UMB Financial Corporation Reports Second Quarter Net Income of $101.3 Million and Net Operating Income(i) of $105.9 Million.

UMB Financial Corporation (Nasdaq: UMBF), a financial services company, announced net income for the second quarter of 2024 of $101.3 million, or $2.07 per diluted share, compared to $110.3 million, or $2.25 per diluted share, in the first quarter (linked quarter) and $90.1 million, or $1.85 per diluted share, in the second quarter of 2023.

Net operating income, a non-GAAP financial measure reconciled later in this release to net income, the nearest comparable GAAP measure, was $105.9 million, or $2.16 per diluted share, for the second quarter of 2024, compared to $120.7 million, or $2.47 per diluted share, for the linked quarter and $93.8 million, or $1.93 per diluted share, for the second quarter of 2023. 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 $146.8 million, or $3.00 per diluted share, for the second quarter of 2024, compared to $157.5 million, or $3.22 per diluted share, for the linked quarter, and $127.9 million, or $2.63 per diluted share, for the second quarter of 2023. These operating PTPP results represent a decrease of 6.7% on a linked-quarter basis and an increase of 14.8% compared to the second quarter of 2023.

“We are pleased with our second quarter financial results, including continued net interest income growth driven by balance sheet growth and net interest margin expansion, and solid credit metrics,” said Mariner Kemper, UMB Financial Corporation chairman and chief executive officer.

“In the second quarter, average loans increased 7.3% to $23.8 billion, and average deposits increased $2.9 billion or 9.1% from one year ago. Our borrowers remain cautiously optimistic, with some continuing concerns around the geopolitical environment, inflation, and the timing of potential rate cuts. Competition for good deals remains robust, however, our focus on relationships and service are our differentiators, allowing us to continue to take market share.

"Credit quality remains very strong, with net charge-offs just 0.05% of average loans for both the second quarter and year-to-date. Net charge-offs have averaged a mere four basis points over the past eight quarters. Non-performing loans fell to just 0.06% of loans for the second quarter.

"Our teams excel at building and maintaining strong relationships across our footprint, and we’re focused on continuing our long track record of growth. We remain excited about the future, including our pending acquisition of Heartland Financial and the opportunity we see as a combined company.”

(i) A non-GAAP financial measure reconciled later in this release to net income, the nearest comparable GAAP measure.

Second Quarter 2024 earnings discussion

Summary of quarterly financial results		UMB Financial Corporation
(unaudited, dollars in thousands, except per share data)
		Q2				Q1				Q2
		2024				2024				2023
Net income (GAAP)		$	101,345			$	110,258			$	90,110
Earnings per share - diluted (GAAP)			2.07				2.25				1.85
Operating pre-tax, pre-provision income (Non-GAAP)(i)			146,840				157,451				127,929
Operating pre-tax, pre-provision earnings per share - diluted (Non-GAAP)(i)			3.00				3.22				2.63
Operating pre-tax, pre-provision income - FTE (Non-GAAP)(i)			153,247				163,967				134,504
Operating pre-tax, pre-provision earnings per share - FTE - diluted (Non-GAAP)(i)			3.13				3.35				2.77
Net operating income (Non-GAAP)(i)			105,873				120,712				93,841
Operating earnings per share - diluted (Non-GAAP)(i)			2.16				2.47				1.93
GAAP
Return on average assets			0.96	%			1.06	%			0.90	%
Return on average equity			12.73				14.11				12.56
Efficiency ratio			63.37				63.44				65.59
Non-GAAP(i)
Operating return on average assets			1.00	%			1.16	%			0.93	%
Operating return on average equity			13.30				15.44				13.08
Operating efficiency ratio			61.86				60.04				64.24

(i)

See reconciliation of Non-GAAP measures to their nearest comparable GAAP measures later in this release.

Summary of year-to-date financial results		UMB Financial Corporation
(unaudited, dollars in thousands, except per share data)		June				June
		YTD				YTD
		2024				2023
Net income (GAAP)		$	211,603			$	182,547
Earnings per share - diluted (GAAP)			4.32				3.75
Operating pre-tax, pre-provision income (Non-GAAP)(i)			304,291				263,298
Operating pre-tax, pre-provision earnings per share - diluted (Non-GAAP)(i)			6.22				5.41
Operating pre-tax, pre-provision income - FTE (Non-GAAP)(i)			317,214				276,428
Operating pre-tax, pre-provision earnings per share - FTE - diluted (Non-GAAP)(i)			6.48				5.68
Net operating income (Non-GAAP)(i)			226,585				186,677
Operating earnings per share - diluted (Non-GAAP)(i)			4.63				3.83
GAAP
Return on average assets			1.01	%			0.93	%
Return on average equity			13.41				13.14
Efficiency ratio			63.41				64.34
Non-GAAP(i)
Operating return on average assets			1.08	%			0.95	%
Operating return on average equity			14.36				13.44
Operating efficiency ratio			60.94				63.61

Summary of revenue		UMB Financial Corporation
(unaudited, dollars in thousands)
		Q2				Q1				Q2				CQ vs.				CQ vs.
		2024				2024				2023				LQ				PY
Net interest income		$	245,108			$	239,434			$	225,611			$	5,674			$	19,497
Noninterest income:
Trust and securities processing			70,010				69,478				61,589				532				8,421
Trading and investment banking			5,461				5,462				4,800				(1	)			661
Service charges on deposit accounts			22,261				20,757				21,381				1,504				880
Insurance fees and commissions			267				283				225				(16	)			42
Brokerage fees			14,020				13,160				13,604				860				416
Bankcard fees			22,346				21,968				18,579				378				3,767
Investment securities (losses) gains, net			(1,867	)			9,371				900				(11,238	)			(2,767	)
Other			12,421				18,765				17,004				(6,344	)			(4,583	)
Total noninterest income		$	144,919			$	159,244			$	138,082			$	(14,325	)		$	6,837
Total revenue		$	390,027			$	398,678			$	363,693			$	(8,651	)		$	26,334
Net interest income (FTE)		$	251,515			$	245,950			$	232,186
Net interest margin (FTE)			2.51	%			2.48	%			2.44	%
Total noninterest income as a % of total revenue			37.2				39.9				38.0

Net interest income

• Second quarter 2024 net interest income totaled $245.1 million, an increase of $5.7 million, or 2.4%, from the linked quarter, driven primarily by continued growth in average loans and higher levels of liquidity, partially offset by higher interest expense.
• Average earning assets increased $359.7 million, or 0.9%, from the linked quarter, largely driven by an increase of $451.8 million in average loans and an increase of $182.8 million in interest-bearing due from banks, partially offset by a decrease of $314.6 million in average securities.
• Average interest-bearing liabilities increased $375.9 million, or 1.3%, from the linked quarter, primarily driven by an increase of $778.0 million in interest-bearing deposits, partially offset by a decrease of $439.0 million in borrowed funds. Average noninterest-bearing demand deposits increased $36.6 million, or 0.4%, as compared to the linked quarter.
• Net interest margin for the second quarter was 2.51%, an increase of three basis points from the linked quarter, driven by increased loan yields, the benefit of free funds, and earning asset mix changes, partially offset by the increased cost of interest-bearing liabilities. The cost of interest-bearing liabilities increased 12 basis points to 4.15%. Total cost of funds increased 10 basis points from the linked quarter to 3.06%. Both average loan yields and earning asset yields increased 13 basis points from the linked quarter.
• On a year-over-year basis, net interest income increased $19.5 million, or 8.6%, driven by a $1.6 billion, or 7.3%, increase in average loans, partially offset by higher interest costs due to unfavorable mix shift in the composition of liabilities as well as the impact of higher short-term interest rates.
• Compared to the second quarter of 2023, average earning assets increased $2.0 billion, or 5.2%, largely driven by the increase in average loans noted above and an increase of $779.2 million in interest-bearing due from banks, partially offset by a decrease of $360.3 million in average securities.
• Average deposits increased 9.1% compared to the second quarter of 2023. Average noninterest-bearing demand deposit balances decreased 4.1% compared to the second quarter of 2023, driven by migration to rate-bearing deposit categories, as expected in a higher interest rate environment. Average demand deposit balances comprised 29.4% of total deposits, compared to 30.0% in the linked quarter and 33.5% in the second quarter of 2023.
• Average borrowed funds decreased $439.0 million as compared to the linked quarter and $1.4 billion as compared to the second quarter of 2023, driven by short-term borrowings with the Federal Home Loan Bank and the Federal Reserve.

Noninterest income

• Second quarter 2024 noninterest income decreased $14.3 million, or 9.0%, on a linked-quarter basis, largely due to:
  • $11.2 million in lower investment securities gains, primarily driven by a net $8.6 million gain on disposition of two of the company's non-marketable securities recognized in the first quarter and a $2.6 million reduction in value of one of the company's non-marketable securities during the second quarter.
  • A decrease of $5.8 million in other miscellaneous income, recorded in other income, related to a $4.0 million legal settlement and a $1.8 million gain on sale of land, both recorded during the first quarter of 2024.
  • These decreases were partially offset by an increase of $1.6 million in derivative income, recorded in other income, and an increase of $1.5 million in service charges on deposit accounts primarily due to higher healthcare income related to customer transfer and conversion.
• Compared to the prior year, noninterest income in the second quarter of 2024 increased $6.8 million, or 5.0%, primarily driven by:
  • Increases of $5.6 million in fund services income, $1.5 million in corporate trust income, and $1.3 million in trust income, all recorded in trust and securities processing.
  • An increase of $3.8 million in bankcard income primarily driven by higher interchange revenue and lower rebates and rewards expense as compared to the prior year.
  • An increase of $1.0 million in healthcare income related to customer transfer and conversion, recorded in service charges on deposit accounts.
  • Increases of $0.5 million in bank-owned life insurance income and $0.5 million in derivative income, both recorded in other income.
  • These increases were partially offset by the following decreases:
    • A decrease of $4.3 million in other miscellaneous income driven by a $4.0 million gain on sale of other assets recorded in the second quarter of 2023.
    • $2.8 million in lower investment securities gains, primarily driven by a $2.6 million reduction in value of one of the company's non-marketable securities during the second quarter of 2024.

Noninterest expense

Summary of noninterest expense		UMB Financial Corporation
(unaudited, dollars in thousands)
		Q2				Q1				Q2				CQ vs.				CQ vs.
		2024				2024				2023				LQ				PY
Salaries and employee benefits		$	142,861			$	143,006			$	143,312			$	(145	)		$	(451	)
Occupancy, net			11,723				12,270				11,746				(547	)			(23	)
Equipment			15,603				16,503				17,086				(900	)			(1,483	)
Supplies and services			3,404				3,301				4,195				103				(791	)
Marketing and business development			6,598				6,025				7,124				573				(526	)
Processing fees			29,701				27,936				26,572				1,765				3,129
Legal and consulting			16,566				7,894				7,059				8,672				9,507
Bankcard			11,818				10,567				8,307				1,251				3,511
Amortization of other intangible assets			1,911				1,960				2,117				(49	)			(206	)
Regulatory fees			2,568				19,395				6,123				(16,827	)			(3,555	)
Other			6,314				5,947				7,032				367				(718	)
Total noninterest expense		$	249,067			$	254,804			$	240,673			$	(5,737	)		$	8,394

• GAAP noninterest expense for the second quarter of 2024 was $249.1 million, a decrease of $5.7 million, or 2.3%, from the linked quarter and an increase of $8.4 million, or 3.5% from the second quarter of 2023. Operating noninterest expense, a non-GAAP financial measure reconciled later in this release to noninterest expense, the nearest comparable GAAP measure, was $243.2 million for the second quarter of 2024, an increase of $2.0 million, or 0.8%, from the linked quarter and an increase of $7.4 million, or 3.1%, from the second quarter of 2023.
• The linked-quarter decrease in GAAP noninterest expense was driven by:
  • A decrease of $16.8 million in regulatory fees expense, driven by the lower industry-wide FDIC special assessment levied on banks to recoup the losses related to two of the bank failures in March 2023. The results for the second quarter of 2024 include a reduction of $3.8 million in pre-tax FDIC special assessment expense while the first quarter included pre-tax expense of $13.0 million, both related to changes made in the loss estimates by the FDIC.
  • This decrease was partially offset by the following increases:
    • An increase of $8.7 million in legal and consulting expense driven by expense related to the announced acquisition of Heartland Financial USA, Inc.
    • An increase of $1.8 million in processing fees expense due to increased software subscription costs.
    • An increase of $1.3 million in bankcard expense driven by higher administrative expense.
• The year-over-year increase in GAAP noninterest expense was driven by:
  • An increase of $9.5 million in legal and consulting expense, primarily driven by expense related to the announced acquisition of Heartland Financial USA, Inc.
  • An increase of $3.5 million in bankcard expense driven by higher administrative expense.
  • These increases were partially offset by a decrease of $3.6 million in regulatory fees expense driven by the aforementioned reduction of $3.8 million in FDIC special assessment expense recorded in the second quarter of 2024.

Income taxes

• The company’s effective tax rate was 18.9% for the six months ended June 30, 2024, compared to 17.6% for the same period in 2023. The increase in the effective tax rate in 2024 is primarily attributable to a smaller portion of income being earned from tax-exempt municipal securities and a decrease in excess tax benefits associated with stock compensation recorded in 2024 as compared to the prior year.

Balance sheet

• Average total assets for the second quarter of 2024 were $42.5 billion compared to $42.0 billion for the linked quarter and $40.4 billion for the same period in 2023.

Summary of average loans and leases - QTD Average										UMB Financial Corporation
(unaudited, dollars in thousands)
		Q2				Q1				Q2				CQ vs.				CQ vs.
		2024				2024				2023				LQ				PY
Commercial and industrial		$	9,926,855			$	9,942,457			$	9,724,300			$	(15,602	)		$	202,555
Specialty lending			502,646				485,989				574,220				16,657				(71,574	)
Commercial real estate			9,360,991				9,026,511				8,178,463				334,480				1,182,528
Consumer real estate			2,998,560				2,968,320				2,833,739				30,240				164,821
Consumer			159,743				154,062				139,705				5,681				20,038
Credit cards			617,502				489,546				485,749				127,956				131,753
Leases and other			239,532				287,158				255,425				(47,626	)			(15,893	)
Total loans		$	23,805,829			$	23,354,043			$	22,191,601			$	451,786			$	1,614,228

• Average loans for the second quarter of 2024 increased $451.8 million, or 1.9%, on a linked-quarter basis and $1.6 billion, or 7.3%, compared to the second quarter of 2023.

Summary of average securities - QTD Average		UMB Financial Corporation
(unaudited, dollars in thousands)
		Q2				Q1				Q2				CQ vs.				CQ vs.
		2024				2024				2023				LQ				PY
Securities available for sale:
U.S. Treasury		$	900,348			$	1,127,611			$	797,104			$	(227,263	)		$	103,244
U.S. Agencies			210,151				199,719				189,091				10,432				21,060
Mortgage-backed			3,667,289				3,595,619				3,813,234				71,670				(145,945	)
State and political subdivisions			1,213,000				1,254,148				1,319,398				(41,148	)			(106,398	)
Corporates			323,751				341,142				349,318				(17,391	)			(25,567	)
Collateralized loan obligations			336,273				347,063				348,078				(10,790	)			(11,805	)
Total securities available for sale		$	6,650,812			$	6,865,302			$	6,816,223			$	(214,490	)		$	(165,411	)
Securities held to maturity:
U.S. Agencies		$	120,563			$	123,225			$	123,135			$	(2,662	)		$	(2,572	)
Mortgage-backed			2,656,096				2,707,780				2,878,657				(51,684	)			(222,561	)
State and political subdivisions			2,798,371				2,821,799				2,822,218				(23,428	)			(23,847	)
Total securities held to maturity		$	5,575,030			$	5,652,804			$	5,824,010			$	(77,774	)		$	(248,980	)
Trading securities		$	26,381			$	17,893			$	12,538			$	8,488			$	13,843
Other securities			448,015				478,805				407,754				(30,790	)			40,261
Total securities		$	12,700,238			$	13,014,804			$	13,060,525			$	(314,566	)		$	(360,287	)

• Average total securities decreased 2.4% on a linked-quarter basis and 2.8% compared to the second quarter of 2023.
• At June 30, 2024, the unrealized pre-tax net loss on the available-for-sale securities portfolio was $678.7 million, or 8.7% of the $7.8 billion amortized cost balance. At June 30, 2024, the unrealized pre-tax net loss on the securities designated as held to maturity was $636.2 million, or 11.5% of the $5.5 billion amortized cost value.

Summary of average deposits - QTD Average						UMB Financial Corporation
(unaudited, dollars in thousands)
		Q2				Q1				Q2				CQ vs.				CQ vs.
		2024				2024				2023				LQ				PY
Deposits:
Noninterest-bearing demand		$	10,103,035			$	10,066,409			$	10,535,325			$	36,626			$	(432,290	)
Interest-bearing demand and savings			21,914,116				20,701,659				17,463,022				1,212,457				4,451,094
Time deposits			2,323,610				2,758,064				3,476,616				(434,454	)			(1,153,006	)
Total deposits		$	34,340,761			$	33,526,132			$	31,474,963			$	814,629			$	2,865,798
Noninterest bearing deposits as % of total			29.4	%			30.0	%			33.5	%

• Average deposits increased 2.4% on a linked-quarter basis and 9.1% compared to the second quarter of 2023.

Capital

Capital information		UMB Financial Corporation
(unaudited, dollars in thousands, except per share data)
		June 30, 2024				March 31, 2024				June 30, 2023
Total equity		$	3,227,347			$	3,152,816			$	2,831,628
Accumulated other comprehensive loss, net			(605,634	)			(594,538	)			(685,831	)
Book value per common share			66.21				64.68				58.36
Tangible book value per common share (Non-GAAP)(i)			60.58				59.01				52.54
Regulatory capital:
Common equity Tier 1 capital		$	3,591,755			$	3,503,837			$	3,273,841
Tier 1 capital			3,591,755				3,503,837				3,273,841
Total capital			4,214,712				4,115,097				3,870,101
Regulatory capital ratios:
Common equity Tier 1 capital ratio			11.14	%			11.09	%			10.65	%
Tier 1 risk-based capital ratio			11.14				11.09				10.65
Total risk-based capital ratio			13.08				13.03				12.59
Tier 1 leverage ratio			8.50				8.39				8.16

(i)

See reconciliation of Non-GAAP measures to their nearest comparable GAAP measures later in this release.

• At June 30, 2024, 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)
		Q2				Q1				Q4				Q3				Q2
		2024				2024				2023				2023				2023
Net charge-offs (recoveries) - total loans		$	2,856			$	3,017			$	1,352			$	4,618			$	(139	)
Net loan charge-offs (recoveries) as a % of total average loans			0.05	%			0.05	%			0.02	%			0.08	%			(0.00	)%
Loans over 90 days past due		$	5,644			$	3,076			$	3,111			$	3,044			$	10,675
Loans over 90 days past due as a % of total loans			0.02	%			0.01	%			0.01	%			0.01	%			0.05	%
Nonaccrual and restructured loans		$	13,743			$	17,756			$	13,212			$	17,042			$	19,347
Nonaccrual and restructured loans as a % of total loans			0.06	%			0.08	%			0.06	%			0.07	%			0.09	%
Provision for credit losses		$	14,050			$	10,000			$	—			$	4,977			$	13,000

• Provision for credit losses for the second quarter increased $4.1 million from the linked quarter and $1.1 million from the second quarter of 2023. These changes are driven largely by ongoing re-calibrations of econometric loss models and underlying macro-economic drivers for certain loan portfolios and $0.6 billion increase in end-of-period loans from March 31, 2024, as well as general portfolio trends in the current period as compared to the prior periods.
• Net charge-offs for the second quarter totaled $2.9 million, or 0.05% of average loans, compared to $3.0 million, or 0.05% of average loans in the linked quarter, and net recoveries of $0.1 million for the second quarter of 2023.

Dividend Declaration

At the company’s quarterly board meeting, the Board of Directors declared a $0.39 per share quarterly cash dividend, payable on October 1, 2024, to shareholders of record at the close of business on September 10, 2024.

Conference Call

The company will host a conference call to discuss its second quarter 2024 earnings results on Wednesday, July 31, 2024, 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 944750. The live call may also be accessed by visiting investorrelations.umb.com or by using the following link:

UMB Financial 2Q 2024 Conference Call

A replay of the conference call may be heard through August 14, 2024, by calling (toll-free) 866-813-9403 or (international) 929-458-6194. The replay access code required for playback is 435652. The call replay may also be accessed at investorrelations.umb.com.

Non-GAAP Financial Information

In this release, we provide information about net operating income, operating earnings per share – diluted (operating EPS), operating return on average equity (operating ROE), operating return on average assets (operating ROA), operating noninterest expense, operating efficiency ratio, 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, 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, operating PTPP, operating PTPP EPS, operating PTPP-FTE, operating PTPP-FTE EPS, tangible shareholders’ equity, and tangible book value per share – and the nearest comparable GAAP financial measures are reconciled later in this release. The company believes that these non-GAAP financial measures and the reconciliations may be useful to investors because they adjust for acquisition- and severance-related items, and the FDIC special assessment 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, the FDIC special assessment, 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, and the FDIC special assessment.

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, and the FDIC special assessment.

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, 2023, 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 instability in the Middle East and 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)
		June 30,
		2024				2023
ASSETS
Loans		$	24,197,462			$	22,483,542
Allowance for credit losses on loans			(239,167	)			(222,161	)
Net loans			23,958,295				22,261,381
Loans held for sale			4,211				3,819
Securities:
Available for sale			7,107,373				6,668,615
Held to maturity, net of allowance for credit losses			5,546,634				5,807,763
Trading securities			28,981				28,887
Other securities			447,650				428,149
Total securities			13,130,638				12,933,414
Federal funds sold and resell agreements			247,462				319,838
Interest-bearing due from banks			4,640,418				3,369,911
Cash and due from banks			464,719				431,527
Premises and equipment, net			226,860				255,127
Accrued income			237,874				190,387
Goodwill			207,385				207,385
Other intangibles, net			67,141				75,184
Other assets			1,284,411				1,195,069
Total assets		$	44,469,414			$	41,243,042
LIABILITIES
Deposits:
Noninterest-bearing demand		$	12,034,606			$	12,142,906
Interest-bearing demand and savings			22,400,255				18,184,063
Time deposits under $250,000			1,421,513				2,665,166
Time deposits of $250,000 or more			661,196				528,326
Total deposits			36,517,570				33,520,461
Federal funds purchased and repurchase agreements			2,217,033				2,050,583
Short-term debt			1,300,000				1,800,000
Long-term debt			384,245				382,280
Accrued expenses and taxes			352,778				256,845
Other liabilities			470,441				401,245
Total liabilities			41,242,067				38,411,414
SHAREHOLDERS' EQUITY
Common stock			55,057				55,057
Capital surplus			1,132,301				1,124,977
Retained earnings			2,984,152				2,681,448
Accumulated other comprehensive loss, net			(605,634	)			(685,831	)
Treasury stock			(338,529	)			(344,023	)
Total shareholders' equity			3,227,347				2,831,628
Total liabilities and shareholders' equity		$	44,469,414			$	41,243,042

Consolidated Statements of Income		UMB Financial Corporation
(unaudited, dollars in thousands except share and per share data)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2024				2023				2024				2023
INTEREST INCOME
Loans		$	400,351			$	342,994			$	785,917			$	651,435
Securities:
Taxable interest			61,582				54,587				122,693				107,636
Tax-exempt interest			25,077				25,550				50,410				50,856
Total securities income			86,659				80,137				173,103				158,492
Federal funds and resell agreements			3,674				3,889				6,736				9,540
Interest-bearing due from banks			47,174				34,206				91,862				50,372
Trading securities			424				154				729				288
Total interest income			538,282				461,380				1,058,347				870,127
INTEREST EXPENSE
Deposits			240,525				170,550				464,400				298,449
Federal funds and repurchase agreements			28,081				24,745				55,743				48,047
Other			24,568				40,474				53,662				56,324
Total interest expense			293,174				235,769				573,805				402,820
Net interest income			245,108				225,611				484,542				467,307
Provision for credit losses			14,050				13,000				24,050				36,250
Net interest income after provision for credit losses			231,058				212,611				460,492				431,057
NONINTEREST INCOME
Trust and securities processing			70,010				61,589				139,488				123,948
Trading and investment banking			5,461				4,800				10,923				10,108
Service charges on deposit accounts			22,261				21,381				43,018				42,540
Insurance fees and commissions			267				225				550				499
Brokerage fees			14,020				13,604				27,180				27,280
Bankcard fees			22,346				18,579				44,314				36,751
Investment securities (losses) gains, net			(1,867	)			900				7,504				(4,424	)
Other			12,421				17,004				31,186				31,580
Total noninterest income			144,919				138,082				304,163				268,282
NONINTEREST EXPENSE
Salaries and employee benefits			142,861				143,312				285,867				285,810
Occupancy, net			11,723				11,746				23,993				23,923
Equipment			15,603				17,086				32,106				34,935
Supplies and services			3,404				4,195				6,705				8,070
Marketing and business development			6,598				7,124				12,623				12,459
Processing fees			29,701				26,572				57,637				49,812
Legal and consulting			16,566				7,059				24,460				14,344
Bankcard			11,818				8,307				22,385				15,440
Amortization of other intangible assets			1,911				2,117				3,871				4,415
Regulatory fees			2,568				6,123				21,963				11,674
Other			6,314				7,032				12,261				16,843
Total noninterest expense			249,067				240,673				503,871				477,725
Income before income taxes			126,910				110,020				260,784				221,614
Income tax expense			25,565				19,910				49,181				39,067
NET INCOME		$	101,345			$	90,110			$	211,603			$	182,547
PER SHARE DATA
Net income – basic		$	2.08			$	1.86			$	4.34			$	3.77
Net income – diluted			2.07				1.85				4.32				3.75
Dividends			0.39				0.38				0.78				0.76
Weighted average shares outstanding – basic			48,744,636				48,514,277				48,704,075				48,474,865
Weighted average shares outstanding – diluted			48,974,265				48,668,413				48,952,054				48,707,487

Consolidated Statements of Comprehensive Income		UMB Financial Corporation
(unaudited, dollars in thousands)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2024				2023				2024				2023
Net income		$	101,345			$	90,110			$	211,603			$	182,547
Other comprehensive (loss) income, before tax:
Unrealized gains and losses on debt securities:
Change in unrealized holding gains and losses, net			(12,727	)			(87,505	)			(54,280	)			6,152
Less: Reclassification adjustment for net (gains) losses included in net income			—				—				(139	)			433
Amortization of net unrealized loss on securities transferred from available-for-sale to held-to-maturity			8,938				10,312				17,727				20,295
Change in unrealized gains and losses on debt securities			(3,789	)			(77,193	)			(36,692	)			26,880
Unrealized gains and losses on derivative hedges:
Change in unrealized gains and losses on derivative hedges, net			(8,775	)			1,848				(22,433	)			321
Less: Reclassification adjustment for net gains included in net income			(2,066	)			(2,660	)			(5,726	)			(5,221	)
Change in unrealized gains and losses on derivative hedges			(10,841	)			(812	)			(28,159	)			(4,900	)
Other comprehensive (loss) income, before tax			(14,630	)			(78,005	)			(64,851	)			21,980
Income tax benefit (expense)			3,534				18,950				16,152				(5,076	)
Other comprehensive (loss) income			(11,096	)			(59,055	)			(48,699	)			16,904
Comprehensive income		$	90,249			$	31,055			$	162,904			$	199,451

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, 2023		$	55,057			$	1,125,949			$	2,536,086			$	(702,735	)		$	(347,264	)		$	2,667,093
Total comprehensive income			—				—				182,547				16,904				—				199,451
Dividends ($0.76 per share)			—				—				(37,185	)			—				—				(37,185	)
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			—				8,455				—				—				—				8,455
Sale of treasury stock			—				115				—				—				140				255
Exercise of stock options			—				222				—				—				520				742
Balance - June 30, 2023		$	55,057			$	1,124,977			$	2,681,448			$	(685,831	)		$	(344,023	)		$	2,831,628
Balance - January 1, 2024		$	55,057			$	1,134,363			$	2,810,824			$	(556,935	)		$	(342,890	)		$	3,100,419
Total comprehensive income (loss)			—				—				211,603				(48,699	)			—				162,904
Dividends ($0.78 per share)			—				—				(38,275	)			—				—				(38,275	)
Purchase of treasury stock			—				—				—				—				(7,537	)			(7,537	)
Issuances of equity awards, net of forfeitures			—				(10,964	)			—				—				11,667				703
Recognition of equity-based compensation			—				10,040				—				—				—				10,040
Sale of treasury stock			—				125				—				—				107				232
Exercise of stock options			—				54				—				—				124				178
Common stock issuance costs			—				(1,317	)			—				—				—				(1,317	)
Balance - June 30, 2024		$	55,057			$	1,132,301			$	2,984,152			$	(605,634	)		$	(338,529	)		$	3,227,347

Average Balances / Yields and Rates		UMB Financial Corporation
(tax - equivalent basis)
(unaudited, dollars in thousands)
		Three Months Ended June 30,
		2024								2023
		Average				Average				Average				Average
		Balance				Yield/Rate				Balance				Yield/Rate
Assets
Loans, net of unearned interest		$	23,805,829				6.77	%		$	22,191,601				6.20	%
Securities:
Taxable			9,033,829				2.74				9,228,103				2.37
Tax-exempt			3,640,028				3.47				3,819,884				3.36
Total securities			12,673,857				2.95				13,047,987				2.66
Federal funds and resell agreements			246,132				6.00				276,459				5.64
Interest bearing due from banks			3,486,907				5.44				2,707,740				5.07
Trading securities			26,381				6.95				12,538				5.37
Total earning assets			40,239,106				5.44				38,236,325				4.91
Allowance for credit losses			(228,369	)							(216,876	)
Other assets			2,465,492								2,345,714
Total assets		$	42,476,229							$	40,365,163
Liabilities and Shareholders' Equity
Interest-bearing deposits		$	24,237,726				3.99	%		$	20,939,638				3.27	%
Federal funds and repurchase agreements			2,421,727				4.66				2,336,929				4.25
Borrowed funds			1,744,448				5.66				3,137,267				5.17
Total interest-bearing liabilities			28,403,901				4.15				26,413,834				3.58
Noninterest-bearing demand deposits			10,103,035								10,535,325
Other liabilities			767,687								539,172
Shareholders' equity			3,201,606								2,876,832
Total liabilities and shareholders' equity		$	42,476,229							$	40,365,163
Net interest spread							1.29	%							1.33	%
Net interest margin							2.51								2.44

Average Balances / Yields and Rates		UMB Financial Corporation
(tax - equivalent basis)
(unaudited, dollars in thousands)
		Six Months Ended June 30,
		2024								2023
		Average				Average				Average				Average
		Balance				Yield/Rate				Balance				Yield/Rate
Assets
Loans, net of unearned interest		$	23,579,936				6.70	%		$	21,734,142				6.05	%
Securities:
Taxable			9,149,309				2.70				9,288,392				2.34
Tax-exempt			3,686,075				3.44				3,832,505				3.36
Total securities			12,835,384				2.91				13,120,897				2.64
Federal funds and resell agreements			226,288				5.99				363,341				5.29
Interest bearing due from banks			3,395,466				5.44				2,127,343				4.77
Trading securities			22,137				7.10				10,907				5.77
Total earning assets			40,059,211				5.38				37,356,630				4.77
Allowance for credit losses			(225,243	)							(206,559	)
Other assets			2,411,681								2,292,479
Total assets		$	42,245,649							$	39,442,550
Liabilities and Shareholders' Equity
Interest-bearing deposits		$	23,848,724				3.92	%		$	20,294,984				2.97	%
Federal funds and repurchase agreements			2,403,240				4.66				2,399,090				4.04
Borrowed funds			1,963,971				5.49				2,174,157				5.22
Total interest-bearing liabilities			28,215,935				4.09				24,868,231				3.27
Noninterest-bearing demand deposits			10,084,722								11,223,478
Other liabilities			772,430								549,787
Shareholders' equity			3,172,562								2,801,054
Total liabilities and shareholders' equity		$	42,245,649							$	39,442,550
Net interest spread							1.29	%							1.50	%
Net interest margin							2.50								2.59

Business Segment Information		UMB Financial Corporation
(unaudited, dollars in thousands)
		Three Months Ended June 30, 2024
		Commercial Banking				Institutional Banking				Personal Banking				Total
Net interest income		$	160,487			$	51,502			$	33,119			$	245,108
Provision for credit losses			11,480				846				1,724				14,050
Noninterest income			27,720				95,092				22,107				144,919
Noninterest expense			85,780				95,531				67,756				249,067
Income (loss) before taxes			90,947				50,217				(14,254	)			126,910
Income tax expense (benefit)			17,858				9,297				(1,590	)			25,565
Net income (loss)		$	73,089			$	40,920			$	(12,664	)		$	101,345
		Three Months Ended June 30, 2023
		Commercial Banking				Institutional Banking				Personal Banking				Total
Net interest income		$	144,389			$	50,397				30,825			$	225,611
Provision for credit losses			11,055				234				1,711				13,000
Noninterest income			25,666				86,813				25,603				138,082
Noninterest expense			85,896				91,591				63,186				240,673
Income (loss) before taxes			73,104				45,385				(8,469	)			110,020
Income tax expense (benefit)			12,996				8,011				(1,097	)			19,910
Net income (loss)		$	60,108			$	37,374			$	(7,372	)		$	90,110
		Six Months Ended June 30, 2024
		Commercial Banking				Institutional Banking				Personal Banking				Total
Net interest income		$	317,734			$	101,362			$	65,446			$	484,542
Provision for credit losses			19,000				1,325				3,725				24,050
Noninterest income			70,686				187,808				45,669				304,163
Noninterest expense			178,199				195,907				129,765				503,871
Income (loss) before taxes			191,221				91,938				(22,375	)			260,784
Income tax expense (benefit)			35,153				16,828				(2,800	)			49,181
Net income (loss)		$	156,068			$	75,110			$	(19,575	)		$	211,603
		Six Months Ended June 30, 2023
		Commercial Banking				Institutional Banking				Personal Banking				Total
Net interest income		$	295,416			$	105,482			$	66,409			$	467,307
Provision for credit losses			32,099				331				3,820				36,250
Noninterest income			48,568				171,051				48,663				268,282
Noninterest expense			169,900				180,962				126,863				477,725
Income (loss) before taxes			141,985				95,240				(15,611	)			221,614
Income tax expense (benefit)			24,638				16,523				(2,094	)			39,067
Net income (loss)		$	117,347			$	78,717			$	(13,517	)		$	182,547

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 June 30, 2024.

Non-GAAP Financial Measures

Net operating income Non-GAAP reconciliations:		UMB Financial Corporation
(unaudited, dollars in thousands except per share data)
		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Net income (GAAP)		$	101,345			$	90,110			$	211,603			$	182,547
Adjustments:
Acquisition expense			9,550				18				9,981				57
Severance expense			130				4,891				276				5,377
FDIC special assessment			(3,800	)			—				9,200				—
Tax-impact of adjustments (i)			(1,352	)			(1,178	)			(4,475	)			(1,304	)
Total Non-GAAP adjustments (net of tax)			4,528				3,731				14,982				4,130
Net operating income (Non-GAAP)		$	105,873			$	93,841			$	226,585			$	186,677
Earnings per share - diluted (GAAP)		$	2.07			$	1.85			$	4.32			$	3.75
Acquisition expense			0.19				—				0.20				—
Severance expense			0.01				0.10				0.01				0.11
FDIC special assessment			(0.08	)			—				0.19				—
Tax-impact of adjustments (i)			(0.03	)			(0.02	)			(0.09	)			(0.03	)
Operating earnings per share - diluted (Non-GAAP)		$	2.16			$	1.93			$	4.63			$	3.83
GAAP
Return on average assets			0.96	%			0.90	%			1.01	%			0.93	%
Return on average equity			12.73				12.56				13.41				13.14
Non-GAAP
Operating return on average assets			1.00	%			0.93	%			1.08	%			0.95	%
Operating return on average equity			13.30				13.08				14.36				13.44

(i)

Calculated using the company’s marginal tax rate of 23.0% for 2024 and 24.0% for 2023.

Operating noninterest expense and operating efficiency ratio Non-GAAP reconciliations:		UMB Financial Corporation
(unaudited, dollars in thousands)
		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Noninterest expense		$	249,067			$	240,673			$	503,871			$	477,725
Adjustments to arrive at operating noninterest expense (pre-tax):
Acquisition expense			9,550				18				9,981				57
Severance expense			130				4,891				276				5,377
FDIC special assessment			(3,800	)			—				9,200				—
Total Non-GAAP adjustments (pre-tax)			5,880				4,909				19,457				5,434
Operating noninterest expense (Non-GAAP)		$	243,187			$	235,764			$	484,414			$	472,291
Noninterest expense		$	249,067			$	240,673			$	503,871			$	477,725
Less: Amortization of other intangibles			1,911				2,117				3,871				4,415
Noninterest expense, net of amortization of other intangibles (Non-GAAP) (numerator A)		$	247,156			$	238,556			$	500,000			$	473,310
Operating noninterest expense		$	243,187			$	235,764			$	484,414			$	472,291
Less: Amortization of other intangibles			1,911				2,117				3,871				4,415
Operating expense, net of amortization of other intangibles (Non-GAAP) (numerator B)		$	241,276			$	233,647			$	480,543			$	467,876
Net interest income		$	245,108			$	225,611			$	484,542			$	467,307
Noninterest income			144,919				138,082				304,163				268,282
Less: Gains (losses) on sales of securities available for sale, net			—				—				139				(2	)
Total Non-GAAP Revenue (denominator A)		$	390,027			$	363,693			$	788,566			$	735,591
Efficiency ratio (numerator A/denominator A)			63.37	%			65.59	%			63.41	%			64.34	%
Operating efficiency ratio (Non-GAAP) (numerator B/denominator A)			61.86				64.24				60.94				63.61

Operating pre-tax, pre-provision income non-GAAP reconciliations:		UMB Financial Corporation
(unaudited, dollars in thousands except per share data)
		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Net interest income (GAAP)		$	245,108			$	225,611			$	484,542			$	467,307
Noninterest income (GAAP)			144,919				138,082				304,163				268,282
Noninterest expense (GAAP)			249,067				240,673				503,871				477,725
Adjustments to arrive at operating noninterest expense:
Acquisition expense			9,550				18				9,981				57
Severance expense			130				4,891				276				5,377
FDIC special assessment			(3,800	)			—				9,200				—
Total Non-GAAP adjustments			5,880				4,909				19,457				5,434
Operating noninterest expense (Non-GAAP)			243,187				235,764				484,414				472,291
Operating pre-tax, pre-provision income (Non-GAAP)		$	146,840			$	127,929			$	304,291			$	263,298
Net interest income earnings per share - diluted (GAAP)		$	5.00			$	4.64			$	9.90			$	9.60
Noninterest income (GAAP)			2.96				2.84				6.21				5.51
Noninterest expense (GAAP)			5.08				4.95				10.29				9.81
Acquisition expense			0.19				—				0.20				—
Severance expense			0.01				0.10				0.01				0.11
FDIC special assessment			(0.08	)			—				0.19				—
Operating pre-tax, pre-provision earnings per share - diluted (Non-GAAP)		$	3.00			$	2.63			$	6.22			$	5.41

Operating pre-tax, pre-provision income - FTE Non-GAAP reconciliations:		UMB Financial Corporation
(unaudited, dollars in thousands except per share data)
		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Net interest income (GAAP)		$	245,108			$	225,611			$	484,542			$	467,307
Adjustments to arrive at net interest income - FTE:
Tax equivalent interest			6,407				6,575				12,923				13,130
Net interest income - FTE (Non-GAAP)			251,515				232,186				497,465				480,437
Noninterest income (GAAP)			144,919				138,082				304,163				268,282
Noninterest expense (GAAP)			249,067				240,673				503,871				477,725
Adjustments to arrive at operating noninterest expense:
Acquisition expense			9,550				18				9,981				57
Severance expense			130				4,891				276				5,377
FDIC special assessment			(3,800	)			—				9,200				—
Total Non-GAAP adjustments			5,880				4,909				19,457				5,434
Operating noninterest expense (Non-GAAP)			243,187				235,764				484,414				472,291
Operating pre-tax, pre-provision income - FTE (Non-GAAP)		$	153,247			$	134,504			$	317,214			$	276,428
Net interest income earnings per share - diluted (GAAP)		$	5.00			$	4.64			$	9.90			$	9.60
Tax equivalent interest			0.13				0.14				0.26				0.27
Net interest income - FTE (Non-GAAP)			5.13				4.78				10.16				9.87
Noninterest income (GAAP)			2.96				2.84				6.21				5.51
Noninterest expense (GAAP)			5.08				4.95				10.29				9.81
Acquisition expense			0.19				—				0.20				—
Severance expense			0.01				0.10				0.01				0.11
FDIC special assessment			(0.08	)			—				0.19				—
Operating pre-tax, pre-provision income - FTE earnings per share - diluted (Non-GAAP)		$	3.13			$	2.77			$	6.48			$	5.68

Tangible book value non-GAAP reconciliations:		UMB Financial Corporation
(unaudited, dollars in thousands except share and per share data)
		As of June 30,
		2024				2023
Total shareholders' equity (GAAP)		$	3,227,347			$	2,831,628
Less: Intangible assets
Goodwill			207,385				207,385
Other intangibles, net			67,141				75,184
Total intangibles, net			274,526				282,569
Total tangible shareholders' equity (Non-GAAP)		$	2,952,821			$	2,549,059
Total shares outstanding			48,745,090				48,517,750
Ratio of total shareholders' equity (book value) per share		$	66.21			$	58.36
Ratio of total tangible shareholders' equity (tangible book value) per share (Non-GAAP)			60.58				52.54

 

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