EX-99.1 2 umbf-ex991_6.htm EX-99.1 umbf-ex991_6.htm

Exhibit 99.1

  

UMB Financial Corporation                                                      News Release

1010 Grand Boulevard

Kansas City, MO 64106

816.860.7000

umb.com

 

//FOR IMMEDIATE RELEASE//

Media Contact: Stephanie Hague: 816.860.5088

Investor Relations Contact: Kay Gregory: 816.860.7106

 

UMB Financial Corporation Reports Earnings of $196.3 Million for the Full-Year 2018

 

KANSAS CITY, Mo. (January 29, 2019) – UMB Financial Corporation (Nasdaq: UMBF), a financial services company, announced results for the fourth quarter and year ended December 31, 2018.  

 

“Results for the fourth quarter 2018 included 8.5 percent annualized average loan growth, 9.9 percent deposit growth and margin expansion of six basis points on a linked-quarter basis,” said Mariner Kemper, chairman and chief executive officer. “However, our results for the quarter were significantly impacted by the charge off of a single $48.1 million factoring relationship. Strong asset quality has long been a hallmark of UMB and this event is certainly not typical for us. After a thorough review, we believe that the issues specific to this credit were isolated and that this charge-off does not point to deterioration in any particular sector. We will continue to evaluate our internal controls.”

 

Income from continuing operations for the fourth quarter 2018 was $25.5 million, or $0.52 per diluted share, compared to $57.8 million, or $1.16 per diluted share, in the third quarter 2018 (linked quarter) and $47.4 million, or $0.95 per diluted share, in the fourth quarter 2017. The reported GAAP income from continuing operations represents decreases of 56.0 percent on a linked-quarter basis and 46.3 percent compared to the fourth quarter 2017. For the year ended December 31, 2018, income from continuing operations was $196.3, million or $3.94 per diluted share, which is an increase of 7.3 percent compared to $183.0 million, or $3.67 per diluted share, for the year ended December 31, 2017.

 

Net operating income from continuing operations, a non-GAAP financial measure reconciled to income from continuing operations, the nearest comparable GAAP measure, later in this release, was $27.6 million, or $0.56 per diluted share, for the fourth quarter 2018, compared to $58.0 million, or $1.16 per diluted share, for the linked quarter and $47.5 million, or $0.95 per diluted share, for the fourth quarter 2017. These results represent decreases of 52.5 percent on a linked-quarter basis and 42.0 percent compared to the fourth quarter 2017. For the year ended December 31, 2018, net operating income from continuing operations was $200.7 million, or $4.03 per diluted share, compared to $183.7 million, or $3.69 per diluted share, for the year ended December 31, 2017.

 

Summary of quarterly financial results

 

UMB Financial Corporation

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4

 

 

Q3

 

 

Q4

 

 

 

2018

 

 

2018

 

 

2017

 

Income from continuing operations

 

$

25,454

 

 

$

57,849

 

 

$

47,357

 

Income from discontinued operations

 

 

—

 

 

 

—

 

 

 

64,604

 

Net income

 

 

25,454

 

 

 

57,849

 

 

 

111,961

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations (diluted)

 

 

0.52

 

 

 

1.16

 

 

 

0.95

 

Earnings per share from discontinued operations (diluted)

 

 

—

 

 

 

—

 

 

 

1.30

 

Earnings per share (diluted)

 

 

0.52

 

 

 

1.16

 

 

 

2.25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating income from continuing operations

 

 

27,578

 

 

 

58,024

 

 

 

47,533

 

Operating earnings per share from continuing operations (diluted)

 

 

0.56

 

 

 

1.16

 

 

 

0.95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP - continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

0.46

%

 

 

1.11

%

 

 

0.91

%

Return on average equity

 

 

4.57

 

 

 

10.32

 

 

 

8.72

 

Efficiency ratio

 

 

71.26

 

 

 

71.27

 

 

 

71.70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP - continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

Operating return on average assets

 

 

0.50

%

 

 

1.11

%

 

 

0.91

%

Operating return on average equity

 

 

4.95

 

 

 

10.35

 

 

 

8.75

 

Operating efficiency ratio

 

 

70.19

 

 

 

71.18

 

 

 

71.59

 

 

Summary of year-to-date financial results

 

UMB Financial Corporation

 

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

 

December

 

 

December

 

 

 

YTD

 

 

YTD

 

 

 

2018

 

 

2017

 

Income from continuing operations

 

$

196,260

 

 

$

182,976

 

(Loss) income from discontinued operations

 

 

(747

)

 

 

64,129

 

Net income

 

 

195,513

 

 

 

247,105

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations (diluted)

 

 

3.94

 

 

 

3.67

 

(Losses) earnings per share from discontinued operations (diluted)

 

 

(0.01

)

 

 

1.29

 

Earnings per share (diluted)

 

 

3.93

 

 

 

4.96

 

 

 

 

 

 

 

 

 

 

Net operating income from continuing operations

 

 

200,743

 

 

 

183,688

 

Operating earnings per share from continuing operations (diluted)

 

 

4.03

 

 

 

3.69

 

 

 

 

 

 

 

 

 

 

GAAP - continuing operations

 

 

 

 

 

 

 

 

Return on average assets

 

 

0.93

%

 

 

0.90

%

Return on average equity

 

 

8.94

 

 

 

8.79

 

Efficiency ratio

 

 

70.39

 

 

 

71.33

 

 

 

 

 

 

 

 

 

 

Non-GAAP - continuing operations

 

 

 

 

 

 

 

 

Operating return on average assets

 

 

0.96

%

 

 

0.90

%

Operating return on average equity

 

 

9.15

 

 

 

8.83

 

Operating efficiency ratio

 

 

69.82

 

 

 

71.22

 

 

 

 

 

 

 

 

Discussion of results from continuing operations

 

Summary of revenue

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4

 

 

Q3

 

 

Q4

 

 

CQ vs.

 

 

CQ vs.

 

 

 

2018

 

 

2018

 

 

2017

 

 

LQ

 

 

PY

 

Net interest income

 

$

161,808

 

 

$

150,490

 

 

$

146,346

 

 

$

11,318

 

 

$

15,462

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trust and securities processing

 

 

41,891

 

 

 

43,425

 

 

 

44,234

 

 

 

(1,534

)

 

 

(2,343

)

Trading and investment banking

 

 

3,119

 

 

 

3,711

 

 

 

5,015

 

 

 

(592

)

 

 

(1,896

)

Service charges on deposit accounts

 

 

20,733

 

 

 

20,927

 

 

 

21,364

 

 

 

(194

)

 

 

(631

)

Insurance fees and commissions

 

 

312

 

 

 

339

 

 

 

388

 

 

 

(27

)

 

 

(76

)

Brokerage fees

 

 

6,761

 

 

 

6,402

 

 

 

6,127

 

 

 

359

 

 

 

634

 

Bankcard fees

 

 

16,375

 

 

 

16,838

 

 

 

17,617

 

 

 

(463

)

 

 

(1,242

)

Gains on sales of securities available for sale, net

 

 

—

 

 

 

211

 

 

 

54

 

 

 

(211

)

 

 

(54

)

Other

 

 

5,808

 

 

 

9,032

 

 

 

11,234

 

 

 

(3,224

)

 

 

(5,426

)

        Total noninterest income

 

$

94,999

 

 

$

100,885

 

 

$

106,033

 

 

$

(5,886

)

 

$

(11,034

)

Total revenue

 

$

256,807

 

 

$

251,375

 

 

$

252,379

 

 

$

5,432

 

 

$

4,428

 

Net interest margin

 

 

3.24

%

 

 

3.18

%

 

 

3.21

%

 

 

 

 

 

 

 

 

Total noninterest income as a % of total revenue

 

 

36.99

 

 

 

40.13

 

 

 

42.01

 

 

 

 

 

 

 

 

 

 

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

 

Net interest income

 

•

Net interest income totaled $161.8 million, an increase of $11.3 million, or 7.5 percent, from linked quarter levels, impacted by a $249.4 million, or 2.1 percent, increase in average loans, as well as a six-basis-point improvement in net interest margin.

 

•

Earning asset yields improved 14 basis points from the linked quarter, primarily due to improved loan yields of 24 basis points to 5.11 percent, in part driven by favorable re-pricing from recent increases in short-term interest rates. The cost of interest-bearing liabilities increased 14 basis points to 1.21 percent, driven by a 19-basis point increase in cost of interest-bearing deposits. Total cost of deposits, including noninterest-bearing deposits, was 75 basis points, an increase of 13 basis points from the linked quarter.

 

•

On a year-over-year basis, the increase in net interest income was driven by an 8.0 percent, or $883.2 million, increase in average loans, as well as higher average loan yields, which increased 71 basis points from 2017, primarily driven by higher short-term interest rates, volume, and asset mix changes.

 

•

For the fourth quarter 2018, average earning assets stood at $20.5 billion, an increase of 5.8 percent over the fourth quarter 2017.

Noninterest income

 

•

Fourth quarter 2018 noninterest income decreased $5.9 million, or 5.8 percent, on a linked quarter basis, largely due to:

 

o

Decreases of $5.7 million and $1.3 million in company-owned life insurance income and derivative income, respectively, both of which are recorded in other income. These decreases were partially offset by $2.9 million in gains on sales of assets and $0.9 million in loss recoveries.  

 

o

A decrease in trust and securities processing due to a $1.5 million decline in alternative investment revenue.

 

o

A $0.6 million decrease in trading and investment banking due to decreased bond trading income.

 

 

•

Compared to prior year, noninterest income in the fourth quarter of 2018 decreased $11.0 million, or 10.4 percent, primarily driven by:

 

o

Decreases of $6.6 million and $0.9 million in company-owned life insurance and derivative income, respectively, both of which are recorded in other income. These decreases were partially offset by $2.9 million in gains on sales of assets.  

 

o

A $3.5 million decline in fund servicing revenue due to customer repricing and losses, which was partially offset by an increase of $1.4 million in corporate trust income, both recorded in trust and securities processing.

 

o

A $1.9 million decrease in trading and investment banking income due to decreased trading volume.

 

o

A $1.7 million increase in rewards and rebates expense recorded as an offset to bankcard fees driven by increased purchase volume, partially offset by a $0.4 million increase in interchange income.

 

o

A $0.6 million decrease in service charges on deposits primarily due to customer repricing.

Noninterest expense

 

Summary of noninterest expense

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4

 

 

Q3

 

 

Q4

 

 

CQ vs.

 

 

CQ vs.

 

 

 

2018

 

 

2018

 

 

2017

 

 

LQ

 

 

PY

 

Salaries and employee benefits

 

$

103,992

 

 

$

102,956

 

 

$

107,656

 

 

$

1,036

 

 

$

(3,664

)

Occupancy, net

 

 

11,845

 

 

 

11,628

 

 

 

11,148

 

 

 

217

 

 

 

697

 

Equipment

 

 

18,983

 

 

 

18,533

 

 

 

18,690

 

 

 

450

 

 

 

293

 

Supplies and services

 

 

3,669

 

 

 

4,528

 

 

 

4,211

 

 

 

(859

)

 

 

(542

)

Marketing and business development

 

 

6,483

 

 

 

6,671

 

 

 

6,540

 

 

 

(188

)

 

 

(57

)

Processing fees

 

 

11,948

 

 

 

12,331

 

 

 

11,238

 

 

 

(383

)

 

 

710

 

Legal and consulting

 

 

11,085

 

 

 

8,470

 

 

 

6,045

 

 

 

2,615

 

 

 

5,040

 

Bankcard

 

 

4,316

 

 

 

4,407

 

 

 

4,405

 

 

 

(91

)

 

 

(89

)

Amortization of other intangible assets

 

 

1,332

 

 

 

1,385

 

 

 

1,641

 

 

 

(53

)

 

 

(309

)

Regulatory fees

 

 

2,681

 

 

 

3,337

 

 

 

3,825

 

 

 

(656

)

 

 

(1,144

)

Other

 

 

7,987

 

 

 

6,139

 

 

 

7,160

 

 

 

1,848

 

 

 

827

 

        Total noninterest expense

 

$

184,321

 

 

$

180,385

 

 

$

182,559

 

 

$

3,936

 

 

$

1,762

 

 

 

•

GAAP noninterest expense for the fourth quarter of 2018 was $184.3 million, an increase of $3.9 million, or 2.2 percent, from the linked quarter and an increase of $1.8 million, or 1.0 percent, from the fourth quarter of 2017.

 

•

On a non-GAAP basis, operating noninterest expense (as reconciled later in this release) was $181.6 million for the fourth quarter 2018, an increase of $1.4 million, or 0.8 percent, compared to the linked quarter, and a decrease of $0.7 million, or 0.4 percent, compared to the fourth quarter 2017.

 

•

The linked quarter increase in noninterest expense was driven by:

 

o

A $1.8 million increase in other noninterest expense, largely driven by a $0.9 million contribution made to the UMB Financial Corporation Charitable Foundation and an increase of $0.7 million in derivative expense.

 

o

A $1.7 million increase in consulting expense incurred in conjunction with the company’s ongoing investments in digital channel and integrated platform solutions to support business growth and the continued modernization of its core systems.

 

o

A $1.0 million increase in salaries and employee benefits, largely due to increased severance during the fourth quarter of 2018 and increased salary and wage expense driven by one additional business day in the fourth quarter compared to the third quarter. These increases were offset by a decrease in deferred compensation expense.  

 

•

The year-over-year increase in noninterest expense was driven by:

 

o

A $5.0 million increase in legal and consulting expense due to investments in digital channel and integrated platform solutions to support business growth and the continued ongoing modernization of the company’s core systems.

 

o

An increase of $0.7 million in derivative expense recorded in other noninterest expense.

 

o

These increases were partially offset by a decrease of $3.7 million in salaries and employee benefits, largely due to decreased deferred compensation expense and bonus expense.

Full year 2018 financial discussion

 

 

•

The 9.2 percent year-over-year increase in net interest income was driven by benefits from higher short-term interest rates, favorable pricing and increased loan balances. In 2018, average loan balances increased $762.9 million and average loan yields increased 57 basis points. Average interest-bearing liabilities increased $620.4 million, while the cost of interest-bearing liabilities increased 47 basis points.

 

•

Full-year noninterest income decreased $21.9 million, or 5.2 percent, due to:

 

o

An $8.1 million increase in rewards and rebates expense recorded as an offset to bankcard fees driven by increased purchase volume, partially offset by a $4.8 million increase in interchange income.

 

o

A $7.6 million decrease in trading and investment banking due to decreased bond trading income and due to market adjustments from the company’s seed investments in certain Scout funds following the liquidation of such investments in 2017.

 

o

A $7.5 million decrease in fund servicing revenue and a $1.0 million decrease in wealth management revenue, partially offset by a $4.0 million increase in corporate trust revenue, all recorded in trust and securities processing.

 

o

A $3.6 million decrease in gains on sales of available-for-sale securities.

 

o

A $3.4 million decrease in service charges on deposits, primarily due to repricing.

 

o

These decreases were partially offset by an increase of $2.6 million in brokerage fees, primarily driven by higher 12b-1 income.

 

•

Full-year noninterest expense increased $12.7 million, or 1.8 percent, primarily due to:

 

o

A $5.3 million increase in salary and employee benefit expense driven by increased bonus and sales commission expense and one additional business day in 2018 as compared to 2017, partially offset by a decrease in deferred compensation expense.  

 

o

A $6.5 million increase in legal and consulting expense and a $4.6 million increase in processing fees expense due to investments in digital channel and integrated platform solutions to support business growth and the continued ongoing modernization of the company’s core systems.

 

o

These increases were partially offset by a decrease of $3.1 million in other noninterest expense due to lower operational losses during 2018 as compared to 2017.

 

•

On a non-GAAP basis, operating noninterest expense, which excludes the impact of acquisition expenses and other items as reconciled later in this release, was $712.0 million for full-year 2018, an increase of $8.0 million, or 1.1 percent, compared to the full-year 2017.

 

 

Income taxes

 

•

The company’s effective tax rate was 12.2 percent for the year ended December 31, 2018, compared to 22.6 percent for the same period in 2017. The decrease is primarily a result of the Tax Cuts and Jobs Act, which lowered the federal corporate income tax rate to 21 percent from 35 percent, effective January 1, 2018. The decrease is also attributable to a discrete tax benefit of $5.1 million related to provision-to-return adjustments.

 

Balance sheet

 

•

Average total assets for the fourth quarter 2018 were $21.9 billion compared to $20.7 billion for both the linked quarter and the same period in 2017.

Summary of average loans and leases - QTD Average

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4

 

 

Q3

 

 

Q4

 

 

CQ vs.

 

 

CQ vs.

 

 

 

2018

 

 

2018

 

 

2017

 

 

LQ

 

 

PY

 

Commercial

 

$

4,977,907

 

 

$

4,717,530

 

 

$

4,438,241

 

 

$

260,377

 

 

$

539,666

 

Asset-based loans

 

 

381,477

 

 

 

382,672

 

 

 

326,845

 

 

 

(1,195

)

 

 

54,632

 

Factoring loans

 

 

300,265

 

 

 

264,414

 

 

 

212,123

 

 

 

35,851

 

 

 

88,142

 

Commercial credit card

 

 

178,772

 

 

 

199,730

 

 

 

172,193

 

 

 

(20,958

)

 

 

6,579

 

Real estate - construction

 

 

826,310

 

 

 

814,053

 

 

 

835,715

 

 

 

12,257

 

 

 

(9,405

)

Real estate - commercial

 

 

3,663,610

 

 

 

3,701,072

 

 

 

3,394,232

 

 

 

(37,462

)

 

 

269,378

 

Real estate - residential

 

 

697,927

 

 

 

688,097

 

 

 

619,985

 

 

 

9,830

 

 

 

77,942

 

Real estate - HELOC

 

 

555,161

 

 

 

566,460

 

 

 

649,268

 

 

 

(11,299

)

 

 

(94,107

)

Consumer credit card

 

 

248,309

 

 

 

222,223

 

 

 

247,284

 

 

 

26,086

 

 

 

1,025

 

Consumer other

 

 

132,812

 

 

 

152,894

 

 

 

164,667

 

 

 

(20,082

)

 

 

(31,855

)

Leases

 

 

5,386

 

 

 

9,407

 

 

 

24,163

 

 

 

(4,021

)

 

 

(18,777

)

Total loans

 

$

11,967,936

 

 

$

11,718,552

 

 

$

11,084,716

 

 

$

249,384

 

 

$

883,220

 

 

 

•

Average loans for the fourth quarter 2018 increased 2.1 percent on a linked-quarter basis and 8.0 percent compared to fourth quarter 2017.

Summary of average securities - QTD Average

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4

 

 

Q3

 

 

Q4

 

 

CQ vs.

 

 

CQ vs.

 

 

 

2018

 

 

2018

 

 

2017

 

 

LQ

 

 

PY

 

Securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    U.S. Treasury

 

$

105,509

 

 

$

38,044

 

 

$

38,776

 

 

$

67,465

 

 

$

66,733

 

    U.S. Agencies

 

 

198

 

 

 

198

 

 

 

14,753

 

 

 

-

 

 

 

(14,555

)

    Mortgage-backed

 

 

3,703,212

 

 

 

3,590,703

 

 

 

3,484,304

 

 

 

112,509

 

 

 

218,908

 

    State and political subdivisions

 

 

2,353,816

 

 

 

2,290,906

 

 

 

2,555,462

 

 

 

62,910

 

 

 

(201,646

)

    Corporates

 

 

—

 

 

 

718

 

 

 

15,880

 

 

 

(718

)

 

 

(15,880

)

Total securities available for sale

 

$

6,162,735

 

 

$

5,920,569

 

 

$

6,109,175

 

 

$

242,166

 

 

$

53,560

 

Securities held to maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State and political subdivisions

 

 

1,180,061

 

 

 

1,205,007

 

 

 

1,269,058

 

 

 

(24,946

)

 

 

(88,997

)

Trading securities

 

 

61,629

 

 

 

45,476

 

 

 

43,388

 

 

 

16,153

 

 

 

18,241

 

Other securities

 

 

66,760

 

 

 

65,962

 

 

 

63,543

 

 

 

798

 

 

 

3,217

 

Total securities

 

$

7,471,185

 

 

$

7,237,014

 

 

$

7,485,164

 

 

$

234,171

 

 

$

(13,979

)

 

•

Average securities available for sale increased 4.1 percent on a linked-quarter basis and remained flat compared to the fourth quarter of 2017.

Summary of average deposits - QTD Average

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4

 

 

Q3

 

 

Q4

 

 

CQ vs.

 

 

CQ vs.

 

 

 

2018

 

 

2018

 

 

2017

 

 

LQ

 

 

PY

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Noninterest-bearing demand

 

$

6,052,011

 

 

$

5,547,880

 

 

$

6,180,293

 

 

$

504,131

 

 

$

(128,282

)

    Interest-bearing demand and savings

 

 

11,057,273

 

 

 

9,954,008

 

 

 

9,439,202

 

 

 

1,103,265

 

 

 

1,618,071

 

    Time deposits

 

 

1,060,838

 

 

 

1,030,411

 

 

 

1,230,303

 

 

 

30,427

 

 

 

(169,465

)

        Total deposits

 

$

18,170,122

 

 

$

16,532,299

 

 

$

16,849,798

 

 

$

1,637,823

 

 

$

1,320,324

 

Noninterest bearing deposits as % of total

 

 

33.31

%

 

 

33.56

%

 

 

36.68

%

 

 

 

 

 

 

 

 

 

 

•

Average deposits increased 9.9 percent on a linked-quarter basis and 7.8 percent as compared to the fourth quarter of 2017, primarily driven by the seasonal influx of public fund deposits as well as recent deposit campaigns.

Capital

 

Capital information

 

UMB Financial Corporation

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

 

September 30, 2018

 

 

December 31, 2017

 

Total equity

 

$

2,228,470

 

 

$

2,203,464

 

 

$

2,181,531

 

Book value per common share

 

 

45.37

 

 

 

44.20

 

 

 

43.72

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulatory capital:

 

 

 

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital

 

$

2,142,469

 

 

$

2,175,700

 

 

$

2,041,504

 

Tier 1 capital

 

 

2,142,469

 

 

 

2,175,700

 

 

 

2,041,504

 

Total capital

 

 

2,318,145

 

 

 

2,348,731

 

 

 

2,213,050

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulatory capital ratios:

 

 

 

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital ratio

 

 

12.89

%

 

 

13.47

%

 

 

12.95

%

Tier 1 risk-based capital ratio

 

 

12.89

 

 

 

13.47

 

 

 

12.95

 

Total risk-based capital ratio

 

 

13.95

 

 

 

14.54

 

 

 

14.04

 

Tier 1 leverage ratio

 

 

9.87

 

 

 

10.58

 

 

 

9.94

 

 

 

•

On December 17, 2018, the company completed its previously announced accelerated share repurchase (ASR) program with Bank of America Merrill Lynch.

 

•

Under the ASR, the company repurchased a total of 780,321 shares of its common stock (or approximately 1.6 percent of its outstanding common stock on October 23, 2018, the date the agreement governing the ASR was entered into) for an aggregate purchase price of $50.0 million.

 

•

At December 31, 2018, the regulatory capital ratios presented in the foregoing table reflect the impact of this ASR, and exceeded all “well-capitalized” regulatory thresholds.

 

Asset Quality

Credit quality

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4

 

 

Q3

 

 

Q2

 

 

Q1

 

 

Q4

 

 

 

2018

 

 

2018

 

 

2018

 

 

2018

 

 

2017

 

Net charge-offs - Commercial loans

 

$

44,010

 

 

$

624

 

 

$

6,137

 

 

$

6,847

 

 

$

2,248

 

Net charge-offs (recoveries) - Real estate loans

 

 

28

 

 

 

408

 

 

 

1,035

 

 

 

1,512

 

 

 

(242

)

Net charge-offs - Consumer credit card loans

 

 

1,606

 

 

 

1,632

 

 

 

1,786

 

 

 

1,849

 

 

 

1,612

 

Net charge-offs - Consumer other loans

 

 

23

 

 

 

82

 

 

 

46

 

 

 

94

 

 

 

167

 

Net charge-offs - Total loans

 

 

45,667

 

 

 

2,746

 

 

 

9,004

 

 

 

10,302

 

 

 

3,785

 

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

 

 

1.51

%

 

 

0.09

%

 

 

0.32

%

 

 

0.37

%

 

 

0.14

%

Loans over 90 days past due

 

$

6,009

 

 

$

1,927

 

 

$

2,883

 

 

$

5,650

 

 

$

3,091

 

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

 

 

0.05

%

 

 

0.02

%

 

 

0.02

%

 

 

0.05

%

 

 

0.03

%

Nonaccrual and restructured loans

 

$

43,018

 

 

$

50,568

 

 

$

56,030

 

 

$

67,604

 

 

$

59,142

 

Nonaccrual and restructured loans as a % of total loans

 

 

0.35

%

 

 

0.42

%

 

 

0.48

%

 

 

0.59

%

 

 

0.52

%

Provision for loan losses

 

$

48,000

 

 

$

5,750

 

 

$

7,000

 

 

$

10,000

 

 

$

6,000

 

 

 

•

Nonperforming loans, defined as restructured loans on nonaccrual and all other nonaccrual loans, decreased $7.6 million from the linked quarter and $16.1 million from the prior year.

 

•

Net charge-offs were $45.7 million, or 1.51 percent, of average loans, compared to $2.7 million, or 0.09 percent, of average loans in the linked quarter, and $3.8 million, or 0.14 percent, of average loans in the fourth quarter of 2017. Charge-offs in the fourth quarter of 2018 included a $48.1 million loss recognized on a single factoring credit relationship, which has since entered into bankruptcy. The company intends to pursue its rights both in and outside the bankruptcy proceedings.

 

•

Provision for loan losses increased $42.3 million from the linked quarter, and $42.0 million from the fourth quarter of 2017. This increase was driven by higher provision to cover the loss related to the single factoring credit relationship noted above, as well as other qualitative factors, such as macroeconomic conditions, loan growth, loan impairment changes, loan risk grading changes, and net charge-off levels.

Dividend Declaration

At the company’s quarterly board meeting, the board of directors declared a $0.30 per share quarterly cash dividend, payable on April 1, 2019, to shareholders of record at the close of business on March 11, 2019.

 

Conference Call

The company plans to host a conference call to discuss its fourth quarter and full year 2018 earnings results on Wednesday, January 30, 2019, at 8:30 a.m. (CT).

 

Interested parties may access the call by dialing (toll-free) 877-267-8760 or (international) 412-542-4148 and requesting to join the UMB Financial call. The live call may also be accessed by visiting the investor relations area of umbfinancial.com or by using the following the link:

 

UMB Financial 4Q 2018 Conference Call

A replay of the conference call may be heard through February 13, 2019 by calling (toll-free)

877-344-7529 or (international) 412-317-0088. The replay access code required for playback is 10127436. The call replay may also be accessed at umbfinancial.com by visiting the investor relations area.

 

 

 

Non-GAAP Financial Information

In this release, we provide information about net operating income from continuing operations (net operating income), operating earnings per share from continuing operations - diluted (operating EPS), operating return on average equity (operating ROE), operating return on average assets (operating ROA), operating noninterest expense, and operating efficiency ratio, all of which are non-GAAP financial measures. This information supplements the results that are reported according to generally accepted accounting principles in the United States (GAAP) and should not be viewed in isolation from, or as a substitute for, GAAP results. The differences between the non-GAAP financial measures – net operating income, operating EPS, operating ROE, operating ROA, operating noninterest expense, and operating efficiency ratio – and the nearest comparable GAAP financial measures are reconciled later in this release. The company believes that these non-GAAP financial measures and the reconciliations may be useful to investors because they adjust for acquisition-, divestiture-, 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 and divestitures, severance expense, and the cumulative tax impact of these adjustments.

 

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

 

Forward-Looking Statements:

This press release contains, and our other communications may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “outlook,” “forecast,” “target,” “trend,” “plan,” “goal,” or other words of comparable meaning or future-tense or conditional verbs such as “may,” “will,” “should,” “would,” or “could.” Forward-looking statements convey our expectations, intentions, or forecasts about future events, circumstances, results, or aspirations. All forward-looking statements are subject to assumptions, risks, and uncertainties, which may change over time and many of which are beyond our control. You should not rely on any forward-looking statement as a prediction or guarantee about the future. Our actual future objectives, strategies, plans, prospects, performance, condition, or results may differ materially from those set forth in any forward-looking statement. Some of the factors that may cause actual results or other future events, circumstances, or aspirations to differ from those in forward-looking statements are described in our Annual Report on Form 10-K for the year ended December 31, 2017, our subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, or other applicable documents that are filed or furnished with the U.S. Securities and Exchange Commission (SEC). Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except to the extent required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K, or other applicable document that is filed or furnished with the SEC.

 

About UMB:

UMB Financial Corporation (Nasdaq: UMBF) is a financial services company headquartered in Kansas City, Mo. UMB offers personal banking, commercial banking, healthcare services and institutional

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

 

 

 

 

 

 

Consolidated Balance Sheets

 

UMB Financial Corporation

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

 

2018

 

 

2017

 

 

 

(unaudited)

 

 

(audited)

 

ASSETS

 

 

 

 

 

 

 

 

Loans

 

$

12,178,150

 

 

$

11,280,513

 

Allowance for loan losses

 

 

(103,635

)

 

 

(100,604

)

Net loans

 

 

12,074,515

 

 

 

11,179,909

 

Loans held for sale

 

 

3,192

 

 

 

1,460

 

Investment Securities:

 

 

 

 

 

 

 

 

Available for sale

 

 

6,542,800

 

 

 

6,258,577

 

Held to maturity

 

 

1,170,646

 

 

 

1,261,014

 

Trading securities

 

 

61,011

 

 

 

54,055

 

Other securities

 

 

73,692

 

 

 

65,897

 

Total investment securities

 

 

7,848,149

 

 

 

7,639,543

 

Federal funds sold and resell agreements

 

 

627,001

 

 

 

191,601

 

Interest-bearing due from banks

 

 

1,047,830

 

 

 

1,351,760

 

Cash and due from banks

 

 

645,123

 

 

 

392,723

 

Premises and equipment, net

 

 

283,879

 

 

 

275,942

 

Accrued income

 

 

110,168

 

 

 

98,863

 

Goodwill

 

 

180,867

 

 

 

180,867

 

Other intangibles, net

 

 

15,003

 

 

 

20,257

 

Other assets

 

 

515,392

 

 

 

438,658

 

Total assets

 

$

23,351,119

 

 

$

21,771,583

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

$

6,680,070

 

 

$

6,839,171

 

Interest-bearing demand and savings

 

 

11,454,442

 

 

 

9,903,565

 

Time deposits under $250,000

 

 

593,904

 

 

 

547,990

 

Time deposits of $250,000 or more

 

 

552,844

 

 

 

732,274

 

Total deposits

 

 

19,281,260

 

 

 

18,023,000

 

Federal funds purchased and repurchase agreements

 

 

1,518,920

 

 

 

1,260,704

 

Long-term debt

 

 

82,671

 

 

 

79,281

 

Accrued expenses and taxes

 

 

177,731

 

 

 

191,464

 

Other liabilities

 

 

62,067

 

 

 

35,603

 

Total liabilities

 

 

21,122,649

 

 

 

19,590,052

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Common stock

 

 

55,057

 

 

 

55,057

 

Capital surplus

 

 

1,054,601

 

 

 

1,046,095

 

Retained earnings

 

 

1,488,421

 

 

 

1,338,110

 

Accumulated other comprehensive loss, net

 

 

(95,782

)

 

 

(45,525

)

Treasury stock

 

 

(273,827

)

 

 

(212,206

)

Total shareholders' equity

 

 

2,228,470

 

 

 

2,181,531

 

Total liabilities and shareholders' equity

 

$

23,351,119

 

 

$

21,771,583

 

 

Consolidated Statements of Income

 

UMB Financial Corporation

 

(dollars in thousands except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(audited)

 

INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

154,120

 

 

$

122,885

 

 

$

559,351

 

 

$

461,301

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable interest

 

 

22,767

 

 

 

17,774

 

 

 

83,333

 

 

 

73,125

 

Tax-exempt interest

 

 

19,137

 

 

 

19,047

 

 

 

74,411

 

 

 

73,419

 

Total securities income

 

 

41,904

 

 

 

36,821

 

 

 

157,744

 

 

 

146,544

 

Federal funds and resell agreements

 

 

2,353

 

 

 

1,062

 

 

 

4,808

 

 

 

3,700

 

Interest-bearing due from banks

 

 

3,761

 

 

 

1,987

 

 

 

7,910

 

 

 

3,871

 

Trading securities

 

 

581

 

 

 

361

 

 

 

2,148

 

 

 

1,496

 

Total interest income

 

 

202,719

 

 

 

163,116

 

 

 

731,961

 

 

 

616,912

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

34,140

 

 

 

12,372

 

 

 

92,101

 

 

 

36,354

 

Federal funds and repurchase agreements

 

 

5,815

 

 

 

3,632

 

 

 

24,737

 

 

 

17,906

 

Other

 

 

956

 

 

 

766

 

 

 

4,677

 

 

 

3,739

 

Total interest expense

 

 

40,911

 

 

 

16,770

 

 

 

121,515

 

 

 

57,999

 

Net interest income

 

 

161,808

 

 

 

146,346

 

 

 

610,446

 

 

 

558,913

 

Provision for loan losses

 

 

48,000

 

 

 

6,000

 

 

 

70,750

 

 

 

41,000

 

Net interest income after provision for loan losses

 

 

113,808

 

 

 

140,346

 

 

 

539,696

 

 

 

517,913

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trust and securities processing

 

 

41,891

 

 

 

44,234

 

 

 

172,163

 

 

 

176,646

 

Trading and investment banking

 

 

3,119

 

 

 

5,015

 

 

 

15,584

 

 

 

23,183

 

Service charges on deposit accounts

 

 

20,733

 

 

 

21,364

 

 

 

84,287

 

 

 

87,680

 

Insurance fees and commissions

 

 

312

 

 

 

388

 

 

 

1,292

 

 

 

1,972

 

Brokerage fees

 

 

6,761

 

 

 

6,127

 

 

 

25,807

 

 

 

23,208

 

Bankcard fees

 

 

16,375

 

 

 

17,617

 

 

 

68,520

 

 

 

73,030

 

Gains on sales of securities available for sale, net

 

 

—

 

 

 

54

 

 

 

578

 

 

 

4,192

 

Other

 

 

5,808

 

 

 

11,234

 

 

 

33,467

 

 

 

33,651

 

Total noninterest income

 

 

94,999

 

 

 

106,033

 

 

 

401,698

 

 

 

423,562

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

103,992

 

 

 

107,656

 

 

 

419,091

 

 

 

413,830

 

Occupancy, net

 

 

11,845

 

 

 

11,148

 

 

 

45,239

 

 

 

44,462

 

Equipment

 

 

18,983

 

 

 

18,690

 

 

 

75,184

 

 

 

72,008

 

Supplies and services

 

 

3,669

 

 

 

4,211

 

 

 

16,103

 

 

 

17,173

 

Marketing and business development

 

 

6,483

 

 

 

6,540

 

 

 

24,372

 

 

 

21,469

 

Processing fees

 

 

11,948

 

 

 

11,238

 

 

 

46,977

 

 

 

42,331

 

Legal and consulting

 

 

11,085

 

 

 

6,045

 

 

 

29,859

 

 

 

23,406

 

Bankcard

 

 

4,316

 

 

 

4,405

 

 

 

17,514

 

 

 

19,471

 

Amortization of other intangible assets

 

 

1,332

 

 

 

1,641

 

 

 

5,764

 

 

 

7,326

 

Regulatory fees

 

 

2,681

 

 

 

3,825

 

 

 

12,695

 

 

 

15,527

 

Other

 

 

7,987

 

 

 

7,160

 

 

 

25,002

 

 

 

28,126

 

Total noninterest expense

 

 

184,321

 

 

 

182,559

 

 

 

717,800

 

 

 

705,129

 

Income before income taxes

 

 

24,486

 

 

 

63,820

 

 

 

223,594

 

 

 

236,346

 

Income tax (benefit) expense

 

 

(968

)

 

 

16,463

 

 

 

27,334

 

 

 

53,370

 

Income from continuing operations

 

 

25,454

 

 

 

47,357

 

 

 

196,260

 

 

 

182,976

 

Discontinued Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from discontinued operations before income taxes

 

 

—

 

 

 

101,948

 

 

 

(917

)

 

 

101,226

 

Income tax expense (benefit)

 

 

—

 

 

 

37,344

 

 

 

(170

)

 

 

37,097

 

Income (loss) from discontinued operations

 

 

—

 

 

 

64,604

 

 

 

(747

)

 

 

64,129

 

NET INCOME

 

$

25,454

 

 

$

111,961

 

 

$

195,513

 

 

$

247,105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PER SHARE DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.52

 

 

$

0.96

 

 

$

3.98

 

 

$

3.72

 

Income (loss) from discontinued operations

 

 

—

 

 

 

1.31

 

 

 

(0.01

)

 

 

1.30

 

Net income – basic

 

 

0.52

 

 

 

2.27

 

 

 

3.97

 

 

 

5.02

 

Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

 

0.52

 

 

 

0.95

 

 

 

3.94

 

 

 

3.67

 

Income (loss) from discontinued operations

 

 

—

 

 

 

1.30

 

 

 

(0.01

)

 

 

1.29

 

Net income - diluted

 

 

0.52

 

 

 

2.25

 

 

 

3.93

 

 

 

4.96

 

Dividends

 

 

0.300

 

 

 

0.275

 

 

 

1.170

 

 

 

1.040

 

Weighted average shares outstanding - basic

 

 

48,898,286

 

 

 

49,229,693

 

 

 

49,334,937

 

 

 

49,223,661

 

Weighted average shares outstanding - diluted

 

 

49,230,321

 

 

 

49,840,529

 

 

 

49,770,737

 

 

 

49,839,290

 

 

Consolidated Statements of Comprehensive Income

 

UMB Financial Corporation

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(audited)

 

Net income

 

$

25,454

 

 

$

111,961

 

 

$

195,513

 

 

$

247,105

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains and losses on debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized holding gains and losses, net

 

 

81,742

 

 

 

(41,507

)

 

 

(51,271

)

 

 

21,139

 

Less: Reclassification adjustment for gains included in net income

 

 

—

 

 

 

(54

)

 

 

(578

)

 

 

(4,192

)

Change in unrealized gains and losses on debt securities during the period

 

 

81,742

 

 

 

(41,561

)

 

 

(51,849

)

 

 

16,947

 

Change in unrealized gains and losses on derivative hedges

 

 

(2,368

)

 

 

30

 

 

 

1,906

 

 

 

(1,050

)

Income tax (expense) benefit

 

 

(19,515

)

 

 

18,674

 

 

 

12,735

 

 

 

(3,880

)

Other comprehensive income (loss) before reclassifications

 

 

59,859

 

 

 

(22,857

)

 

 

(37,208

)

 

 

12,017

 

Amounts reclassified from accumulated other comprehensive income

 

 

—

 

 

 

—

 

 

 

(13,049

)

 

 

—

 

Net current-period other comprehensive income (loss)

 

 

59,859

 

 

 

(22,857

)

 

 

(50,257

)

 

 

12,017

 

Comprehensive income

 

$

85,313

 

 

$

89,104

 

 

$

145,256

 

 

$

259,122

 

 

Consolidated Statements of Shareholders' Equity

UMB Financial Corporation

 

(dollars in thousands except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(audited)

 

Common

Stock

 

 

Capital

Surplus

 

 

Retained

Earnings

 

 

Accumulated Other Comprehensive Loss

 

 

Treasury

Stock

 

 

Total

 

Balance - January 1, 2017

 

$

55,057

 

 

$

1,033,419

 

 

$

1,142,887

 

 

$

(57,542

)

 

$

(211,437

)

 

$

1,962,384

 

Total comprehensive income

 

 

—

 

 

 

—

 

 

 

247,105

 

 

 

12,017

 

 

 

—

 

 

 

259,122

 

Cash dividends ($1.04 per share)

 

 

—

 

 

 

—

 

 

 

(51,882

)

 

 

—

 

 

 

—

 

 

 

(51,882

)

Purchase of treasury stock

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(15,276

)

 

 

(15,276

)

Issuance of equity awards

 

 

—

 

 

 

(2,871

)

 

 

—

 

 

 

—

 

 

 

3,343

 

 

 

472

 

Recognition of equity-based compensation

 

 

—

 

 

 

12,844

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

12,844

 

Sale of treasury stock

 

 

—

 

 

 

608

 

 

 

—

 

 

 

—

 

 

 

512

 

 

 

1,120

 

Exercise of stock options

 

 

—

 

 

 

2,095

 

 

 

—

 

 

 

—

 

 

 

10,652

 

 

 

12,747

 

Balance - December 31, 2017

 

$

55,057

 

 

$

1,046,095

 

 

$

1,338,110

 

 

$

(45,525

)

 

$

(212,206

)

 

$

2,181,531

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - January 1, 2018

 

$

55,057

 

 

$

1,046,095

 

 

$

1,338,110

 

 

$

(45,525

)

 

$

(212,206

)

 

$

2,181,531

 

Total comprehensive income (loss)

 

 

—

 

 

 

—

 

 

 

195,513

 

 

 

(50,257

)

 

 

—

 

 

 

145,256

 

Reclassification of certain tax effects

 

 

—

 

 

 

—

 

 

 

12,917

 

 

 

—

 

 

 

—

 

 

 

12,917

 

Cash dividends ($1.17 per share)

 

 

—

 

 

 

—

 

 

 

(58,264

)

 

 

—

 

 

 

—

 

 

 

(58,264

)

Purchase of treasury stock

 

 

—

 

 

 

(2,807

)

 

 

—

 

 

 

—

 

 

 

(73,700

)

 

 

(76,507

)

Issuance of equity awards

 

 

—

 

 

 

(2,004

)

 

 

—

 

 

 

—

 

 

 

2,499

 

 

 

495

 

Recognition of equity-based compensation

 

 

—

 

 

 

10,579

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

10,579

 

Sale of treasury stock

 

 

—

 

 

 

524

 

 

 

—

 

 

 

—

 

 

 

538

 

 

 

1,062

 

Exercise of stock options

 

 

—

 

 

 

2,214

 

 

 

—

 

 

 

—

 

 

 

9,042

 

 

 

11,256

 

Cumulative effect adjustments

 

 

—

 

 

 

—

 

 

 

145

 

 

 

—

 

 

 

—

 

 

 

145

 

Balance - December 31, 2018

 

$

55,057

 

 

$

1,054,601

 

 

$

1,488,421

 

 

$

(95,782

)

 

$

(273,827

)

 

$

2,228,470

 

 

 

 

 

 

 

 

 

Average Balances / Yields and Rates

 

UMB Financial Corporation

 

(tax - equivalent basis)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

 

2018

 

 

2017

 

 

 

Average

 

 

Average

 

 

Average

 

 

Average

 

 

 

Balance

 

 

Yield/Rate

 

 

Balance

 

 

Yield/Rate

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, net of unearned interest

 

$

11,967,936

 

 

 

5.11

%

 

$

11,084,716

 

 

 

4.40

%

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Taxable

 

 

3,943,891

 

 

 

2.29

 

 

 

3,688,202

 

 

 

1.91

 

  Tax-exempt

 

 

3,465,665

 

 

 

2.77

 

 

 

3,753,574

 

 

 

3.08

 

    Total securities

 

 

7,409,556

 

 

 

2.51

 

 

 

7,441,776

 

 

 

2.50

 

Federal funds and resell agreements

 

 

344,502

 

 

 

2.71

 

 

 

181,933

 

 

 

2.32

 

Interest bearing due from banks

 

 

672,916

 

 

 

2.22

 

 

 

587,181

 

 

 

1.34

 

Trading securities

 

 

61,629

 

 

 

4.44

 

 

 

43,388

 

 

 

4.21

 

    Total earning assets

 

 

20,456,539

 

 

 

4.03

 

 

 

19,338,994

 

 

 

3.56

 

Allowance for loan losses

 

 

(101,221

)

 

 

 

 

 

 

(100,344

)

 

 

 

 

Other assets

 

 

1,523,434

 

 

 

 

 

 

 

1,485,075

 

 

 

 

 

    Total assets

 

$

21,878,752

 

 

 

 

 

 

$

20,723,725

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

12,118,111

 

 

 

1.12

%

 

$

10,669,505

 

 

 

0.46

%

Federal funds and repurchase agreements

 

 

1,206,152

 

 

 

1.91

 

 

 

1,424,380

 

 

 

1.01

 

Borrowed funds

 

 

80,442

 

 

 

4.71

 

 

 

76,626

 

 

 

3.97

 

    Total interest-bearing liabilities

 

 

13,404,705

 

 

 

1.21

 

 

 

12,170,511

 

 

 

0.55

 

Noninterest-bearing demand deposits

 

 

6,052,011

 

 

 

 

 

 

 

6,180,293

 

 

 

 

 

Other liabilities

 

 

213,107

 

 

 

 

 

 

 

217,721

 

 

 

 

 

Shareholders' equity

 

 

2,208,929

 

 

 

 

 

 

 

2,155,200

 

 

 

 

 

    Total liabilities and shareholders' equity

 

$

21,878,752

 

 

 

 

 

 

$

20,723,725

 

 

 

 

 

Net interest spread

 

 

 

 

 

 

2.82

%

 

 

 

 

 

 

3.01

%

Net interest margin

 

 

 

 

 

 

3.24

 

 

 

 

 

 

 

3.21

 

 

 

Average Balances / Yields and Rates

 

UMB Financial Corporation

 

(tax - equivalent basis)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

 

2018

 

 

2017

 

 

 

Average

 

 

Average

 

 

Average

 

 

Average

 

 

 

Balance

 

 

Yield/Rate

 

 

Balance

 

 

Yield/Rate

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, net of unearned interest

 

$

11,606,544

 

 

 

4.82

%

 

$

10,843,642

 

 

 

4.25

%

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Taxable

 

 

3,858,829

 

 

 

2.16

 

 

 

3,918,001

 

 

 

1.87

 

  Tax-exempt

 

 

3,505,602

 

 

 

2.68

 

 

 

3,657,951

 

 

 

3.08

 

    Total securities

 

 

7,364,431

 

 

 

2.41

 

 

 

7,575,952

 

 

 

2.45

 

Federal funds and resell agreements

 

 

178,801

 

 

 

2.69

 

 

 

190,074

 

 

 

1.95

 

Interest bearing due from banks

 

 

419,768

 

 

 

1.88

 

 

 

351,293

 

 

 

1.10

 

Trading securities

 

 

49,345

 

 

 

4.97

 

 

 

57,013

 

 

 

3.28

 

    Total earning assets

 

 

19,618,889

 

 

 

3.83

 

 

 

19,017,974

 

 

 

3.45

 

Allowance for loan losses

 

 

(100,948

)

 

 

 

 

 

 

(97,231

)

 

 

 

 

Other assets

 

 

1,481,936

 

 

 

 

 

 

 

1,475,685

 

 

 

 

 

    Total assets

 

$

20,999,877

 

 

 

 

 

 

$

20,396,428

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

11,156,002

 

 

 

0.83

%

 

$

10,002,497

 

 

 

0.36

%

Federal funds and repurchase agreements

 

 

1,559,149

 

 

 

1.59

 

 

 

2,095,111

 

 

 

0.85

 

Borrowed funds

 

 

79,191

 

 

 

5.91

 

 

 

76,301

 

 

 

4.90

 

    Total interest-bearing liabilities

 

 

12,794,342

 

 

 

0.95

 

 

 

12,173,909

 

 

 

0.48

 

Noninterest-bearing demand deposits

 

 

5,828,545

 

 

 

 

 

 

 

5,936,172

 

 

 

 

 

Other liabilities

 

 

182,202

 

 

 

 

 

 

 

205,500

 

 

 

 

 

Shareholders' equity

 

 

2,194,788

 

 

 

 

 

 

 

2,080,847

 

 

 

 

 

    Total liabilities and shareholders' equity

 

$

20,999,877

 

 

 

 

 

 

$

20,396,428

 

 

 

 

 

Net interest spread

 

 

 

 

 

 

2.88

%

 

 

 

 

 

 

2.97

%

Net interest margin

 

 

 

 

 

 

3.21

 

 

 

 

 

 

 

3.15

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Segment Information

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2018

 

 

 

Commercial Banking

 

 

Institutional Banking

 

 

Personal Banking

 

 

Healthcare Services

 

 

Total

 

Net interest income

 

$

100,423

 

 

$

19,361

 

 

$

31,988

 

 

$

10,036

 

 

$

161,808

 

Provision for loan losses

 

 

46,662

 

 

 

308

 

 

 

1,030

 

 

 

—

 

 

 

48,000

 

Noninterest income

 

 

14,689

 

 

 

41,569

 

 

 

30,310

 

 

 

8,431

 

 

 

94,999

 

Noninterest expense

 

 

65,037

 

 

 

48,175

 

 

 

59,112

 

 

 

11,997

 

 

 

184,321

 

Income before taxes

 

 

3,413

 

 

 

12,447

 

 

 

2,156

 

 

 

6,470

 

 

 

24,486

 

Income tax benefit

 

 

(135

)

 

 

(492

)

 

 

(85

)

 

 

(256

)

 

 

(968

)

Income from continuing operations

 

$

3,548

 

 

$

12,939

 

 

$

2,241

 

 

$

6,726

 

 

$

25,454

 

Average assets

 

$

10,061,000

 

 

$

4,291,000

 

 

$

5,272,000

 

 

$

2,255,000

 

 

$

21,879,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2017

 

 

 

Commercial Banking

 

 

Institutional Banking

 

 

Personal Banking

 

 

Healthcare Services

 

 

Total

 

Net interest income

 

$

92,130

 

 

$

15,245

 

 

$

30,821

 

 

$

8,150

 

 

$

146,346

 

Provision for loan losses

 

 

4,437

 

 

 

360

 

 

 

1,203

 

 

 

—

 

 

 

6,000

 

Noninterest income

 

 

20,921

 

 

 

46,771

 

 

 

30,250

 

 

 

8,091

 

 

 

106,033

 

Noninterest expense

 

 

65,196

 

 

 

48,532

 

 

 

57,162

 

 

 

11,669

 

 

 

182,559

 

Income before taxes

 

 

43,418

 

 

 

13,124

 

 

 

2,706

 

 

 

4,572

 

 

 

63,820

 

Income tax expense

 

 

11,199

 

 

 

3,385

 

 

 

699

 

 

 

1,180

 

 

 

16,463

 

Income from continuing operations

 

$

32,219

 

 

$

9,739

 

 

$

2,007

 

 

$

3,392

 

 

$

47,357

 

Average assets

 

$

9,710,000

 

 

$

4,101,000

 

 

$

4,953,000

 

 

$

1,960,000

 

 

$

20,724,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2018

 

 

 

Commercial Banking

 

 

Institutional Banking

 

 

Personal Banking

 

 

Healthcare Services

 

 

Total

 

Net interest income

 

$

380,266

 

 

$

66,585

 

 

$

125,045

 

 

$

38,550

 

 

$

610,446

 

Provision for loan losses

 

 

63,841

 

 

 

1,335

 

 

 

5,574

 

 

 

—

 

 

 

70,750

 

Noninterest income

 

 

74,931

 

 

 

173,591

 

 

 

118,344

 

 

 

34,832

 

 

 

401,698

 

Noninterest expense

 

 

253,740

 

 

 

189,708

 

 

 

225,406

 

 

 

48,946

 

 

 

717,800

 

Income before taxes

 

 

137,616

 

 

 

49,133

 

 

 

12,409

 

 

 

24,436

 

 

 

223,594

 

Income tax expense

 

 

16,824

 

 

 

6,007

 

 

 

1,517

 

 

 

2,986

 

 

 

27,334

 

Income from continuing operations

 

$

120,792

 

 

$

43,126

 

 

$

10,892

 

 

$

21,450

 

 

$

196,260

 

Average assets

 

$

9,856,000

 

 

$

3,995,000

 

 

$

4,959,000

 

 

$

2,190,000

 

 

$

21,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2017

 

 

 

Commercial Banking

 

 

Institutional Banking

 

 

Personal Banking

 

 

Healthcare Services

 

 

Total

 

Net interest income

 

$

353,627

 

 

$

51,977

 

 

$

122,304

 

 

$

31,005

 

 

$

558,913

 

Provision for loan losses

 

 

32,937

 

 

 

1,461

 

 

 

6,602

 

 

 

—

 

 

 

41,000

 

Noninterest income

 

 

82,221

 

 

 

187,003

 

 

 

118,896

 

 

 

35,442

 

 

 

423,562

 

Noninterest expense

 

 

250,308

 

 

 

184,618

 

 

 

226,634

 

 

 

43,569

 

 

 

705,129

 

Income before taxes

 

 

152,603

 

 

 

52,901

 

 

 

7,964

 

 

 

22,878

 

 

 

236,346

 

Income tax expense

 

 

34,460

 

 

 

11,946

 

 

 

1,798

 

 

 

5,166

 

 

 

53,370

 

Income from continuing operations

 

$

118,143

 

 

$

40,955

 

 

$

6,166

 

 

$

17,712

 

 

$

182,976

 

Average assets

 

$

9,717,000

 

 

$

3,622,000

 

 

$

5,160,000

 

 

$

1,897,000

 

 

$

20,396,000

 

 

 

The company has strategically aligned its operations into the following four reportable segments: Commercial Banking, Institutional Banking, Personal Banking, and Healthcare Services. Senior executive officers regularly evaluate business segment financial results produced by the company’s internal reporting system in deciding how to allocate resources and assess performance for individual business segments. Previously, the company had the following two business segments: Bank and Asset Servicing. The company’s reportable segments include certain corporate overhead, technology and service costs that are allocated based on methodologies that are applied consistently between periods. For comparability purposes, amounts in all periods are based on methodologies in effect at December 31, 2018.  

 

Non-GAAP Financial Measures

 

UMB Financial Corporation

 

Net operating income Non-GAAP reconciliations:

 

 

 

(unaudited, dollars in thousands except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

Year Ended December 31,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Income from continuing operations (GAAP)

 

$

25,454

 

 

$

47,357

 

 

$

196,260

 

 

$

182,976

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Acquisition and divestiture expense

 

 

5

 

 

 

52

 

 

 

2

 

 

 

74

 

     Severance expense

 

 

2,725

 

 

 

224

 

 

 

5,760

 

 

 

1,039

 

     Tax-impact of adjustments (i)

 

 

(606

)

 

 

(100

)

 

 

(1,279

)

 

 

(401

)

Total Non-GAAP adjustments (net of tax)

 

 

2,124

 

 

 

176

 

 

 

4,483

 

 

 

712

 

Net operating income from continuing operations (Non-GAAP)

 

$

27,578

 

 

$

47,533

 

 

$

200,743

 

 

$

183,688

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations - diluted (GAAP)

 

$

0.52

 

 

$

0.95

 

 

$

3.94

 

 

$

3.67

 

     Acquisition and divestiture expense (income)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

     Severance expense

 

 

0.05

 

 

 

—

 

 

 

0.12

 

 

 

0.02

 

     Tax-impact of adjustments (i)

 

 

(0.01

)

 

 

—

 

 

 

(0.03

)

 

 

—

 

Operating earnings per share from continuing operations - diluted (Non-GAAP)

 

$

0.56

 

 

$

0.95

 

 

$

4.03

 

 

$

3.69

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

0.46

%

 

 

0.91

%

 

 

0.93

%

 

 

0.90

%

Return on average equity

 

 

4.57

 

 

 

8.72

 

 

 

8.94

 

 

 

8.79

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating return on average assets

 

 

0.50

%

 

 

0.91

%

 

 

0.96

%

 

 

0.90

%

Operating return on average equity

 

 

4.95

 

 

 

8.75

 

 

 

9.15

 

 

 

8.83

 

 

(i) Calculated using the company’s marginal tax rate of 22.2 percent for periods beginning after December 31, 2017 as a result of the Tax Cuts and Jobs Act. The prior periods were calculated using the company’s marginal tax rate of 36.0 percent.

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

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

Year Ended December 31,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Noninterest expense

 

$

184,321

 

 

$

182,559

 

 

$

717,800

 

 

$

705,129

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Acquisition and divestiture expense

 

 

5

 

 

 

52

 

 

 

2

 

 

 

74

 

     Severance expense

 

 

2,725

 

 

 

224

 

 

 

5,760

 

 

 

1,039

 

     Total Non-GAAP adjustments (pre-tax)

 

 

2,730

 

 

 

276

 

 

 

5,762

 

 

 

1,113

 

Operating noninterest expense (Non-GAAP)

 

$

181,591

 

 

$

182,283

 

 

$

712,038

 

 

$

704,016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense

 

$

184,321

 

 

$

182,559

 

 

$

717,800

 

 

$

705,129

 

     Less: Amortization of other intangibles

 

 

1,332

 

 

 

1,641

 

 

 

5,764

 

 

 

7,326

 

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

 

$

182,989

 

 

$

180,918

 

 

$

712,036

 

 

$

697,803

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating noninterest expense

 

$

181,591

 

 

$

182,283

 

 

$

712,038

 

 

$

704,016

 

     Less: Amortization of other intangibles

 

 

1,332

 

 

 

1,641

 

 

 

5,764

 

 

 

7,326

 

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

 

$

180,259

 

 

$

180,642

 

 

$

706,274

 

 

$

696,690

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

161,808

 

 

$

146,346

 

 

$

610,446

 

 

$

558,913

 

Noninterest income

 

 

94,999

 

 

 

106,033

 

 

 

401,698

 

 

 

423,562

 

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

 

 

—

 

 

 

54

 

 

 

578

 

 

 

4,192

 

Total Non-GAAP Revenue (denominator A)

 

$

256,807

 

 

$

252,325

 

 

$

1,011,566

 

 

$

978,283

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Efficiency ratio (numerator A/denominator A)

 

 

71.26

%

 

 

71.70

%

 

 

70.39

%

 

 

71.33

%

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

 

 

70.19

 

 

 

71.59

 

 

 

69.82

 

 

 

71.22