UMB Financial Corporation Reports First Quarter 2015 Earnings of $33.8 million, or $0.74 per Diluted Share

UMB Financial Corporation (Nasdaq: UMBF), a diversified financial holding company, announced earnings for the three months ended March 31, 2015 of $33.8 million or $0.75 per share ($0.74 diluted). This is an increase of $10.4 million, or 44.2 percent, compared to first quarter 2014 earnings of $23.4 million or $0.52 per share ($0.52 diluted).

“This year is off to a good start for UMB, and we plan to focus on three main areas to continue growing our company,” said Mariner Kemper, Chairman and Chief Executive Officer. “First, our long-term strategy continues to maximize operating leverage while managing expenses over the long term. Second, we continue to focus on improving performance in Scout Investments, which is the best way to stem future outflows. Finally, we are optimistic that our announced acquisition of Marquette Financial Companies will be approved and we’ll bring two great companies together with a strong go-to-market strategy.”

“For the first quarter of 2015, average loan balances increased 11.8 percent to $7.5 billion,” Kemper continued. “This year-over-year growth was fueled by commercial and industrial, commercial real estate and construction loan growth across our entire footprint. We continue growing our loan portfolio while adhering to our careful underwriting philosophy, as evidenced by a 0.39 percent nonperforming loans as a percentage of the total loan portfolio. Fee businesses also remain an important part of our diversified financial services model. Healthcare Services continues to perform well, with $1.4 billion in purchase volume for the quarter, an increase of 21.1 percent compared to the same quarter last year. Healthcare deposits and assets now stand at $1.2 billion as of March 31, 2015. Additionally, assets under administration at UMB Fund Services increased $7.2 billion compared to the first quarter 2014, driving revenue to $24.4 million, an increase of 5.5 percent compared to first quarter 2014 revenue.”

Net Interest Income and Margin

Net interest income for the first quarter of 2015 increased $4.9 million, or 5.7 percent, compared to the same period in 2014. Average earning assets increased by $327.1 million, or 2.1 percent, compared to the first quarter of 2014. This increase was due to a $791.2 million, or 11.8 percent, increase in average loans, offset by a $588.6 million, of 34.7 percent, decrease in average interest bearing due from banks. Net interest margin increased seven basis points to 2.46 percent for the three months ended March 31, 2015, compared to the same quarter in 2014.

Noninterest Income and Expense

Noninterest income increased $2.2 million, or 1.8 percent, for the three months ended March 31, 2015, compared to the same period in 2014. Increases in noninterest income include an increase of $5.9 million in gains on sales of securities available for sale and a $1.8 million, or 41.6 percent, increase in trading and investment banking income. Decreases in noninterest income include trust and securities processing income, which decreased $4.3 million, or 6.0 percent, for the three months ended March 31, 2015, compared to the same period in 2014. The decrease in trust and securities processing income was largely due to an $8.9 million, or 35.4 percent, decrease in advisory fee income from the Scout Funds, offset by a $2.2 million, or 9.6 percent, increase in fees related to institutional and personal investment management services, and a $2.1 million, or 9.9 percent, increase in fund administration and custody services. Equity earnings on alternative investments decreased $3.4 million due to a decline in unrealized gains on Prairie Capital Management (PCM) equity method investments for the three months ended March 31, 2015, compared to the same period in 2014.

Noninterest expense decreased $7.8 million, or 4.5 percent, for the three months ended March 31, 2015, compared to the same period in 2014. The primary drivers of the decrease were a $15.0 million contingency reserve recorded in the first quarter of 2014 with no related reserve during the same period in 2015, and a $5.1 million, or 49.1 percent, decrease in other noninterest expense for the three months ended March 31, 2015, compared to the same period in 2014. The decrease in other noninterest expense was due to a decrease of $6.7 million in fair value adjustments on contingent consideration expense. These decreases were offset by an increase in salaries and benefits expense, which increased by $9.7 million or 10.9 percent. This was due to an increase of $4.8 million, or 9.2 percent, in salaries and wages, a $3.2 million, or 17.9 percent, an increase in commissions and bonuses, and a $1.7 million, or 9.0 percent, increase in employee benefits expense. Equipment expense increased by $1.5 million, or 11.9 percent, due to an increase in computer and hardware expenses. Legal and consulting expenses increased $1.0 million, or 29.8 percent. Included in total noninterest expense for the three-month period ended March 31, 2015 is $0.8 million of acquisition-related expenses related to the pending acquisition of Marquette Financial Companies, primarily due to legal and consulting expenses.

Balance Sheet

Average total assets for the three months ended March 31, 2015 were $16.8 billion compared to $16.5 billion for the same period in 2014, an increase of $327.7 million, or 2.0 percent. Average earning assets increased by $327.1 million for the period, or 2.1 percent.

Average loan balances for the three months ended March 31, 2015 increased $791.2 million, or 11.8 percent, to $7.5 billion compared to the same period in 2014. Actual loan balances on March 31, 2015 were $7.5 billion, an increase of $739.2 million, or 10.9 percent, compared to March 31, 2014. This increase was driven by an increase in commercial and industrial loans of $318.5 million, or 9.1 percent, and an increase in commercial real estate loans of $232.2 million, or 13.6 percent, and an increase in construction real estate loans of $70.3 million or 37.8 percent.

Nonperforming loans, defined as nonaccrual loans and restructured loans on nonaccrual, decreased to $29.2 million on March 31, 2015 from $30.2 million on March 31, 2014. As a percentage of loans, nonperforming loans decreased to 0.39 percent as of March 31, 2015, compared to 0.45 percent on March 31, 2014. The company’s allowance for loan losses totaled $77.5 million, or 1.03 percent of loans, as of March 31, 2015, compared to $75.5 million, or 1.12 percent of loans, as of March 31, 2014.

For the three months ended March 31, 2015, average securities, including trading securities, totaled $7.2 billion. This is an increase of $117.4 million, or 1.7 percent, from the same period in 2014.

Average total deposits increased $127.2 million, or 1.0 percent, to $13.3 billion for the three months ended March 31, 2015, compared to the same period in 2014. Average noninterest-bearing demand deposits increased $493.4 million, or 9.5 percent, in the first quarter of 2015 compared to the same one in 2014. Average interest-bearing deposits decreased by $366.1 million, or 4.6 percent, in the first quarter of 2015 as compared to the same period in 2014. Total deposits as of March 31, 2015 were $13.2 billion, compared to $12.3 billion as of March 31, 2014, a 7.3 percent increase. Also, as of March 31, 2015, noninterest-bearing demand deposits were 42.7 percent of total deposits.

“We continue to make progress on our strategy to shift the balance sheet into higher-yielding loans versus investment securities,” said Brian Walker, Chief Financial Officer. “First quarter 2015 average loans were a higher percentage of earning assets than first quarter 2014 average loans, resulting in a 56.3 percent loan-to-deposit ratio and a 2.46 percent net interest margin. We are encouraged by the year-over-year margin improvement and are cautiously optimistic for the remainder of 2015.”

As of March 31, 2015, UMB had total shareholders’ equity of $1.7 billion, an increase of 9.1 percent as compared to March 31, 2014.

Conference Call

The company plans to host a conference call to discuss its 2015 first quarter earnings results on April 29, 2015, at 8:30 a.m. (CT).

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

UMB Financial 1Q 2015 Conference Call

A replay of the conference call may be heard until May 14, 2015, by calling (toll-free) 877-344-7529 or (U.S.) 412-317-0088. The replay pass code required for playback is 10063617. The call replay may also be accessed via the company's website umbfinancial.com by visiting the investor relations area.

Forward-Looking Statements:

This 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, 2014, 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 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. 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 diversified financial holding company headquartered in Kansas City, Mo., offering complete banking services, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas. Subsidiaries of the holding company include companies that offer services to mutual funds and alternative-investment entities and registered investment advisors that offer equity and fixed income strategies to institutions and individual investors. For more information, visit umb.com, umbfinancial.com, blog.umb.com or follow us on Twitter at @UMBBank, Facebook at facebook.com/UMBBank and LinkedIn at linkedin.com/company/umb-bank.