sale subordinated debt security
recorded in the first quarter.
- Compared to the prior year, noninterest income in the first
quarter of 2023 increased $6.5 million, or 5.3%, primarily driven
by:
- An increase of $10.2 million in brokerage income, largely
driven by increases in 12b-1 fees and money market income.
- An increase of $4.1 million in company-owned life insurance
income, recorded in other income. The increase in company-owned
life insurance is offset by a proportionate increase in deferred
compensation expense as noted below.
- Increases of $2.3 million in corporate trust income and $1.3
million in fund services income, both recorded in trust and
securities processing.
- An increase of $1.5 million in bankcard income due to higher
interchange revenue.
- These increases were partially offset by the following
decreases:
- A decrease of $4.8 million in investment securities gains,
driven by an impairment loss on an available-for-sale subordinated
debt security recorded in the first quarter of 2023.
- A decrease of $3.5 million in service charges on deposits
primarily due to decreased healthcare services income related to
customer transfer and conversion fees recognized in the first
quarter of 2022.
- A decrease of $2.4 million in other miscellaneous income,
driven by the gain on sale of the company’s factoring loan
portfolio recorded in the first quarter of 2022.
- A decrease of $2.1 million in derivative income, recorded in
other income.
Noninterest expense
Summary of noninterest expense
UMB Financial
Corporation
(unaudited, dollars in thousands)
Q1
Q4
Q1
CQ vs.
CQ vs.
2023
2022
2022
LQ
PY
Salaries and employee benefits
$
142,498
$
135,940
$
130,634
$
6,558
$
11,864
Occupancy, net
12,177
12,409
12,232
(232
)
(55
)
Equipment
17,849
18,969
18,164
(1,120
)
(315
)
Supplies and services
3,875
3,697
3,262
178
613
Marketing and business development
5,335
8,788
4,932
(3,453
)
403
Processing fees
23,240
23,545
18,443
(305
)
4,797
Legal and consulting
7,285
10,664
6,911
(3,379
)
374
Bankcard
7,133
7,369
6,567
(236
)
566
Amortization of other intangible
assets
2,298
1,649
1,071
649
1,227
Regulatory fees
5,551
4,232
3,482
1,319
2,069
Other
9,811
10,556
9,080
(745
)
731
Total noninterest expense
$
237,052
$
237,818
$
214,778
$
(766
)
$
22,274
- Noninterest expense for the first quarter of 2023 was $237.1
million, a decrease of $0.8 million, or 0.3%, from the linked
quarter and an increase of $22.3 million, or 10.4%, from the first
quarter of 2022.
- The linked-quarter decrease in noninterest expense was driven
by:
- A decrease of $6.6 million in salaries and bonus expense,
recorded in salaries and employee benefits, driven primarily by
increased incentive compensation tied to business growth and higher
overall company performance during the fourth quarter of 2022.
- Decreases of $3.5 million in marketing and business development
expense and $3.4 million in legal and consulting expense due to the
timing of multiple projects. The decrease in marketing and business
development expense was also partially driven by a decrease in
advertising for various projects and a decrease in travel and
entertainment expense.
- A decrease of $1.1 million in equipment expense driven by
reduced software expense.
- These decreases were partially offset by increases of $13.2
million in employee benefits expense driven by a seasonal increase
of $11.3 million in payroll taxes, insurance, and 401(k) expense
recognized in the first quarter, as well as an increase of $2.5
million in deferred compensation expense, all recorded in salaries
and employee benefits. The increase in deferred compensation
expense was offset by the increase in company-owned life insurance
income noted above. Additionally, there was an increase of $1.3
million in regulatory fees expense driven by higher deposit
insurance expense due to previously announced higher industry
assessment rates.
- The year-over-year increase in noninterest expense was driven
by:
- An increase of $11.9 million in salaries and employee benefits
expense, driven primarily by increases of $11.0 million in salaries
and wage expense and $4.7 million in employee benefits expense,
primarily due to an increase of $3.1 million in payroll taxes,
insurance, and 401(k) expense, and an increase of $1.7 million in
deferred compensation expense. These increases were partially
offset by a decrease of $3.8 million in bonus and commission
expense. The increase in deferred compensation expense was offset
by the increase in company-owned life insurance income noted
above.
- An increase of $4.8 million in processing fees expense due to
the ongoing modernization of the company’s core systems and the
timing of multiple software projects.
- Increases of $2.1 million in regulatory fees expense driven by
higher deposit insurance expense, $2.0 million in operational
losses, recorded in other expense, and $1.2 million in intangible
amortization expense. The increase in amortization expense is
related to the acquisition of the healthcare savings account
business from Old National Bank, completed in the fourth quarter of
2022.
Income taxes
- The company’s effective tax rate was 17.2% for the three months
ended March 31, 2023, compared to 15.7% for the same period in
2022. The effective tax rate increased primarily as a result of a
decrease in excess tax benefits associated with stock compensation
recorded in the first quarter of 2023 compared to the same period a
year earlier.
Balance sheet
- Average total assets for the first quarter of 2023 were $38.5
billion compared to $37.3 billion for the linked quarter and $39.2
billion for the same period in 2022.
Summary of average loans and leases -
QTD Average
UMB Financial
Corporation
(unaudited, dollars in thousands)
Q1
Q4
Q1
CQ vs.
CQ vs.
2023
2022
2022
LQ
PY
Commercial and industrial
$
9,287,319
$
8,891,356
$
7,409,623
$
395,963
$
1,877,696
Specialty lending
564,633
559,200
463,793
5,433
100,840
Commercial real estate
7,812,140
7,323,877
6,338,160
488,263
1,473,980
Consumer real estate
2,738,184
2,678,771
2,339,050
59,413
399,134
Consumer
136,571
145,811
135,942
(9,240
)
629
Credit cards
453,704
457,043
399,857
(3,339
)
53,847
Leases and other
279,049
238,603
274,652
40,446
4,397
Total loans
$
21,271,600
$
20,294,661
$
17,361,077
$
976,939
$
3,910,523
- Average loans for the first quarter of 2023 increased $976.9
million, or 4.8%, on a linked-quarter basis and $3.9 billion, or
22.5%, compared to the first quarter of 2022.
Summary of average securities - QTD
Average
UMB Financial
Corporation
(unaudited, dollars in thousands)
Q1
Q4
Q1
CQ vs.
CQ vs.
2023
2022
2022
LQ
PY
Securities available for sale:
U.S. Treasury
$
783,170
$
752,339
$
176,476
$
30,831
$
606,694
U.S. Agencies
171,825
171,171
125,017
654
46,808
Mortgage-backed
3,938,137
4,027,120
7,317,968
(88,983
)
(3,379,831
)
State and political subdivisions
1,356,785
1,353,307
3,170,757
3,478
(1,813,972
)
Corporates
364,854
366,131
337,526
(1,277
)
27,328
Collateralized loan obligations
348,477
328,475
150,134
20,002
198,343
Total securities available for sale
$
6,963,248
$
6,998,543
$
11,277,878
$
(35,295
)
$
(4,314,630
)
Securities held to maturity:
U.S. Agencies
$
123,106
$
123,077
$
133
$
29
$
122,973
Mortgage-backed
2,934,113
2,983,489
708,075
(49,376
)
2,226,038
State and political subdivisions
2,814,912
2,765,717
1,185,609
49,195
1,629,303
Total securities held to maturity
$
5,872,131
$
5,872,283
$
1,893,817
$
(152
)
$
3,978,314
Trading securities
9,258
11,799
20,836
(2,541
)
(11,578
)
Other securities
359,238
315,748
329,611
43,490
29,627
Total securities
$
13,203,875
$
13,198,373
$
13,522,142
$
5,502
$
(318,267
)
- Average total securities remained flat on a linked-quarter
basis and decreased 2.4% compared to the first quarter of
2022.
- At March 31, 2023, the unrealized pre-tax net loss on the
available-for-sale securities portfolio narrowed to $677.7 million,
or 8.9% of the $7.6 billion amortized cost value, down from $771.6
million at December 31, 2022.
- At March 31, 2023, the unrealized pre-tax net loss on the
securities designated as held to maturity narrowed to $489.8
million, or 8.4% of amortized cost value, compared to $580.9
million at December 31, 2022.
- During 2022, the company transferred securities with an
amortized cost balance of $4.1 billion and a fair value of $3.8
billion from the available-for-sale category to the
held-to-maturity category. The remaining balance of unrealized
pre-tax net losses related to transferred securities was $237.1
million as of March 31, 2023 and was included in the amortized cost
balance of held-to-maturity securities.
- At March 31, 2023, an after-tax gain of $57.2 million was
included in accumulated other comprehensive income (AOCI) related
to the company’s fair value hedges of municipal securities. During
2021, the company entered into ten of these hedge transactions,
nine of which have since been terminated. The gain on the
terminated hedges is being amortized over the remaining life of the
underlying bonds.
Summary of average deposits - QTD
Average
UMB Financial
Corporation
(unaudited, dollars in thousands)
Q1
Q4
Q1
CQ vs.
CQ vs.
2023
2022
2022
LQ
PY
Deposits:
Noninterest-bearing demand
$
11,919,277
$
12,454,413
$
14,025,585
$
(535,136
)
$
(2,106,308
)
Interest-bearing demand and savings
18,427,662
17,952,568
17,852,721
475,094
574,941
Time deposits
1,215,506
966,969
701,973
248,537
513,533
Total deposits
$
31,562,445
$
31,373,950
$
32,580,279
$
188,495
$
(1,017,834
)
Noninterest bearing deposits as % of
total
37.8
%
39.7
%
43.0
%
- Average deposits increased 0.6% on a linked-quarter basis and
decreased 3.1% compared to the first quarter of 2022.
- As of March 31, 2023, the total estimated uninsured deposits
were $21.3 billion or approximately 66.6% of total deposits.
Estimated uninsured deposits, when adjusted to exclude affiliate
(company-owned) and collateralized deposits, were $13.8 billion and
represented approximately 43.1% of total deposits.
Capital
Capital information
UMB Financial
Corporation
(unaudited, dollars in thousands, except
per share data)
March 31, 2023
December 31, 2022
March 31, 2022
Total equity
$
2,814,659
$
2,667,093
$
2,748,405
Accumulated other comprehensive (loss)
income, net
(626,776
)
(702,735
)
(343,128
)
Book value per common share
58.03
55.20
56.78
Tangible book value per common share
(Non-GAAP)
52.17
49.28
52.69
Regulatory capital:
Common equity Tier 1 capital
$
3,196,111
$
3,129,030
$
2,938,100
Tier 1 capital
3,196,111
3,129,030
2,938,100
Total capital
3,776,407
3,682,619
3,369,866
Regulatory capital ratios:
Common equity Tier 1 capital ratio
10.57
%
10.62
%
11.81
%
Tier 1 risk-based capital ratio
10.57
10.62
11.81
Total risk-based capital ratio
12.49
12.50
13.55
Tier 1 leverage ratio
8.35
8.43
7.53
- At March 31, 2023, the regulatory capital ratios presented in
the foregoing table exceeded all “well-capitalized” regulatory
thresholds.
Asset Quality
Credit quality
UMB Financial
Corporation
(unaudited, dollars in thousands)
Q1
Q4
Q3
Q2
Q1
2023
2022
2022
2022
2022
Net charge-offs - total loans
$
4,643
$
2,189
$
1,173
$
28,128
$
8,378
Net loan charge-offs as a % of total
average loans
0.09
%
0.04
%
0.02
%
0.62
%
0.20
%
Loans over 90 days past due
$
1,723
$
1,617
$
2,513
$
3,446
$
3,600
Loans over 90 days past due as a % of
total loans
0.01
%
0.01
%
0.01
%
0.02
%
0.02
%
Nonaccrual and restructured loans
$
15,480
$
19,269
$
19,817
$
18,117
$
110,356
Nonaccrual and restructured loans as a %
of total loans
0.07
%
0.09
%
0.10
%
0.10
%
0.62
%
Provision for credit losses
$
23,250
$
9,000
$
22,000
$
13,400
$
(6,500
)
- Provision for credit losses for the first quarter totaled $23.3
million, an increase of $14.3 million from the linked quarter and
an increase of $29.8 million from the first quarter of 2022. These
changes are driven largely by loan growth and changes in
macro-economic metrics in the current period as compared to the
prior periods.
- Net charge-offs for the first quarter totaled $4.6 million, or
0.09%, of average loans, compared to $2.2 million, or 0.04%, of
average loans in the linked quarter, and $8.4 million, or 0.20%, of
average loans for the first quarter of 2022.
Dividend Declaration
At the company’s quarterly board meeting, the Board of Directors
declared a $0.38 per share quarterly cash dividend, payable on July
3, 2023, to shareholders of record at the close of business on June
12, 2023.
Conference Call
The company plans to host a conference call to discuss its first
quarter 2023 earnings results on Wednesday, April 26, 2023, at 8:30
a.m. (CT).
Interested parties may access the call by dialing (toll-free)
833-470-1428 or (international) 404-975-4839 and requesting to join
the UMB Financial call with access code 443869. The live call may
also be accessed by visiting investorrelations.umb.com or by using
the following link:
UMB Financial 1Q 2023 Conference Call
A replay of the conference call may be heard through May 10,
2023, by calling (toll-free) 866-813-9403 or (international)
226-828-7578. The replay access code required for playback is
582627. The call replay may also be accessed at
investorrelations.umb.com.
Non-GAAP Financial
Information
In this release, we may provide information about net operating
income, operating earnings per share – diluted (operating EPS),
operating return on average equity (operating ROE), operating
return on average assets (operating ROA), operating noninterest
expense, operating efficiency ratio, operating pre-tax,
pre-provision income (operating PTPP), operating pre-tax,
pre-provision earnings per share – diluted (operating PTPP EPS),
operating pre-tax, pre-provision income on a fully tax equivalent
basis (operating PTPP-FTE), operating pre-tax, pre-provision FTE
earnings per share – diluted (operating PTPP-FTE EPS), tangible
shareholders’ equity, tangible book value per share, and operating
return on average tangible equity excluding AOCI, 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, operating PTPP,
operating PTPP EPS, operating PTPP-FTE, operating PTPP-FTE EPS,
tangible shareholders’ equity, tangible book value per share, and
operating return on average tangible equity excluding AOCI – 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 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, 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,
divided by the company’s average total shareholders’ equity for the
relevant period. Operating ROA is calculated as net operating
income, divided by the company’s average assets for the relevant
period. Operating noninterest expense for the relevant period is
defined as GAAP noninterest expense, adjusted to reflect the
pre-tax impact of non-GAAP adjustments described above. Operating
efficiency ratio is calculated as the company’s operating
noninterest expense, net of amortization of other intangibles,
divided by the company’s total non-GAAP revenue (calculated as net
interest income plus noninterest income, less gains on sales of
securities available for sale, net).
Operating PTPP income for the relevant period is defined as GAAP
net interest income plus GAAP noninterest income, less noninterest
expense, adjusted to reflect the impact of excluding expenses
related to acquisitions and severance expense.
Operating PTPP-FTE for the relevant period is defined as GAAP
net interest income on a fully tax equivalent basis plus GAAP
noninterest income, less noninterest expense, adjusted to reflect
the impact of excluding expenses related to acquisitions and
severance expense.
Tangible shareholders’ equity for the relevant period is defined
as GAAP shareholders’ equity, net of intangible assets. Tangible
book value per share is defined as tangible shareholders’ equity
divided by the Company’s total shares outstanding.
Operating return on average tangible equity excluding AOCI is
calculated as net operating income, divided by the company’s
average tangible shareholders’ equity exclusive of AOCI for the
relevant period.
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, 2022, 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: macroeconomic and adverse developments and
uncertainties related to the collateral effects of the collapse of,
and challenges for, domestic and international banks, including the
impacts to the U.S. and global economies; sustained levels of high
inflation and the potential for an economic recession on the heels
of aggressive quantitative tightening by the Federal Reserve, and
impacts related to or resulting from Russia’s military action in
Ukraine, such as the broader impacts to financial markets and the
global macroeconomic and geopolitical environments, may also cause
actual results or other future events, circumstances, or
aspirations to differ from our forward-looking statements. 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. As the company’s reach continues to
grow, it also serves business clients nationwide and institutional
clients in several countries. For more information, visit UMB.com,
UMB Blog, UMB Facebook and UMB LinkedIn.
Consolidated Balance Sheets
UMB Financial
Corporation
(unaudited, dollars in thousands)
March 31,
2023
2022
ASSETS
Loans
$
21,812,972
$
17,731,700
Allowance for credit losses on loans
(210,509
)
(179,288
)
Net loans
21,602,463
17,552,412
Loans held for sale
1,422
384
Securities:
Available for sale
6,907,897
8,550,093
Held to maturity, net of allowance for
credit losses
5,859,323
4,600,187
Trading securities
19,823
17,059
Other securities
416,337
332,123
Total securities
13,203,380
13,499,462
Federal funds sold and resell
agreements
368,158
1,319,809
Interest-bearing due from banks
3,121,323
6,355,941
Cash and due from banks
472,248
357,772
Premises and equipment, net
260,623
264,519
Accrued income
181,586
127,139
Goodwill
207,385
182,225
Other intangibles, net
76,426
15,690
Other assets
1,112,176
930,389
Total assets
$
40,607,190
$
40,605,742
LIABILITIES
Deposits:
Noninterest-bearing demand
$
12,488,803
$
15,946,738
Interest-bearing demand and savings
16,760,603
17,828,794
Time deposits under $250,000
456,129
399,467
Time deposits of $250,000 or more
2,226,369
187,566
Total deposits
31,931,904
34,362,565
Federal funds purchased and repurchase
agreements
2,160,808
2,840,535
Short-term debt
2,800,000
—
Long-term debt
381,796
272,036
Accrued expenses and taxes
207,633
178,130
Other liabilities
310,390
204,071
Total liabilities
37,792,531
37,857,337
SHAREHOLDERS' EQUITY
Common stock
55,057
55,057
Capital surplus
1,120,877
1,109,585
Retained earnings
2,609,928
2,265,129
Accumulated other comprehensive loss,
net
(626,776
)
(343,128
)
Treasury stock
(344,427
)
(338,238
)
Total shareholders' equity
2,814,659
2,748,405
Total liabilities and shareholders'
equity
$
40,607,190
$
40,605,742
Consolidated Statements of
Income
UMB Financial
Corporation
(unaudited, dollars in thousands except
share and per share data)
Three Months Ended
March 31,
2023
2022
INTEREST INCOME
Loans
$
308,441
$
149,470
Securities:
Taxable interest
53,049
43,382
Tax-exempt interest
25,306
23,855
Total securities income
78,355
67,237
Federal funds and resell agreements
5,651
2,450
Interest-bearing due from banks
16,166
2,457
Trading securities
134
185
Total interest income
408,747
221,799
INTEREST EXPENSE
Deposits
127,899
6,173
Federal funds and repurchase
agreements
23,302
2,148
Other
15,850
3,123
Total interest expense
167,051
11,444
Net interest income
241,696
210,355
Provision for credit losses
23,250
(6,500
)
Net interest income after provision for
credit losses
218,446
216,855
NONINTEREST INCOME
Trust and securities processing
62,359
59,528
Trading and investment banking
5,308
5,440
Service charges on deposit accounts
21,159
24,642
Insurance fees and commissions
274
259
Brokerage fees
13,676
3,456
Bankcard fees
18,172
16,635
Investment securities losses, net
(5,324
)
(522
)
Other
14,576
14,240
Total noninterest income
130,200
123,678
NONINTEREST EXPENSE
Salaries and employee benefits
142,498
130,634
Occupancy, net
12,177
12,232
Equipment
17,849
18,164
Supplies and services
3,875
3,262
Marketing and business development
5,335
4,932
Processing fees
23,240
18,443
Legal and consulting
7,285
6,911
Bankcard
7,133
6,567
Amortization of other intangible
assets
2,298
1,071
Regulatory fees
5,551
3,482
Other
9,811
9,080
Total noninterest expense
237,052
214,778
Income before income taxes
111,594
125,755
Income tax expense
19,157
19,792
NET INCOME
$
92,437
$
105,963
PER SHARE DATA
Net income – basic
$
1.91
$
2.19
Net income – diluted
1.90
2.17
Dividends
0.38
0.37
Weighted average shares outstanding –
basic
48,435,016
48,406,840
Weighted average shares outstanding –
diluted
48,746,562
48,832,177
Consolidated Statements of
Comprehensive Income
UMB Financial
Corporation
(unaudited, dollars in thousands)
Three Months Ended
March 31,
2023
2022
Net income
$
92,437
$
105,963
Other comprehensive income (loss), before
tax:
Unrealized gains and losses on debt
securities:
Change in unrealized holding gains and
losses, net
93,657
(622,910
)
Less: Reclassification adjustment for net
losses included in net income
433
—
Amortization of net unrealized loss on
securities transferred from available-for-sale to
held-to-maturity
9,983
582
Change in unrealized gains and losses on
debt securities
104,073
(622,328
)
Unrealized gains and losses on derivative
hedges:
Change in unrealized gains and losses on
derivative hedges, net
(1,527
)
4,680
Less: Reclassification adjustment for net
gains included in net income
(2,561
)
(851
)
Change in unrealized gains and losses on
derivative hedges
(4,088
)
3,829
Other comprehensive income (loss), before
tax
99,985
(618,499
)
Income tax (expense) benefit
(24,026
)
149,057
Other comprehensive income (loss)
75,959
(469,442
)
Comprehensive income (loss)
$
168,396
$
(363,479
)
Consolidated Statements of
Shareholders' Equity
UMB Financial
Corporation
(unaudited, dollars in thousands except
per share data)
Common
Stock
Capital
Surplus
Retained
Earnings
Accumulated Other
Comprehensive Income (Loss)
Treasury
Stock
Total
Balance - January 1, 2022
$
55,057
$
1,110,520
$
2,176,998
$
126,314
$
(323,465
)
$
3,145,424
Total comprehensive income (loss)
—
—
105,963
(469,442
)
—
(363,479
)
Dividends ($0.37 per share)
—
—
(17,832
)
—
—
(17,832
)
Purchase of treasury stock
—
—
—
—
(22,487
)
(22,487
)
Issuances of equity awards, net of
forfeitures
—
(6,630
)
—
—
7,309
679
Recognition of equity-based
compensation
—
5,485
—
—
—
5,485
Sale of treasury stock
—
84
—
—
54
138
Exercise of stock options
—
126
—
—
351
477
Balance - March 31, 2022
$
55,057
$
1,109,585
$
2,265,129
$
(343,128
)
$
(338,238
)
$
2,748,405
Balance - January 1, 2023
$
55,057
$
1,125,949
$
2,536,086
$
(702,735
)
$
(347,264
)
$
2,667,093
Total comprehensive income
—
—
92,437
75,959
—
168,396
Dividends ($0.38 per share)
—
—
(18,595
)
—
—
(18,595
)
Purchase of treasury stock
—
—
—
—
(7,902
)
(7,902
)
Issuances of equity awards, net of
forfeitures
—
(9,764
)
—
—
10,483
719
Recognition of equity-based
compensation
—
4,516
—
—
—
4,516
Sale of treasury stock
—
71
—
—
56
127
Exercise of stock options
—
105
—
—
200
305
Balance - March 31, 2023
$
55,057
$
1,120,877
$
2,609,928
$
(626,776
)
$
(344,427
)
$
2,814,659
Average Balances / Yields and
Rates
UMB Financial
Corporation
(tax - equivalent basis)
(unaudited, dollars in thousands)
Three Months Ended March
31,
2023
2022
Average
Average
Average
Average
Balance
Yield/Rate
Balance
Yield/Rate
Assets
Loans, net of unearned interest
$
21,271,600
5.88
%
$
17,361,077
3.49
%
Securities:
Taxable
9,349,351
2.30
9,461,567
1.86
Tax-exempt
3,845,266
3.35
4,039,739
3.03
Total securities
13,194,617
2.61
13,501,306
2.21
Federal funds and resell agreements
451,188
5.08
1,265,776
0.78
Interest bearing due from banks
1,533,704
4.27
5,320,360
0.19
Trading securities
9,258
6.31
20,836
4.38
Total earning assets
36,460,367
4.62
37,469,355
2.47
Allowance for credit losses
(196,128
)
(198,217
)
Other assets
2,239,140
1,882,376
Total assets
$
38,503,379
$
39,153,514
Liabilities and Shareholders'
Equity
Interest-bearing deposits
$
19,643,168
2.64
%
$
18,554,694
0.13
%
Federal funds and repurchase
agreements
2,461,942
3.84
2,973,785
0.29
Borrowed funds
1,200,346
5.36
271,731
4.66
Total interest-bearing liabilities
23,305,456
2.91
21,800,210
0.21
Noninterest-bearing demand deposits
11,919,277
14,025,585
Other liabilities
554,211
394,714
Shareholders' equity
2,724,435
2,933,005
Total liabilities and shareholders'
equity
$
38,503,379
$
39,153,514
Net interest spread
1.71
%
2.26
%
Net interest margin
2.76
2.35
Business Segment Information
UMB Financial
Corporation
(unaudited, dollars in thousands)
Three Months Ended March 31,
2023
Commercial Banking
Institutional Banking
Personal Banking
Total
Net interest income
$
151,027
$
55,085
$
35,584
$
241,696
Provision for credit losses
21,045
96
2,109
23,250
Noninterest income
22,902
84,238
23,060
130,200
Noninterest expense
84,002
89,372
63,678
237,052
Income (loss) before taxes
68,882
49,855
(7,143
)
111,594
Income tax expense (benefit)
11,825
8,558
(1,226
)
19,157
Net income (loss)
$
57,057
$
41,297
$
(5,917
)
$
92,437
Three Months Ended March 31,
2022
Commercial Banking
Institutional Banking
Personal Banking
Total
Net interest income
$
145,002
$
26,253
39,100
$
210,355
Provision for credit losses
(7,040
)
151
389
(6,500
)
Noninterest income
26,700
73,272
23,706
123,678
Noninterest expense
79,589
75,602
59,587
214,778
Income before taxes
99,153
23,772
2,830
125,755
Income tax expense
15,606
3,741
445
19,792
Net income
$
83,547
$
20,031
$
2,385
$
105,963
The company has strategically aligned its operations into the
following three reportable segments: Commercial Banking,
Institutional Banking, and Personal Banking. Senior executive
officers regularly evaluate business segment financial results
produced by the company’s internal reporting system in deciding how
to allocate resources and assess performance for individual
business segments. The company’s reportable segments include
certain corporate overhead, technology and service costs that are
allocated based on methodologies that are applied consistently
between periods. For comparability purposes, amounts in all periods
are based on methodologies in effect at March 31, 2023.
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,
2023
2022
Net income (GAAP)
$
92,437
$
105,963
Adjustments:
Acquisition expense
39
—
Severance expense
486
145
Tax-impact of adjustments (i)
(126
)
(35
)
Total Non-GAAP adjustments (net of
tax)
399
110
Net operating income (Non-GAAP)
$
92,836
$
106,073
Earnings per share - diluted (GAAP)
$
1.90
$
2.17
Acquisition expense
—
—
Severance expense
0.01
—
Tax-impact of adjustments (i)
—
—
Operating earnings per share - diluted
(Non-GAAP)
$
1.91
$
2.17
GAAP
Return on average assets
0.97
%
1.10
%
Return on average equity
13.76
14.65
Non-GAAP
Operating return on average assets
0.98
%
1.10
%
Operating return on average equity
13.82
14.67
(i) Calculated using the
company’s marginal tax rate of 24.0%.
Operating noninterest expense and
operating efficiency ratio Non-GAAP reconciliations:
UMB Financial
Corporation
(unaudited, dollars in thousands)
Three Months Ended March
31,
2023
2022
Noninterest expense
$
237,052
$
214,778
Adjustments to arrive at operating
noninterest expense (pre-tax):
Acquisition expense
39
—
Severance expense
486
145
Total Non-GAAP adjustments (pre-tax)
525
145
Operating noninterest expense
(Non-GAAP)
$
236,527
$
214,633
Noninterest expense
$
237,052
$
214,778
Less: Amortization of other
intangibles
2,298
1,071
Noninterest expense, net of amortization
of other intangibles (Non-GAAP) (numerator A)
$
234,754
$
213,707
Operating noninterest expense
$
236,527
$
214,633
Less: Amortization of other
intangibles
2,298
1,071
Operating expense, net of amortization of
other intangibles (Non-GAAP) (numerator B)
$
234,229
$
213,562
Net interest income
$
241,696
$
210,355
Noninterest income
130,200
123,678
Less: Losses on sales of securities
available for sale, net
(2
)
—
Total Non-GAAP Revenue (denominator A)
$
371,898
$
334,033
Efficiency ratio (numerator A/denominator
A)
63.12
%
63.98
%
Operating efficiency ratio (Non-GAAP)
(numerator B/denominator A)
62.98
63.93
Operating pre-tax, pre-provision income
non-GAAP reconciliations:
UMB Financial
Corporation
(unaudited, dollars in thousands except
per share data)
Three Months Ended March
31,
2023
2022
Net interest income (GAAP)
$
241,696
$
210,355
Noninterest income (GAAP)
130,200
123,678
Noninterest expense (GAAP)
237,052
214,778
Adjustments to arrive at operating
noninterest expense:
Acquisition expense
39
—
Severance expense
486
145
Total Non-GAAP adjustments
525
145
Operating noninterest expense
(Non-GAAP)
236,527
214,633
Operating pre-tax, pre-provision income
(Non-GAAP)
$
135,369
$
119,400
Net interest income earnings per share -
diluted (GAAP)
$
4.96
$
4.31
Noninterest income (GAAP)
2.67
2.53
Noninterest expense (GAAP)
4.86
4.40
Acquisition expense
—
—
Severance expense
0.01
—
Operating pre-tax, pre-provision earnings
per share - diluted (Non-GAAP)
$
2.78
$
2.44
Operating pre-tax, pre-provision income
- FTE Non-GAAP reconciliations:
UMB Financial
Corporation
(unaudited, dollars in thousands except
per share data)
Three Months Ended March
31,
2023
2022
Net interest income (GAAP)
$
241,696
$
210,355
Adjustments to arrive at net interest
income - FTE:
Tax equivalent interest
6,555
6,399
Net interest income - FTE (Non-GAAP)
248,251
216,754
Noninterest income (GAAP)
130,200
123,678
Noninterest expense (GAAP)
237,052
214,778
Adjustments to arrive at operating
noninterest expense:
Acquisition expense
39
—
Severance expense
486
145
Total Non-GAAP adjustments
525
145
Operating noninterest expense
(Non-GAAP)
236,527
214,633
Operating pre-tax, pre-provision income -
FTE (Non-GAAP)
$
141,924
$
125,799
Net interest income earnings per share -
diluted (GAAP)
$
4.96
$
4.31
Tax equivalent interest
0.13
0.13
Net interest income - FTE (Non-GAAP)
5.09
4.44
Noninterest income (GAAP)
2.67
2.53
Noninterest expense (GAAP)
4.86
4.40
Acquisition expense
—
—
Severance expense
0.01
—
Operating pre-tax, pre-provision income -
FTE earnings per share - diluted (Non-GAAP)
$
2.91
$
2.57
Tangible book value non-GAAP
reconciliations:
UMB Financial
Corporation
(unaudited, dollars in thousands except
share and per share data)
As of March 31,
2023
2022
Total shareholders' equity (GAAP)
$
2,814,659
$
2,748,405
Less: Intangible assets
Goodwill
207,385
182,225
Other intangibles, net
76,426
15,690
Total intangibles, net
283,811
197,915
Total tangible shareholders' equity
(Non-GAAP)
$
2,530,848
$
2,550,490
Total shares outstanding
48,507,116
48,403,262
Ratio of total shareholders' equity (book
value) per share
$
58.03
$
56.78
Ratio of total tangible shareholders'
equity (tangible book value) per share (Non-GAAP)
52.17
52.69
Operating return on average tangible
equity excluding AOCI non-GAAP reconciliations:
UMB Financial
Corporation
(unaudited, dollars in thousands)
Three Months Ended
March 31,
December 31,
March 31,
2023
2022
2022
Average total shareholders' equity
(GAAP)
$
2,724,435
$
2,621,693
$
2,933,005
Less: Average intangible assets
Average goodwill
207,385
194,805
174,689
Average other intangibles, net
77,575
46,243
14,105
Average total intangibles, net
284,960
241,049
188,794
Average total tangible shareholders'
equity (Non-GAAP)
2,439,475
2,380,644
2,744,211
Less: Average accumulated other
comprehensive (loss) income (AOCI)
(643,559
)
(741,438
)
(126,392
)
Average total tangible shareholders'
equity excluding AOCI (Non-GAAP)
$
3,083,034
$
3,122,082
$
2,870,603
Net operating income (Non-GAAP)
$
92,836
$
101,092
$
106,073
Non-GAAP
Operating return on average tangible
equity excluding AOCI
12.21
%
12.85
%
14.99
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230421005431/en/
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