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Section 1: 8-K (8-K)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):  7/28/2020

 

 

UMB FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

 

 

Commission File Number: 001-38481

 

Missouri

  

43-0903811

(State or other jurisdiction of

  

(IRS Employer

incorporation)

  

Identification No.)

 

1010 Grand Blvd., Kansas City, MO 64106

(Address of principal executive offices, including zip code)

 

(816) 860-7000

(Registrant’s telephone number, including area code)

 

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

Pre-commencement communications pursuant to Rule 13c-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities Registered Pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $1.00 Par Value

UMBF

The NASDAQ Global Select Market

 

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 


Item 2.02Results of Operations and Financial Condition

 

On July 28, 2020, UMB Financial Corporation (the “Company”) issued a press release announcing the financial results for the Company for the quarter and period ended June 30, 2020.  A copy of the press release is attached as Exhibit 99.1 and the information is hereby incorporated by reference herein.

 

The information contained in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 hereto, is being furnished and shall not be deemed to be “filed” with the Securities and Exchange Commission (“SEC”) for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section and is not incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference to this Current Report on Form 8-K in such a filing.

 

Item 7.01    Regulation FD Disclosure

 

On July 28, 2020, the Company announced in the same press release that the Board of Directors of the Company (the “Board”) had declared a quarterly dividend of $0.31 per share that is payable on October 1, 2020 to shareholders of record of the Company as of the close of business on September 10, 2020.

 

The Company is furnishing a copy of materials that will be used in the Company’s shareholder conference call at 8:30 a.m. (CT) on July 29, 2020.  A copy of the materials is attached as Exhibit 99.2 and will be available on the Company’s website at www.umb.com.  The materials are dated July 28, 2020, and the Company disclaims any obligation to correct or update any of the materials in the future.  

 

The information provided under Item 7.01 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 hereto, is being furnished and is not deemed to be “filed” with the SEC for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section and is not incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference to this Current Report on Form 8-K in such a filing.

                                       

Item 9.01    Financial Statements and Exhibits

 

99.1

Press Release announcing financial results for quarter and period ended June 30, 2020, and announcing dividend declaration.

 

99.2

Investor Presentation Materials, dated July 28, 2020.

 

104

The cover page from this Current Report on Form 8-K, formatted in Inline XBRL.

 

 

 

 

 

 

 

 


SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

UMB FINANCIAL CORPORATION

 

 

By:

 

 

/s/ Ram Shankar

 

Ram Shankar

Chief Financial Officer

Date: July 28, 2020

 

 

 

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

umbf-ex991_7.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 Second Quarter 2020 Net Income of $60.5 Million

 

Second Quarter 2020 Highlights

 

 

GAAP net income of $60.5 million, or $1.26 per diluted share; operating net income of $63.8 million, or $1.33 per diluted share.

 

Pre-tax, pre-provision (PTPP) income of $90.2 million, an increase of 7.6% from the linked quarter.

 

Total revenue increased 9.7% to $298.7 million, compared to the linked quarter.

 

Average loans, excluding Paycheck Protection Program (PPP) balances, increased 8.2% on a linked-quarter annualized basis.

 

Loans recorded under the PPP totaled $1.5 billion as of June 30, 2020.

 

Average deposits grew $2.0 billion to $22.8 billion compared to the first quarter of 2020.

 

GAAP book value per share of $57.84, a 14.5% increase, and tangible book value per share of $53.57, a 15.1% increase compared to a year ago.

 

Credit quality remained strong, with net charge-offs of just 0.15% of average loans, consistent with the company’s historical performance.

 

 

KANSAS CITY, Mo. (July 28, 2020) – UMB Financial Corporation (Nasdaq: UMBF), a financial services company, announced net income for the second quarter of 2020 of $60.5 million, or $1.26 per diluted share, compared to a net loss of $3.4 million in the first quarter of 2020 (linked quarter) and net income of $57.0 million, or $1.16 per diluted share, in the second quarter of 2019.  

 

Net operating income, a non-GAAP financial measure reconciled to net income, the nearest comparable GAAP measure, later in this release, was $63.8 million, or $1.33 per diluted share, for the second quarter of 2020, compared to a net operating loss of $1.9 million for the linked quarter and net operating income of $57.2 million, or $1.17 per diluted share, for the second quarter of 2019. Pre-tax, pre-provision income (PTPP), a non-GAAP measure reconciled to net income before taxes, the nearest comparable GAAP measure, later in this release, was $90.2 million, or $1.88 per diluted share, for the second quarter of 2020, compared to $83.7 million, or $1.72 per diluted share, for the linked quarter, and $78.4 million, or $1.60 per diluted share, for the second quarter of 2019. These PTPP results represent increases of 7.6% on a linked-quarter basis and 15.0% compared to the second quarter of 2019.

 

 

 


Summary of quarterly financial results

 

UMB Financial Corporation

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2

 

 

Q1

 

 

Q2

 

 

 

2020

 

 

2020

 

 

2019

 

Net income (loss)

 

$

60,529

 

 

$

(3,439

)

 

$

56,959

 

Earnings (losses) per share (diluted)

 

 

1.26

 

 

 

(0.07

)

 

 

1.16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax, pre-provision income

 

 

90,152

 

 

 

83,746

 

 

 

78,425

 

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

 

 

1.88

 

 

 

1.72

 

 

 

1.60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating income (loss)

 

 

63,835

 

 

 

(1,881

)

 

 

57,245

 

Operating earnings (losses) per share (diluted)

 

 

1.33

 

 

 

(0.04

)

 

 

1.17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

0.87

%

 

 

(0.05

)%

 

 

0.98

%

Return on average equity

 

 

8.95

 

 

 

(0.51

)

 

 

9.46

 

Efficiency ratio

 

 

70.20

 

 

 

68.93

 

 

 

70.32

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

Operating return on average assets

 

 

0.91

%

 

 

(0.03

)%

 

 

0.99

%

Operating return on average equity

 

 

9.44

 

 

 

(0.28

)

 

 

9.51

 

Operating efficiency ratio

 

 

68.76

 

 

 

68.19

 

 

 

70.19

 

 

 

Summary of year-to-date financial results

 

UMB Financial Corporation

 

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

 

June

 

 

June

 

 

 

YTD

 

 

YTD

 

 

 

2020

 

 

2019

 

Net income

 

$

57,090

 

 

$

114,703

 

Earnings per share (diluted)

 

 

1.18

 

 

 

2.34

 

 

 

 

 

 

 

 

 

 

Pre-tax, pre-provision income

 

 

173,898

 

 

 

159,049

 

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

 

 

3.59

 

 

 

3.24

 

 

 

 

 

 

 

 

 

 

Net operating income

 

 

61,954

 

 

 

115,453

 

Operating earnings per share (diluted)

 

 

1.28

 

 

 

2.36

 

 

 

 

 

 

 

 

 

 

GAAP

 

 

 

 

 

 

 

 

Return on average assets

 

 

0.42

%

 

 

1.00

%

Return on average equity

 

 

4.22

 

 

 

9.95

 

Efficiency ratio

 

 

69.59

 

 

 

70.16

 

 

 

 

 

 

 

 

 

 

Non-GAAP

 

 

 

 

 

 

 

 

Operating return on average assets

 

 

0.46

%

 

 

1.01

%

Operating return on average equity

 

 

4.58

 

 

 

10.01

 

Operating efficiency ratio

 

 

68.49

 

 

 

69.98

 

 

 

“As the country continues to navigate its way through an uncertain economic environment, our second quarter results highlight the strength of our fortress balance sheet and the quality of our underwriting practices, as evidenced by just 15 basis points of net charge-offs. Additionally, we added $1.5 billion in loans under the Paycheck Protection Program (PPP) during the quarter,” said Mariner Kemper, chairman, president and chief executive officer. “Despite the unprecedented times, average loans, excluding PPP balances, increased 8.2% on a linked-quarter annualized basis. Finally, we launched our corporate citizenship report outlining some of our 2019 environmental, social and governance efforts, which has


been a collaborative effort of listening to, and engaging with, our associates, customers, and communities.”

 

Summary of revenue

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2

 

 

Q1

 

 

Q2

 

 

CQ vs.

 

 

CQ vs.

 

 

 

2020

 

 

2020

 

 

2019

 

 

LQ

 

 

PY

 

Net interest income

 

$

178,229

 

 

$

173,941

 

 

$

166,414

 

 

$

4,288

 

 

$

11,815

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trust and securities processing

 

 

46,321

 

 

 

47,000

 

 

 

42,903

 

 

 

(679

)

 

 

3,418

 

Trading and investment banking

 

 

12,851

 

 

 

1,723

 

 

 

5,453

 

 

 

11,128

 

 

 

7,398

 

Service charges on deposit accounts

 

 

19,074

 

 

 

25,081

 

 

 

20,747

 

 

 

(6,007

)

 

 

(1,673

)

Insurance fees and commissions

 

 

533

 

 

 

259

 

 

 

465

 

 

 

274

 

 

 

68

 

Brokerage fees

 

 

5,753

 

 

 

9,860

 

 

 

7,077

 

 

 

(4,107

)

 

 

(1,324

)

Bankcard fees

 

 

12,916

 

 

 

16,545

 

 

 

16,439

 

 

 

(3,629

)

 

 

(3,523

)

Gains (losses) on sales of securities available for sale, net

 

 

4,006

 

 

 

1,227

 

 

 

(1,403

)

 

 

2,779

 

 

 

5,409

 

Other

 

 

19,002

 

 

 

(3,271

)

 

 

13,717

 

 

 

22,273

 

 

 

5,285

 

        Total noninterest income

 

$

120,456

 

 

$

98,424

 

 

$

105,398

 

 

$

22,032

 

 

$

15,058

 

Total revenue

 

$

298,685

 

 

$

272,365

 

 

$

271,812

 

 

$

26,320

 

 

$

26,873

 

Net interest margin

 

 

2.79

%

 

 

2.97

%

 

 

3.19

%

 

 

 

 

 

 

 

 

Total noninterest income as a % of total revenue

 

 

40.33

 

 

 

36.14

 

 

 

38.78

 

 

 

 

 

 

 

 

 

 

Net interest income

 

Net interest income totaled $178.2 million, an increase of $4.3 million, or 2.5%, from the linked quarter, driven by a $1.5 billion, or 10.9%, increase in average loans, and an 8.7% increase in average earning assets. The increase in loan balances was primarily driven by the company’s participation in the PPP, which contributed $1.5 billion in balances. While new loan production during the quarter remained strong, this growth was negated by normalization of line utilization activity which spiked in the first quarter following the initial impact of the COVID-19 pandemic.

 

Net interest margin for the second quarter was 2.79%, a decrease of 18 basis points from the linked quarter, in large part due to lower short-term interest rates and a build-up of excess liquidity. Earning asset yields declined 57 basis points from the linked quarter, driven by declining yields in the loan portfolio due to recent reductions in short-term interest rates and an unfavorable earning asset mix shift driven by excess liquidity and, to a lesser extent, the impact of lower-yielding PPP loans. Federal funds and resell agreements, interest-bearing due from banks, and trading securities averaged $2.3 billion, an 11.4% increase from $2.1 billion in the linked quarter. The cost of interest-bearing liabilities decreased 58 basis points to 0.34%, driven by a 53-basis-point decline in the cost of interest-bearing deposits and lower borrowing costs. Net interest spread increased one basis point to 2.67 from the linked quarter and was five basis points lower than the second quarter of 2019.

 

On a year-over-year basis, net interest income increased $11.8 million, or 7.1%, driven by a $2.5 billion, or 19.6%, increase in average loans, and a $4.9 billion, or 22.7%, increase in earning assets.

 

Average deposits increased 9.4% on a linked-quarter basis and 21.3% compared to the second quarter of 2019. Average noninterest-bearing demand deposit balances increased 18.0% on a linked-quarter basis and 26.1% compared to the second quarter of 2019.

Noninterest income

 

Second quarter 2020 noninterest income increased $22.0 million, or 22.4%, on a linked-quarter basis, largely due to:

 

o

An increase of $24.8 million in company-owned life insurance income, reflecting the impact of higher market valuations of the underlying investments, recorded in other


 

income. The increase in company-owned life insurance income is offset by a proportionate increase in deferred compensation expense as noted below.

 

o

An increase of $11.1 million in trading and investment banking, primarily driven by higher trading volumes, as well as an increase of $4.9 million in market valuation of investments in the company’s trading portfolio.

 

o

These increases were partially offset by the following decreases:

 

A decrease of $5.5 million in healthcare income, recorded in service charges on deposits, related to non-recurring customer transfer and conversion fees recorded in the first quarter.

 

A decrease of $4.1 million in brokerage fees, primarily driven by decreased 12b-1 income.

 

A decrease of $3.6 million in bankcard fees, primarily due to decreased interchange income.

 

Compared to the prior year, noninterest income in the second quarter of 2020 increased $15.1 million, or 14.3%, primarily driven by:

 

o

An increase of $8.9 million in company-owned life insurance, recorded in other income. The increase in company-owned life insurance income is offset by a proportionate increase in deferred compensation expense as noted below.

 

o

An increase of $7.4 million in trading and investment banking, primarily driven by higher trading volumes, as well as an increase of $1.1 million in market valuation of investments in the company’s trading portfolio.

 

o

An increase of $5.4 million in gains on sales of available-for-sale securities.

 

o

These increases were partially offset by the following decreases:

 

A decrease of $3.5 million in bankcard fees, primarily due to decreased interchange income.

 

A decrease of $1.3 million in brokerage fees, primarily due to decreased 12b-1 income.

 

A decrease of $1.0 million in equity earnings on alternative investments, recorded in other income.

Noninterest expense

 

Summary of noninterest expense

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2

 

 

Q1

 

 

Q2

 

 

CQ vs.

 

 

CQ vs.

 

 

 

2020

 

 

2020

 

 

2019

 

 

LQ

 

 

PY

 

Salaries and employee benefits

 

$

130,938

 

 

$

111,060

 

 

$

114,454

 

 

$

19,878

 

 

$

16,484

 

Occupancy, net

 

 

11,411

 

 

 

12,180

 

 

 

11,539

 

 

 

(769

)

 

 

(128

)

Equipment

 

 

21,502

 

 

 

21,241

 

 

 

18,824

 

 

 

261

 

 

 

2,678

 

Supplies and services

 

 

3,785

 

 

 

4,185

 

 

 

4,285

 

 

 

(400

)

 

 

(500

)

Marketing and business development

 

 

3,284

 

 

 

4,640

 

 

 

7,304

 

 

 

(1,356

)

 

 

(4,020

)

Processing fees

 

 

13,603

 

 

 

13,390

 

 

 

13,096

 

 

 

213

 

 

 

507

 

Legal and consulting

 

 

6,220

 

 

 

6,110

 

 

 

7,496

 

 

 

110

 

 

 

(1,276

)

Bankcard

 

 

4,549

 

 

 

4,860

 

 

 

4,701

 

 

 

(311

)

 

 

(152

)

Amortization of other intangible assets

 

 

1,658

 

 

 

1,734

 

 

 

1,251

 

 

 

(76

)

 

 

407

 

Regulatory fees

 

 

3,211

 

 

 

2,366

 

 

 

2,910

 

 

 

845

 

 

 

301

 

Other

 

 

8,372

 

 

 

6,853

 

 

 

7,527

 

 

 

1,519

 

 

 

845

 

        Total noninterest expense

 

$

208,533

 

 

$

188,619

 

 

$

193,387

 

 

$

19,914

 

 

$

15,146

 

 

 

GAAP noninterest expense for the second quarter of 2020 was $208.5 million, an increase of $19.9 million, or 10.6%, from the linked quarter and an increase of $15.1 million, or 7.8%, from


 

the second quarter of 2019. Expenses for the quarter included $4.0 million in non-recurring compensation and other costs tied to the company’s COVID-19 response.

 

The linked quarter increase in noninterest expense was driven by:

 

o

An increase of $19.9 million in salaries and employee benefits, largely driven by a $24.6 million increase in deferred compensation expense, which was offset by the increase in company-owned life insurance income noted above. This increase was partially offset by a decrease of $5.5 million in payroll taxes and profit sharing and 401(k) expense.

 

o

An increase of $1.5 million in other expense driven by operational losses in the second quarter.

 

o

These increases were partially offset by a decrease of $1.4 million in marketing and business development expense due to a decline in travel and entertainment expenses in the second quarter due to the pandemic.

 

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

 

o

A $16.5 million increase in salaries and employee benefits, primarily due to increases of $9.8 million in deferred compensation expense, $3.5 million in bonus and commission expense, and $3.2 million in salary and wage expense, which included compensation expense tied to the company’s COVID-19 response. The increase in deferred compensation expense was offset by the increase in company-owned life insurance income noted above.  

 

o

An increase of $2.7 million in equipment expense, due to investments in digital channel and integrated platform solutions to support business growth and the ongoing modernization of the company’s core systems.

 

o

These increases were partially offset by a decrease of $4.0 million in marketing and business development expense primarily due to a decline in travel and entertainment expense due to the pandemic.

Income taxes

 

The company’s effective tax rate was 11.3% for the six months ended June 30, 2020, compared to 15.5% for the same period in 2019. The decrease in the effective rate for 2020 is primarily attributable to a larger portion of income being earned from tax-exempt municipal securities.

Balance sheet

 

Average total assets for the second quarter of 2020 were $28.1 billion compared to $26.0 billion for the linked quarter and $23.3 billion for the same period in 2019.

Summary of average loans and leases - QTD Average

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2

 

 

Q1

 

 

Q2

 

 

CQ vs.

 

 

CQ vs.

 

 

 

2020

 

 

2020

 

 

2019

 

 

LQ

 

 

PY

 

Commercial and industrial

 

$

6,970,223

 

 

$

5,786,545

 

 

$

5,278,626

 

 

$

1,183,678

 

 

$

1,691,597

 

Specialty lending

 

 

471,571

 

 

 

510,316

 

 

 

682,306

 

 

 

(38,745

)

 

 

(210,735

)

Commercial real estate

 

 

5,435,428

 

 

 

5,181,036

 

 

 

4,696,665

 

 

 

254,392

 

 

 

738,763

 

Consumer real estate

 

 

1,528,501

 

 

 

1,414,025

 

 

 

1,241,078

 

 

 

114,476

 

 

 

287,423

 

Consumer

 

 

146,120

 

 

 

141,972

 

 

 

132,662

 

 

 

4,148

 

 

 

13,458

 

Credit cards

 

 

353,424

 

 

 

418,485

 

 

 

427,176

 

 

 

(65,061

)

 

 

(73,752

)

Leases and other

 

 

193,099

 

 

 

164,187

 

 

 

162,468

 

 

 

28,912

 

 

 

30,631

 

Total loans

 

$

15,098,366

 

 

$

13,616,566

 

 

$

12,620,981

 

 

$

1,481,800

 

 

$

2,477,385

 

 

 

Average loans for the second quarter of 2020 increased 10.9% on a linked-quarter basis and 19.6% compared to the second quarter of 2019, primarily due to the company’s participation in PPP, which had an average balance of $1.2 billion in the second quarter.


Summary of average securities - QTD Average

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2

 

 

Q1

 

 

Q2

 

 

CQ vs.

 

 

CQ vs.

 

 

 

2020

 

 

2020

 

 

2019

 

 

LQ

 

 

PY

 

Securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    U.S. Treasury

 

$

31,150

 

 

$

49,638

 

 

$

256,949

 

 

$

(18,488

)

 

$

(225,799

)

    U.S. Agencies

 

 

403,290

 

 

 

94,342

 

 

 

91,822

 

 

 

308,948

 

 

 

311,468

 

    Mortgage-backed

 

 

4,284,374

 

 

 

4,133,118

 

 

 

3,926,164

 

 

 

151,256

 

 

 

358,210

 

    State and political subdivisions

 

 

3,108,661

 

 

 

3,058,594

 

 

 

2,659,397

 

 

 

50,067

 

 

 

449,264

 

    Corporates

 

 

98,089

 

 

 

188,257

 

 

 

84,910

 

 

 

(90,168

)

 

 

13,179

 

    Commercial Paper

 

 

2,040

 

 

 

 

 

 

 

 

 

2,040

 

 

 

2,040

 

Total securities available for sale

 

$

7,927,604

 

 

$

7,523,949

 

 

$

7,019,242

 

 

$

403,655

 

 

$

908,362

 

Securities held to maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State and political subdivisions

 

$

1,100,843

 

 

$

1,108,716

 

 

$

1,128,526

 

 

$

(7,873

)

 

$

(27,683

)

Trading securities

 

 

37,816

 

 

 

48,102

 

 

 

61,565

 

 

 

(10,286

)

 

 

(23,749

)

Other securities

 

 

148,918

 

 

 

124,795

 

 

 

80,097

 

 

 

24,123

 

 

 

68,821

 

Total securities

 

$

9,215,181

 

 

$

8,805,562

 

 

$

8,289,430

 

 

$

409,619

 

 

$

925,751

 

 

Average securities available for sale increased 5.4% on a linked-quarter basis and 12.9% compared to the second quarter of 2019.

Summary of average deposits - QTD Average

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2

 

 

Q1

 

 

Q2

 

 

CQ vs.

 

 

CQ vs.

 

 

 

2020

 

 

2020

 

 

2019

 

 

LQ

 

 

PY

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Noninterest-bearing demand

 

$

7,662,836

 

 

$

6,495,611

 

 

$

6,078,520

 

 

$

1,167,225

 

 

$

1,584,316

 

    Interest-bearing demand and savings

 

 

14,160,722

 

 

 

13,232,370

 

 

 

11,740,634

 

 

 

928,352

 

 

 

2,420,088

 

    Time deposits

 

 

957,007

 

 

 

1,097,780

 

 

 

966,719

 

 

 

(140,773

)

 

 

(9,712

)

        Total deposits

 

$

22,780,565

 

 

$

20,825,761

 

 

$

18,785,873

 

 

$

1,954,804

 

 

$

3,994,692

 

Noninterest bearing deposits as % of total

 

 

33.64

%

 

 

31.19

%

 

 

32.36

%

 

 

 

 

 

 

 

 

 

 

Average deposits increased 9.4% on a linked-quarter basis and 21.3% compared to the second quarter of 2019.

 

Average noninterest-bearing demand deposits increased 18.0% on a linked-quarter basis to $7.7 billion.

Capital

 

Capital information

 

UMB Financial Corporation

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2020

 

 

March 31, 2020

 

 

June 30, 2019

 

Total equity

 

$

2,777,395

 

 

$

2,663,441

 

 

$

2,477,790

 

Book value per common share

 

 

57.84

 

 

 

55.33

 

 

 

50.50

 

Tangible book value per common share

 

 

53.57

 

 

 

51.04

 

 

 

46.56

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulatory capital:

 

 

 

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital

 

$

2,335,625

 

 

$

2,279,039

 

 

$

2,236,930

 

Tier 1 capital

 

 

2,335,625

 

 

 

2,279,039

 

 

 

2,236,930

 

Total capital

 

 

2,580,849

 

 

 

2,514,445

 

 

 

2,411,510

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulatory capital ratios:

 

 

 

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital ratio

 

 

11.92

%

 

 

11.90

%

 

 

12.65

%

Tier 1 risk-based capital ratio

 

 

11.92

 

 

 

11.90

 

 

 

12.65

 

Total risk-based capital ratio

 

 

13.17

 

 

 

13.12

 

 

 

13.63

 

Tier 1 leverage ratio

 

 

8.35

 

 

 

8.81

 

 

 

9.69

 


 

 

At June 30, 2020, the regulatory capital ratios presented in the foregoing table exceeded all “well-capitalized” regulatory thresholds.

 

The company did not execute any open market share repurchases during the second quarter, outside of the completion of the $30 million accelerated share repurchase program that was entered into in early March.

 

Asset Quality

Credit quality

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2

 

 

Q1

 

 

Q4

 

 

Q3

 

 

Q2

 

 

 

2020

 

 

2020

 

 

2019

 

 

2019

 

 

2019

 

Net charge-offs - Total loans

 

$

5,541

 

 

$

7,672

 

 

$

7,618

 

 

$

2,186

 

 

$

12,569

 

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

 

 

0.15

%

 

 

0.23

%

 

 

0.23

%

 

 

0.07

%

 

 

0.40

%

Loans over 90 days past due

 

$

4,588

 

 

$

2,211

 

 

$

2,069

 

 

$

2,466

 

 

$

1,825

 

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

 

 

0.03

%

 

 

0.02

%

 

 

0.02

%

 

 

0.02

%

 

 

0.01

%

Nonaccrual and restructured loans

 

$

82,245

 

 

$

97,029

 

 

$

56,347

 

 

$

71,838

 

 

$

53,395

 

Nonaccrual and restructured loans as a % of total loans

 

 

0.54

%

 

 

0.70

%

 

 

0.42

%

 

 

0.55

%

 

 

0.41

%

Provision for credit losses

 

$

21,500

 

 

$

88,000

 

 

$

2,000

 

 

$

7,500

 

 

$

11,000

 

 

 

Provision for credit losses for the second quarter totaled $21.5 million, a decrease of $66.5 million from the linked quarter, and an increase of $10.5 million from the second quarter of 2019.

 

Net charge-offs totaled $5.5 million, or 0.15%, of average loans, compared to $7.7 million, or 0.23%, of average loans in the linked quarter.  

 

The reserve build during the second quarter reflects the continued impact of the adoption of the current expected credit losses (CECL) accounting standard on January 1, 2020, and changes to key macroeconomic variables due to the COVID-19 pandemic.

Dividend Declaration

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

 

Conference Call

The company plans to host a conference call to discuss its second quarter 2020 earnings results on Wednesday, July 29, 2020, at 8:30 a.m. (CT).

 

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

 

UMB Financial 2Q 2020 Conference Call

A replay of the conference call may be heard through August 12, 2020 by calling (toll-free)

877-344-7529 or (international) 412-317-0088. The replay access code required for playback is 10145903. 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 (loss), operating earnings (losses) per share - diluted (operating EPS), operating return on average equity (operating ROE), operating return on average assets (operating ROA), operating noninterest expense, operating efficiency ratio, pre-tax, pre-provision income, pre-tax, pre-provision earnings per share – diluted (PTPP EPS), tangible shareholders’ equity, and tangible book value per share, all of which are non-GAAP financial measures. This information supplements the results that are reported according to generally accepted accounting


principles in the United States (GAAP) and should not be viewed in isolation from, or as a substitute for, GAAP results. The differences between the non-GAAP financial measures – net operating income, operating EPS, operating ROE, operating ROA, operating noninterest expense, operating efficiency ratio, PTPP, PTPP EPS, tangible shareholders’ equity, and tangible book value per share – and the nearest comparable GAAP financial measures are reconciled later in this release. The company believes that these non-GAAP financial measures and the reconciliations may be useful to investors because they adjust for acquisition-, severance-, and COVID-19 related items that management does not believe reflect the company’s fundamental operating performance. COVID-19 related expense includes hazard pay for branch associates, computer hardware expense to support associates working remotely, and additional equipment, cleaning, and janitorial supplies to protect the well-being of our associates and customers while on the company’s premises.

 

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

 

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

 

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

 

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

 

 

Forward-Looking Statements:

This press release contains, and our other communications may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “outlook,” “forecast,” “target,” “trend,” “plan,” “goal,” or other words of comparable meaning or future-tense or conditional verbs such as “may,” “will,” “should,” “would,” or “could.” Forward-looking statements convey our expectations, intentions, or forecasts about future events, circumstances, results, or aspirations. All forward-looking statements are subject to assumptions, risks, and uncertainties, which may change over time and many of which are beyond our control. You should not rely on any forward-looking statement as a prediction or guarantee about the future. Our actual future objectives, strategies, plans, prospects, performance, condition, or results may differ materially from those set forth in any forward-looking statement. Some of the factors that may cause actual results or other future events, circumstances, or aspirations to differ from those in forward-looking statements are described in our Annual Report on Form 10-K for the year ended December 31, 2019, our subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, or other applicable documents that are filed or furnished with the U.S. Securities and Exchange Commission (SEC). In addition to such factors that have been disclosed previously, the COVID-19 pandemic (the pandemic) may also cause actual results or other future events, circumstances, or aspirations to differ from our forward-looking statements. The pandemic has created a global public-health crisis that has resulted in widespread volatility and deteriorations in household, business, economic, and market conditions. It is currently adversely affecting the company


and its customers, counterparties, employees, and third-party service providers, and the continued adverse impacts on our business, financial position, results of operations, and prospects could be significant. We are not able to accurately predict the extent of the impact of the pandemic on our capital, liquidity, and other financial positions and on our business, results of operations, and prospects at this time, and we believe it will depend on a number of evolving factors, including: (i) the duration, extent and severity of the pandemic; (ii) the response of governmental and non-governmental authorities to the pandemic, which is rapidly changing and not always coordinated or consistent across jurisdictions; (iii) the effect of the pandemic on our customers, counterparties, employees and third-party service providers, which may vary widely, and which is generally expected to increase our credit, counterparty, operational, and other risks; and (iv) the effect of the pandemic on economies and markets, which in turn could adversely affect, among other things, the origination of new loans and the performance of our existing loans. The pandemic is also expected to have a significant impact on our CECL calculation and related provision under a new accounting standard that we were required to phase in beginning January 2020.  The CECL calculation includes periodic estimates of the net amount expected to be collected over the contractual term of certain financial assets, and requires us to take into account, among other things, economic conditions forecasted over the life of the financial asset, including the current and anticipated effects of the pandemic. Any forward-looking statement should be evaluated in light of these considerations. Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except to the extent required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K, or other applicable document that is filed or furnished with the SEC.

 

About UMB:

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

 

 

 

 

 

 

 

 

 

 

 


Consolidated Balance Sheets

 

UMB Financial Corporation

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

June 30,

 

 

 

2020

 

 

2019

 

ASSETS

 

 

 

 

 

 

 

 

Loans

 

$

15,305,097

 

 

$

12,900,269

 

Allowance for credit losses on loans

 

 

(200,300